Crisis in the US: Plan B?

[Warmoog]

Crisis in the US: "Plan B"?

Richard C. Cook

November 11, 2007

Global Research

 

Strange events are taking place in the U.S.

 

By August 2007, a lot of very smart people were reading the tea leaves, convinced that the upper echelons of the U.S. government had their own hidden reasons for forecasting an event even more heinous than the attacks of September 11, 2001.

 

President George W. Bush, Vice President Richard Cheney, and Secretary of the Department of Homeland Security Michael Chertoff had been hinting that another 9/11 could be coming.

 

Figures from the U.S. military had also projected a 9/11-type event. On April 23, 2006, for instance, the Washington Post published a statement by an unnamed Pentagon source that, “Another attack could create both a justification and an opportunity that is lacking today to retaliate against some known targets.”

 

9/11 was a turning point in history, and not just because it provided a pretext for the Bush administration to use off-the-shelf plans to invade Afghanistan and Iraq. The 9/11 Commission criticized the government for failing to do enough to act on danger signs that attacks may have been afoot. But a movement has formed which argues that the reality was worse—that 9/11 was an inside job staged to further the geopolitical ambitions of an elite seeking to use U.S. military power to advance its own imperialistic agenda.

 

What is indisputable is that from the 2000 presidential election through the 9/11 attacks and their aftermath, what New York Times columnist Paul Krugman termed a "revolutionary power" took control of the U.S. government.

 

Krugman's statement, contained in the introduction to his 2005 book The Great Unraveling, has not been taken seriously enough. George W. Bush had lost the popular vote to Al Gore but was named to office by a Supreme Court that rubber-stamped what Greg Palast and others have proven was an extended process of electoral fraud in Florida. The subsequent actions and policies of the Bush/Cheney administration have been in accord with its dubious beginnings.

 

From the emergence of the Neocons as an ideological power base dominant over U.S. foreign policy, to destruction wreaked on the Bill of Rights by illegal surveillance of citizens, to the senseless creation of the bureaucratically monstrous Department of Homeland Security and passage of the Patriot Acts, to the initiation of "wars of choice" leading to the devastation of two nations and the killing or displacement of perhaps a million Middle Eastern non-combatants, to violation of international treaties and conventions against wars of aggression and torture of prisoners, to presiding over an economy ruined by the continued export of manufacturing jobs and the creation and deflation of the housing bubble, to the wrecking of the federal budget by over a trillion dollars of wartime expenditure, to the abandonment of the city of New Orleans during and after Hurricane Katrina, to tax cuts for the most wealthy while the income of the middle class has drastically eroded, and to threats to start another war, this time against Iran, based on deceptions similar to those which preceded the Iraq invasion, the Bush/Cheney administration has brought the U.S. to the brink of catastrophe.

 

What is now being asked is whether there was a plan that was to take place in September-October 2007 whereby the rest of the job would have been done. Speculation was that a nuclear device was to have been detonated in a U.S. city, perhaps one of the six attached to cruise missiles that were "inadvertently" carried by the Air Force B-52 bomber that flew from South Dakota to Louisiana just before Labor Day.

 

Check this link from the Arkansas Democrat Gazette for the official explanation of the incident: (source).

 

According to the Air Force's report, the missiles were being mothballed due to "a treaty," but ground personnel at Minot Air Force Base "grabbed the wrong ones" and loaded missiles with nuclear warheads by mistake.

 

Some have argued that these nukes were secretly bound for Iran to prepare for a nuclear attack on that country. But would such a Keystone Cops routine have been necessary to prepare for military action as a contingency to implement a possible decision coming from the highest political levels?

 

Suppose, on the other hand, that one of the nukes was targeted for a false-flag domestic attack, perhaps a city like Portland, Oregon, where military exercises simulating a major terrorist incident had been scheduled and where residents actually were warning each other to leave town.

 

Was the attack to trigger an economic collapse, leading as a side-effect to a payoff of billions of dollars for the placers of the "bin Laden bets" that were reportedly made in the financial markets anticipating a fifty percent decline in stock prices? Of course such an attack would be blamed on foreign terrorists. The trail of the explosion would be found to lead to Iran, resulting in war against that nation. Would the Constitution then have been suspended and martial law declared? Would citizens have been rounded up and herded into prison camps?

 

Such a scenario seems unfathomable, horrendous, even incredible. But it still may have been in character for a regime whose actions have led the world to view the U.S. as the greatest existing threat to peace. Rumors about such possible events have been churning on the internet for months.

