Wednesday, February 18, 2009

More Bad News (To (En)Lighten Your Day)

If you're looking to fill in with some light reading while I continue to readjust to my move, there's always this:

Bad News From America’s Top Spy TruthDig By Chris Hedges February 16, 2009 - We have a remarkable ability to create our own monsters. A few decades of meddling in the Middle East with our Israeli doppelgänger and we get Hezbollah, Hamas, al-Qaida, the Iraqi resistance movement and a resurgent Taliban. Now we trash the world economy and destroy the ecosystem and sit back to watch our handiwork. Hints of our brave new world seeped out Thursday when Washington’s new director of national intelligence, retired Adm. Dennis Blair, testified before the Senate Intelligence Committee. He warned that the deepening economic crisis posed perhaps our gravest threat to stability and national security. It could trigger, he said, a return to the “violent extremism” of the 1920s and 1930s. It turns out that Wall Street, rather than Islamic jihad, has produced our most dangerous terrorists. You wouldn’t know this from the Obama administration, which seems hellbent on draining the blood out of the body politic and transfusing it into the corpse of our financial system. But by the time Barack Obama is done all we will be left with is a corpse—a corpse and no blood. And then what? We will see accelerated plant and retail closures, inflation, an epidemic of bankruptcies, new rounds of foreclosures, bread lines, unemployment surpassing the levels of the Great Depression and, as Blair fears, social upheaval. The United Nations’ International Labor Organization estimates that some 50 million workers will lose their jobs worldwide this year. The collapse has already seen 3.6 million lost jobs in the United States. The International Monetary Fund’s prediction for global economic growth in 2009 is 0.5 percent—the worst since World War II. There are 2.3 million properties in the United States that received a default notice or were repossessed last year. And this number is set to rise in 2009, especially as vacant commercial real estate begins to be foreclosed. About 20,000 major global banks collapsed, were sold or were nationalized in 2008. There are an estimated 62,000 U.S. companies expected to shut down this year. Unemployment, when you add people no longer looking for jobs and part-time workers who cannot find full-time employment, is close to 14 percent. And we have few tools left to dig our way out. The manufacturing sector in the United States has been destroyed by globalization. Consumers, thanks to credit card companies and easy lines of credit, are $14 trillion in debt. The government has pledged trillions toward the crisis, most of it borrowed or printed in the form of new money. It is borrowing trillions more to fund our wars in Afghanistan and Iraq. And no one states the obvious: We will never be able to pay these loans back. We are supposed to somehow spend our way out of the crisis and maintain our imperial project on credit. Let our kids worry about it. There is no coherent and realistic plan, one built around our severe limitations, to stanch the bleeding or ameliorate the mounting deprivations we will suffer as citizens. Contrast this with the national security state’s strategies to crush potential civil unrest and you get a glimpse of the future. It doesn’t look good. “The primary near-term security concern of the United States is the global economic crisis and its geopolitical implications,” Blair told the Senate. “The crisis has been ongoing for over a year, and economists are divided over whether and when we could hit bottom. Some even fear that the recession could further deepen and reach the level of the Great Depression. Of course, all of us recall the dramatic political consequences wrought by the economic turmoil of the 1920s and 1930s in Europe, the instability, and high levels of violent extremism.” The specter of social unrest was raised at the U.S. Army War College in November in a monograph [click on Policypointers’ pdf link to see the report] titled “Known Unknowns: Unconventional ‘Strategic Shocks’ in Defense Strategy Development.” The military must be prepared, the document warned, for a “violent, strategic dislocation inside the United States,” which could be provoked by “unforeseen economic collapse,” “purposeful domestic resistance,” “pervasive public health emergencies” or “loss of functioning political and legal order.” The “widespread civil violence,” the document said, “would force the defense establishment to reorient priorities in extremis to defend basic domestic order and human security.” “An American government and defense establishment lulled into complacency by a long-secure domestic order would be forced to rapidly divest some or most external security commitments in order to address rapidly expanding human insecurity at home,” it went on. “Under the most extreme circumstances, this might include use of military force against hostile groups inside the United States. Further, DoD [the Department of Defense] would be, by necessity, an essential enabling hub for the continuity of political authority in a multi-state or nationwide civil conflict or disturbance,” the document read. In plain English, something bureaucrats and the military seem incapable of employing, this translates into the imposition of martial law and a de facto government being run out of the Department of Defense. They are considering it. So should you. Adm. Blair warned the Senate that “roughly a quarter of the countries in the world have already experienced low-level instability such as government changes because of the current slowdown.” He noted that the “bulk of anti-state demonstrations” internationally have been seen in Europe and the former Soviet Union, but this did not mean they could not spread to the United States. He told the senators that the collapse of the global financial system is “likely to produce a wave of economic crises in emerging market nations over the next year.” He added that “much of Latin America, former Soviet Union states and sub-Saharan Africa lack sufficient cash reserves, access to international aid or credit, or other coping mechanism.” “When those growth rates go down, my gut tells me that there are going to be problems coming out of that, and we’re looking for that,” he said. He referred to “statistical modeling” showing that “economic crises increase the risk of regime-threatening instability if they persist over a one to two year period.” Blair articulated the newest narrative of fear. As the economic unraveling accelerates we will be told it is not the bearded Islamic extremists, although those in power will drag them out of the Halloween closet when they need to give us an exotic shock, but instead the domestic riffraff, environmentalists, anarchists, unions and enraged members of our dispossessed working class who threaten us. Crime, as it always does in times of turmoil, will grow. Those who oppose the iron fist of the state security apparatus will be lumped together in slick, corporate news reports with the growing criminal underclass. The committee’s Republican vice chairman, Sen. Christopher Bond of Missouri, not quite knowing what to make of Blair’s testimony, said he was concerned that Blair was making the “conditions in the country” and the global economic crisis “the primary focus of the intelligence community.” The economic collapse has exposed the stupidity of our collective faith in a free market and the absurdity of an economy based on the goals of endless growth, consumption, borrowing and expansion. The ideology of unlimited growth failed to take into account the massive depletion of the world’s resources, from fossil fuels to clean water to fish stocks to erosion, as well as overpopulation, global warming and climate change. The huge international flows of unregulated capital have wrecked the global financial system. An overvalued dollar (which will soon deflate), wild tech, stock and housing financial bubbles, unchecked greed, the decimation of our manufacturing sector, the empowerment of an oligarchic class, the corruption of our political elite, the impoverishment of workers, a bloated military and defense budget and unrestrained credit binges have conspired to bring us down. The financial crisis will soon become a currency crisis. This second shock will threaten our financial viability. We let the market rule. Now we are paying for it. The corporate thieves, those who insisted they be paid tens of millions of dollars because they were the best and the brightest, have been exposed as con artists. Our elected officials, along with the press, have been exposed as corrupt and spineless corporate lackeys. Our business schools and intellectual elite have been exposed as frauds. The age of the West has ended. Look to China. Laissez-faire capitalism has destroyed itself. It is time to dust off your copies of Marx.
Sorry ya asked now, aren't ya? (Doin' my best Scarahy impression.) Suzan ____________________________________

