BioLeo Panitch is the Canada Research Chair in Comparative Political Economy and a Distinguished Research Professor of Political Science at York University in Toronto. Panitch is also the author of "Global Capitalism and American Empire" and his most recent release "American Empire and the Political Economy of International Finance".
Comments from Registered Members | (Register or log in to make your comment.) | dude08 2009-10-19
Why would you want to give your own power to the state to protect you, when you could assert your own power, there are many ways to be a slave. | dude08 2009-10-19
@Karl Marx: that youtube video is interesting, the other I don't have time for. If you have any books to recommend I would love to hear them. The problem I have with the video is that it talks about the coercion of the state in protecting private property, and how wage labor is really slave labor, but then it's ok and moral to make the productive pay for the unproductive in the same way. I just don't see it that way, there is a way to escape that cycle and control your own production. You don't have to be at the whim of others. | Karl Marx 2009-10-19
@dud. Let me reiterate this for you and I. Leo is speaking from the perspective of pragmatism. The same perspectives you may find in the power structure. That perspective should not be confused with that of socialism. The reasons he's doing this may be varied. TRN's report, Autoworkers "challenge logic of capitalism", produces an alternative to that perspective with his comrade from the socialist register. If you need a tutorial on capitalism and free markets...(http://www.youtube.com/watch?v=B7G4WIa-HAk) and (http://video.google.com/videoplay?docid=-345721242223597335#) | dude08 2009-10-18
@Karl Marx: I sympathize with you when people try to claim a label that you don't feel they deserve. To me it is much like when people blame capitalism and free markets for the economic crisis, but in reality we do not have such a thing when you look at the Community Reinvestment Act, Basel Accord, Freddie Mac, Fannie Mae, FHA, The Fed, FDIC, and on and on... but when Leo talks about democratizing the economy and what is produced, that to me is socialism. He also must call himself a socialist, as editor of Socialist Register. I don't know what else to call his ideas, so what would you call it? | Karl Marx 2009-10-18
Leo is by NO MEANS a socialist and Socialism CAN NOT be equated to fascism. If you think these things you're either clueless or a PSYOP bot. If you need help understanding these basic questions, go to the World Socialist Website at http://www.wsws.org/
You could also visiting In Defence of Marxism at http://www.marxist.com/
or check out the Party for Socialism and Liberation at http://www.pslweb.org/site/PageServer
Their are many, many good marxist and socialist sites available to shatter these myths and set the record straight.
What Leo is clearly projecting to TRN is pragmatic thought, assumptions that even Obama and Zbigniew Brzezinski have articulated to both the LaRouche and Libertarian quacks. | halgol60 2009-10-17
One more thing: Those "very, very deep domestic financial markets, enormous financial capacity, institutional capacity..." are the same mechanisms that got us into "very, very deep" doo-doo. IOW, I don't think that is a good argument supporting the hegemony of the USD as "reserve currency." It's about WHO is in charge, and that could be an economy with "deep, deep markets," or it could be a shallower one with strong regulation and oversight (and maybe a sense of "fairness," if that still exists in the Western World) | shawmutfinlay 2009-10-17
I am the last person to shoot down a contrarian position on anything. However, I really think the professor is delusional. I have been noticing a similar pattern of more extreme (violent?) denial/panic in other socialists & progressives. I think it stems from, as we move further from covert to overt socialism/fascism, they are afraid of having egg on their face as everyone begins to see their utopian vision is really a nightmare. | iliosis 2009-10-17
Some of his arguments are weak or false, he does hit on some good points, but his argument is weak, just another dollar supporter. He thinks it is ridiculous that China and Russia discuss another global currency because USSR defaulted? Come on, America is on the verge of defaulting, it is ridiculous to think that US can pay off any of its debt. There are only two options, massive inflation or default...Then we will see which currency will be on top, most likely the Euro or China's Yuan. | dude08 2009-10-17
@Benny: you must not have seen his previous interviews, Leo is a socialist, not right-wing.
Thi guy doesn't have a clue, talk about the facts, The Fed buying half of the government's debt, countries like China diversifying their investments away from the T-Bills.
I think Leo has it wrong when he says trying to lower the deficit will be paid by the poor. On one hand, yes credit will tighten and their will be less borrowing, on the other hand inflation will destroy their real wages | Benny 2009-10-17
Why TRN would interview some right wing professor who never worked in the industry in his life about the dollar. He probably hide in his university tower researching. Plz, interview some1 that actually works in the industry with more credibility. His praising of the American way of life sicken me. Yuck! | halgol60 2009-10-17
Sorry. I think I meant "over-appraising" of home values (assets) and under-appraising of potential losses (liabilities) -- and Black says there is evidence of bullying of appraisers by the banks to ensure positive-looking paper balances. | halgol60 2009-10-17
A bit off topic, maybe, but William Black (appearing on DemocracyNow this week) says the US is in for more economic trouble shortly. Currently, banks are posting high profit margins by under-appraising the value of homes that should be counted as losses, the owners being months in arrears on their mortgages. The bottom has not fallen out of the housing market in the U.S. The pain will come for the banks, and soon.