 

But the rumors have not been confined to "conspiracy theorists." Regarding President Bush’s commitment to the sanctity of constitutional processes, Congressman John Olver expressed the prevailing view in government circles when he told twenty of his constituents at a private meeting in Massachusetts on July 5, 2007, that he could not support a movement to impeach Bush. According to an attendee, the reason the Congressman gave was that, "The President would declare a national emergency, institute martial law, and suspend the 2008 elections."

 

Therefore we might ask if it is true, as some sources have alleged, that the reason these events have not taken place was that there was a revolt by the U.S. military, which refused to carry out the false-flag attack that may have been intended?

 

What then has happened differently which indicates that events may have altered or postponed such a sinister denouement to the nightmare of the last seven years?

 

What has happened appears to be that the U.S. establishment has decided to move to "Plan B." This may be defined as a decision that the sway of the Bush/Cheney regime must end and that some semblance of normality should be restored, at least in appearance, by making Hillary Clinton the next President.

 

Of course part and parcel of any Hillary Clinton presidency would be the presence and participation of her husband, former President Bill Clinton. We may rightly speak of "the Clintons" as a unit in this context.

 

The signs that Hillary Clinton is the President-designee have been appearing in droves. These include her rise in the polls, especially in Iowa, the emergence of an anti-Bush surge in the mega-media, especially on MSNBC, and the appointment of Democrats with ties to the Clintons at the Defense and Treasury Departments. Other signs include the emergence of a campaign by certain well-connected websites to keep tabs on pro-Neocon news commentators and offensives being launched against some particularly obnoxious right-wing media figures such as Bill O'Reilly and Rush Limbaugh.

 

The way Hillary Clinton is being portrayed in the mega-media is of decisive importance, because media-owning conglomerates such as GE, Viacom, and Disney serve the interests of the establishment, not the public. Nothing makes it to the airwaves without the approval of the financial interests which control these giants. Also decisive was the appearance of Hillary and Bill on the cover of the October 6 edition of The Economist, long the keystone publication of the Anglo-American international financial empire.

 

The Washington Post, another establishment house organ, has noted that Hillary herself is couching her election in terms of "when, not if." The theme she is projecting is that of an anointed insider calling for "national unity." For this she is being duly attacked by her competitors, most notably John Edwards.

 

The best example of how the mega-media is telegraphing establishment intent was Chris Mathews' lead story on Hardball on Monday night, November 5, which displayed MSNBC's "Power Rankings" for presidential candidates. The segment began with an adulatory profile of Hillary's campaign. Mathews then set a record for premature declaration of victory by predicting her as "the most likely winner of the Democratic nomination and presidential election" a full year before the election is even to take place.

 

Mathews repeated his judgment several times in what was obviously rehearsed language, even as the members of his three-person panel of commentators were trying in vain to raise objections, including the view that Hillary might not even win the Iowa caucuses or the New Hampshire primary. Mathews repeatedly overrode his own experts with his insistence that Hillary was the MSMBC pick.

 

Oh yes, we will have the formality of a presidential election. Doubtless some fur will fly, because Hillary will always be the Clinton the right-wing most loves to hate. So we won't see a coronation.

 

It is certain, however, that the current regime will exact a price for accepting at least temporary defeat. So far the price seems to be agreement by Hillary Clinton that the conquest of Iraq is a fait accompli, that the building of the Baghdad supersize embassy will continue, that permanent military bases in Iraq will be maintained a lá Korea, and that the option of an attack on Iran will remain "on the table."

 

She has not raised her voice against any of this. The vehicle by which Clinton signed on to a possible attack on Iran was her vote in favor of the Senate resolution naming the Iranian Revolutionary Guards as a terrorist sponsor. Perhaps there is also an understanding between the Clintons and the Bush/Cheney camp that the latter will not be prosecuted for crimes committed in office.

 

No matter who becomes president in 2008, that person will be left with a nation in disarray. This includes a foreign policy that has been sacrificed to militaristic interests, the rise of a militant Russia now allied with China through the Shanghai Cooperative Organization, and a Latin America in open revolt against U.S. domination. Even maintaining a post-Bush foreign policy will be a challenge, given Condoleezza Rice's legacy of a State Department whose morale is in shreds due to a vicious Neocon takeover of the foreign service that will persist for a generation or more.

 

Meanwhile, the U.S. economy is a wreck, with out-of-control debt, the housing collapse in full flower, continued erosion of manufacturing jobs, a sinking dollar, a crumbling physical infrastructure, soaring oil and food prices, out-of-control illegal immigration, and hordes of well-heeled foreigners buying U.S. assets with rapidly depreciating dollars.

