Muslims and the free falling US economy

Zafar Bangash

Shawwal 03, 1432 2011-09-01

Editorials

by Zafar Bangash (Editorials, Crescent International Vol. 40, No. 7, Shawwal, 1432)

As for the US economy, despite optimistic statements by President Barack Obama that it is on the mend — what else can he say? — statistics paint a very different picture.

Like the twin towers of the World Trade Center, the US military and economy are both in free fall. As with the twin towers, the dispersal of large amounts of toxic debris will cause havoc to those within its range and beyond. But unlike the twin towers, only one institution — the US military — has been hit by external forces: Iraqi and Afghan resistance fighters. This of course has had a huge negative impact on the US economy. There are both external and internal factors responsible for US economic collapse. Muslims both in the US and in the Muslim world will be affected by these developments.

As for the US economy, despite optimistic statements by President Barack Obama that it is on the mend — what else can he say? — statistics paint a very different picture. Respected American economists — Joseph Stiglitz and Paul Krugman, for instance — have repeatedly warned about the disastrous effects of running a casino economy, but powerful interest groups through their lobbies have frustrated any serious attempts at addressing the problem. This was most recently witnessed in the tussle between Obama and the Republican-dominated Congress about increasing the debt ceiling and reducing the deficit. Republicans were adamant that taxes on the rich should not be raised and that expenditure should match income. This translates into cutting services to the poor; in other words, take it from the poor and give it to the rich. When much of the US national income is handed over to the rich — companies like General Electric earn billions of dollars in profits, supplemented by billions back in tax rebates — economic growth could continue only through consumption financed by a mounting pile of debt, mainly from China, Japan and Middle Eastern cash cows like Saudi Arabia. This ideologically driven policy has brought the US to the brink of economic ruin.

But why are members of Congress hell-bent on pursuing a policy that is bound to lead to even greater economic disaster? Part of the answer has been provided by the Center for Responsive Politics: nearly half of all members of Congress are millionaires, and between 2008 and 2009, when most Americans were feeling the brunt of the recession, the personal wealth of members of Congress collectively increased by more than 16%. Further, it is corporations that provide the bulk of campaign funding to candidates. How could political slaves make policies that are detrimental to the interests of their paymasters?

On the flip side, the Labor Department reported on July 8 that only 18,000 new jobs were created in the previous month, a large number of them being government jobs, which take more from the public treasury than they return in tax income. Its Household Survey showed 445,000 jobs lost. In fact, the dismal job picture is exacerbated by monthly BLS reports saying: “The confidence level for the monthly change in total employment is on the order of plus or minus 430,000 jobs.” In order to stay at the same level, the US needs to create 200,000 new jobs every month — a far cry from the reality today. In fact, leading economists challenge the official unemployment rate of 9.2%; they say the real figure is close to 30%.

Two groups are at the forefront of pursuing and maintaining the current ruinous economic policy: “the too big to fail” failed banks, and arms manufacturers. Banksters have got away with trillions of dollars in handouts. The arms manufacturers that have dominated US military policy for decades, insist on keeping the US defence (offence) expenditure at record levels. The Pentagon budget has increased by 67% in the last decade. If previously, the US waged wars to grab the resources of other countries, now it is untenable as the disastrous wars in Iraq and Afghanistan show. Second, the US maintains hundreds of military bases (nearly 1,000) around the globe to protect corporate interests at the cost of hundreds of billions of dollars annually.

A decade ago, the US was awash in surplus funds. Come George W. Bush on the scene and according to economist Joseph Stiglitz: “Unaffordable tax cuts and wars, a major recession, and soaring health-care costs — fueled in part by the commitment of George W Bush’s administration to giving drug companies free rein in setting prices, even with government money at stake — quickly transformed a huge surplus into record peacetime deficits. The remedies to the US deficit follow immediately from this diagnosis: put America back to work by stimulating the economy; end the mindless wars; rein in military and drug costs; and raise taxes, at least on the very rich.” But do not hold your breath for this to happen. The right-wing ideologues will have none of this.

What we are likely to see is the intensification of propaganda against Muslims in the US and possibly new wars in the Muslim world even though the outgoing US Defence Secretary Robert Gates had the courage to say, “no more wars of choice.” His sound advice is likely to fall on deaf ears in Washington. Nor is there a possibility that any politician would dare raise the question of billions of dollars in handouts to the parasitical state of Israel. According to one estimate, it is close to $15 billion annually when all the under-the-table deals are considered.

The collapse of the US economy has naturally resulted in collapse of the dollar. Already gold prices have skyrocketed and will continue to do so as a hedge against the loss in value of the US dollar. It makes little sense for Muslim governments to transfer their deposits from dollars to euros. It is time for Muslim governments — at least those that have some interest of their people at heart — to consider creating an alternative currency to the dollar and euro. There is little point in going from Uncle Sam to nephew Charlie. Better to make a clean break from the international thieves. Will Muslim governments take this crucial step?