Middle Class Welcome To The Desert Of The Real

Padraig

Banned
The Freefalling Dollar and Bush’s war on the Middle Class

By Mike Whitney

13th May, 2006
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-- -- The dollar is getting hammered almost daily now. It’s like watching the blood ooze from a hemophiliac. In just one month the dollar has tumbled from $1.20 to $1.29 vs. the euro; an astonishing 7% retreat.

Can’t the American people see what is happening to their future? In just 6 years Bush has taken the world’s strongest currency and chopped it into finally ground hash. By the time people rouse from their stupor, the greenback will be eye to eye with the peso.

Bush has piled up more debt than all the other presidents combined. His tax cuts have fattened the bankrolls of his constituents but they’ve put the dollar on a downward slide. Since he took office the once-mighty greenback has plummeted a whopping 35%.

Meanwhile, at the Federal Reserve, new Fed-master Bernacke has the printing presses running at warp-speed. The soaring price of oil has soaked up more than a trillion dollars of freshly-minted fiat currency, but it’s the only thing that's kept the greenback from slipping beneath the waves. Unfortunately, that trick won’t last forever.

Now that Bernacke is hinting that interest hikes may slow down or stop entirely, central banks across the world are stealthily off-loading their dollar-stockpiles. The twin-deficits ($400 billion account deficit and $800 billion trade deficit) have finally come home to roost and are pushing the dollar to new lows.

Dick Cheney’s foolish axiom, “Deficits don’t matter” has turned into a funereal-dirge for the greenback. Deficits Do matter, and bankers around the world are proving that by hastily moving away from Uncle Sam’s washed-out script.

On Thursday the congress added another $70 billion to Washington’s mountain of debt, completely ignoring the fact that the dollar lost a full 2% against the euro in the same 24 hour period. Is it possible to be that obtuse?

Is anyone minding the store? The blinkered congress keeps writing bad checks on an overdrawn account and then patting themselves on the back for a hard day’s work. It’s incredible. What foreign country wants to be yoked to a currency that is underwritten by $8.4 trillion in debt and freefalling by the day?

The currency markets are as jittery as anyone can ever remember. The European Central Bank (ECB) and Japan are not prepared to take over as the world’s reserve currency, but they are equally reticent to keep shoring up the flaccid dollar. What they’d like to see is the Bush administration demonstrate that they can still be a responsible steward of the global economic system, a role the US has managed since World War 2.

Don’t expect maturity from this crowd.

Bush is simply carrying out a crackpot plan from his globalist friends at the Council on Foreign Relations (CFR) It is a strategy that Washington has executed many times via its surrogates in the World Bank and IMF. Corrupt politicians (Bush and co) plunge the nation into unsustainable debt, interest rates rise, the economy implodes, and the banks and corporations pick the carcass clean; privatizing what they can while destroying what's left of the social safety net. (John Perkins “Diary of an Economic Hit Man” provides a first rate account of how this method has been used repeatedly throughout Latin America) In fact, it is simply the corporate version of traditional colonialism.

The American public is too blind to see that the trap has now been set for them and that soon they'll be tottering off to the grocery store with wheelbarrows of cash for a loaf of bread and a head of lettuce.

The dollar-slaughter is the biggest part of this whacko scheme. It is the quickest way to crush the middle class by robbing them of their life-savings through hyper-inflation.

We often refer to Tom Friedman in this column as the unofficial spokesman for the Council on Foreign Relations. The CFR is an amalgam of American elites from all professions who are committed to the creation of a “global government”. When Friedman preaches his “Flat-earth” theory of economics from his perch at the New York Times, he’s really offering his vision of what America will look like after labor laws and trade protections have been removed and workers are forced to compete head-on with the poorest paid workers in China or Guatemala. The falling dollar will trigger this scenario sooner than we think.

This view of unfettered capitalism is the Holy Grail of “free market” globalists. In fact, they invariably refer to it as “democracy”. It portends a world where industry overlords dictate policy to their political underlings and where society is entirely shaped to enhance corporate profits.

