----- Original Message ----- Sent: Saturday, April 16, 2005 3:31 PM
From:
http://www.smirkingchimp.com/article.php?sid=20632&mode=nested&order=0
Mike Whitney: 'The economic tsunami, just months away'
"If the world's central bankers accumulate fewer dollars, the result would be an unrelenting American need to borrow in the face of an ever weaker dollar - a recipe for higher interest rates and higher prices. The economic repercussions could unfold gradually, resulting in a long, slow decline in living standards. Or there could be a quick unraveling, with the hallmarks of an uncontrolled fiscal crisis." -- New York Times editorial
I know, from reading the comments on this web site, that many Smirking Chimp readers believe as I do, that the economic tsunami planned by the Bush administration is probably only months away. Many of us have watched helplessly as the national debt has increased 3 trillion dollars while the dollar has continued its predictable decline. At present, the dollar has fallen a whopping 38% since Bush took office, due entirely to the massive $450 billion tax cuts Bush gave away to his constituents. At the same time, myriad laws have been passed (Patriot Act, Intelligence Reform Bill, Homeland Security Bill, National ID, Passport requirements etc.) anticipating the need for greater repression when the economy takes its inevitable nosedive. Regrettably, that nosedive looks to be coming sooner rather than later.
The administration is currently putting as much pressure as possible on OPEC to ratchet up the flow of oil another 1 million barrels per day (well over capacity) to settle down nervous markets and buy time for the planned bombing of Iran in June.
Like Greenspan's artificially low interest rates, the manipulation of oil production is a way of concealing how dire the situation really is. Rising prices at the pump signal an upcoming recession, (depression?) so the administration is pulling out all the stops to meet the short term demand and maintain the illusion that things are still okay. (Bush would rather avoid massive popular unrest until his battle-plans for Iran are carried out)
But, of course, things are not okay. The country has been intentionally plundered and will eventually wind up in the hands of its creditors as Bush advisors planned from the very beginning. Those who don't believe this should note the methodical way that the deficits have been produced at (around) $450 billion per year; a systematic and orderly siphoning off of the nation's future. The value of the dollar and the increasing national debt follow exactly the same (deliberate) downward trajectory.
This same Ponzi scheme has been carried out repeatedly by the IMF and World Bank; Argentina being the last dramatic illustration. (Argentina's economic collapse occurred when its trade deficit was running at 4%; right now ours is at an unprecedented 6%.) Bankruptcy is a fairly straight forward way of delivering valuable public assets and resources to collaborative industries, and of annihilating national sovereignty. After a nation is successfully driven into destitution, public policy decisions are made by the creditors and not by representatives of the people. (Enter, Paul Wolfowitz)
Did Americans really believe they could avoid a similar fate?
If so, they'd better forget about it, because the hammer is about to come down Big-time, and the collateral damage will be huge.
The Bush administration is mainly comprised of internationalists. That doesn't mean that they "hate America"; simply that they are committed to bringing America into line with the "new world order" and an economic regime that has been approved by corporate and financial elites alike. Their patriotism extends no further than the garish tri-colored flag on their lapel. The catastrophe that middle class Americans face is what these elites breezily refer to as "shock therapy"; a sudden jolt, followed by fundamental changes to the system. We can expect tax reform, fiscal discipline, deregulation, free capital flows, lowered tariffs, reduced public services, and privatization. In other words, a society entirely "of, by, and for" corporations.
There are a number of signs that the economy is close to meltdown-stage. Even with cheap energy, low interest rates and $450 billion in borrowed revenue pumped into the system each year, things have still been in a virtual holding pattern. This has a lot to due with the massive shifting of wealth to the richest Americans. Supply-side, trickle-down theories have been widely discredited and Bush's tax cuts have done nothing to stimulate the economy as promised. Now, with oil tilting towards $60 per barrel, things are changing quickly, and the shock-waves should be felt throughout the country in very short order.
The Iraq war has contributed considerably to our current dilemma. The conflict has taken nearly one million barrels of Iraqi oil per day off line. In other words, the astronomical prices at the pump are the direct result of Bush's war. The media has failed to report on the negative affects on oil production, just as they have concealed the incredibly successful insurgent strategy of destroying pipelines. This isn't a storyline that plays well to the American public, who expected that Iraq would be paying for its own reconstruction by now. Instead, the resistance is striking back at the empire's Achilles heel (America's need for massive amounts of cheap oil) and its having a dramatic affect on the US economy.
Just as the economy cannot float along with a sharp increase in oil prices, so too, Bush's profligate deficits threaten the dollar's status as the world's reserve currency. This is much more serious than a simple decline in the value of the dollar. If the major oil producers convert from the dollar to the euro, the American economy will sink almost overnight. If oil is traded in euros then central banks around the world would be compelled to follow and America will be required to pay off its enormous $8 trillion debt. That, of course, would be doomsday for the American economy, and the administration would do whatever is in its power to avoid that scenario. But, already a recent report indicates that two-thirds of the world's 65 central banks have "begun to move from dollars to euros." The Bush plan to savage the dollar has been telegraphed around the world and there's only one thing that the administration can do to insure that energy traders keep trading in dollars....control the flow of oil. That means that an attack on Iran is nearly a certainty.
The difficulties facing both the dollar and the economy are not insurmountable. The world has shown an unbelievable willingness to compensate for America's wasteful spending as long as America shows itself to be a responsible steward of the global economy. However, the military and economic recklessness suggests that some of the key players on the world stage (particularly Russia, Iran, Venezuela, Germany, France, China, Brazil) are collaborating on an alternate plan; a contingency plan. If Iran is bombed in an unprovoked act of aggression, we will certainly see this plan activated. The most likely scenario would be a quick switch to the euro that would have grave implications for the American economy. For Iran, the attack would justify arming disparate terrorist organizations with the weaponry they need to attack American and Israeli interests wherever they may be. In any event, the attack will confirm for everyone that we are engaged in a new world war; a conflict for global domination.
Tough Years Ahead
The neoliberal chickens have come home to roost. America has become the latest and grandest experiment for the eccentric economic policies of the Washington Consensus. The architects of this maniacal plan are expecting to bankrupt the nation and precipitate a seismic (and irreversible) shift in the fortunes of middle class Americans. The overwhelming accumulation of public debt coupled with a one-party political system (that controls the voting machinery) ensures that we are facing years of collective struggle ahead. If there's a quick fix, I have no idea what it might be.
