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MEET UNCLE SAM - WITHOUT CLOTHES - PARADING AROUND CHINA AND THE WORLD: msg#00555
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MEET UNCLE SAM - WITHOUT CLOTHES - PARADING AROUND CHINA AND THE WORLD |
http://www.studien-von-zeitfragen.net/Zeitfragen/Uncle_Sam__/uncle_sam__.html
MEET UNCLE SAM - WITHOUT CLOTHES -
PARADING AROUND CHINA AND THE WORLD
Observed From the Top of the Great Wall through the Eyes of the
Innocent Little Boy
by Andre Gunder Frank
Introducing Uncle Sam - Without Clothes
Uncle Sam has just reneged and defaulted on up to forty percent of its
trillions of dollars [$] foreign debt, and nobody has said a word
except for a line in this week’s Economist. In plain English that means
that Uncle Sam runs a world-wide confidence racket with his self-made $
based on the confidence that he has elicited and received from others
around the world, and he is a also a dead-beat in that he does not
honor and return the money he has received. How much of our dollar
stake we lost depends on how much we, the creditors, originally paid
for it. He let, or rather through his deliberate political economic
policies, drove his $ down by over 40 percent from one Euro at $ 80
cents at its highest to now 135 cents against the Euro, Yen, Yuan and
other currencies. And $ is still declining, indeed apt to plummet
altogether.
There was also a spate of competitive devaluations in the 1930s, and it
was called the “Beggar Thy Neighbor Policy” of shifting the costs for
the neighbor/s to bear. True, with the decline of $, so has the real
value that foreigners pay decreased to service their debt to Uncle Sam.
That works only if they can themselves earn a profit from an increase
in value of other currencies against $. Otherwise, foreigners earn and
pay in the same devalued $, plus the loss from devaluation between the
time they received $ and had to repay it to Uncle Sam. China and other
East Asians do earn in and have pegged their currencies to $, so they
have already lost a substantial portion of their world’s by far largest
$ stake. And they, like all others, will also lose the rest.
For Uncle Sam’s debt to the rest of the world already amounts to over
one third of his annual national domestic production NDP, and it is
still growing. That already makes his debt economically and politically
never repayable, even if he wanted to, which obviously he does not.
Uncle Sam’s domestic debt, e.g. by consumers on credit cards and
mortgages, is almost 100 percent of GDP and consumption, including that
from China. Uncle Sam’s federal debt is now $ 7,5 trillion [T], of
which all but $1T was built up in the last three decades, the last $ 2T
in the last eight years, and the last $1T in the last two years. Alas,
that costs over $ 330B in interest, compared to $ 15B spent on NASA.
“Who Me, Worry?” Congress just raised the debt ceiling to $8.2 T. To
help us visualize, only $ 1 T in tightly packed $ 1,000 dollar bills
would match a building 40 stories high, so that $ 7.5T would be 300
stories or about three times the height of the Empire State Building.
Nearly half of that is owed to foreigners. All Uncle Sam’s debt,
including private household debt of about $ 10T, plus corporate and
financial debt, with their options, derivatives and the like, plus
state and local government debt comes to an unimaginable $ 37 trillion,
to help you 1,480 Empire State buildings high, and nearly four times
Uncle Sam’s NDP. Uncle Sam’s issue last year of a mere record high $
140B in high -yielding junk bonds must seem puny, even if they are so
called because they are [only!] the first to be defaulted, after or
along with consumer and mortgage debt and business belly ups. Only some
of that debt and its coming default can be managed domestically, but
with dangerous limitations for Uncle Sam as noted below. That is only
one reason I want you to meet Uncle Sam, the dead-beat confidence man,
who may remind you of the Meet Joe Black movie. For as we get to know
Uncle Sam better below, we will find that he is also a Shylock and a
corrupt one at that.
Uncle Sam`s Cold War
Proxy for the North-West vs. South War
Before we go on, lets first translate this jumble of numbers into plain
English. It was already done back in 1948 by George Kennan, otherwise
known as Mr. X the architect of Uncle Sam’s Containment Policy:
We have about half the world's wealth ...but only 5 percent of its
population....
In this situation ... our real job in the coming years is to devise a
pattern of relationships which permit us to maintain this position of
disparity...
To do so we have to dispense with all sentimentality and day-dreaming,
... concentrate everywhere on our immediate national objectives...[and]
deal in straight power concepts.
The less we are hampered by idealistic slogans, the better [Department
of State Policy Planning Study No. 23, 1948].
Of course, that statement was for Uncle Sam’s private internal
consumption only. For the rest of the world, including most Uncle
Sammies, “idealistic slogans” will do better, so long as they don’t
hamper us, of course. For they manifest the world’s grandest ever Ponzi
Scheme Confidence Racket run around the world by Uncle Sam. How else
“to maintain this disparity”? Naked power helps, but it is not enough.
All the more so, given that since Mr. X wrote, the already then
terribly UNfair world distribution of income has become about 3 times
more unequal. For today, just consider this simple index: 265 MILLION
Uncle Sammies consume more oil, 22 percent of the world’s total, than
over THREE BILLION Asians, who all put together get 20 percent – and
want more, especially the Chinese. Of course the Uncle Sam also
accounts for a similar proportionate share of the Good Earth. To help
him do it, he also relies on the Pentagon, which to boot is itself
probably the biggest and least observed single polluter of all.
This observation also marks a continuity across that other wall, the
one that fell in Berlin in 1989. For it shows that Mr. X’s Cold War
Containment was not only or even primarily against the Russians, but
also a Containment of the other 95 percent of the world and especially
of the vast poor majority who suffers most from the disparity he
observed. Indeed, he suggests that the East-West Cold War, that he was
instrumental in starting already as Uncle Sam’s ambassador in Moscow,
was largely a proxy for the North- and especially Uncle Sam-South real
war over that half, or both halves, of the world’s wealth. So that
should leave us less surprised at the failure of the mistakenly
anticipated ‘’Peace Dividend” to materialize after that little wall
fell down in 1989. The other, or the real, war continues and only takes
other forms or rather labels, for ‘human rights,” “democracy,” the
“free market” and “free trade,” “freedom” in general, indeed even
‘’civilization,” all of the last several of which are echoes of the
‘’white man’s burden” from the 19th century. Just add a few new
againsts, first ‘’narco terrorism” by Bush Daddy vs. Noriega, and now
just undefined “terrorism” by Bush Son vs. anybody and everybody “who
is not with us.” I forgot “weapons of mass destruction,” the ones of
which Uncle Sam has and uses the most, oh and weapons of mass deception
that Uncle Sam uses like nobody’s business. That is of course a sine
qua non of any Confidence Racket, and he runs the world’s grandest
ever, as we will observe ad naseum, starting right now.
Uncle Sam Lives Holy off the Fat of the World`s Land
and from Chinese Work
Uncle Sam is the world’s most privileged for having the exclusive right
to print the world’s reserve currency at will at a cost of nothing but
the paper and ink it is printed on. By so doing, he can also export to
foreigners the inflation that his irresponsible printing of $
generates. For there are already at least three times as many $
floating around the world as at Uncle Sam’s home. Additionally, his is
also the only ‘’foreign’’ debt that is mostly denominated in his own $
currency. Most foreigners’ debt is also denominated in the same $, but
they have to buy $ from Uncle Sam with their own currency and real
goods.
So Uncle Sam simply pays the Chinese and others essentially with those
$ that have no real worth beyond its paper and ink. So especially poor
China gives away for nothing at all to Uncle Sam $ hundreds of billions
[Bs] worth of real goods produced at home and consumed by rich Uncle
Sam. Then China turns around and trades these same Uncle Sam paper $
bills in for other Uncle Sam paper $ called Treasury Certificate bonds,
which are even more worthless, except that they pay a percent of
interest. For as we already noted they will never be able to be cashed
in and redeemed in full or even in part, and anyway they have already
lost much of their value to Uncle Sam already. In an earlier essay , I
argued that Uncle Sam’s power rests on two pillars only, the paper $
and the Pentagon. Each supports the other, but the vulnerability of
each is also an Achilles heel that threatens the viability of the
other. Since then, Afghanistan and Iraq have shown much of the
confidence in the Pentagon to have been misplaced. That has helped
reduce confidence and value also in $ in the dollar, which has in turn
reduced Uncle Sam’s ability to use that $ to finance his Pentagon
foreign adventures. See my 2004 essay “Coup d`Etat and Paper Tiger in
Washington, Fiery Dragon in the Pacific,” which also conjures up the
productive growth of China.