 

The economy is in much worse shape today than when Bill Clinton took over from George H. W. Bush in 1992. It will be a miracle if the next president is able to keep the U.S. from sinking into a depression. The only qualification to this assessment lies with the large companies heavily invested in the growing Chinese economy—GM, GE, IBM, etc. But a majority of the stock of these and other corporations is owned by financial institutions, while the trickle-down effect of dividends will provide only a fraction of the purchasing power needed to keep the U.S. economy afloat.

 

While the views of the American public still seem to register to a slight degree, the Democrats have failed to respond to their restoration by the electorate to power in Congress by ending the Iraq War. But by their votes in 2006 and by consistently giving George W. Bush such low ratings in the polls, Americans have delivered a message. So have the many internet sites covering the real news of the war and the economy.

 

As well have the two maverick presidential candidates, Ron Paul the Republican and Dennis Kucinich the Democrat, who have been saying things not heard in the supine world of American politics for a long time. Things like getting rid of the inept handling of credit by the Federal Reserve and stopping the war in Iraq by exiting right now, without any more lies or excuses.

 

But it is by no means certain that there is much immediate hope of salvaging the nation from the current debacle. The interests of millions of Americans have been severely damaged by the financial and political malfeasance that has gone on for so long. Abroad, the deaths or ruin of large numbers of people in the Middle East must be accounted for. That region is now less stable than ever, as the situation in Pakistan shows. A negotiated two-state settlement between Israel and the Palestinians seems a distant dream. Finally, sane multilateral systems for sharing of the world's resources among nations or dealing with global warming are nowhere in sight. And a nuclear holocaust involving the U.S. vs. Russia and possibly China is a growing danger.

 

Further, the U.S. economy can't simply be "fixed." It is too far gone for that. The elite began their takedown of the economy during the 1970s and show no signs of being able to reverse course. It started with the removal of the gold-peg to the dollar in 1971 and continued with the explosion of U.S. currency on the international scene due to the petrodollar, soaring trade and fiscal deficits, action to permanently mortgage us to military-backed dependence on imported Middle Eastern oil, a permanent tilt in favor of Israel vs. the Islamic world, and, finally, the galloping 1970s inflation.

 

These events led to the Fed-induced crash of 1979-83 which left us with today’s travesty of a "service" economy. Now in 2007 the Fed is trying to engineer a "soft landing" of an economy trapped in unsustainable debt and collapsing bubbles, at least until the 2008 election. But everyone knows a crash is coming, particularly as China and other nations dump the plummeting dollar as their reserve currency.

 

So what are the Clintons and their government-in-waiting planning? You would think they had something in mind. But maybe not. During the 1990s, Bill Clinton acted in full accord with the globalists’ agenda by continuing with the Reagan/Bush I privatization of the economy, with downsizing of government, and with promotion of the dot.com bubble that ended with the 2000 market crash. Unfortunately, it will not be as simple to engineer a repeat performance of even the ephemeral prosperity of the 1990s when what is lacking today is a real economic driver.

 

The grievous condition of the U.S. is reflected in an epidemic of mental and emotional illness and a rising violent crime rate. It is reflected in a USA Today poll, where 72 percent of Americans say the nation is moving in the wrong direction (74 percent in a Washington Post/ABC News poll). And who knows what disasters global warming has in store?

 

To face all this will require a decisive reorientation of U.S. governance. There is little in the history of the Clintons, their opportunistic style, and their passivity to the financier elite that justifies this much optimism. The financial controllers today exert more power over the U.S. economy and the nation's politics than at any time in history. They are not giving up this power. In fact, Hillary is their "safest" choice among the Democrats in maintaining control.

 

Perhaps we may want to indulge in a sigh of relief at how much worse things could have been—or may still be—if Bush/Cheney unleash even more disasters. But stay tuned. The next four years are likely to be decisive—particularly because the plan to elevate Hillary Clinton may be a trap by which she is left holding the bag for an economic collapse that would make it much easier than at present for the Neocon storm troopers to rush back in.

 

What is absolutely certain is that the people of the world do not want war, regardless of their religion, race, or nationality. The people of the world want economic fairness. The people of the world want to live by honest labor, not bank credit. And the people of the world want an environment that is clean and safe for future generations. The only people who do not appear to want these things have been those who are currently in charge of the U.S. government.

 

The question now is what are the American people willing to do to assure that what is truly in the best interests of the nation will prevail? Will they continue to be manipulated by the fear which has been the basis of the Bush/Cheney mode of governance? Will they continue to act as obedient puppets as it becomes harder and harder to earn a living and raise a family in an economy throttled by debt and a declining standard of living? Will they simply vote for whom they are told to support by the media and the pollsters? Or will some decide that enough is enough and resolve to take America back in 2008?

 

But even if they do, can they succeed?

