Tag Archives: Economics

The Two Causes of the Coming Great Depression

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By Charles Hugh Smith

Source: Of Two Minds

There are two approaches to analyzing a situation:

1. Choose the desired outcome–generally the one that doesn’t require any major changes, sacrifices or downward mobility
2. Identify the initial conditions and systemic dynamics and then follow these to a conclusion back-tested by comparisons with historical outcomes.

Our default setting as humans is 1: select the outcome we want and then find whatever bits and pieces supports that conclusion. Cherry-pick data, draw false analogies–the field is wide open.

This is why we get so upset when our “analysis” is challenged: we’re forced to ask what happens to us if our desired outcome doesn’t transpire, and since the answer might be something less than optimal, we violently reject any data or analogies that conflict with our carefully curated “analysis.”

A great deal of what passes for analysis today is cherry-picked bits and pieces that support a happy story of endlessly expanding prosperity–AI, fusion, etc.–with no mention of limits, constraints, costs or worst-case outcomes rather than best-case outcomes.

Let’s start with an historical analogy most reject: the Great Depression of 1929 to 1942. The conventional account claims that the Depression was the result of a “Federal Reserve policy error”: the Fed tightened credit when it should have loosened it.

This is nonsense. What actually happened was credit expanded rapidly in the Roaring 1920s, which is why they were Roaring. Farmers could borrow money to buy prairie land to put under the plow, speculators could borrow $9 on margin to play the stock market with $1 in cash, and so on.

In other words, what happened was a gigantic credit bubble inflated that pushed stocks and other assets to unsustainable heights of over-valuation, valuations based on the Roaring 20s expansion of credit and consumption continuing forever.

But all bubbles pop, and so the weather changed for the worse and newly plowed prairie turned into a Dust Bowl, wiping out heavily leveraged farmers. Since there was no federal bank deposit guarantee (no FDIC), the bankruptcies of overleveraged borrowers wiped out thousands of small banks, wiping out the savings of prudent depositors.

So even prudent savers got wiped out in the crash of the credit bubble.

Stock speculators gambling on margin (i.e. borrowed money) were quickly wiped out, and the selling became self-reinforcing, accelerating the cascading crash.

The real policy error was protecting the wealthy who owned the debt from a debt-clearing write-down. The wealthy own debt, the non-wealthy owe debt. When the debt is defaulted on, the lender / owner of the debt has to absorb the loss. The debtor is freed of the burden. In a debt-clearing event driven by defaults, insolvencies and bankruptcies, the wealthy are the losers and the debtors are freed of the burden of debt.

Various programs were implemented to stave off the consequences of default, as if pushing losses into the future would somehow enable the credit bubble to reinflate. That’s not how it works: the financial system is like a forest, and if the dead wood of bad debt piles up and isn’t allowed to burn, then the forest cannot foster new growth.

Economies that refuse to accept the wealth destruction that results from credit bubbles popping stagnate. This is the story of Japan from 1990 to the present: the status quo in Japan refused to accept the losses, hiding bad debt (i.e. non-performing loans) behind artifices such as new loans that covered the interest due, listing the non-performing loans in “zombie” categories, i.e. as assets that were still on the books at full value even though they were essentially worthless, and so on.

The net result was 33 years of stagnation and social decay as young people gave up on owning homes and having families.

Now the US has inflated another “debt super-cycle” credit bubble that has pushed assets into over-valuation. Once again the goal is to avoid handing the wealthy owners of all this debt the enormous losses that must be accepted to clear the dead wood of bad debt, money lent to borrowers and projects that were not creditworthy except in a bubble.

The lesson the status quo took from the Great Depression is to cover up private-sector over-valuations and bad debts with vast expansions of credit via the Federal Reserve and the federal government. Please look at these four charts below:
1. total credit (TCMDO)
2. the Federal Reserve balance sheet (2 charts)
3. federal debt

All are in visibly unsustainable parabolic ascents.

Predictably, the status quo will refuse to accept the necessity of clearing the dead wood and accepting the trillions of dollars in losses that will accrue to those who own the unpayable debts.

Consider CRE, commercial real estate. Office towers are now worth one-third of their pre-pandemic valuations, the valuations on which their mortgages were based. There is no way these properties can be magically restored to their previous over-valuation. Massive losses must be accepted by the owners of the debt. If those losses make them insolvent, so be it. That is unacceptable in a system geared to protect the wealthy at all costs.

