The Late Great USA: The Coming Merger with Mexico and Canada. Jerome R. Corsi. 2007. ISBN 978-0-079045-14-1
EXCERPTS
The argument made in The Late Great USA is that policy makers in the three nations and multinational corporations have placed the United States, Mexico, and Canada on a fast track to merge together economically and politically.
Our national sovereignty is in danger of being compromised in favor of an emerging regional government, designed of the elite, by the elite, and for the elite, who are working to achieve global ambitions in the pursuit of wealth and power for themselves
On December 18, 1951, “the Six” – a group of European nations consisting of Belgium, France, Germany, Italy, Luxembourg, and the Netherlands – signed the Treaty of Paris, formally establishing the European Coal and Steel Community (ECSC). Then, on March 25, 1957, the Six signed the Treaty of Rome establishing the European Economic Community (EED), commonly referred to in the United Kingdom as the European Common Market. From here, a series of incremental steps can be traced that moved a European common market into a European regional government. Once Europe started taking steps toward economic unity, political unity followed.
The Treaty of the European Union, signed in Maastricht, the Netherlands, on February 7, 1992, formed a full-fledged regional government … On January 1, 2002, the euro was introduced and the traditional national currencies of the participating EU countries were phased out. Today, some 70 to 80 percent of the laws passed in Europe involve nothing more than rubber stamping regulations already written by nameless “working group” bureaucrats in Brussels, Luxembourg. Virtually gone is the ability of the European countries to set their own policy direction and the ultimate arbiter of justice is he European Court of Justice in Luxembourg, not the highest national court in each country.
This book will demonstrate that disturbing parallels exist between the stealth process that resulted in the EU, and the incremental actions being taken by the governments of the United States, Mexico, and Canada to unite our nations into an emerging regional configuration.
North America has its own version of the ECSC in NAFTA and in the SPP (Security and Prosperity Partnership), put into place by an informal agreement between Mexico, Canada, and the United States in 2005. A North American Union is even advocated by America’s own Jean Monnet – Professor Robert Pastor, who has proposed a North American currency call the “amero”, and who has played a significant role in a number of meetings and conferences, closed to the public, between top American, Canadian, and Mexican officials.
In March 2005, the [Council on Foreign Relations] task force issued its first report, a chairmen’s summary entitled “Creating a North American Community.
… the CFR task force suggested that the borders between the United States and Mexico and between the United States and Canada be largely opened in the pursuit of regional economic prosperity. The task force clearly pushed for a North American common market: “We focus our recommendations on the creation of a single economic space that expands the economic opportunities of a security zone that protects the region from external threats while facilitating the legitimate passage of goods, people, and capital.” Open borders with Mexico and Canada would allow “migration” of “North Americans” (the citizens of the United States, Mexico, and Canada) relatively free passage across North American borders, provided the travelers presented the proper “North American” documents. The task force supported their North American focus with the following three specific recommendations:
• To adopt a common North American external tariff by “harmonizing” tariffs to the lowest possible rate between Mexico, Canada, and the United States.
• To develop a North American Border Pass with biometric identifiers to expedite passage through customs, immigration, and airport security throughout North America.
• To establish a North American Investment Fund to stimulate infrastructure development in Mexico.
The goal was to transform NAFTA into a European Union-type customs union.
To implement the Security and Prosperity Partnership (SPP), the three [national] leaders decided that bureaucrats from the three nations would create “working groups” tasked with “integrating” and “harmonizing” the administrative law and regulatory structures of the three nations in a broad range of public policy areas. “Working groups” is a term commonly used in the European Union to describe the bureaucratic entities that run the EU from behind closed doors in Brussels and Luxembourg. Working groups were constituted at the Waco summit [2005] to put in motion the creation of a continental set of administrative rules and regulations the bureaucrats in the three nations would use to set continental public policy within the legal structure of their three countries, a feat to be achieved by “memoranda of understanding”, not laws or treaties.
This Security and Prosperity Partnership of North American (SPP) was never submitted to Congress for debate and decision. There was no law passed by Congress, no law signed by the president, and no treated ratified by the Senate.
The CFR Independent Task force on the Future of North America [2005] repeated the earlier statement of the CFR Chairman’s Statement that 2010 was an important date: “The Task Force’s central recommendation is the establishment by 2010 of a North American economic and security community, the boundaries of which would be defined by a common external tariff and an outer security perimenter.
Like [Jean Monnet], [Robert] Pastor rejects traditional notions of American sovereignty. In a 2004 article in CFR’s Foreign Affairs entitle “North America’s Second Decade,” Pastor argued that the United States would gain by ceding U.S. national sovereignty. “Countries are benefited,” he wrote, “when they change these [national sovereignty] policies, and evidence suggests that North Americans are ready for a new relationship that renders this old definition of sovereignty obsolete.”
In his 2001 book Toward a North American Community, Pastor never used the phrase “North American Union,” but he devoted an entire chapter to asking: “Is a North American Community Feasible? Can Sovereignty Be Transcended?” Here Pastor argued that trilateral thinking is “contrary to habit, but essential.” Carefully, Pastor follows the lead of Jean Monnet, who learned to suppress any reference to his desire to create a “European union” … What is needed, he concluded, to establish this community “is the nurturing of a regional identity and small steps that would help the peoples of the three countries understand the need for deeper integration.
Pastor has also argued that we should expand the NAFTA visa program into a North American passport, an idea SPP advanced as biometric “trusted traveler” border passes. He recommended the formation of a single North American Customs and Immigration Force, an idea the CFR task force report in May 2005 advanced as developing a North American security perimeter.
… on October 7, 2004 Senator John Cornyn (R-TX) introduced a bill in the U.S. Senate (S. 2491) that authorized the president “to negotiate the creation of a North American Investment Fund that was distinct from the North American Development fund. The move did not escape Pastor’s attention. He called S. 2491 “a far-reaching bill that incorporates lessons from Europe and proposes to channel funds from all three governments toward infrastructure and education in Mexico.” He was pleased to see his pet project introduced to Congress, especially since a conservative Republican Party senator from a state adjoining Mexico introduced the bill. The language of Cornyn’s bill was so close to Pastor’s own writings that many suspected Pastor had worked directly with Senator Cornyn in developing the proposed legislation.
Among Pastor’s key recommendations is that we establish the amero. The amero is a regional currency designed to replace the U.S. dollar, the Canadian dollar, and the Mexican peso, much as the euro has replaced the currencies of the participating European Union nations.
In a 1999 paper entitled, “The Case for the Amero: The Economics and Politics of a North American Monetary Union,” [Herbert] Grubel explained his plans for creating the amero. He took pains to argue that the innovation would not necessarily erode national sovereignty … Grubel proposed, as an example, a plan to convert to the amero in 2010 … Ironically, this coincides with the Council on Foreign Relations task force’s report “building a North American Community,” which suggests that same date as a target for putting in place the basic institutions required for a new regional government. At the same time, Grubel proposed a North American central bank that would replace the national central banks of the three countries and a board of governors that would be chosen the economic importance and the population of the three countries.
Pastor openly acknowledges that the idea of abandoning the dollar will be unpopular in the United States. He also understands that the United States economy dominates the North American market and, as such, the United States has less to gain by abandoning the dollar to a new currency that would incorporate Canada and Mexico in a monetary union. Still, Pastor argues that in the long run the concept is “fair” in that the introduction of the amero “does not alter the relative power equation in North America, but it provides space for our neighbors to participate in decision making. Pastor compares “the essence of the idea” with how Woodrow Wilson and Franklin D Roosevelt envisioned international organizations that allowed decision-making space for all participating nations on an equal basis, regardless of their relative strength or size. For this reason, Pastor urged readers not to dismiss the idea, but to consider that “in the long term, the amero is in the best interests of all three countries.”
The arguments to implement the amero gain strength as the dollar continues to weaken. With our large trade and federal budget deficits, a fiscal crisis is building for the dollar.
The winners in free trade have been multinational corporations, who already operate across countries to such an extent that they view borders as anachronistic, if not an impediment to their business expansion and profit potential.
The introduction of the amero would entail the same loss of sovereignty that the introduction of the euro has caused in Europe. Today, the central banks of the European Union countries using the euro are no longer in control of their own national destinies.
A move to the amero as a unitary North American currency would entail a similar move to a North American Central Bank, which would have similar supremacy over the U.S. Treasury and the Federal Reserve.
Multinational corporations feel they have the right to set the rules, since their economic activity produces the wealth and employment individual nation-states rely upon for taxation and revenue. Without multinational corporations, the United States, Canada, and Mexico would become economic basket cases. Or so leaders of such companies claim.
The North American Competitiveness Council, a public group consisting of businesspeople and formed under the SPP, has been created to allow multinational corporations to advise the three governments on the future progress and direction of SPP. These big business-influenced working groups are hard at work attempting to integrate North America.
Chapter 11 of the NAFTA agreement allows a private NAFTA foreign investor to sue the U.S. government if the investor believes a state or federal law damages the investor’s NAFTA business. Under Chapter 11, NAFTA established a tribunal that may conduct a trial to decide the case according to the legal principals established by either the World Bank’s International Centre for the Settlement of Investment Disputes or the UN’s Commission for International Trade Law. If the decision is adverse to the United States, the NAFTA tribunal can impose its decision as final, trumping U.S. law, even as decided by the U.S. Supreme Court.
As the SPP advances, will the U.S. Bill of Rights be among the laws that have to be “integrated” and “harmonized” with Mexico’s and Canada’s?
Robert Pastor has repeatedly argued for the creation of a North American Union “Permanent Tribual on Trade and Investment.” He understands that a “permanent court would permit the accumulation of precedent and lay the groundwork for North American business law.
If a NAFTA Chapter 11 tribunal can overturn even Supreme Court decisions, we have already entered the era where a regional judicial structure created under a trade law has power over the highest court in the land. The movement toward a North American Union begins with the economy, moves to the courts, and ends with political union.
Mexico has placed the SPP within the office of the secretaria de economia and created an extensive website for the Alianza Para La Securidad Y La Prosperidad de America del Norte (ASPAN). The Mexican website describes ASPAN as “a permanent trilateral process to create a major integration of North America.”
While the SPP has worked to ease border restrictions by implementing trusted traveler and trusted trader programs, the Bush administration through the Federal Highway Administration (FHWA) has supported plans in the state of Texas to build a huge NAFTA superhighway, four football fields wide, from the Mexican border at Laredo, Texas, to the Canadian border north of Duluth, Minnesota. The moment the Texas Legislature suggested imposing a two-year moratorium on the construction of TTC-35 parallel to Interstate 35, the chief counsel for FHWA sent a letter to the executive director of the Texas Department of Transportation (TxDOT) threatening a loss of federal highway funds should the legislature move ahead.
Construction began on the Trans-Texas Corridor (TTC) following the reelection of Governor [Rick] Perry in November 2006. In a four-way race in which a plurality of the vote was sufficient to win, Perry was reelected with less than 40 percent of the vote. All three of his opponents campaigned against the Trans-Texas Corridor. Despite receiving less than a majority vote, Perry has been determined to proceed with the TTC-35 project. Plans to build TTC-35 are fully disclosed on www.keeptexasmoving.org, and official Texas Department of Transportation (TxDOT) website.
Texas will make use of the recent Supreme Court case Kelo v. City of New London (545 U.S. 469 [2005]). In this case, the Supreme Court decided that eminent domain could be used to seize private property from U.S. citizens even though the purpose of the land seizure was to benefit a private corporation. The Supreme Court case said nothing that would imply the private corporation involved would have to be a U.S. corporation, which allows the Spanish-owned group backing the TTC to operate.
The Council of Kansas City voted on May 18,2006, to name the Mexican customs facility the “Kansas City Customs Port,” despite the fact that it is actually a Mexican possession, staffed by Mexican government customs officials. The $3 million facility will be paid for by Kansas City taxpayers, not by the Mexican government.
CANAMEX is a proposed NAFTA superhighway that would extend from Edmonton, in Alberta, Canada, to Mexico City. The route would connect Salt Lake City and Las Vegas on the western slope of the Rocky Mountains. On the eastern slope, a superhighway called “Camino Real” would connect Billings, Montaa; Cheyenne, Wyoming; Denver, Colorado; and El Paso, Texas. Both routes would connect in Canada, extending to Fairbanks, Alaska, and in Mexico where they would terminate at Mexico City. In 1995, CANAMEX Corridor (www.canamex.org) was founded as a trade organization. The FHWA identifies CANAMEX and the Camino Real routes as High Priority Corridors under federal highway law.
In order to solidify its economic superiority over North America, Red China is working to restructure the North American transportation infrastructure. To that end, they are investing heavily in developing deep water ports in Mexico in order to bring an unprecedented volume of containers into the United States along the emerging NAFTA super corridor. Hutchison Ports Holdings (HPH), a wholly owned subsidiary of China’s giant Hutchison Whampoa Limited (HWL), is investing millions to expand the deep water ports on Mexico’s Pacific coast at Lazaro Cardenas and Manzanillo. Now Hutchison Ports is pledging millions more to develop Punta Colonet, a desolate Mexican Bay in Baja California. Mexico plans over the next seven years to dredge and convert Punta Colonet into a ten- to twenty-berth-deep water port capable of processing some six million standard Twenty-Foot Equivalent Units (TEUs).
The Port Authority of San Antonio has been working actively with the Chinese to open and develop the Mexican coast to more Chinese shipments. In April 2006, officials of the Port Authority of San Antonio traveled to China with representatives of the Free Trade Alliance San Antonio, the Port of Lazaro Cardenas, and Hutchison Port Holdings to develop the Mexican ports … The Free Trade Alliance San Antonio is self-described as a “public-private” organization created in 1994 to lead the development of San Antonio as a competitive “inland port and international trade center.
In a letter included in the 2006 Financial Report of the United States Government, David M. Walker, the Comptroller General of the United States, clarified the $53 trillion negative net worth; “This translates to a current burden of about $170,000 per American or approximately $440,000 per American household.”
The United States currently has totalization agreements with twenty-one countries. The agreements allow workers to combine earnings from foreign countries with earnings in the United States to qualify for Social Security benefits. The agreement with Mexico would allow a Mexican worker to quality for Social Security benefits after only six quarters (eighteen months) of employment in the United States. A U.S. worker typically needs forty calendar quarters (120 months) to receive U.S. Social Security benefits. The agreement reveals the Bush administration’s determination to incorporate illegal workers from Mexico into the U.S. economy. Furthermore, keeping the U.S.-Mexico Totalization Agreement from the public suggests the Bush administration has something to hide.
QUOTATIONS
Robert L. Bartley
Reformist Mexican President Vincente Fox raises eyebrows with his suggestion that over a decade or two NAFTA should evolve into something like the European Union, with open borders for not only goods and investment but also people. He can rest assured that there is one voice north of the Rio Grande that supports his vision. To wit, this newspaper [Wall Street Journal].
Robert N. Gardner
In short the case-by-case approach can produce some remarkable concessions of “sovereignty” that could not be achieved on an across-the-board basis
Herbert G. Grubel
[in 1999] On the day the North American Monetary Union is created – perhaps on January 1, 2010 – Canada, the United States and Mexico will replace their national currencies with the amero.
Jean Monnet
The sovereign nations of the past could no longer solve the problems of the present; they cannot ensure their own progress or control their own future. And the [European] Community is only a stage on the way to the organized world of tomorrow.
Thomas A. Shannon
What we are doing in North America today is consolidating democratic states, integrating them economically but then providing a security overlay and a level of cooperation and dialogue that will strengthen the economic institutions, strengthen our ability to protect and promote our prosperity, and enhance our ability to create the opportunity that people can … take advantage of.
Showing posts with label government. Show all posts
Showing posts with label government. Show all posts
Monday, December 15, 2008
Sunday, November 30, 2008
THE REAL TRUTH BEHIND THE CITIGROUP BANK NATIONALIZATION - Engdahl
Check out Engdahl's take on what is really going on with the Citigroup "bail out", which is really a nationalization of the country's biggest bank:
http://www.financialsense.com/editorials/engdahl/2008/1126.html
Keep your eyes and mind open,
Michael Childress
http://www.financialsense.com/editorials/engdahl/2008/1126.html
Keep your eyes and mind open,
Michael Childress
Friday, November 7, 2008
Ten "Cannots" by W.J.H. Boetcker
TEN CANNOTS
Reverend William John Henry Boetcker (1873-1962)
You cannot keep out of trouble by spending more than your income.
You cannot establish sound security on borrowed money.
You cannot help little men by tearing down big men.
You cannot help the poor by destroying the rich.
You cannot strengthen the weak by weakening the strong.
You cannot bring about prosperity by discouraging thrift.
You cannot lift the wage earner up by pulling down the wage payer.
You cannot further the brotherhood of man by inciting class hatred.
You cannot build character and courage by taking away men's initiative and independence.
You cannot help men permanently by doing for them, what they could and should do for themselves.
Reverend William John Henry Boetcker (1873-1962)
You cannot keep out of trouble by spending more than your income.
You cannot establish sound security on borrowed money.
You cannot help little men by tearing down big men.
You cannot help the poor by destroying the rich.
You cannot strengthen the weak by weakening the strong.
You cannot bring about prosperity by discouraging thrift.
You cannot lift the wage earner up by pulling down the wage payer.
You cannot further the brotherhood of man by inciting class hatred.
You cannot build character and courage by taking away men's initiative and independence.
You cannot help men permanently by doing for them, what they could and should do for themselves.
Wednesday, October 8, 2008
A Century of War by William Engdahl - Excerpts
A Century of War: Anglo-American Oil Politics and the New World Order. William Engdahl. 2004 (rev ed). ISBN 978-0745323091
EXCERPTS
The power of the dollar and the power of the U.S. military had been uniquely intertwined with one commodity, the basis of the world economic growth engine, since before the First World War. That commodity was petroleum, and in its service British, American, German, French, Italian, and other nations called their soldiers to war. As Henry Kissinger once expressed this importance: ‘control energy and you control the nations.’
No other element has shaped the history of the past 100 years so much as the fight to secure and control the world’s reserves of petroleum. Too little is understood of how political and economic power around the raw material, petroleum, has been shaped by interests principally under the control of two nations, the United Kingdom and, later, the United States of America.