For the avatars of predatory capitalism, Friedman’s Flat-world is a “dreamscape”; the capitalist Valhalla. For the struggling middle class, it is a return to the law of the jungle; the fast-track to widespread destitution.

By collapsing the dollar, Bush can shift the wealth of the American middle class to corporate mandarins in the blink of an eye. Industry profits will soar while working class people drown in an ocean of red ink.

The wheezing housing bubble and the steadily rising interest rates are a warning sign that time is running out on the dollar. America is being readied for economic “shock therapy” and “structural readjustment”, the vile remedies for ailing economies. When the bottom drops out, the snoozing American middle class will finally stir from their slumber and get their first look at the new world
 

gek-opel

entered apprentice
Interesting reading as ever Padraig- plus what's going to happen once Chavez and Ahmadinejad switch their oil transactions to Euros?
 

Padraig

Banned
gek-opel said:
Interesting reading as ever Padraig- plus what's going to happen once Chavez and Ahmadinejad switch their oil transactions to Euros?

And it now appears they will have some additional competition:

Putin proposes creation of ruble-denominated oil, gas exchange :

President Vladimir Putin said Wednesday that a ruble-denominated oil and natural gas stock exchange should be set up in Russia. Putin said: "The ruble must become a more widespread means of international transactions. To this end, we need to open a stock exchange in Russia to trade in oil, gas, and other goods to be paid for with rubles."

"Our goods are traded on global markets. Why are not they traded in Russia?" Putin said.


Me-too Currency nationalism is afoot ...
 

zhao

there are no accidents
cover some of same ground and more:

April 8, 2005

Coming Sooner Than You Think

The Economic Tsunami

By MIKE WHITNEY

"If the world's central bankers accumulate fewer dollars, the result would be an unrelenting American need to borrow in the face of an ever weaker dollar - a recipe for higher interest rates and higher prices. The economic repercussions could unfold gradually, resulting in a long, slow decline in living standards. Or there could be a quick unraveling, with the hallmarks of an uncontrolled fiscal crisis."

New York Times editorial 4-2-05

It seems that there are a growing number of people who believe as I do, that the economic tsunami planned by the Bush administration is probably only months away. In just 5 short years the national debt has increased by nearly 3 trillion dollars while the dollar has continued its predictable decline. The dollar has fallen a whopping 38% since Bush took office, due largely to the massive $450 billion per year tax cuts. At the same time, numerous laws have been passed (Patriot Act, Intelligence Reform Bill, Homeland Security Bill, National ID, Passport requirements etc) anticipating the need for greater repression when the economy takes its inevitable nosedive. Regrettably, that nosedive looks to be coming sooner rather than later.

The administration is currently putting as much pressure as possible on OPEC to ratchet up the flow of oil another 1 million barrels per day (well over capacity) to settle down nervous markets and buy time for the planned bombing of Iran in June. Like Fed Chief Alan Greenspan's artificially low interest rates, the manipulation of oil production is a way of concealing how dire the situation really is. Rising prices at the pump signal an upcoming recession, (depression?) so the administration is pulling out all the stops to meet the short term demand and maintain the illusion that things are still okay. (Bush would rather avoid massive popular unrest until his battle-plans for Iran are carried out)

But, of course, things are not okay. The country has been intentionally plundered and will eventually wind up in the hands of its creditors as Bush and his lieutenants planned from the very beginning. Those who don't believe this should note the methodical way that the deficits have been produced at (around) $450 billion per year; a systematic and orderly siphoning off of the nation's future. The value of the dollar and the increasing national debt follow exactly the same (deliberate) downward trajectory.

