- BANFF, Alta. - The US dollar
is fast reaching a point at which foreign investors will abandon it and
send it into a freefall, says Bill Clinton's former economic
adviser.
-
- Robert Reich told the Global Business Forum in Banff
that record high budget and trade deficits, personal debt and a foreign
policy that is alienating traditional allies, has the already slumping
US dollar headed for collapse. The US already requires a daily infusion
of $1.2 billion in foreign investment just to keep the greenback's decline
under control, he said.
-
- "The mainstream view is that the budget deficit
(currently $422 billion).. is going to get larger,: said Reich, who is
an "informal adviser" to presidential hopeful John Kerry.
"Simultaneously,
the mainstream view is that there is no reason to believe that the trade
deficit (approximately $600 billion) is going to shrink anytime
soon.
-
- In fact, I see the dollar continuing to decline and I
see at some point a tipping point where East Asian banks that have been
trying to prop up the dollar, maintaining their exports (to the US),
because
at some point it becomes a lousy investment."
-
- Reich said global investors are already conducting
significant
amounts of business in Euros, not US dollars.
-
- The reason for Reich's speech to the audience of
approximately
200 business leaders, mostly Canadians, was to explain why free trade has
suddenly been revived as a great economic evil in the US.
-
- In painting a black outlook for the US economy, Reich
suggested the worst is yet to come, especially if President George W. Bush
and the Republican party's agenda of tax less and spend more is re-elected
in November.
-
- "My upbeat message is that we don't have to have
it like we have it," said Reich, who insisted Bush is not entirely
to blame, but bears considerable responsibility for the economic straits
facing the US.
-
- "Deficits matter," he said.
-
- "If you embark on a unilateral foreign policy and
the rest of the world is upset with you, that has a boomerang effect on
your global businesses. It can't help but (have an effect). So not only
does fiscal policy matter, but your foreign policy cannot be completely
divorced from your national economic policy.
-
- Reich said regardless of who is the next leader,
significant
measures are going to be needed to control the budget deficit and to begin
rebuilding the economy so that real manufacturing wages, which have been
largely stagnant in the US since the Reagan era in the 1980s, begin to
grow.
-
- He also said that while the US is unlikely to retreat
from global trade, it is also unlikely to aggressively pursue more open
trade for the time being. That's because US workers are suffering and are
looking for something to blame, like outsourcing, he said, and politicians
are being forced to play along.
-
- "A lot of people are very, very willing to blame
other countries for the loss of American jobs or the stresses on American
wages," said Reich. "This blame is ill-founded.
-
- "Nevertheless, in political terms, people talk about
jobs being lost in the United States to China... or to India... or
elsewhere."
-
- Reich also tried to quiet fears among Canadians that
Kerry is anti-free trade, saying only that Kerry wants to remove certain
tax incentives that encourage companies to move a portion of their
manufacturing
offshore so that they can legally shelter money from income taxes. He said
Kerry believes strongly in the value of trade and that Canadians shouldn't
fear his policies.
-
- Note - This article was originally published in the
Edmonton
Journal and the Vancouver Sun, September 25, 2004.
-
- http://portland.indymedia.org/en/2004/10/298769.shtml
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