Gerard Bad: The international debt and the loophole of the ticket Board.
This article was published in the n ° 144 of exchanges was 2013.
The economic and journalistic press constantly gargling a civilizing language through considerations to group countries according to the importance of industrial development, in reality their dependence on financial and industrial. A range of titles the most various will be used so as to suggest that the proletarian misery corresponds to a lack of development... If we take some of these designations, such as 'third world' "Fourth World" "developing countries", "least developed countries", 'new industrialized countries' etc., this is only for show all developmental variants to hide both human nature of a generous humanism exploitation. In Europe we had the PIGS (1) (Portugal, Ireland, Greece and Spain) to make fun of insolvent countries.
Such as when talking about countries in development (PED), should say developing financial dependence (PVDF) - same for the newly industrialized countries (NICs) or emerging economies.
Return on the international debt
The debt of the third world (2) or (PVD) developing countries is recurrent. As early as 1820, the capitalist system enters the newly independent countries of Latin America. The wars of political independence will pave the way to financial dependency; Enter the vortex of debt the Colombia, the Chile, the Peru, the Argentina, the Mexico and the Guatemala: all will borrow on the London market. What is characteristic, it is to see that regularly of the whole country are grim and can no longer repay their debt immiserizing their population. At this time there the capital flow back to any other "meccas" and return when the situation began to improve. Sovereign risk or payment cessations hinder the expansion of capital which seems even regenerate from crisis to crisis. Rosa Luxemburg in his day had quite understood how the system operated:
"Between 1870 and 1875, she writes, loans were raised in London for a value of £ 260 million, which immediately caused rapid growth in exports of British goods in overseas countries. Although these countries embraced periodically bankruptcy, capital continued to flow in droves. At the end of the 1870s, some countries had partially or completely suspended payment of interest: the Turkey, Egypt, the Greece, the Bolivia, Costa Rica, Ecuador, the Honduras, the Mexico, the Paraguay, Saint-Domingue, the Peru, the Uruguay, the Venezuela. However, at the end of the 1880s, fever of loans to States to overseas incorporated... »
(The Accumulation of capital, ed. Maspero, p. 95; see also page 72)
The debt of the third world: 1970-1990
At the end of the 1960s, it was visible that a process of change in the debt of the third world would engage. Indeed more and more private bank loans will flood the third world. According to the OECD, between 1970 and 1977, the external debt of developing countries rose from $ 72.2 billion to $ 244 billion. The the United Nations Conference on trade and development (UNCTAD) (3) will indicate that 72% of bank loans came from private credit so that they don't representetaient that 51% of these loans in 1967. It was to relaunch growth to counter the depression after World War II. Indeed the international financing system, waterlogged capital fallow, was more profitable opportunities in industrialized countries. By the 1970s there will be a gradual saturation of global productive capacity (4).
A retry of reproduction extended by the explosion of international loans will occur. Capital export fever seizes financial places of Panama, Bahrain, Abu Dhabi, Hong Kong, Singapore... in the same footsteps as described by Rosa Luxemburg, but at a higher level of development of the productive forces. Financial intermediaries export their capital so that developing countries and LDCs are industrializing purchasing equipment produced in the countries of the centre, and become dependent on this exported industrialization and its mode of consumption. Their take-off will be with machines and equipment last cry, which puts much the idea that relocations are primarily motivated by the cost of the work.
The industrialization of developing countries is still limited largely to manufacturing industry, technology transfer will be slow, its main objective will be the reimbursement of debts:
"The World Bank also reports that during the past years, Malaysia, the Colombia, the Turkey and the Thailand have considerably increased their exports of manufactures. Yet when comparing table of the nations to which is an important part of the debt to sources of private funding, the table of countries that produce and export of manufactured products, we find that it is, without exception, the same countries. We therefore deduce a vital relationship between external debt and the new division of work desired by the big banks. »
(Samuel Lichtensztejn and José M. Quijano, the debt of underdeveloped countries and the role of international private banks, ed. Publisud, 1982)
The debt of the third world has revealed that it was more possible for the banks to grant loans with as goal that the third world consumes the industrial productions of the OECD. The terms of trade is unequal and the cost of the imported material still growing it became patent that many countries could no longer pay their debt, they spoke even to cancel (5) the debt of the third world.
The period where loans were used to subsidize imports began to touch the bottom. The financing of the development of the third world will mutate into financing the deficits. It is at that moment that a remodel of the payment of the debt was based on the exploitation of third world labour force. Banks and multinationals saw their interests, the bourgeoisie comprador as by bringing foreign currency to pay the debt service. The time of the relocation of the centre to the periphery began:
«And after major bankers, the countries of the centre would retain in the future their monopoly on industries of high performance that require technology sophisticated while the most advanced third world countries would launch in the industries or plants of fixtures that require intensive.» The North-South axis of the commercial channels would be more devoted solely to the exchange of products manufactured from raw materials; diversified merchandise trade would take first place. »
(Samuel Lichtensztejn and José M. Quijano, op. cit.).