2 comments:

BadTux said...

Chris Hedges? He's a great war reporter, but I'm not sure he ever learned anything about economics.

First of all, there's is a way to deal with the unpayable debts of most Americans. It's called *bankruptcy*. Just make bankruptcy easier to access, have people declare bankruptcy and discharge their debts, bingo. We're back to Day One. Of course, the banks would need to be re-capitalized after that, but... hold it. We already need to do that :-).

Secondly, the national debt. We had this problem after the Vietnam War. The Vietnam War was sucking up 10% of the U.S. GDP in 1967. We had to get out of Vietnam because it was bankrupting the nation, forget about protests and stuff, those were utterly ignored by our ruling elite, the fact that the war was bankrupting the nation was not. So anyhow, 1973 arrives. The war is over. The debt is unpayable. Except... the U.S. government possesses this marvelous invention called the PRINTING PRESS. So they INFLATED their way out of the debt by printing the money to pay it off. It killed the Presidencies of Gerald Ford and Jimmie Carter, but it was a success, at least until Ronnie Raygun came in and undid their work by running up his own huge deficits. Anyhow, yeah, this would cause inflation, like it did in the 1970's. And it'd hurt imports and help exports by devaluing the dollar relative to foreign currencies. And your question is?!

Finally, manufacturing: The U.S. still manufactures as much "stuff" as it did twenty years ago. It's just *different* stuff. Granted, you can't find a piece of American-made underwear in the stores. But your computer probably has a main processor chip made in Chandler, Arizona. Your Internet packets are probably crossing across a main trunk switch made in Frement, California. If you own a motorcycle, the accessories for that motorcycle are probably made by a small business in Utah that makes virtually all motorcycle accessories sold for popular motorcycles here in the USA on their own jigs in their own factory with US-made steel. And if we became unable to buy underwear from China because of printing so much money that China no longer wants our dollars, we still have cloth manufacturing facilities and resources here in the USA that could be put back to work making underwear, and there's still custom crafts ladies who sew things who could make underwear. It'd be expensive. Things would not be the same as today, where you can walk into Wally World and buy a pack of 20 undies for $20. You'd probably pay that much for one piece of underwear. But we wouldn't end up wearing buckets.

In other words, I think Chris Hedges underestimates the resources still available to the United States, and overestimates the economic problems of the United States. Granted, the US's economic problems are dire. But we're not yet in the position of the Ottoman Empire in 1875 with debts denominated in foreign currencies and forced to default because our payments on said debts amount to 50% of the nation's GDP. We still make stuff, unlike the Ottoman Empire which had missed the industrial revolution and thus had to import all mass-produced items. There is still a *long* ways to go until we reach that level of national bankruptcy... and it's unclear that it's going to happen within our own lifetimes, if ever, due to the considerable resources this nation still has despite the erosion of its infrastructure over the past twenty-five years.

-Badtux the Economics Penguin

Suzan said...

Tuxy,

Always wonderful to get your view of events.

And your question is?!

I guess you've left us speechless!

Granted, the US's economic problems are dire. But we're not yet in the position of the Ottoman Empire in 1875 with debts denominated in foreign currencies and forced to default because our payments on said debts amount to 50% of the nation's GDP. We still make stuff, unlike the Ottoman Empire which had missed the industrial revolution and thus had to import all mass-produced items. There is still a *long* ways to go until we reach that level of national bankruptcy... and it's unclear that it's going to happen within our own lifetimes, if ever, due to the considerable resources this nation still has despite the erosion of its infrastructure over the past twenty-five years.

Thanks for your words of wisdom. We need to be reminded that things may not be as bad as they seem. Your history lesson lets us know it could be much worse.

S