But bubbles pop anyway, regardless of policy tweaks. Consider these stock market charts of the Roaring 20s and the Great Depression and the present (below). The similarity is remarkable–possibly even eerie.

The big difference between the Great Depression of the 1930s and the Depression we’re entering is the world still had enormous reserves of resources to tap and a (by today’s standards) modest population in the resource-consuming developed nations.

Recall that a developed-world consumer uses up to 100 times more energy and resources than a poor person in a rural undeveloped nation. Recycling a few bottles doesn’t change this.

This means the planet’s “savings account” of abundant, cheap-to-access resources has been depleted. Yes, there is still oil and copper, etc., but it’s of far lower quality and much harder to get now. The rich ores have been mined and the shallow super-giant oil fields have all been tapped long ago. Now the Saudis must pump stupendous quantities of seawater into their oil wells to maintain production. All these technologies consume vast quantities of energy.

The inevitable result is the energy efficiency–how much energy is required to access, process and transport the energy–has plummeted even as consumption has soared.

The outcome many hope for is some new miraculously cheap and abundant sources of energy such as fusion. But fusion is far more complicated and tricky than pumping oil, and oil is a high-energy-density fuel that can be stored rather easily. All the electricity generated by various technologies can’t be stored easily or cheaply, and so the happy story is that a new miraculous battery technology is just around the corner.

But batteries are also complicated and resource-dense, so they’ll always be as expensive as the materials needed to fabricate them. There will never be “low-cost” batteries if the materials needed to make them are scarce and expensive to dig out of the ground, process and transport.

So the policy choices are simple: either protect the wealthy from write-downs of bad debt and the collapse of asset bubbles and usher in decades of stagnation, or force the wealthy to take the losses and clear away the dead wood.

But either choice will be constrained by the reality that humanity has already drained the easy-to-get “savings account” of global resources.

I get emails from readers who say things like “mining techniques are far more efficient now.” That’s fine, but most of these new mines are often thousands of kilometers away from railways or seaports, and thousands of kilometers away from the processing plants that turn the ore into useful metals.

Recall the enormity of the cost and effort required to build a single two-lane highway thousands of kilometers to a new mine, and the oceans of diesel fuel needed to power the mining equipment and trucks hauling the ore to railways or seaports. Recall the immense amounts of energy required to smelt / process these ores, and the near-zero percentage of lithium-ion batteries that are currently being recycled.

Batteries are difficult to recycle because they’re not manufactured to be recycled, and they’re not manufactured to be recycled because that would raise costs considerably, reducing profits.

So on the present course, the idea is to manufacture billions of batteries, throw them all in the landfill in 10 years, and then mine enough minerals to build another couple billion batteries and then repeat the cycle of throwing them away in 10 years forever.

That isn’t realistic, so the status quo will have to adjust to this unwelcome reality.

This is why I keep writing books about relocalizing, degrowth, using less rather than more to yield a higher level of well-being. The resource “savings account” won’t support fantasies of endlessly expanding consumption of hard-to-get resources.

But the status quo has much to unlearn, and it seems the only pathway to a new understanding is a Great Depression that won’t end with a new expansion of credit because the resources required for that new expansion simply won’t be available or affordable.

Reducing our exposure to avoidable risks is a key strategy of Self-Reliance.

Gee, Thanks America! U.S. Sanctions Make Russian Economy Stronger and Precipitate Multipolar World

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By SCF Editorial

Source: Strategic Culture Foundation

The paradoxical thing is that U.S. and European sanctions against Russia while intended to cripple the Russian economy have made the stronger.

Russia’s economy is performing strongly, according to recent forecasts from the World Bank and International Monetary Fund. The outcome defies earlier predictions by the United States and its European allies which held that Western sanctions would bring the Russian economy to its knees and force it to submissively “Cry Uncle”.

When the conflict in Ukraine escalated 16 months ago (after eight years of NATO-sponsored aggression using the Kiev Neo-Nazi regime), various Western politicians and pundits were relishing the prospect of the Russian economy collapsing from “Total War” launched against its international banking and trade.

