The political shock waves caused by Donald Trump’s election as US President on Wednesday will undermine the already collapsing fragile economies of world capitalism, already drowning in a sea of debt estimated at $315 trillion.
A catastrophic economic tsunami is following right behind!
Governments alone owe an unprecedented $91 trillion. This is an amount almost equal to the size of the global economy. The debt burdens have grown so large that they now pose a growing threat to all workers’ living standards.
The International Monetary Fund last week reiterated its warning that ‘chronic fiscal deficits’ in the US must be ‘urgently addressed’.
As interest rates rise, private investment falls, and governments are less able to borrow to respond to economic downturns.
Tackling America’s debt problem will require either tax hikes or huge cuts to benefits, such as the social security and health insurance programmes, said Karen Dynan, former chief economist at the US Treasury.
Kenneth Rogoff, an economics professor at Harvard University, agrees that the US and other countries will have to make painful adjustments.
Next year, US interest payments will top $1 trillion on a national debt of more than $30 trillion, itself a sum roughly equal to the size of the US economy, according to the Congressional Budget Office.
Trump, having won the election, will now wage economic war on the rest of the world. His slogans of ‘Make America great again’ and ‘America first’ promise to protect US jobs and incomes by erecting huge trade barriers of 60-100% against Chinese imports, primarily against electric vehicles, and with trade tariffs rising to 20% or more against all other countries.
The National Institute of Economic and Social Research (NIESR) said the protectionist measures planned by Trump will result in rising inflation and higher interest rates from the Bank of England.
Such tariff walls as the 60% tariff on Chinese goods and a 10% tariff on goods from all other countries, and the resulting trade war, will lower UK growth by 0.7 percentage points and 0.5 percentage points in the first two years. The UK inflation rate will be 3-4 points higher while interest rates will be 2-3 points higher, said the NIESR.
This will be a catastrophe for the EU, with Germany already crashing deeper into recession and France right behind it. But the real sick man of Europe is the UK, where Starmer’s Labour government policy is to ‘grow the economy’ to raise funds for public education, health and social services.
Claire Lombardelli, the Bank of England’s deputy governor, commented: ‘Obviously the front-loaded fiscal loosening that the Budget represents means we have got higher inflation over the next three years’.
Bank governor Bailey stressed that the degree to which the Bank would need to keep interest rates higher for longer depended on how businesses responded to the tax raid.
Trump’s threatened US cuts to NATO spending to save money thrusts the burden of funding Zelensky’s fascist-infested Ukrainian government onto the bankrupt EU and Britain.
A desperate UK government delegation is presently in the US begging and pleading for a special UK-US trade deal to secure its ‘special relationship’ as US imperialism’s running dog, following a previous appeal by the then Tory government. This was dismissed with a curt ‘get to the back of the queue’ order!
All this is not made any easier by current Foreign Secretary Lammy’s 2018 comments that Trump is a ‘woman-hating neo-nazi sympathiser’ and ‘sociopath’, which has not been forgotten or forgiven, says former White House press secretary, Sean Spicer.
Then of course there is the fact of the 100 Labour Party members who travelled to America to campaign for the Democrat candidate Kamala Harris in the recent election.
It is clear that all talk by Starmer’s government about growing the capitalist economy to repay the massive public debt of over £2 trillion is duplicitous, as the real intention is to privatise and annihilate the NHS and all public services, by unloading the entire cost of the capitalist economic crisis onto the backs of the working class.
Trump’s electoral victory only deepens the world and UK social crisis enormously and makes it absolutely urgent that the TUC mobiles the trade unions in a general strike to defend the welfare state, wages and jobs.
Starmer’s Labour government must be brought down and be replaced by a workers government and socialism!