Western Military-Capitalist Civilization in Disarray by K. Gajendra Singh SignUp
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Western Military-Capitalist Civilization in Disarray
by K. Gajendra Singh Bookmark and Share
 


"Credit easing does not and cannot substitute for earnings, wages or tax revenues." 
' Max Fraad Wolff

"The [US] financial system is out of control and has led the economy into a wildly turbulent sea of heavily leveraged speculation.-- the road ahead is dark and unknown." 
' Steve Fraser author of "Wall Street: America's Dream Palace."

"The recession train has left the station, but it's going to be 18 months, instead of five years," 
' a hopeful forecast by economist Prof. Nouriel Roubini on the bailout .

"Before the US economy can truly begin to expand again, the savings rate must rise to pre-bubble levels of 8pc--$2 trillion of household debt must be eliminated", 
' Economist David Rosenberg

George Bush Legacy

Nineteen Al Qaeda trained hijackers brought down the New York Trade Towers, symbols of US economic might and dented the Pentagon, a symbol of US military force, the most powerful ever in history, on which US spends over $500 billion, almost as much as the rest of the world put together, to 'defend' the nation or rather to blackmail, threaten and unilaterally attack other nations, riding roughshod over the UN Charter.

But, a more lasting legacy of President George W Bush's eight year watch would be crashing of old established financial institutions like the Lehmen Brothers and Merril Lynch, effective nationalization of mortgage behemoths Fannie Mae and Freddie Mac, insurance company AIG and the merger of banks, JP Morgan and Bear Sterns. After granting tax concessions to the most affluent US citizens, Bush has indebted the American masses by nationalizing losses running into trillions of US dollars of private organizations and massive expenditures on two ongoing wars. Of course in this free for all rampant and reckless march of Western capitalism, most US administrations, since the Reagan era and including of Bill Clinton have helped in the downhill slide.

A Trillion US Dollar Bail Out Plan and More 

Expressing concern that "Our entire economy is in danger," and the country faced economic ruin if the Congress did not act fast, President George W Bush in a televised speech on 24 September took his case on the financial bailout packet to the American people. "The market is not functioning properly. There has been a widespread loss of confidence, and major sectors of country's financial system are at risk of shutting down. The government's top economic experts warn that, without immediate action by Congress, America could slip into a financial panic."

"More banks could fail. The stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet. Foreclosures would rise dramatically. More businesses would close their doors, and millions of Americans could lose their jobs," he warned.

Democrats and even many Republicans in the US Congress are strongly opposed to the lame-duck administration's request for an additional $700 billion and unprecedented authority to buy distressed (read junk) assets to prevent a financial meltdown. Treasury Secretary Hank Paulson's bailout plan is now called the Troubled Asset Relief Program, or TARP and a fine print states that "the Secretary's authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time, " i.e. it can be more in total .This is apart from several hundred billion dollars already written down this year .

There are no explanations of how the bailout will work, no demands on the bankers in exchange for the public's money in the opaque three-page summary of plan, which also states in "Section 8. Review. Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency." In other words, no lawsuits allowed by aggrieved investors or American taxpayers. The chances are that all Congressmen and Senators, up for November elections and reliant on financiers would finally vote for the bail out.

The Federal Reserve itself is running out of money with 60% of its $800 billion portfolio now loaded down with junk--the mortgage securities and other rotten assets it took off Wall Street balance sheets. The Reserve is fast approaching its own historic disgrace almost like it was after the 1929 crash. Foreign investors--China, Japan and other major creditors--have been burned and may step back from pumping more capital in the casino like US economy.

Allowing troubled Goldman Sachs and Morgan Stanley to become bank holding companies a few days ago, killed the 1933 Glass-Steagall act. The Bank Holding Company Act of 1956 had debarred bank holding companies from engaging in non-consumer oriented banking activities, like investment banking and prohibited acquiring banks in other states than headquartered . The interstate restrictions were removed in 1994, and the 1999 Gramm-Leach-Bliley Act took care of the rest , both under President Bill Clinton's watch.

The impoverishing of the poor and enriching of the rich ruling elite in USA has been aptly described by Bill Moyers and Michael Winship in Truthout;

"From our offices in Manhattan, we look out on the tall, gleaming skyscrapers that are cathedrals of wealth and power - the Olympus ruled by the gods of finance, the temples of the mighty, the holy of holies, whose priests guard the sacred texts of salvation - the ones containing the secrets of subprime lending and derivatives as mysterious and elusive as the Grail itself. 

"This last couple of weeks, ordinary mortals below could almost hear the ripcords of golden parachutes being pulled as the divinities on high prepared for soft, safe landings - all this while tossing their workers like sacrificial lambs into the purgatory of unemployment. 

"During the last five years of his tenure as CEO of now-bankrupt Lehman Brothers, Richard Fuld's total take was $354 million. John Thain, the current chairman of Merrill Lynch, taken over this week by Bank of America, has been on the job for just nine months. He pocketed a $15 million signing bonus. His predecessor, Stan O'Neal, retired with a package valued at $161 million, after the company reported an $8 billion loss in a single quarter. And remember Bear Stearns's Chairman James Cayne? After the company collapsed earlier this year and was up for sale at bargain basement prices, he sold his stake for more than $60 million.

"Daniel Mudd and Richard Syron, the former heads of Fannie Mae and Freddie Mac - aka the gods who failed - are fighting to keep severance packages of close to $24 million combined - on top of the millions in salary each earned last year while slaughtering the golden calf. As it is written in the Gospel According to Me, when the going gets tough, the tough get going."

If Brezhnev lorded over the stagnation and decline of the Soviet power, in USA, the economic decline has been accomplished by the heads of the Federal Reserve, Alan Greenspan and now Ben Bernanke, chosen by USA's ruling elite.