My comment is that perhaps this double (or maybe triple or more) "dip" will add to the gloomy disposition of the USD in coming months. | idslayer 2009-10-17
My esteem for Professor Panich has diminished. I'm astounded that he's so lax about the debt-based nature of our system of money-creation. Our economic system is fundamentally dysfunctional with compounding interest generating additional debt, for which no money is ever created. Professor Panich talks all around this fundamental flaw: debt-based "fiat" currency. Our "government currency" is "Money as Debt" http://video.google.com/videoplay?docid=-2550156453790090544# | Saturn_ls1 2009-10-16
Wealth has always been highly mobile, especially the highly rich. To nod positively to PJ’s statement that “here's no shortage of wealth in the United States” suggests to me LP chooses his points opportunistically. As LP points out “very high interest rates, which brought the world's capital flowing into the United States” but fails to recognize how easily that same wealth can flow out.
I agree with LP’s “What matters a lot more is the strength of the American state” however vehemently disagree as to the implied health by LP’s looking at mostly the size,” enormous financial capacity”, of the American economy as opposed to it’s health. NO LP, “The whole world has been running effectively now for almost a century…”, is WRONG. Markets and economies have become substantially more volatile and there has been a growing transfer of wealth since about ’71. The size of the debt in America (and other “developed” economies, matters very much, especially the transfer of it to the averag | Saturn_ls1 2009-10-16
America is and has been hollowed out. LP talks as if the loss of “world reserve currency” status has not started – like it is an all or nothing state. The world economy is complex and massive but not totally handcuffed to the USD. Just like the American standard of living, it has borrowed against the future heavily and may well soon be beyond reversing course (if that has not already happened). I completely agree that China is in a pickle visa-a-vi USD holdings while the USA is its largest market. But that is changing rapidly as China’s (and Asia’s) economies grow. The reduction on the dependency on the USA for market and the USD for trading has begun and will continue with increasing speed. With these changes the wealth in America is and will continue to flow out as well.
The industrial might of Asia, an increasingly educated workforce coupled with lower wages (and standards of living) makes an American recovery extremely challenging. □
| gegenwarst 2009-10-16
I don't know if Mr. Pantich is comparing apples to oranges but it seems that he's ignoring the fact that central banks, especially from Asia, are right now diversifying their reserves (there is a substantial decline in the amount of dollars being procured by these institutions in the last two years); thus, the trend is clear: the US dollar is going to lose its status as a reserve currency - and it is a matter of time. The brute and ignorant American populace should better be prepared when the federal government declares a bank holiday. | dart 2009-10-16
Early in the clip LP mentions USD rising during the debt crisis but forgets to say that the YEN carry trade was being unwound reversing flow out of the dollar.//He does not mention that all fiat currencies eventually fail.//When PJ says there is no shortage of wealth in the US he forgets there is also no shortage of debt-public and private-much of it owed to foreigners nontheless LP readily agrees without qualification.//Foreigners are greatly concerned about the US war economy beacause they are funding the deficit spending that enables military threats to their countries so they will dump the dollar as soon as possible.Why is Iran selling oil in euros?//Peter Shiff whose livlihood depends on being right about this would vaporise this guy!The next clip should be amusing. | dart 2009-10-16
Will PJ mention Robert Fisk`s article on de-dollarising oil which so upset Wall Street or does LP have better Chinese contacts than him?What of the 70- trillion plus unfunded US liabilities,2T fiscal deficit and how will 500T of derivatives be unaravelled.When gold hits 1300 where will oil be and how many dollars can the US print before the world calls for higher interest rates which will kill any recovery and make Govt. debt servicing unbearable.What`s his response to BIS criticisms.What`s his response to reports of 50% devaluation within 5 years or currency swaps and bi-lateral trade avoiding the dollar and depriving the US of valuable seignorage?Is he a deflationist or inflationist?Any comment on commercial property,prime and Alt A failure what USD impact from these? What would he say to Marc Faber,Peter Shiff et al?And why is the dollar falling against gold? So far I`ve heard only waffle. | dart 2009-10-16
Dependant on a public sector job he can do little else but to talk the dollar up.Stating the facile truth like` nobody wants a weak dollar` and that `no replacement is yet forseeable` is both patronising and deliberately deceptive.The US has defaulted twice (1933 & 1971) quoting Russia while avoiding mention of concerted Wall Street attack.His beloved FED has completely mismanaged monetary policy since its criminal inception losing 95%-96% of USD purchasing.Its 1944 extension via IMF/WB was a means to imperial expansion which included a provision preventing any recipient nations from creating a currency linked to gold to maintain dollar hegemony.So as he trashes hard currencies I doubt he can/will explain that provision.(Continued) | LiberalChiroDoc 2009-10-16
Mr. Panitch's best point about the extreme dysfunction of our economy and society is how when we incur debt building bombs, there is no anger about the debt. But when we want to incur debt to provide healthcare for our citizens, there is outrage. |
PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. Well, these days the American dollar is falling—some people say “sinking”, some people want to use the word “tanking”. And some people are cheering; other people are aren't. If you hold a lot of American dollars, I suppose you're not cheering so much, although some people see this as a decline of the American Empire and the possible move to another currency or reserve currency as the basis for world trade. Joining us to discuss all of this is Professor Leo Panitch. He teaches at York University in political economy. Thanks for joining us. LEO PANITCH, PROF. POLITICAL SCIENCE, YORK UNIVERSITY: Hi, Paul.JAY: So where are you? Are you cheering the decline of the American dollar as some people on the left are? And also some people, the monetarists and people into gold, are also predicting the demise of the US dollar and some other reserve currency. What's your take on all of this?PANITCH: Well, the American dollar's not going away as the global currency. There's nothing that can possibly replace it. This kind of movement speculation around the dollar needs to be seen in context, and the context is that structurally, in order to be a world currency, you have to have very, very deep domestic financial markets, enormous financial capacity, institutional capacity, both through your banks—private banks and the central bank—to be able to manage the amount of flow that goes on around the world daily in the exchange of goods and services through a monetary unit. And the reason the American dollar is what it is in the world is precisely 'cause it has that structural capacity, where the Federal Reserve and the banks on Wall Street (which are not separate entities; they're very integrated) have the deep institutional capacity to do that. And when the crisis occurred, you could see immediately, despite the fact that the crisis began in the United States, began on Wall Street, began in terms of the Federal Reserve not being prudential regulators, the world's money came rushing in to American Treasury bills and the American dollar 'cause that is the safest monetary unit in the world. It's the one where world capital knows that their property will be protected. The American state stands as the protector of property in the capitalist world. So the American dollar went up in the middle of this crisis, and it went up a lot. And what has happened in the last few weeks, really, is that it's gone back down to where it was in 2007 when the crisis began.JAY: Does this represent a loss of faith in the US dollar?PANITCH: Not at all. Not at all. As the fundamental unit of currency, no. There's no question that other states would like to have more control over this fluctuating currency. They are dependent on the American state in this sense and American markets on markets globally as they trade dollars. And if it goes up and down, they can lose or gain money. And therefore there is a lot of talk about trying to replace it. But it's whistling in the dark. You know, the Chinese simply do not have the institutional capacity, the depth the financial markets do. Maybe they will in a generation or two, but right now they don't.JAY: Is this part of what's happening is that China, Russia, and some of the countries that have articulated this position are preparing for 5, 10, or 15 years years from now?PANITCH: Well, they can't, really, this other kind of thing that you can simply pull out of the hat and build that way. And in order to play that kind of role in the world system, you'd have to have the renminbi not being a currency that is mainly oriented to getting exports into foreign markets. No, it's not something that they [inaudible] I was at the St. Petersburg Economic Forum back in June where there was a lot of talk of this. And, you know, there's even talk about the ruble becoming a global currency. And, you know, this is clearly trying to puff up your world standing. You know, these days you can't be a communist power with an enormous military capacity, etcetera. You can pretend that you're going to have a global currency. The whole thing's a Potemkin village. You know that old story about bringing tourists to the old peasant villages, and they're faked television or film fronts, and you think you're in this wonderful old peasant village? Well, talking about the ruble as a global currency a decade after the Russians defaulted on their debt, whatever you bank, is practically tanking in Russia. It's absurd. But they can talk this kind of line. And that's what's been going on, largely, in the world. No, I don't think that anybody wants the American dollar to fall too far, and certainly not to fall off its perch in terms of the global responsibility the American state takes. You know, the Chinese don't want the American dollar to fall too far, because it would mean a terrible effect in terms of all of the dollars they're holding, all the Treasury bills they're holding, and in terms of their ability to keep on exporting, keep on keeping their economy going as a exporting economy.JAY: There's different arguments on this. Let's take up one of them, this sort of right libertarian argument. They talk about the US currency and they talk about this fiat currency and that the idea that having a currency as the world currency that isn't related to things of real value like gold or something. What do you make of that whole argument?PANITCH: Nothing, really. It's an old myth and illusion. [inaudible] able to convert dollars since 1933 as an individual. Until 1971, the Americans said, “We will allow other banks, central banks, official government central banks, to come and exchange dollars for the gold we have in Fort Knox.” That was stopped