Rakesh Bhandari bhandari at Princeton.EDU
Tue Mar 7 08:35:29 PST 2000

With the kind of careful attention and empirical scrutiny without which the left cannot develop, Enrique challenges Gilpin's numbers (I am always excited to open his posts):
>Hold it. The dollar overhang is a $265 billion *loan*. Them furriners could
>use those bills to get $265 billion worth of stuff from the US *once*, and
>then the overhamg would be gone. The US saves about 7% of that in payments
>each year, so the actual subsidy is no more than $20 billion.
>That's a pretty big fuck-up, isn't it?

Enrique, I get Gilpin's meaning to be that yes indeed to the extent those dollars are simply accepted and *not* cashed in, only then is the US defacto receiving a $265 bn dollar loan without having to pay interest per annum at about 5% (which I suppose is how he gets the $13 bn dollars in saved interest payments?)--roughly what a govt security would return? You use 7%; he seems to use 4.9%.

Yet in the other passage he laid out reasons why future German and/or Japanense support of the dollar could be expected unless of course the US itself decides to devalue to write off debt (isn't this what has just happened to Japan again?) That is, he implicitly suggests that this is not an ordinary loan at all due to the political power of the debtor to constrain the creditors who themselves are worried that the economic insolvency of the debtor would mean the withdrawal of global 'security' forces (or the resurgence of protectionism in the market upon which the creditors depend).

I have been trying to suggest here the importance of analysis that attempts to fuse the economic and the political--something that Strange, Gowan, Spiro, Gilpin and others seem to have achieved. Yes, they are all political scientists.

This is difficult for academics due disciplinary boundary between economics and politics and for Marxists since Marx never finished his book on the state or the world market.

Yours, Rakesh

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