This same Ponzi scheme has been carried out repeatedly by the IMF and World Bank throughout the world; Argentina being the last dramatic illustration. (Argentina's economic collapse occurred when its trade deficit was running at 4%; right now ours is at an unprecedented 6%.) Bankruptcy is a fairly straight forward way of delivering valuable public assets and resources to collaborative industries, and of annihilating national sovereignty. After a nation is successfully driven to destitution, public policy decisions are made by creditors and not by representatives of the people. (Enter, Paul Wolfowitz)

Did Americans really believe they could avoid a similar fate?

If so, they'd better forget about it, because the hammer is about to come down big-time, and the collateral damage will be huge.

The Bush administration is mainly comprised of internationalists. That doesn't mean that they "hate America"; simply that they are committed to bringing America into line with the "new world order" and an economic regime that has been approved by corporate and financial elites alike. Their patriotism extends no further than the garish tri-colored flag on their lapel. The catastrophe that middle class Americans face is what these elites breezily refer to as "shock therapy"; a sudden jolt, followed by fundamental changes to the system. In the near future we can expect tax reform, fiscal discipline, deregulation, free capital flows, lowered tariffs, reduced public services, and privatization. In other words, a society entirely designed to service the needs of corporations.

There are a number of signs that the economy is close to meltdown-stage. Even with cheap energy, low interest rates and $450 billion in borrowed revenue pumped into the system each year, the economy is still barely treading water. This has a lot to due with the colossal shifting of wealth brought on by the tax cuts. Supply-side, trickle-down theories have been widely discredited and Bush's tax cuts have done nothing to stimulate the economy as promised. Now, with oil tilting towards $60 per barrel, the economic landscape is changing quickly, and shock-waves are already being felt throughout the country.

The Iraq war has contributed considerably to our current dilemma. The conflict has taken nearly one million barrels of Iraqi oil per day off line.(The exact amount that the administration is trying to replace by pressuring OPEC) In other words, the astronomical prices at the pump are the direct result of Bush's war. The media has failed to report on the negative affects the war has had on oil production, just as they have obscured the incredibly successful insurgent strategy of destroying pipelines. This isn't a storyline that plays well to the American public, who expected that Iraq would be paying for its own reconstruction by now. Instead, the resistance is striking back at the empire's Achilles heel (America's need for massive amounts of cheap oil) and its having a damaging affect on the US economy.

Just as the economy cannot float along with sharp increases in oil prices, so too, Bush's profligate deficits threaten the dollar's status as the world's reserve currency. This is much more serious than a simple decline in the value of the dollar. If the major oil producers convert from the dollar to the euro, the American economy will sink almost overnight. If oil is traded in euros then central banks around the world would be compelled to follow and America will be required to pay off its enormous $8 trillion debt. That, of course, would be doomsday for the American economy. But, a recent report indicates that two-thirds of the world's 65 central banks have already "begun to move from dollars to euros." The Bush plan to savage the dollar has been telegraphed around the world and, as the New York Times says, "the greenback has nowhere to go but down". There's only one thing that the administration can do to ensure that energy dealers keep trading in dollars.control the flow of oil. That means that an attack on Iran is nearly a certainty.

The difficulties facing both the dollar and the economy are not insurmountable. The world has been more than willing to compensate for America's wasteful spending as long as America shows itself to be a responsible steward of the global economy. However, the administration's military and economic recklessness suggests that some of the key players on the world stage (particularly Russia, Iran, Venezuela, Germany, France, China, Brazil) are collaborating on an alternate plan; a contingency plan. If Iran is bombed in an unprovoked act of aggression, we will certainly see this plan activated. The most likely scenario would be a quick switch to the euro that would have grave implications for the American economy. (Russia has already indicated that it will do this) For Iran, an attack would justify arming disparate terrorist organizations with the weaponry they need to attack American and Israeli interests wherever they may be. In any event, an unprovoked attack will dispel the remaining illusions about Bush's war against terror and confirm to everyone that we are engaged in a new world war; a conflict for global domination.