Seeds of Cancer in Body Economic

The seeds of financial cancer were sowed at the 1944 Bretton Woods agreement which nominated the US dollar as the reserve currency pegged at 35 dollars to an ounce of gold. This cancer was embedded in body politic when Washington 'defaulted ' in 1971 and refused to honor the agreement. Washington has been helped in this game by the US-Saudi dynasty nexus where by in return for protecting the profligate Saudi Princes, Riyadh agreed to nominate the crude oil trade in US dollars, an arrangement followed by other oil producers.This has evolved into the emergence of the Military-Industry Complex with US Congress as its political spine, always pliant, bribed and cajoled by the Wall Street's financial services industry.

The importance of petroleum in warfare and economy became obvious even before the Second World War. By 1940s, the British who dominated the Middle East and still ruled over India, realizing the importance of oil and the strategic importance of Middle East as lifeline to India, had created military alliances with most of the countries of the Middle East including Iran to protect oil wells from the Soviet Union. By partitioning Hindustan, the British created a weak and dependent Pakistan as a bulwark against any USSR overtures into the Gulf. After the Second WW, USA was formally anointed the leader of the Western Christian nations although after the First WW itself the financial power base had started shifting towards the Wall Street from the City of London, but the latter still has great leverage for manipulation and mischief. 

From 1950s onwards, USSR made inroads into many Arab states led by secular, and nationalist leaders like Gamal Nasser of Egypt. West used religion and conservative and hereditary rulers to counter the egalitarian waves of socialism sweeping the Middle East, Asia and Africa. The battle lines for influence and control between the West and USSR (and China) saw many ups and downs. An epochal change occurred in 1979 when the US ally the Shah of Iran was overthrown by Khomeini led Shia revolution, threatening the Sheikhdoms and Kingdoms in the region. Western world and its frightened allies in the region, taken aback, encouraged and helped financially and militarily Saddam Hussein to douse the leaping flames from the volcano of Shia revolution with its belief in martyrdom. Iran and Iraq lost over a million young men; the 1980s Iraq 'Iran war only protected the vested interests of the West and its allies in the region. 

From the Middle East, Western strategic lever to manipulate and control the region beyond and its resources extended into South Asia through an axis between the USA, Saud dynasty, obscurantist Wahabi clerics and the Pakistan military. This axis along with support from other Muslim countries and even China fathered, nurtured, trained and financed with arms and billions of dollars, the present monster of militants and Jihadis to battle and force out the Soviet forces from Afghanistan.The nurseries of terrorism were left behind intact which morphed into Al Qaeda and Talibans, the latter with full support from Pakistan and the Gulf's Arab rulers and US acquiescence, which wanted a 'stable' Afghanistan for its Multinationals' pipelines to carry energy from central to south Asia and beyond. That project remains unfulfilled.

For his cooperation in 1980s, Pakistan President Gen Zia- ul- Haq was suitably rewarded with money and military aid which emboldened Islamabad to carry out later an invasion on Kargil in India. With the abundance of arms, Pakistan acquired a Kalashnikov culture of violence while increased opium production in Afghanistan, with Pakistan as an exit route left millions of its citizens addicted to the drug. Gen Zia Islamized Pak polity and completed nuclear bomb program with acquiescence and even support form the West. Later, Pakistan openly proliferated nuclear technology and material to north Korea, Iran, Libya and others. 

Although a large number of Americans and a significant plurality believe that the 911 was an inside job by CIA, with help from Mossad, the Israeli intelligence agency, the author however, believes that the neo-con dominated Bush administration, whose ill planned and invasion and continued occupation of Iraq has become a quagmire and it finds itself in an increasingly untenable position in Afghanistan, was plainly incapable of accomplishing such an operation. And, while the hijackers originated from Saudi Arabia (which provides the majority of foreign Sunni suicide bombers in Iraq) and Egypt, these countries remain unscathed while Afghanistan and Iraq were invaded. 

Now-a-days Washington and Tel Aviv regularly threaten to bomb Iran. In 2006, Israel even invaded Lebanon to destroy Hezbollah 2006, but instead the aura of the invincibility of its defense forces was shattered. But Tel Aviv bombers killed civilians and indulged in an orgy of destroying civilians infrastructure in Lebanon. US has surpassed even the Mongols in an unparalleled destruction in Iraq. More than a million Iraqis have been killed, many millions made refugees, more than four thousand US soldiers killed with many tens of thousands maimed and injured. The Iraq war has already cost over US$ 500 billion (the total estimates could be one to three US$ trillions). Washington now bombs lands inside Pakistan; Bush having authorized such attacks, much to the frustration and impotent anger of its strategic ally Pakistan, a nation under siege by the monsters of its own creation with full help from its friends. Afghanistan has become a haven for resurgent Taliban and nationalist forces in its eastern provinces and in the adjoining similar ethnic Pushtoon inhabited areas of Pakistan.

How to Avoid a Hangover (High on Borrowed Funds) ; Stay Perpetually Drunk

In "US at a turning point" Max Fraad Wolff commented recently on his website GlobalMacroScope

"This is now a national disaster for the United States. The centrality and import of inexpensive and available credit to America's function is total. We have moved well beyond a subprime crisis. We have moved well beyond a financial industry crisis. The position of the US economy is in jeopardy and the employment, security and wealth of the nation is now very much in play. 

"Like the nations of East Asia in the aftermath of the Asian financial crisis of 1997-8, or Eastern Europe after the collapse of the Soviet Union in 1991, our way of economic life - warts and all - is imperiled. No matter what happens as the week comes to a close our lives have changed. Shock waves are emanating out from the debt collapse ground zero. US$3.6 trillion in global stock market wealth has evaporated this week (in September). The job losses and macro effects are not far off.

