A Three
Kings’ January 6th 2005 Year of the Rooster Offering
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 Income 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 Spaghetti Western Vigilante Posse 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@msc-salzburg.at 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
Studien von Zeitfragen, 9. Januar 2005