The neoliberal chickens have come home to roost. America has become the latest staging ground for the eccentric economic policies of the Washington Consensus. The towering national debt coupled with the staggering trade deficits have put the nation on a precipice and a seismic shift in the fortunes of middle-class Americans is looking more likely all the time. The New York Times summarized the country's prospects like this:

"The economic repercussions could unfold gradually, resulting in a long, slow decline in living standards. Or there could be a quick unraveling, with the hallmarks of an uncontrolled fiscal crisis."

"An uncontrolled fiscal crisis"... America's future under George Bush. We are facing years of collective struggle ahead. If there's a quick fix, I have no idea what it might be.
 

gek-opel

entered apprentice
Confucius: Where did you get that article from? (great stuff by the way).

ALSO: What impact would this kind of shakedown have on Europe then? A massive boost to their power? And for the UK? Would we continue to tow the transatlantic line, or plunge into the Euro ASAP?
 

tatarsky

Well-known member
Yes indeedy, things could get mighty interesting over the coming years, with the potential collapse of the dollar. You don't need me to remind you of how America's indebted to the hilt, primarily bankrolled by the Chinese. So far, they've gotten away with it, because oil is currently traded in dollars, meaning that every country in the world has to buy dollars to get their oil. This system has underpinned the global economic framework ever since currencies stopped being backed by gold.

But there are already signs that this could change, as Iran threatens to trade in euros. The trouble is that the US has continued to print up money, in effect writing IOUs to anyone that will take them. For decades this was done reasonably sensibly, but now the rest of the world is beginning to think again about whether these IOUs are a good idea, as the American economy looks increasingly fragile. Things have gotten so out of control that the Fed no longer publishes numbers on M3, meaning that no one has clue about just how many dollars are out there.

Quite how it will all pan out I don't know - by which I mean, how will the creditors get their money back? Will the Chinese send the bailiffs round to middle america? How would this happen? Is it really in the creditors interest to see America go bankrupt?

This article adds quite an interesting perspective:

http://www.zapatageorge.com/WhatIf.html

February 18, 2006



What if THIS is what is really going on?



By George S. Blake



Market mavens have been baffled by the seemingly illogical purchase of U.S. dept instruments by
Asia’s big players. The result have been lower rates at the long end of the bond market.

They say that the U.S.A is soaking up all of the net savings of the entire world.

Why would Asian governments be satisfied with such low rates if only they would back off of their
purchases and allow interest rates to rise?

Well folks, lets think about that. Suppose that the ministers of the federal bank of China in
conjunction with head politicians had a meeting where they said, “You know, We are exporting real
goods to the U.S.A and we get back in return their fait U.S. dollars, we are not making a good trade
here gentlemen we’re getting potentially worthless paper and we are sending them real stuff.
However, The young fellow that we pay to do the thinking has come up with a brilliant idea, as
estimated that our purchases of crude oil (which we pay for in U.S. dollars) amounts to
approximately $32 billion U.S. dollars a year. Now if we will purchase $800 billion dollars of U.S.
treasury securities the amount of interest on that money will pay our oil bill (which has to be paid in
U.S. dollars.) Now you say, well we would have to have sufficient trade surplus’s to make the $800
billion dollar purchase. We have not been running at that kind of trade surplus with the United
States, however, it would be easy enough to alter the figures to show that we were running that
amount of trade surplus, so as not to arouse any suspicion. And then, Instead of returning trade
dollars to the U.S. we merely print enough renmindi’s to make up the difference, and we buy dollars
with our renmindi’s then we hand them to the U.S. treasury along with our trade surplus to make up
that difference. Then we have done exactly to them what they have been doing to us. We are
shipping them false currency, created currency, printing press currency for their U.S. treasuries we
get dollars and interests (we pay our oil bill with that).

What’s wrong with that idea gentlemen ? At that point the federal reserve bank of China votes
unanimously to adopt this plan and carry it forward from year 2001.