Additionally we must realize that Uncle Sam’s numbers above and below
are also all literally relative. So far the relations – in particular
with China - still favor Uncle Sam, but they also help maintain an
image that is deceptive. Consider the following:
" ... a $2 toy leaving a Uncle Sam-owned factory in China is a $3
shipment arriving at San Diego. By the time a Uncle Sam consumer buys
it for $10 at Wal-Mart, the Uncle Sam economy registers $10 in final
sales, less $3 import cost, for a $7 addition to the Uncle Sam gross
domestic product (GDP)"
[http://archives.econ.utah.edu/archives/a-list/2004w07/msg00083.htm the
original said US].
Moreover, ever clever Uncle Sam has arranged matters so as to earn 9
percent from his economic and financial holdings abroad, while
foreigners earn only 3 percent real return on theirs, and only one
percent on their Treasury Certificates, invested in Uncle Sam’s God’s
Country. Note that this difference of 6 percent is already double what
Uncle Sam pays out, and his total 9 percent take is triple the 3
percent he gives back. Therefore, although the reciprocal foreign
holdings by each other with Uncle Sam and abroad are now about equal,
Uncle Sam is still the BIG net interest/ed winner, just like any
Shylock, but no other ever did so grand a business.
But Uncle Sam also earns quite well, thank you , from other holdings
abroad, e.g. from service payments by mostly poor foreign debtors. The
sums involved are not peanuts. For from his direct investments in
foreign property alone, Uncle Sam profits now equal 50 percent, and
including his receipts from other holdings abroad, now are a full 100
percent, of Uncle Sam’s profits derived from all of his own domestic
activities combined! These foreign receipts add more than 4 percent to
Uncle Sam’s NDP. That helps nicely to compensate for the failure of
domestic profits yet to recover even their level in 1972. That is
because Uncle Sam has failed to make enough real good investments at
home to boost productivity and profits thereon. That extra profit from
foreigners also compensates for much of the Uncle Sam still rising
trade deficit of $ 600+ B a year [last month it was at an $ 666 annual
rate, it was announced today] from excess home consumption over what he
himself produces. That has resulted in the trillions $ [three of them
it is said] of his foreign debt. But Uncle Sam is playing his cards
close to his chest and is understandably reluctant to make any official
revelation of how high [more than the Empire State building in $ 1000
bills?] his foreign debt really is. Nonetheless, we may rest assured
that his gross foreign debt is by far the world’s largest and remains
so also as net foreign debt even if we deduct foreigners’ debts to him.
The productivity hype of Clinton’s ‘’new economy” 1990s was limited to
computers and IT, and even that proved to be a sham when the dot com
bubble burst. Also, not only the apparent increase in “profits” but
also that of “productivity” was being boosted by shop-floor, office and
sales floor worker speed-up and/or longer work-times at the bottom.
WALMART obliges its non-union [it won’t permit any] workers on threat
of dismissal to "clock-out" and return to work at no pay. At the top
productivity and profits were boosted by “creative accounting” hype by
Enron, Arthur Anderson and others of their likes engaged in shams.
Uncle Sam cannot save himself: He is hooked on Consumption and other
Drugs
Why any and all this?, we may well ask. The simple answer is that Uncle
Sam, who is increasingly hooked on consumption not to mention harder
drugs, saves no more than 0.2 percent of his own income. The Fed’s guru
now you see him-now you don’t Dr. of financial and media magic, Alan
Greenspan recently observed that this is so, because the richest 20
percent of Uncle Sammies, who are the only ones who do save, have
reduced their savings to 2 percent. Yet, even these measly savings
[other and poorer countries save and even invest 20, 30, 40 percent of
their income] are more than counterbalanced by the 6 percent deficit
spending of the Uncle Sam government, which does so largely on their
behalf. That is what brings the average between the two together to
those 0,2 percent. So Uncle Sam has a $ 400+ reported budget deficit,
which is really $ 600+ B if we count ,as we should, the $ 200+ B Uncle
Sam ‘’borrows’’ from the temporary surplus in his own Federal Social
Security fund that he is also bankrupting. But never mind, Uncle Sam
President Bush just promised to privatize much if that and let people
buy their own old age ‘’security’’ in the ever insecure market.
Rich Uncle Sam, and primarily his highest off the hog earners and
consumers as well as of course the Big Uncle in Washington himself,
live off the fat of the rest of the world’s land. Apart from printing
world money, Uncle Sam also does so with his “twin deficits,” first his
$ 600+B budget deficit and then the above mentioned related $600+B
trade deficit, now at an $ 666B annual rate last month, as we saw. With
them, Uncle Sam absorbs the savings of others who themselves are –
often much - lower on the hog: Particularly their central banks place
many of their reserves in world currency $ in the hands of Uncle Sam in
Washington and some also in $ at home. Their private investors send $
to or buy $ assets in Wall Street, all with the confidence that they
are putting their where-with-all in the world’s most safe Uncle Sam
haven [that of course is part of the above mentioned confidence
racket]. From the central banks alone, we are looking at yearly sums of
over $ 100B from Europe, over $ 100B from poor China, $ 140B from
super-saver Japan, an amount of many $10sB by many others around the
world. That also includes investors and banks from the poor Third World.
How Uncle Sam Creates and Collects Third World Debt
In addition, Uncle Sam also obliges the states in the Third World to
act as collection agencies or even as Repo Goons, where goons are the
ones sent out to repo-ssess the Godfather’s property by any means. Only
in this case, it is not even that; for he is just taking new
possession, since the original debt has long since been paid off. The
states raise taxes and fees from the population but lower social
spending on education and health to at home to divert funds to pay the
debt abroad. They also borrow in turn from private capital at home at
high interest rates that the state pays to the rich lenders, but out of
taxes collected from the poor. That way, income is ‘’recycled” from
poor to rich at home as well as from these poor via the foreign debt to
the even richer abroad. These literally forced savings of the poor are
then sent to Uncle Sam in the form of ‘’service’’ on the $ debt that is
“owed” to him.
Privatization is the name of the game in the Third World as elsewhere,
except for the debt! Only the debt was socialized after it had been
incurred mostly by private business, but only the state had enough
power to squeeze the greatest bulk of back payments out of the hides of
its poor and middle-class people and transfer them as ‘’invisible
service payments’’ to Uncle Sam. When Mexicans were told to tighten
their belt still further, they answered that we can’t because we
already ate it yesterday. Only Argentina and for a while Russia
declared an effective moratorium on debt ‘’service’’ and that only
after political economic policies, imposed by Uncle Sam’s advisers and
his IMF strong arm, had destroyed their entire societies like never
before in ‘’peace’’ time. Uncle Sam’s Treasury Secretary and his IMF
hand-maiden blithely continue to strut around the world insisting that
the Third – and ex-Second, now also Third – World of course continue to
service their foreign debts, especially to him. No matter that with
interest rates multiplied several times over by Uncle Sam himself after
the Fed’s Paul Volcker’s coup in October 1979, most have already paid
off their original borrowings three to five times over. For to pay at
those interest rates that Volcker boosted to 20 percent, they had to
borrow still more at higher rates until their outstanding foreign debt
doubled and tripled. And so did their domestic debt from which part of
the foreign payments were raised as particularly in Brazil. All that,
while Uncle Sam himself is blithely defaulting on his own foreign debt,
as he already had several times before in the 19th century.
