Collapsing empire watch

[seemslikeadream]

Collapsing empire watch
BY GLENN GREENWALD

iStockphoto/Salon
It's easy to say and easy to document, but quite difficult to really internalize, that the United States is in the process of imperial collapse. Every now and then, however, one encounters certain facts which compellingly and viscerally highlight how real that is. Here's the latest such fact, from a new study in Health Affairs by Columbia Health Policy Professors Peter A. Muennig and Sherry A. Glied (h/t):

In 1950, the United States was fifth among the leading industrialized nations with respect to female life expectancy at birth, surpassed only by Sweden, Norway, Australia, and the Netherlands. The last available measure of female life expectancy had the United States ranked at forty-sixth in the world. As of September 23, 2010, the United States ranked forty-ninth for both male and female life expectancy combined.

Just to underscore the rapidity of the decline, as recently as 1999, the U.S. was ranked by the World Health Organization as 24th in life expectancy. It's now 49th. There are other similarly potent indicators. In 2009, the National Center for Health Statistics ranked the U.S. in 30th place in global infant mortality rates. Out of 20 "rich countries" measured by UNICEF, the U.S. ranks 19th in "child well-being." Out of 33 nations measured by the OECD, the U.S. ranks 27th for student math literacy and 22nd for student science literacy. In 2009, the World Economic Forum ranked 133 nations in terms of "soundness" of their banks, and the U.S. was ranked in 108th place, just behind Tanzania and just ahead of Venezuela.

There is, however, some good news: the U.S. is now in fifth place in total number of executions, behind only China, Iran, Iraq and Saudi Arabia, and comfortably ahead of Yemen and Sudan, while there are two categories in which the U.S. has been and remains the undisputed champion of the world -- this one and this one. And, of course, the U.S. is not just objectively the greatest country on the planet, but the greatest country ever to exist in all of human history -- as Dave Roberts put it in response to these life expectancy numbers: "but we're No. 1 in bestness!" -- so we're every bit as exceptional as ever.

The Final End of Bretton Woods 2?
The inability of global leaders to address global current account imbalances now truly threatens global financial stability. Perhaps this was inevitable - the dollar has not depreciated to a degree commensurate with the financial crisis. Moreover, as the global economy stabilized the old imbalances made a comeback, sucking stimulus from the US economy and leaving US labor markets crippled. The latter prompts the US Federal Reserve to initiate a policy stance that will undoubtedly resonate throughout the globe. As a result we could now be standing witness to the final end of Bretton Woods 2. And a bloody end it may be.

Of course, the end of Bretton Woods 2 has been long prophesied. Back in October 2008, Brad Setser foresaw its imminent demise:

I increasingly suspect that the combination of falling oil prices and falling demand for imported goods will produce significant fall in the US trade and current account deficit in the fourth quarter, with a corresponding fall in the emerging world’s combined surplus. The Bretton Woods 2 system – where China and then the oil-exporters provided (subsidized) financing to the US to sustain their exports – will come close to ending, at least temporarily. If the US and Europe are not importing much, the rest of the world won’t be exporting much….

And rather than ending with a whimper, Bretton Woods 2 may end with a bang….

….If Bretton Woods 2 ends in 2009 – if US demand for imports falls sharply in the last part of 2008 and early 2009, bringing the US trade deficit down – it won’t have ended in the way Nouriel and I outlined back in late 2004 and early 2005. We postulated that foreign demand for US debt would dry up – pushing up US Treasury rates and delivering a nasty shock to a housing-centric economy... it didn’t quite play out that way. The US and European banking system collapsed before the balance of financial terror collapsed.

But Bretton Woods 2 was soon reborn, as the steady improvement to the US current account deficit was soon reversed:


Bretton Woods 2 simply morphed forms. Rather than a reliance on US financial institutions to intermediate the channel between foreign savers and US households, a modified Bretton Woods 2 - Bretton Woods 2.1 - relied on the US government to step into the void created by the financial mess and become the intermediary, either by propping up mortgage markets via the takeover of Freddie and Fannie, or the fiscal stimulus, or a dozen of other programs initiated during the financial crisis.