Well folks, the last five years the Chinese may have created a huge surplus with the U.S. but
suppose that they didn’t, suppose that all that treasury purchase was printing press renmindi’s as
all of the U.S. dollars that we used to buy their real goods come off of our printing presses. In other
words, we have tit for tat. They have learned to play the game which we taught them.

Now just suppose that that’s the real reason why the purchase of U.S. treasuries runs on and on
and on. Well, you know that if the Chinese had the idea, the Japanese have also had the idea. You
can bet that lesser governments with printing presses have also caught on to the game. So, how
much purchase of U.S. indeptinous if from real savings and how much of it is from printing press
money?

The answer to this question may contain the answer to how long will it go on, the critical question
we all look forward to answering.


----------

Now that may seem like a bit of stretch of the imagination, but if it IS going on, then it certainly would make the dollar's collapse a lot less harmful to China - ultimately they wouldn't really care, because they've bought America's fake money with their fake money. This would leave China at a safe distance to watch the dollar collapse, with inflation scything through the America population's purchasing power.

If as confucious's article suggests, America will go bankrupt Argentina-style, and policy decision go in to the hand of creditors, what exactly would that look like? It wouldn't be enter Wolfowitz, as the article suggests, because America isn't bankrolled by the IMF or World Bank. We know what the World Bank would do (Washington Consensus - tight monetary policy, cut spending enormously, bye-bye MediCare), but what would China do? What would they want from America?
 

zhao

there are no accidents
I was reading a print-out of stuff related to this thread at the office yesterday and one of the producers goes "what you readin'? - I said "an article about economic collapse" and he goes "of what?" - I said "oh... a little place called America" - he chuckles in a sneering sort of way and says "is that possible?" - so I hand him the print out of the original article on this thread- he starts reading and his eyes go real wide and continues to read as he walks out of the room.
 
so what would be the flow on effect to New Zealand ???

I know there is a shitload of foreigners buying up lush coastal property, well any property actually making it harder for first time mortgage owners to get a foot in the door as the prices being paid are hugely inflated.

I'd still rather be here than pretty much anywhere else cos if it all turns to shit we'll collectively just grow, hunt and fish again or if it turns real shit revert to cannibalism again

only trouble is whitefolk don't taste too good. too bloody salty :D

scary times especially since they reckon the mayan calender is out by a few years and its not
20/12/2012 it october 28th next year :cool:

bring on the age of light
 

corneilius

Well-known member
Us collapse - Uk relapse?

Wow! *shivers* If US goes, everyone attached goes with them, to varying degrees, depending upon level of dependency. UK is pretty dependent ........

Food for thought ..... learn to grow food!

I am on tour, festivals and gigs.... so not posting so much ..... kind regards all!
 

gek-opel

entered apprentice
Recession is maybe what we need now tho? Rather than bland affluence? Maybe a bit of struggle will enable people to re-assess their values a little? Bolster creativity? Create some new and functional political ideologies? (will actually likely lead to a rise in the right wing as well tho...)
 

tatarsky

Well-known member
The fallout to the Uk is pretty hard to read. You'd expect it'd be pretty bad (or good, depending on how you look at things, hey gek?), but then again, most of our exports go to europe. If the US recession is stimulated by oil switching to Euros, europe would presumably gain spending power, so perhaps we'd be ok (or just as bad)? Hmmm... complicated.
 

gek-opel

entered apprentice
And obviously- our stock market will take a battering -- The FTSE follows the NYSE quite closely does it not (just look at recent patterns for evidence of this)--- tho what the long term impact of this might be is difficult to know...
 

tatarsky

Well-known member
Yeah, the FTSE could take a good kicking, but then it did after the dotcom bubble too, and that was fairly painless to your average man on the street. What's really going to fuck america is massive inflation. Whether we get that too is the real issue, to my mind.
 

Freakaholic

not just an addiction
With all this talk of the US's economic collapse, and how it could effect Europe, i wonder if this will have any impact?