As from the year 2000 developing countries produced almost a quarter of world production. While in 1970 four-fifths of world production were still concentrated in the core countries (Western Europe, North America, Oceania, and Japan).
The impact of the oil price shocks on developing countries and the least developed countries
There generally too little attention to what were truly the oil crises and their consequences. So let's summarize the situation with emphasis on what seems essential. For developing countries and LDCs, the impact of the increase in the price of crude (+ 400%) was devastating, these countries without significant oil resources have not sufficient currency to buy oil products (fertilizer, chemicals...). The concept of "Fourth World" as new hierarchical classification of the capital was born. The happiness of each had the misfortune of others. OPEC countries will benefit, between 1974 and 1980, a surplus of $ 330 billion. While the trade deficit in non-oil economies, the world, will be of the order of 300 billion (6).
After the oil shock of 1973, the deficit of the importing countries of the third world passes from 36.8% to 72.7% in 1977. India, Bangladesh and some black African countries are in dramatic situations. It is the final OPEC which will serve as a funder to cushion the painful increase in the price of crude. It should be noted that through the IMF and Saudi capital that the operation "oil facility" is going. It is supposed to help the poorest countries. But the bulk of petrodollars, 120 billion, will be recycled by American, European and Japanese banks.
A few years later, program change: the United States decide the deregulation of their domestic market and developed the concept of "great basin" (7) where all can supply oil according to the course of it.
"First Executive Order signed by Ronald Reagan in January 1981 fully deregulated the domestic oil market. The idea was no longer the quest for energy independence but the minimization of the cost of supply. The evolution of oil dependency would be determined by the free functioning of the market, i.e. by free competition between domestic oil and imported oil. »(Ramses, éd. Dunod, 2005, p.146)
We all know what happened, instability in teeth of saw, but on the rise, the price of oil. If during the 2000-2003 period the price of the barrel stabilizes between 22 and 28 dollars, following a collapse in 1998 to $ 10, the 2004-2008 period will be the explosion of the application; the price will reach $ 100 a barrel with a peak of 145 in 2008. The barrel is currently (July 2013) at 106.61 dollars.
1994: the debt of developing countries explodes again
The end of 1994, the debt of developing countries explodes again, she spent $ 840 billion in 1982 to 1 $ 900 billion. This corresponds to a new influx of private capital which have invested in Argentina, China, South Korea, Indonesia, Malaysia, Mexico and Thailand. All except China will enter into crisis: 1994, third Mexican crisis; 1997-1998, so-called Asian crisis that will affect the Indonesia, South Korea, the Thailand and Malaysia; 2001-2002 crisis in Argentina.
The debt crisis of the developing countries is in the end than that of the total capital and will manifest itself through a series of downgradings financial (8), whose 2002 argentine crisis will highlight the risk of sovereign debt. These events will be at the base of the reversal of monetary policy American and its spectacular swelling of the deficit. The United States came to replace the PED or emerging economy as debtor of global financial markets. West Germany and Japan taking the place of OPEC as providers of funds.
Since then, the so-called (2007-2008) subprime crisis broke in the United States, Center of global capitalism, and has spread around the world. Six years have passed and despite measures in any kind the crisis is still there, and nothing to restart the machine. Worse yet, people find that the rescue of the banks by the States (2007-2009) resulted in the degradation of public finances resulting in a crisis of sovereign debt, which they are the victims. We see States such as the Portugal, the Ireland, the Spain and the Italy take the path of the default in payment of the Greece.
The Governments of left and right are in place only to pay for their crisis peoples. Austerity plans fall cascading despite interested self-critical of the IMF and the G7. In early may, the Portuguese Prime Minister announced that it would make severe cuts in public spending (9) in order to meet the budgetary commitments. Pedro Passos Coelho announced the postponement of the age of retirement, the lengthening of working hours and reducing the number of officials. The European Union also has its mingong (Chinese word for migrants of the Interior); in countries like the Greece, the Spain, the Portugal of many without jobs are forced into emigration: according to a Spanish employers ' organisation, more than 300,000 Spaniards have left the country since 2008. The Greek crisis is a godsend for the Germany that needs each year a migratory flow of 200,000 immigrants; 30,000 Greeks joined the Germany between June 2011 and June 2012 and 25,000 Spaniards annually.