Well, it didn’t turn out like that. Far from it. As the World Bank noted above, the Western sanctions have simply helped Russia boost alternative markets in China, India, and elsewhere around the globe. A principal earner for Russia is energy exports of oil and gas. Increased sales to Asia have maintained revenues despite the loss of European markets due to Western sanctions.

The paradoxical thing is that U.S. and European sanctions against Russia while intended to cripple the Russian economy have actually made the latter stronger.

Michael Hudson, an American global economics analyst, points out: “The sanctions have obliged Russia to become self-sufficient in food production, manufacturing production and consumer goods.”

Hudson also notes that the U.S. geopolitical strategy is to use sanctions in order to make its supposed European allies more dependent and subservient to Washington.

Another respected commentator, Glenn Diesen, a Norwegian geoeconomics professor, likened the use of Western sanctions to the self-destructive behavior of “self-harm”. The United States and European Union, he says, have “handed over a huge market to the rest of the world”.

Diesen also observes that 85 percent of the world’s population lives in countries that do not comply with Western sanctions against Russia. This global majority is more than ever creating new forms of trade and finance that obviate Western control. A major impetus for this positive development is the necessity bequeathed by Washington’s systematic abuse of power and privilege.

The repercussions are more far-reaching and profound than the inadvertent benefits accruing to Russia’s national economy. What the Western sanctions are also doing is accelerating the development of a multipolar world and the demise of the U.S. dollar as a global reserve currency. The upshot of those two trends is the historic dwindling of American imperial power – albeit with outbursts of militarism and warmongering along the way down.

A significant illustration of the times a-changing was seen this week at the 25th summit of the St Petersburg International Economic Forum (SPIEF). Attending the four-day event were 17,000 delegates from some 130 nations. This year’s convocation witnessed large representations from Asia, Latin America and Africa.

The bustling event not only reflected Russia’s own economic strength but the fact that – far from being “isolated” and downtrodden – Russia is viewed by the rest of the world as an engine for growth and more prosperous multipolar relations.

Indeed, from the perspective of most nations, it looks like the United States and its Western allies are the ones who are isolated and anachronistic.

One of the attendees at SPIEF was American industrial analyst Douglas Andrew Littleton who commented: “Western sanctions against Russia have backfired.” And he added: “I’m happy that Russia has been able to bypass and skirt the sanctions in so many ways with their friends and allies.”

What’s going on here is not just merely the emergence of an alternative system, but an epochal political and perhaps moral paradigm shift. The globe wants more peaceful and mutual relations of cooperation and development. Most people on this Earth want endless warmongering, militarism and unilateral bullying by self-ordained powers to be put to an end. The planet is crying out for a world based on justice and peace.

What the world is realizing more than ever is that the unilateral use of economic sanctions by Washington is nothing but warfare and state terrorism by another, more palatable name. For decades, the U.S. has tried to use economic weapons to strangle and kill other nations. North Korea, Cuba, Iran, Iraq and many other countries come to mind where U.S. imperialism has imposed conditions of economic genocide.

The world is well aware of this fiendish legacy and has had enough of American barbarism wielded with the help of its Western lackeys in NATO and the European Union.

We should here make special mention of Syria, the Arab nation struggling to recover from 12 years of war that was inflicted upon it by Washington and its NATO partners for “regime change”. Today, Syria’s recovery is cruelly hampered by economic sanctions imposed by the U.S. and EU. How despicable is that?

There is an unerring historical sense, however, that Washington, has finally met its nemesis. By racking up sanctions against Russia and dragooning its EU lackeys to follow suit, the United States has now unleashed a historic dynamic process of its own imperial collapse.

For decades, U.S. sanctions worked to a nefarious degree on isolated, smaller nations to indeed enforce vengeful hardship.

Not anymore. Russia’s vast natural wealth and economy are too big to contain. Militarily, too, Russia will not be pushed around. Indeed, it has pushed back in Ukraine against the West’s deceptive and pernicious proxy war.

Organically and consciously, the world economy and international relations have been transformed in recent years, especially with the rise of China and Eurasia generally.

Another key development is that the Western imperialist media monopoly has also been broken. Washington and its minions in the European political class are held in contempt as liars and charlatans, even by their own populations.