NYSE could strike Euronext deal in weeks -sources

By Mathieu Robbins

LONDON (Reuters) - NYSE Group Inc. could strike an agreed deal to buy pan-European exchange Euronext NV for about 8 billion euros (5.5 billion pounds) within weeks, sources familiar with the matter said on Thursday.
Advert for the new Scotsman jobs site

NYSE unveiled its stock and cash offer of around 8 billion euros for Euronext on Monday and said at the time it hoped to clinch an agreed deal within 24 to 48 hours.

However, the sources said that outstanding details and public holidays in Europe and the United States would delay any agreement for at least a week.

NYSE is keen to nail a deal after Frankfurt-based Deutsche Boerse on Tuesday detailed its rival cash-and-share proposal, and could yet modify its offer to try and clinch a deal.

Euronext at its annual general meeting on Tuesday said it preferred the NYSE proposal to the competing offer from European rival Deutsche Boerse.

A successful NYSE bid would create a mammoth, trans-atlantic exchange, listing companies with total market value of around $27 trillion (14.5 trillion pounds).

Euronext said on Tuesday it would listen to investors' views before it makes a final recommendation at a future extraordinary general meeting.

Atticus Capital LP, the U.S. hedge fund that owns about 9 percent of Euronext and had been one of the proponents of a merger with Deutsche Boerse, said on Wednesday it agrees with Euronext management.

Euronext and NYSE declined to comment.


---------------------

Could it be that combining the 2 continents' exchanges will intermingle our economies so much that Europe wont be able to let the US dollar collapse?
 

IdleRich

IdleRich
"Could it be that combining the 2 continents' exchanges will intermingle our economies so much that Europe wont be able to let the US dollar collapse?"
To be honest I wouldn't read any big significance into this. It seems that a merger fo some kind between some of the big exchanges is inevitable but at times it could have just as easily been the LSE joining with Euronext or the Deutsche Bourse or even the NYSE. None of those combinations would have involved a country that used dollars and a country that used euros.
Even if Euronext does merge with New York I'm not sure how it will link the eurozone to the dollar. Presumably (I could be wrong here) the exchanges will still be separate, listing Dutch companies in Holland and US companies in New York. What I mean is I don't see how the economies will be intermingled by the fact that the markets for trading their companies are owned by the same people. I may be totally wrong here, if anyone knows any better please explain it to me.
 

matt b

Indexing all opinion
gek-opel said:
Recession is maybe what we need now tho? Rather than bland affluence? Maybe a bit of struggle will enable people to re-assess their values a little? Bolster creativity? Create some new and functional political ideologies? (will actually likely lead to a rise in the right wing as well tho...)

sorry gek, i find this mildly offensive! this sort of argument is made by those (of us) who aren't living hand to mouth existences, working minimum wage jobs, bringing up children on benefits etc- they're struggling to survive and have little/no time to 're-assess' their values as it is.

take a trip up to the north east (lets say, the poorer parts of sunderland)- there ain't a whole lot of bland affluence beyond elizabeth david sov. rings and a new shell suit ;). these are communities that traditionally were very tight knit and had the values you mention. this seems to be unravelling and isolation/hate seems to be on the rise (the BNP vote was 10,000 in the recent elections, asylum seekers- all 20 of them are blamed for a whole host of problems), whilst the political class gets on with exploitation and stuffing their fat faces- see any of the recent issues of private eye for details.

i understand that the daily mail 'middle england' classes need a fucking good kick up the arse (particularly when the BNP are now becoming a 'respectable' party in their eyes and the most productive thing they can do is stick fucking flags of st george on their cars), but wishing for a massive recession has too high a cost for those already mentioned.
 
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owen

Well-known member
well, there's been a recession in manufacturing for years now...and yeah, the north/south divide is way more present than we're led to think. on a train journey to glasgow a few months ago places like warrington and motherwell looking like nothing had changed since 1930...the dole queue in the office outside my friend's flat in glasgow stretching out into the street...
 
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