Economic downturn intensifies global currency conflict

Andre Damon


National Bank of Switzerland in Bern

The world currency crisis is rooted fundamentally in the long-term decline of American capitalism and the US dollar, the foundation of the post-war currency regime.

Amid a torrent of disastrous news for the world economy, the Swiss National Bank on Tuesday took the drastic step of setting a ceiling for the Swiss franc, a move that harkens back to to the competitive devaluations and currency wars of the 1930s.

The Swiss National Bank announced that it would adopt a minimum exchange rate of SFr1.20 to the euro, and that it is prepared to purchase foreign currency in “unlimited quantities” in order to defend the franc.

The move triggered a massive sell-off of the currency, which almost immediately lost nearly ten percent of its value against the euro.

The Swiss franc has risen 25 percent against the euro in the past two years, as the currency became a safe haven for investors amidst an intensifying debt crisis in the eurozone.

In its press release announcing the measure, the Swiss National Bank said that the “overvaluation of the Swiss franc poses an acute threat to the Swiss economy,” and that the central bank is “aiming for a substantial and sustained weakening of the Swiss franc.”

The bank will enforce the new minimum rate with “the utmost determination,” the statement added.

The Swiss economy is highly export-driven, and a continued increase in the value of the Franc would significantly increase the price of exports, hitting Swiss manufacturers’ sales to its main trading partners in the European Union. Swedish economic forecaster BAK Base on Tuesday cut its estimated growth rate for Switzerland next year to 0.8 per cent, compared to the rate of 1.9 percent estimated for this year.

The Swiss franc increased sharply during the past week in response to the exacerbation of the European debt crisis and fears of an even sharper downturn of the world economy. Since August 30, the Swiss franc has risen eight percent against the euro, offsetting all previous efforts by the country's central bank to control its appreciation.


United Nations report warns of dollar "collapse"

Andre Damon
WSWS

The risk of banking is socialized, while the profits are privatized.

The world economy faces the “looming risk of a collapse of the dollar,” together with the dangers of rising commodity prices, continued high unemployment and the risk of sovereign debt default, according to a report published last week by the United Nations.

The report [.pdf], a mid-year update to the 200-page conspectus[*][.pdf] of the world economy issued earlier this year, says that the precipitous fall of the dollar since the start of the new millennium portends the possibility of a destabilization and “crisis of confidence” of the world reserve currency.

The risk of a dollar collapse is just one of the economic pitfalls outlined in the report. The report's headline conclusion on economic growth, which is slightly improved from its earlier estimate, is overshadowed by the risks it outlines to every other aspect of the world economy—from rising food prices, falling living standards, the potential for sovereign debt defaults, and the destabilization of currency systems.


US government demands Twitter account information of WikiLeaks and followers

Andre Damon
WSWS

The US Department of Justice has issued a court order to Twitter, the social networking site, demanding that it hand over information on WikiLeaks and its collaborators. WikiLeaks said that the subpoena, if not blocked, will grant the government access to the names of the more than 600,000 people who “follow” WikiLeaks over the network.

The subpoena, issued December 14, covers all official Twitter accounts of WikiLeaks, as well as the personal accounts of Birgitta Jónsdóttir, a member of the Icelandic parliament, and WikiLeaks collaborators Rop Gonggrijp and Jacob Appelbaum. The order also requests all information on Pfc. Bradley Manning―who the US government claims leaked information through WikiLeaks―and WikiLeaks founder Julian Assange.

The government is demanding that Twitter hand over mailing addresses and billing information, IP addresses used to access Twitter, as well as bank records and credit card information.

The subpoena provoked an uproar in Iceland, where the foreign minister summoned the US ambassador for an explanation. “[It is] very serious that a foreign state, the United States, demands such personal information of an Icelandic person, an elected official,” said Interior Minister Ogmundur Jonasson in a press interview with the Icelandic National Broadcasting Service.

This concern is heightened, Jonasson said, when “put [in] perspective and concerns freedom of speech and people's freedom in general.”

Ms. Jónsdóttir denounced the subpoena in a telephone interview with the WSWS on Sunday.

“There is no criminal case against me because I have done nothing in violation of any law,” she stated. “The US government is trying to criminalize whistleblowing and publication of whistleblowing,” [Jónsdóttir added.] “They want to make it tantamount to spying, and if they succeed in doing that, journalists could be prosecuted just for doing their jobs.”


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