CONTENTS

1) The price of American currency unit
2) The World stock market
3) The Frauds of the U.S. Federal Reserve System
4) Movement of world finance
5) Structure of GDP and structure of employment
6) Export and import
7) Gold of contention

2) The World stock market

Speculation about American dollar should be complemented with scandalous facts of world stock market ‘mutations’. Let’s take newspaper 'Financial Times' data of the annual list of largest companies .
Here are some facts. Total market capital of 500 largest companies according FT estimation by the beginning of 2001 was 19,41 trillion dollars. By the beginning of 2002 the sum of market capital 500 companies was 16,2 trillion dollars. In other words stock market exhaled some 3,2 trillion dollars.
59,4% of this last breath belonged to UK and US corporations which lost 1,57 trln dollars (USA) and 332 bln. Dollars (UK) respectively. It was not the end of the world. The most of world population even did not notice such loss. However this sum is equal one tenth of world GDP per year! This fraud could be explained by overstated prices of stock market assets of the “leading” companies in FT list.
Several American corporations recently have founded themselves in a focus of permanent scandals as if it confirms the above statement. Here is the list of its crimes:
Enron (October 2001) had breached in electricity trading reporting system. Taking away debts to 3000 daughters’ companies’ accounts that leads to concealment of total corporate debt 31 billion dollars, accounts manipulations with pension funds, use of insiders’ information for selling own shares. Enron’s market capital in 2000 was 54, 3 bln.dollars;
Tyco (January 2002) had used shadow schemes in merger and acquisition operations and in tax minimization with help of insiders’ information for selling own shares. Tyco’s market capital in 2001 was 65, 5 bln.dollars;
General Electric – April 2002 – use of its own pension fund loans for overstating profit volumes. GE is the leader of FT-500 list with its 372 bln. dollars in 2002.;
WorldСom – June 2002 – including the outlays of 3,9 bln.dollars to capital investments (overstatement of profit quantity), as well as wrongful credits for board of directors. Marker evaluation of company by 2000 was as 55 bln.dollars while by 2001 it was already 19,9 bln.;
Xerox – June 2002 – overstatement of profit volume by 36% (1,4 bln.dollars) within last five years .
Since the 25th of June, 2002, after Worldcom’s frauds American securities started to cheapen. New collapse of the U.S. hi-tech companies took place on all stock markets. Traders have been taking out money from American stocks. On the 26th of June as a result Euro had beaten psychological level of dollar parity of 1 to 1 in exchange market. Worldcom shares for instance was already at 23 cent next day (against the previous price of 60 dollars), demand was getting down. Company is announced as bankrupt; its top management was arrested by the end of July and appears before the court for the case of fraud as well as another company – Adelphia.
Pharmaceutical giant Merck was also under suspicion. It overstated its profit by 12 billion dollars. In 2001 market capital of Merck was 130,7 bln.dollars and it took 15th position in FT-list, while in 2000 capital was 197,7 bln.dollars and it occupied 13th place in FT-list. According the Reuters’ data company has been showing profit before tax in 2001 as 10,4 bln.dollars. Is that means straw profit? Investigators had a big doubt about such grandees as AOL-TimeWarner and Johnson & Johnson. There are 900 companies in total are under suspicion. We feel the lack of confidence toward American stocks. World stock markets is in fever. July dollar has got cheaper then euro. However as soon as States started bombing Iraq dollar has beaten Euro again.
As a matter of fact dollar and Euro are one and the same. There is no difference between them. The term ‘Euro-dollar’ appears as a practice of dollar financial operations on European and later on Asian markets. It was quite independent virtual currency inseparable from dollar. It has been enlarging ‘dollar space’ and it was its reserve financial niche. After the great victory of Euro over dicker of European currencies yesterday’s dollar became today’s “Euro”. To the point of financial settlements between dollar, SDR and European single currency basket nothing has changed. Even the symbol of Euro (€) looks like mathematical symbol of Euro as a set member (?), ‘dollar set’. Dollar-Euro game line bigger traders’ pockets: banks, investment companies, corporations. Ordinary people loose money since they don’t know dependency between American military operations and growth of dollar rates. (See details on dollar and Euro in «Gold of contention»).