 

While Hillary Clinton is likely the designated Democratic nominee, Rudy Giuliani leads the polls for the Republicans. Giuliani, with his own group of Neocon advisers and his militant outbursts promising more war, is the ideological godson of Bush/Cheney.

 

Whoever is pulling the strings behind the scenes, it is likely obvious to them that to allow a character like Giuliani to step in while so many raw nerves are exposed among the American populace could lead to a premature explosion. Especially since Giuliani spent most of his adult life as a prosecutor putting people in jail. It's hardly a time in the nation's life when what is needed as head of state is an expert at slamming people into detention.

 

So what if Giuliani actually threatens to defeat Hillary while the establishment has decided to support her, perhaps just to buy time?

 

The establishment is taking precautions. It seems to be doing so by starting to promote a plan that could see Ron Paul running as a third-party candidate. You can see this unfolding, for instance, in his favorable treatment on CNN's "Situation Room." And could Dr. Paul really have begun suddenly to raise enormous amounts of campaign cash without someone in the establishment giving a green light?

 

Ron Paul as a candidate would obviously generate enormous excitement. But he could end up playing the same role as Ross Perot in the 1992 election, where Perot allowed disgruntled voters to let off steam while drawing enough votes to allow Bill Clinton to defeat George H.W. Bush.

 

One way or the other, the fix is on.

 

Finally, we should note that the "revolutionary power" Paul Krugman refers to is not just the Bush/Cheney/Neocon regime. They are only the most visible recent manifestation.

 

The true "revolutionary power" is much less visible but may reasonably be identified with the higher echelons of the "financier elite" and "establishment" referred to throughout this article. The underlying agenda of this group seems to be to destroy the U.S. as the world's greatest industrial democracy, turn it into a province of a globalist system under their control, and use its land and population as muscle for world monetary and military dominance.

 

Can anything be done? Of course. The underlying problem is that the power and wealth acquired by the U.S. after World War II has eroded—has perhaps been squandered—as the rest of the world has grown up. Certainly, if the right people were in charge the U.S. could accept the inevitable, rebuild its failed domestic economy on democratic principles, and assume its rightful place as one of several major world powers, with the responsibility this would entail. Instead, we have been trying to hold onto what has slipped away by a continued resort to financial aggression combined with force of arms, rather than altruistic action based on enlightened ideals.

 

It's a failed mission. What has happened to America in the last decade is turning into the greatest tragedy of modern history.

 

And what can ordinary people do while all this is unfolding? The best advice seems to be not to try to hoard paper assets, which the elite are able easily to manipulate or devalue. It's to get out of debt, hone our manual skills, invest in a small business, grow our own food, stay positive, help others, work hard, eschew the consumption lifestyle, pray and meditate, be sober, and learn to think for ourselves. We might try to work within the political system if we can and want to, but should not count on easy successes, because, as the man said, "It's a hard rain's gonna fall."

 

Richard C. Cook is a retired federal analyst, whose career included service with the U.S. Civil Service Commission, the Food and Drug Administration, the Carter White House, and NASA, followed by twenty-one years with the U.S. Treasury Department. His articles on economics, politics, and space policy have appeared on numerous websites. He is the author of Challenger Revealed: An Insider’s Account of How the Reagan Administration Caused the Greatest Tragedy of the Space Age, called by one reviewer, “the most important spaceflight book of the last twenty years.” His website is at www.richardccook.com.

 

Richard C. Cook is a frequent contributor to Global Research. Global Research Articles by Richard C. Cook.

[Armchair Politician]

I don't buy the 9/11 conspiracy theory chiefly because it is unnecessary. The USA has never needed any justification for invading other countries.

 

The USA has not invaded anyone recently because it's also counterproductive. Wars cost money, political capital, and economic resources, all of which are better spent elsewhere. Japan and Germany are economic powerhouses today because they were constitutionally barred from wasting money on weapons and wars.

 

9/11 slipped past the USA administration because they're incompetent, not because it's an inside job. Even Bangladesh did a better job with their hurricane than the USA did, and theirs was 100x worse.

 

They're just ******. If they had insidious plans they would screw those up too. In fact they do, those are the ones that are complete f***-ups, like arming the Shi'ites to fight the Sunnis, then arming the Sunnis to fight the Shi'ites, now they're just fighting both. That's a classic USA foot-shot, bullsie right in the bone.

[Castro]

Crisis of the U.S. Dollar System

 

By F. William Engdahl

 

Global Research, October 14, 2006

 

Text of author's presentation at an international conference held in Feldkirch, Austria, September 2003.

 

It's accepted wisdom that the United States, despite recent problems, is still the strongest growth locomotive for the world economy, the pillar of the global system. What if we were to discover that, instead of being the pillar, that the United States was, in fact, the heart of a dysfunctional economic system, which is spreading instability, unemployment, and depression globally?