In a world of overaccumulation of capital and industrial overcapacity, it becomes almost impossible to continue the rhythms of growth on the rise, i.e. to be able to continue an extended accumulation. Austerity measures that swept the planet, of course narrowed the scope of global demand at the expense of any particular economic bloc or certain industrial sectors, overcapacity in the automobile sector demonstrated each day (10). The last G7 meeting (10 and 11 may 2013 in London) highlighted contradictions within global finance. While the IMF and the G20 start to make their criticism on measures of austerity, the convening of a G7, by the United Kingdom which has the Presidency, sought to affirm need to stay the course of austerity and rely on central banks for the revival. In other words, the G7 meeting was designed to counter the self-criticism of the IMF on the damage inflicted on the economy by too severe discipline. For the British the solution lies in money creation by the central banks, i.e. operate printing money and monetize debt.
Playing on the money is the basis of monetarism, but get to create the funny money is a loophole that will have catastrophic consequences, as competitive devaluations have shown. The Canadian participant in the G7, Jim Flaherty, yet advocate of austerity, still questioned the consequences of money supply explosion: "I understand the interest but it's supposed to remain a temporary measure and not become a permanent lever under penalty of in having to pay the consequences." However the Pandora's box opened again amply in the land of the rising sun. The Japan wants to double its money supply by late 2014, which reduced the yen to its lowest level for four years. Meanwhile, in the United States, the Fed continues its injections of currency in monetary circuits at the rate of 85 billion dollars per month.
The currency war returns to the front of the stage as a protectionist measure. All will eventually devalue their currency to retrieve market at the expense of other shares. For example the devaluation of the Japanese currency will give a boost to the export of Toyota, Nissan (11), Honda... at the expense of Chinese, German and Korean motor industries; but it will not take much time for the injured fall in turn the value of their currency. Each hit battering of this kind entails restructuring and mass redundancies and the increase in productivity... Germany, whose growth is export, reacted immediately and considered cheating; the Americans are going in the same direction as the Germans and think that it is unfair to be competed by a simple currency effect.
"Slips of the trade war war coins, which can be powered by a bidding war without end", they lament. In fact, if everyone starts to make money, the real danger becomes global, on fears the formation of new financial bubbles above these masses of floating capital.
The Monroe doctrine, the name of the president of the United States (March 4, 1817 - March 4, 1825) famous for its "America for the Americans" followed by the recognition of the new Latin American republics, was only an undertaking for the North America to hunt the Spanish occupier. The wilsonnisme and the right of peoples to self-determination of them - even continue in the same direction, national independence as the prelude to the penetration of financial capital.
The international borrowing is the expression of the total capital, the capital which already begins to come out of the national frameworks in the form of imperialism (financial capital). What is characteristic is that the system seems completely impervious to the crises of debt, to the State risk... Like a wave, financial capital comes constantly collide on the cliff of debt which collapses, and then resumes the ardour. The question which arises is why and how such a system can hold.
In this article we have tried to show how the financial capital goes from crisis to crisis by a spiral motion, that the export of capital has nothing progressive and humanist but applies only to the reproduction of capital, its enlargement. When the profit drop, the capital packed her bags and seeks other opportunities. Debt of third world shows the various stages in the final led to the global crisis. The oil shocks had the function to save the universal currency at risk represented by the dollar. The American strategy was that their European and Japanese rivals as well as the third world contribute to bear part of their commercial and monetary crisis in order to avoid the fragmentation of the system. The Anglo-American oil cartel would use the oil shocks for these purposes.
The United States was first recipient of the oil crisis that they had triggered. They pay slightly more expensive oil, but Europe and the Japan still more; as for the third world, there are already more, and talking about fourth world; a fourth world primarily in debt from U.S. banks. End of 1975, two-thirds of the loans came from US banks.
The Americans thought they had finally saved the world from financial disaster by putting Europe and Japan to contribution, through two devaluations of the dollar to cushion the oil shocks, making thus pay the OPEC countries which will wipe the debt of the world, i.e. the American on her claims.
The United States had managed to temporarily improve their competitive position on the market of product manufactured, upgraded American crude (and that of Alaska) while giving the dollar in the saddle on the foreign exchange market. The cartel of the seven sisters pocketed the profits. However Europe, the Japan and other countries will react, both by creating national companies such as the Italian ENI, others of OPEC, seeking to dampen the devaluations of the dollar bill.
This redistribution of oil crises and devaluations of the dollar suddenly will transform OPEC funder of the third world and allowing private banks to withdraw temporarily from a sector which no longer gives the desired juice (12). It is the financial windfall to OPEC who will inherit the vexations of developing countries whose growth is interrupted because of the increase in the price of oil and the fall in the price of primary agricultural and mining products.