British control of the seas, and with it control of world shipping trade, was thus to emerge after Waterloo as one of the three pillars of a new British Empire … Britain’s unquestioned domination of international banking was the second pillar of English Imperial power following 1815. The third pillar, more and more crucial as the century wore on, was British geopolitical domination of the world’s major raw materials – cotton, metals, coffee, coal, and by the century’s end, the new ‘black gold’, petroleum.
Under the hegemony of free trade, British merchant banks reaped enormous profits on the India-Turkey-China opium trade, while the British Foreign Ministry furthered their banking interests by publicly demanding China open its ports to ‘free trade’, during the British Opium Wars.
… increasingly after the 1846 Corn Laws repeal, the dominant faction in British economic policy was not industry or agriculture, but finance and international trade. In order to insure the supremacy of British international banking, those bankers were willing to sacrifice domestic industry and investment, much as happened in the United States after the Kennedy assassination in the 1960s.
For more than two decades [~1888-1910], the question of the construction of a modern railway linking Continental Europe with Baghdad was a point of friction at the center of German-English relations. By the estimation of Deutsche Bank director Karl Helfferich, the person responsible at the time for the Baghdad rail project negotiations, no other issue led to greater tension between London and Berlin in the decade and a half before 1914, with the possible exception of the issue of Germany’s growing naval fleet.
By early 1913, acting secretly, again at Churchill’s urging, the British government bought up majority share ownership of Anglo-Persian Oil (today British Petroleum). From this point, oil was at the core of British strategic interest.
Many in the British establishment had determined well before 1914 that war was the only course suitable to bring the European situation under control. British interests dictated, according to her balance of power logic, a shift from the traditional ‘pro-Ottoman and anti-Russian’ alliance strategy of the nineteenth century, to a ‘pro-Russian and anti-German alliance strategy.
… then the infamous Dreyfus affair erupted in the French press. Its direct aim was to rupture the delicate efforts of Hanotaux to stabilize relations with Germany. A French army captain named Dreyfus was prosecuted on charges of spying for the Germans. Hanotaux intervened in the initial process in 1894, correctly warning that the Dreyfus affair would lead to ‘a diplomatic rupture with Germany, even war.’ Dreyfus was exonerated years later, and it was revealed that Count Ferdinand Walsin-Esterhazy, in the pay of the Rothschild banking family, had manufactured the evidence against Dreyfus. By 1898, Hanotaux was out of office and had been succeeded by the malleable Anglophile, Theophile Delcasse.
Thus, a British-French-Russian Triple Entente in effect had been fully established by 1907. Britain had created a web of secret alliances encircling Germany, and had laid the foundations for the coming military showdown with the Kaiser’s Reich. The next seven years were ones of preparation for the final elimination of the German threat.
One of the better kept secrets of the 1914-18 world war was that on the eve of August 1914, when Britain declared war against the German Reich, the British Treasury and the finances of the British Empire were in effect bankrupt. An examination of the actual financial relations of the principal parties to the war reveals an extraordinary background of secret credits, coupled with detailed plans to reallocate the raw materials and physical wealth of the entire world after the war, especially those areas of the Ottoman Empire believed to hold significant petroleum reserves.
Romania during the course of the war was the only secure German petroleum supply for her entire air force, tank forces, and U-boat fleet. The British campaign in the Dardanelles, the disastrous defeat at Gallipoli, was undertaken to secure the oil supplies of the Russian Baku for the Anglo-French war effort. The Ottoman sultan had embargoed the shipping out of Russian oil via the Dardanelles. By 1918, the rich Russian oil fields of Baku on the Caspian Sea were the object of intense military and political effort on the part of Germany, and also of Britain, which pre-emptively occupied them for a critical period of weeks in August 1918, denying the German General Staff vital oil supplies. Denial of Baku was a decisive last blow against Germany, which sued for peace some weeks later, only months after it had seemed that Germany had defeated the Allied forces. Oil had proved to be at the center of geopolitics.
Britain emerged from the deliberations of the 1919 Versailles conference in the most apparent respects the dominant superpower in the world. One small detail, pushed to the background during the actual conduct of the war between 1914 and 1918, however, was that this victory was secured on borrowed money.
By January 1915, four months into the Great War, the British government had named a private New York banking house, J.P. Morgan & Co., to be its sole purchasing agent for all war supplies from the United States. Morgan was designated Britain’s exclusive financial agent for all British war lending from private U.S. banks as well. In a short time, Britain in turn became the guarantor for all such war purchases and loans by the French, Italians and Russians in the war against the German-Austrian Continental powers. It was a giant credit pyramid on top of which sat the influential American house of Morgan. Never had a single banking house gambled on such high and risky global stakes … Morgan, with its franchise as sole purchasing agent for the entire Entente group, became virtual arbiter over the future of the U.S. industrial and agricultural export economy. Morgan decided who would, or would not, be favored with very sizable and highly profitable export orders for the European war effort against Germany.
By the eve of the American entry into the war in 1917 on the side of Britain, the Entente powers had raised some $1,250,000,000 through the private efforts of Morgan, Citibank, and the other major New York investment houses, a staggering sum in that day. Morgan’s relation to the financial powers of the newly created New York Federal Reserve Bank, under the control of former J.P. Morgan banker Governor Benjamin Strong, was essential to the success of the private financial mobilization.
… it became clear [1917] that nothing else but American entry into the war would turn the looming disaster in Europe facing J.P. Morgan and Morgan’s European clients. They organized that America would enter the European war on the ‘right’ side – in support of British interests. Morgan & Co., and Britain as well, faced complete financial ruin by early 1917 if they did not succeed.
Had Woodrow Wilson not been persuaded to sign the Federal Reserve Act into law on December 23, 1913, it is questionable whether the United States would ever have committed the resources it did to a war in Europe. Without the new law, it is also doubtful whether Britain would have launched her bold designs against the rival empires of the Continent in August 1914. The house of Morgan and the powerful international financial interests of the City of London played the critical role in shaping a U.S. Federal Reserve System in the months just before the outbreak of the European war.
Morgan & Co. had quietly shifted their private British government loans over to the general debt of the U.S. Treasury as soon as the United States officially entered the war, in effect making the British debts the burden of the American taxpayers after the war.
During the course of the Versailles talks, a new institution of Anglo-American coordination in strategic affairs was formed. Lionel Curtis, a longtime member of the secretive Round Table or ‘new empire’ circle of Balfour, Milner and others, proposed organizing a Royal Institute of International Affairs. The proposal was made on May 30, 1919, in the midst of the Versailles deliberations, at a private gathering at the Hotel Majestic. Philip Kerr (Lord Lothian), Lord Robert Cecil and other members of the Round Table circle attended that formative meeting. The first nominal mission of the new institute would be to write the ‘official’ history of the Versailles peace conference. The Royal Institute received an initial endowment of £2,000 from Thomas Lamont of J.P. Morgan. Historian Arnold J. Toynbee was the institute’s first paid staff member. The same circle at Versailles also decided to establish an American branch of the London Institute, to be named the New York Council on Foreign Relations, so as to obscure its close British ties. The New York Council was initially composed almost entirely of the Morgan men, financed by Morgan money.
The combined burden of the Versailles German reparations debt, as well as the inter-Allied debts of the respective ‘victors’ – the war debts of France, Italy and Belgium to Britain, and in turn, of Britain to the United States – overwhelmed world finance and monetary policy from 1919 through to the October 1929 Wall Street crash … The scale of the combined war debt burden of Europe was so large that its annual debt service demands on the world financial system were greater than the entire annual foreign trade of the United States during the 1920. New York’s international banking community redirected world capital flows to the service of this staggering debt burden.
The oil wars, which had shaken the world for more than a decade, were finally resolved in a ‘ceasefire’, which resulted in the creation of an enormously powerful Anglo-American oil cartel, later dubbed the ‘Seven Sisters’. The peace agreement was formalized in 1927 at Achnacarry, the Scottish castle of Shell’s Sir Henri Deterding. John Cadman, representing the British government’s Anglo-Persian Oil Co. (British Petroleum), and Walter Teagle, president of Rockefeller’s Standard Oil of New Jersey (Exxon), gathered under the cover of a grouse shoot to conclude the most powerful economic cartel in modern history. The Seven Sisters were effectively one. Their secret pact was formalized as the ‘As Is’ agreement of 1928, or the Achnacarry agreement. British and American oil majors agreed to accept the existing market divisions and shares, to set a secret world cartel price, and to end the destructive competition and price wars of the previous decade. The respective governments merely ratified this private accord the same year in what became the Red Line agreement. Since this time, with minor interruption, the Anglo-American grip over the world’s oil reserves has been hegemonic … By 1932, all seven major companies in the Anglo-American sphere – Esso (Standard of N.J.), Mobil (Standard of N.Y.) Gulf Oil, Texaco, Standard of California (Chevron), as well as Royal Dutch Shell and Anglo-Persian Oil Co. (British Petroleum) – were part of the Achnacarry cartel.
The unstable international monetary order imposed after Versailles by London and New York bankers on a defeated central Europe came to an abrupt, if predictable, end in 1929. Montagu Norman, then the world’s most influential central banker as governor of the Bank of England, precipitated the crash of the Wall Street stock market in October 1929. Norman had asked the governor of the New York Federal Reserve Bank, George Harrison, to raise U.S. interest rate levels. Harrison complied, and the most dramatic financial and economic collapse in U.S. history ensued in the following months.
In November 1925, Italian Finance Minister Volpi di Misurata announced that the Mussolini government had reached an agreement on repaying the Versailles war debts of Italy to Britain and the United States. One week later, J.P. Morgan & Co., financial agents of the Mussolini government in the United States, announced a crucial $100 million loan to Italy to ‘stabilize the lira’. In reality, Morgan had decided to stabilize Mussolini’s fascist regime. On the urging of J.P. Morgan & Co. and Montagu Norman, governor of the Bank of England, Volpi di Misurata established in 1926 a single Italian central bank, the Bank of Italy, to control national monetary policy and further ensure repayment of foreign debts.
Since 1926 [Hjalmar] Schacht had secretly been a backer of the radical National Socialist German worker’s Party (NSDAP) or Nazi party of Adolf Hitler. After resigning his Reichsbank post, Schacht acted as a key liaison between powerful, but skeptical, German industrial leaders, the so-called ‘Schlotbarone’ of the Ruhr, and foreign financial leaders, especially Britain’s Lord Norman. British policy at this juncture was to create the ‘Hitler Project’, knowing full well what its ultimate geopolitical and military direction would be. As Colonel David Stirling, the founder of Britain’s elite Special Air Services, related in a private discussion almost half a century later, ‘The greatest mistake we British did was to think we could play the German Empire against the Russian Empire, and have them bleed one another to death.’
While Norman and the Bank of England had adamantly refused to advance a pfennig of credit to Germany at the critical period in 1931 (thus precipitating the banking and unemployment crisis which made desperate alternatives such as Hitler even thinkable to leading circles in Germany), as soon as Hitler had consolidated power, in early 1933, the same Montagu Norman moved with indecent haste to reward the Hitler government with vital Bank of England credit. Norman made a special visit to Berlin in May 1934 to arrange further secret financial stabilization for the new regime. Hitler had responded by making Norman’s dear friend Schacht his minister of economics as well as president of the Reichsbank. The latter post Schacht held until 1939.
Little attention has been paid to the role of oil in the postwar European Recovery Program (ERP), better known as the Marshall Plan, named after its architect, Secretary of State George C. Marshall. From its inception in 1947, the largest single expenditure by ERP recipient countries in Western Europe was to use Marshall Plan dollars to purchase oil, oil supplied primarily by American oil companies. According to official records of the State Department, more than 10 per cent of all U.S. Marshall aid went to buy American oil … Further, the U.S. companies, with support of the Washington government, refused to allow Marshall Plan dollars to be used to build indigenous European refining capacity, further tightening the stranglehold of American Big Oil on postwar Europe.
In his first days in office, under guidance from his advisors, President Lyndon Baines Johnson, a small-town Texas politician with little knowledge of international politics, let alone monetary policy, reversed the earlier decision of John Kennedy. President Johnson was led to believe that a full-scale military war in southeast Asia would solve many problems of the stagnant U.S. economy and show the world that American was still resolute … More and more during the 1960s, the heart of the U.S. economy was being transformed into a kind of military economy, in which the cold war against communist danger was used to justify tens of billions of dollars of spending. The military spending became the backup for the global economic interests of the New York financial and oil interests, another echo of nineteenth-century British Empire, dressed in the garb of twentieth-century anticommunism.
To finance the enormous deficits of his Great Society program and the Vietnam buildup during the 1960s, Johnson, fearful of losing votes if he raised taxes, simply printed dollars, by selling more U.S. Treasury bonds to finance the deficits. In the early 1960s, the U.S. federal budget deficit averaged approximately $3 billion annually. It hit an alarming $9 billion 1967 as the war costs soared, and by 1968 it reached a staggering $25 billion.
The Bank of England and London’s Sir Siegmund Warburg, with the assistance of his friends in Washington, especially Undersecretary of State George Ball, had cleverly lured the [expatriate U.S.] dollars into what was to become the largest concentration of dollar credit outside of the United States itself – the London Eurodollar market, by the 1970s an estimated $1.3 trillion pool of ‘hot money’, all of it ‘offshore’, that is, beyond the control of any nation or central bank.
After August 1971, the dominant U.S. policy under the White House national security advisor, Henry A. Kissinger, was to control, not to develop, economies throughout the world. U.S. policy officials began proudly calling themselves ‘neo-Malthusians’. Population reduction in developing nations, rather than technology transfer and industrial growth strategies, became the dominating priority in the 1970s, yet another throwback to nineteenth-century British colonial thinking.
In May 1973, with the dramatic fall of the dollar still vivid, a group of 84 of the world’s top financial and political insiders met at Saltsjobaden, Sweden, the secluded island resort of the Swedish Wallenberg family. This gathering of Prince Bernhard’s Bilderberg group heard an American participant, Walter Levy, outline a ‘scenario’ for an imminent 400 percent increase in OPEC petroleum revenues. The purpose of the secret Saltsjobaden meeting was not to prevent the expected oil price shock, but rather to plan how to manage the about-to-be-created flood of oil dollars, a process U.S. Secretary of State Kissinger later called ‘recycling the petrodollar flows’.
The most severe impact of the oil crisis was on the United States largest city, New York. In December 1974, nine of the world’s most powerful bankers, led by David Rockefeller’s Chase Manhattan Citibank, and the London-New York investment bank, Lazard Freres, told New York Mayor Abraham Beame, and old-line machine politician, that unless he turned over control of the city’s huge pension funds to a committee of the banks, the Municipal Assistance Corporation , the banks and their influential friends in the media would ensure the financial ruin of the city. Not surprisingly, the overpowered mayor capitulated and New York City was forced to slash spending for roadways, bridges, hospitals and schools in order to service their bank debt, and to lay off tens of thousands of city workers. The nation’s greatest city had begun its descent into a scrap heap. Felix Rohatyn of Lazard Freres became head of the new bankers’ collection agency, dubbed ‘Big MAC’ by the press.
But while Kissinger’s 1973 oil shock had a devastating impact on world industrial growth, it had an enormous benefit for certain established interests – the major New York and London banks, and the Seven Sisters oil multinationals of the United States and Britain. By 1974 Exxon had overtaken General Motors as the largest American corporation in gross revenues. Her sisters, including Mobil, Texaco, Chevron and Gulf, were not far behind. The bulk of the OPEC dollar revenues, Kissinger’s ‘recycled petrodollars’, was deposited with the leading banks of London and New York, the banks which dealt in dollars as well as international oil trade. Chase Manhattan, Citibank, Manufacturers Hanover, Bank of America, Barclays, Lloyds, Midland Bank – all enjoyed the windfall profits of the oil crisis.
The American oilman present at the May 1973 Saltsjobaden meeting of the Bilderberg group, Robert O. Anderson, was a central figure in the implementation of the ensuing Anglo-American ecology agenda. It was to become one of the most successful frauds in history. Anderson and his Atlantic Richfield Oil Co. funneled millions of dollars through their Atlantic Richfield Foundation into select organization to target nuclear energy. One of the prime beneficiaries of Anderson’s largesse was a group called Friends of the Earth, which was organized in this time with a $200,00 grand from Anderson. One of the earliest actions of Anderson’s Friends of the Earth was an assault on the German nuclear industry, through such antinuclear actions as the anti-Brockdorf demonstrations in 1976, led by Friends of the Earth leader Holger Strohm. The director of Friends of the Earth in France, Brice Lalonde, was the Paris partner of the Rockefeller family law firm Coudert Brothers, and became Mitterand’s environment minister in 1989. It was Friends of the Earth which was used to block a major Japanese-Australian uranium supply agreement. In November 1974, Japanese Prime Minister Tanaka went to Canberra to meet Australian Prime Minister Gough Whitlam. The two made a commitment, potentially worth billions of dollars, for Australia to supply Japan’s needs for future uranium ore and enter a joint project to develop uranium enrichment technology. British uranium mining giant Rio Tinto Zinc secretly deployed Friends of the Earth in Australia to mobilize opposition to the pending Japanese agreement, resulting some months later in the fall of Whitham’s government. Friends of the Earth had ‘friends’ in very high places in London and Washington. But Robert O. Anderson’s major vehicle for spreading the new ‘limits to growth’ ideology among American and European establishment circles was his Aspen Institute for Humanistic Studies. With Anderson as chairman and Atlantic Richfield head Thornton Bradshaw as vice-chairman, the Aspen Institute in the early 1970s was a major financial conduit for the creation of the establishment’s new antinuclear agenda. Among the better-known trustees of Aspen at this time was World Bank president and the man who ran the Vietnam war, Robert S. McNamara. Other carefully selected Aspen trustees included Lord Bullock of Oxford University, Richard Gardner, an Anglophile American economist who was later U.S. ambassador to Italy, Wall Street banker Russell Peterson of Lehman Brothers Kuhn Loeb Inc., as well as Exxon board member Jack G. Clarke, Gulf Oil’s Jerry McAfee and Mobil Oil director George C. McGhee, the former State Department official who was present in 1954 at the founding meeting of the Bilderberg group.