Speaking of that, it may be well to recall at least two pieces of
advice from that time: Lord Cromer, who administered Egypt for then
dominant British imperial interests sad that his most important
instrument for doing so was Egypt’s debts to Britain. These had just
multiplied when Egypt was obliged to sell its Suez Canal shares to
Britain in order to pay off earlier debts. British Prime Minister
Disraeli explained and justified his purchase of the same on the
grounds that it would strengthen British Imperial interests. Today,
that is called ‘’debt-for-equity swaps,” which is one of Uncle Sam’s
latter day favorite policies to use the debt to acquire profitable
and/or strategically important real resources, as was the Canal as the
short cut to the jewel of the British Empire in India.
Another piece of practical advice came from the premier military
strategist Clausewitz: Make the lands you conquer pay for their own
conquest and administration. That is of course exactly what Britain did
in India through the infamous ‘’Home Charges” remitted to London in
payment for Britain administering India. Even the British themselves
recognized this as “tribute” that was responsible for much of “The
Drain” from India to Britain. How much more efficient yet to let
foreign countries’ own states administer themselves [Britain called it
“Indirect Rule“], but by rules set and imposed by the Uncle Sam run IMF
and then effect a drain of debt service anyway. So therein the British
also set a 19th century precedent with ‘’independent’’ states. It has
since been called the “imperialism of free trade.” As long as the rules
work, fine. When they don’t, a bit of gun-boat diplomacy can help, and
Uncle Sam already learned to use that early in he 20th century. When
even that was not enough, the next option is to invade, and if
necessary to occupy – and then to rely on the Clausewitz rule to make
the victims pay for their own occupation. We shall note several recent
instances thereof below and pay special attention to the present one in
Iraq.
Meantime as I write, but after I wrote the above, I received the
following e-mail:
Confessions of an Economic Hit Man:
How the U.S. Uses Globalization to Cheat Poor Countries Out of
Trillions.
„We speak with John Perkins, a former respected member of the
international banking community. In his book Confessions of an Economic
Hit Man he describes how as a highly paid professional, he helped the
U.S. cheat poor countries around the globe out of trillions of dollars
by lending them more money than they could possibly repay and then take
over their economies.
JOHN PERKINS: Basically what we were trained to do and what our job is
to do is to build up the American empire. To bring -- to create
situations where as many resources as possible flow into this country,
to our corporations, and our government, and in fact we’ve been very
successful. We’ve built the largest empire in the history of the world…
primarily through economic manipulation, through cheating, through
fraud, through seducing people into our way of life, through the
economic hit men. I was very much a part of that…. I was initially
recruited while I was in business school back in the late sixties by
the National Security Agency, the nation's largest and least understood
spy organization… and then [it] send[s] us to work for private
consulting companies, engineering firms, construction companies, so
that if we were caught, there would be no connection with the
government.…
I became its chief economist. I ended up having fifty people working
for me. But my real job was deal-making. It was giving loans to other
countries, huge loans, much bigger than they could possibly repay. One
of the conditions of the loan–let's say a $1 billion to a country like
Indonesia or Ecuador–and this country would then have to give ninety
percent of that loan back to a U.S. company, or U.S. companies … a
Halliburton or a Bechtel.… A country today like Ecuador owes over fifty
percent of its national budget just to pay down its debt. And it really
can’t do it. So, we literally have them over a barrel. So, when we want
more oil, we go to Ecuador and say, “Look, you're not able to repay
your debts, therefore give your oil companies your Amazon rain forest,
which are filled with oil.” And today we're going in and destroying
Amazonian rain forests, forcing Ecuador to give them to us because
they’ve accumulated all this debt … [We work] very, very closely with
the World Bank. The World Bank provides most of the money that’s used
by economic hit men, it and the I.M.F.
[http://www.democracynow.org/article.pl?sid=04/11/09/1526251]
Uncle Sam consumes and controls Oil
Last but not least, oil producers also put their savings in Uncle Sam.
With the ‘’shock” of oil that restored its real price after its dollar
valuation had fallen in 1973, ever cleverer by half Henry Kissinger
made a deal with the world’s largest oil exporter in Saudi Arabia that
it would continue to price oil in $, and these earnings would be
deposited in Uncle Sam, partly compensated by military hardware in
return. That deal de facto extended to all OPEC and still stands,
except that before the War against Iraq it suddenly opted out by
switching to pricing its oil in Euros, and Iran threatened do so as
well. North Korea has no oil but trades entirely in Euros. That
constitutes the triple “rogue states axis of evil.” Today Venezuela is
a major oil supplier to Uncle Sam and also supplies some at
preferential rates as non-dollar trade swaps to other poor countries
like Cuba. So Uncle Sam sponsored and financed military commandos from
its Plan Columbia next door, promoted an illegal coup, and when that
failed a legal referendum in his attempt at yet another “regime change”
there as well; and now along with Brazil all three are being baptized
as yet another ‘’axis of evil.”
After writing this, I found that the good [hit] man Mr. Perkins was in
Saudi Arabia too:
Yes, it was a fascinating time. I remember well … the Treasury
Department hired me and a few other economic hit men. We went to Saudi
Arabia.,.. And we worked out this deal whereby the Royal House of Saud
agreed to send most of their petro-dollars back to the United States
and invest them in U.S. government securities. The Treasury Department
would use the interest from these securities to hire U.S. companies to
build Saudi Arabia–new cities, new infrastructure–which we’ve done. And
the House of Saud would agree to maintain the price of oil within
acceptable limits to us, which they’ve done all of these years, and we
would agree to keep the House of Saud in power as long as they did
this, which we’ve done, which is one of the reasons we went to war with
Iraq in the first place. And in Iraq we tried to implement the same
policy that was so successful in Saudi Arabia, but Saddam Hussein
didn't buy. When the economic hit men fail in this scenario, the next
step is what we call the jackals. Jackals are C.I.A.-sanctioned people
that come in and try to foment a coup or revolution. If that doesn't
work, they perform assassinations. Or try to. In the case of Iraq, they
weren't able to get through to Saddam Hussein. He had -- His bodyguards
were too good. He had doubles. They couldn’t get through to him. So the
third line of defense, if the economic hit men and the jackals fail,
the next line of defense is our young men and women, who are sent in to
die and kill, which is what we’ve obviously done in Iraq.
http://www.democracynow .org/article.pl?sid=04/11/09/1526251
(For more details see also William Engdahl`s “Century of War” - Pluto
and University of Chicago Press 2004; note SvZ).
The World’s Grandest ever Ponzi Scheme Confidence Racket
To return to the main issue and call a spade a HUGE spade, all of the
above are part and parcel of the world’s biggest ever Ponzi scheme
confidence racket. Like all other ones, its most essential
characteristic is that it can only continue to pay off $ and be
maintained at the top as long as it continues to receive new $ at the
bottom, voluntarily through confidence if possible and by force if not.
[Of course, the Clausewitz and Cromer formulaes result in the poorest
paying the most, since they are also the most defenseless: so that the
ones sitting on/above them, pass as much of the cost and pain down to
them].
But what if and when confidence runs out, and $ no longer comes? Things
are already getting shakier at the Uncle Sam house. The declining $
reduces the necessary $ inflows. Last month, they were only $ 48B
against outflows of $ 55B. So the Uncle Sam Dr. Greenspan needs to
raise interest rates to maintain some Uncle Sam attraction for the
foreign $ he needs to fill the trade gap. As a quid pro quo for being
reappointed by President Bush, he promised to do that only after the
election. That time has now arrived, but doing so threatens to collapse
the housing bubble that was built on low interest and mortgage – and
re-mortgage- rates. But it is in their house values that most of Uncle
Sam people have their savings if any. They and this imaginary wealth
effect supported over-consumption and the nearly as high as NDP
household debt. Volker’s high interest rate successor at the Fed,
Greenspan lowered interest rates almost to zero, which made borrowing
and mortgages – that is debt - cheap and plentiful. That increased the
demand for consumer goods and houses. The former are cheap from China,
but the latter drives up the price and ‘’value’’ of houses, which has
encouraged upgrading to still more expensive ones, increased
‘’collateral,” and still more borrowing, and still more consumption. So
did capital flight from East Asia after its 1997 financial crisis. It
fled to Uncle Sam’s safe haven, both to Washington into Treasury
Certificates and to New Work into Wall Street equities. At the same
time, Uncle Sam benefited from the crisis by buying devalued East Asian
currencies and using them to buy up East Asian real resources, and in
Korea also banks, at bargain basement reduced prices. That is what
generated the big bull market of rising stock prices and again apparent
greater wealth, which also supported more consumption. Since then, he
stock market has already crashed again.