Let’s go back a little. The result of the year 2000 for Worldcom shows market capital as 55,96 bln.dollars. Profit before tax was 7,5 bln.dollars, and net profit was +4,1 bln.dollars Perhaps, these 4 billions was the subject of put-up job in 2002. Be noticed that in 1997 market capital of Worldcom equaled 31,8 bln.dollars. Profit before tax was negative this year. -2,18 bln.dollars. The things get worse after 11th of September 2001. By January 2002 market evaluation reached 19,96 bln.dollars. That is Worldcom “lost weight" in 2,8 times. However it came down from 88 to 110 only in the FT-list. According Reuters data the company was evaluated as 10,91 bln.dollars by the end of 2001. There is no data on profit and employment. Today we may speak in terms of downfall of the company.
The same story has repeated with Enron. In 2001 this company has market capital as 54,3 bln. dollars. A year later (after September 11th, 2001) market price of the company fell down to 11,5 bln. dollars (Financial Times). In connection with scandal of counterfeit accountancy papers and cheating of stockholders stocks of the company suddenly went down in value. It is at the edge of bankruptcy. Besides this scandal sounded the name of auditing company Arthur Andersen which was also defame its name by false audit of Enron and after revelation of these facts it has dealt with liquidation of papers. Hereby put-up job is becoming the principal technology of world stock market "development" even if we talk about the top of world list larger companies mostly concentrated in USA. We may add here what we stated above about the price of dollar and American economy. This picture of world economy with dollar as a core or pivot precipitates us in a state of horror. Perhaps because of it price of gold rose up to 320 dollar per troy ounce by July 2002 then reached five year maximum.
Let's complement the picture with series of scandals and shocks caused by the "Case of analysts" appeared in the very heard of world finance.
Dr. D.Kengilal from New York charged Merill Lynch investment bank in March 2001 that he had lost about 500 thousand dollars (put in Internet companies stocks) as a result of consultants' services of this bank. Merill Lynch broker serving this doctor advised him to pack up shares of Infospace Inc., while these shares were loosing its price catastrophically. It means that such kind of analyst knowingly misguided investors proposing to buy certain stocks that bank directly works with. General attorney of New York A.Spitzer has waged a real war against investment banks in May 2002. He made his own investigation and accused Wall Street bank in total corruption purposed on decimation of investors' purses. At present general attorney inquires five cases of corruption in three larger investment banks (Merill Lynch, Salomon Smith Braney и Morgan Stanley Dean Witter) and menaces to start with investigation towards dicker of another banks. The «Case of analysts» is in one raw with Enron and Worldcom scandals. Companies and banks using such analysts get money on behalf of clients. And "independence" of analysts proves to have a certain price. Put-up job gives a free way to them.
Another example: Early growth of General Electric by 15% which makes this company the most attractive in world stock market was due to mega-mergers and accountancy figures manipulations. There is also a doubt concerning the practice when stock options were not included in total costs of company, so all top managers of company had received an addition to their salary. The sums of such options were some hundreds of million dollars and its absence in accountancy papers falsified real financial position of famous company .
Colligating these facts we may say that it is difficult to explain this sizeable cheapening of world stock market only by terrorists' attack on New York, September 2001. Market had got cheaper in 3,2 trillion dollars during just one year! Collapse of two World Trade towers could not cause such colossal losses of world economy, (which were not noticed by anyone, as it seemed to). It is more likely that the price of world stock market is overstated by huge extent as it is with dollar and American economy.
Globalisation of world capitalist economy makes these frauds and tricks more and more repeated and wrecking for world hearth as we could imagine '11th of September' replicates several times running. It means that we came up to the threshold of bourgeois economy on its own basis. World capitalism now can develop only through self-destruction in world wars and crisis or by put-up jobs and global finance tricks. We could ignore existence of world stock market if we could not collate its total assets with world product volume. Hence, any shocks or downfalls on Euro-American stock markets immediately influence negatively on poor countries. Developing and poor countries did not get such scale of finance speculation with fictitious capital yet, and did not pick up how to get trillions of dollars out of the blue.