In October 1979, a devastating new Anglo-American financial shock was unleashed on top of the second oil crisis of that year. That August, on the advice of David Rockefeller and other influential voices of the Wall Street banking establishment, President Carter appointed Paul A. Volcker, the man who, back in August 1971, had been a key architect of the policy of taking the dollar off the gold standard, to head the Federal Reserve. Volcker, a former official at Rockefeller’s Chase Manhattan Bank, and, of course, a member of David Rockefeller’s Trilateral Commission, was president of the New York Federal Reserve at the time of his appointment as head of the world’s most powerful central bank … In October 1979, Volcker unveiled a radical new Federal Reserve monetary policy. He deceived a shocked Congress and a desperate White House by insisting that his radical monetarist cure was aimed at ‘squeezing inflation out of the system’. It was aimed at making the U.S. dollar the most eagerly sought currency in the world and to stop industrial growth dead in its tracks, in order that political and financial power flow back to the dollar imperium … The oil crisis and the Volcker shock were further strengthened by a decision of the leading circles of the establishment to ‘take the bloom off the nuclear rose’ once and for all, in order to ensure that the alarming trend of developing worldwide nuclear energy resources to replace reliance on Anglo-American oil was decisively ended.
Prophetically, as he signed the new Garn-St. Germain Act into law, President Reagan enthusiastically told an audience of invited S&L bankers, ‘I think we’ve hit the jackpot.’ This ‘jackpot’ was the beginning of the collapse of the $1.3 trillion savings and loan banking system. The new law opened the doors of the S&Ls to wholesale financial abuses and wild speculative risks as never before. Moreover, it made S&L banks an ideal vehicle for organized crime to launder billions of dollars from the growing narcotics business in 1980s America. Few noticed that it was the former firm of Donald Regan, Merrill Lynch, whose Lugano office was implicated in laundering billions of dollars of Mafia heroin profits in the so-called ‘pizza connection’. The wild and woolly climate of deregulation created an ambience in which normal, well-run savings banks were surpassed by fast-track banks which catered to dubious monies with no questions asked. Banks laundered funds for covert operations of the CIA, as well as covert operations of the Bonano or other organized crime families. The son of the vice president, Neil Bush, was a director of the Silverado Savings and Loan in Colorado, later indicted by the government for illegal practices. Son Neil had the good taste to ‘resign’ the week his father received the Republican nomination for president in 1988.
… as the largest military buildup since the Vietnam War took place in Saudi Arabia, in preparation for offensive saturation bombing in Iraq in the early days of January 1991, more than a few informed voices inside the Washington establishment began to express grave doubts as to the ultimate wisdom of Bush’s clear military intent. In a November 12, 1990 television interview, a former Reagan administration navy secretary, James H. Webb declared, ‘The purpose of our presence in the Persian Gulf is to further the Bush Administration’s New World Order, and I don’t like it.’
With the collapse of the Soviet Union at the beginning of the 1990s, hopes were high in many quarters that the world might see a new era of peace and prosperity. The decade that followed disappointed, to put it mildly. Far from an end to geopolitics and cold war, the stage merely shifted. As sole surviving superpower, Washington set about shaping its New World Order, though the term was quickly dropped by George H.W. Bush after it drew critical attention in his 1991 State of the Union speech. It provoked too many questions as to whose order it was and what priorities it might have.
By the start of the new century, powerful circles in the U.S. establishment had decided it was time for a change in emphasis. If the Treasury had been the symbol of power in the Clinton era, the Defense Department was to become the focal point of the Bush era. And, as during most of the cold war, its agenda was directly tied to oil geopolitics.
With undeveloped oil reserves perhaps even larger than those of Saudi Arabia, Iraq had become an object of intense interest to Cheney and the Bush Administration very early on. Paul O’Neill, a Bush cabinet member who had been fired in late 2002 for not being a good team player, later revealed that, as president, Bush had decided to make Iraqi regime-change a top goal well before the September 11, 2001 terror attacks.
The Taliban fell out of favor in Washington in July 2001, when U.S. negotiators proposed conditions for their pipeline, reportedly telling the Taliban leaders, ‘Either you accept our offer on a carpet of gold, or we bury you under a carpet of bombs.’ The Taliban was demanding U.S. aid to rebuild the Afghan infrastructure. They wanted the pipeline not only to be a transit line to India and beyond, but also to serve Afghan needs for energy. Washington rejected the demands. September 11, 2001, gave Washington the excuse to deliver its carpet of bombs to Kabul.
The military attack on Afghanistan, the first strike in the new war on terror gave Washington many things. It gave it the pretext for a huge Pentagon budget increase to nearly $400 billion a year, and for building a ring of permanent U.S. military bases from Uzbekistan to Afghanistan and Kyrgyzstan, places deep inside the former Soviet Union territory. (The latter point was not lost on Russian thinkers around President Putin.) The U.S. removal of the Taliban also gave the world a flood of heroin, as old warlords suppressed by the Taliban were able to resume poppy cultivation.
EXCERPTS
The power of the dollar and the power of the U.S. military had been uniquely intertwined with one commodity, the basis of the world economic growth engine, since before the First World War. That commodity was petroleum, and in its service British, American, German, French, Italian, and other nations called their soldiers to war. As Henry Kissinger once expressed this importance: ‘control energy and you control the nations.’
No other element has shaped the history of the past 100 years so much as the fight to secure and control the world’s reserves of petroleum. Too little is understood of how political and economic power around the raw material, petroleum, has been shaped by interests principally under the control of two nations, the United Kingdom and, later, the United States of America.
British control of the seas, and with it control of world shipping trade, was thus to emerge after Waterloo as one of the three pillars of a new British Empire … Britain’s unquestioned domination of international banking was the second pillar of English Imperial power following 1815. The third pillar, more and more crucial as the century wore on, was British geopolitical domination of the world’s major raw materials – cotton, metals, coffee, coal, and by the century’s end, the new ‘black gold’, petroleum.
Under the hegemony of free trade, British merchant banks reaped enormous profits on the India-Turkey-China opium trade, while the British Foreign Ministry furthered their banking interests by publicly demanding China open its ports to ‘free trade’, during the British Opium Wars.
… increasingly after the 1846 Corn Laws repeal, the dominant faction in British economic policy was not industry or agriculture, but finance and international trade. In order to insure the supremacy of British international banking, those bankers were willing to sacrifice domestic industry and investment, much as happened in the United States after the Kennedy assassination in the 1960s.
For more than two decades [~1888-1910], the question of the construction of a modern railway linking Continental Europe with Baghdad was a point of friction at the center of German-English relations. By the estimation of Deutsche Bank director Karl Helfferich, the person responsible at the time for the Baghdad rail project negotiations, no other issue led to greater tension between London and Berlin in the decade and a half before 1914, with the possible exception of the issue of Germany’s growing naval fleet.
By early 1913, acting secretly, again at Churchill’s urging, the British government bought up majority share ownership of Anglo-Persian Oil (today British Petroleum). From this point, oil was at the core of British strategic interest.
Many in the British establishment had determined well before 1914 that war was the only course suitable to bring the European situation under control. British interests dictated, according to her balance of power logic, a shift from the traditional ‘pro-Ottoman and anti-Russian’ alliance strategy of the nineteenth century, to a ‘pro-Russian and anti-German alliance strategy.
… then the infamous Dreyfus affair erupted in the French press. Its direct aim was to rupture the delicate efforts of Hanotaux to stabilize relations with Germany. A French army captain named Dreyfus was prosecuted on charges of spying for the Germans. Hanotaux intervened in the initial process in 1894, correctly warning that the Dreyfus affair would lead to ‘a diplomatic rupture with Germany, even war.’ Dreyfus was exonerated years later, and it was revealed that Count Ferdinand Walsin-Esterhazy, in the pay of the Rothschild banking family, had manufactured the evidence against Dreyfus. By 1898, Hanotaux was out of office and had been succeeded by the malleable Anglophile, Theophile Delcasse.
Thus, a British-French-Russian Triple Entente in effect had been fully established by 1907. Britain had created a web of secret alliances encircling Germany, and had laid the foundations for the coming military showdown with the Kaiser’s Reich. The next seven years were ones of preparation for the final elimination of the German threat.
One of the better kept secrets of the 1914-18 world war was that on the eve of August 1914, when Britain declared war against the German Reich, the British Treasury and the finances of the British Empire were in effect bankrupt. An examination of the actual financial relations of the principal parties to the war reveals an extraordinary background of secret credits, coupled with detailed plans to reallocate the raw materials and physical wealth of the entire world after the war, especially those areas of the Ottoman Empire believed to hold significant petroleum reserves.
Romania during the course of the war was the only secure German petroleum supply for her entire air force, tank forces, and U-boat fleet. The British campaign in the Dardanelles, the disastrous defeat at Gallipoli, was undertaken to secure the oil supplies of the Russian Baku for the Anglo-French war effort. The Ottoman sultan had embargoed the shipping out of Russian oil via the Dardanelles. By 1918, the rich Russian oil fields of Baku on the Caspian Sea were the object of intense military and political effort on the part of Germany, and also of Britain, which pre-emptively occupied them for a critical period of weeks in August 1918, denying the German General Staff vital oil supplies. Denial of Baku was a decisive last blow against Germany, which sued for peace some weeks later, only months after it had seemed that Germany had defeated the Allied forces. Oil had proved to be at the center of geopolitics.
Britain emerged from the deliberations of the 1919 Versailles conference in the most apparent respects the dominant superpower in the world. One small detail, pushed to the background during the actual conduct of the war between 1914 and 1918, however, was that this victory was secured on borrowed money.
By January 1915, four months into the Great War, the British government had named a private New York banking house, J.P. Morgan & Co., to be its sole purchasing agent for all war supplies from the United States. Morgan was designated Britain’s exclusive financial agent for all British war lending from private U.S. banks as well. In a short time, Britain in turn became the guarantor for all such war purchases and loans by the French, Italians and Russians in the war against the German-Austrian Continental powers. It was a giant credit pyramid on top of which sat the influential American house of Morgan. Never had a single banking house gambled on such high and risky global stakes … Morgan, with its franchise as sole purchasing agent for the entire Entente group, became virtual arbiter over the future of the U.S. industrial and agricultural export economy. Morgan decided who would, or would not, be favored with very sizable and highly profitable export orders for the European war effort against Germany.
By the eve of the American entry into the war in 1917 on the side of Britain, the Entente powers had raised some $1,250,000,000 through the private efforts of Morgan, Citibank, and the other major New York investment houses, a staggering sum in that day. Morgan’s relation to the financial powers of the newly created New York Federal Reserve Bank, under the control of former J.P. Morgan banker Governor Benjamin Strong, was essential to the success of the private financial mobilization.
… it became clear [1917] that nothing else but American entry into the war would turn the looming disaster in Europe facing J.P. Morgan and Morgan’s European clients. They organized that America would enter the European war on the ‘right’ side – in support of British interests. Morgan & Co., and Britain as well, faced complete financial ruin by early 1917 if they did not succeed.
Had Woodrow Wilson not been persuaded to sign the Federal Reserve Act into law on December 23, 1913, it is questionable whether the United States would ever have committed the resources it did to a war in Europe. Without the new law, it is also doubtful whether Britain would have launched her bold designs against the rival empires of the Continent in August 1914. The house of Morgan and the powerful international financial interests of the City of London played the critical role in shaping a U.S. Federal Reserve System in the months just before the outbreak of the European war.
Morgan & Co. had quietly shifted their private British government loans over to the general debt of the U.S. Treasury as soon as the United States officially entered the war, in effect making the British debts the burden of the American taxpayers after the war.
During the course of the Versailles talks, a new institution of Anglo-American coordination in strategic affairs was formed. Lionel Curtis, a longtime member of the secretive Round Table or ‘new empire’ circle of Balfour, Milner and others, proposed organizing a Royal Institute of International Affairs. The proposal was made on May 30, 1919, in the midst of the Versailles deliberations, at a private gathering at the Hotel Majestic. Philip Kerr (Lord Lothian), Lord Robert Cecil and other members of the Round Table circle attended that formative meeting. The first nominal mission of the new institute would be to write the ‘official’ history of the Versailles peace conference. The Royal Institute received an initial endowment of £2,000 from Thomas Lamont of J.P. Morgan. Historian Arnold J. Toynbee was the institute’s first paid staff member. The same circle at Versailles also decided to establish an American branch of the London Institute, to be named the New York Council on Foreign Relations, so as to obscure its close British ties. The New York Council was initially composed almost entirely of the Morgan men, financed by Morgan money.
The combined burden of the Versailles German reparations debt, as well as the inter-Allied debts of the respective ‘victors’ – the war debts of France, Italy and Belgium to Britain, and in turn, of Britain to the United States – overwhelmed world finance and monetary policy from 1919 through to the October 1929 Wall Street crash … The scale of the combined war debt burden of Europe was so large that its annual debt service demands on the world financial system were greater than the entire annual foreign trade of the United States during the 1920. New York’s international banking community redirected world capital flows to the service of this staggering debt burden.
The oil wars, which had shaken the world for more than a decade, were finally resolved in a ‘ceasefire’, which resulted in the creation of an enormously powerful Anglo-American oil cartel, later dubbed the ‘Seven Sisters’. The peace agreement was formalized in 1927 at Achnacarry, the Scottish castle of Shell’s Sir Henri Deterding. John Cadman, representing the British government’s Anglo-Persian Oil Co. (British Petroleum), and Walter Teagle, president of Rockefeller’s Standard Oil of New Jersey (Exxon), gathered under the cover of a grouse shoot to conclude the most powerful economic cartel in modern history. The Seven Sisters were effectively one. Their secret pact was formalized as the ‘As Is’ agreement of 1928, or the Achnacarry agreement. British and American oil majors agreed to accept the existing market divisions and shares, to set a secret world cartel price, and to end the destructive competition and price wars of the previous decade. The respective governments merely ratified this private accord the same year in what became the Red Line agreement. Since this time, with minor interruption, the Anglo-American grip over the world’s oil reserves has been hegemonic … By 1932, all seven major companies in the Anglo-American sphere – Esso (Standard of N.J.), Mobil (Standard of N.Y.) Gulf Oil, Texaco, Standard of California (Chevron), as well as Royal Dutch Shell and Anglo-Persian Oil Co. (British Petroleum) – were part of the Achnacarry cartel.
The unstable international monetary order imposed after Versailles by London and New York bankers on a defeated central Europe came to an abrupt, if predictable, end in 1929. Montagu Norman, then the world’s most influential central banker as governor of the Bank of England, precipitated the crash of the Wall Street stock market in October 1929. Norman had asked the governor of the New York Federal Reserve Bank, George Harrison, to raise U.S. interest rate levels. Harrison complied, and the most dramatic financial and economic collapse in U.S. history ensued in the following months.
In November 1925, Italian Finance Minister Volpi di Misurata announced that the Mussolini government had reached an agreement on repaying the Versailles war debts of Italy to Britain and the United States. One week later, J.P. Morgan & Co., financial agents of the Mussolini government in the United States, announced a crucial $100 million loan to Italy to ‘stabilize the lira’. In reality, Morgan had decided to stabilize Mussolini’s fascist regime. On the urging of J.P. Morgan & Co. and Montagu Norman, governor of the Bank of England, Volpi di Misurata established in 1926 a single Italian central bank, the Bank of Italy, to control national monetary policy and further ensure repayment of foreign debts.
Since 1926 [Hjalmar] Schacht had secretly been a backer of the radical National Socialist German worker’s Party (NSDAP) or Nazi party of Adolf Hitler. After resigning his Reichsbank post, Schacht acted as a key liaison between powerful, but skeptical, German industrial leaders, the so-called ‘Schlotbarone’ of the Ruhr, and foreign financial leaders, especially Britain’s Lord Norman. British policy at this juncture was to create the ‘Hitler Project’, knowing full well what its ultimate geopolitical and military direction would be. As Colonel David Stirling, the founder of Britain’s elite Special Air Services, related in a private discussion almost half a century later, ‘The greatest mistake we British did was to think we could play the German Empire against the Russian Empire, and have them bleed one another to death.’
While Norman and the Bank of England had adamantly refused to advance a pfennig of credit to Germany at the critical period in 1931 (thus precipitating the banking and unemployment crisis which made desperate alternatives such as Hitler even thinkable to leading circles in Germany), as soon as Hitler had consolidated power, in early 1933, the same Montagu Norman moved with indecent haste to reward the Hitler government with vital Bank of England credit. Norman made a special visit to Berlin in May 1934 to arrange further secret financial stabilization for the new regime. Hitler had responded by making Norman’s dear friend Schacht his minister of economics as well as president of the Reichsbank. The latter post Schacht held until 1939.
Little attention has been paid to the role of oil in the postwar European Recovery Program (ERP), better known as the Marshall Plan, named after its architect, Secretary of State George C. Marshall. From its inception in 1947, the largest single expenditure by ERP recipient countries in Western Europe was to use Marshall Plan dollars to purchase oil, oil supplied primarily by American oil companies. According to official records of the State Department, more than 10 per cent of all U.S. Marshall aid went to buy American oil … Further, the U.S. companies, with support of the Washington government, refused to allow Marshall Plan dollars to be used to build indigenous European refining capacity, further tightening the stranglehold of American Big Oil on postwar Europe.
In his first days in office, under guidance from his advisors, President Lyndon Baines Johnson, a small-town Texas politician with little knowledge of international politics, let alone monetary policy, reversed the earlier decision of John Kennedy. President Johnson was led to believe that a full-scale military war in southeast Asia would solve many problems of the stagnant U.S. economy and show the world that American was still resolute … More and more during the 1960s, the heart of the U.S. economy was being transformed into a kind of military economy, in which the cold war against communist danger was used to justify tens of billions of dollars of spending. The military spending became the backup for the global economic interests of the New York financial and oil interests, another echo of nineteenth-century British Empire, dressed in the garb of twentieth-century anticommunism.
To finance the enormous deficits of his Great Society program and the Vietnam buildup during the 1960s, Johnson, fearful of losing votes if he raised taxes, simply printed dollars, by selling more U.S. Treasury bonds to finance the deficits. In the early 1960s, the U.S. federal budget deficit averaged approximately $3 billion annually. It hit an alarming $9 billion 1967 as the war costs soared, and by 1968 it reached a staggering $25 billion.
The Bank of England and London’s Sir Siegmund Warburg, with the assistance of his friends in Washington, especially Undersecretary of State George Ball, had cleverly lured the [expatriate U.S.] dollars into what was to become the largest concentration of dollar credit outside of the United States itself – the London Eurodollar market, by the 1970s an estimated $1.3 trillion pool of ‘hot money’, all of it ‘offshore’, that is, beyond the control of any nation or central bank.