 

No other nation on earth comes near to the commanding US military superiority in smart bombs, military IT, or in sheer force capabilities. The US position in the world since 1945, and especially since 1971, has rested on two pillars, however: The superiority of the US military over all, and, the role of the dollar as world reserve currency. That dollar is the Achilles heel of American hegemony today.

 

In my view, the world has entered a new, highly dangerous phase since the collapse of the US stock market bubble in 2001. I am speaking about the unsustainable basis of the very Dollar System itself. What is that Dollar System?

 

How the Dollar System works

 

After 1945, the US emerged from war with the world's gold reserves, the largest industrial base, and a surplus of dollars backed by gold. In the 1950's into the 1960's Cold War, the US could afford to be generous to key allies such as Germany and Japan, to allow the economies of Asia and Western Europe to flourish as a counter to communism. By opening the US to imports from Japan and West Germany, a stability was reached. More importantly, from pure US self-interest, a tight trade area was built which worked also to the advantage of the US.

 

That held until the late 1960's, when the costly Vietnam war led to a drain of US gold reserves. By 1968 the drain had reached crisis levels, as foreign central banks holding dollars feared the US deficits would make their dollars worthless, and preferred real gold instead.

 

In August 1971, Nixon finally broke the Bretton Woods agreement, and refused to redeem dollars for gold. He had not enough gold to give. That turn opened a most remarkable phase of world economic history. After 1971 the dollar was fixed not to an ounce of gold, something measurable. It was fixed only to the printing press of the Treasury and Federal Reserve.

 

The dollar became a political currency—do you have "confidence" in the US as the defender of the Free World? At first Washington did not appreciate what a weapon it had created after it broke from gold. It acted out of necessity, as its gold reserves had got dangerously low. It used its role as the pillar of NATO and free world security to demand allies continue to accept its dollars as before.

 

Currencies floated up and down against the dollar. Financial markets were slowly deregulated. Controls were lifted. Offshore banking was allowed, with unregulated hedge funds and financial derivatives. All these changes originated from Washington, in coordination with New York banks.

 

The dollar debt paradox

 

What soon became clear to US Treasury and Federal Reserve circles after 1971, was that they could exert more global influence via debt, US Treasury debt, than they ever did by running trade surpluses. One man's debt is the other's credit. Because all key commodities, above all, oil, were traded globally in dollars, demand for dollars would continue, even if the US created more dollars than its own economy justified.

 

Soon, its trade partners held so many dollars that they feared to create a dollar crisis. Instead, they systematically inflated, and actually weakened their own economies to support the Dollar System, fearing a global collapse. The first shock came with the 1973 increase in oil by 400%. Germany, Japan and the world was devastated, unemployment soared. The dollar gained.

 

This Dollar System is the real source of a global inflation which we have witnessed in Europe and worldwide since 1971. In the years between 1945 and 1965, total supply of dollars grew a total of only some 55%. Those were the golden years of low inflation and stable growth. After Nixon's break with gold, dollars expanded by more than 2,000% between 1970 and 2001!

 

The dollar is still the only global reserve currency. This means other central banks must hold dollars as reserve to guarantee against currency crises, to back their export trade, to finance oil imports and such. Today, some 67% of all central bank reserves are dollars. Gold is but a tiny share now, and Euros only about 15%. Until creation of the Euro, there was not even a theoretical rival to the dollar reserve currency role.

 

What is little understood, is how the role of US trade deficits and the Dollar System are connected. The United States has followed a deliberate policy of trade deficits and budget deficits for most of the past two decades, so-called benign neglect, in effect, to lock the rest of the world into dependence on a US money system. So long as the world accepts US dollars as money value, the US enjoys unique advantage as the sole printer of those dollars. The trick is to get the world to accept. The history of the past 30 years is about how this was done, using WTO, IMF, World Bank and George Soros to name a few.

 

What has evolved is a mechanism more effective than any the British Empire had with India and its colonies under the Gold Standard. So long as the US is the sole military superpower, the world will continue to accept inflated US dollars as payment for its goods. Developing countries like Argentina or Congo or Zambia are forced to get dollars to get the IMF seal of approval. Industrial trading nations are forced to earn dollars to defend their own currencies. The total effect of US financial and political and trade policy has been to maintain the unique role of the dollar in the world economy. It is no accident that the greatest financial center in the world is New York. It's the core of the global Dollar System.

 

It works so: A German company, say BMW, gets dollars for its car sales in the USA. It turns the dollars over to the Bundesbank or ECB in exchange for Marks or Euros it can use.