When the housing market also crashes with Dr. Greenspan’s present and
future increase in interest rates, and therefore mortgage costs, a
collapse of the housing price bubble would not only drastically
undercut house prices. It would thereby have falling domino effects on
the owners’ enormous second and third re-mortgages, consumer credit
card and other debt, their consumption, corporate debt and profit and
investment. In fact, these factors would be enough to also plummet
Uncle Sam into deep recession, if not depression, and another Big Bear
deflation on stock and de facto on other prices, rendering debt service
even more onerous. If $ declines, even domestic $ price inflation is de
facto deflationary against other currencies, that Russians and Latin
Americans discovered to their peril as we observe below. Still lower
real Uncle Sam investment would reduce its industrial productivity and
competitiveness even more – probably to a degree lower than can
compensated by further devaluing $ and making its exports cheaper as is
the confident hope of many, probably including the good Dr.
Until now, the apparent inflation of prices abroad in rubles and pesos
and their consequent devaluations have been a de facto deflation in
terms of the $ world currency. Uncle Sam then printed $ to buy up at
fire sale bargain $ prices their natural resources in Russia [whose
economy was then run on $100 bills], and companies and even banks, as
in South Korea. True, now Dr. Greenspan and Uncle Sam are trying again
to get other central banks also to raise their interest rates and
plunge their own people into even deeper depression. But even if he
can, thereby also canceling out the relative attractiveness of his own
interest rate hike, how could that save Uncle Sam himself?
So far beyond Osama bin Laden, Al Queda and all terrorists put
together, the greatest real world threat to Uncle Sam is that this $
does not keep coming in. For instance, foreign central banks and
private investors [it is said that “overseas Chinese” have a tidy
trillion $] could any day decide to place more of their money elsewhere
than in the declining $ and abandon poor ol’ Uncle Sam to his destiny.
China could double its per capita income very quickly if it made real
investments at home instead of financial ones with Uncle Sam. Indeed
Henry C.K. Liu writes, albeit a bit unrealistically that “if the US$430
of Chinese exports were consumed domestically at their final market
price, US$2.15 trillion would be added to China’s 2003 GDP of $1
trillion, tripling it”
[http://archives.econ.utah.edu/archives/a-list/2004w07].
Dump Uncle Sam $ by Euro and East Asian Community Currency?
Central banks, European and others, can now put their reserves – in
rising! – Euros or even soon to be revalued Chinese Yuan. Not so far
down the road, there may be an East Asian currency, e.g. a basket first
of ASEAN + 3 [China, Japan, Korea] – and then + 4 India. While India’s
total exports in the past five years rose by 73 percent, those to ASEAN
rose double that rate and six-fold to China. India has become an ASEAN
summit partner, its Prime Minister just declared that India wants ever
closer relations with ASEAN, and its ambitions stretch still further to
an AEC from India to Japan [EPW]. Not for nothing, in the 1997 East
Asian currency and then full economic crisis, Uncle Sam strong-armed
Japan not to start a proposed East Asian currency fund that would have
prevented at least the worst of the economic crisis. But now, the
indeed Uncle Sam friend in need China is already taking steps toward
such an arrangement, only on a much grander financial and now also
economic scale.
A day after writing the above, I read in the Economist [11-17 Dec.
2004:50] a report on the previous week’s summit meeting of Asean+3 in
Malaysia. Its Prime Minister announced that this summit should lay the
groundwork for an East Asian Community EAC that “should build a
free-trade area, co-operate on finance, and sign a security pact … that
would transform East Asia into a cohesive economic block…. In fact,
some of these schemes are already in motion….China, as the region’s
pre-eminent economic and military power will doubtless dominate… and
host the second East Asia Summit.” The report goes on to recall that in
1990, Uncle Sam shot down a previous initiative for fear of losing
influence in the region. Now the report is entitled “Yankee stay home.”
Or what if already long before that comes to pass, exporters of oil
simply cease to price it in ever devaluing $, and instead make a mint
by switching to the rising Euro and/or a basket of East Asian
currencies. For that would at one stroke, in order still to be able to
buy oil, vastly diminish the world demand for and price of $ by
obliging anyone who wants to buy oil to purchase and increase the
demand price of the Euro or Yen/Yuan instead of $. That would crash $
and tumble Uncle Sam in one fell swoop, as foreign and even domestic
owners of $ would also sell off as many of them as fast as they could
and other countries’ central banks would switch their reserves out of $
in the no longer safe haven Uncle Sam. That would drive the $ down even
more, and of course halt any more $ inflow to Uncle Sam by the
foreigners who have been financing the Uncle Sam consumption spree.
Since selling oil for falling $ instead of rising Euro is evidently bad
business, the world’s largest exporters in Russia and OPEC have been
considering actually doing just that. In the meantime, they have raised
the $ price of oil so that in Euro terms it has remained about stable
since 2000. So far, many oil exporters and others still place their
increased amount of $ with Uncle Sam, even though he now offers an ever
less attractive and less safe haven, but Russia is now buying more
Euros with some of its $.
So, many countries’ central banks have begun to put ever more of their
reserves into the Euro and currencies other than Uncle Sam $. Now even
the best friend indeed, the Central Bank of China, the greatest friend
of Uncle Sam in need, has begun to buy some Euros. China itself has
also begun to use some of its $ - as long as they are still accepted by
them - to buy real goods from other Asians and thousands of tons of
iron ore and steel from Brazil, etc. Its President recently took a huge
business delegation to China, and the Chinese one just went to
Argentina. They are going after African oil and South African minerals
too.
Uncle Sam and his own Economy are a real Hollow Doughnut
All Ponzi schemes build a financial pyramid. Many who pay into them
also live in a financial world themselves, but others need to derive
their in-payment through earnings from production in the real world. In
today’s world of financial transactions that every day are one hundred
fold more than all payments for real goods and services put together,
the financial ones put the real ones into the shadow behind their
brilliance. Moreover to over-simplify a very complex matter into more
intelligible lay wo/man’s language, options, derivatives, swaps and
other recent financial instruments have been ever much further
compounding already compounded interest on the real properties in which
their stake and debts are based, which has contributed to the
spectacular growth of this financial world. Nonetheless, the financial
pyramid that we see in all its splendor and brilliance, especially in
its center at Uncle Sam’s home, still sits on top of a real world
producer > merchant > consumer base, even if the financial one
also provides credit for these real world transactions.
Now what if we look at the world as a doughnut, analogous to so many
cities in Uncle Sam rust belt. The center is derelict and hollowed out
as production and consumption has moved to the surrounding suburbs [in
automobile Detroit, the windows of the principal department store
Hudson’s have been boarded up for years, even as Detroit has built an
expensive ”Renaissance Center” to re-gentrify it’s city center, a
process that has ‘’succeeded’’ in some other cities]. Derelict General
Motors Flint gives us Michael Moore, who features it from [GM CEO]
“Roger and Me” to ‘Fahrenheit 9-11.” We might look at the entire world
in doughnut terms, with the whole of Uncle Sam in the empty hole in the
middle that produces almost nothing it can sell abroad. The main
exceptions are agricultural goods and military hardware that are
heavily subsidized by the Uncle Sam government from its tax-payers and
$ paper printing press, and even so he runs a $ 600 +B budged deficit.
The BIG difference in this Uncle Sam doughnut is that both the budget
and the $ 600+B trade deficit are financed by foreigners, as we have
seen. Uncle Sam would exclude most of them as persons, but gladly
receives the real goods they produce. As world consumer of last resort,
as already suggested, Uncle Sam performs this important function in the
present world political economic division of labor: everybody else
produces and needs to export, and Uncle Sam consumes and needs to
import.