After August 1971, the dominant U.S. policy under the White House national security advisor, Henry A. Kissinger, was to control, not to develop, economies throughout the world. U.S. policy officials began proudly calling themselves ‘neo-Malthusians’. Population reduction in developing nations, rather than technology transfer and industrial growth strategies, became the dominating priority in the 1970s, yet another throwback to nineteenth-century British colonial thinking.
In May 1973, with the dramatic fall of the dollar still vivid, a group of 84 of the world’s top financial and political insiders met at Saltsjobaden, Sweden, the secluded island resort of the Swedish Wallenberg family. This gathering of Prince Bernhard’s Bilderberg group heard an American participant, Walter Levy, outline a ‘scenario’ for an imminent 400 percent increase in OPEC petroleum revenues. The purpose of the secret Saltsjobaden meeting was not to prevent the expected oil price shock, but rather to plan how to manage the about-to-be-created flood of oil dollars, a process U.S. Secretary of State Kissinger later called ‘recycling the petrodollar flows’.
The most severe impact of the oil crisis was on the United States largest city, New York. In December 1974, nine of the world’s most powerful bankers, led by David Rockefeller’s Chase Manhattan Citibank, and the London-New York investment bank, Lazard Freres, told New York Mayor Abraham Beame, and old-line machine politician, that unless he turned over control of the city’s huge pension funds to a committee of the banks, the Municipal Assistance Corporation , the banks and their influential friends in the media would ensure the financial ruin of the city. Not surprisingly, the overpowered mayor capitulated and New York City was forced to slash spending for roadways, bridges, hospitals and schools in order to service their bank debt, and to lay off tens of thousands of city workers. The nation’s greatest city had begun its descent into a scrap heap. Felix Rohatyn of Lazard Freres became head of the new bankers’ collection agency, dubbed ‘Big MAC’ by the press.
But while Kissinger’s 1973 oil shock had a devastating impact on world industrial growth, it had an enormous benefit for certain established interests – the major New York and London banks, and the Seven Sisters oil multinationals of the United States and Britain. By 1974 Exxon had overtaken General Motors as the largest American corporation in gross revenues. Her sisters, including Mobil, Texaco, Chevron and Gulf, were not far behind. The bulk of the OPEC dollar revenues, Kissinger’s ‘recycled petrodollars’, was deposited with the leading banks of London and New York, the banks which dealt in dollars as well as international oil trade. Chase Manhattan, Citibank, Manufacturers Hanover, Bank of America, Barclays, Lloyds, Midland Bank – all enjoyed the windfall profits of the oil crisis.
The American oilman present at the May 1973 Saltsjobaden meeting of the Bilderberg group, Robert O. Anderson, was a central figure in the implementation of the ensuing Anglo-American ecology agenda. It was to become one of the most successful frauds in history. Anderson and his Atlantic Richfield Oil Co. funneled millions of dollars through their Atlantic Richfield Foundation into select organization to target nuclear energy. One of the prime beneficiaries of Anderson’s largesse was a group called Friends of the Earth, which was organized in this time with a $200,00 grand from Anderson. One of the earliest actions of Anderson’s Friends of the Earth was an assault on the German nuclear industry, through such antinuclear actions as the anti-Brockdorf demonstrations in 1976, led by Friends of the Earth leader Holger Strohm. The director of Friends of the Earth in France, Brice Lalonde, was the Paris partner of the Rockefeller family law firm Coudert Brothers, and became Mitterand’s environment minister in 1989. It was Friends of the Earth which was used to block a major Japanese-Australian uranium supply agreement. In November 1974, Japanese Prime Minister Tanaka went to Canberra to meet Australian Prime Minister Gough Whitlam. The two made a commitment, potentially worth billions of dollars, for Australia to supply Japan’s needs for future uranium ore and enter a joint project to develop uranium enrichment technology. British uranium mining giant Rio Tinto Zinc secretly deployed Friends of the Earth in Australia to mobilize opposition to the pending Japanese agreement, resulting some months later in the fall of Whitham’s government. Friends of the Earth had ‘friends’ in very high places in London and Washington. But Robert O. Anderson’s major vehicle for spreading the new ‘limits to growth’ ideology among American and European establishment circles was his Aspen Institute for Humanistic Studies. With Anderson as chairman and Atlantic Richfield head Thornton Bradshaw as vice-chairman, the Aspen Institute in the early 1970s was a major financial conduit for the creation of the establishment’s new antinuclear agenda. Among the better-known trustees of Aspen at this time was World Bank president and the man who ran the Vietnam war, Robert S. McNamara. Other carefully selected Aspen trustees included Lord Bullock of Oxford University, Richard Gardner, an Anglophile American economist who was later U.S. ambassador to Italy, Wall Street banker Russell Peterson of Lehman Brothers Kuhn Loeb Inc., as well as Exxon board member Jack G. Clarke, Gulf Oil’s Jerry McAfee and Mobil Oil director George C. McGhee, the former State Department official who was present in 1954 at the founding meeting of the Bilderberg group.
In October 1979, a devastating new Anglo-American financial shock was unleashed on top of the second oil crisis of that year. That August, on the advice of David Rockefeller and other influential voices of the Wall Street banking establishment, President Carter appointed Paul A. Volcker, the man who, back in August 1971, had been a key architect of the policy of taking the dollar off the gold standard, to head the Federal Reserve. Volcker, a former official at Rockefeller’s Chase Manhattan Bank, and, of course, a member of David Rockefeller’s Trilateral Commission, was president of the New York Federal Reserve at the time of his appointment as head of the world’s most powerful central bank … In October 1979, Volcker unveiled a radical new Federal Reserve monetary policy. He deceived a shocked Congress and a desperate White House by insisting that his radical monetarist cure was aimed at ‘squeezing inflation out of the system’. It was aimed at making the U.S. dollar the most eagerly sought currency in the world and to stop industrial growth dead in its tracks, in order that political and financial power flow back to the dollar imperium … The oil crisis and the Volcker shock were further strengthened by a decision of the leading circles of the establishment to ‘take the bloom off the nuclear rose’ once and for all, in order to ensure that the alarming trend of developing worldwide nuclear energy resources to replace reliance on Anglo-American oil was decisively ended.
Prophetically, as he signed the new Garn-St. Germain Act into law, President Reagan enthusiastically told an audience of invited S&L bankers, ‘I think we’ve hit the jackpot.’ This ‘jackpot’ was the beginning of the collapse of the $1.3 trillion savings and loan banking system. The new law opened the doors of the S&Ls to wholesale financial abuses and wild speculative risks as never before. Moreover, it made S&L banks an ideal vehicle for organized crime to launder billions of dollars from the growing narcotics business in 1980s America. Few noticed that it was the former firm of Donald Regan, Merrill Lynch, whose Lugano office was implicated in laundering billions of dollars of Mafia heroin profits in the so-called ‘pizza connection’. The wild and woolly climate of deregulation created an ambience in which normal, well-run savings banks were surpassed by fast-track banks which catered to dubious monies with no questions asked. Banks laundered funds for covert operations of the CIA, as well as covert operations of the Bonano or other organized crime families. The son of the vice president, Neil Bush, was a director of the Silverado Savings and Loan in Colorado, later indicted by the government for illegal practices. Son Neil had the good taste to ‘resign’ the week his father received the Republican nomination for president in 1988.
… as the largest military buildup since the Vietnam War took place in Saudi Arabia, in preparation for offensive saturation bombing in Iraq in the early days of January 1991, more than a few informed voices inside the Washington establishment began to express grave doubts as to the ultimate wisdom of Bush’s clear military intent. In a November 12, 1990 television interview, a former Reagan administration navy secretary, James H. Webb declared, ‘The purpose of our presence in the Persian Gulf is to further the Bush Administration’s New World Order, and I don’t like it.’
With the collapse of the Soviet Union at the beginning of the 1990s, hopes were high in many quarters that the world might see a new era of peace and prosperity. The decade that followed disappointed, to put it mildly. Far from an end to geopolitics and cold war, the stage merely shifted. As sole surviving superpower, Washington set about shaping its New World Order, though the term was quickly dropped by George H.W. Bush after it drew critical attention in his 1991 State of the Union speech. It provoked too many questions as to whose order it was and what priorities it might have.
By the start of the new century, powerful circles in the U.S. establishment had decided it was time for a change in emphasis. If the Treasury had been the symbol of power in the Clinton era, the Defense Department was to become the focal point of the Bush era. And, as during most of the cold war, its agenda was directly tied to oil geopolitics.
With undeveloped oil reserves perhaps even larger than those of Saudi Arabia, Iraq had become an object of intense interest to Cheney and the Bush Administration very early on. Paul O’Neill, a Bush cabinet member who had been fired in late 2002 for not being a good team player, later revealed that, as president, Bush had decided to make Iraqi regime-change a top goal well before the September 11, 2001 terror attacks.
The Taliban fell out of favor in Washington in July 2001, when U.S. negotiators proposed conditions for their pipeline, reportedly telling the Taliban leaders, ‘Either you accept our offer on a carpet of gold, or we bury you under a carpet of bombs.’ The Taliban was demanding U.S. aid to rebuild the Afghan infrastructure. They wanted the pipeline not only to be a transit line to India and beyond, but also to serve Afghan needs for energy. Washington rejected the demands. September 11, 2001, gave Washington the excuse to deliver its carpet of bombs to Kabul.
The military attack on Afghanistan, the first strike in the new war on terror gave Washington many things. It gave it the pretext for a huge Pentagon budget increase to nearly $400 billion a year, and for building a ring of permanent U.S. military bases from Uzbekistan to Afghanistan and Kyrgyzstan, places deep inside the former Soviet Union territory. (The latter point was not lost on Russian thinkers around President Putin.) The U.S. removal of the Taliban also gave the world a flood of heroin, as old warlords suppressed by the Taliban were able to resume poppy cultivation.
Sunday, October 5, 2008
Dark Ages America: The Final Phase of Empire by Morris Berman - Excerpts
Dark Ages America: The Final Phase of Empire. Morris Berman. 2006. ISBN 0-393-05866-2
EXCERPTS
In his famous essay of 1784, “What is Enlightenment?”, the German philosopher Immanuel Kant wrote, “Enlightenment is man’s release from his self-incurred tutelage,” which he defined as his “inability to make use of his understanding without direction from another.” Sapere aude!, cried Kant; “have the courage to use your own reason! – that is the motto of enlightenment.”
Quite honestly, we may be only one more terrorist attack away from a police state.
Despite the unifying patriotic rhetoric that permeates the United States, on some level Americans are not really fooled; at bottom, each person knows he or she must continually “reinvent themselves,” which is to say, go it alone. America is the ultimate anti-community.
American citizens cannot choose not to participate in the utterly fluid, high-pressure society that the United States has become. Liquid modernity is, in short, quite rigid: a world of compulsive self-determination.
On the grassroots level of people’s working lives, this merger of our identities with the economy is surely one of the most destructive aspects of the new globalized world order.
The Italian political theorist Antonio Gramsci pointed out long ago that if you capture people’s minds, their hands will follow. He called this “hegemony”, the symbolic level of the dominant culture that convinces people – the evidence of their lives notwithstanding – that this is the best of all possible worlds.
… “one dollar, one vote”, which is actually the description of a plutocracy.
Globalization is our destiny; it is, in effect, the final phase of capitalism. We did not evolve to this place by accident, and short of massive civilizational breakdown, there seems to be now way to alter this trajectory – not even slightly.
In the absence of broad structural awareness, alternatives to a world characterized by liquid modernity don’t have much of a chance. It is also the case that the absence of such alternatives is our consciousness is an inherent feature of this world. In such a context, anything truly different, and certainly anything truly creative, has to swim against an enormous tide of commercial garbage.
The fact is that liquid modernity has a strongly addictive quality to it: its participants are often convinced that death is actually life. In “The Numbing of the American Mind,” Thomas de Zengotita points out that it constitutes “a vast goo of meaningless stimulation.”
… the more money moves to the center of our lives, the more cynical we become about higher values. This … generates a culture of sensation, a longing for speed and excitement, because natural excitement is increasingly absent.
Modern American childhood … is for the most part an education in shopping.
The upshot of all of this is that school is turned into a venue for corporate and consumerist indoctrination – with the blessing of many schools and probably most of society.
The reason shows such as Seinfeld or Friends were so popular is that they depicted community situations – i.e., ones in which people hang out together on a daily basis and have a shared history. The irony of millions of isolated Americans sitting home alone and vicariously participating in a group experience that they themselves will never have, because they will never have it, hardly needs comment …
In what other context would we expect to find “reality” shows on TV, such as Survivor, in which screwing the other person is the name of the game, and which millions find vastly entertaining.
… “social capital”, the connections among individuals that are based on reciprocity and trust.
Shopping malls are now America’s most distinctive public space, and mall culture is about being in the presence of others, but not in their company.
… it is precisely in the declining phase of a civilization that it beats the drum of self-congratulation most fiercely.
Negative freedom … is essentially the freedom to be left alone. Societies without this type of freedom tend to be tribal (or organic) in nature, heavily dominated by custom and tradition. In those cultures, the separation of church and state – a mainstay of secular democracy – is usually absent.
As a California migrant worker once remarked to his family, on a return visit south of the border over the Christmas holiday, “The gringos don’t like to be reminded that they are corpses.”
… Osama’s laundry list of grievances … in particular the fact that the United States has inherited the mantle and pattern of nineteenth-century European imperialism: military garrisons, economic control, support for brutal leaders, exploitation of natural resources.
Beginning with the Wilson administration, taxes collected for individuals were used to provide corporations with loans and subsidies for overseas expansion.
Michael Hunt defines ideology as a structure of meaning that is part of the culture – so much a part, in our own case, that we take it for granted, are not really aware of it, and regard other ideologies as aberrant.
Americans still live in a world in which Anglos are on top, Europeans follow, and the Third (read: nonwhite) World sits at the bottom … Plainly put, Americans don’t respect cultural patterns different from their own, and this has facilitated an imperial foreign policy.
The American Dream involves something more comprehensive than just making money … it includes Americans’ vision of themselves as bringing freedom and the American way of life to the world, being atop a racial hierarchy (although this is no longer expressed overtly), and keeping political revolution at bay.
Across much of Asia and Latin America, our allies cared nothing for democracy; their allegiance was to our dollars, not to our values. Nor did we care, so long as they let us install military bases and said the “right” things.
Recall what [George] Kennan wrote: that the USSR viewed the outside world as hostile, was persuaded of its own doctrinaire rightness, insisted on the elimination of all competing powers and ideologies, believed that no opposition to them could possibly have any merit, and saw their regime as the only true one “in a dark and misguided world.” Let’s not kid ourselves: it would be hard to find a better description of American postwar foreign policy, right down to today.
It is this, to my mind, that makes [Carter] so unusual; it sets him off from presidents such as Reagan or Bush Jr. – men who were (are) very doctrinaire and who confuse(d) strength with rigidity (the American public does as well). Carter accepted compromises and contradictions when necessary, and saw the foreign policy arena as one necessarily fraught with conflict and inconsistency. Allied with this, he did not think in oppositional terms, and since that is all the media and public seem to be able to do, his message got lost.
It is no accident that [Carter] was defeated by an actor, a not terribly astute, sloganeering individual with an opposite modus operandi. Popularity with the media was at the top of Reagan’s list. He was not interested in the substantive details of foreign policy; he probably couldn’t even understand them. What interested the fortieth president was rhetoric, public appearances, and ceremonial duties. He had no intellectual curiosity whatsoever; his political philosophy amounted to little more than “us good, them bad”, and that was basically what most of the American people wanted to hear.
We love our large, energy-inefficient vehicles, and don’t seem to be too preoccupied with the fact that other peoples of the world have to die in large numbers so that we can live an extravagant and wasteful lifestyle.
Americans as a people don’t really like to look inward. Our feelings on the subject are much closer to, say, Bush Sr. than to Jimmy Carter. Whenever the elder Bush was asked probing questions, his immediate response was “Don’t stretch me out on the couch.”
[Andrew] Bacevich claims that [America] had a “globalization” strategy in the 1890s and that it was still operative one hundred years later. Then as now, the goal was to create an integrated international order that offered no barriers to the flow of goods, capital, and ideas, and that is administered by the United States.
The German philosopher Hegel referred to this as “negative identity,” the process of creating an identity for yourself by defining yourself against something. Ultimately, he said, it never works, for to say “I am not that” is at root empty; it doesn’t tell you who you actually are, and in essence enables you to hide from that question.
When you get down to it, globalization, besides being an updated euphemism for imperialism, is not much more than the elite version of shopping.
That September [2002], the White House released the “National Security Strategy” (NSS) … We shall “rid the world of evil”, it fatuously declares; we shall act preemptively; we shall act alone if necessary; and w shall decide who is or is not an enemy, and deserving of “regime change”. In a word, we are going to militarily rearrange the world to suit ourselves. The war on Iraq began almost exactly six months later.
Hendrik Hertzberg of The New Yorker argues that the NSS was a “vision of what used to be called, when we believed it to be the Soviet ambition, world domination.” The document, he claimed was a prescription for a benevolent American dictatorship, as well as for perpetual war. A regime in which the cops have to answer only to themselves, he pointed out, had a name: police state.
In the case of the Bush Doctrine, coupled with the Bush administration’s assault on civil liberties, I think it can be argued that we have been in the midst of a slow-motion coup d’êtat, one that has, in fact, been building since the late seventies, and that can now, in the wake of the 2004 presidential election, finalize its program for a one-party system and a theocratic plutocracy.
To realize their dream of a pax Americana, Wolfowitz, Rumsfeld, Cheney, et al. relied in the 1990s on a number of think tanks and front groups that have interlocking directorates and shared origins in those earlier organizations: the American Enterprise Institute, the Center for Security Policy, and the Center for Strategic and International Studies, among others. They provided the Bush Jr. administration with policy advice and personnel. They also relied on right-wing media empires to blanket the public space with their message, in much the same way – if more powerfully – that the yellow press of Hearst and Pulitzer did during the Spanish-American War. Thus Rupert Murdoch disseminates propaganda via Fox News, and the Weekly Standard is a mouthpiece for defense establishment intellectuals (for instance, Richard Perle, who is also a fellow of the American Enterprise Institute). There is also the National Interest and the Washington Times (the latter owned by the Reverend Sun Myung Moon), which also owns the UPI newswire. The result is a “seamless propaganda machine” that has effectively destroyed public discourse in the United States, to the point that we now dwell in a kind of right-wing propagandistic fog.
