War Abroad and Poverty at Home, By Paul Craig Roberts

3/05/08 "ICH" -- - The US Senate has voted $165 billion to fund Bush’s wars of aggression against Afghanistan and Iraq through next spring.

As the US is broke and deep in debt, every one of the $165 billion dollars will have to be borrowed. American consumers are also broke and deep in debt. Their zero saving rate means every one of the $165 billion dollars will have to be borrowed from foreigners.

The “world’s only superpower” is so broke it can’t even finance its own wars.

Each additional dollar that the irresponsible Bush Regime has to solicit from foreigners puts more downward pressure on the dollar’s value. During the eight wasted and extravagant years of the Bush Regime, the once mighty US dollar has lost about 60% of its value against the euro.

The dollar has lost even more of its value against gold and oil.

Before Bush began his wars of aggression, oil was $25 a barrel. Today it is $130 a barrel. Some of this rise may result from run-away speculation in the futures market. However, the main cause is the eroding value of the dollar. Oil is real, and unlike paper dollars is limited in supply. With US massive trade and budget deficits, the outpouring of dollar obligations mounts, thus driving down the value of the dollar.

Each time the dollar price of oil rises, the US trade deficit rises, requiring more foreign financing of US energy use. Bush has managed to drive the US oil import bill up from $106 billion in 2006 to approximately $500 billion 18 months later--every dollar of which has to be financed by foreigners.

Without foreign money, the US “superpower” cannot finance its imports or its government’s operation.

When the oil price rises, Americans, who are increasingly poor, cannot pay their winter heating bills. Thus, the Senate’s military spending bill contains more heating subsidies for America’s growing legion of poor people.

The rising price of energy drives up the price of producing and transporting all goods, but American incomes are not rising except for the extremely rich.

The disappearing value of the US dollar, which pushes up oil prices and raises the trade deficit, then pushes up heating subsidies and raises the budget deficit.

While I agree with Mr. Roberts on his assessment of the financial condition of the country, its roots go much deeper than the Bushco bunch. Old Georgie boy may be more blatant than most, but he is surely not the only one to blame for the mismanagement and corruption that has been the downfall of our nation. Congress is as just as responsible for the mess we are in, placing a higher priority on self serving political goals than on any attempt to do the right thing for this country or its people, and such has been the case for a quite a few years now. Demofacists or Rethuglicans...no difference...just two branches of the same rotten tree, both sucking the life out of our country to enrich themselves at the expense of the citizens they claim to serve. And, we the people must accept a healthy dose of the blame for allowing this to happen. We've been asleep at the wheel folks...will we wake up before the crash?

Subprime Nation

Meanwhile, Washington drifts mindlessly toward the maelstrom. With the dollar sinking, oil surging to $100 a barrel, the Dow having its worst January in memory, foreclosures mounting, credit card debt going rotten, and consumers and businesses unable or unwilling to borrow, we appear headed into recession.


If so, tax revenue will fall and spending on unemployment will surge. The price of the stimulus packages both parties are preparing will further add to the deficit and further imperil the U.S. credit rating. This all comes in the year that the first of the baby boomers, born in 1946, reach early retirement and eligibility for Social Security.


To stave off recession, the Fed appears anxious to slash interest rates another half-point, if not more. That will further weaken the dollar and raise the costs of the imports to which we have become addicted. While all this is bad news for the Republicans, it is worse news for the republic. As we save nothing, we must borrow both to pay for the imported oil and foreign manufactures upon which we have become dependent.

We are thus in the position of having to borrow from Europe to defend Europe, of having to borrow from China and Japan to defend Chinese and Japanese access to Gulf oil, and of having to borrow from Arab emirs, sultans and monarchs to make Iraq safe for democracy.


We borrow from the nations we defend so that we may continue to defend them. To question this is an unpardonable heresy called "isolationism."


And the chickens of globalism are coming home to roost.


We let Europe to get away with imposing value-added taxes averaging 15 percent on our exports to them, while they rebate that value-added tax on their exports to us. Thus, the euro has almost doubled in value against the dollar in the Bush years, as NATO Europe begins to bail out on Iraq and Afghanistan.


We sat still as Japan protected her markets and dumped high quality goods into ours and China undervalued its currency to suck jobs, technology and factories out of the United States. Now, China and Japan have $2 trillion in cash reserves. The Arabs have an equal amount of petrodollars. Both are headed here to spend their depreciating dollars snapping up U.S. assets – banks, ports, highways, defense contractors.


America, to pay her bills, has begun to sell herself to the world.


Its balance sheet gutted by the subprime mortgage crisis, Citicorp got a $7.5 billion injection from Abu Dhabi and is now fishing for $1 billion from Kuwait and $9 billion from China. Beijing has put $5 billion into Morgan Stanley and bought heavily into Barclays Bank.