By unwisely attempting to trap the Russian bear, the West has only created a scenario of revolt by the rest of the world from the West’s exploitative control. Five centuries of European and American Western parasitism have run their course.

Russia’s economic strength is galvanizing the rest of the world to shake off the chains of Western domination and subjugation. The process of dumping the dollar is gathering momentum which self-harming sanctions are precipitating. Pillars and facades are crumbling in real time.

The theme for the SPIEF event this year was “Sovereign Development – the Basis for a Just World”.

As with many other empires in the annals of history that have collapsed, arrogance and hubris often precede the fall. The American and Western elite thought they had an eternal license to wreak havoc for their own selfish gain. Their economic plunder and weaponry are now turning on their own heads. And it’s long overdue.

The Ultimate All-American Slush Fund

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How A New Budget Loophole Could Send Pentagon Spending Soaring Even Higher

By Julia Gledhill and William D. Hartung

Source: TomDispatch

On June 3rd, President Joe Biden signed a bill into law that lifted the government’s debt ceiling and capped some categories of government spending. The big winner was — surprise, surprise! — the Pentagon.

Congress spared military-related programs any cuts while freezing all other categories of discretionary spending at the fiscal year 2023 level (except support for veterans). Indeed, lawmakers set the budget for the Pentagon and for other national security programs like nuclear-related work developing nuclear warheads at the Department of Energy at the level requested in the administration’s Fiscal Year 2024 budget proposal — a 3.3% increase in military spending to a whopping total of $886 billion. Consider that preferential treatment of the first order and, mind you, for the only government agency that’s failed to pass a single financial audit! 

Even so, that $886 billion hike in Pentagon and related spending is likely to prove just a floor, not a ceiling, on what will be allocated for “national defense” next year. An analysis of the deal by the Wall Street Journal found that spending on the Pentagon and veterans’ care — neither of which is frozen in the agreement — is likely to pass $1 trillion next year.

Compare that to the $637 billion left for the rest of the government’s discretionary budget. In other words, public health, environmental protection, housing, transportation, and almost everything else the government undertakes will have to make do with not even 45% of the federal government’s discretionary budget, less than what would be needed to keep up with inflation. (Forget addressing unmet needs in this country.)

And count on one thing: national security spending is likely to increase even more, thanks to a huge (if little-noticed) loophole in that budget deal, one that hawks in Congress are already salivating over how best to exploit. Yes, that loophole is easy to miss, given the bureaucratese used to explain it, but its potential impact on soaring military budgets couldn’t be clearer. In its analysis of the budget deal, the Congressional Budget Office noted that “funding designated as an emergency requirement or for overseas contingency operations would not be constrained” by anything the senators and House congressional representatives had agreed to.

As we should have learned from the 20 years of all-American wars in Afghanistan and Iraq, the term “overseas contingency” can be stretched to cover almost anything the Pentagon wants to spend your tax dollars on. In fact, there was even an “Overseas Contingency Operations” (OCO) account supposedly reserved for funding this country’s seemingly never-ending post-9/11 wars. And it certainly was used to fund them, but hundreds of billions of dollars of Pentagon projects that had nothing to do with the conflicts in Iraq or Afghanistan were funded that way as well. The critics of Pentagon overspending quickly dubbed it that department’s “slush fund.”

So, prepare yourself for “Slush Fund II” (coming soon to a theater near you). This time the vehicle for padding the Pentagon budget is likely to be the next military aid package for Ukraine, which will likely be put forward as an emergency bill later this year.  Expect that package to include not only aid to help Ukraine fend off Russia’s ongoing brutal invasion but tens of billions of dollars more to — yes, of course! — pump up the Pentagon’s already bloated budget.

Senator Lindsey Graham (R-SC) made just such a point in talking with reporters shortly after the debt-ceiling deal was passed by Congress. “There will be a day before too long,” he told them, “where we’ll have to deal with the Ukrainian situation. And that will create an opportunity for me and others to fill in the deficiencies that exist from this budget deal.”

Senate Majority Leader Chuck Schumer (D-NY) made a similar point in a statement on the Senate floor during the debate over that deal. “The debt ceiling deal,” he said, “does nothing to limit the Senate’s ability to appropriate emergency/supplemental funds to ensure our military capabilities are sufficient to deter China, Russia, and our other adversaries and respond to ongoing and growing national security threats.”

