by David Glenn Cox
“Come gather round people where ever you roam
And admit that the waters around you have grown
And accept it that soon you’ll be drenched to bone
If your time to you is worth saving
Then you better start swimming or you’ll sink like a stone
For the times they are a changing” Bob Dylan
Our world is in flux, a time of grave superstition, a time when the earth beneath our feet liquefies. A time when the people search for leaders and the leaders are themselves lost, a time when all good men are gone.
Before the collapse of the American economy in 2007 the financial experts began to ask, could the Euro be the reserve currency of the future? Then the US created and led the world into a financial bolgia, the world’s economies both sick and well were thrown into chaos and disarray. Germany began a financial stimulus program three times the size per capita as the Obama stimulus and lo and behold the German economy began to recover. German unemployment is at its lowest level since reunification while US unemployment has stagnated and become malignant.
Ah, but that is Germany, the largest and most powerful of the European economies. The stronger nations of the European Union have recovered while the weaker have floundered. Suddenly, debt levels are seen as an urgent crisis. Suddenly, Greece is forced into first one round of austerity and then a second round of austerity. The first round caused the Greek economy to wither and shrink, so what do you suppose the effect of the second round will be?
The incoming Greek government had discovered that debt levels had been hidden from public scrutiny by the use of currency exchanges facilitated by Goldman Sachs. But that was then, back when credit was still king. Now austerity rules the kingdom and no one speaks of the Euro as the world’s reserve currency any more. The crisis moves on to Ireland, Spain, Italy and Portugal, and with each move the European Union has to cover these checks.
Then the Arab Spring uprisings begin in Tunisia, Egypt, Iraq, Bahrain, Syria and Saudi Arabia. The American media only covers those uprisings which our government approves of while ignoring other state murders and atrocities in Syria, Saudi Arabia, Iraq and Bahrain. Then the uprising began in Libya and US Co-President Hillary Clinton is all in favor of it. Not like the situation in Egypt where she was against the uprising before she was in favor of it. The European Union begins air strikes in Libya but the US military’s response is strangely token, a few air strikes and a few dozen cruise missiles.
Does the US not want to fully assist our European allies? Defense Secretary Robert Gates gives a possible explanation in his departing speech. He complained that the Europeans had failed to help us enough in our wars of empire and aggrandizement. He complained that European defense budgets had not risen to the levels of American military defense spending and even went so far as to question whether NATO was still a viable alliance.
Reckless defense spending and reckless tax cuts along with insane trade policies have left the US economy driven upon the siren’s rocks, but to Gates the problems were with the Europeans who were not crazy enough to follow us on to the rocks. Those European economies refused to follow us over the financial abyss. Is this just Gates whining or is this the consensus of the US military elite in general? Ten weeks on in the Libyan campaign, the European Union is running out of ordinance for their fighter aircraft. Has the US offered assistance? No, they haven’t, you’re on your own fellows.
The credit rating agencies begin to downgrade the credit ratings of the European economic lagers forcing Germany and France to play economic twister. These credit rating agencies were easily manipulated by the large banks during the US economic collapse. Are we to believe now that they have found Jesus and will walk the straight and narrow from here on out? Just coincidently, of course, the same credit rating agencies, with all the earmarks of a publicity stunt threaten the US credit rating on the very day Congressional deficit talks begin on Capitol Hill.
So Germany’s stimulus, three times the size of the US stimulus, succeeds and a draconian austerity package pushes the Greek economy further under water. So US politicians propose to do what exactly in this country? The Federal Reserve is lending money to the banks at near zero interest to assist in refloating banks waterlogged with bad debts and inflating the currency under its quantitative easing program.
The bank home foreclosures continue at a sluggish pace, slowed by the robo signing scandal, but also because until the bank actually tries to sell a property it can still claim the property at its prior value on its books. A thirty percent drop in home prices means a thirty percent drop in bank Real Estate assets. These banks now face lower profits margins because of reduced interest rates on loans and lawsuit settlements. These lower asset values due to Real Estate devaluations leaves but one economic bright spot, that fountain of easy cash found on Wall Street.
After the crash, the stock market comes roaring back mainly because it was the only game left in town. The choice was simple, leave your money in a dusty bank vault at two percent interest or put it on Wall Street where bargains could be had. But, since it was the only game in town and everyone wanted to play and the prices are being forced up artificially. News of Bill Gates finding a dollar in his coat pocket and Microsoft stock values would rise. Ben Bernanke has a head cold and the market would fall 100 points on sucker day. The day the insiders tank the market after pumping it up to reap the profits and then pump it back up again to start the process all over again next week.