 

The German central bank thus builds up its dollar currency reserves. Since the oil shocks of the 1970's, the need to have dollars to import oil became national security policy for most countries, Germany included. Boosting dollar exports was a national goal. But since the Bundesbank no longer could get gold for their dollars, the issue became what to do with the mountain of dollars their trade earned. They decided to at least earn an interest rate by buying safe, secure US Treasury bonds. So long as the US had a large Budget deficit, there were plenty of bonds to buy.

 

Today, most foreign central banks hold US Treasury bonds or similar US government assets as their "currency reserves." They in fact hold an estimated $1 trillion to $1.5 trillion of US Government debt. Here is the devil of the system. In effect, the US economy is addicted to foreign borrowing, like a drug addict. It is able to enjoy a far higher living standard than were it to have to use its own savings to finance its consumption. America lives off the borrowed money of the rest of the world in the Dollar System. In effect, the German workers at BMW build the cars and give it away to Americans for free, when the central bank uses the dollars to buy US bonds.

 

Today, the US trade deficit runs at an unbelievable $500 billion, and the dollar does not collapse. Why? In May and June alone, the Bank of China and Bank of Japan bought $100 billion of US Treasury and other government debt! Even when the value of those bonds was falling. They did it to save their exports by manipulating the Yen to dollar to prevent a rising yen.

 

Because the world payments system, and most importantly, the world capital markets---stocks, bonds, derivatives—are dollar markets, the dollar overwhelms all others. The European Central Bank could offer an alternative. So far it does not. It only reacts to a dollar world. German banks destroy the German economy as they rush to imitate US banks. The Dollar System is destroying the German industrial base. German national economic policy as well as Bundesbank and now ECB policy is oriented on the far smaller export sector, to maximize trade surplus dollars, or to the big banks, to attract as many dollars as possible.

 

China plays a key role today

 

The biggest dollar surplus country today is China. Globalization is in fact just a code word for dollarization. The Chinese Yuan is fixed to the dollar. The US is being flooded with cheap Chinese goods, often outsourced by US multinationals. China today has the largest trade surplus with the US, more than $100 billion a year. Japan is second with $70 billion. Canada with $48 bn, Mexico with $37 bn and Germany with $36 bn make the top 5 trade deficit countries, a total deficit of almost $300 billion of the colossal $480 deficit in 2002. This gives a clue to US foreign policy priorities.

 

What is perverse about this system is the fact that Washington has succeeded in getting foreign surplus countries to invest their own savings, to be a creditor to the US, buying Treasury bonds. Asian countries like Indonesia export capital to the US instead of the reverse!

 

The US Treasury and Greenspan are certain that its trade partners will be forced to always buy more US debt to prevent the global monetary system from collapsing, as nearly happened in 1998 with the Russia default and the LTCM hedge fund crisis.

 

Washington Treasury officials have learned to be masters at the psychology of "monetary chicken." Treasury Secretary Snow used an implied threat of letting the dollar collapse, after the Iraq war, to warn Germany about the risk of trying to be too close to France with the Euro. Some weeks after the dollar had fallen sharply, and German export industry was screaming pain, Snow reversed his stand and the dollar stabilized. Now the dollar again rises as foreign money flows back in.

 

But debt must be repaid you say? Does it ever? The central banks just keep buying new debt, rolling the old debts over. The debts of the USA are the assets of the rest of the world, the basis of their credit systems!

 

The second key to the Dollar System deals with poorer debtor countries. Here the US influence is strategic in the key multilateral institutions of finance—World Bank and IMF, WTO. Entire countries like Argentina or Brazil or Indonesia are forced to devalue currencies relative to the dollar, privatize key state industries, cut subsidies, all to repay dollar debt, most often to private US banks. When they resist selling off their best assets, tehy are charged with being corrupt. The growth of offshore money centers in the Caribbean, a key part of the drug money cycle, is also a direct consequence of the decisions in Washington in the 1970's and after, to deregulate financial markets and banks. As long as the dollar is the global currency, the US gains, or at least its big banks.

 

This is a kind of Dollar Imperialism more slick than anything the British Empire even dreamed of. It is a part of the current America "Empire" debate no one mentions. Instead of the US investing in colonies like England to earn profits on the trade, the money comes from the client states into the US economy. The problem is that Washington has allowed this perverse system to get out of all control to the point today it threatens to bring the entire world to the point of collapse. Had the US instead promoted long-term policy of investing in the economic growth and self-sufficiency of countries like Argentina or Congo, rather than bleeding them in repayment of unpayable dollar debts, the world would look far less unstable today.