The crash of $ would [will?] crumble this entire world-embracing and
organizing political economic doughnut and throw hundreds of millions
of people, not to mention zillions of $ and their owners, into turmoil
with unforeseen and perhaps unforeseeable consequences. Many people,
high and low on the world totem pole, have a BIG stake in avoiding
that, even if it requires continuing to blow the empty Uncle Sam up
like a balloon. Or to refer to a well know simile, to continue to
pretend that the Emperor with no Clothes is dressed up and to send him
some to boot. That still includes China, for which a financial show
down with Uncle Sam would be a blessing in disguise: That would oblige
China to change political economic course, and instead of giving its
goods away for free to Uncle Sam, to turn production and consumption
inward to its poor interior and to the near outward in East Asia, all
of which it could and should be doing already; and the latter China has
recently begun to do, but not yet the former.
The Uncle Sam Paper $ Tiger poses a MAD
Geo-political Catch 22
So what will happen to the rich on top of the Uncle Sam Ponzi scheme,
when the confidence of poorer central banks and oil exporters in the
middle runs out, and the more destitute poorest around the world,
confident or not, can no longer make their in - payments at the bottom?
The Uncle Sam Ponzi Scheme Confidence Racket would – or will? – come
crashing down, like all other such schemes before, only this time with
a world-wide bang. It would cut the world’s present Uncle Sam consumer
demand of last resort down to real/istic world size and hurt many
exporters and producers elsewhere in the world. In fact, it may involve
a wholesale fundamental reorganization of the world political economy
now run by Uncle Sam.
Of course, crashing the $ would also in one fell swoop wipe out, that
is default, the Uncle Sam debt altogether. Thereby, it would
simultaneously also make all foreigners and rich Americans lose the
whole of their $ asset shirt. They are still desperately trying to save
as much of it as possible by not going for the crash, that is for
broke. That is, they are trying to protect the remainder of their $
investment shirt by keeping their $ live sustaining pump going. The
whole business of maintaining the Uncle Sam Ponzi Scheme poses the
world’s biggest and craziest Catch – 22 since MAD, and it is just about
as mad.
All the more reason why it MUST be resolved. But the way out of the mad
Catch 22 need not be a soft landing. It can be hard one indeed. This
dissolution of the Uncle Sam Ponzi Scheme will be costly and the
greatest costs will as usual probably be dumped on the poorest who are
least able to bear these costs, but who are also least able to protect
themselves from being forced to do so. And the historically necessary
transition out from under the Uncle Sam run doughnut world can bring
the entire world into the deepest depression ever. Only East Asia is in
a relatively good position to save itself from being pulled – or pushed
- to the bottom, but even then also after paying a high cost for this
transition – toward itself!
However, the world is facing an even MADer global geopolitical and
military Catch 22. It remains the great unknown and perhaps unknowable.
How would [will?] Uncle Sam react as a Paper [money] Tiger that is
wounded by a crash of the Ponzi Scheme Confidence Racket from which he
and millions of un -knowing Uncle Sammies have lived the good life? To
compensate for less bread and civil rights but more “Patriot”ic acts at
home, a more chauvinist Uncle Sam can provide a World War III circus
abroad. A crash of $ will pull the financial rug out from under, and
his discourage his foreign victims from continuing to pay for new
Pentagon adventures abroad. But some more wars may still be possible
with the weapons he would still have and some more Military Keyenesian
government deficit spending at home, also for the new ‘’small’’ nukes
he is preparing for the occasion. That could well – nay horribly – be
the cost to the world of the current policies to ‘’defend Freedom and
Civilization.” The Super Catch 22 is that almost nobody other than
Osama bin Laden wants to run that risk.
Yet, such a transition would [will?] not be historically new. Recall
how much the transition to Uncle Sam cost: a 30 Year War from 1914 to
1945 with the intervening second Great Depression in a century that
cost 100 million lives lost to war, more than in all previous world
history combined, not to mention the literally [hundreds?] of millions
who suffered and died from unnecessary starvation and disease. Or the
previous transition to the British Major Bull cost the Napoleonic Wars,
the Great Depression of 1873-95, colonialism and semi-colonialism, to
name a few, and their human costs. The latter coincided with the most
pronounced El Niño climatic changes in two centuries, which ravaged
Indians, Chinese, and many others with famines. But these were in turn
magnified by the Imperial Colonial powers who used in their own
interests, e.g. increased export of wheat from India especially during
years of famine.
The parallels with today, including even again taking advantage of a
century later renewed stronger El Niños are too horrifying and guilt
generating for hardly anybody to make. They include Uncle Sam’s IMF
imposed ‘’structural adjustment” that obliges Mexican peasants to have
already eaten the belt that the IMF wants them to tighten still
further. Three million dead and still counting in Rwanda and Burundi,
and then some in neighboring Congo, came after IMF imposed strictures
and the cancellation primarily by Uncle Sam of the Coffee Agreement
that had sustained its price for these producers. And now – nay since
the CIA murder of Lumumba and the elevation of Kasavubu in Katanga in
1961, indeed since the King of Belgium’s private reserve of the Congo
in the 19th century, we get the scramble for and production and sale
there of gold for Uncle Sam’s Fort Knox, and now also titanium so that
we can communicate by mobile cell phone, diamonds for ever, and so on.
Uncle Sam also took advantage of yet another strong El Niño event that
ravaged South East Asia, and especially Indonesia, simultaneously with
the post 1997 financial crisis that Uncle Sam deliberately parlayed
into an economic depression. It was so great that it swept out of
office President Suharto whom Uncle Sam had installed there thirty
years earlier with his CIA coup against the popular father of
Indonesian independence, Sukarno. That had cost at least half a million
but also an estimated up to one million lives that Suharto took
directly plus the poverty generated by the infamous “Berkely Mafia”
that he installed to run the Indonesian economy into the ground. The
parallels with the past also include environmental degradation, and the
shift of ecological damage from the rich who generate it to the poor
Third World who bears its greatest burden. And of course we should not
forget World War III [the third after the second AND fought in the
Third World] that Daddy Bush began against Iraq in 1991 [See my “Third
World War” and more].
Yet there are also others in the world who do not [yet? ] feel all that
caught up in the Catch 22. Calculatedly just before this year’s 2004
Uncle Sam election, one of them said so out loud in a video broadcast
to the world. It seems to have been least publicly noted by its
principal addressee Uncle Sam, who should have been the most interested
party: For it was none other than bin Laden himself who announced that
he is ‘’going to bankrupt the Uncle Sam!’’ In view of the deliberate
Uncle Sam blindness to the shakiness of his real world foundation
abroad, so massive a collapse abroad may not be more difficult to
arrange than as it was only to topple its Twin Tower symbol at home.
The Pentagon is the World`s largest Planned Economy - To redistribute
Incom from Poor to Rich at home and abroad to blackmail Friend and Foe
to do the same
Meantime back on the farm as the saying goes in Texas, what does Uncle
Sam himself blithely do with the world’s hard earned savings and money?
His consumers still over-consume it without 99.9 percent of them
knowing what they are doing, since hardly anyone tells them so. And
Uncle Sam’s government uses much and all of its increase of hundreds of
B$ for the Pentagon. That money is not spent to pay its poor
professional soldiers who come mostly from small town rural America and
took the only job they could get, and even less is spent on its hapless
reservists. They told Rummy in Kuwait that he does not even provide
them with sufficient and safe equipment. Rummy replied, I am an old
man, I just got up, and I need time to get my thoughts together.
But at home in the Pentagon, Rummy faces no such problem. There he
knows very well what he is doing, privatizing war also in Iraq as at
home. The Military-Industrial Complex against which General Eisenhower
warned in his 1961 parting Presidential address is alive and kicking,
more than ever under the stewardship of “Vice” President Cheney and his
De[a]fSec Rumsfeld. With their jobs disastrously well done, both are
being kept on for a second term. So is Paul Wolfowitz “of Arabia” who
with Douglas Feith is one of the duo at the Pentagon that went to
Israel. [Regarding the latter, the German Der Spiegel Dec 20,2004:33
quotes Tommy Franks, who was the commander of the Iraq invasion, as
calling “the greatest total idiot that there is on God’s Earth, with
whom I have to battle almost every day”].