In essence, a nasty surprise awaited US policymakers - after two years of scrambling to find the right mix of policies, including an all out effort to prevent a devastating collapse of financial markets and a what Administration officials believed to be a substantial fiscal stimulus, the US economy remains mired at a suboptimal level as stimulus flows out beyond US borders. The opportunity for a smooth transition out of Bretton Woods 2 was lost.

How has it come to this? To understand the challenge ahead, we need to begin with two points of general agreement. The first is that the US has a significant and persistent current account deficit, which implies that domestic absorption of goods and services, by all sectors, exceeds potential output. In other words, we rely on a steady inflow of goods and services to satisfy our excess demand, a situation we typically find acceptable during a high growth phase when domestic investment exceeds domestic saving. The second point of agreement is that high unemployment implies that actual output is far below potential output. We clearly have unused capacity.

Points one and two appear that they should be mutually exclusive, but they are not. The fact that they are not begs an explanation. Paul Krugman sends us to Paul Samuelson to provide that explanation:

Here’s what he [Samuelson] wrote in his 1964 paper “Theoretical notes on trade problems”: “With employment less than full and Net National Product suboptimal, all the debunked mercantilist arguments turn out to be valid.” And he went on to mention the appendix to the latest edition of his Economics, “pointing out the genuine problems for free-trade apologetics raised by overvaluation”.

I think Samuelson is correct; an excessively high dollar is the explanation for the simultaneous existence of a sizable current account deficit and excessive unemployment. Indeed, there appears to be a externally determined downward limit to real value of the Dollar, and we are close to pushing against it:


The US appears to have little control over that minimum level. Foreign central have repeatedly acted to limit Dollar depreciation. Over the years, US policymakers have happily accepted this state of affairs (the steady financial inflow certainly helped support structural fiscal deficits), all the while ignoring the very real structural outcomes of blind adherence to the idea of a strong Dollar. spencer at Angry Bear succinctly lays out the structural impact:

The first chart is of imports market share, or imports as a share of what we purchase in the US. In the second quarter of this year imports market share rebounded to about where it was at the pre-recession peak, or about 16% of consumption. Since the early 1980's when the US started borrowing abroad to finance its two structural deficits -- federal and foreign--trades share of consumption has risen from about 6% to some 16%. Normally this has a small negative impact on the US economy, but sometimes you get quarters like the last quarter. Last quarter real domestic consumption rose at a 4.9% annual rate. That was an increase of $162.6 billion( 2005 $). But real imports also increased $142.2 billion (2005 $). That mean that the increase in imports was 87.5% of the increase in domestic demand.

To apply a little old fashion Keynesian analysis or terminology, the leakage abroad of the demand growth was 87.5%. It does not take some great new "freshwater" theory to explain why the stimulus is not working as expected, simple old fashioned Keynesian models explain it adequately.

Years of current account deficits - deficits induced not by the decisions of private savers looking to maximize returns but by foreign public sector entities seeking to maintain export growth - has literally resulted in a US economy that, on net, is unable to produce the goods its citizens want to consume. Hence a blast of stimulus flows overseas , the rising trade deficit heralded as a sign of strong US demand despite the inconvenient truth of little net job creation.

Which brings us to this observation by Simon Johnson:

The main reason the U.S. isn’t bouncing back so fast is because of exports and the dollar. South Korea, Russia, and other emerging markets that go through severe crises usually undergo a sharp depreciation in the inflation-adjusted value of the currency, making them hypercompetitive, at least for a while. This makes it easier to replace imports with domestic goods and services and much more attractive to export.

In contrast, the global financial crisis actually strengthened the U.S. dollar as it was seen as a haven, although the dollar has fallen somewhat from its recent peak against major trading partners.

Currency depreciation - of substantial magnitude - is a mechanism by which economies recover from financial crisis. But we shouldn't underestimate that challenges that accompany such an adjustment. If it happens to quickly - a sudden stop of capital - the most likely short run outcome is that the current account deficit will be resolved with import compression via a sharp drop in demand. This would be painful, to say the least. It is not the optimal path.