The major investment banks made money in the stock market on every trading day of the fourth quarter. Honest, like the guy who goes to Las Vegas and wins every hand of black jack and every slot machine handle pulled on every day for three months. There was some question and public scrutiny of such an incredible run of good fortune and so the banks in the first quarter had obvious misses. Goldman Sachs missed one day and JP Morgan missed twice.
If the Euro were to become stronger and the dollar were to become weaker, what would happen to the Wall Street game? If the European economy were to recover faster than the American economy, where would you invest your money? If the Germans and the French are forced to play economic twister trying to nurse the weaker sisters of the European Union back to health, who wins?
Why, the US wins, Wall Street wins, Treasury bills win and the dollar wins. Everyday that the currency is inflated is a day that bank debts are reduced. Only it can’t go on forever, the day of reckoning must soon come, but it mustn’t come before the next Presidential election. The insane military spending can’t be stopped without prompting economic collapse. If the military were to flinch, the game of empire chicken would be over. We cannot end our insane trade policy because it has become codified into law, removing it from the hands of our elected leaders. The rich and powerful who profit from it and purchase the candidates that run for office would never tolerate it.
So the only avenue that is left is to take the money from you, to squeeze the budget, to makes cuts to the elderly, the small and the weak, buying time until after the Presidential election. Last month the International Energy Agency, made up of primarily European nations voted the release 60 million barrels of refined crude onto the energy market. Barack Obama was contractually obligated to respond in kind and released one million barrels of unrefined crude. The Europeans were fighting back, firing a shot across the bow of Wall Street and oil traders to show that they were not impotent.
LONDON, June 27 (Reuters) – Europe will release mostly oil industry refined products in contrast with a U.S. government crude reserves release as part of a coordinated action by consumer countries to prevent high energy prices from stunting the economic recovery.
The rising oil prices were due to the Libyan campaign in which the assistance of the United States is minimal. Oil purchases denominated in dollars reflect the relative value of those inflated dollars versus the relative value of a barrel of oil, so the economy in fear of being stunted was the European economy. Barack Obama’s one million barrel pittance was literally a drop in the ocean, barely the filling of a cigarette lighter. These actions are not only unsupportive they are down right hostile towards the Europeans in the face of a sixty year alliance
Perhaps Robert Gates’ departing shots were just that, shots across the bow. The US no longer views the European Union as a partner but as a competitor, an economic adversary. The US will use every power at its disposal to defend itself and to defend the dollar as the world’s reserve currency. California is in a worse financial situation than Greece but bond rating agencies express no fears of a California default, not yet anyway.
The budget crisis is an excuse to make deep cuts in the domestic economy to keep the game going until after next elections. The crisis, which has never actually gone away, has only been papered over after victory was declared on Wall Street, (Mission Accomplished) while the pundits, purveyors and pimps bank the fires and prepare for a Weimar style American economy. The three trillion dollars in Chinese-held treasury notes might be worth perhaps ten cents on the dollar and a twelve hundred dollar monthly Social Security check might be worth ten cents on the dollars as well?
It is the only way out for the masters of the universe, with a military budget which has quadrupled but offers to give back ten percent. Income tax rates for the wealthy are at record lows with no talk of giving back any tax cuts. Instead the gang of six proposes cutting both income tax rates and corporate tax rates but only to make the system fairer. Insanity on the half shell as the grand compromise is tax cuts for the rich! What sort of deficit reduction program begins with tax cuts for the rich and benefit cuts for everyone else? The crooked kind, the sham, the made for TV kind and the corporate Fascist kind. The kind where Republicans asks for four trillion in budget cuts and the so called Democratic President agrees to 3.7 as he deals directly with the Republican leadership and leaves his own party in the dark.
A time of deep division, of greed and excess, of angry crowds and muddled masses. A time of cold days and dark nights as the harbingers of financial excess and failure circle like buzzards over head. A time when the dead bury the living, where the skeletons of age climb up upon the corpses of youth. Where the preachers of prosperity save themselves after taking one last collection from the faithful. Barack Obama? Michele Bachmann? An honest political system Ha, ha, ha…some people will believe anything!