Finding it harder to maximize profits through investing in expanded productive capacity, capitalists have turned to other avenues for the highest returns. This includes financial speculation in stocks, bonds and currency markets and other financial paper in so-called emerging markets, a term used to refer to less developed colonial and semicolonial nations.
Since 2008, U.S. capitalists have poured $1.1 trillion into these countries, inflating a giant and increasingly unstable debt balloon.
Now the propertied holders of this debt are acting on fears over the growing risks, rapidly dialing back these “investments,” not just in Argentina and Turkey, but Hungary, Brazil, India, South Africa, Indonesia and other places.
This fear, according to the prevailing view among financial commentators, was stoked by two developments. One, growing signs of a slowdown in Chinese manufacturing, which many capitalists hoped would drive a world economic recovery. And two, the decision of the Federal Reserve Bank to begin tapering back its money printing schemes, which, according to its proponents, help buoy capital investment.
The Argentine government devalued the peso Jan. 23, as international currency traders started dumping it. The peso’s value against the dollar slid 15 percent in two hours until the central bank stepped in and sold $1.25 billion of its dwindling foreign currency reserves over the next few days to stem the tide. Argentina’s reserves have fallen to $28.3 billion from a peak of $52.6 billion in January 2011.
The credit rating agency Moody’s is betting the peso will lose another 50 percent of its value this year, reported the Financial Times, as Argentina’s inflation rate, an estimated 28 percent in 2013, continues to rise.
The Turkish lira fell 20 percent against the dollar over the past month. In response, the country’s central bank raised interest rates Jan. 28, starting with the seven-day repurchase rate, which it more than doubled from 4.5 to 10 percent. While this slowed the lira’s slide, it “arrived too late to convince foreign investors to treat Turkey as the promising investment it was for them until recently,” said a Marketwatch opinion column. The move is, however, expected to bring an end to a construction boom fueled by massive real estate speculation.
Not one of the countries that capitalists refer to as “emerging” or “developing” nations has ever emerged or developed into an advanced capitalist power, or ever will. This has been true since the rise of imperialism in the early 1900s, a scientific conclusion explained by Bolshevik leader V.I. Lenin nearly 100 years ago in Imperialism: The Highest Stage of Capitalism.
Workers and peasants in the colonial and semicolonial world are exploited by domestic and foreign capitalists while at the same time held in debt bondage to international finance capital through the agencies of the national bourgeoisies in their countries. Vast quantities of wealth produced by the toilers are siphoned into banks in the U.S. and other imperialist centers to cover interest payments on the debt. Turkey’s foreign debt is $373 billion; Argentina’s, $141 billion.
“Since the consolidation of imperialism,” wrote Jack Barnes, Socialist Workers Party national secretary, in Capitalism’s World Disorder, “every action by finance capital in relation to the more economically backward countries ends up further warping the economies of the colonial or semicolonial countries. That is the effect of every bank loan to their ruling classes; every investment in landed, industrial, and commercial capital; every purchase of bonds issued by a semicolonial administration; every trade pact; every scheme to peg the value of weaker currencies to stronger ones.”
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