Neither, though, is the current path - a painstakingly slow Dollar depreciation. The result so far is persistently high US unemployment, with no relief in sight. In frustration, policymakers lash out against the wrong target, free trade. Krugman's frustration rises to the level that he supports the Levin bill as the only remaining option:

Finally, the idea that what we need is a mature discussion of global rebalancing strikes me as reasonable — if you have been living in a cave the past three or four years. We’ve been reasoning, and reasoning, and reasoning, and nothing changes. Clearly, China does not want to act — not out of national interest, but because of the political influence of its export industries. It won’t change its behavior unless it faces an additional incentive — like the prospect of countervailing duties.

But I don't want to make this piece about China. It is more than China at this point. It became more than China the instant US Federal Reserve policymakers woke up one morning and decided they needed to take the dual mandate seriously. And seriously means quantitative easing. Brad DeLong suggests that when the Fed actually acts on November 3, it will be too little too late. But if it is too little, more will be forthcoming.

Put simply, the Federal Reserve is positioned to declare war on Bretton Woods 2. November 3, 2010. Mark it on your calendars.

So perhaps Bretton Woods does not end because foreign governments are unwilling to bear ever increasing levels of currency and interest rate risk or due to the collapse of private intermediaries in the US, but because it has delivered the threat of deflation to the US, and that provokes a substantial response from the Federal Reserve. A side effect of the next round of quantitative easing is an attack on the strong dollar policy.

The rest of the world is howling. The Chinese are not alone; no one wants it to end. From Bloomberg:

Leaders of the world economy failed to narrow differences over currencies as they turned to the International Monetary Fund to calm frictions that are already sparking protectionism….

….Days after Brazilian Finance Minister Guido Mantega set the tone for the gathering by declaring a “currency war” was underway, officials held their traditional battle lines. U.S. Treasury Secretary Timothy F. Geithner and European Central Bank President Jean-Claude Trichet were among those to signal irritation that China is restraining the yuan to aid exports even as its economy outpaces those of other G-20 members.

“Global rebalancing is not progressing as well as needed to avoid threats to the global economic recovery,” Geithner said. “Our initial achievements are at risk of being undermined by the limited extent of progress toward more domestic demand- led growth in countries running external surpluses and by the extent of foreign-exchange intervention as countries with undervalued currencies lean against appreciation.”

At the same time, officials from emerging economies including China complained that low interest rates in the U.S. and its developed-world counterparts mean investors are pouring capital into their markets, threatening growth by forcing up currencies and inflating asset bubbles. The MSCI Emerging Markets Index of stocks has soared 13 percent since the start of September...

...“Near-zero interest rates and rapid monetary expansion are geared at stimulating domestic demand but also tend to produce a weakening of their currencies,” Mantega said Oct. 9. As a result, developing countries will continue to build up reserves in foreign currency to avoid “volatility and appreciation.”

Consider the enormity of the situation at hand. The Federal Reserve is poised to crank up the printing press for the sake of satisfying their domestic mandate. One mechanism, perhaps the only mechanism, by which we can expect meaningful, sustained reversal from the current set of imbalances is via a significant depreciation of the dollar. The rest of the world appears prepared to fight the Fed because they know no other path.

Bad things happen when you fight the Fed. You find yourself on the wrong side of a whole bunch of trades. In this case, I suspect it means that Bretton Woods 2 finally collapses in a disorderly mess. There may really be no other way for it to end, because its end yields clear winners and losers. And the losers, in this case largely emerging markets, and not prepared to accept their fate.

Moreover, there is no agreement on what should be the post-Bretton Woods 2 rules of the game for international finance. Is there even a meaningful policy discussion? Perhaps a little hope via Bloomberg:

Suggestions for how to resolve currency differences were vague in Washington, with French Finance Minister Christine Lagarde proposing better coordination and more diversification, while Canada’s Jim Flaherty suggested that new “rules of the road” be outlined.

Of course, in the next sentence hope is dashed:

European Central Bank Executive Board member Lorenzo-Bini Smaghi suggested the G- 20 may be too big to find a compromise.