When individuals “get religion” – and there is really no other name for the Manichaean anticommunism that gripped America during the Cold War – reason and even common decency typically fly out the window, and the results are frequently horrific.
Our basic Middle Eastern policy is by now fully transparent to the Islamic world: the United States supports whoever serves and extends its power, and that can change at a moment’s notice.
On 1 November 1983 Secretary of State George Shultz received intelligence reports showing that Iraq was using chemical weapons almost daily. The following February, Iraq used large amounts of mustard gas and also the lethal never agent tabun (this was later documented by the United Nations); Reagan responded (in November) by restoring diplomatic relations with Iraq. He and Bush Sr. also authorized the sale of poisonous chemicals, anthrax, and bubonic plague.
An intellectual lightweight who didn’t really know what he was doing, Bush Sr. was quickly pushed aside by history after he had fulfilled his role as a catalyst for certain events. By the time his son came to power, the new world order – that is, global American hegemony and the final phase of empire – was pretty much in place. Being a lightweight – or a vacuous marionette, in George Jr.’s case – was not a liability but actually an asset; that Bush Jr. was (is) a hollow mouthpiece for a self-destructive imperial project is an arrangement that makes the project all that much easier to fulfill. That “he’s a real nowhere man” is not an obstacle for a nation sliding into chaos while it is trying to convince itself that it is in charge of the world. Indeed, it’s a perfect fit.
The “coalition” bombardment of Iraq began on 17 January 1991 (Baghdad time) and went on for forty-three days … As many as 200,000 people died. Targets chosen included water and sewage treatment plants, electrical generating plants, oil refineries, transportation networks, factories, bridges, roads, and irrigation systems, much of which bombing constituted violations of international law … There was also a kind of demonic violence exercised against retreating Iraqi forces, who were massacred in flight on February 26-27, after a cease-fire was already in place (also a war crime, in violation of the Fourth Geneva Convention).
… as philosopher Douglas Kellner points out, there was really no single reason that the United States went to war; rather, it was “overdetermined”, a confluence of political, economic, and military considerations all coming together. Yet the most suspicious aspect of the whole affair, according to foreign policy expert Christopher Layne, was the Bush administration’s inability to articulate a coherent rationale for it, which suggests that the core reason lay in the values and premises of the foreign policy elite – principles that they themselves couldn’t clearly articulate – regarding the concept of a new world order.
But whatever the U.S. policy has been on the [West Bank] settlement question, the one thing the United States has decidedly not done is force the issue by threatening to pull the plug on the huge amount of foreign aid it gives Israel each year. The reason for this lies in the latter’s role as our proxy in the Middle East.
The Nixon Doctrine – that certain countries in key regions of the world would play the role of “local police” under the direction of the U.S. ….
And because Israel serves as America’s proxy, supposedly protecting U.S. economic and strategic interests; because Muslims the world over know about the $3 billion subsidy and where Israeli weaponry comes from; because they see the United States consistently voting against the Palestinians, and for the Israelis, in the United Nations, even on human rights issues – for all these reasons, they despise the United States, and cite the Israeli-Palestinian conflict as the key sticking point in their relations with the West.
The enemy – “evil” – can never be defeated by definition; there are no possible criteria for what a victory would consist of.
As the British journalist George Monbiot predicted even before the “National Security Strategy” was issued by the White House in September 2002, “If the U.S. were not preparing to attach Iraq, it would be preparing to attack another nation. The U.S. will go to war because it needs a country with which to go to war.”
… when a powerful nation can pick fights only with the small and the weak, it is because appearances to the contrary, it is weak itself.
… on 19 July 2004 Newsweek broke the story that the White House and the Justice Department had, for several months, been discussing the possibility of postponing the November 2 presidential elections, which would have been a first in American history, if it had come to pass. If power at all costs is the game, then democratic elections, protection against torture, civil liberties – all of the things we used to take for granted – become expendable, and practically overnight. As America morphed from a republic into an empire, these sorts of changes began to occur quite naturally, the unthinkable became perfectly thinkable, after all. Nor have most Americans, it must be said, been overly concerned about this new direction in which we are moving. Indeed, a large percentage of them are probably not even aware of it.
Two days after 9/11, Chalmers Johnson remarked in an interview, “I know it sounds cruel to say, but the people of New York were collateral damage of American foreign policy.”
In very rough terms, the central drama of American history is that of an expanding capitalist economy that gained momentum, moving faster and faster, feeding greedily on technological innovation (especially after World War II), eventually steamrolling all other values except those of a market economy, and heavily influencing U.S. foreign policy in its wake.
Our typical idea of the perfect vacation is to go somewhere that has escaped the ravages of “progress”, or that can create the illusion of having done so, because we are disgusted by urban decay and suburban sprawl and meaningless jobs to which we commute an hour or more every day.
“It has been our fate as a nation,” wrote Richard Hofstadter, “not to have ideologies, but to be one.” Americanism, in short: that is our religion.
As Clay McShane points out in Down the Asphalt Path, trolleys contradicted basic American values. They were dirty and overcrowded and made it impossible for the middle class to isolate itself from the lower classes – blacks and immigrants in particular. Meanwhile, by 1932 General Motors formed a consortium of tire, oil, and highway companies to buy and then shut down streetcar systems, bribing local officials when necessary. In the next quarter century, as 1974 Senate antitrust hearings revealed, GM, by means of monopolies and interlocking directorates, killed off more than a hundred electric surface rail systems in forty-five states.
From a European point of view, says sociologist Ray Oldenburg, American suburbs are like prisons. There is no contact between households, and one rarely knows one’s neighbors. There are no places to walk or cafes to sit where people drop in and socialize or read the newspaper.
Portland politics does not revolve around race because the place is one of the whitest cities around, and Oregon one of the whitest states. Given the absence of the “white flight” factor endemic to much of the United States, there hasn’t been that great a motivation for suburban housing in the greater Portland area.
The truth is that cities and civilization are nearly synonymous, and if the former die out, so do the latter. Nor does renaming a phenomenon change it. Techno-oriented or not, the new suburbs continue the trend of racial and class segregation; have not become independent economic entities; are destructive of the environment; epitomize the culture of consumption; and lack the diversity, cosmopolitanism, political culture, and public life that real cities have. The ethos of the technocity remains what the suburban ethos has always been: resistance to heterogeneity, and the desire to live apart.
.. the sad fact is that daily American life contains a great amount of violence and ignorance and is pervaded by a lot of (repressed) alienation and spiritual emptiness.
As Fareed Zakaria notes, the sacred cow in the United States is the American people, to which politicians have to pay ritual homage if they value their careers. No matter how manifestly stupid the people’s behavior is, American politician praise their sagacity. Uttering the phrase, “the American people”, says Zakaria, is tantamount to announcing a divine visitation; anything has the force of biblical revelation if it is ascribed to this mystical, all-knowing entity.
It seems to me that the people do get the government they deserve, and even beyond that, the government who they are, so to speak.
Shopping, of course, is a pretty pathetic religion, but if “God” can be said to be where someone puts most of their attention, then the data are in. Americans spend far more time in shopping malls that in church, for example, and by 1987 the country had more malls than high schools.
The basic perception of Americans from the outside is that we are children, adolescents at best, and Bush is just such a person.
Those of us who now have different values from the country may have to look elsewhere for hope, quality, humanism, and – possibly – freedom, which is not exactly what we had in mind when we were growing up.
Note that since World War II, we have avoided taking on an equal power. Our engagement with the Soviet Union itself was a balancing act involving the (often judicious) use of diplomacy. When we actually attacked, it was at the periphery: Korea (a stalemate); Vietnam (a defeat). Otherwise, the engagement consisted of covert operations against virtually defenseless nations or massive attacks on puny countries or tinpot dictators (Grenada, Panama, Iraq, and so on).
Leaving its abysmal record on human rights aside, China is beginning to resemble the United States in Mandarin. It seems to have no larger vision, and there is absolutely no indications that its emergence as a superpower will herald a better world.
So many Americans posses what might be called a kind of “life stupidity”: they haven’t a clue as to what the good life really is. Like Edward G. Robinson in Key Largo, they think it amounts to a single word: more.
… former Wall Street Journal reported Michael Ybarra, in Washington Gone Crazy, demonstrates quite clearly that the anti-Communist hysteria of the late 1940s and 1950s was not really a response to espionage or an external threat, but more fundamentally “a conservative reaction to the New Deal,” a long-standing series of resentments that included “rural rancor toward urban cities, nativist dread of encroaching minorities, fundamentalist anxieties over the spread of secular values,” and the like. When you add to these the contemporary hatred of knowledge and Enlightenment thinking, and the subliminal awareness that we have become unmoored and are basically failing as a nation, you have a rather potent brew on your hands.
QUOTATIONS
Robert Bellah
Our material success is our punishment, in terms of what that success has done to the natural environment, our social fabric, and our personal lives.
Cicero
Not to know what happened before one was born is always to be a child.
Samuel Huntington
The West won the world not by its superiority in its ideas or values or religion … but rather by its superiority in applying organized violence. Westerners often forget this fact; non-Westerners never do.
H.L. Mencken
As democracy is perfected, the office of president represents, more and more clearly, the inner soul of the people. On some great and glorious day the plain folks of the land will reach their heart’s desire at last and the White House will be adorned by a downright moron.
Emmanuel Todd
Theatrical military activism against inconsequential rogue states … is a sign of weakness, not of strength … This is classic for a crumbling system … The final glory is militarism.
Polly Toynbee
God’s chosen people, uniquely blessed, nurture a self-image almost as deranged in its profound self-delusion as the old Soviet Union. The most advanced … nation on earth knows nothing of itself, irony-free and blind to the world around it.
Sharon Zukin
The seduction of shopping is not about buying goods. It’s about dreaming of a perfect society and a perfect self.
EXCERPTS
In his famous essay of 1784, “What is Enlightenment?”, the German philosopher Immanuel Kant wrote, “Enlightenment is man’s release from his self-incurred tutelage,” which he defined as his “inability to make use of his understanding without direction from another.” Sapere aude!, cried Kant; “have the courage to use your own reason! – that is the motto of enlightenment.”
Quite honestly, we may be only one more terrorist attack away from a police state.
Despite the unifying patriotic rhetoric that permeates the United States, on some level Americans are not really fooled; at bottom, each person knows he or she must continually “reinvent themselves,” which is to say, go it alone. America is the ultimate anti-community.
American citizens cannot choose not to participate in the utterly fluid, high-pressure society that the United States has become. Liquid modernity is, in short, quite rigid: a world of compulsive self-determination.
On the grassroots level of people’s working lives, this merger of our identities with the economy is surely one of the most destructive aspects of the new globalized world order.
The Italian political theorist Antonio Gramsci pointed out long ago that if you capture people’s minds, their hands will follow. He called this “hegemony”, the symbolic level of the dominant culture that convinces people – the evidence of their lives notwithstanding – that this is the best of all possible worlds.
… “one dollar, one vote”, which is actually the description of a plutocracy.
Globalization is our destiny; it is, in effect, the final phase of capitalism. We did not evolve to this place by accident, and short of massive civilizational breakdown, there seems to be now way to alter this trajectory – not even slightly.
In the absence of broad structural awareness, alternatives to a world characterized by liquid modernity don’t have much of a chance. It is also the case that the absence of such alternatives is our consciousness is an inherent feature of this world. In such a context, anything truly different, and certainly anything truly creative, has to swim against an enormous tide of commercial garbage.
The fact is that liquid modernity has a strongly addictive quality to it: its participants are often convinced that death is actually life. In “The Numbing of the American Mind,” Thomas de Zengotita points out that it constitutes “a vast goo of meaningless stimulation.”
… the more money moves to the center of our lives, the more cynical we become about higher values. This … generates a culture of sensation, a longing for speed and excitement, because natural excitement is increasingly absent.
Modern American childhood … is for the most part an education in shopping.
The upshot of all of this is that school is turned into a venue for corporate and consumerist indoctrination – with the blessing of many schools and probably most of society.
The reason shows such as Seinfeld or Friends were so popular is that they depicted community situations – i.e., ones in which people hang out together on a daily basis and have a shared history. The irony of millions of isolated Americans sitting home alone and vicariously participating in a group experience that they themselves will never have, because they will never have it, hardly needs comment …
In what other context would we expect to find “reality” shows on TV, such as Survivor, in which screwing the other person is the name of the game, and which millions find vastly entertaining.
… “social capital”, the connections among individuals that are based on reciprocity and trust.
Shopping malls are now America’s most distinctive public space, and mall culture is about being in the presence of others, but not in their company.
… it is precisely in the declining phase of a civilization that it beats the drum of self-congratulation most fiercely.
Negative freedom … is essentially the freedom to be left alone. Societies without this type of freedom tend to be tribal (or organic) in nature, heavily dominated by custom and tradition. In those cultures, the separation of church and state – a mainstay of secular democracy – is usually absent.
As a California migrant worker once remarked to his family, on a return visit south of the border over the Christmas holiday, “The gringos don’t like to be reminded that they are corpses.”
… Osama’s laundry list of grievances … in particular the fact that the United States has inherited the mantle and pattern of nineteenth-century European imperialism: military garrisons, economic control, support for brutal leaders, exploitation of natural resources.
Beginning with the Wilson administration, taxes collected for individuals were used to provide corporations with loans and subsidies for overseas expansion.
Michael Hunt defines ideology as a structure of meaning that is part of the culture – so much a part, in our own case, that we take it for granted, are not really aware of it, and regard other ideologies as aberrant.
Americans still live in a world in which Anglos are on top, Europeans follow, and the Third (read: nonwhite) World sits at the bottom … Plainly put, Americans don’t respect cultural patterns different from their own, and this has facilitated an imperial foreign policy.
The American Dream involves something more comprehensive than just making money … it includes Americans’ vision of themselves as bringing freedom and the American way of life to the world, being atop a racial hierarchy (although this is no longer expressed overtly), and keeping political revolution at bay.
Across much of Asia and Latin America, our allies cared nothing for democracy; their allegiance was to our dollars, not to our values. Nor did we care, so long as they let us install military bases and said the “right” things.
Recall what [George] Kennan wrote: that the USSR viewed the outside world as hostile, was persuaded of its own doctrinaire rightness, insisted on the elimination of all competing powers and ideologies, believed that no opposition to them could possibly have any merit, and saw their regime as the only true one “in a dark and misguided world.” Let’s not kid ourselves: it would be hard to find a better description of American postwar foreign policy, right down to today.
It is this, to my mind, that makes [Carter] so unusual; it sets him off from presidents such as Reagan or Bush Jr. – men who were (are) very doctrinaire and who confuse(d) strength with rigidity (the American public does as well). Carter accepted compromises and contradictions when necessary, and saw the foreign policy arena as one necessarily fraught with conflict and inconsistency. Allied with this, he did not think in oppositional terms, and since that is all the media and public seem to be able to do, his message got lost.
It is no accident that [Carter] was defeated by an actor, a not terribly astute, sloganeering individual with an opposite modus operandi. Popularity with the media was at the top of Reagan’s list. He was not interested in the substantive details of foreign policy; he probably couldn’t even understand them. What interested the fortieth president was rhetoric, public appearances, and ceremonial duties. He had no intellectual curiosity whatsoever; his political philosophy amounted to little more than “us good, them bad”, and that was basically what most of the American people wanted to hear.
We love our large, energy-inefficient vehicles, and don’t seem to be too preoccupied with the fact that other peoples of the world have to die in large numbers so that we can live an extravagant and wasteful lifestyle.
Americans as a people don’t really like to look inward. Our feelings on the subject are much closer to, say, Bush Sr. than to Jimmy Carter. Whenever the elder Bush was asked probing questions, his immediate response was “Don’t stretch me out on the couch.”
[Andrew] Bacevich claims that [America] had a “globalization” strategy in the 1890s and that it was still operative one hundred years later. Then as now, the goal was to create an integrated international order that offered no barriers to the flow of goods, capital, and ideas, and that is administered by the United States.
The German philosopher Hegel referred to this as “negative identity,” the process of creating an identity for yourself by defining yourself against something. Ultimately, he said, it never works, for to say “I am not that” is at root empty; it doesn’t tell you who you actually are, and in essence enables you to hide from that question.
When you get down to it, globalization, besides being an updated euphemism for imperialism, is not much more than the elite version of shopping.
That September [2002], the White House released the “National Security Strategy” (NSS) … We shall “rid the world of evil”, it fatuously declares; we shall act preemptively; we shall act alone if necessary; and w shall decide who is or is not an enemy, and deserving of “regime change”. In a word, we are going to militarily rearrange the world to suit ourselves. The war on Iraq began almost exactly six months later.
Hendrik Hertzberg of The New Yorker argues that the NSS was a “vision of what used to be called, when we believed it to be the Soviet ambition, world domination.” The document, he claimed was a prescription for a benevolent American dictatorship, as well as for perpetual war. A regime in which the cops have to answer only to themselves, he pointed out, had a name: police state.
In the case of the Bush Doctrine, coupled with the Bush administration’s assault on civil liberties, I think it can be argued that we have been in the midst of a slow-motion coup d’êtat, one that has, in fact, been building since the late seventies, and that can now, in the wake of the 2004 presidential election, finalize its program for a one-party system and a theocratic plutocracy.
To realize their dream of a pax Americana, Wolfowitz, Rumsfeld, Cheney, et al. relied in the 1990s on a number of think tanks and front groups that have interlocking directorates and shared origins in those earlier organizations: the American Enterprise Institute, the Center for Security Policy, and the Center for Strategic and International Studies, among others. They provided the Bush Jr. administration with policy advice and personnel. They also relied on right-wing media empires to blanket the public space with their message, in much the same way – if more powerfully – that the yellow press of Hearst and Pulitzer did during the Spanish-American War. Thus Rupert Murdoch disseminates propaganda via Fox News, and the Weekly Standard is a mouthpiece for defense establishment intellectuals (for instance, Richard Perle, who is also a fellow of the American Enterprise Institute). There is also the National Interest and the Washington Times (the latter owned by the Reverend Sun Myung Moon), which also owns the UPI newswire. The result is a “seamless propaganda machine” that has effectively destroyed public discourse in the United States, to the point that we now dwell in a kind of right-wing propagandistic fog.