3) The Frauds of the U.S. Federal Reserve System

Visible in figures potency of American economy and exchange can be questioned if we make use of Federal Reserve data for the period from January 1995 to January 2002 for instance .
We take data on assets and liabilities of U.S. commercial banks seasonally adjusted. Commercial banks in general include the following institutions: large domestically chartered banks, small domestically chartered banks, foreign related institutions.
So, commercial banks' assets consist of bank credit, inter-bank loans, cash assets and other assets. Liabilities consist of deposits, borrowings, net due to related foreign offices and other liabilities. What are the volumes and their distribution we may get from tables below.

Table 3. Assets of the U.S. commercial banks (bn$)

Table 4. Liabilities of the U.S. commercial banks (bn$)

Here we got picture of figure scales. Now let's get down to structure of commercial banks assets.

Table 5. Structure of credit in the U.S. commercial banks (bn$)

Let's take January figures of 2002 for instance. «Other securities» in credit structure equals 12,26%. What is the quality of 'securities' in USA we saw in previous section as we mentioned Enron and Worldcom with their false data on profits and assets. I remind once again that stock market had lost "somewhere" 3,2 trillion dollars. This figure is balanced with total amount of American credits. Farther U.S. government securities in credit sum equals 15%. Let us say a government security is a promise of government to purchaser of its papers to pay from the forthcoming tax receipts that are not exists at the moment of purchasing. The case when government borrows live money in return of its debt obligations had gained menacing volumes in XX century. Most of developed countries have state debt exceeding half of the year gross domestic product. Given these circumstances government securities are depreciating every year.
Anyway, government securities and other securities in sum of credit together equal 27,26%. Thus, the power of world capital (active part of bank assets) is overstated according this indicator as well. This fact is also get world finance and economy closer to overwhelming crush.
The item «loans and leases in bank credit» by the same January of 2002 is splitting as follows: trade and industrial credit – 18,79%, real estate – 32,65%, consumer credit – 10,44%, insurance – 2,74% and other loans – 8,12%. In total we have 10,44% more of credit sum, which are not in stock, in "physical terms". It means that consumer credit for instance exists virtually in bank assets like some advance. Real money transfer to bank accounts as soon as persons receive their wages and salaries and they start their credit repayment. The most of the larger companies have the same structure of its assets as banks do: lots of stocks, overstated fixed assets, overestimated paper capital. Even if we neglect loans and leases recalculation of assets with account of unsound securities (as if they are absent in credit composition) will give us negative value of difference between assets and liabilities in commercial banks.

Table 6. Valuation of the U.S. commercial banks assets «deficiency» (bn$)

It is obvious that this situation with structure of credit will worsen both in USA and other developed countries. The share of paper capital in all financial means is getting bigger and bigger while the share of real (tangible) assets is turning smaller. In terms of world economy scale it keeps dark menace of global crush as well.

4) Movement of world finance

Let's see world finance as a whole. In context of world finance actual results of financial tricks are visible more distinctly. We use as basis data sources took by V.Chernishev in his work mentioned above. I should notice that I have found several mistakes linked to incorrect grouping of indicators. Finally it brought incorrect result: for example when he stated that liabilities exceeded assets in 2 trillion dollars! Quality of his results had dwindled due to outdated data sources with some figures for previous years. I hope now the result will be more believable, given statistics data is believable too (as well as history, economics and so on) in a society based of possession and domination.

Table 7. World finance in 1998 and 2000, assets and liabilities by regions (bn$ / %)

Total number of financial assets in the world had grown in 1,32 trillion dollars for two years. It is not a secret that majority of them is related to developed capitalist countries. They have in its disposition 57,51% of assets increment and 43,32% of liabilities increment. Africa and Western Hemisphere (South and Central America) during two years had lost 200 bln dollars of financial assets and 150 bln dollars of financial liabilities in total.
Developing countries of Europe, Asia and Middle East were only to improve their financial indicators. Most of their increment belongs to China, Hong Kong, Singapore, Malaysia and Thailand. Little later we will collate indicators of assets and liabilities increments with GDP of mentioned regions on the background of its population number. Now it is important to know, what was the structure of finance inside statistic group "developing countries", since this group is too dissimilar and presents itself as unity of deadly competitors at the world capital market. Moreover it is well known that each capital aspires pure monopoly. This circumstance given the global development of world capitalism aggravates the possibility of total crisis in world economy.