Unless checked in South Korea, the discord may snap the G- 20’s united front formed to fight the financial crisis and recession.

And don’t expect that the International Monetary Fund is prepared to deal with this crisis:

Unable to find common ground themselves, governments agreed the IMF should serve as currency cop by preparing reports which show how the policies of one economy affect others. The studies will focus on the U.S., China, the U.K. and the euro area.

“The need to have this kind of spillover report has been discussed for months and now it’s part of our toolbox,” IMF Managing Director Dominique Strauss-Kahn said.

Well, thank the Heavens above, the IMF stands ready to produce a report. Now I can sleep easy.

Bottom Line: The time may finally be at hand when the imbalances created by Bretton Woods 2 now tear the system asunder. The collapse is coming via an unexpected channel; rather than originating from abroad, the shock that sets it in motion comes from the inside, a blast of stimulus from the US Federal Reserve. And at the moment, the collapse looks likely to turn disorderly quickly. If the Federal Reserve is committed to quantitative easing, there is no way for the rest of the world to stop to flow of dollars that is already emanating from the US. Yet much of the world does not want to accept the inevitable, and there appears to be no agreement on what comes next. Call me pessimistic, but right now I don't see how this situation gets anything but more ugly

[Peachtree Pam]

More signs of the times: turning asphalt roads back into gravel.

http://online.wsj.com/article/SB1000142 ... 37746.html

Roads to Ruin: Towns Rip Up the Pavement
Asphalt Is Replaced By Cheaper Gravel; 'Back to Stone Age'


By LAUREN ETTER


A road crew in Jamestown, N.D., where road repair means reclaiming the original asphalt and processing it to resemble gravel.

SPIRITWOOD, N.D.—A hulking yellow machine inched along Old Highway 10 here recently in a summer scene that seemed as normal as the nearby corn swaying in the breeze. But instead of laying a blanket of steaming blacktop, the machine was grinding the asphalt road into bits.

"When [counties] had lots of money, they paved a lot of the roads and tried to make life easier for the people who lived out here," said Stutsman County Highway Superintendant Mike Zimmerman, sifting the dusty black rubble through his fingers. "Now, it's catching up to them."

Outside this speck of a town, pop. 78, a 10-mile stretch of road had deteriorated to the point that residents reported seeing ducks floating in potholes, Mr. Zimmerman said. As the road wore out, the cost of repaving became too great. Last year, the county spent $400,000 on an RM300 Caterpillar rotary mixer to grind the road up, making it look more like the old homesteader trail it once was.

Paved roads, historical emblems of American achievement, are being torn up across rural America and replaced with gravel or other rough surfaces as counties struggle with tight budgets and dwindling state and federal revenue. State money for local roads was cut in many places amid budget shortfalls.

The heavy machines at work in Jamestown, N.D., are grinding the asphalt off road beds, grading the bed and packing the material back down to create a new road surface.

In Michigan, at least 38 of the 83 counties have converted some asphalt roads to gravel in recent years. Last year, South Dakota turned at least 100 miles of asphalt road surfaces to gravel. Counties in Alabama and Pennsylvania have begun downgrading asphalt roads to cheaper chip-and-seal road, also known as "poor man's pavement." Some counties in Ohio are simply letting roads erode to gravel.

The moves have angered some residents because of the choking dust and windshield-cracking stones that gravel roads can kick up, not to mention the jarring "washboard" effect of driving on rutted gravel.

But higher taxes for road maintenance are equally unpopular. In June, Stutsman County residents rejected a measure that would have generated more money for roads by increasing property and sales taxes.

"I'd rather my kids drive on a gravel road than stick them with a big tax bill," said Bob Baumann, as he sipped a bottle of Coors Light at the Sportsman's Bar Café and Gas in Spiritwood.

Rebuilding an asphalt road today is particularly expensive because the price of asphalt cement, a petroleum-based material mixed with rocks to make asphalt, has more than doubled over the past 10 years. Gravel becomes a cheaper option once an asphalt road has been neglected for so long that major rehabilitation is necessary.