Between 1994 and mid-2003, Uncle Sam’s Pentagon made over 3,000
contracts valued at more than $300 billion with 12 Uncle Sam private
military companies [PMCs] out of the 35 estimated by the NYT, others of
which are small and offer mercenary services. But more than 2,700 of
those contracts were given to only two companies: to Kellogg Brown
& Root (KBR), a subsidiary of Cheney's Halliburton, and to Booz
Allen Hamilton. [Center for Public Integrity's International Consortium
of Investigative Journalists, cited in Mafruza Khan e-mail, 16 Aug
2003]. In Iraq these PMCs now have as many mercenaries as Uncle Sam and
UK troops combined. But of course that is still ‘’small’’ potatoes,
since the bulk of Pentagon money is Uncle Sam-ed to buy expensive
weapons systems from the only four major Uncle Sam ‘’Defense”
contractors and the likes of Vice President Cheney’s Halliburton. Uncle
Sam then uses these arms unilaterally to twist others arms by armed
threat and blackmail, and if that is not enough to invade the world
that provided the money in the first place. After all, Uncle Sam has to
do what it must to keep the money coming in.
To carry the “White Man`s Burden” to defend his “Civilization” the Law
of the West is the Spaghetti Western Posse Vigilante Law
Uncle Sam unilateralism is not so much , as often mistakenly supposed,
just going it alone. Yes, it is to proclaim fighting for ‘’Freedom”
[whose?- we may ask] and “saving Civilization,” as Uncle Sam President
Bush and his even more eloquent UK mouth piece Tony Blair proclaim
every day. The simplest way to ‘’save’’ civilization was by simply
abolishing in a day its most precious gift of the whole body of
international law to keep the peace, which the West had taken centuries
to develop, admittedly also in its own imperial interests. Still, it
was the best and only international law we had, and at the very least
better than nothing at all. Now the only “Law of the West” that remains
is indeed ‘The law of the West’: The spaghetti western vigilante law of
posses that, with or without a conniving judge, take the ‘law’ into
their own hands to form a lynch party. Then they go after whom and
where and when they please. Alas, now in the real world the self-
appointed posses operate “out of area” on a much grander scale than any
fictional spaghetti western film could ever have imagined.
That also means disembowelling and paralyzing the UN institution that
was established to guard the peace, except when Uncle Sam after its own
wars always re-cycles the UN to pick up the pieces he shattered in
Yugoslavia, Afghanistan and now Iraq. But in so doing, it also means,
to dupe, threaten, cajole and blackmail all others – friends and foes
alike – to do his bidding on every issue, big and small. He has trained
a whole civilian army of officials to do that. That way, Uncle Sam
‘’unilaterally’’ throws his still apparent weight around in all other
international institutions that deal with endeavors from agriculture
and aviation to zoology. But Uncle Sam extorts real unilateral favors
for himself even more through his bi-lateral relations. That is why WTO
was dead on arrival. Indeed Uncle Sam now prefers to Uncle Same
bi-lateral relations unilaterally, as he increasingly isolates himself
internationally. So, he can exercise even more military, political and
economic bargaining power over any one of his victims than he any
longer can over all or even many of them in international institutions.
Uncle Sam`s proud March from the Halls of Montezuma to the Shores of
Tripoli - on to Panama, twice to Iraq, Afghanistan
And when that bargaining is not enough, or even if it could be, Uncle
Sam simply attacks when he feels like it and invades little Grenada
[population, all of 300,000]; Nicaragua [with the help of arch-enemy
Iran]; Panama [7,000 civilians killed in one night to capture one man
only, Daddy Bush’s one-time friend and ally Noriega – there is an all
smiles photo of them shaking hands]; Iraq in 1991 [that was even a
money making venture as Uncle Sam extorted more $ from his allies to
pay for the war than it actually cost him! But Iraq was contaminated by
Uncle Sam’s depleted uranium, which has multiplied birth defect there –
and which caused the infamous “Gulf War syndrome” among his and British
troops, which Uncle Sam denies and refuses to acknowledge]. The less
said about Somalia the better. Yugoslavia was attacked in part to make
an example out of what can happen when a state is weak enough and, yet
in abject defiance of Uncle Sam and his IMF, maintains some state
ownership of important means of production and still provides social
welfare state protection to the population. That is like still Belorus
today, where Uncle Sam also tried to get ‘’regime change,” but military
action is more difficult on the border of Russia, unless it is in
accord as against Afghanistan or is bought off. Moreover, Yugoslavia
only gave up in 1999 after Russia withdrew its support from it; because
Uncle Sam successfully used political economic blackmail and partly
bought it off in Berlin.
Then Afghanistan became a targeted victim, again with the help of Iran
and Russia. That is after Uncle Sam created and sponsored the Taliban
government that eradicated opium. But the ‘’liberated” Afghanistan now
grows opium again even more than before Taliban eradicated it so that
opium now accounts for one third of Afghanistan’s GDP, according to the
new announcement upon taking office by the new President who was
installed by Uncle Sam. At the same time as I write, Uncle Sam is
launching a renewed military offensive against Taliban; but there is no
more mention of bin Laden. And now innocent Iraq is already the Uncle
Sam target and victim again, of which more below. Whos’e next, Iran?,
Syria? – not Libya, it is now obediently making oil deals with Uncle
Sam; and not North Korea that made nukes to protect itself against
precisely that.
Sorry, I neglected to mention two additional perhaps possible
alternatives prior to invasion. One is of course sponsoring,
organizing, or even making a military or otherwise coup d’ etat of
which the CIA has a proud record,: Iran in 1953, Guatemala in 1954,
Congo in 1960, Vietnam in 1961, Brazil in 1964, Guyana in 1964,
Indonesia in 1964-65, Dominican Republic in 1965, Ghana in 1966, Greece
in 1967, Cambodia in 1970, Chile in 1973, Argentina in 1976, Bolivia
again and again, Fiji in 1987, Nicaragua in 1990 by “election” under
threat of continuing the Contras war, Haiti again and again – against
the ex-puppet Uncle Sam put there in the first place, just to name a
few of the better known ones [of course not at the Uncle Sam home].
Another alternative is better known and attempted several times against
on Fidel Castro in Cuba with explosive cigars and other imaginative CIA
‘’dirty tricks,” all of which have been unsuccessful. So was the
bombing of Cornel Ghadafi’s tent home that killed his daughter. But our
good Mr. Perkins relates a successful CIA attempt:
The Japanese wanted to finance and construct a sea-level canal in
Panama.
[It’s President Omar] Torrijos talked to them about this which very
much upset Bechtel Corporation, whose president was George Shultz and
senior council was Caspar Weinberger. When Carter was thrown out (and
that's an interesting story - how that actually happened), when he lost
the election, and Reagan came in and Shultz came in as Secretary of
State from Bechtel, and Weinberger came from Bechtel to be Secretary of
Defense, they were extremely angry at Torrijos -- tried to get him to
renegotiate the Canal Treaty and not to talk to the Japanese. He
adamantly refused. He was a very principled man. He had his problem,
but he was a very principled man. He was an amazing man, Torrijos. And
so, he died in a fiery airplane crash, which was connected to a tape
recorder with explosives in it, which -- I was there. I had been
working with him. I knew that we economic hit men had failed. I knew
the jackals were closing in on him, and the next thing, his plane
exploded with a tape recorder with a bomb in it. There's no question in
my mind that it was C.I.A. sanctioned, and most -- many Latin American
investigators have come to the same conclusion. Of course, we never
heard about that in our country.
http://www.democracynow.org/article.pl?sid=04/11/09/1526251
Torrijos had previously signed a treaty with President Cater handing
over the Panama Canal to – Panama!
