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US economy on verge of collapse, warns Democrat LaRouche
Fakir Chand in Bangalore | May 26, 2003 19:25 IST
Lyndon H LaRouche, US economist and Democratic Party candidate for the 2004 presidential elections, has warned that the beleaguered United States economy would collapse in the near future due to the irrational fiscal and monetary policies being pursued by the Bush Administration even after the Iraq war and the 9/11 attacks.
LaRouche, who is in Bangalore to participate in the two-day 'International Conference on World Situation after Iraq War' told rediff.com on Monday that the US dollar, which has been weakening against a basket currencies of late, was likely to erode further by another 25-50 per cent by this year-end.
"The US economy is on the verge of collapse due to the parasitical and monetary policies of the war-mongering Bush government. Its foreign exchange rate and monetary system are in the grip of serious crisis that may take the economy into a terminal state if remedial measures are not taken immediately," LaRouche stated.
The robust US economy began to decline with the emergence of the Bush Administration in early 2001, and any recovery is unlikely due to mounting federal and current account deficits, growing inflation, rising unemployment, and a weak dollar.
"Though the Bush Administration launched the Iraq war ostensibly to eliminate weapons of mass destruction and regime change, the main reason was to deflect the attention of the Americans and the world from the systemic and endemic failures of the economic and fiscal policies bedeviling the US," LaRouche asserted.
Lamenting that the Bush government was yet to learn any lesson from either the Iraq war or 9/11 till date, LaRouche said the US involvement in the reconstruction and formation of a Iraqi government would only drive the economy into a tailspin as such efforts would cost the US billions of dollars to sustain over the next two years, militarily or otherwise.
"Despite the US Constitution providing checks and balances on the way the government spends its budgetary funds through the Congress, the Senate and the House of Representatives, the Bush Administration's foreign policies of ushering a new world order and fight against global terrorism have diverted its attention and resources in checking the economic and monetary ills plaguing the US," LaRouche declared.
Taking a dig at his own Democratic Party for getting carried away by the wave of patriotism and Pax Americana agenda, LaRouche said a weak opposition and a divided Congress/Senate is letting the US executive to get away with its imperialistic and hegemonic policies.
"As a result of all these disastrous factors, the US is heading for a major political and economic crises. What's at stake is the financial benefits of certain vested interests in the White House than global peace and the security of the American people," LaRouche claimed.
The existing IMF-World Bank framework needs to be overhauled if the problems faced by the world economy have to be tackled. Though China, and India to an extent have some internal strengths to survive the onslaught of global competition and the US hegemony, Europe will have tougher times ahead in grappling with the current world economic crisis due to lower productivity, growing unemployment, and stagflation.
"No nation will be able to withstand the collapse of the exchange rate system in the US as dollar continues to dominate other currencies. But its depreciation by 18-19 during the last few weeks has set off alarm bells in the global financial markets, as assets and investments of many leading countries are still parked in US vaults in dollar currency.
At this rate, a dollar decline by another 25-50 per cent will have a deleterious effect on the global economy, leading to collapse of world trade, and hurting exports and imports to the US and Europe," LaRouche disclosed.
Offering a solution to the Bush Administration to get out of the mess it has landed the US, LaRouche said a economic recovery from self-collapse of the present financial system was to return to a fixed exchange rate and regulated monetary system, with long-term credit lines on simple interest rates.
"The required credit for the global economic recovery can be generated only by sovereign nation-states. The thrust of investments' to set the recovery into motion can come from the expansion of basic infrastructure in the developing countries, especially in the Asia-Pacific region, where two-thirds of the world's population live," LaRouche said.