"Well beyond the US's oft-discussed addiction to oil is its never-mentioned addiction to foreign credit. In 2007, America imported 49% of total global reported imported capital, the lowest US percentage in several years. Thus, our 25% reported share of oil consumption is much lower than our share in imported capital. We became addicted to debt - especially foreign debt - and that addiction becomes an illness in a credit constriction. Leading US banks and financial firms grew large and reaped huge profits writing, packaging, trading and rewriting, repackaging and re-trading all that borrowed money. Thus, the boom created the bust."

The Crash of Western Capitalist Civilization?

Richard C. Cook, a former U.S. civil servant with vast experience in many departments takes the kid gloves off US hubris and self-serving views of western 'civilization', its military, political and economic excesses over the last 500 years, and the likely outcomes .Wrote Cook recently.

"Train-wreck" doesn't even begin to describe what is starting to happen to the U.S. today with the financial crisis, an onrushing depression, and the failure of George W. Bush's war policy as he is faced down by Iran and the Russian bear. But in an even broader sense, the West, as a civilization, after a century of world war and the utter failure of global finance capitalism, may have reached its limits.

"If so, probably a majority of the people in the world are thinking: "Serves them right." For the last 500 years, the West has been striding across the globe, armed to the teeth with firearms, warships, bombers, and'more recently'depleted uranium, enforcing the "white man's burden" by enslaving nations and peoples and confiscating everything of value'ranging from art objects to gold to oil'that can be carried away.

"The financiers behind it all have also used the diabolically clever practice of creating money "out of thin air" to put the natives everywhere into debt, and, when that has proven insufficient, of doing the same to their own populations. All this is rationalized by various brands of racism, cultural superiority, social Darwinism, historical determinism, "dominion of the Elect," "God's chosen people," etc. Or, simply, "might makes right."

"Some call it "The New World Order."

" So today, we Americans, denizens of the "land of the free and the home of the brave," victors in two world wars, bearers of "democracy" to Afghanistan and Iraq, allies of the brave Israelis who hold high the banner of Judeo-Christian values among the ungrateful Palestinians'well, we Americans owe our own bankers almost $70 trillion at most recent count. With the government takeover of Fannie Mae and Freddie Mac, we owe holders of bad housing loans, including the governments of China, Korea, and Japan, another few trillion.

"The bluster of Kissinger, Brzezinski, the Kristols, the Christian fundamentalists, and their paid-off politicians and media millionaires notwithstanding, America'indeed, the entire West'has been found out, perhaps even checkmated on the world stage.

"The Bush/Cheney wars in Afghanistan and Iraq have blackened America's name forever. Iran has called our bluff. In Israel the gap between rich and poor is increasing as much as in the U.S. According to an article by Ian S. Lustick, the Palestinians have stood up to the Israelis to the point where more Jews are emigrating from that country than are moving in, and where those who remain are increasingly huddling around Tel Aviv as a safe haven. 

"In the 1990s, the European bankers used U.S. and NATO forces to dismember Yugoslavia so George Soros and the Rothschilds could gobble up Balkan resources. But that strategy is failing in the Caucasus, where the Russians fought back against the genocidal attack by Dick Cheney's poodle, Mikheil Saakashvili, the New York-trained attorney the CIA got elected as the president of Georgia."

Vladimir Putin is the Foremost Figure on the World Stage Today

On the tussle for the soul of Ukraine, wrote Cook ,"And now the people of Ukraine, the "Little Russians," realizing what the West has in store for them, are rushing back into the Slavic fold and may be only a year or so away from reuniting with their "Russian" cousins across the border. [a large majority in Ukraine is opposed to joining NATO)

"What is telling is to watch the Western financier press, chiefly the Washington Post and the New York Times , which fume about Russian prime Minister Vladimir Putin and his "authoritarian" manner. An example is the article on conference in Moscow. Mrs Barry wrote, "In three-and-a-half hours, in tones that were alternatively pugilistic and needy, Vladimir V. Putin tried to explain himself."

"I am sorry, Ms. Barry. You and your editors may think your writing is cute, but Vladimir Putin is the foremost figure on the world stage today. He will remain so after George W. Bush leaves the White House disgraced. Putin is heir to an epochal movement of patriots who began in the 1970s to take back Russia from within. -- with a base of operations from within the KGB and the Orthodox Church, led to Gorbachev's glasnost in the 1980s, and culminated in the Second Russian Revolution of 1991. At that point, the Western financiers gleefully rushed in to support an assault from the Russian "oligarchs" who were looting Russia of everything it owned. 
"The oligarchs were the shock troops of a financier assault that had already begun to overlap in the West with the Russian Mafia. Cheered on by the Washington Post and aided by academic advisors from places like Harvard, this international syndicate nearly destroyed Russia during the 1990s. But when Putin was appointed interim president by Boris Yelstin in 1999, and after winning the presidential election of 2000 in his own right, he began to fight back.

"From the mid-1970s to today, thousands of Russian gangsters, along with many hard-line Bolsheviks/Stalinists, were allowed to emigrate. Many settled in the U.S. and are here today, and many more settled in Israel. In fact, one reason the price of condos in New York, Miami, Tel Aviv, and elsewhere has inflated so much reportedly is the flood of cash from racketeering. 

"The crooks have allied themselves with the Colombian drug cartels and have heavily infiltrated the world's financial systems, even setting up their own banks for laundering money and speculating in the commodities markets. 