The monetarist reversal of 1979 and the Liberal wave that will follow will enable international financial markets to overwhelm all control systems and in particular those States on the economy. This means that financial capital, which has the world market as playground, continues his emancipation from State shackles, via financial globalization. The scholarship to the chagrin of fire Lenin (13) is back and will bend the rigidities of State monopoly capitalism both West to East. Without sufficient return capital turned to emerging stock markets efficient. As early as 1980 there will be an acceleration of foreign direct investment (IDI). At the beginning of the 1990s, the development of what was called "market regionalisation", happened in ten years of 1,000 billion dollars of capitalization to 2,000 billion. In 1994 the debt of emerging economies will explode and is going to be the signal of a crisis of international indebtedness including centered on Latin America, chasse gardée American banks.
Latin American debt quickly appeared to blow up the international financial system, proving that this debt was that of the total capital. One entire system of clogging, Brady plan and other will do that moving deadlines forward: the Citicorp (14) is forced to provision for doubtful debt that other banks may not be. The international financial system will enter finally into turmoil with the subprime crisis and simmering since in the basins of the European Union faced it also not only public debt, but the State risk yet. Currently speculators are counting on oil, hoping a recovery of the world economy in 2014, as they hoped before an indefinite courses boost gold.
None of this will be to the appointment; even the IMF questioned. However overcapacity, public spending will continue and inflation will start to grow.
Gérard Bad end June 2013
Regarding inflation show on this blog
Bibliography: Ramses, ed. Dunod, 2005; Jean-Marie Chevalier, the new oil challenge, Ed Calmann-Lévy, 1973; Samuel Lichtensztejn and José M. Quijano, debt of underdeveloped countries and the role of international private banks, ed. Publisud, 1982; Pascal Arnaud, the debt of the third world, ed. The discovery, 1984; Jacques Adda, the globalization of the economy, ed. The discovery, 2012.
NOTES
(1) In English PIGS corresponds to French pork, and S to Spain (Spain).
(2) The term 'third world' dated August 14, 1952, under the pen of Alfred Sauvy in the political, economic and literary, in reference to the two blocs then, but also to the third State of the French revolution: «because finally this third world ignored, exploited, scorned as the third estate, wants to also be something. "
(3) Created in 1964, UNCTAD has for objective to integrate developing countries into world l´economie so as to promote their development.
(4) The unemployment rate began his rise: mid-1973 to mid-1975 he spent from 5% to 9% in the United States and 2.5% to 5% in the EEC.
(5) When talking about debt cancellation, it is especially reduction of public debts incurred from States and official international organizations. Debt private, for a country becoming insolvent, there's little recourse on the part of creditors. Hence a grey market where these claims to resell, as junk bonds (junk bonds), with a deep discount (effects of the rating of the debt and the risk premium on borrowing rates).
(6) Pascal Arnaud, the debt of the third world, ed. The discovery, 1984, p 47.
(7) The 'one great poll' formula is Morris Adelman, Professor at the MIT, one of the leading experts in the oil market.
(8) See in this article "Crisis, the end of the spared" topic in Exchange No. 138, p.48.
(9) In order to find here EUR 4.8 billion in 2015, the Portuguese Government wants to abolish 30,000 posts of officials and raise the age of departure to retirement at age 66. 2013 Budget increases taxes on income of 30% on average.
(10) The direct consequence of this slump, it is the underuse of factories in Europe. In the automotive sector, 100 production sites, 58% are losing money because they do not fully use their abilities. "The underutilization of European factories has reached a critical level, and capacity reductions announced to date will most likely insufficient to remedy the situation, said Laurent Petizon, general manager of Alix Partner's. '' To adjust production to the low volumes of sales anticipated for the coming years, should reduce the capacity of 3 million units. This figure equals the closing of 10 plants of the size of the site PSA of Sochaux (316 700 cars in 2012). The study reveals that the underutilization of sites particularly affects France, where 62% of the factories are losing money. "(New plant [usinenouvelle.com], reporting a study of Alix Partner's consulting firm, that the auto market will remain permanently depressed, with still more glaring production overcapacity).
(11) Carlos Ghosn, inter alia, president of Nissan, regrets for many months the strength of the yen, "hampering the competitiveness of Japanese groups.
(12) From 1978 to 1982, the debt of non-petroleum countries changes from $ 336 to $ 612 billion and banks will limit their loans. (Pascal Arnaud, op. cit., p73).
(13) Lenin: "in other words, the old capitalism, capitalism of free competition, with this regulator absolutely essential was for him the scholarship, disappears forever. He was succeeded by a new capitalism, which includes obvious elements of transition, a kind of mixture between free competition and monopoly. » (Imperialism, highest stage of capitalism.)
(14) In April 1998, Citicorp will merge with Traveler Group to become Citigroup.