One potential (and surprising) snag in the future plans of those Pentagon budget boosters in both parties may be the position of House Speaker Kevin McCarthy (R-CA). He has, in fact, described efforts to increase Pentagon spending beyond the level set in the recent budget deal as “part of the problem.” For the moment at least, he openly opposes producing an emergency package to increase the Pentagon budget, saying:

“The last five audits the Department of Defense [have] failed. So there’s a lot of places for reform [where] we can have a lot of savings. We’ve plussed it up. This is the most money we’ve ever spent on defense — this is the most money anyone in the world has ever spent on defense. So I don’t think the first answer is to do a supplemental.”

The Massive Overfunding of the Pentagon

The Department of Defense is, of course, already massively overfunded. That $886 billion figure is among the highest ever — hundreds of billions of dollars more than at the peak of the Korean or Vietnam wars or during the most intensely combative years of the Cold War. It’s higher than the combined military budgets of the next 10 countries combined, most of whom are, in any case, U.S. allies. And it’s estimated to be three times what the Chinese military, the Pentagon’s “pacing threat,” receives annually. Consider it an irony that actually “keeping pace” with China would involve a massive cut in military spending, not an increase in the Pentagon’s bloated budget.

It also should go without saying that preparations to effectively defend the United States and its allies could be achieved for so much less than is currently lavished on the Pentagon.  A new approach could easily save significantly more than $100 billion in fiscal year 2024, as proposed by Representatives Barbara Lee (D-CA) and Mark Pocan (D-WI) in the People Over Pentagon Act, the preeminent budget-cut proposal in Congress. An illustrative report released by the Congressional Budget Office (CBO) in late 2021 sketched out three scenarios, all involving a less interventionist, more restrained approach to defense that would include greater reliance on allies. Each option would reduce America’s 1.3-million-strong active military force (by up to one-fifth in one scenario). Total savings from the CBO’s proposed changes would, over a decade, be $1 trillion.

And a more comprehensive approach that shifted away from the current “cover the globe” strategy of being able to fight (though, as the history of this century shows, not always win) wars virtually anywhere on Earth on short notice — without allies, if necessary — could save hundreds of billions more over the next decade. Cutting bureaucracy and making other changes in defense policy could also yield yet more savings. To cite just two examples, reducing the Pentagon’s cohort of more than half-a-million private contract employees and scaling back its nuclear weapons “modernization” program would save significantly more than $300 billion extra over a decade.

But none of this is even remotely likely without concerted public pressure to, as a start, keep members of Congress from adding tens of billions of dollars in spending on parochial military projects that channel funding into their states or districts. And it would also mean pushing back against the propaganda of Pentagon contractors who claim they need ever more money to provide adequate tools to defend the country.

Contractors Crying Wolf

While demanding ever more of our tax dollars, the giant military-industrial corporations are spending all too much of their time simply stuffing the pockets of their shareholders rather than investing in the tools needed to actually defend this country. A recent Department of Defense report found that, from 2010-2019, such companies increased by 73% over the previous decade what they paid their shareholders. Meanwhile, their investment in research, development, and capital assets declined significantly. Still, such corporations claim that, without further Pentagon funding, they can’t afford to invest enough in their businesses to meet future national security challenges, which include ramping up weapons production to provide arms for Ukraine.

In reality, however, the financial data suggests that they simply chose to reward their shareholders over everything and everyone else, even as they experienced steadily improving profit margins and cash generation. In fact, the report pointed out that those companies “generate substantial amounts of cash beyond their needs for operations or capital investment.” So instead of investing further in their businesses, they choose to eat their “seed corn” by prioritizing short-term gains over long-term investments and by “investing” additional profits in their shareholders. And when you eat your seed corn, you have nothing left to plant next year.

Never fear, though, since Congress seems eternally prepared to bail them out. Their businesses, in fact, continue to thrive because Congress authorizes funding for the Pentagon to repeatedly grant them massive contracts, no matter their performance or lack of internal investment. No other industry could get away with such maximalist thinking.

Military contractors outperform similarly sized companies in non-defense industries in eight out of nine key financial metrics — including higher total returns to shareholders (a category where they leave much of the rest of the S&P 500 in the dust). They financially outshine their commercial counterparts for two obvious reasons: first, the government subsidizes so many of their costs; second, the weapons industry is so concentrated that its major firms have little or no competition.