"Today, Putin is cleaning out the remaining gangster class. His efforts reached a milestone in January with the arrest in Moscow of Semion Mogilevich, called "the world's most dangerous man." 
Putin has declared that the world will not be governed in a "unipolar" manner; i.e. by the U.S. military as the police force for the global financiers. "This does not mean Russia has to be our enemy. In fact the world would be much better off, and much safer, if we joined with Russia as allies in keeping the peace. "

"But to do that our system would have to change, because finance capitalism is far too unstable to coexist with other nations as equals. It must either grow or die, because it always needs new victims to pay the interest on its usury practices and to finance its speculative balloons. As a last resort, it needs the kind of financial institution bailouts being engineered by Secretary of the Treasury Henry Paulson, where the only remaining stopgap is borrowing from public funds and adding to the national debt. 

"Once economic growth stops, as has now happened, and all the bubbles to restart it have blown up, as has also happened, the end really is nigh. Especially if the host'the U.S.'is bankrupt."

Unlike the last 1997-98 crisis the centre of gravity is now at the heart of liberal capitalism, USA and Europe. Having globalised and attached the world economy to its coat tails , the US recession is now dragging down the whole world. Remember US economy philosopher Francis Fukuyama who in 1989 in an essay entitled "The End of History?" had argued that western political and economic model had conclusively triumphed at the end of the Cold War .

" In August/Sept 1998 the very bastions of capitalism were reduced to utter panic and incoherence after the collapse of East and South East Asian economies , the decimation of the rouble and impending fall of the Brazilian economy . On September 8, The Washington Post under the title " Rethink Capitalism "wrote,' What is frightening about the world's current economic troubles is a sense that rules we thought we understood don't seem to apply now. Until a few months ago, we thought we knew what a developing country had to do to join the ranks of the wealthy. We thought we knew how a Communist country could transform itself into a capitalist one. The general understanding was that as the world became more connected, it also would become more prosperous. Now, with Russia and much of Asia having crashed, with Eastern Europe and Latin America imperiled and with much of Africa going backward, the certainties of only a year ago seem far from certain.' 

" Some other headlines around the same time were 'Global Capitalism, Once Triumphant, Is in Full Retreat 'by Robert J. Samuelson in Newsweek' ,'In Russia, the Liberal Western Model Has Failed 'by Martin Malia in International Herald Tribune etc. There were similar articles in Foreign Affairs of CFR, Washington and other journals. After chiding Asians for their crony capitalism , in Sep 1998, LTMC a big US Investment firm run by two 1997 Nobel Prize Winners for Economics (derivative trading?) had to be bailed out as its bets around the world amounted to US$ 100 billion .Perhaps in expatiation Amritya Sen was given next years prize for his writings on famines and democracy. " --- from my article "CAPITALISM IN CRISIS AND FAILURE OF GLOBALIZATION' , published in the Romanian Journal of International Affairs, Bucharest Volume VI 1-2 , October , 2000.

Confidence in the US Dollar;

Before 9/11, at a lunch for the Turkish Prime Minister at the Rashtrapati Bhavan I had demurred to an Indian economist ,now occupying a very high position in the government about the inequities of the current economic order , founded on the US dollar as the dominant reserve currency, which accounted for 68 percent of global currency reserves, up from 51 percent a decade ago. Yet in 2000, the US share of global exports ($781.1 billion out of a world total of $6.2 trillion) was only 12.3 percent and its share of global imports ($1.257 trillion out of a world total of $6.65 trillion) was 18.9 percent.

"Ever since 1971, when US president Richard Nixon arbitrarily took the dollar off the gold standard ($35 per ounce) in force since the Bretton Woods Conference at the end of World War II, the dollar has become the global monetary instrument that the United States, and only the United States, can produce by fiat, despite record US current-account deficits and the US as the leading debtor nation. The US national debt as of April 4 was $6.021 trillion against a GDP of $9 trillion. (It is now 9 trillion in a GDP of around 13 trillion) 

"India has to maintain ample foreign-exchange reserves, which have now reached $60 billion. Most of this must be kept in low-interest US securities, which US companies like Enron can then invest in India and force governments to guarantee 15 percent returns. Thus US companies earn billions of dollars by investing Indian savings in India. " [ This argument I had used in my piece ,'Decline of the American Century ' used by Asia Times on 11 September , 2002 , first anniversary of 11/9.]

The Indian economist appeared irritated and replied with great insouciance ," Yes , but you have to create confidence in the dollar as US has done." Since then many lunches have been organized at the Rashtrapati Bhavan and look where is the confidence in the US dollar. 

The citadel of Capitalism is now on a nationalization spree. Even in the so called Nehru's socialist era in India before 1991, Indian state sector had a lower share in GDP than that in UK , but India was demonized by the West as almost a communist state for not opening India to FDI. It is policies of that era implemented by Nehru and others that gave the economic and industrial strength and resilience, and human resources to build up the Indian industry . 

Even then officers, specially in economic affairs department of Indian Ministry of Finance and elsewhere, with possibilities of a deputation were chosen with tacit approval from USA controlling the IMF, World Bank and other Washington consensus institutions. They were, if found in tune with western thinking, then seconded to these Institutions, after which they earned fat pensions. Since then they have continued to promote policies favoring the West.

Victor Yushchenko

Here is an example of how USA proxies function. Ukraine's President Viktor Yushchenko as the head of the newly-formed National Bank of Ukraine in 1993, enforced the IMF's usual shock therapy economic medicine which only impoverished the economy. A new Ukrainian national currency, resulted in a dramatic plunge in real wages and the standard of living tumbled. In 1999, Yushchenko was appointed Prime Minister because of promised IMF loans. In the now discredited IMF programs, he closed down part of the country's manufacturing base. 

In 2001, he was dismissed following a non-confidence vote in the parliament ' "Viktor Yushchenko has fulfilled obligations to the IMF better and more accurately than his duties to citizens of his/our country, Olena Markosyan, a Kharkiv-based analyst, opined in Ukrainian centrist daily Den" (BBC Monitoring, 16 Nov 2004). 