When individuals “get religion” – and there is really no other name for the Manichaean anticommunism that gripped America during the Cold War – reason and even common decency typically fly out the window, and the results are frequently horrific.
Our basic Middle Eastern policy is by now fully transparent to the Islamic world: the United States supports whoever serves and extends its power, and that can change at a moment’s notice.
On 1 November 1983 Secretary of State George Shultz received intelligence reports showing that Iraq was using chemical weapons almost daily. The following February, Iraq used large amounts of mustard gas and also the lethal never agent tabun (this was later documented by the United Nations); Reagan responded (in November) by restoring diplomatic relations with Iraq. He and Bush Sr. also authorized the sale of poisonous chemicals, anthrax, and bubonic plague.
An intellectual lightweight who didn’t really know what he was doing, Bush Sr. was quickly pushed aside by history after he had fulfilled his role as a catalyst for certain events. By the time his son came to power, the new world order – that is, global American hegemony and the final phase of empire – was pretty much in place. Being a lightweight – or a vacuous marionette, in George Jr.’s case – was not a liability but actually an asset; that Bush Jr. was (is) a hollow mouthpiece for a self-destructive imperial project is an arrangement that makes the project all that much easier to fulfill. That “he’s a real nowhere man” is not an obstacle for a nation sliding into chaos while it is trying to convince itself that it is in charge of the world. Indeed, it’s a perfect fit.
The “coalition” bombardment of Iraq began on 17 January 1991 (Baghdad time) and went on for forty-three days … As many as 200,000 people died. Targets chosen included water and sewage treatment plants, electrical generating plants, oil refineries, transportation networks, factories, bridges, roads, and irrigation systems, much of which bombing constituted violations of international law … There was also a kind of demonic violence exercised against retreating Iraqi forces, who were massacred in flight on February 26-27, after a cease-fire was already in place (also a war crime, in violation of the Fourth Geneva Convention).
… as philosopher Douglas Kellner points out, there was really no single reason that the United States went to war; rather, it was “overdetermined”, a confluence of political, economic, and military considerations all coming together. Yet the most suspicious aspect of the whole affair, according to foreign policy expert Christopher Layne, was the Bush administration’s inability to articulate a coherent rationale for it, which suggests that the core reason lay in the values and premises of the foreign policy elite – principles that they themselves couldn’t clearly articulate – regarding the concept of a new world order.
But whatever the U.S. policy has been on the [West Bank] settlement question, the one thing the United States has decidedly not done is force the issue by threatening to pull the plug on the huge amount of foreign aid it gives Israel each year. The reason for this lies in the latter’s role as our proxy in the Middle East.
The Nixon Doctrine – that certain countries in key regions of the world would play the role of “local police” under the direction of the U.S. ….
And because Israel serves as America’s proxy, supposedly protecting U.S. economic and strategic interests; because Muslims the world over know about the $3 billion subsidy and where Israeli weaponry comes from; because they see the United States consistently voting against the Palestinians, and for the Israelis, in the United Nations, even on human rights issues – for all these reasons, they despise the United States, and cite the Israeli-Palestinian conflict as the key sticking point in their relations with the West.
The enemy – “evil” – can never be defeated by definition; there are no possible criteria for what a victory would consist of.
As the British journalist George Monbiot predicted even before the “National Security Strategy” was issued by the White House in September 2002, “If the U.S. were not preparing to attach Iraq, it would be preparing to attack another nation. The U.S. will go to war because it needs a country with which to go to war.”
… when a powerful nation can pick fights only with the small and the weak, it is because appearances to the contrary, it is weak itself.
… on 19 July 2004 Newsweek broke the story that the White House and the Justice Department had, for several months, been discussing the possibility of postponing the November 2 presidential elections, which would have been a first in American history, if it had come to pass. If power at all costs is the game, then democratic elections, protection against torture, civil liberties – all of the things we used to take for granted – become expendable, and practically overnight. As America morphed from a republic into an empire, these sorts of changes began to occur quite naturally, the unthinkable became perfectly thinkable, after all. Nor have most Americans, it must be said, been overly concerned about this new direction in which we are moving. Indeed, a large percentage of them are probably not even aware of it.
Two days after 9/11, Chalmers Johnson remarked in an interview, “I know it sounds cruel to say, but the people of New York were collateral damage of American foreign policy.”
In very rough terms, the central drama of American history is that of an expanding capitalist economy that gained momentum, moving faster and faster, feeding greedily on technological innovation (especially after World War II), eventually steamrolling all other values except those of a market economy, and heavily influencing U.S. foreign policy in its wake.
Our typical idea of the perfect vacation is to go somewhere that has escaped the ravages of “progress”, or that can create the illusion of having done so, because we are disgusted by urban decay and suburban sprawl and meaningless jobs to which we commute an hour or more every day.
“It has been our fate as a nation,” wrote Richard Hofstadter, “not to have ideologies, but to be one.” Americanism, in short: that is our religion.
As Clay McShane points out in Down the Asphalt Path, trolleys contradicted basic American values. They were dirty and overcrowded and made it impossible for the middle class to isolate itself from the lower classes – blacks and immigrants in particular. Meanwhile, by 1932 General Motors formed a consortium of tire, oil, and highway companies to buy and then shut down streetcar systems, bribing local officials when necessary. In the next quarter century, as 1974 Senate antitrust hearings revealed, GM, by means of monopolies and interlocking directorates, killed off more than a hundred electric surface rail systems in forty-five states.
From a European point of view, says sociologist Ray Oldenburg, American suburbs are like prisons. There is no contact between households, and one rarely knows one’s neighbors. There are no places to walk or cafes to sit where people drop in and socialize or read the newspaper.
Portland politics does not revolve around race because the place is one of the whitest cities around, and Oregon one of the whitest states. Given the absence of the “white flight” factor endemic to much of the United States, there hasn’t been that great a motivation for suburban housing in the greater Portland area.
The truth is that cities and civilization are nearly synonymous, and if the former die out, so do the latter. Nor does renaming a phenomenon change it. Techno-oriented or not, the new suburbs continue the trend of racial and class segregation; have not become independent economic entities; are destructive of the environment; epitomize the culture of consumption; and lack the diversity, cosmopolitanism, political culture, and public life that real cities have. The ethos of the technocity remains what the suburban ethos has always been: resistance to heterogeneity, and the desire to live apart.
.. the sad fact is that daily American life contains a great amount of violence and ignorance and is pervaded by a lot of (repressed) alienation and spiritual emptiness.
As Fareed Zakaria notes, the sacred cow in the United States is the American people, to which politicians have to pay ritual homage if they value their careers. No matter how manifestly stupid the people’s behavior is, American politician praise their sagacity. Uttering the phrase, “the American people”, says Zakaria, is tantamount to announcing a divine visitation; anything has the force of biblical revelation if it is ascribed to this mystical, all-knowing entity.
It seems to me that the people do get the government they deserve, and even beyond that, the government who they are, so to speak.
Shopping, of course, is a pretty pathetic religion, but if “God” can be said to be where someone puts most of their attention, then the data are in. Americans spend far more time in shopping malls that in church, for example, and by 1987 the country had more malls than high schools.
The basic perception of Americans from the outside is that we are children, adolescents at best, and Bush is just such a person.
Those of us who now have different values from the country may have to look elsewhere for hope, quality, humanism, and – possibly – freedom, which is not exactly what we had in mind when we were growing up.
Note that since World War II, we have avoided taking on an equal power. Our engagement with the Soviet Union itself was a balancing act involving the (often judicious) use of diplomacy. When we actually attacked, it was at the periphery: Korea (a stalemate); Vietnam (a defeat). Otherwise, the engagement consisted of covert operations against virtually defenseless nations or massive attacks on puny countries or tinpot dictators (Grenada, Panama, Iraq, and so on).
Leaving its abysmal record on human rights aside, China is beginning to resemble the United States in Mandarin. It seems to have no larger vision, and there is absolutely no indications that its emergence as a superpower will herald a better world.
So many Americans posses what might be called a kind of “life stupidity”: they haven’t a clue as to what the good life really is. Like Edward G. Robinson in Key Largo, they think it amounts to a single word: more.
… former Wall Street Journal reported Michael Ybarra, in Washington Gone Crazy, demonstrates quite clearly that the anti-Communist hysteria of the late 1940s and 1950s was not really a response to espionage or an external threat, but more fundamentally “a conservative reaction to the New Deal,” a long-standing series of resentments that included “rural rancor toward urban cities, nativist dread of encroaching minorities, fundamentalist anxieties over the spread of secular values,” and the like. When you add to these the contemporary hatred of knowledge and Enlightenment thinking, and the subliminal awareness that we have become unmoored and are basically failing as a nation, you have a rather potent brew on your hands.
QUOTATIONS
Robert Bellah
Our material success is our punishment, in terms of what that success has done to the natural environment, our social fabric, and our personal lives.
Cicero
Not to know what happened before one was born is always to be a child.
Samuel Huntington
The West won the world not by its superiority in its ideas or values or religion … but rather by its superiority in applying organized violence. Westerners often forget this fact; non-Westerners never do.
H.L. Mencken
As democracy is perfected, the office of president represents, more and more clearly, the inner soul of the people. On some great and glorious day the plain folks of the land will reach their heart’s desire at last and the White House will be adorned by a downright moron.
Emmanuel Todd
Theatrical military activism against inconsequential rogue states … is a sign of weakness, not of strength … This is classic for a crumbling system … The final glory is militarism.
Polly Toynbee
God’s chosen people, uniquely blessed, nurture a self-image almost as deranged in its profound self-delusion as the old Soviet Union. The most advanced … nation on earth knows nothing of itself, irony-free and blind to the world around it.
Sharon Zukin
The seduction of shopping is not about buying goods. It’s about dreaming of a perfect society and a perfect self.
Friday, October 3, 2008
Prediction of US Financial Collapse - Jim Willie
The Big Bail Out probably won't succeed, but it might by the Powers That Be time until after the new President takes office to mollify the US Public. Here are some detailed projections of what is likely to happy from Jim Willie:
http://www.financialsense.com/fsu/editorials/willie/2008/1002.html
One special note: There is good reason to expect at least one major banking "holiday" ("lock down" is a better description) coming shortly. This is what happened in 1933 immediately after Roosevelt took office. Sometime between now and, say, February, we should expect the same thing - but expanded to cover banks and credit cards.
Keep your eyes and mind open,
Michael Childress
http://www.financialsense.com/fsu/editorials/willie/2008/1002.html
One special note: There is good reason to expect at least one major banking "holiday" ("lock down" is a better description) coming shortly. This is what happened in 1933 immediately after Roosevelt took office. Sometime between now and, say, February, we should expect the same thing - but expanded to cover banks and credit cards.
Keep your eyes and mind open,
Michael Childress
Wednesday, October 1, 2008
Engdahl's Take on the Big Bailout
Who are all the players involved in the Big Bank Bailout to be voted again, today, 1 October 2008? Are there ANY with no vested interests? Probably not. Here's some background:
http://www.financialsense.com/editorials/engdahl/2008/1001.html
Keep your eyes and mind open,
Michael Childress
http://www.financialsense.com/editorials/engdahl/2008/1001.html
Keep your eyes and mind open,
Michael Childress
Sunday, September 28, 2008
Crisis Investing for the Rest of the '90s by Douglas Casey - Excerpts
Crisis Investing for the Rest of the '90s. Douglas Casey. 1995. ISBN-13: 978-0806516127
EXCERPTS
At a minimum we're headed for a financial collapse. A financial collapse does not mean that any real assets disappear. It means that assets change ownership. The buildings, factories, machines, and technology that were created during good times do not vanish just because the stocks, bonds, and bank accounts that represent them are devalued or dishonored. Nor does the desire of people to create and produce vanish when their finances go bad; instead they may become even more motivated.
My belief ... is that when this business cycle peaks and the market distortions and the misallocations of capital forced by the government's intervention in the economy are finally unwound, the consequences will probably reach far beyond the economic sphere.
Why should a depression occur now? A depression could have materialized out of any of the credit crunches in the last three decades, including the financial squeezes of 1962, 1966, 1970, 1974, 1980 and 1982. With each episode inflation went higher, interest rates rose, unemployment increased, and the bankruptcies were bigger. Near bankruptcies (such as Lockheed, New York City, Chrysler, Continental Bank) became more numerous and dangerous and more likely to demand a government rescue. But each time we experienced just a recession that the government ended before the underlying distortions in the economy had been eliminated. And each time the authorities succeeded in preventing a financial collapse, the system became more carelessly confident of government doing so the next time.
The depression of the 1930s was deepened , and was prolonged for years, by Hoover's and Roosevelt's interventionist policies. The Work Projects Administration (WPA), the National Recovery Administration (NRA), the Tennessee Valley Authority (TVA), the Federal Deposit Insurance Corporation (FDIC) and numerous other New Deal creations not only prevented the economy from cleansing itself, they also produced new distortions in the economy. Roosevelt's "solutions" to the depression were almost identical to Hoover's, but Roosevelt's public relations was far superior, enabling him to position himself as the savior of capitalism even while he lengthened the depression.
Socialism is not a serious intellectual challenge. It persists because it expresses so well and underlying set of spiritual and psychological problems. Few reasonable people who have actually looked at the historic results of socialism honestly believe government intervention is the solution to economic problems, rather than the cause. But how someone reacts to economic ideas is much more a question of values and psychology than of intelligence and knowledge.
In fact, most "economists" turn out to be merely political apologists. They prescribe the way they would like the world to work and tailor their theories to help politicians demonstrate the virtue and necessity of their quest for more power.
Politics deals with who decides who gets what, how, why, and when. It deals with how men cooperate with, and compete against, one another in the process not of producing wealth, but of taking it.
Confidence is considered a critical commodity today, because the dollar and the economy itself rest on confidence alone. Yet confidence can vanish like a pile of feathers in a hurricane, once the extent of our problems becomes clear. Confidence in the economy is a very shaky foundation upon which to build your future. I suggest you lose that confidence now and beat the last-minute rush.
Every thinking person must be his own economist, simply because everyone needs a worldview to deal with reality. You can't delegate it to an "expert" any more than you can delegate the formulation of your personal philosophy and ethics to someone else. You need to decide whether we're to experience prosperity or a depression, and how you want to prepare.
A depression is an economic crisis with both danger and opportunity. Everyone will feel the danger, but those who see the opportunity will profit from the crisis. After all, one function of a depression is to return wealth to its rightful owners ... Disaster-caused depressions destroy wealth and make it harder to produce more. Economically caused depressions, through regulations, make it impossible, or at least unprofitable, for the average person to produce wealth.
A real estate collapse doesn't mean the buildings will tumble. But their prices will and their owners may change. A corporation's bankruptcy doesn't mean that the factories or technology it owned will vanish; they will become the property of a different corporation. A government default on its bonds doesn't mean the country (which is not at all the same thing as the government) is bankrupt. It just means that those who held the bonds are poorer and those who otherwise would have been taxed to pay the bonds are richer. In other words, all the real wealth will still be there, but its ownership will change. And some commodities will become more (or less) valuable relative to other commodities.
Because the banks have just taken in billions of dollars, courtesy of the government, they have plenty of money to lend, and at very low rates. "Interest" is the rental price of money, and with money in such ample supply, the price drops. Like any other business with excess capacity, the bankers have a "special" on money.
A recession follows an inflationary boom when the market tries to readjust to normal patterns of supply and demand. It's a painful period when the free market corrects the misallocation of resources encouraged by government inflation. People have more of some consumer products than ever, and there is more plant capacity to produce those products, but few people are as well off as they were before the inflation. They're actually less well off than if the government had only taxed them.
The contraction will be called a recession if the government acts quickly and reinflates the money supply in time to prevent complete collapse. It will be called a depression if the government decides not to act, acts too late, or acts with too little reinflation. In other words, it will be a depression if the government allows the economy to cleanse itself of the distortions that have occurred due to earlier government intervention and inflation; it will be a recession if the government steps in before the liquidation is complete.
At some point, the economy is no longer controlled by individual citizens in the marketplace but by government "planners", who find they have only one of two alternatives: stop "stimulating" and permit a full-scale credit collapse, or continue stimulating until the dollar loses all value and society breaks down. Depending on which they choose, we will have a depression characterized by deflation or by hyperinflation.
"Inflation" occurs when the creation of currency outruns the creation of real wealth it can bid for. It isn't caused by price increases; rather it causes price increases. Inflation is not caused by the butcher, the baker, or the auto maker, although they usually get the blame. On the contrary, by producing real wealth, they fight the effects of inflation. Inflation is the work of the government alone, since government alone controls the creation of dollars.
If taxation is the expropriation of wealth by force, then inflation is its expropriation by fraud.
Money is the means by which all other material goods are valued. It represents, in an objective way, the hours of one's life spent in acquiring it. And if enough money allows one to live life as one wishes, it represents freedom as well. It represents all the good things one hopes to have, do, and provide for others. Money is life concentrated.
Only the rich can afford the legal counsel it takes to weave and dodge through the laws that restrict the masses. The rich can afford the accountants to chart a path through loopholes in the tax law. The rich have the credit to borrow and thereby profit from inflation. The rich can pay to influence how the government distorts the economy, so that the distortions are profitable to them.
Always, and without exception, the most socialistic, or centrally planned, economies have the most unequal distribution of wealth. In those societies the unprincipled become rich, and the rich stay that way, through political power.
At any given moment a fixed amount of capital in the world is available for borrowing. The government is considered the most creditworthy borrower, since it has what amounts to a 100 percent lien on all the wealth in its bailiwick, so it can borrow all it wants, and at the lowest rates. Why should anyone lend to a business, which could go bankrupt, when the government is available? The ultimate result is "crowding out". The potential for real problems first arose in the middle of the 1970s; as of 1991, the government consumed approximately 79 percent of all new credit.
A better term for the underground economy might be the "alternative economy", since "underground" has acquired a somewhat pejorative connotation. The alternative economy, which includes everything from barter of services to the millions who don't file tax returns, obey regulations, or purchase licenses to do business, is simply the untaxed, unregulated free market in action. It runs the way business did in the early part of the century, before the income tax, the Federal Reserve, and most regulatory agencies. In the alternative economy, the sellers earn more, the buyers pay less, and the State is shut out. Everyone wins, except those who are fed by the government.
