Friday, November 05, 2010



This is an excellent explanatory piece on one of the most important economic realities facing the world.

Sadly, in the United States the level of discourse in politics is so consistently low and juvenile, people do not appreciate this looming situation, and their cowardly politicians are not about to explain it to them.

We should never forget the role that pointless and destructive wars play.

Its current two wars have achieved nothing useful to the world's economy, being essentially a kind of gigantic consumption for which America has not the legitimate means to pay. War has been America's junk food since the 1950s.

Were America functioning the way most countries must function - that is, paying for what they consume and not borrowing to pay for what they consume - I believe we would see a much more judicious use of its Frankenstein military.

Indeed, the monster would be cut down to size more in keeping with America's own defense and proper interests, not insane crusades all over the globe based solely on the prejudices of American voters and narrow special interests.

The expenses it put into killing three million Vietnamese and toppling a stable government in Cambodia decades ago were colossal at the time. After that hugely destructive and pointless war, Nixon devalued the currency.

The whole world was forced into paying for America's obtuse policies.

"Whatever we think of America - we know and trust her globally far more than the regime running China as a one party state with vast swathes of the country and activity closed to any sort of observer. "

I don't see any factual basis for that statement. It's purely emotional, a result of being comfortable with years of shared culture.

The fact is for all the pose of openness, American society at the top - where it counts in terms of power and influence - is not really very open.

Many secrets remain secrets virtually forever, even long after the supposedly mandated time of their release.

The motivations of America's establishment are often not clear, and we receive only fluff explanations for major actions which affect the entire world.

For example, the invasion of Iraq has not yet been honestly explained.

If you are familiar with the details of 9/11, you know that complex event has never been explained.

We still do not know why or exactly how President Kennedy was killed. The official investigations are discredited in scores of ways.

What about the very legitimacy of American governments?

Kennedy won through vote fraud.

Lyndon Johnson's career in Texas started with vote fraud.

Bush won through vote fraud in Florida in 2000.

All national elections in the US are largely decided by money. This recent Mid-term election saw mountains of cash spent, about $4 billion dollars. Those contributors are buying influence and access, things which ordinary Americans are pretty well excluded from today. If you live in any major state, you have as much chance of talking to your Senator as you have talking to the President: zero.

The American intelligence establishment now consists of at least 16 agencies. Only recently a glimmer of information about its budget was revealed. It's now at least $80 billion a year. Only a decade ago, CIA was typically said to cost $30 billion.

That dwarfs everything else on the planet, just as today America's military spending exceeds the total of all other nations on earth combined. What are they doing with that colossal amount? What is the long term effect of such immense power, especially when combined with economic vulnerabilities?

Every phone call and e-mail in America is recorded and run through super-computers. The same for Britain or Canada. The FBI has the authority to go to public libraries and check what people are reading. You can be excluded from flying by the mere adding of your name to a list, and there is almost no way to remove it. Privacy has been invaded as almost never before.

Eisenhower warned of the Military-Industrial Complex, and it has been a growing problem in a free society for decades, but today its threat has reached a new order of magnitude.

Now we have a set of super economic problems facing this top-heavy power structure. It is not at all clear that its responses will be favorable to the world. Rather, the reverse is very much likely.

We know what Lord Acton said of power. Never was there a greater test of his observation than what we see in America today.

“It will start a civil war in America in my opinion because the middle class is going to be wiped out in the coming dollar collapse.

“The anger and resentment expressed by the Tea Party people will be a drop in the ocean.”

The US middle class - at least the large, more modest portion of it - has been effectively in decline for decades. Real wages have steadily fallen.

America’s immense boom after WW II was based on all its competitors being prostrate and on its factories having only just become gigantic to serve a huge military. But one by one, the competitors have returned and new ones have emerged.

The myth of American economic magic spun during the 1940-50s is beginning to dissolve – what American politicians love to call “the American Dream.” The rude fact is that America is not really very competitive in many economic activities, and nothing is harder than coming down from the kind of high Americans have long been on.

People were able to offset this reality by such adjustments as both husband and wife working and moving to cheaper houses in the suburbs.

But these patches are pretty well exhausted.

Further, a tremendously important economic issue not discussed here is the future climb in energy prices once the economic downturn is over. We will see oil at well over $100/barrel again.

The growth of China and India mean nothing but immense increases in the demand for energy, as well as other vital commodities.

All those poor lower middle-class Americans out in the suburbs are going to find their adaptation no longer works.

When oil a while back temporarily reached nearly $150/barrel briefly, we saw the beginnings of a revolution in America. Large car sales crashed, and large cars - pick-up trucks and SUVs are essential parts of the suburban life formula.

When such prices are sustained, people will be dumping their sprawling suburban homes which require a great deal of energy to heat and cool and to reach from work.

America's most ferocious home growth for years has been in the American South West, but those homes require large amounts of energy to cool through semi-desert climates.

America’s military spending too has been a terrible investment. No economic activity is more wasteful than building expensive hardware in huge quantities basically to rust. And its very existence is a constant lure to its use in wars that add even more waste.