Yushchenko was elected President in a December, 2004 re-poll as a result of US led West supported franchised 'street (orange) revolution ', earlier carried out successfully in Serbia and Georgia but which failed in Belarus, Uzbekistan and Kyrgyzstan.

According to New Statesman Yushchenko was supported covertly by the National Endowment for Democracy (NED), the Carnegie Endowment for International Peace, Freedom House and George Soros' Open Society Institute, the very entities, which helped oust Shevardnadze in Georgia the previous year. The NED has four affiliate institutes: The International Republican Institute (IRI), the National Democratic Institute for International Affairs (NDI), the Center for International Private Enterprise (CIPE), and the American Center for International Labor Solidarity (ACILS). They" provide technical assistance to aspiring democrats worldwide." Basically they help install pro-US puppets under the pretext of promoting democracy. 

It appears that speculation on land and housing was a major factor in bringing economic downfall in South East Asia in 1997-98 and elsewhere too. Indians have still not caught on that the land and housing values not withstanding genuine demand have reached sky high levels .They are not commensurate with returns on rents aka, speculation capital has entered the sector even from abroad.

In his book , "A Century of War: Anglo-American Oil Politics and the New World Order ", William Engdahl explains what happened to the Japanese economy .US Treasury Secretary James Baker through the 1985 Plaza accord and the Baker-Miyazawa agreement a month later got Tokyo to exercise monetary and fiscal measures to expand domestic demand and reduce Japan's external surplus. The Bank of Japan redced interest rates to 2.5% from 1987 until May, 1989 to stimulate US goods purchases. Instead, cheap money went into Japanese stocks and real estate and led to colossal twin bubbles still deflating today. 

Within months the Yen "shot up 40% against the dollar, and overnight Japan became the world's largest banking center, surpassing London and New York. As the country's twin bubbles inflated, Japan became home to the world's 10 largest banks, an astonishing achievement for a country its size or any country. Things were so extreme at the bubble's peak that the value of Tokyo real estate, in dollars, exceeded all of it in the US, and the nominal value of Japanese stocks amounted to 42% of the world's total - but not for long. Tokyo equities peaked in December, 1989. Three months later, the Nikkei dropped 23% or over $1 trillion in value, and it was just the beginning. From its 38,915 peak, Japanese stocks plunged to 7831 in April, 2003 with no assurance that's a bottom'".

US Arm Merchants, War lords and Military-Industry Complex.

It was President Dwight D. Eisenhower who introduced the phrase the Military Industry Complex to the public in his farewell address of January 17, 1961.

"Our military organization today bears little relation to that known by any of my predecessors in peacetime," he said, "or indeed by the fighting men of World War II and Korea... We have been compelled to create a permanent armaments industry of vast proportions... We must not fail to comprehend its grave implications... We must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex.-- [in the original draft the Complex had included the Congress too and rightly]

"Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hope of its children."

In a recent article on the Seeking Alpha website, University of Pennsylvania's Wharton School Prof James Quinn noted that the United States currently spends more on the military than the next 45 highest spending countries in the world combined, "Where did the peace dividend from winning the Cold War go,?" Quinn asks. The U.S. spends on weapons 5.8 times more than China, 10.2 times more than Russia and 98.6 times more than Iran. "The Cold War has been over for 20 years, but we are spending like World War III is on the near time horizon. There is no country on earth that can challenge the U.S. militarily." 

America is spending as if it is preparing for a major conflict, therefore much of the world feels that USA has aggressive intentions. As for the threat from Iran to US or Iran, Quinn says that Tehran spends $7.2 billion annually on their military. " We could make a parking lot out of their cities in any conflict. Does anyone really believe that they would make a nuclear weapon and use it on Israel? Their country would be obliterated." [Israel has over two hundred nuclear bombs]

US Military spending which was just under $400 billion in 2000 has since 9/11 more than doubled. "The natural response of the U.S. should have been to increase spending on border protection, upgrading the CIA, and increasing our ability to gather intelligence. Defeating the Taliban in Afghanistan and cornering Bin Laden in the mountains was more than enough to deter other countries from allowing terrorists to operate within their borders." 

Instead, Quinn added the U.S. spent billions on weapons, aircraft, tanks and missiles. "The neo-cons, led by Cheney, Rumsfeld, and Wolfowitz, saw the 9/11 attack as their opportunity to change the world. They've gotten their wish." [Whether in Iraq ,Lebanon, Afghanistan and possibly even in Pakistan] 

At the height of the Roman Empire, the Romans had an estimated 37 major military bases scattered around their dominions. At the height of the British Empire, the British had 36 of them planet wide. 

Depending on just who you listen to and how you count, US have hundreds of bases. According to Pentagon records, there are 761 active military "sites" abroad. U.S. troops are stationed in 70 percent of the world's countries - in 147 countries and 10 territories. Thus USA garrisons the planet north to south, east to west, and even on the seven seas, thanks to our various fleets and our massive aircraft carriers which, with 5,000-6,000 personnel aboard -- that is, the population of an American town -- are functionally floating bases. 

"If there were no aggressive intentions behind this policing of the world it would be particularly difficult to explain current U.S. troop deployments in Germany and Japan where the Pentagon has 57,000 and 33,000 troops, respectively. Quinn asks: "Germany and Japan each spend $40 billion on their military. Can't they defend themselves at this point? We defeated them 60 years ago. It is time to leave." 

He warns , "This is a prelude to decades of occupation in Iraq. Don't believe the blather about withdrawal. The military has no intention of withdrawing."

The greed of the defense contractors feeds the wars . The top five defense contractors generated almost $129 billion in revenues and $8 billion in profits in 2006, double their revenue and profits in 2000 when Bush became president. 