"A lot of these roads have just deteriorated to the point that they have no other choice than to turn them back to gravel," says Larry Galehouse, director of the National Center for Pavement Preservation at Michigan State University. Still, "we're leaving an awful legacy for future generations."

Some experts caution that gravel roads can be costlier in the long run than consistently maintained asphalt because gravel needs to be graded and smoothed. A gravel road "is not a free road," says Purdue University's John Habermann, who organized a recent seminar about the resurgence of gravel roads titled "Back to the Stone Age."

Paving grew in popularity in the early 20th century as more cars hit streets and spread when the federal government built the Interstate Highway System.

Over the years, many of the two-lane arteries that connect country roads with metro areas have deteriorated under rising traffic and the growing weight of farm combines, logging trucks and other heavy equipment.

Frederick Wachtel, county engineer in Coshocton County, Ohio, says his budget, largely driven by fuel taxes and vehicle registration fees, was off 5% last year, the first decline in nearly 20 years. He is now letting some of his roads return to nature.

In Spiritwood one day recently, a soft breeze carried the scents of cow manure and hot asphalt over the tall broom grass. The giant Caterpillar chugged along at a speed of 2.4 feet per minute and pulverized Old Highway 10 into a black dust with chunks of rock and pavement. A piece of equipment following behind rolled the surface flat.

The machines rumbled along a path carved by homesteaders' covered wagons in the 1800s. Over time, grain elevators and railroad depots sprung up along the route, which became known as the Old Red Trail. Later, the road was paved and renamed Highway 10.

After Interstate 94 was built alongside the road in the 1950s, it became Old Highway 10. Traffic volumes gradually dropped until Old 10 became a lazy backcountry road dotted with abandoned farmsteads. In the 1960s the state gave Old 10 to the counties it ran through, leaving them to pay for upkeep. North Dakota's Stutsman County got a 30-mile stretch.

The gift became a burden. The Stutsman highway department, which gets the bulk of its funds from local property taxes, state fuel taxes and vehicle registration fees, let the road fall into disrepair as it juggled other projects. Every year without major maintenance, the road became more expensive to fix.

Judy Graves of Ypsilanti, N.D., voted against the measure to raise taxes for roads. But she says she and others nonetheless wrote to Gov. John Hoeven and asked him to stop Old 10 from being ground up because it still carries traffic to a Cargill Inc. malting plant. She says the county has mismanaged its finances and badly neglected roads.

"Our expenses outweigh the income," says Mr. Zimmerman, who has been with the county highway department for nearly 30 years. He says the county will pay about $2,600 per mile annually for the newly ground-up road, as against about $75,000 per mile to reconstruct it.

Gayne Gasal, who lives along the redone stretch of road, says it has turned out "better than we all thought." But Sportsman's Bar owner Hilda Kuntz worries that the classic cars and bikers that roll through town in the summer will stay away.

"It's going to kill my business," she said.

[wintler2]

Empires take a while to crumble, didn't Rome take 400? This one will be faster cos more highly leveraged (import dependent, overpopulated landbase, hyperspecialised..) but will still take .. decades? 1 decade? Less?

On ABC tv's Q&A show last week they had Geoffrey Robertson & Tariq Ali (amongst others) and someone asked 'is this the end of the USA as global superpower and what should Oz do about it?' TA said "wish could agree but can't, china is economic but not military rival, there are no rivals to US hegemony"; GR cited # of nukes and said will last a while. (great show: GR discussed his push to prosecute the Pope for crimes against humanity, Paul Kelly ed. of The Australian outed as a catholic)

Assuming the US empire does/is collapsing, is anyone certain that its passing will be an unarguable good for those living outside the borders of the 50odd official states? If, oh, just say, China takes USs place as the bully you 'sell' your lunch to, will that be better?

[Peachtree Pam]

Apologies if this has already been posted elsewhere.

