THE American viewing public got a stark warning from the billionaire Donald Trump during a recent TV interview when he announced that Americans should prepare for ‘Financial Ruin’.
In stark contrast to the narrative pushed by the Obama administration and faithfully repeated by the bourgeois media that US capitalism has recovered from the financial crash of 2007/8, a statement they back up by reference to the ‘dramatic’ drop in unemployment figures, Trump is a very scared billionaire.
In his Fox TV interview he made clear that the US is heading to become a very large-scale Greece or Spain facing economic ruin.
He pointed out the unpalatable truth that the US is no longer a rich country, saying:
‘When you’re not rich, you have to go out and borrow money. We’re borrowing from the Chinese and others. We’re up to $16 trillion in debt.’
He added: ‘We are going up to $16 trillion [in debt] very soon, and it’s going to be a lot higher than that before he gets finished. When you have [debt] in the $21-$22 trillions, you are talking about a downgrade no matter how you cut it.’
As for the drop in unemployment in the US, Trump is scathing about these figures saying that the official unemployment rate of 5.5% for February 2015 ‘isn’t the real number’ and that the actual figure was 15 or 16%.
In fact, the actual figures for unemployment not just in the US but throughout the capitalist world are notoriously difficult the quantify.
The official rate in the US disregards all those employed on a part-time basis because they are unable to obtain full-time work plus what is classified as persons ‘marginally attached to the labour force’ – that is those workers who have just simply given up and no longer bother to register as unemployed.
The US Bureau of Labour Statistics, which does take these numbers into account, gives the actual rate of unemployment for February as 11%, exactly twice that of the official rate. Even this figure is probably an underestimation of the scale of unemployment in the US. Trump is not alone in confidently predicting an epic crash in the near future.
The Swiss economist, Marc Faber, has been sounding alarm bells about a global recession and crash for some time, stating recently: ‘I think somewhere down the line we will have a massive wealth destruction. I would say that well-to-do people may lose up to 50 percent of their total wealth.’
Faber put the odds on a global recession as being ‘100%’.
Economist and the chief executive officer of the investment company Euro Pacific Capital, Peter Schiff, is equally worried sick that the facade of economic growth by US capitalism is just a mask for a bankrupt and over-inflated economy that is headed for a spectacular collapse.
Schiff is predicting that the inflationary bubble in the stock markets, driven by the Fed printing trillions of dollars of worthless paper money through its Quantitative Easing programme, is about to burst. Schiff said that the stock market collapse in 2008 ‘wasn’t the real crash. The real crash is coming’.
He went on: ‘If we keep doing this policy of stimulus and growing government, it’s just going to get worse for the average American. Our standard of living is going to fall … People who are expecting Social Security can’t get all that money. People expecting government pensions can’t get all their money … We simply can’t afford to pay them.’
To this growing list of economists and financial analysts can be added the name The Jerome Levy Forecasting Centre based in New York.
This centre accurately forecast the sub-prime mortgage housing bubble of 2008 and today it is predicting a 65% probability of a worldwide recession impacting on the US economy by the end of 2015.
All these warnings have been dismissed by ‘mainstream’ bourgeois economists as the products of eccentric billionaires and prophets of economic doom.
However, it is now abundantly clear that even amongst the heady optimists of Wall Street, who in the past have always believed that their money and profits would grow for all eternity under capitalism, are having to face up to a severe reality check.
Investors are getting very worried about how long the gravy train will actually last under the impact of the world crisis.
In particular, they are worried about falling oil prices; stagnant wages, the ‘double edged-sword’ of a strong US dollar and the collapse of foreign markets like the eurozone and China.
The collapse of oil prices (from $100 to $45 a barrel) is forcing businesses and corporations to cut back on jobs and spending.
The US oil industry added 13% (over half a million jobs) in America since 2009 – now these same energy companies are laying off thousands with many more redundancies expected.
Corporate earnings are being hit with the US’s largest building company reporting a 25% drop in profits because of business slowdown in oil-producing regions. This led to a fall of 291 points on the Dow index.
Equally the dramatic rise of the US dollar far from being a sign of strength in the economy is having a disastrous effect forcing up the price of US exports.
The giant computer company, Microsoft, saw its shares drop by as much as 10% due to expected falls in sales abroad because of the strong US dollar.
The same drops are occurring in other big companies like Procter & Gamble and United Technologies – companies that employ thousands of workers whose jobs are now at risk.
On the domestic front, despite all claims to the contrary, high unemployment along with wage ‘stagnation’ (wages in America have not increased over the past seven years – the average wage in 2007 was $790 a week, at the end of 2014 it was $796) mean that any hope of a wage or job growth boosting the economy and avoiding complete collapse has gone completely out the window.
As for the world crisis, Wall Street traders are becoming very worried indeed. Referring to the meltdown in the Eurozone, the slowdown of economic growth and demand in China plus the chaos caused by the imperialist-inspired coup in Ukraine, one of the investors’ newsletters recently observed with great understatement that the American economy ‘cannot really outperform while the rest are in shambles’.
In fact an entire section of the American capitalist class is waking up to the reality that every measure taken by the central banks and governments to stave off the crash of 2008 – pumping out trillions of dollars of free money to the banks through QE and near zero interest rates – has only had the effect of prolonging and deepening the historic crisis of capitalism.
What is really terrifying them is that in the coming catastrophic crash (that they are so confidently predicting) they will be forced to take on and defeat a powerful movement of American workers.
As can be seen from the mass movement of the low-paid sweeping the country and the huge strike movement amongst highly paid workers like the dockers on the west coast, the American working class is determined that it will not be smashed and reduced to the starvation levels of the 1930s depression.
While the multi-billionaires and kings of Wall Street look for bunkers to try and weather the impending financial Armageddon, the working class are marching on the road to socialist revolution and workers’ power in order to defend their very existence.