Adding insult to injury, contractors are overcharging the government for the basic weaponry they produce while they rake in cash to enrich their shareholders. In the past 15 years, the Pentagon’s internal watchdog has exposed price gouging by contractors ranging from Boeing and Lockheed Martin to lesser-known companies like TransDigm Group. In 2011, Boeing made about $13 million in excess profits by overcharging the Army for 18 spare parts used in Apache and Chinook helicopters. To put that in perspective, the Army paid $1,678.61 each for a tiny helicopter part that the Pentagon already had in stock at its own warehouse for only $7.71.

The Pentagon found Lockheed Martin and Boeing price gouging together in 2015. They overcharged the military by “hundreds of millions of dollars” for missiles. TransDigm similarly made $16 million by overcharging for spare parts between 2015 and 2017 and even more in the following two years, generating nearly $21 million in excess profits. If you can believe it, there is no legal requirement for such companies to refund the government if they’re exposed for price gouging.

Of course, there’s nothing new about such corporate price gouging, nor is it unique to the arms industry. But it’s especially egregious there, given how heavily the major military contractors depend on the government’s business. Lockheed Martin, the biggest of them, got a staggering 73% of its $66 billion in net sales from the government in 2022. Boeing, which does far more commercial business, still generated 40% of its revenue from the government that year. (Down from 51% in 2020.)

Despite their reliance on government contracts, companies like Boeing seem to be doubling down on practices that often lead to price gouging. According to Bloomberg News, between 2020 and 2021, Boeing refused to provide the Pentagon with certified cost and pricing data for nearly 11,000 spare parts on a single Air Force contract. Senator Elizabeth Warren (D-MA) and Representative John Garamendi (D-CA) have demanded that the Pentagon investigate since, without such information, the department will continue to be hard-pressed to ensure that it’s paying anything like a fair price, whatever its purchases.

Curbing the Special Interest Politics of “Defense”

Reining in rip-offs and corruption on the part of weapons contractors large and small could save the American taxpayer untold billions of dollars. And curbing special-interest politics on the part of the denizens of the military-industrial-congressional complex (MICC) could help open the way towards the development of a truly defensive global military strategy rather than the current interventionist approach that has embroiled the United States in the devastating and counterproductive wars of this century.

One modest step towards reining in the power of the arms lobby would be to revamp the campaign finance system by providing federal matching funds, thereby diluting the influential nature of the tens of millions in campaign contributions the arms industry makes every election cycle. In addition, prohibiting retiring top military officers from going to work for arms-making companies — or, at least, extending the cooling off period to at least four years before they can do so, as proposed by Senator Warren — would also help reduce the undue influence exerted by the MICC.

Last but not least, steps could be taken to prevent the military services from giving Congress their annual wish lists — officially known as “unfunded priorities lists” — of items they want added to the Pentagon budget. After all, those are but another tool allowing members of Congress to add billions more than what the Pentagon has even asked for to that department’s budget.

Whether such reforms alone, if adopted, would be enough to truly roll back excess Pentagon spending remains to be seen. Without them, however, count on one thing: the department’s budget will almost certainly continue to soar, undoubtedly reaching $1 trillion or more annually within just the next few years.  Americans can’t afford to let that happen.

The BRICS Reshape the Global Geopolitical Map

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By Manuel F. Diaz

Source: InfoBrics.org

Thirty years ago, pluripolarity was far from a reality in a world that had been under U.S. hegemony since the collapse of the Soviet Union in 1991. Today, however, humanity is taking important steps toward forming a plural geopolitics whose protagonists are the emerging countries that challenge Western power.

The turning point towards a new form of integration, which will generate a new world political balance, occurred in 2009 when Brazil, Russia, India, and China held the first BRIC summit.

After the incorporation of South Africa to this group in 2010, the BRICS has generated such real prospects that other nations with productive capacity and diversified economies have expressed interest in joining. Among them are Saudi Arabia, Algeria, Argentina, the United Arab Emirates, and Mexico.

In the article “Can the BRICS Trump the IMF and the World Bank?,” Palestinian-American journalist Ramzy Baroud noted that “one of the biggest opportunities and challenges” the BRICS now faces is expanding its membership while maintaining its current growth.