"The War on Terror," Quinn adds, "has been a windfall for the defense industry and their shareholders. They contribute tremendous amounts of money to Congressional candidates and have thousands of lobbyists pushing for still more defense contracts. It appears," he adds, "that the biggest winners of the War on Terror are the CEO's of the defense contractors. I wonder if they realized how rich they would become as they watched the Twin Towers crumble to the ground." 

The Myth of Missile Defense aka Leveraging of Defense Expenditure

In a recent Guardian article , George Monbiot exposed the whole charade of missile defense based on fear. The system has been in development since 1946, and has achieved nothing. "The programme has managed to hit two out of the five missiles fired over the past five years during tests of its main component, the ground-based midcourse missile defence (GMD) system. But, sadly, these tests bear no relation to anything resembling a real nuclear strike. All the trials run so far - successful or otherwise - have been rigged. The target, its type, trajectory and destination, are known before the test begins. Only one enemy missile is used, as the system doesn't have a hope in hell of knocking down two or more. If decoy missiles are deployed, they bear no resemblance to the target and they are identified as decoys in advance. In order to try to enhance the appearance of success, recent flight tests have become even less realistic: the agency has now stopped using decoys altogether when testing its GMD system."

"This points to one of the intractable weaknesses of missile defence: it is hard to see how the interceptors could ever outwit enemy attempts to confuse them. As Philip Coyle - formerly a senior official at the Pentagon with responsibility for missile defence - points out, there are endless means by which another state could fool the system. For every real missile it launched, it could dispatch a host of dummies with the same radar and infra-red signatures. Even balloons or bits of metal foil would render anything resembling the current system inoperable. You can reduce a missile's susceptibility to laser penetration by 90% by painting it white. This sophisticated avoidance technology, available from your local hardware shop, makes another multibillion component of the programme obsolete. Or you could simply forget about ballistic missiles and attack using cruise missiles, against which the system is useless."

"Missile defence is so expensive and the measures required to evade it so cheap that if the US government were serious about making the system work it would bankrupt the country, just as the arms race helped to bring the Soviet Union down. By spending a couple of billion dollars on decoy technologies, Russia would commit the US to trillions of dollars of countermeasures. The cost ratios are such that even Iran could outspend the US.

"The US has spent between $120bn and $150bn on the programme since Ronald Reagan re-launched it in 1983. Under George Bush, the costs have accelerated. The Pentagon has requested $62bn for the next five-year tranche, which means that the total cost between 2003 and 2013 will be $110bn. Yet there are no clear criteria for success. As a recent paper in the journal Defense and Security Analysis shows, the Pentagon invented a new funding system in order to allow the missile defence programme to evade the government's usual accounting standards. "

"US politics, because of the failure by both Republicans and Democrats to deal with the problems of campaign finance, is rotten from head to toe. But under Bush, the corruption has acquired Nigerian qualities. Federal government is a vast corporate welfare programme, rewarding the industries that give millions of dollars in political donations with contracts worth billions. Missile defence is the biggest pork barrel of all, the magic pudding that won't run out, however much you eat. The funds channeled to defence, aerospace and other manufacturing and service companies will never run dry because the system will never work."

The Wild West of Human Creativity for Defense

Developers working for the principal US military research agency Defense Advanced Research Projects Agency (DARPA) have dreamed up an unmanned spy plane that can, in theory, stay up in the air for five years straight, wrote Tom Nurse in Tom-Dispatch in August. 

After the USSR 's first man-made basketball-sized Sputnik earth satellite in October 1957, the United States, caught off guard and almost went into a panic mode. So, in 1958, the Pentagon created DARPA to ensure Washington forever maintained "a lead in applying state-of-the-art technology for military capabilities and to prevent technological surprise from her adversaries." But now with Soviet Union a history, and next defense spender China 's budget only 65 billion compared to USA's nearly 600 billion, DAPA merrily goes on gobbling funds, in some of the most bizarre schemes like a "mechanical elephant" that never made it into the jungles of Vietnam and telepathy research for psychic spying. The researchers are now developing a robotic canine called "Big Dog" for the Army.

In 2002, DARPA researchers demonstrated remote control of the movements of a rat with electrodes implanted into its brain using a laptop computer. In 2003 and 2004, DARPA's "Robolife" program researchers turned their attention to the "performance of rats, birds and insects in performing missions of interest to DoD, such as exploration of caves or covert deposition of sensors." Militarizing the animal world, however, carries its own risks. Take World War II's Project X-Ray in which bats with incendiary explosives strapped to their bodies turned on their military masters and set fire to a U.S. Army airfield. Just imagine what an army of Army rats might do! 

Other similarly named projects from the animal kingdom are WolfPack, a group (pack) of miniaturized, unattended ground sensors that are meant to work together in detecting, identifying and jamming enemy communications; Piranha, a project to "enable submarines to engage elusive maneuvering land and sea targets"; and Hummingbird Warrior, a program to produce a helicopter-like vertical take-off and landing unmanned air vehicle (UAV).

After the warnings about sinister African killer bees what about weaponizing insects as well? Instead of your plain old, garden variety Stinger missiles, you could have a swarm of missile stingers. DARPA-sponsored researchers are working on biologically-inspired "eyes" patterned after those of flies. "We think we can use this concept to make smart weapons smarter," says professor of materials science and engineering Paul Holloway, the project's lead researcher. 

How ever , while U.S. Navy Vice Admiral Timothy Keating, on the eve of the invasion of Iraq, bragged of a military "plan that reduces to an absolute minimum, if not eliminates, noncombatant casualties," the truth was different . While 68% of munitions used in Operation Iraqi Freedom were precision-guided, as opposed to only 6.5% in the 1991 Gulf War, the ratio of civilian to military deaths turned out to be almost twice as high this time around, according to Carl Conetta of the Massachusetts-based think-tank, Project on Defense Alternatives.