Being on the wrong side of a bear market is somewhat comparable to the progressive stages of people when they discover they have contracted a terminal disease. First comes denial, then anger and blame, then false hope and grasping at straws, then finally acceptance and resignation. Only then is the market really dead and ready for reincarnation.
Big companies have always had an edge when it comes to manipulating and gaining from the government's regulations and tax rules. In fact, they have often been strong proponents of government intervention, because it can help the established companies stave off new competition. Large corporations have an innate advantage in getting government contracts and otherwise feeding at the public trough. It's much easier for Big Government to deal with Big Business and Big Labor on Big Deals. But the tenor of the times has turned against them; only government has continued to grow, because it alone has the legal power to coerce. Like a cancer, it's reaching its largest size at the very time its host, the Mass Economy, is dying.
Small business is stagnating for several reasons. First, loan capital is tough to come by, even with interest rates very low ... Second, regulatory hassles - everything from sexual harassment liability to making the premises accessible to the handicapped to zero-tolerance environmental policy - have driven the costs, and liability, of doing business beyond the level small outfits can handle ... Third, the associated costs of starting a new business - taxes, license fees, legal fees, medical and other insurance - are far higher than in the past ... All these problems stem from the government. Perversely, they're all likely to get much worse as the malaise of the Greater Depression deepens.
The main reason for shorting stocks is the reason you are in the stock market in the first place: personal profit. There are, of course, risks peculiar to shorting, and I'll cover them below. But on the whole, this is perhaps the single, most-profitable thing you can do in the market year in and year out, in good times and bad.
If "everyone" owns a stock, then all the potential buyers have already bought; and there's only one thing they can do: sell. Perversely, they'll all sell at once.
People invest in mutual funds because they believe the funds relieve them of need to be cautious. They hope the funds will beat the market, which a lot of mutual fund advertising seems to promise. The industry as a whole, however, underperforms the market; that was, you will recall, one of the reasons for the creation of index funds.
When an institution sells, the only likely buyer is another fun; but they'll all be selling together, for the same reasons. That kind of thing can put a market into freefall. Vacuums could develop under stocks with heavy institutional ownership. Their chart patterns would resemble the glide path of an ICBM on re-entry. Index funds will likely lead the way.
Short-term U.S. Treasuries - It's hard to conceive of them defaulting unless there's a domestic revolution or the government loses a major war. That they are redeemable only in paper dollars, which have no intrinsic worth, is beside the point. In today's moving paper fantasy, you must pretend U.S. Treasuries are "good as gold", since they are, by far, the safest way to own dollars.
Bonds should be viewed as vehicles for speculation on the direction of long-term rates, not something for those investors who want safety and capital conservation. They are political footballs that will be passed dozens of times in the years to come by the intellectuals making a game out of "fine tuning" the economy. You can bet that the ball is going to be dropped at some point.
... brokers like to keep things simple rather than risk confusing a customer; they're in sales, not the education business.
Smart places to live might be Nevada or Washington, close to the Oregon border, or in Wyoming, close to the Montana line. You would pay no income tax where you live, but could make all your purchases where no sales tax is levied.
Political jurisdictions compete to provide a favorable environment for corporations. Sound good? It's not, unless you naively think that what's good for management is good for the shareholders. Management prefers jurisdictions where the law keeps the owners from becoming a nuisance. That is why most corporations are headquartered in Delaware; laws in that state make it easy for management to get its way, as opposed to guarding the rights of shareholders. Delaware receives about 20 percent of its budget from the corporation business, and its officials know what side their bread is buttered on.
Most companies subject to takeovers are vulnerable only because their stock price is low relative to their assets. And that happens when the assets are being misallocated and the market has no confidence in management's abilities to correct the error. In fact, a company can usually be acquired only if management owns no more than a token care of stock. And if the managers are not also owners, why should they care what the business is worth, as long as they keep their jobs? Most managers of big corporations own very little stock in them; arguably, that is because they can see it's a poor long-term investment.
Unlike currency, gold cannot lose value because of government mismanagement. On the contrary, it tends to gain value because of government mismanagement.
Gold ... is a matchless crisis hedge. It's the only financial asset that's completely invisible and private. There are no social security numbers stamped on gold coins, and they leave no paper trail when they change hands. Unlike real estate, for instance, a government cannot easily find gold to tax or confiscate. Unlike stocks, gold doesn't represent a value that can be dissipated or mismanaged. Unlike bonds, gold cannot default. And unlike currency, gold cannot be inflated away. There are not many low-risk places for wealth to hide today. But plenty of wealth exists and, as the world's greatest coward, capital will look for a place to hide when things get scary. Gold is the perfect financial asset in times of uncertainty.
The art of investing emphasizes inaction as much as it does action. Success is a long-term proposition, and most of your time should be spent patiently hunting for the fattest prizes, not frenetically chasing after every mangy stray. Given transaction costs and the vagaries of your own mind set, an even-odds bet is inevitably a fool's bet. You want anomalies where risk and reward are heavily weighted in your favor, where the arguments that you'll be right are so compelling that you are almost forced to act.
The most important question about any investment is: What is the downside?
Government quotas, subsidies, supports, taxes, and marketing regulations are the greatest cause of commodities' volatility; they alternatively cause disruptive shortages and wasteful surpluses. Government intervention gives the appearance of stability over the short-run, but at great cost to both the producer and consumer in the long-run. This offers great opportunities to speculators.
Rather than just deregulate, it would be more in character for the powers that be to create the conditions for a famine in order to get prices up to subsidize inefficient farmers. You may think I'm stretching the point. But the U.S. government cause the slaughter and burial of whole herds of livestock, and poured tons of milk in the gutter during the '30s in a futile attempt to raise prices, even while many people couldn't afford to eat.
The world may still be on a honeymoon following the collapse of communism, but it's hardly the end of history. The fundamental cause of war and revolution still exists, namely, politics. And, to a lesser extent, just plain geography.
Most people do not want to hear the bearish argument for real estate, since by far their largest asset is their house. For the average American family a house is much more than a home; it's a combination investment, savings program, tax shelter, and retirement program. A crash in housing prices would be more devaluating than a stock market crash, not only financially but psychologically.
Real estate has traditionally been the most debt-leveraged of all markets. In the United States, few people can buy real estate, and few people can sell, without borrowing money. Getting a mortgage has always been integral to buying a house except for the very rich. The easy availability of cheap mortgages is the most important single reason that real estate prices increased faster than consumer prices from the '50s through the '70s. U.S. real estate prices are built on a pyramid of long-term mortgage money.
You can't hide real estate, which makes it the most taxable of all investments. Many local governments are in deep financial trouble, and property taxes are excellent candidates for "revenue enhancement". Property taxes also suit the envy-driven, tax-the-rich hysteria that is likely to grow as the average person's standard of living declines.
Taxes, like every form of government action, cause distortions and misallocations of capital. Taxes induce people to act in ways they otherwise would not. And, in what will become a desperate quest for revenue, the government will unwind the tax breaks that have favored real estate over many decades. As a result the distortions those breaks caused will also come apart. Artificially high property prices will tumble.
It's one thing to arrive at a conclusion that U.S. property has entered on a long-term bear market. But it is priced in dollars, and it seems an even surer bet that dollars are eventually going to zero. Instead of seeing the mortgage as a means to buy property, it might be a better idea to view a mortgage as a way to short sell the dollar. It's convenient for borrowers, therefore, that the fixed rate mortgage is still available. I don't like the idea of paying interest. I would rather collect it. Nor do I like the idea of being in debt; it limits your options and puts at risk. But fixed-interest debt remains an excellent defense against a collapsing currency.
The speculator provides a public service by offering a bid when otherwise none is available. A speculator simply gives people what they want most of the time. When prices are high and everyone seeks property, he endeavors to keep prices from going even higher by providing a supply. And when prices are low and everyone desperately needs cash, he once again bows to the will of the market. Buying low and selling high is helpful to people when they need cash more than land.
Foreign aid might accurately be described as a transfer from poor people in rich countries to rich people in poor countries.
When going to a place like Mozambique is suggested to most people, their first reaction is they would feel safer in Miami when they want warm weather. But those who buy a dumpy studio apartment in Miami will someday wonder why they didn't go for a large farm on the African coast instead. The reason, of course, is that they are provincial and not very imaginative and probably, alas, belong in Miami.
The failure of Credit Anstalt in Austria, a bank few Americans knew of, sparked the 1929 depression.
Despite recent large sell-offs, Japan's stock and property markets are not cheap. Prices continue to reflect the good times of the last few decades. The next few years will probably be grim enough to shake up price perceptions; views ingrained over many years do not turn on a dime. As with most historic events, Japan's crisis will not bottom out until the collapse of its financial markets is the headline in every magazine and newspaper around the world.
A collapse in Tokyo, therefore, wouldn't just be a story on the evening news; it could be the signal for a worldwide financial and economic catastrophe. There is no rule that says a depression in America has to be made here; everything is imported these days.
Every nation is insufferably nationalistic. Unfortunately, the Japanese and the Americans are two of the worst offenders and believe that anyone who is not one of them is genetically disadvantaged. Moreover, they are radically different cultures, leaving plenty of room for miscommunication, or worse.
The weapons business is the biggest in the world, bigger even than illegal drugs, and the Japanese have almost no participation there. With their tremendous abilities to produce to high standards and innovate, the Japanese should surpass the American, Russian, British, French, and other arms manufacturers as easily as they did the automakers. Arms will, before the end of the decade, be a perfect area to pick up the slack created by dropping consumer goods exports.
As bad as things were in the United States in the '30s, people still had businesses, savings, and farms - and incentives to rebuild. And the system allowed them to start anew. The Russians have none of that. They own little; the state owns everything. And since the state already owns everything, it has nothing to tax.
We're still paying for the Vietnam War, since it was fought with 100 percent borrowed money. $160 billion over about twenty years at about 8 percent compounded is already $640 billion, and growing at about $50 billion a year. The bill for the instant gratification in Iraq will also grow for years.
Military prowess is a poor substitute for the real roots of greatness, or even for economic power, as the Russians have just discovered and as the Germans and Japanese learned in World War II or the Romans found in the late empire. War is the most unpredictable of human activities, has unintended consequences, and can take on a life of its own.
In a just society, law concerns itself with only two matters: contracts (have you done all that you agreed to do?) and torts ( have you encroached upon another's person or property?). There are encompassed by "common law". Common law, determining right and wrong, is based on principles of justice that can be considered universal in societies. That is vastly different from "legislation" or "political law", which is arbitrarily constructed by officials. Legislation mostly deals with what have come to be known as "victimless crimes".
The U.N. Convention against Illicit Traffic in Narcotic Drugs defines money laundering as "the concealment or disguise of the true nature, source, disposition, movement, or ownership of proceeds and includes the movement or conversion of proceeds by electronic transmission." The treaty does not specify that the proceeds need be from any illegal activity; the simple act of protecting your financial privacy leaves you open to sanctions. About seventy nations, including the United States since 1990, are signatories to this treaty, and treaties have the effect of law within the United States.
Some Americans simplistically believe an opposition to the war on drugs amounts to an endorsement of drugs and an unwillingness to see their destructive effects on society eliminated. I see drug use as a debilitating at best and tend to eschew the company of those who use them. But destroying liberty isn't an even remotely acceptable method to discourage drug addiction. Nor is it effective.
Government sponsors untold waste, criminality, and inequality, in every sphere of life it touches, giving little of value in return. Its contributions to the commonweal are wars, pogroms, confiscations, persecutions, taxation, regulation, and inflation. And it's not just some governments of which that's true, although some are clearly much worse than others. It's an inherent characteristic of all government.
Force is the essence of government. But the possession of a monopoly on force almost inevitably requires a territory, and maintaining control of territory is considered the test of a "successful" government. Would any "terrorist" organization be more "legitimate" if it had its own country? Absolutely. Would it be any less vicious or predatory by that fact? No, just as most governments today (the ex-Communist countries and the kleptocracies of the Third World being the best examples), demonstrate. Governments can be much more dangerous than the mobs that gave them birth.
In general, government judicial systems are far more concerned about crimes against the state than crimes against the individual. In China, as the Tiananmen Square revolt demonstrated, the gravest crime consists of agitation for democracy; in the United States, it consists of nonsupport of the government by refusing to pay taxes or obey regulations. And in all cases a show of humility, a respectful attitude, and the renunciation of politically incorrect ideas are required.
In the perverse "real world" of today ... the police, courts, and the military are among the least significant parts of government; moreover, government fails to produce quality products in any other worthwhile area it pursues, such as education. Indeed, its main products are taxation, regulation, inflation, and wealth redistribution, which all eventually destroy their supposed beneficiaries as surely as they do those who are taxed overtly.
Politics is the theory and practice of government. It concerns itself with how force should be applied in controlling people, which is to say, in restricting their freedom. It should be analyzed on that basis.
QUOTATIONS
Bakunin, Michael
Ever since States came into existence, the political world has always been and still continues to be the state for high knavery and unsurpassed brigandage – brigandage and knavery which are held in high honor, since they are ordained by patriotism, by transcendent morality, and by the supreme interest of the State. This explains to us why all the history of ancient and modern States is nothing more than a series of revolting crimes; why present and past kings and ministers of all times and all countries – statesmen, diplomats, bureaucrats, and warriors – if judged from the point of view of simple morality and human justice, deserve a thousand times the gallows or penal servitude. For there is no terror, cruelty, sacrilege, perjury, imposture, infamous transaction, cynical theft, brazen robbery, or foul treason which has not been and is not still being committed daily by representatives of the State.
Lord Byron
Ready money is Aladdin's Lamp.
Edwards, Bo
The Bill of Rights applies to criminal cases. For example, the right to have a lawyer, the right to a trial by jury, and the government must prove its case beyond a reasonable doubt. None of those rights apply in a civil case where the government is bringing a civil forfeiture case against your property.
O'Rourke, P.J.
Every government is a parliament of whores. The trouble is, in a democracy, the whores are us.
Jean-Francois Revel
Authoritarian socialism has failed almost everywhere, but you will not find a single Marxist who will say it has failed because it was wrong or impractical. He will say it has failed because nobody went far enough with it. So failure never proves a myth is wrong.
Nathan Rothschild
Buy when blood is running in the streets.
Paul Samuelson (Nobel laureate, in 1989)
What really counts is results, and there can be no doubt that the Soviet planning system has been a powerful engine for economic growth
Paul Samuelson (Nobel laureate, in 1989)
The Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive.
Mark Skousen
Taxation is the price we pay for failing to build a civilized society. The higher the tax level, the greater the failure. A centrally planned totalitarian state is a complete failure of civilization, while a totally voluntary society is its ultimate success.
Gore Vidal
Free enterprise ended in the United States a good many years ago. Big oil, big steel, big agriculture avoid the open marketplace.
EXCERPTS
At a minimum we're headed for a financial collapse. A financial collapse does not mean that any real assets disappear. It means that assets change ownership. The buildings, factories, machines, and technology that were created during good times do not vanish just because the stocks, bonds, and bank accounts that represent them are devalued or dishonored. Nor does the desire of people to create and produce vanish when their finances go bad; instead they may become even more motivated.
My belief ... is that when this business cycle peaks and the market distortions and the misallocations of capital forced by the government's intervention in the economy are finally unwound, the consequences will probably reach far beyond the economic sphere.
Why should a depression occur now? A depression could have materialized out of any of the credit crunches in the last three decades, including the financial squeezes of 1962, 1966, 1970, 1974, 1980 and 1982. With each episode inflation went higher, interest rates rose, unemployment increased, and the bankruptcies were bigger. Near bankruptcies (such as Lockheed, New York City, Chrysler, Continental Bank) became more numerous and dangerous and more likely to demand a government rescue. But each time we experienced just a recession that the government ended before the underlying distortions in the economy had been eliminated. And each time the authorities succeeded in preventing a financial collapse, the system became more carelessly confident of government doing so the next time.
The depression of the 1930s was deepened , and was prolonged for years, by Hoover's and Roosevelt's interventionist policies. The Work Projects Administration (WPA), the National Recovery Administration (NRA), the Tennessee Valley Authority (TVA), the Federal Deposit Insurance Corporation (FDIC) and numerous other New Deal creations not only prevented the economy from cleansing itself, they also produced new distortions in the economy. Roosevelt's "solutions" to the depression were almost identical to Hoover's, but Roosevelt's public relations was far superior, enabling him to position himself as the savior of capitalism even while he lengthened the depression.
Socialism is not a serious intellectual challenge. It persists because it expresses so well and underlying set of spiritual and psychological problems. Few reasonable people who have actually looked at the historic results of socialism honestly believe government intervention is the solution to economic problems, rather than the cause. But how someone reacts to economic ideas is much more a question of values and psychology than of intelligence and knowledge.
In fact, most "economists" turn out to be merely political apologists. They prescribe the way they would like the world to work and tailor their theories to help politicians demonstrate the virtue and necessity of their quest for more power.
Politics deals with who decides who gets what, how, why, and when. It deals with how men cooperate with, and compete against, one another in the process not of producing wealth, but of taking it.
Confidence is considered a critical commodity today, because the dollar and the economy itself rest on confidence alone. Yet confidence can vanish like a pile of feathers in a hurricane, once the extent of our problems becomes clear. Confidence in the economy is a very shaky foundation upon which to build your future. I suggest you lose that confidence now and beat the last-minute rush.
Every thinking person must be his own economist, simply because everyone needs a worldview to deal with reality. You can't delegate it to an "expert" any more than you can delegate the formulation of your personal philosophy and ethics to someone else. You need to decide whether we're to experience prosperity or a depression, and how you want to prepare.
A depression is an economic crisis with both danger and opportunity. Everyone will feel the danger, but those who see the opportunity will profit from the crisis. After all, one function of a depression is to return wealth to its rightful owners ... Disaster-caused depressions destroy wealth and make it harder to produce more. Economically caused depressions, through regulations, make it impossible, or at least unprofitable, for the average person to produce wealth.