Simple inspection also reveals that being too good a political friend
or tool of Uncle Sam can also be just about the riskiest, that is
foolish, thing any statesman can do; for it can easily spell his
political or physical death sentence after Uncle Sam stabs him in the
back. A successor of Torrijos, as we noted, is now sitting in an Uncle
Sam jail after loyally serving and smiling in a photo with George Bush
[father]. But the line is long and goes all the way around the world
starting in the 1950s and 1960s: Rhee in Korea , Diem in Vietnam,
Trujillo in the Dominican Republic, Somoza in Nicaragua, virtually
everybody in Haiti from Papa and Baby Doc to the priest Aristide
installed by Clinton and removed by Bush, the Shah of Iran - put there
after the 1953 CIA coup against Mossadeq after he had nationalized
Irani oil but was let go when his usefulness faded, as was Mobutu after
three decades in Zaire, Saddam Hussein - Rummy himself went to see him
twice in his already previous incarnation as Secretary of Defense,
Yugoslavia’s Milosevic - he was the necessary and reliable implementor
of the Uncle Sam Dayton agreement in Bosnia, and of course the Taliban
- Uncle Sam himself formed and put it in charge of Afghanistan, not to
mention one Osama bin Laden – he also served Uncle Sam there.
[Not?] incidentally, simple inspection of the facts on the ground also
reveals that, if the above ‘’lines of defense” fail and Uncle Sam goes
to war, except for little Grenada, not a single one of these or any
other Uncle Sam wars was ever won by his military force, unless it be
the Pacific one against Japan. World War II was won in Europe at
Stalingrad in 1943 by Russian troops who would have reached Berlin even
if Uncle Sam had not arrived later]. The Korean War was and remains a
stalemate. The War against Vietnam was lost. The War against Yugoslavia
was ‘’won” only when the Russians withdrew their support, and then all
but seven Yugoslav tanks and all of its planes left Kosovo unharmed.
Only its and Yugoslavia’s civilian infrastructure had been bombed to
smithereens, and its and the wider Balkan landscape was polluted for
eons by Uncle Sam’s renewed use of depleted uranium. The War against
Afghanistan is being lost, and so is the War against Iraq, despite the
reported use once again of depleted uranium, also again of napalm as in
Vietnam and even of gas.
Uncle Sam`s Geo-Political Muslims and Oil “Middle Eastern” Plan from
Casablanca to Jakarta
Nonetheless, Uncle Sam has plenty other geo-political economic military
plans going again. For starters, he has already built 800 military
bases around the world and especially in the oil rich ‘’heartland’’ of
Zbigniew Brzezinski [Ziggy’s] global ‘’Chessboard” and to surround
China. The Pentagon is also to redeploy 60 percent of U.S. Submarine
fleet to Western Pacific [according to a P. Jakob Förg
j.foerg@xxxxxxxxxxxxxxx December 12 e-mail] All that is for future use
but also already present political influence. Apart from that, Uncle
Sam President Bush has a new “Plan for the Middle East,” which now
stretches from Morocco beyond Pakistan – to Muslim Indonesia? Just what
this plan involves is not yet clear, but civil society is already
paving the way as well: Yale University Press already lists Pakistan
among its “Middle Eastern” Studies, and Swissair has a paper place mat
that places Karachi, Delhi and Mumbai on its ‘’Middle Eastern”
destinations. What is clear is that Israel is to remain the Uncle Sam
political and military stalking horse in the region that it has always
been. Never mind whether Republicans or Democrats rule in Washington,
Israel’s hunting dog like role for Uncle Sam in its oil rich area of
operation remains, and so does the security Israel in turn enjoys from
Uncle Sam’s international diplomatic, political and military protection
no matter what, as well as Uncle Sam’s direct economic and military
support without which of Israel could not exist. Only now, Israel’s
assigned and self-appointed regional reach may expand even further as
the two above mentioned high placed Pentagon neo-cons even went there
to make a plan for the racist chauvinist Likud party now in power. And
Bush himself went to Africa, especially West Africa to look at its oil.
In the Americas, his Plan “Colombia” [it has oil too] has been extended
to the whole Andean region [Ecuador also exports oil], he has yet
another plan for the Amazon [maybe some oil is to be found there and in
the meantime he built a huge base there, allegedly for NASA which is
not unknown to engage in military ventures], a plan to ‘’take care of “
with World Bank help the world’s largest underground deposit of sweet
water under Iguazu Falls, where Brazil, Argentina and Paraguay meet,
and he is already again training 40,000 Latin American military
personnel at a time on Uncle Sam bases at home, of which he has another
half dozen beyond his shores as well. Just recently Rummy went to
Ecuador to meet with, lay out his plans for, and reportedly cajole, his
counterpart assembled ‘’Defense” Ministers form all the Latin American
countries.
All this is a giant global military political economic foundation on
which to maintain Uncle Sam’s financial Ponzi Scheme Confidence Racket,
and cheap at twice the price for those that end up with the $ as long
as he can pay for it all with the self-made paper $ that so far also
maintains the global Ponzi business. Well to be honest, it’s not only
for the $. After all that is only useful if you can actually buy
something with it, especially the oil that keeps the foundation running.
Not only does Uncle Sam have to buy ever more oil, today with
self-printed $, but perhaps tomorrow with Euros or Yuan. He also has to
try to make sure to have his hand on every spigot; so he can control
who else can, and especially who can not buy it. So that is why we now
find him attempting political and financial $ control of the oil
spigots, wherever he still can, and for establishing a military
presence as in Central Asia, or Uncle Sam-ing military power to go in
as to Iraq. That is both to use it as a lever of control and/or to warn
its neighbors what may happen to them if they fail to continue to play
along with Uncle Sam. Fortunately for him, most of East Asia and
especially China also seem to be obliged to buy foreign oil, even if
tomorrow perhaps no longer with $ but with Yuan/Yen. On the other hand
sad but true, the world’s biggest seller of oil is Russia, whose
spigots remain beyond Uncle Sam control. But how could Uncle Sam
continue to pay for and maintain all these bold Uncle Sam ventures in
Defense of Freedom with that self made paper $ -- if nobody accepts it
any more? And why should anybody ?
Uncle Sam`s Grand Cause for Iraq; give its $30B to Halliburton et al
The December 10 FT offers some additional tip of the iceberg examples
of Uncle Sam Defense of Freedom in Iraq. Though poor Iraq sits on top
of the world’s largest still unexploited pool of ever more precious
oil, it remains in the background or only at the bottom of this story
that barely mentions it and, like the present essay, focuses instead on
related $ and Uncle Sam. In two different reports, it relates how three
helicopters flew 14 tons of $ 100 dollar bills in to the Kurds, who
long since have been an Uncle Sam Fifth Column in the area. The money,
much of the $ 1.8B Uncle Sam pay-off to the Kurds, was part of Iraq’s
earnings in the UN ‘’oil-for-food” fund. Initially, of course, the
bills simply were the product of the self-same Uncle Sam printing
press, for which Iraq had exported real oil. It did not come from the $
18B that Uncle Sam’s Congress appropriated for ’reconstruction’ of
Iraq. As an FT graph graphically shows, no more than $ 388 million – or
2.15 percent - of that Uncle Sam money had yet been spent, and only $
5B of it had even been budgeted by Uncle Sam in Iraq by the time Uncle
Sam pro-consul Brenner went home with a job well done. No, instead in
his wisdom the Good Uncle had thought it best to have spent $13B of the
$ 20B of Iraqi funds. That was 65 percent of the Iraqi money compared
to the still only 2 percent of the nearly equivalent amount of original
Uncle Sam money. By the time the new Iraqi government took over some
tasks from Uncle Sam who put them there, they discovered that a full $
20B of their funds had been spent, $ 11B from sales of oil [IHT]. How
come? – we may ask. So simple is the answer of the ‘’responsible’’
finance officer, Uncle Sam Admiral Oliver, “I know we spent some money
from [the Iraqi] fund. It was purely the matter that we’d run out of
Uncle Sam money” – of which there was only another $ 17.5+B unspent. We
might wonder whether the good General was schooled in Clausewitz on war
and happened to discover his good advice about making the conquered
victim pay for his own military occupation, in this case by Uncle Sam.