Merrill-Lynch, ravaged by subprime mortgage losses, sold part of itself to Singapore for $7.5 billion and is seeking another $3 billion to $4 billion from the Arabs. Swiss-based UBS, taking a near $15 billion write-down in subprime mortgages, has gotten an infusion of $10 billion from Singapore.


Bain Capital is partnering with China's Huawei Technologies in a buyout of 3Com, the U.S. company that provides the technology that protects Pentagon computers from Chinese hackers.


This self-indulgent generation has borrowed itself into unpayable debt. Now the folks from whom we borrowed to buy all that oil and all those cars, electronics and clothes are coming to buy the country we inherited. We are prodigal sons, and the day of reckoning approaches.


Imagine, the world's last remaining superpower crushed by consumerism. Incredible isn't it? We're selling freedom down the river for the latest "must have" thing that NOBODY needs. All that money spent on national defense...for what? No other country will invade us, why should they? Much easier to sell the sheeple gadgets and gizmos until they destroy themselves...Why spend on military means when we will cheerfully allow them to make a profit off our stupidity as we defeat our own country economically.

The Central Bank; Silent partner in the bloodletting

The meltdown in the real estate market continues to send tremors through Wall Street. Trillions of dollars in complex bonds (CDOs and MBSs) are being downgraded as foreclosures increase and housing inventory soars. Banks, insurance companies, pension funds, bond insurers, hedge funds; are all among the living-dead. Many are already insolvent and many more will follow. It's just a matter of time. The foundation of the financial markets is crumbling. The scheme to transform the liabilities of loan-applicants with bad credit into a reliable source of fat profits has failed. Alchemy still doesn't work. Never has.


The subprime crisis and (subsequent) credit crunch originated at the Federal Reserve. The Fed triggered a speculative frenzy by lowering interest rates below the rate of inflation for over 31 months between 2002 and 2004. Trillions of dollars were fed into the banking system creating the biggest equity bubble in history. Now that the housing bubble is crashing to earth--and trillions of dollars in shaky bonds are headed for the landfill--the Fed is trying to distance itself from any responsibility. But we know the truth. The plan was authored and executed by the Fed and that's where the blame lies. Everyone else is just a “bit player”.


What matters most, is that the system is collapsing. It is being slowly crushed by the accumulated weight of its own corruption. When the system crashes, the flag will be lowered over Guantanamo Bay, the present oligarchy of racketeers will be removed from office, and the troops will come home from Iraq. Sometimes positive results derive from tragedy.


There could be anarchy or tyranny or martial law or detention camps. Who really knows? It's understandable that the public is worried about “what could happen” in the near future. But, consider this: can we continue moving in the same direction that we are now? Can we keep pouring the blood of innocent people all over the planet while claiming to own the world and all of its resources? Can we keep ignoring the species-threatening challenges of global warming, peak oil and nuclear proliferation?

No.


Well, then, is there any chance that the media, the congress, the courts, or the president will come to their senses; chart a different course, restore civil liberties, stop the human rights abuse, and withdrawal the troops?


No.


So tell me, dear reader, what hope is there for change apart from a full-system economic collapse?


Political systems do not have to be perfect to be acceptable. I'm not naive. But---for many of us---there are basic moral criteria that have to be observed to win our support. The Bush administration has elevated killing, torture and kidnapping to a level of state policy. This is unacceptable by any standard, and yet, all the levers of power are controlled by people who support the present doctrine.


Isn't that so?


The United States is not a beacon of hope or a light unto the world. It is a menace and a growing threat to survival on earth. America's political and military belligerence is just an extension of a domineering economic system which serves the sole interests of the rich and powerful. The Central Bank plays a critical role in this paradigm. Nation's don't go to war without the blessing of their main financial institutions. The “big money” guys are the silent partners in the plunder and bloodletting.


The men who own and oversee the US financial system; created the cancer which is presently devouring it from the inside. Now the tumor has metastasized and spread through the entire organism. The situation is irreversible. The economy is on its last legs and headed for a fall. US political leaders will have to accept a world in which America is just one of many states of equal power and significance. Military funding will slow to a dribble. The killing will stop. Finally.

Well, we are surely in for some changes in the world, and very soon. I wonder what will become of this country after the economy goes down in flames. Will we reevaluate our priorities? Will we demand accountability from the government and our citizens who are supposed to keep it honest? Will we demand our rights as free citizens and accept the personal responsibilities that come with freedom? Or, will we demand another nanny state to take care of us so we don't have to bother with being adults. Will we learn from our mistakes or be crushed by them?

Congress Quietly Approves Billions More for Iraq War

The Senate agreed on Thursday to increase the federal debt limit by $850 billion -- from $8.965 trillion to $9.815 trillion -- and then proceeded to approve a stop-gap spending bill that gives the Bush White House at least $9 billion in new funding for its war in Iraq.

