$' decline: My 1.492 cents

In the fifties that snooty, inward-looking, jingoistic English newspaper the Telegraph printed a memorable headline “Elizabeth Taylor says she feels like a million dollars (£358,000)”

This was back in the days when a million dollars was a lot of money. Today, if Zinedine Zidane looked a million dollars, Real Madrid would wonder why they paid a hundred times over the odds for him.

A few weeks after I read that amusing story, I came across a editorial in the same newspaper, which is always a useful gauge of how people on the opposite side of the political spectrum see things. They complained that Sterling had declined severely against the dollar over the last 50 years and somehow managed to pin the blame on Tony Blair for not taking a stronger anti-euro line.

Today a quid will get you almost two bucks, a euro is worth almost once and a half as much again as it was three years ago. Shoppers from Europe are flying across the Atlantic in droves, impervious to either the threat of terrorism or the environmental impact. If the Telegraph is celebrating, it’s because their tongue is as far up George Bush’s ass as Blair’s.

I’m not an economist, and I have no wish to be. I think members of that profession are for the most part antisocial little nerds who know the price of everything and the value of nothing. Nevertheless, I live inside the cash economy and until I learn to grow my own food and weave my own clothes what happens on the world’s currency exchange markets has a bearing on my life. I rely on people like William Keegan and Joseph Stiglitz to translate economics into English for me.

The consensus among many economists is that the Bush administration is deliberately letting the dollar slide because they are the sperm of Satan and want to impoverish the rest of the world while enriching their own fat, greedy asses. And who am I to argue with such wise men?

The reason the dollar is dropping is that the US borrowed so much to buy Iraq and it’s proving to have been an extremely unwise investment. The war in Iraq cost over $250 billion - that’s around $40 for every person on Earth, and it’s hard to see how they can ever pay back that money until the Iraqi oil wells are pumping, which might not be for years.

According to Paul O’ Neill, Dick Cheney insists that deficits don’t matter, as that great intellectual, Ronald Reagan, proved. In a sense, they don’t matter to the republican party, as they can always rely on the democrats to clean up the mess they make when they get back into power eventually, and this commitment to fiscal prudence prevents them from spending money on anything progressive that might make America better for anyone but the very rich.

The weak dollar is providing a stimulus for the US as it makes their exports cheaper. The American economy is growing at a rate of around 3% while those of France and Germany hover under 1%. American treasury secretary Jon Snow seems happy to see things continue this way as they want to punish France and Germany for not helping them to steal Iraq. The complaints have so far only come from Belgium and Austria, though there's no sign of the term "Freedom Waffles" or any indication that Arnie will be forced to change his name to Smith.

But the weak dollar policy could also be aimed at China, which has been pegging it’s currency to the dollar. Poor old America claims this is unfair, though when Liz Taylor was a saleable commodity and America was the world’s economic powerhouse, all exchange rates were fixed. By pushing the rembini further and further down, they increase the chances of China’s economy overheating, so they’re hoping that the weak dollar will break the back of the fixed exchange rate.

Like every other Bush administration policy, this policy is both malign and fraught with risk. The US has been happy to exploit China’s cheap labour for years and years but when it becomes a threat economically they decide to change the rules. It mirrors the development of Britain, which allowed free trade when it’s economy was growing, but introduced protection when it was the world’s biggest economic power.

Today we live in a world of so-called free trade, though everyone knows that the policies of the WTO are fiercely biased in favour of rich nations. Again, it’s rules seem to apply to everyone equally, except of course the US, which applied sanctions on EU steel, which was being produced more efficiently and cheaply at the time. It’s a worrying reflection of the moral compass of the Bush administration that it seeks to punish other nations for not joining in imperialist wars or producing steel cheaply. France and Germany tried to complain to the WTO and impose retaliatory sanctions, but by the time they had the weak dollar made them unnecessary.

Thankfully for the rest of the world, the policy of letting the dollar slide isn’t sustainable. The only reason the US can run up such a huge deficit is that the dollar is the currency of choice for other country’s foreign reserves: the war in Iraq was basically financed by other country’s like China buying it’s currency. If the currency continues to weaken, China will start buying Euros instead, as a few countries which have a bone to pick with Uncle Sam already have. It’s in China’s interest to do this politically as well as economically, as continued purchase of dollars would allow the US to invade Iran and tighten it’s control over oil, on which China is heavily dependent. My hope is that if the Euro replaces the dollar the EU will use it’s new power more benignly, though it’s hard to see how they could do otherwise.

If this doesn’t happen then the EU will have to start considering what’s in WTO membership for them. It seems only reasonable that countries which are faced with aggressive economic policies. The tragedy is that while they are allowed to flout WTO rules with impunity when it comes to Africa, when it comes to the US, which has an effective veto over WTO policy, any violations meet with massive fines. But the EU is no position to let the Euro slide as it’s constitution favours stability ahead of growth.

What other choice does it have but to impose tariffs? If this means leaving the WTO, so be it. It’s an organisation which the US ruthlessly uses to enforce it’s own profit-driven, privatisation-fuelled economic system on the rest of the world. It pushes down both taxes and wages around the world, and leads to commodities travelling inordinate distances with no concern for the environment or the use of limited fossil fuels. So what is the EU, which donates huge amounts of money for foreign aid and takes the lead on climate change, doing in such a body?
I’m all for a trade war against the economic terrorism of the US. I hope taxes are imposed on McDonalds and Burger King so high that no-one will be able to buy them. I hope anyone wearing a pair of Nikes or Jimmy Choos will be shouted at on the street. I hope anyone driving a Ford or a Chrysler will have to pay double the congestion charges of anyone else. I hope anyone coming back from a shopping trip to New York will be treated the same way that Irish people visiting England have been for so long, ignominiously strip-searched to see if they’re hiding Sex and the City DVDs in their underwear. But I’m forced to acknowledge that while the US is a virtual dictatorship, the EU is so fragmented that this is unlikely to happen.

Meanwhile Liz Taylor still looks like a million dollars, though that’s only about E746,000, the cost of a des-res in Foxrock. I think I know what I’d prefer.