A real estate collapse doesn't mean the buildings will tumble. But their prices will and their owners may change. A corporation's bankruptcy doesn't mean that the factories or technology it owned will vanish; they will become the property of a different corporation. A government default on its bonds doesn't mean the country (which is not at all the same thing as the government) is bankrupt. It just means that those who held the bonds are poorer and those who otherwise would have been taxed to pay the bonds are richer. In other words, all the real wealth will still be there, but its ownership will change. And some commodities will become more (or less) valuable relative to other commodities.
Because the banks have just taken in billions of dollars, courtesy of the government, they have plenty of money to lend, and at very low rates. "Interest" is the rental price of money, and with money in such ample supply, the price drops. Like any other business with excess capacity, the bankers have a "special" on money.
A recession follows an inflationary boom when the market tries to readjust to normal patterns of supply and demand. It's a painful period when the free market corrects the misallocation of resources encouraged by government inflation. People have more of some consumer products than ever, and there is more plant capacity to produce those products, but few people are as well off as they were before the inflation. They're actually less well off than if the government had only taxed them.
The contraction will be called a recession if the government acts quickly and reinflates the money supply in time to prevent complete collapse. It will be called a depression if the government decides not to act, acts too late, or acts with too little reinflation. In other words, it will be a depression if the government allows the economy to cleanse itself of the distortions that have occurred due to earlier government intervention and inflation; it will be a recession if the government steps in before the liquidation is complete.
At some point, the economy is no longer controlled by individual citizens in the marketplace but by government "planners", who find they have only one of two alternatives: stop "stimulating" and permit a full-scale credit collapse, or continue stimulating until the dollar loses all value and society breaks down. Depending on which they choose, we will have a depression characterized by deflation or by hyperinflation.
"Inflation" occurs when the creation of currency outruns the creation of real wealth it can bid for. It isn't caused by price increases; rather it causes price increases. Inflation is not caused by the butcher, the baker, or the auto maker, although they usually get the blame. On the contrary, by producing real wealth, they fight the effects of inflation. Inflation is the work of the government alone, since government alone controls the creation of dollars.
If taxation is the expropriation of wealth by force, then inflation is its expropriation by fraud.
Money is the means by which all other material goods are valued. It represents, in an objective way, the hours of one's life spent in acquiring it. And if enough money allows one to live life as one wishes, it represents freedom as well. It represents all the good things one hopes to have, do, and provide for others. Money is life concentrated.
Only the rich can afford the legal counsel it takes to weave and dodge through the laws that restrict the masses. The rich can afford the accountants to chart a path through loopholes in the tax law. The rich have the credit to borrow and thereby profit from inflation. The rich can pay to influence how the government distorts the economy, so that the distortions are profitable to them.
Always, and without exception, the most socialistic, or centrally planned, economies have the most unequal distribution of wealth. In those societies the unprincipled become rich, and the rich stay that way, through political power.
At any given moment a fixed amount of capital in the world is available for borrowing. The government is considered the most creditworthy borrower, since it has what amounts to a 100 percent lien on all the wealth in its bailiwick, so it can borrow all it wants, and at the lowest rates. Why should anyone lend to a business, which could go bankrupt, when the government is available? The ultimate result is "crowding out". The potential for real problems first arose in the middle of the 1970s; as of 1991, the government consumed approximately 79 percent of all new credit.
A better term for the underground economy might be the "alternative economy", since "underground" has acquired a somewhat pejorative connotation. The alternative economy, which includes everything from barter of services to the millions who don't file tax returns, obey regulations, or purchase licenses to do business, is simply the untaxed, unregulated free market in action. It runs the way business did in the early part of the century, before the income tax, the Federal Reserve, and most regulatory agencies. In the alternative economy, the sellers earn more, the buyers pay less, and the State is shut out. Everyone wins, except those who are fed by the government.
Being on the wrong side of a bear market is somewhat comparable to the progressive stages of people when they discover they have contracted a terminal disease. First comes denial, then anger and blame, then false hope and grasping at straws, then finally acceptance and resignation. Only then is the market really dead and ready for reincarnation.
Big companies have always had an edge when it comes to manipulating and gaining from the government's regulations and tax rules. In fact, they have often been strong proponents of government intervention, because it can help the established companies stave off new competition. Large corporations have an innate advantage in getting government contracts and otherwise feeding at the public trough. It's much easier for Big Government to deal with Big Business and Big Labor on Big Deals. But the tenor of the times has turned against them; only government has continued to grow, because it alone has the legal power to coerce. Like a cancer, it's reaching its largest size at the very time its host, the Mass Economy, is dying.
Small business is stagnating for several reasons. First, loan capital is tough to come by, even with interest rates very low ... Second, regulatory hassles - everything from sexual harassment liability to making the premises accessible to the handicapped to zero-tolerance environmental policy - have driven the costs, and liability, of doing business beyond the level small outfits can handle ... Third, the associated costs of starting a new business - taxes, license fees, legal fees, medical and other insurance - are far higher than in the past ... All these problems stem from the government. Perversely, they're all likely to get much worse as the malaise of the Greater Depression deepens.
The main reason for shorting stocks is the reason you are in the stock market in the first place: personal profit. There are, of course, risks peculiar to shorting, and I'll cover them below. But on the whole, this is perhaps the single, most-profitable thing you can do in the market year in and year out, in good times and bad.
If "everyone" owns a stock, then all the potential buyers have already bought; and there's only one thing they can do: sell. Perversely, they'll all sell at once.
People invest in mutual funds because they believe the funds relieve them of need to be cautious. They hope the funds will beat the market, which a lot of mutual fund advertising seems to promise. The industry as a whole, however, underperforms the market; that was, you will recall, one of the reasons for the creation of index funds.
When an institution sells, the only likely buyer is another fun; but they'll all be selling together, for the same reasons. That kind of thing can put a market into freefall. Vacuums could develop under stocks with heavy institutional ownership. Their chart patterns would resemble the glide path of an ICBM on re-entry. Index funds will likely lead the way.
Short-term U.S. Treasuries - It's hard to conceive of them defaulting unless there's a domestic revolution or the government loses a major war. That they are redeemable only in paper dollars, which have no intrinsic worth, is beside the point. In today's moving paper fantasy, you must pretend U.S. Treasuries are "good as gold", since they are, by far, the safest way to own dollars.
Bonds should be viewed as vehicles for speculation on the direction of long-term rates, not something for those investors who want safety and capital conservation. They are political footballs that will be passed dozens of times in the years to come by the intellectuals making a game out of "fine tuning" the economy. You can bet that the ball is going to be dropped at some point.
... brokers like to keep things simple rather than risk confusing a customer; they're in sales, not the education business.
Smart places to live might be Nevada or Washington, close to the Oregon border, or in Wyoming, close to the Montana line. You would pay no income tax where you live, but could make all your purchases where no sales tax is levied.
Political jurisdictions compete to provide a favorable environment for corporations. Sound good? It's not, unless you naively think that what's good for management is good for the shareholders. Management prefers jurisdictions where the law keeps the owners from becoming a nuisance. That is why most corporations are headquartered in Delaware; laws in that state make it easy for management to get its way, as opposed to guarding the rights of shareholders. Delaware receives about 20 percent of its budget from the corporation business, and its officials know what side their bread is buttered on.
Most companies subject to takeovers are vulnerable only because their stock price is low relative to their assets. And that happens when the assets are being misallocated and the market has no confidence in management's abilities to correct the error. In fact, a company can usually be acquired only if management owns no more than a token care of stock. And if the managers are not also owners, why should they care what the business is worth, as long as they keep their jobs? Most managers of big corporations own very little stock in them; arguably, that is because they can see it's a poor long-term investment.
Unlike currency, gold cannot lose value because of government mismanagement. On the contrary, it tends to gain value because of government mismanagement.
Gold ... is a matchless crisis hedge. It's the only financial asset that's completely invisible and private. There are no social security numbers stamped on gold coins, and they leave no paper trail when they change hands. Unlike real estate, for instance, a government cannot easily find gold to tax or confiscate. Unlike stocks, gold doesn't represent a value that can be dissipated or mismanaged. Unlike bonds, gold cannot default. And unlike currency, gold cannot be inflated away. There are not many low-risk places for wealth to hide today. But plenty of wealth exists and, as the world's greatest coward, capital will look for a place to hide when things get scary. Gold is the perfect financial asset in times of uncertainty.
The art of investing emphasizes inaction as much as it does action. Success is a long-term proposition, and most of your time should be spent patiently hunting for the fattest prizes, not frenetically chasing after every mangy stray. Given transaction costs and the vagaries of your own mind set, an even-odds bet is inevitably a fool's bet. You want anomalies where risk and reward are heavily weighted in your favor, where the arguments that you'll be right are so compelling that you are almost forced to act.
The most important question about any investment is: What is the downside?
Government quotas, subsidies, supports, taxes, and marketing regulations are the greatest cause of commodities' volatility; they alternatively cause disruptive shortages and wasteful surpluses. Government intervention gives the appearance of stability over the short-run, but at great cost to both the producer and consumer in the long-run. This offers great opportunities to speculators.
Rather than just deregulate, it would be more in character for the powers that be to create the conditions for a famine in order to get prices up to subsidize inefficient farmers. You may think I'm stretching the point. But the U.S. government cause the slaughter and burial of whole herds of livestock, and poured tons of milk in the gutter during the '30s in a futile attempt to raise prices, even while many people couldn't afford to eat.
The world may still be on a honeymoon following the collapse of communism, but it's hardly the end of history. The fundamental cause of war and revolution still exists, namely, politics. And, to a lesser extent, just plain geography.
Most people do not want to hear the bearish argument for real estate, since by far their largest asset is their house. For the average American family a house is much more than a home; it's a combination investment, savings program, tax shelter, and retirement program. A crash in housing prices would be more devaluating than a stock market crash, not only financially but psychologically.
Real estate has traditionally been the most debt-leveraged of all markets. In the United States, few people can buy real estate, and few people can sell, without borrowing money. Getting a mortgage has always been integral to buying a house except for the very rich. The easy availability of cheap mortgages is the most important single reason that real estate prices increased faster than consumer prices from the '50s through the '70s. U.S. real estate prices are built on a pyramid of long-term mortgage money.
You can't hide real estate, which makes it the most taxable of all investments. Many local governments are in deep financial trouble, and property taxes are excellent candidates for "revenue enhancement". Property taxes also suit the envy-driven, tax-the-rich hysteria that is likely to grow as the average person's standard of living declines.
Taxes, like every form of government action, cause distortions and misallocations of capital. Taxes induce people to act in ways they otherwise would not. And, in what will become a desperate quest for revenue, the government will unwind the tax breaks that have favored real estate over many decades. As a result the distortions those breaks caused will also come apart. Artificially high property prices will tumble.
It's one thing to arrive at a conclusion that U.S. property has entered on a long-term bear market. But it is priced in dollars, and it seems an even surer bet that dollars are eventually going to zero. Instead of seeing the mortgage as a means to buy property, it might be a better idea to view a mortgage as a way to short sell the dollar. It's convenient for borrowers, therefore, that the fixed rate mortgage is still available. I don't like the idea of paying interest. I would rather collect it. Nor do I like the idea of being in debt; it limits your options and puts at risk. But fixed-interest debt remains an excellent defense against a collapsing currency.
The speculator provides a public service by offering a bid when otherwise none is available. A speculator simply gives people what they want most of the time. When prices are high and everyone seeks property, he endeavors to keep prices from going even higher by providing a supply. And when prices are low and everyone desperately needs cash, he once again bows to the will of the market. Buying low and selling high is helpful to people when they need cash more than land.
Foreign aid might accurately be described as a transfer from poor people in rich countries to rich people in poor countries.
When going to a place like Mozambique is suggested to most people, their first reaction is they would feel safer in Miami when they want warm weather. But those who buy a dumpy studio apartment in Miami will someday wonder why they didn't go for a large farm on the African coast instead. The reason, of course, is that they are provincial and not very imaginative and probably, alas, belong in Miami.
The failure of Credit Anstalt in Austria, a bank few Americans knew of, sparked the 1929 depression.
Despite recent large sell-offs, Japan's stock and property markets are not cheap. Prices continue to reflect the good times of the last few decades. The next few years will probably be grim enough to shake up price perceptions; views ingrained over many years do not turn on a dime. As with most historic events, Japan's crisis will not bottom out until the collapse of its financial markets is the headline in every magazine and newspaper around the world.
A collapse in Tokyo, therefore, wouldn't just be a story on the evening news; it could be the signal for a worldwide financial and economic catastrophe. There is no rule that says a depression in America has to be made here; everything is imported these days.
Every nation is insufferably nationalistic. Unfortunately, the Japanese and the Americans are two of the worst offenders and believe that anyone who is not one of them is genetically disadvantaged. Moreover, they are radically different cultures, leaving plenty of room for miscommunication, or worse.
The weapons business is the biggest in the world, bigger even than illegal drugs, and the Japanese have almost no participation there. With their tremendous abilities to produce to high standards and innovate, the Japanese should surpass the American, Russian, British, French, and other arms manufacturers as easily as they did the automakers. Arms will, before the end of the decade, be a perfect area to pick up the slack created by dropping consumer goods exports.
As bad as things were in the United States in the '30s, people still had businesses, savings, and farms - and incentives to rebuild. And the system allowed them to start anew. The Russians have none of that. They own little; the state owns everything. And since the state already owns everything, it has nothing to tax.
We're still paying for the Vietnam War, since it was fought with 100 percent borrowed money. $160 billion over about twenty years at about 8 percent compounded is already $640 billion, and growing at about $50 billion a year. The bill for the instant gratification in Iraq will also grow for years.
Military prowess is a poor substitute for the real roots of greatness, or even for economic power, as the Russians have just discovered and as the Germans and Japanese learned in World War II or the Romans found in the late empire. War is the most unpredictable of human activities, has unintended consequences, and can take on a life of its own.
In a just society, law concerns itself with only two matters: contracts (have you done all that you agreed to do?) and torts ( have you encroached upon another's person or property?). There are encompassed by "common law". Common law, determining right and wrong, is based on principles of justice that can be considered universal in societies. That is vastly different from "legislation" or "political law", which is arbitrarily constructed by officials. Legislation mostly deals with what have come to be known as "victimless crimes".
The U.N. Convention against Illicit Traffic in Narcotic Drugs defines money laundering as "the concealment or disguise of the true nature, source, disposition, movement, or ownership of proceeds and includes the movement or conversion of proceeds by electronic transmission." The treaty does not specify that the proceeds need be from any illegal activity; the simple act of protecting your financial privacy leaves you open to sanctions. About seventy nations, including the United States since 1990, are signatories to this treaty, and treaties have the effect of law within the United States.
Some Americans simplistically believe an opposition to the war on drugs amounts to an endorsement of drugs and an unwillingness to see their destructive effects on society eliminated. I see drug use as a debilitating at best and tend to eschew the company of those who use them. But destroying liberty isn't an even remotely acceptable method to discourage drug addiction. Nor is it effective.
Government sponsors untold waste, criminality, and inequality, in every sphere of life it touches, giving little of value in return. Its contributions to the commonweal are wars, pogroms, confiscations, persecutions, taxation, regulation, and inflation. And it's not just some governments of which that's true, although some are clearly much worse than others. It's an inherent characteristic of all government.
Force is the essence of government. But the possession of a monopoly on force almost inevitably requires a territory, and maintaining control of territory is considered the test of a "successful" government. Would any "terrorist" organization be more "legitimate" if it had its own country? Absolutely. Would it be any less vicious or predatory by that fact? No, just as most governments today (the ex-Communist countries and the kleptocracies of the Third World being the best examples), demonstrate. Governments can be much more dangerous than the mobs that gave them birth.
In general, government judicial systems are far more concerned about crimes against the state than crimes against the individual. In China, as the Tiananmen Square revolt demonstrated, the gravest crime consists of agitation for democracy; in the United States, it consists of nonsupport of the government by refusing to pay taxes or obey regulations. And in all cases a show of humility, a respectful attitude, and the renunciation of politically incorrect ideas are required.
In the perverse "real world" of today ... the police, courts, and the military are among the least significant parts of government; moreover, government fails to produce quality products in any other worthwhile area it pursues, such as education. Indeed, its main products are taxation, regulation, inflation, and wealth redistribution, which all eventually destroy their supposed beneficiaries as surely as they do those who are taxed overtly.
Politics is the theory and practice of government. It concerns itself with how force should be applied in controlling people, which is to say, in restricting their freedom. It should be analyzed on that basis.
QUOTATIONS
Bakunin, Michael
Ever since States came into existence, the political world has always been and still continues to be the state for high knavery and unsurpassed brigandage – brigandage and knavery which are held in high honor, since they are ordained by patriotism, by transcendent morality, and by the supreme interest of the State. This explains to us why all the history of ancient and modern States is nothing more than a series of revolting crimes; why present and past kings and ministers of all times and all countries – statesmen, diplomats, bureaucrats, and warriors – if judged from the point of view of simple morality and human justice, deserve a thousand times the gallows or penal servitude. For there is no terror, cruelty, sacrilege, perjury, imposture, infamous transaction, cynical theft, brazen robbery, or foul treason which has not been and is not still being committed daily by representatives of the State.
Lord Byron
Ready money is Aladdin's Lamp.
Edwards, Bo
The Bill of Rights applies to criminal cases. For example, the right to have a lawyer, the right to a trial by jury, and the government must prove its case beyond a reasonable doubt. None of those rights apply in a civil case where the government is bringing a civil forfeiture case against your property.
O'Rourke, P.J.
Every government is a parliament of whores. The trouble is, in a democracy, the whores are us.
Jean-Francois Revel
Authoritarian socialism has failed almost everywhere, but you will not find a single Marxist who will say it has failed because it was wrong or impractical. He will say it has failed because nobody went far enough with it. So failure never proves a myth is wrong.
Nathan Rothschild
Buy when blood is running in the streets.
Paul Samuelson (Nobel laureate, in 1989)
What really counts is results, and there can be no doubt that the Soviet planning system has been a powerful engine for economic growth
Paul Samuelson (Nobel laureate, in 1989)
The Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive.
Mark Skousen
Taxation is the price we pay for failing to build a civilized society. The higher the tax level, the greater the failure. A centrally planned totalitarian state is a complete failure of civilization, while a totally voluntary society is its ultimate success.
Gore Vidal
Free enterprise ended in the United States a good many years ago. Big oil, big steel, big agriculture avoid the open marketplace.
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