T
he Wild Human Ape

Nick Nurse says that perhaps the most frightening of DARPA's weaponized science projects "deal with militarily enhancing that most violent of apes -- man. In its 2003 strategic plan, DARPA touted the "Enhanced Human Performance" component of its "Bio-Revolution" program whose aim is to prevent humans from "becoming the weakest link in the U.S. military." Lest rats, bees, and trees become the dominant warriors, Enhanced Human Performance will "exploit the life sciences to make the individual war fighter stronger, more alert, more enduring, and better able to heal." Yes, what now captivates DARPA researchers once captivated comic-book readers -- the dream of creating a real-life Captain America, that weakling-turned-Axis-smashing-super-patriot by way of "super soldier serum."

"In 2002, U.S. pilots under the influence of Air Force "go-pills" (which Air Force spokeswoman Lt. Jennifer Ferrau calls a "fatigue management tool") killed four Canadian soldiers and injured eight others when they dropped a laser-guided bomb on a Canadian military training exercise in Afghanistan. Today, DARPA's Continuous Assisted Performance (CAP) program is aimed at creating a 24/7 trooper by "investigating ways to prevent fatigue and enable soldiers to stay awake, alert, and effective for up to seven days straight without suffering any deleterious mental or physical effects and without using any of the current generation of stimulants," wrote Nurse

War-making is Now America's Most Advanced Product

While DARPA "has been behind some of the world's most revolutionary inventions" -- "the Internet, the global positioning system, stealth technology and the computer mouse ," 85%-90% of its projects fail to meet their full objectives. DARPA's spectacular failure rate and noteworthy successes stem from its high-risk ventures. For years DARPA has funded extremely unconventional, sometimes beyond-the-pale, avant-garde research in all realms of science and technology. But "every project, however mind-stretching, invariably must end, directly or indirectly, in the incapacitation or death of future American enemies." The successful projects are the M-16 rifle, Hellfire-missile-equipped Predator drones, stealth fighters and bombers, surface-to-surface artillery rocket systems, Tomahawk cruise missiles, B-52 bomber upgrades, Titan missiles, Javelin portable "fire and forget" guided missiles, and cannon-launched Copperhead guided projectiles, among others.

Concludes Nurse," Other than finding new ways of circumventing international law (e.g. bypassing violations of national airspace with space-launched weapons), which the U.S. already does quite well with current technology, or the mountain climber's mantra "because it's there," it's hard to fathom why the government is still locked in a Cold War-style arms race in a single hyperpower world. The only explanation available lies in the driving will of the ever-expanding military-industrial complex, named by President Eisenhower. This would certainly help explain why we have no educational or environmental DARPAs. For today's researchers, DARPA is, both intellectually and financially, a fabulous and alluring gravy train, the only agency that puts real money into and rewards creative and maverick thinking. The freedom to dream and create, DARPA's mandate, is seductive and exceptional and, as such, so dangerous that we have to ask ourselves whether war-making isn't now America's most advanced product."

An Orgy of Spending and the Coming Great Consumer Crash of 2009

Prof James Quinn warned in August that for" the last seven years the American consumer has carried the weight of the world on its shoulders. This has been a heavy burden, but when you take steroids it doesn't seem so heavy. The steroid of choice for the American consumer has been debt. We have utilized home equity loans, cash out refinancing, credit card debt, and auto loans to live above our means. It has been a fun ride, but the ride is over. We can't get steroids from our dealer (banks) anymore."

With charts and graphs he explains that the tremendous prosperity that began during the Reagan years of the early 1980's has been a false prosperity built upon easy credit. In 1968, when the credit card was a new concept, total credit debt was $8 billion. Now the total exceeds $880 billion according to the Federal Reserve. Household debt reached $13.8 trillion in 2007, with $10.5 trillion of that mortgage debt. The leading edge of the baby boomers turned 30 years of age in the late 1970's, just as the usage of debt began to accelerate. Debt took off like a rocket ship after 9/11 with the President urging Americans to spend and Alan Greenspan lowering interest rates to 1%. Only in the bizarre world of America in the last 7 years, while in the midst of 2 foreign wars, would a President urge his citizens to show their patriotism by buying cars and TVs.

A phenomenon called "expenditure cascade" has occurred in the U.S. according to Cornell Professor Robert Frank. When top earners build large multi-million dollar mansions, they shift the frame of reference for those just below them on the income scale. Those people then respond by building bigger houses and so on down the food chain. This has resulted in families living on the edge. If one parent loses their job, it's an easy slide into bankruptcy.

In the developed world US has the lowest savings rate. but no other country in the world can spend like it. Its motto is live for today, the government will bail you out in the future.

Continues Prof Quinn ,"We have outsourced our savings to the emerging economies, along with our manufacturing jobs. The Chinese are saving the money we've paid them for flat screen TVs and the Middle Eastern countries are saving the money we've paid them for oil. You need savings in order to increase investment. The emerging markets are making the vast majority of the investments in the world.

'Wall Street created new investment vehicles that allowed mortgages to be packaged and sold to investors throughout the world with investment grade ratings provided by Moody's and S&P, for a price. Mortgage companies and lenders developed ARMs, Option ARMs, teaser rate loans, no-doc loans, negative amortization loans and 100% financing loans. The demand caused by this influx of new home buyers drove prices skyward, with home prices doubling in five years. This price rise brought in the speculators/flippers, who began to buy multiple houses with nothing down, pre-construction, with plans to sell them for a profit without ever moving into them.

