World slump at root of dollar crisis Trade war measures steppe up to cut US deficit

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At the beginning of 1977 bere was much discussion in the apitalist press of the forthpoming boom.

Now, one year later, they We looking back on the wreckage nd asking whatever happened.

One characteristic common all the major capitalist countries in the last year has been the failure of the growth of the conomy to reach the levels which were being officially preficted as the year began.

PHOTO: Andrew Wiard, Report Healey Asked why he was ¡warded the Companion if Honour award, TGWU These • problem Western E frequently Britain.

Japan

W. Germany UK figures show that the was most severe in urope and worst of all country we are tolo experienced an miracle in 1977Manufactured goods Japan's relatively high economic growth last year was achieved, despite a fairly stagnant home market, through a sharp increase in the export of manufactured goods which has given it a huge trade surplus.

The trade war measures recently taken against Japanese exports by the US and the European Economic Community will make it increasingly difficult to maintain this growth rate through exports.

The profound imbalance in the world capitalist economy is also shown by the fact that the Officially growth of National I early 197 5.25 4.75 2.75 0.25 United States economic growth rate, which was also comparatively high, was maintained only at the cost of a gigantic trade deficit.

At the beginning of the year the official forecast was that the USA would have a balance of payments deficit in 1977 of 3 billion dollars.

In the event it turned out to be 20 billion dollars, an unforseen disaster which once again been shattering confidence in the dollar.

The international value of the dollar in terms of other currencies has fallen about 10% in the last six months.

US capitalists have been divided about what to do about this fall.

Some, fearing domestic inflation above all, have wanted it stopped.

Others, especially exporters xpected Outcome for Gross 1977, latest 'oduct OECD estim: and those that compete with imports, have seen the fall of the dollar as another protectionist device which also cuts real wages.

The Carter administration has implicitly gone along with the latter position by not intervening to hold up the dollar's value, hoping also that the worsening international position would twist the arm of the US Congress into passing the energy bill which, Carter hints, will solve the problem by reducing oil imports.

Carter Fleet Street had a field day last week 'exposing' the doctor who allowed lesbians to have children through artificial insemination.

The dreadful threat to their immaculate conception of family life was supposed to chill the marrow in our bones despite the fact that children born to lesbians who have no sexual contact with men are by definition wanted children.

The papers dragged out their right wing 'outrage' spokesmen including Jill Knight.

Acceptable?

As one lesbian mother told the Observer, (which rejected the gutter press approach):

"Does she think it would be acceptable for somebody like myself-an admitted lesbian-to have sexual intercourse with a man-which I find repugnant, and then give birth. Would she like me to resort to picking up a man on the streets?"

Women and men who invaded the offices of the London Evening News to protest at the story made lesser headlines.

The Daily Mail for example, (which operates from the same building as the News) did not carry a single word about the protest.

Cheered

Orvousiy they ic 1820 155003 petter inese But last week Carter same up against the contradictions in the policy of 'benign neglect"

In particular he was told in Saudi Arabia that unless firm action was taken to stop the dollar's slide, Saudi Arabia would cease to argue for stability in the oil price.

A monetary 'swap' arrangement was hurriedly made with West Germany, and old ones reactivated, so as to give the American Federal Reserve Board (the equivalent of the Bank of England) reserves of foreign currency with which to buy up dollars in the market and hold up the price.

This policy worked wondersfor precisely one day.

On Friday last the value of the dollar fell back about as much as it had risen the previous day.

Reluctant

The announcement of the West German baling-out operation was, therefore, not enough.

The US Government seems reluctant to actually use the new foreign exchange it has acquired to buy dollars.

No doubt it fears that the PHOTO: Mark Rusher. IFL the protestors were cheered by some of the journalists on the Erening lews and suceeded in forcing the managemen: s* the peter ::

Other high: :: the SENTE 30. 3•3- * MP. hi Angere 1: 200= material forces putting down the dollar are so strong that these extra reserves may last no time at all and so worsen the situation.

Contradiction

As an alternative, the Federal Reserve had raised interest rates to attract speculative finance capital into the US.

• This new measure carries the contradiction that it may tend to hold down the already depressed level of capitalist investment.

It has been calculated that at 2.36 pm. on January 27, the Gross National Product of the USA will, thanks partly to inflation, for the first time reach the annual level of 2,000 billion dollars.

The fall of the dollar and the failure of the United States capitalism to lay any new foundation for secure expansion and accumulation, however, suggest that this 'event' will not be greeted with much waving of the stars and stripes.

One symptom of capitalists' reaction to 1978 is that last week the Wall Street stock exchange index fell to below 800 for the first time since 1975. propaganda Ant Questions. began by defending the women, to rowes nt protest trom the Judener Seeing which wat ??: WInT was blowing Aimmin ranidh rorised his sies i assure the audier: that he mi course nas r.