 

The internal debt bomb in the USA

 

The question is if the Dollar System is reaching its real limits? The Dollar System for the past 30 years has been built on growing dollar debt. What if the rest of the world decides it no longer wants to give its savings to the US Treasury to finance its deficits or its wars? What if China decides that it should diversify its risk by buying Euro debt? Or Japan or Russia? That day may come sooner than we think.

 

In addition to colossal debts to the rest of the world, the US internal debt burdens have reached alarming levels in the past three decades, especially the past decade.

 

The total US debt—public and private—has more than doubled since 1995. It is now officially over $34 trillion. It was just over $16 trillion in 1995, and "only" $7 trillion in 1985. Most alarming it has grown faster than income to service it, or GDP.

 

Since the Asia crisis in 1998, the US debt situation has exploded. The heart of the debt explosion is in US private consumer debt. And the heart of consumer debt is the home mortgage debt growth, helped by two semi-government agencies—Fannie Mae and Freddie Mac. Since 2001 and the collapse of the stock market wealth, the Federal Reserve has cut interest rates 13 times to a 45 year low.

 

US Households took on new home mortgage debt in the first six months this year at an annual rate of $700 billion, double the debt growth in 2000. Total mortgage debt in the US totals just under $5 trillion, double the debt in 1996. It has grown far faster than personal income per capita. That is larger than the GDP of most nations.

 

The aim has been to inflate a housing speculation market in order to keep the economy rolling. The cost has been staggering new debt levels. Because it was created with record low interest rates, when rates again rise, millions of Americans will suddenly find the burden impossible, especially as unemployment rises. Fannie Mae and Freddie Mac combined guarantee $3 trillion in US home mortgages. The US banking system holds much of their bonds. When the housing bubble collapses, a new banking crisis is pre-programmed as well, with JP Morgan/Chase, Wells Fargo and BankAmerica the worst.

 

The US economy has only managed to avoid a severe recession since the collapse of the stock market three years ago, by a record amount of consumer borrowing. "Shop until you drop" is a popular American expression. The Federal Reserve has pushed interest rates down to 1%, the lowest in 45 years. The aim is to keep the cost of the debt low such that families continue to borrow, in order to spend! Some 76% of the US economy GDP today is consumer spending. And most of that is tied to a record boom in home buying.

 

But the rate of new debt growth among families is rapidly reaching alarm levels, while the overall manufacturing economy continues to stagnate or decline. Today US factories only operate at 74% of capacity, near historic lows. With so much unused capacity, there is little chance companies will soon invest in new factories or jobs. They are going to China.

 

So Greenspan continues to rely on foreign money to prop up his consumer debt bubble, at low interest rates. Were foreign money to stop propping the US economy, now at some $2.5 billion daily, the Federal Reserve would be forced to raise its interest rates to make dollar investments more attractive. Higher rates would trigger a crisis in consumer debt, mortgage defaults, credit card and car loan failures. Higher rates would plunge the US economy into a depression. This may be about to happen, despite poor George Bush's desires to get reelected.

 

There is a limit how much debt US families can pay to keep the economy afloat.

 

There is no US recovery, merely a debt spending boom based on this home buying explosion.

 

Total US household debt reached a high in June of $8.7 trillion, double that of 1994. Families are agreeing to longer debt payments for basics like homes or cars. The length of new car loans now averages 60.7 months, and the amount of car debt financed increased to $27,920, and the average new home costs $243,000.

 

With rapidly rising unemployment and a real economy that is not growing, at some point there will come a violent reality clash, as the market for home lending reaches its limit. At that point the danger is the consumer will stop buying, and the manufacturing economy will not be able to create new jobs and a real recovery. The jobs have gone to China!

 

We might already be at or very close to that point. In the past six weeks, US interest rates have risen sharply, as owners of US bonds have started to sell in panic levels, fearing the bonanza in real estate may be over, and trying to get out with some profit before bond prices collapse. The European Central Bank is advising member banks to not buy any more US Freddie Mac or government agency debts.

 

The problem is this process of creating debt, domestic and foreign, to keep the US economy going, has gathered so much momentum it risks destroying what remains of the US manufacturing and technology base. Henry Kissinger warned in a conference of Computer Associates in June, that the US risked destroying its own middle class, and its key strategic industries via outsourcing to China, India and other cheap areas. Today only 11% of the total workforce is in manufacturing. In 1970, it was 30%. Post-industrial America is a bubble economy about to pop.

 

Fed chief Greenspan even warned China about the rate of its trade increase with the US, pressuring China to upvalue the Renminbi to make its goods less competitive in dollar markets, and slow the job loss. But this is dangerous. China holds $340 billion in US Treasury bonds and other reserve assets. The US needs the Chinese dollar savings to finance its soaring deficits.