How Democracy Dies: Lessons From a Master

http://www.truthdig.com/report/page2/ho ... _20101011/

Posted on Oct 11, 2010


By Chris Hedges

The ancient Greek playwright Aristophanes spent his life battling the assault on democracy by tyrants. It is disheartening to be reminded that he lost. But he understood that the hardest struggle for humankind is often stating and understanding the obvious. Aristophanes, who had the temerity to portray the ruling Greek tyrant, Cleon, as a dog, is the perfect playwright to turn to in trying to grasp the danger posed to us by movements from the tea party to militias to the Christian right, as well as the bankrupt and corrupt power elite that no longer concerns itself with the needs of its citizens. He saw the same corruption 2,400 years ago. He feared correctly that it would extinguish Athenian democracy. And he struggled in vain to rouse Athenians from their slumber.

There is a yearning by tens of millions of Americans, lumped into a diffuse and fractious movement, to destroy the intellectual and scientific rigor of the Enlightenment. They seek out of ignorance and desperation to create a utopian society based on “biblical law.” They want to transform America’s secular state into a tyrannical theocracy. These radicals, rather than the terrorists who oppose us, are the gravest threat to our open society. They have, with the backing of hundreds of millions of dollars in corporate money, gained tremendous power. They peddle pseudoscience such as “Intelligent Design” in our schools. They keep us locked into endless and futile wars of imperialism. They mount bigoted crusades against gays, immigrants, liberals and Muslims. They turn our judiciary, in the name of conservative values, over to corporations. They have transformed our liberal class into hand puppets for corporate power. And we remain meek and supine.

They want to transform America’s secular state into a tyrannical theocracy. These radicals, rather than the terrorists who oppose us, are the gravest threat to our open society.

The huge amount of taxpayer money doled out to Wall Street, investment banks, the oil and natural gas industry and the defense industry, along with the dismantling of our manufacturing sector, is why we are impoverished. It is why our houses are being foreclosed on. It is why some 45 million Americans are denied medical care. It is why our infrastructure, from public schools to bridges, is rotting. It is why many of us cannot find jobs. We are being fleeced. The flagrant theft of public funds and rise of an obscenely rich oligarchic class is masked by the tough talk of demagogues, themselves millionaires, who use fear and bombast to keep us afraid, confused and enslaved.

Aristophanes saw the same psychological and political manipulation undermine the democratic state in ancient Athens. He repeatedly warned Athenians in plays such as “The Clouds,” “The Wasps,” “The Birds,” “The Frogs” and “Lysistrata” that permitting political leaders who shout “I shall never betray the Athenian!” or “I shall keep up the fight in defense of the people forever!” to get their hands on state funds and power would end with the citizens enslaved.

“The truth is, they want you, you see, to be poor,” Aristophanes wrote in his play “The Wasps.” “If you don’t know the reason, I’ll tell you. It’s to train you to know who your tamer is. Then, whenever he gives you a whistle and sets you against an opponent of his, you jump out and tear them to pieces.”

Our democracy, through years of war, theft and corruption, is also being diminished. But the example Aristophanes offers is not a hopeful one. He held up the same corruption to his fellow Greeks. He repeatedly chided them for not rising up and fighting back. He warned, ominously, that by the time most citizens awoke it would be too late. And he was right. The appearance of normality lulls us into a false hope and submission. Those who shout most loudly in defense of the ideals of the founding fathers, the sacredness of Constitution and the values of the Christian religion are those who most actively seek to subvert the principles they claim to champion. They hold up the icons and language of traditional patriotism, the rule of law and Christian charity to demolish the belief systems that give them cultural and political legitimacy. And those who should defend these beliefs are cowed and silent.

“For a considerable length of time the normality of the normal world is the most efficient protection against disclosure of totalitarian mass crimes,” Hannah Arendt wrote in “The Origins of Totalitarianism.” “Normal men don’t know that everything is possible, refuse to believe their eyes and ears in the face of the monstrous. ... The reason why the totalitarian regimes can get so far toward realizing a fictitious, topsy-turvy world is that the outside non-totalitarian world, which always comprises a great part of the population of the totalitarian country itself, indulges in wishful thinking and shirks reality in the face of real insanity. ...”