'Average Americans who saw their paper wealth growing rapidly, as their home value increased, took advantage of this by refinancing their mortgages and extracting the equity from their homes and spending it. In 2004 and 2005, Americans sucked $800 billion from their homes each year. The buying binge led to 8.5 million total home sales in 2005, about 3.5 million more than what would have been expected based on historical rates.

"Only when the tide goes out do you discover who's been swimming naked."

'The pseudo-wealth that has been created in the last seven years has begun to unwind, but will increase in speed in 2009. The tide is on its way out, and the naked swimmers are numbered in the millions. Home prices reached an unsustainable level in 2006. Prices had gone parabolic between 2001 and 2006, with the average price reaching above $225,000. In 2001, prices were just above $125,000. As the pundits keep looking for a bottom in housing, there is a long way to go. 

'The massive overbuilding based on false demand has led to 3.5 million excess homes in the U.S. based upon historical trends. The most shocking fact is that there are 1.5 million vacant homes. This oversupply can only be corrected by massive price decreases. The millions of exotic mortgages (subprime, alt-A, ARMs, no-doc, and negative amortization), which have started to blow up, has led to a tsunami of foreclosures. In 2005 there were less than 600,000 foreclosures in the U.S. In the 1st two quarters of 2008 there have been more than 1,350,000 foreclosures, with the pace accelerating. Approximately 15% of all subprime mortgages and 7% of all Alt-A mortgages are in delinquency. According to UBS, 27.2% of subprime mortgages originated in 2007 by Washington Mutual are in delinquency. Washington Mutual is the poster child for how not to run a savings and loan.

'The combination of oversupply, over-leverage, and foreclosure tsunami has now taken on a life of its own. Home prices have been spiraling downward for two years to the point where 29% of all households that purchased in the last five years owe more than their house is worth according to Zillow, the home valuation company. For those who bought in 2006, 45% have negative equity. It is now making economic sense for people to just walk away from their house and send the keys to the lender. This is referred to as 'jingle mail'

'Consumers have dramatically increased the use of credit cards, now that the housing ATM has run out of cash. The average American household has credit card debt of $9,840 versus $2,966 in 1990, at an average interest rate of 19%. Credit card delinquencies have increased to 4.51% in the 1st quarter. Amex just announced a major unexpected write-off because its prime customers have hit the wall and are defaulting. Consumers used their credit and debit cards to buy $51 billion of fast food in 2006 according to Carddata. According to the Federal Reserve, 40% of American families spend more than they earn.

'Retailers, homebuilders, restaurants, and car makers extrapolated the false demand far into the future. There are now over 7,000 Wal-Marts, 6,000 CVSs, and 30,000 McDonalds. Any company that built their business on false assumptions and excess debt will be meeting their maker, shortly.

Banks are doing what they usually do, closing the barn door after the pigs have escaped. As their losses have crossed the $500 billion mark, it is getting tougher for them to convince more suckers to buy their toxic waste "assets" Based on the well qualified assessments of Bridgewater Associates and NYU economist Nouriel Roubini, there is still $1.0 to $1.5 trillion in losses to go.

Bank Lending to Consumers will be Subdued for Years

Government unemployment figures have begun to skyrocket, while the true unadjusted unemployment figures point to a major recession. If the number of people who have given up looking for a job were included, the official 5.7% unemployment rate would jump to 14%. People without jobs can't spend money or make mortgage payments. With the deep recession anticipate, the official figures will reach 7%. This will result in lower consumption.

Nurse warns ,"the gathering storm has arrived. It will be long, painful and destructive. Those who prepared for the storm by not taking on excessive debt and living above their means, will ride it out unscathed. Those who built their house on sand by leveraging up and living the "good" life, will see their house swept out to sea.

He then sounds optimistic ,"The storm will pass and we will rebuild. Our country is resilient. The purging of this massive debt will result in the creative destruction that is the hallmark of American capitalism. New opportunities, new technologies and a new attitude will put us back on course.- The "material generation" needs to dematerialize. 

"My biggest concern is that our politician leaders and their cronies running our government will continue to try and reverse the normal capitalistic course of recession and expansion. Companies need to fail, housing needs to find its bottom based on supply, demand and price. Those who gambled must be allowed to lose and suffer the consequences. If the government attempts to shift the losses to those who lived lifestyles of thrift, an angry uprising will ensue. Government intervention in this natural process could lead to a decade long depression. Let's hope that reasonable heads prevail."

David Rosenberg, the brilliant economist from Merrill Lynch, describes what has happened and what is to come:

"This is an epic event; we're talking about the end of a 20-year secular credit expansion that went absolutely parabolic from 2001-2007.

"Before the US economy can truly begin to expand again, the savings rate must rise to pre-bubble levels of 8pc, that the US housing stocks must fall to below eight months' supply, and that the household interest coverage ratio must fall from 14pc to 10.5pc.

"It's important to note what sort of surgery that is going to require. We will probably have to eliminate $2 trillion of household debt to get there," he predicts, saying this will happen either through debt being written off, as major financial institutions continue to do, or for consumers themselves to shrink their own "balance sheets".

The elimination of $2 trillion of household debt will lead to the closing of thousands of retail stores, strip malls, restaurants, and bank branches. There should be a lot of vacant buildings available in the next few years, and a few suspicious fires.

Let us see ! The Americans are in for an interesting time, as the Chinese would say and so would be the Chinese themselves and the rest of world yoked to the US economy.

K Gajendra Singh, Indian ambassador (retired), served as ambassador to Turkey and Azerbaijan from August 1992 to April 1996. Prior to that, he served terms as ambassador to Jordan, Romania and Senegal. He is currently chairman of the Foundation for Indo-Turkic Studies. Copy right with the author. E-mail: Gajendrak@hotmail.com  

25-Sep-2008
More by :  K. Gajendra Singh
 
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Solitude and other poems by Rajender Krishan
 


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