in '71. The whole world has been running effectively now for almost a century on a system that is based on fiat money. And anyways—.JAY: Just explain for a second what that is.PANITCH: Well, fiat money is, you know, the government currency that isn't backed by gold or silver. But even back when, you know, the world was trading in gold and silver, back in the 19th century, or appeared to be, it was effectively trading through the British pound. It was the fact that the Bank of England was issuing dollars, pounds, issuing currency, and it maintained that they would be able to transfer funds from that to gold, the gold standard that kept the thing going. [inaudible] didn't believe in gold; they believed in the British Empire, they believed in the guarantee that the bank Bank of England was giving in the value of its currency. So it was never—you know, people think that the only real thing in the world is this bar of gold. No. What matters a lot more is the strength of the American state and the strength of the British state and what it can call on in terms of taxation. It has far more resources, these states do, in terms of being able to tax its population, its corporations, its productive enterprises, its banks in order to back up its bonds.JAY: Because there's no shortage of wealth in the United States. They're just not taxing it right now.PANITCH: Exactly.JAY: So if that isn't the issue, the other issue that gets raised is the threat of hyperinflation, that the United States is essentially just printing money or borrowing so much for the stimulus package and the wars and everything else that that's going to create a loss of faith in the US dollar.PANITCH: Yeah. What's going on here is a concern by those who are holding dollars and holding American Treasury bills, which they see as the safest place in the world, that they may get a devaluation of their capital, because if the dollar gets devalued by inflation or by it falling [inaudible] other currencies, and they go and eventually trade what they're holding for another currency, they will lose money. And since interest rates are so low, that's a concern. And what they essentially want—and this is what the pressure was on back in 1979 as well, during the last crisis, when that problem was solved by very high interest rates, which brought the world's capital flowing into the United States and broke the back of inflation by throwing people out of work because companies couldn't afford to pay for their debt. Lay people off and you have that massively induced crisis of the early 1980s. What's going on today by those who are demanding that we need a strong dollar and therefore we need to deal with the fiscal deficit is a concern that the American state show that it's not open to democratic pressures, that it's open to capitalist pressures. It's not the size of the deficit that matters. Under Reagan, under Bush, the deficit grew enormously. But so long as it's on military expenditure, so long as it's a product of tax cuts on the wealthy, then that's okay. But at the moment when there's a health-care debate going on in the United States, right, then you get enormous pressures to try to ensure, well, we don't want government expenditures, we don't want the fiscal deficit going toward social ends, right? In the middle of the debate about the Employee Free Choice Act, right, we don't want the kind of expenditures that are going to strengthen the backs of labor and that are going to increase wage costs, right, for employers. So what you're getting is a debate over substance behind this monetary debate, a debate over social substance, about what the nature of the American state is going to be. It was exactly similar in the late 1970s. And, of course, foreign governments that say they want a strong dollar, often they appear progressive, and often, you know, people who are progressive look to them as spokesman for the poor of the world. Right? So you've got the German Social Democrats in the late '70s saying, “We want the Americans to fix their deficit and guarantee the strength of the dollar.” You get the Chinese, and even [Hugo] Chávez and the Venezuelans, saying today the American dollar is weak, it's tanking. You know. And then the Americans think they've got to respond by strengthening it. Well, the effect of that is, sure, they strengthen it, but they strengthen it by breaking the backs of poor people through the way in which states' expenditure is restructured. Or people in the south called for the American dollar to be stronger in the late 1970s, and you ended up with the debt crisis as American interest rates were raised through the roof. All of these Third World countries had been borrowing at enormous danger to themselves and interest rates through the roof. They couldn't pay for their debt, and they ended up in hock to the IMF and the World Bank, which restructured their whole economies in an extremely reactionary neoliberal way. We have to be very careful when we have this, you know, happiness about seeing the American dollar tanking and calling for it either to prove that it's strong or to get out of the way. Well, if they try to prove it's strong, they prove it's strong on the backs of the poor people in the United States and the poor people in the world.JAY: In the next segment of the interview, let's talk just a little bit more of the consequences of the dollar going down these last few weeks and what it means for working people in the US and around the world. Thanks for joining us on The Real News Network, and join us for part two of our interview with Professor Professor Leo Panitch.DISCLAIMER:Please note that TRNN transcripts are typed from a recording of the program; The Real News Network cannot guarantee their complete accuracy. |
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