All ideological, theological and political debates with the representatives of the corporate state, including the feckless and weak Barack Obama, are useless. They cannot be reached. They do not want a dialogue. They care nothing for real reform or participatory democracy. They use the tricks and mirages of public relations to mask a steadily growing assault on our civil liberties, our inability to make a living and the loss of basic services from education to health care. Our gutless liberal class placates the enemies of democracy, hoping desperately to remain part of the ruling elite, rather than resist. And, in many ways, liberals, because they serve as a cover for these corporate extremists, are our greatest traitors.

Aristophanes too lived in a time of endless war. He knew that war always empowered anti-democratic forces. He saw how war ate away at the insides of a democratic state until it was hollowed out. His play “Lysistrata,” written after Athens had spent 21 years consumed by the Peloponnesian War, is a satire in which the young women refuse to have sex with their men until the war ends and the older women seize the Acropolis, where the funds for war are stored. The play called on Athenians to consider radical acts of civil disobedience to halt a war that was ravaging the state. The play’s heroine, Lysistrata, whose name means “Disbander of Armies,” was the playwright’s mouthpiece for the folly and self-destructiveness of war. But Athens, which would lose the war, did not listen.

The tragedy is that liberals and secularists, like Obama, are not viewed as competitors by the corporate forces that hold power, but as contaminates that must be eliminated. They have sought to work with forces that will never be placated. They have abandoned the most basic values of the liberal class to play a game that in the end will mean their political and cultural extinction. There will be no swastikas this time but seas of red, white and blue flags and Christian crosses. There will be no stiff-armed salutes, but recitations of the Pledge of Allegiance. There will be no brown shirts but nocturnal visits from Homeland Security. The fear, rage and hatred of our dispossessed and confused working class are being channeled into currents that are undermining the last vestiges of the democratic state. These dangerous emotions, directed against a liberal class that as in ancient Athens betrayed the population, have a strong appeal. And unless we adopt the radicalism held by Aristophanes, unless we begin to hinder the functioning of the corporate state through acts of civil disobedience, we are finished.

Let us not stand at the open gates of the city meekly waiting for the barbarians. They are coming. They are slouching towards Bethlehem. Let us, if nothing else, like Aristophanes, begin to call our tyranny by its name.

[bks]

Bottom Line: The time may finally be at hand when the imbalances created by Bretton Woods 2 now tear the system asunder. The collapse is coming via an unexpected channel; rather than originating from abroad, the shock that sets it in motion comes from the inside, a blast of stimulus from the US Federal Reserve. And at the moment, the collapse looks likely to turn disorderly quickly. If the Federal Reserve is committed to quantitative easing, there is no way for the rest of the world to stop to flow of dollars that is already emanating from the US. Yet much of the world does not want to accept the inevitable, and there appears to be no agreement on what comes next. Call me pessimistic, but right now I don't see how this situation gets anything but more ugly

Are those countries financing US indebtedness prepared to stop buying US Treasuries? Seems they'll have to in order to stem the tide. You would think there'd be more of a constituency abroad for taking the loss on current Treasury holdings, rather than risk getting crushed later. Am I missing something?

It's very sobering to realize that while the US could not fund its military imperialism without the continuing participation of foreign central banks, that participation continues. Anyone following the Treasury bond markets? What's the latest?

[anothershamus]

BKS wrote:

It's very sobering to realize that while the US could not fund its military imperialism without the continuing participation of foreign central banks, that participation continues.

Wouldn't that be a shame, to have to get out of the business of "occupying force".

It does look like it's going to get messy and maybe painful, I just hope it goes through the violent part quickly. My worst fear is roving bands. Probably existing groups will just go rouge to get what they want, (food, gas, ammo).
If they are large enough no one can stop them! The largest one is the National Guard. If they start taking stuff, look out!

Maybe we can get them to go against the local gangs and have a Thunderdome style sport.

Wow, I would totally pay to see that!

[vanlose kid]

David Simon (creator of The Wire) on the end of American Empire, ca. 2007.
well worth watching.





*

[Bruce Dazzling]

Thanks for posting the David Simon vids, vanlose.

That's good stuff.

[Simulist]

"If you thought you were living in a democracy — if you bought into that — you've got to go to a dictionary, and look up the word, 'oligarchy.' And you've got to think about what it means."