Additionally, the administration has been given emergency authority to tap further into a $70 billion "bridge fund" to provide new infusions of money for the occupation while the Congress works on appropriations bills for the Department of Defense and other agencies.

Translation: Under the guise of a stop-gap spending bill that is simply supposed to keep the government running until a long-delayed appropriations process is completed -- probably in November -- the Congress has just approved a massive increase in war funding.

The move was backed by every senator who cast a vote, save one.

Wisconsin Senator Russ Feingold, the maverick Democrat who has led the fight to end the war and bring U.S. troops home from Iraq, was on the losing end of the 94-1 vote. (The five senators who did not vote, all presidential candidates who are more involved in campaigning than governing, were Democrats Hillary Clinton, Barack Obama and Joe Biden and Republicans John McCain and Sam Brownback.)

Quite amusing when you consider the constant barrage of sound bites on the corporate media "news" in which members of the Democratic Majority insinuate that they are all working to end the war...as they were elected to do...I wonder how many of their supporters will pay attention to what they DO, (0r in most cases don't) rather than what the say.

Greenspan and the Economy of Greed

As the Empire Slips

By PAUL CRAIG ROBERTS

Former Fed Chairman Alan Greenspan's memoir has put him in the news these last few days. He has upset Republicans with his comments on various presidents, with George W. Bush getting the brickbats and Clinton the praise, and by saying that Bush's invasion of Iraq was about oil, not weapons of mass destruction.

Opponents of Bush's wars welcomed Greenspan's statement, as it strips the moral pretext away from Bush's aggression, leaving naked greed unmasked.

It is certainly the case that Iraq was not invaded because of WMD, which the Bush administration knew did not exist. But the oil pretext is also phony. The US could have purchased a lot of oil for the trillion dollars that the Iraq invasion has already cost in out-of-pocket expenses and already incurred future expenses.

Moreover, Bush's invasion of Iraq, by worsening the US deficit and causing additional US reliance on foreign loans, has undermined the US dollar's role as reserve currency, thus threatening America's ability to pay for its imports. Greenspan himself said that the US dollar "doesn't have all that much of an advantage" and could be replaced by the Euro as the reserve currency. By the end of last year, Greenspan said, foreign central banks already held 25 percent of their reserves in Euros and 9 percent in other foreign currencies. The dollar's role has shrunk to 66 percent.

If the dollar loses its reserve currency status, the US would magically have to move from an $800 billion trade deficit to a trade surplus so that the US could earn enough Euros to pay for its imports of oil and manufactured goods.

Bush's wars are about American hegemony, not oil. The oil companies did not write the neoconservatives' "Project for a New American Century," which calls for US/Israeli hegemony over the entire Middle East, a hegemony that would conveniently remove obstacles to Israeli territorial expansion.

We are murdering millions to ensure that our economy....a house of cards built of fiat currency....does not collapse. How many countries will we have to occupy to prop up the dollar? Ducking, weaving, and invading won't work forever...at some point the crash will come.

Congress Asked to Lift Debt Ceiling

By THE ASSOCIATED PRESS
Published: September 19, 2007
Filed at 2:26 p.m. ET

WASHINGTON (AP) -- Treasury Secretary Henry Paulson told Congress on Wednesday that the federal government will hit the current debt ceiling on Oct. 1.

He urged quick action to increase the limit, saying it was essential to protect the ''full faith and credit'' of the country, especially at a time of financial market turmoil.

The current debt limit is $8.965 trillion. Unless Congress votes to raise that ceiling, the country would be unable to borrow more money to keep the government operating and to pay debt obligations coming due. The United States has never defaulted on a debt payment but the decision on whether to raise the debt ceiling often sparks a prolonged political battle in Congress.

In his letter to congressional leaders, Paulson said that according to data now available, the Treasury expects to hit the current debt ceiling on Oct. 1 -- the first day of the new federal budget year. However, that projection does not take into account maneuvers the government often has to employ of withdrawing investments from certain trust funds to create room for extra borrowing until Congress finally approves a debt increase.

''The full faith and credit of the United States, to which we all remain committed, is a national asset and a cornerstone of the global financial system,'' Paulson said in his letter. ''In light of current developments in financial markets, which would be exacerbated by uncertainty in the Treasuries market, I urge the Senate to pass the legislation reported by the Finance Committee to increase the debt limit as soon as possible.''

The Senate Finance Committee earlier this month approved increasing the limit on the national debt to $9.82 trillion. That boost of $850 billion would be the fifth increase in the government's borrowing limit since President Bush took office in 2001.

The national debt is the total accumulation of annual budget deficits, which must be financed with borrowed money.

Yep, and an awful lot of that debt is held by foreign nations, China for instance. Amazing that we Americans see fit to traipse all over the world, proclaiming our superiority to all and dictating to others (to whom we likely owe money) how their governments should be run, when we quite obviously do not have our own house in order.