US capitalism really has got its back to the wall, and has somewhat lost its balance, when its Treasury Secretary, Geithner, says that he is ‘quite open’ to a Chinese suggestion for the development of a global reserve currency to replace the US dollar.
It is the Chinese government’s purchasing of US debt that has kept the USA from state bankruptcy.
A fortnight ago the Chinese Prime Minister confessed that he was ‘worried’ about the future of the US and had asked for reassurances that it would act ‘responsibly’.
If the Chinese Stalinists end their backing for US Treasury bonds, US capitalism will be sunk, and this is what the objective crisis is forcing the Chinese to seriously consider.
Making the US capitalists and Chinese Stalinists even more nervous is the latest economic news out of the US.
The fourth quarter of 2008 showed a 6.3 per cent decline in the Gross Domestic Product, making for the worst quarter figures for 26 years.
The Labour Department added to the gloom with its report that first-time claims for unemployment benefits rose by 8,000 to 652,000 in February, while continuing claims jumped by 122,000 to a record 5.56 million.
At the same time Corporate profits before taxes fell by a record $250 billion or 16.5 per cent at a quarterly rate. It was the largest percentage decline in profits since 1953.
Domestic profits of financial corporations dropped $178 billion, while domestic profits of non-financial companies dropped by $89 billion.
The government’s estimates of profits from current operations do not include the writing down of toxic assets.
For all of 2008, profits fell 10.1 per cent, the most since 1970, while business investment dropped by 21.7 per cent in the fourth quarter, with investment in equipment and software falling by 28.1 per cent.
Exports fell 23.6 per cent in the fourth quarter, the most since 1971, with export of goods falling by 32 per cent, and imports falling by 17.5 per cent.
This desperate crisis of American capitalism is at the centre of the world crisis.
Its leaders are becoming more and more convinced that he only way out of it is through imperialist wars to reorder the planet.
This is why there is now a sharp growth of tensions with China, with the US Pentagon suggesting that China’s military power is altering the balance of power in Asia, in a way that cannot be tolerated.
A Chinese spokesman called this Pentagon view ‘a gross distortion of the facts’, and urged an end to ‘Cold War thinking’.
However, in its annual report to Congress, the Pentagon said China was developing ‘disruptive’ technologies for nuclear, space and cyber warfare.
At the same time the US ruling class is railing at Iran. On the one hand Obama is offering Iran a ‘fresh start’ while on the other hand US land, air and naval forces around Iran are at a level not seen since the US attack on Iraq.
Iran is being told: collaborate with the US or face a massive military strike.
Faced with this threat Iran has agreed to attend the US-convened conference on Afghanistan, at the Hague, where expanding military action from Afghanistan into Pakistan will be discussed.
However subordinating Iran to the US will mean condemning it to backwardness, a road that the Iranian bourgeoisie will be loth to take.
Faced with crisis-ridden imperialism, which is now being driven into new wars as its economic and political crisis deepens, the working class and the poor of the world have only one option: that is to organise the victory of the world socialist revolution, to replace capitalism and imperialism with socialism.