— David Simon

[Bruce Dazzling]

‎"Our media, the people who are attending to the problems and challenging government, and who are supposed to tell truth to power -- they are weaker than ever. Our entertainment is more distracting than ever. Our politicians are more careerist and cultured to party politics than ever. The expectations of our basic institutions are being minimized every day. We put a label on failure and call it success. Orwell would be cracking up."

~ David Simon

[Simulist]

"We're fucked."

— Simulist

[justdrew]

looks like they're going ahead with this...

Federal Reserve to print billions of dollars in massive shadow stimulus

By Agence France-Presse
Tuesday, November 2nd, 2010 -- 5:23 pm

Federal Reserve to print billions of dollars in massive shadow stimulusThe Federal Reserve's policy-setting panel began a crucial two-day meeting Tuesday, poised to cast aside its long-held reluctance to micro-manage the economy in a bid to avoid a lost decade of growth.

The central bank's open market committee (FOMC) is expected to approve massive stimulus spending not seen since the depths of the economic crisis.

At the conclusion of the meeting Wednesday, the Fed is expected to announce it will resume the large-scale purchase of long-term US bonds -- essentially printing billions of dollars -- in the hope of boosting a weak recovery.

While the Fed took similar measures during the crisis, it is unprecedented when the economy is not teetering on the edge of collapse, raising protests from some Fed members who fear it is unnecessary and will fuel long-term inflation.

Critics of the policy argue that although the recovery is painfully slow, markets should be allowed to do their work. They also worry that if the policy fails the Fed's credibility will be wrecked.

"I think that this will quite possibly be the worst mistake by the Fed in a generation," said Stephen Stanley of Pierpont Securities.

But supporters argue that the Fed is failing in both of the prongs of its dual mandate, with unemployment and inflation both at unsustainable levels and must act.

Since Fed chairman Ben Bernanke first suggested the possibility in late September, and confirmed it in October, markets and most economists have penciled in another round of quantitative easing (QE) as a solid bet.

Goldman Sachs analysts and others predicted the rate-setting Federal Open Market Committee would start with a purchase of about 500 billion dollars in Treasury bonds.

The Fed already has poured in more than 1.5 trillion dollars to spark a recovery.

The FOMC meeting opened Tuesday in the thick of hotly contested congressional and local elections nationwide.

President Barack Obama's Democrats are poised to lose seats in Congress to Republicans, who oppose the administration's massive stimulus spending that dragged the economy out of the worst recession since the Great Depression, but ran up sky-high deficits doing it.

A government report Friday showing only modest third-quarter economic growth bolstered expectations of further Fed stimulus to lower long-term interest rates and fight off deflationary pressure in the slack economy.

The world's largest economy grew at a 2.0 percent annual rate in July-September, in line with expectations, slightly more than a 1.7 percent expansion in the second quarter.

Economists consider that economic growth must reach about three percent for some time to significantly reduce high unemployment.

But more than a year after the recession officially ended, unemployment has been hovering near double-digits.

When the government reports payroll data on Friday, the jobless rate was expected to remain stuck at 9.6 percent for the third straight month in October.

"The US economic recovery continues on, but growth remains too weak to cause a serious improvement in the labor market," said Augustine Faucher at Moody's Analytics.

Amid that backdrop the Fed has left interest rates at historic lows and is unlikely to change that stance any time soon.

Nomura Global Economics analysts predicted the FOMC statement would include a commitment to continue buying until the committee's forecasts show significant progress toward full employment and inflation approaches more acceptable levels.

[Bruce Dazzling]

But more than a year after the recession officially ended, unemployment has been hovering near double-digits.

Mindfuck alert!

[vanlose kid]

But more than a year after the recession officially ended, unemployment has been hovering near double-digits.

Mindfuck alert!

*

[Luther Blissett]

My girlfriend just got me started watching The Wire last night and I think that David Simon might wind up being my only "television" related stalwart of anti-fascism.

Also, the Obama Mission Accomplished picture is funny nowadays. Fred Armison was doing a good big dick impression on SNL last night. I hate the way they switch back and forth between insulting power and supporting it. I think the loss of Tina Fey's influence affected that.