 

It is caught in its own web: American jobs, hi-tech jobs as well as factory jobs, are vanishing permanently as US factories source to China, India or other cheap areas. If Washington pressures China and others to cut back exports they risk to kill the goose that lays golden dollar eggs. Who will buy that growing Government dollar debt? Private bond traders are desperately trying to sell their US bonds. Germany can only buy so much dollar debt, also Japan.

 

The US waged war in Iraq not out of fundamental strength but fundamental weakness. It is economic weakness however, not military.

 

Oil and food, and money as strategic weapon

 

The fundamental reason for the Iraq war, beyond agendas of Richard Perle or other hawks, is hence, strategic in my view. US economic hegemony in this distorted Dollar System increasingly depends on a rising rate of support from the rest of the world to sustain US debt levels. Like the old Sorcerers' Apprentice. But the point is past where this can be gotten easily. That is the real significance of the US shift to unilateralism and military threats as foreign policy. Europe can no longer be given a piece of the Third World debt pie as in the 1980's. Japan has to cough up even more, as does China now.

 

Even ordinary Americans have to give up their pension promises. If the Dollar System is to remain hegemonic, it must find major new sources of support. That spells likely destabilization and wars for the rest of the world.

 

Could it be that in this context, some long-term thinkers in Washington and elsewhere have devised a strategy of establishing US military control of all strategic sources of oil for the one potential power rival, Eurasia, from Brussels to Berlin to Moscow and Beijing? The dollar vulnerability and debt problems are well known in leading policy circles.

 

As Henry Kissinger once noted, "Who controls the food supply controls the people; who controls the energy can control whole continents; who controls money can control the world."

 

 

F. William Engdahl is a Global Research Contributing Editor and author of the book, ‘A Century of War: Anglo-American Oil Politics and the New World Order,’ Pluto Press Ltd. He has completed a soon-to-be published book on GMO titled, ‘Seeds of Destruction: The Hidden Political Agenda Behind GMO’. He may be contacted through his website, www.engdahl.oilgeopolitics.net

[Warmoog]

Originally posted by Armchair Politician:

I don't buy the 9/11 conspiracy theory chiefly because it is unnecessary. The USA has never needed any justification for invading other countries.

That's a first. Tell me, what is the whole "war on terror," launched on the heels of 9/11 (even though all the evidence shows it was planned out long before then), if not justification for perpetual war, preemptive strikes, sweeping crackdowns on civil liberties, massive human rights abuses, and other sinister plans inline with an agenda of domination and tyranny? What were the events of that fateful day, if not justification for the subsequent invasion of Afghanistan? What was the big lie about WMDs, not to mention the other lie linking the late Saddam Hussein to 9/11, if not (bogus) justification with which to wage war on Iraq? No offence intended, but you should consider taking your head out of the sand long enough to look back and figure out what has been going on in the world for the last six years or more.

 

As for 9/11 itself, here is a novel idea: do a little research. Everything you would ever want to know about it, and then some, is already at your fingertips. Look at all of the evidence and weigh the truth-value of the different theories explaining what took place that day. See if the official story holds water. See if it stands up to the basic laws of science. Then, try to draw sound conclusions from everything. Your comments bring up the 'why' questions, which are of course important, but I think the sensible thing to do is to try to figure out what happened before moving on to those.

[Castro]

^^^^ 9/11 is to our time what Pearl Harbor was to WW2 and the Gulf of Tonkin was to Vietnam: preparation rewarded with opportunity.

 

You may have seen the documentary "Loose Change" and how it tries to offer an alternative to the official "19 hijackers" theory. Some of the claims made in that documentary are somewhat difficult to ascertain. Specially conspiracies involving thousands, if not tens of thousands, of people. Surely that many people could not have all stuck to the same script for this length of time. Still, with advanced knowledge of the attack, much could have been done to, shall we say, facilitate it.

 

Many argue there was advance knowledge of the Pearl Harbor attack as well but letting it occur, at the cost of those lives, was far more beneficial than attempting to stop it. Similarly, I believe, allowing 9/11 to occur had far greater ramifications than the few photo-ops to have been gained from preventing it.

[Fabregas]

The strange thing about 9/11 is that we are led to believe some "extreme Mazlem radicals", who were busy screwing western women, drinking at clubs and bathing naked on beaches allegedly blew themselves up because they were "Mazlem radicals" who hated the "western way of life". Then, we are told one of them left a letter which started with the "Islamic" words " in the name of my family". What Muslim begins a letter like this? Allahu Yaclam. But no doubt if it wasn't for poor Iraqis we would see American Tanks in Damascus, Tehran and beyond(as originally planned)!