Recent financial reports revealed that the BRICS have the world’s largest gross domestic product (GDP) and that economic bloc contributes 31.5 percent of global GDP, while the Group of Seven (G7) stuck at 30.7 percent.

The International Monetary Fund (IMF) and the World Bank (WB) are known for providing financial support to developing countries under conditions that, under the pretext of defending human rights or democracy, seek to favor the privatization of public goods and the opening of domestic markets for Western foreign investors.

Due to these politically-driven conditionalities, the struggle for alternatives to the IMF-WB mechanisms becomes a political task. The Global South requires international institutions that are not interested in indirectly manipulating or controlling national economies.

That is the call for the BRICS to evolve towards integration schemes that go beyond the exclusively economic realm, although the basis of the fight against the U.S.-controlled institutions is the formation of an alternative economy.

Recently, the BRICS placed a capital of US$50 billion for the launch of their New Development Bank (NDB), which will be chaired by former Brazilian president Dilma Rousseff.

This happened at a time when presidents Xi Jinping (China) and Lula da Silva (Brazil) showed a shared interest in influencing the peaceful solution of the Ukrainian conflict.

Under these circumstances, to argue that the BRICS are a group with purely economic interests is to ignore much of the its history.

“The timing of the BRICS expansion, the stern political discourse of its members, potential members and allies, the repeated visits by top Russian and Chinese diplomats to Africa and other regions of the Global South, etc… indicate that the BRICS have become the new geopolitical, economic and diplomatic platform for the countries of the South,” said Baroud.

Meanwhile, the Western powers, whose economies are struggling to stay afloat, are closely and suspiciously watching the changes taking place in the Global South at the hands of the BRICS.

The Hegemon Will Go Full Hybrid War Against BRICS+

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The Hybrid War 2.0 against the Global South has not even started. Swing states, you have all been warned.

By Pepe Escobar

Source: Global Research

U.S. Think Tank Land hacks are not exactly familiar with Montaigne: “On the highest throne in the world, we still sit only on our own bottom.”

Hubris leads these specimens to presume their flaccid bottoms are placed high above anyone else’s. The result is that a trademark mix of arrogance and ignorance always ends up unmasking the predictability of their forecasts.

U.S. Think Tank Land – inebriated by their self-created aura of power – always telegraphs in advance what they’re up to. That was the case with Project 9/11 (“We need a new Pearl Harbor”). That was the case with the RAND report on over-extending and unbalancing Russia. And now that’s the case with the incoming

American War on BRICS as outlined by the chairman of the New York-based Eurasia Group.

It’s always painful to suffer through the intellectually shallow Think Thank Land wet dreams masquerading as “analyses” but in this particular case key Global South players need to be firmly aware of what awaits them.

Predictably, the whole “analysis” revolves around the imminent, devastating humiliation to the Hegemon and its vassals: what happens next in country 404, also known – for now – as Ukraine.

Brazil, India, Indonesia and Saudi Arabia are dismissed as “four major fence-sitters” when it comes to the U.S./NATO proxy war against Russia. It’s the same old “you’re with us or against us” trope.

But then we are presented with the six major Global South culprits: Brazil, India, Indonesia, Saudi Arabia, South Africa and Turkey.

In yet another crude, parochial remix of a catch phrase referring to the American elections, these are qualified as the key swing states the Hegemon will need to seduce, cajole, intimidate and threaten to assure its dominance of the “rules-based international order”.

Saudi Arabia and South Africa are added to a previous report focused on the “four major fence sitters”.

The swing state manifesto notes that all of them are G-20 members and “active in both geopolitics and geoeconomics” (Oh really? Now that’s some breaking news). What it does not say is that three of them are BRICS members (Brazil, India, South Africa) and the other three are serious candidates to join BRICS+: deliberations will be turbo-charged in the upcoming BRICS summit in South Africa in August.

So it’s clear what the swing state manifesto is all about: a call to arms for the American war against the BRICS.

So BRICS packs no punch

The swing state manifesto harbors wet dreams of near-shoring and friend-shoring moving away from China. Nonsense: enhanced intra-BRICS+ trade will be the order of the day from now on, especially with the expanded practice of trade in national currencies (see Brazil-China or within ASEAN), the first step towards widespread de-dollarization.