Table 8. Finance of industrially developed countries in 1998 and 2000, assets and liabilities (bn$ / %)

Here comes a marvelous hocus-pocus! During these two years assets increment of Japan and Western Europe are practically balanced each other, while increment of American financial assets actually equals the whole world assets increment. Moreover, American finances are balanced. It can not be said about Western Europe finances even despite positive increment of assets and liabilities difference.
Reasonable explanation comes to mind. The years 1999 and 2000 are marked with active military operations at Balkan Peninsula. In 1999 Yugoslavia war 19 countries took part. Consequently capitals went away from these territories. As a result developed countries had not only lost hundreds of million assets and liabilities but they had received declining of Euro-dollar rate. So then by the beginning of 1998 Euro price was 1,16 of dollar, in 1999 Euro was 1,0046 of dollar and in 2000 it was 0,9305 dollar per 1 Euro. Its seems that difference is nominal but if we apply it to trillions turnover it shows sensible movement.
Imagine, how much these operations of 19 NATO countries will cost if their handreds of bomber flew every day. It is important to stress that by the beginning of war budgets of all countries involved were approved and no military outlays were envisaged in such volume. Anyway these expenditures were ought to be paid by state borrowing (debt).
Have a look on table 7, what is the quantity of debt papers accumulated in different region of developed world by the end of June 1999. Let us remind that bombardments of Serbia and Kosovo were finished of 10th of June of that year. The security of dollar in the south of Yugoslavia was deployment of alliance NATO troops.
Get back to Euro zone. USA for instance is proved to have 7,5 trillions of debt obligations issued by federal government that is equal 54,8% of total debt papers. In Japan governmental securities formed 73,6% of total debt sum, that is 3,58 trillion dollars. Euro zone countries issued governmental securities by 3,2 trillion dollars that made out 61,4% of all outstanding papers on market.

Table 9. Structure of finance in Euro zone, in USA and Japan, June 1999 (bn$)

Let me remind you that governmental debt is a financial means which are not exist in reality like elementary particle with imaginary mass at about light speed. They can be «detected» while entering tax accounts of government; not on the sport but by portions, by quantum. Since most of citizens do not pay taxes in advance for several years or months. Wars and military outlays are paid by state debts as rule. They are not small as you can see; they even exceed sums of bank credits, to say nothing about GDP of respective countries and regions.
Thus, active consumption of the commodity "war" aggravates indicators of the territory purchasing it. Depicture, how wrecking the third world war could be because it can capture not only Asia and Europe but North and South America as well. It is quite probable that present trade and financial wars of global competitors at world market can not stop on local conflicts and potential threats. Each group of world capital accumulated power for new battle for market is assured that its financial power though nominal, figurative is an absolute magnitude. Then try to hold participants of world brigandage from this delusion. The war for them is demolition of labour by capital; eating of workers by capitalist within the labour process is a trivial daily or hourly practice.
Don't be fooled by giant figures of assets and liabilities concentrated in Western Europe. Capitals floating out from Europe after the war. Balance of US foreign direct investments in Europe and European ones in USA by 2000 is formed with a huge excess in favour of America. Western Europe invested 890,6 bln.dollars in USA against 648,7 American bln.dollars invested in Europe . However in 1999 Europe left in USA only 670 bln.dollars while USA invested in Europe 588 bln.dollars
Western European market possesses highly developed infrastructure and industrial network with more or less planned intake of foreign labour force from Asia and Northern Africa. It is very attractive for transnational corporations – American, European, Japanese, and Korean and from other countries. Despite this the war made capital divert to safe America. USA as usual gains benefits from any war in aged Europe.
And now check against each other magnitude of financial assets and world GDP, population and number of working force.