The Iraqi representative on the funding disbursement and oversight
committee attended only one of its 43 meetings; but why bother with
more, when most expenditures were authorized without any meeting at
all. So although Uncle Sam funds were budgeted for all sorts of
projects, they were nonetheless paid out of Iraqi funds. Of these, many
disbursements were even made without any contract whatsoever, in one
case a mere $ 1.4B. Most others occurred without any multiple
competitive, nor otherwise open bids. The Uncle Sam funds, on the other
hand, remained virtually unspent in Iraq. Maybe Admiral Oliver had
‘’run out of Uncle Sam money” in Iraq, because it remained with Uncle
Sam at home in Washington; and if disbursed at all, it simply changed
hands and bank accounts right there. After all, that is much more
efficient than it would be to send it back and forth, and a bit of it
might not even get back. Moreover also, it has long since been SOP for
the bulk of the $ that Uncle Sam lends or even “gives” “to” and ‘’for”
all Third World countries, just to leave the $ at home where it belongs
and would return to anyway. No matter; Uncle Sam Congress has already
appropriated another $ 30B to ‘’prepare for transition to elections” in
Iraq in January 2005.
All that being the case, it would of course be altogether undesirable
for Iraqi, let alone Uncle Sam’s, funds to be squandered on any Iraqi
service of old foreign debt to others. So it was only logical to
strong-arm ‘’allies’’ who can’t help already losing Uncle Sam debt to
them, also to forgive the Iraqi debt. That is, as we may recall from
above, while Uncle Sam still insists that the rest of the Third World
must continue servicing their debts to him! For God forbid that any
re-payment of Iraqi debt should go instead to those un-Godly Russians,
traitorous Frenchmen or even to the Chinese best friend indeed, who
most invested in Iraq, a dastardly thing to do in the first place, when
Uncle Sam has much more worthy causes for the Iraqi money.
And what are these grander worthy Uncle Sam causes?, we may ask. The
largest single payment of $ 1.4B was of course to the self-same Vice
President Cheney’s Halliburton. Yet we now know that at the same time
it was also cheating even his generous Uncle Sam benefactor out of
hundreds of millions more $ on the side, buying petrol for x $ in
Kuwait and selling it in Iraq for 5 -10x $ and other sly frauds.
Altogether, Halliburton got Iraq contracts for a cool $ 10B – plus
change. [IHT]. [Cheney also has an interest in UNOCAL that has long
wanted to build an oil pipe line from Central Asia to the Indian Ocean
through Afghanistan, first with the help of Taliban whom Uncle Sam had
put in charge there for precisely that purpose and then invited to
Texas for talks while they still seemed to be doing their assigned job.
Indeed, they also visited the purely Afghanistan ‘’academic research’’
outfit at the University of Nebraska in Omaha. But alas, Taliban was
not up to their assigned task of keeping order for the construction of
the pipe line, and so had to go. Now Uncle Sam and UNOCAL will instead
use the good offices of the new Afghani President and Uncle Sam
Ambassador there, both of whom just ‘’happen’’ to be former [?] UNOCAL
people].
Uncle Sam`s “Medal of Freedom” for Bremer, Franks, Tenet - for a Job
well done robbing Iraq for the Benefit of Cheney et al
Without the shadow of a doubt, most of the other abundant Iraqi and so
far sparse Uncle Sam $ that was spent in Iraq went to other Uncle Sam
crony, with some crumbs off the table for UK, corporations and even to
private and military individuals who have their fingers in the till.
Alas, we will never know who they all are; since, as per Uncle Sam’s
Inspector-General, “I was, candidly, not interested in having army
auditors because I thought we had to slide into the Iraqi system as
quickly as possible.” Frankly being both non and anti-military, I have
not myself read Clausewitz. So I do not know what, if any, good advice
he gives about relying on corruption as the first principle in cutting
and dividing up the conquered pie.
All of the above ‘’speculation’’ of mine was written before the UN
International Advisory and Monitoring Board for Development in Iraq
IAMBDI just issued a report on its findings about the Uncle Sam
stewardship. Before we get to the Report, we should keep in mind that
the FT observes diplomatically “the UN has been reluctant to take Uncle
Sam to task publicly over its spending of Iraqi funds.” The FT quotes
directly from the Report: “There were control weaknesses … inadequate
accounting systems, uneven application of agreed-upon contracting
procedures and inadequate record keeping.” The IHT also makes its own
summary of the same report: “There had been widespread irregularities,
including financial mismanagement, a failure to cut smuggling [outward
of oil and other Iraqi physical property; nobody knows at what price
and to whose benefit] and over dependence on no-bid contracts” [IHT].
The FT, for its part, offers a bit more specifics from the Report: “Of
particular concern … were contracts with sometimes billions of dollars
that were awarded to Uncle Sam companies such as Halliburton from Iraqi
funds without competitive tender.” Yesterday, Uncle Sam President Bush
gave Uncle Sam’s highest civilian award, The Medal of Freedom, to L.
Paul Bremer III, the Uncle Sam civilian pro-consul who oversaw it all,
and to General Tommy Franks, who led the invasion that made it all
possible in the first place. George Tenet, the Director of the CIA that
provided all the bogus Uncle Sam information to ‘’legitimatize’’ the
whole enterprise to begin with and who has since been discredited and
forced to resign was not forgotten either and received the third award.
The IHT published a ceremonial photograph of the three all smiles with
George W. who was smiling too. After all it’s due recognition for a job
well done, thank you.
In Conclusion:
Uncle George W. Sam says its only right for our Boys to lay their Lives
on the Line to protect Freedom for Halliburton to rob Iraq
We may rest assured that those who in their service to “Freedom” [for
whom and what? - we may ask],had their hand in the till of Iraqi money
were among those whom we may recall the Fed’s Dr. Greenspan labelling
as the upper 20 percent of Uncle Sam’s income earners. They are the
most privileged over -consumers, who are totally [ir]responsible for
the Uncle Sam under-saving, he said, and also for the growing trade
deficit about which the Dr. recently complained in Berlin. If we
examine the Uncle Sam income distribution a bit further, we may well
learn that among these 20 percent, the lion’s share of this $, like
most of that from the Pentagon, ends up in the pockets of the upper 2
percent most super-privileged, so they can over-consume still more of
the fat of the earth. Who would deny them that this is surely a worthy
cause for the protection of Freedom at any price. That includes
President Bush’s [in]famous invitation to the Iraqis ‘’let them come
on” against Uncle Sam. It is difficult to understand the President when
he encourages the Iraqis ‘’to come’’ when they are already at home in
Iraq and it is Uncle Sam who sent his troops there. But maybe Faluja
explains what President Bush had in mind about the Iraqis ‘’coming’’
out against Uncle Sam. But as Uncle Sam’s President Bush himself told
the world, it is only right that ‘’we’’ exclude other countries from
the trough and till in Iraq. After all he explained when the Iraqis
accepted his invitation, it was ‘’our boys who put their lives on the
line.” I wish the personification of Uncle Sam had also explained for
what and for whom.
+ The few numbers that are not generally available, or from the cited
FT of December 10 and 15, 2004 and other sources like the International
Herald Tribune [IHT] also of December 15 and EPW, Economic and
Political Weekly,[ Mumbai Dec. 4,2004: 5189] are from “The Economics of
Uncle Sam Imperialism at the turn of the 21st Century” by Gerard
Dumenil & Dominique Levy in Review of International Political
Economy 11/4/Oct. 2004:657-676. The author is thankful to them in
Paris, to Jeffrey Sommers in Riga, William Engdahl in Wiesbaden and
Mark Weisbrot in Washington for their useful and much Uncle used
comments. Barry Gills in Newcastle insisted that I refer only to Uncle
Sam and proposed the world division of labor between Uncle Sam
consumers and producers everywhere else and referred me to Clausewitz.
Readers will be most grateful to Arlene Hohnstock for having rendered
all this tale readable. Of course none of them have any responsibility
for the doughnut shaped use I have made of them. Much more of my –
through the eyes of that little boy - observations can be found on my
web site at rojasdatabank/info/agfrank and in regard to Uncle Sam et al
within it especially in the sections http://rrojasdatabank
.info/agfrank/new_world_order.html and
http://rrojasdatabank.info/agfrank/online.html#current
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