Table 10. Comparison of world finance to GDP and number of population and workforce, 1998 (bn$ / %)

Table above gives us specified figure of world GDP expressed in U.S. dollars. It equals 31,05 trillion dollars. It is not incidental perhaps that magnitude of active part world finance is placed within those limits. However it is perplexing, why Asia for instance with 53,7% of world population and 54,9% of world labour force produces only 9,9% of world GDP. In comparison with them industrial countries make 76,9% of world GDP while population of them forms only 14,2% of world one and labour force forms 15,9% respectively.
We should recall here that world GDP roughly presents itself newly produced value, which consists of overall wage (salary), profit and taxes. It means that total wage and profit of industrially developed countries in 3,3 times bigger then the same indicators for developing countries. At the same time number of working force in third world countries in 5,2 times higher then in advanced industrial countries.
Just a simple contrast of GDP "output" per workforce unit shows the following plot: developed countries – 58294 dollars per workforce unit, developing countries – 3308 dollars per workforce unit. If we take out China, Korea, Hong Kong, Singapore and Thailand from 'developing group' then we have an output of GDP per workforce unit as 657 dollar! Even if we do not take into account actual number of unemployed (data is not available).
Global misbalance of living labour inputs expressed in total number of working hours and its results evaluated in "main exchange" conceals real menace of world crush caused by inconsistency of labour price in one region in comparison with another. While the share of living labour in product of wealthy countries is still decreasing because of permanent improvements in technology and equipment and subsequent growth of labour productivity. World capital has no intention to change global division of labour and not even to raise scientific and technological level of production in backward countries. Nevertheless, Asian squad of capitalism had grown as serious and effective rival. This rival wants to take part in world re-partition by capital like all the rest. For this purpose there is a lot of arms already, and armies are also well equipped. Asia is also rich with population. Unlikely for American and European capital to do with Asian and Arabic pressure if they would think to put back young Asian capitalism.
Colossal inequality between labour hours and financial results in developing world shows in Asia by the most sharp way. Unlikely this internal tension would exist for a long time given a growing tendency of developed countries economic parasitism. 'Parasitism' is expressing in a reducing share of material production in GDP structure of all industrial countries. In developing countries this share is still high. Thus the third world credits developed countries by low-price labour and reinforces their currencies. The Danger of social outburst between developed and developing worlds is approaching, as economic power of Asia and the rest developing world is growing. And there is no financial fraud alike Asian crisis of 1997-1998 to stop the pressure of new squads of capital, well armed. Anyway the events of 11th of September 2001 was an open expression of clash when developed world and exploited developing worlds were get together.
The change of world finance structure is ought to reflect on regional positions of international liquidity as well as on its IMF positions. Here we have some interesting tendencies.

Table 11. Dynamics of international liquidity, 1998-2000 (mln.US$ / SDR)

Within these two years total number of IMF quotas had increased by 66 billion SDR of which 42,13 billion SDR or 63,8% belong to industrially developed countries (IDC). In 1998 total quota of IDC was only 60,5%. This way erosion of regional quotas value in favour of developed countries goes. At that IDC did not buy SDR (or 'paper gold' of IMF) but got rid of it, while Africa and Western hemisphere had increased their sum of IMF 'credit money' by the name of 'SDR'.
As for the increment of foreign exchange and gold (in troy ounces) IDC again outstripped their backward neighbors on the planet. Thus, currency of wealthy countries had grown by 58,4 bln.dollars (33,4% of total increment of exchange liquidity). There was not the same dynamics in gold motion. Only Asian and African countries increase their gold in troy ounces. Gold liquidity of industrial countries in dollar evaluation had grown by 26,17 bln.dollars, of which 100,5% fall exclusively on Western Europe nations. This happened despite the decline of troy ounce quantity at the disposal of industrial countries from 808 mln. To 772 mln. It is obvious that gold price outgrown within two years, that points at period of serious crisis, wars or the eve of such events.
In June 2002 Euro had almost balanced with dollar in its price, even gold price had grown. At the same time there was a feeling of disbelief to American, for instance, stocks and exchange together with increasing instability of world economy. As mentioned above, this instability was conditioned to growing share of speculative money instruments and governmental debts at the market, as well as enlarging of industrial countries economic parasitism caused by reduction of material production share in national GDP structure.

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