The swing states are characterized as “not a new incarnation” of the Non-Aligned Movement (NAM), or “other groupings dominated by the Global South, such as the G-77 and BRICS.”

Talk about exponential nonsense. This is all about BRICS+ – which now has the tools (including the NDB, the BRICS bank) to do what NAM could never accomplish during the Cold War: establish the framework of a new system bypassing Bretton Woods and the interlocking coercion mechanisms of the Hegemon.

As for stating that BRICS has not “packed much punch” that only reveals U.S. Think Tank Land’s cosmic ignorance of what BRICS + is all about.

The position of India is only considered in terms of being a Quad member – defined as a “U.S.-led effort to balance China”. Correction: contain China.

As for the “choice” of swing states of choosing between the U.S. and China on semiconductors, AI, quantum technology, 5G and biotechnology, that’s not about “choice”, but to what level they are able to sustain Hegemon pressure to demonize Chinese technology.

Pressure on Brazil, for instance, is much heavier than on Saudi Arabia or Indonesia.

In the end though, it all comes back to the Straussian neocon obsession: Ukraine. The swing states, in varying degrees, are guilty of opposing and/or undermining the sanctions dementia. Turkey, for instance, is accused of channeling “dual-use” items to Russia. Not a word on the U.S. financial system viciously forcing Turkish banks to stop accepting Russian MIR payment cards.

On the wishful thinking front, this pearl stands out among many: “The Kremlin seems to believe it can make a living by turning its trade south and east.”

Well, Russia is already making excellent living all across Eurasia and a vast expanse of the Global South.

The economy has re-started (drivers are domestic tourism, machine building and the metals industry); inflation is at only 2.5% (lower than anywhere in the EU); unemployment is at only 3.5%; and head of the Central Bank Elvira Nabiullina said that by 2024 growth will be back to pre-SMO levels.

U.S. Think Tankland is congenitally incapable of understanding that even if BRICS+ nations may still have some serious trade credit issues to iron out, Moscow has already shown how even an implied hard backing of a currency can turn out to be an instant game changer. Russia is at the same time backing not only the ruble but also the yuan.

Meanwhile, the Global South de-dollarization caravan moves on relentlessly – as much as the proxy war hyenas may keep howling in the dark. When the full – staggering – scale of NATO’s humiliation in Ukraine unfolds, arguably by mid-summer, the de-dollarization high-speed train will be fully booked, non-stop.

“Offer you can’t refuse” rides again

If all of the above was not already silly enough, the swing state manifesto doubles down on the nuclear front, accusing them of “future (nuclear) proliferation risks”: especially – who else – Iran.

By the way, Russia is defined as a “middle power, but one in decline”. And “hyper-revisionist” to boot. Oh dear: with “experts” like this, the Americans don’t even need enemies.

And yes, by now you may be excused to roar with laughter: China is accused of attempting to direct and co-opt BRICS. The “suggestion” – or “offer you can’t refuse”, Mafia-style – to the swing states is that you cannot join a “Chinese-directed, Russian-assisted body actively opposing the United States.”

The message is unmistakable: “The threat of a Sino-Russian co-optation of an expanded BRICS—and through it, of the global south—is real, and it needs to be addressed.”

And here are the recipes to address it. Invite most swing states to the G-7 (that was a miserable failure). “More high-level visits by key U.S. diplomats” (welcome to cookie distributor Vicky Nuland). And last but not least, Mafia tactics, as in a “nimbler trade strategy that begins to crack the nut of access to the U.S. market.”

The swing state manifesto could not but let the Top Cat out of the bag, predicting, rather praying that “U.S.-China tensions rise dramatically and turn into a Cold War-style confrontation.” That’s already happening – unleashed by the Hegemon.

So what would be the follow-up? The much sought after and spun-to-death “decoupling”, forcing the swing states to “align more closely with one side or the other”. It’s “you’re with us or against us” all over again.

So there you go. Raw, in the flesh – with inbuilt veiled threats. The Hybrid War 2.0 against the Global South has not even started. Swing states, you have all been warned.

What Happens When the Competent Opt Out?

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By Charles Hugh Smith

Source: Of Two Minds

By this terminal stage, the competent have been driven out, quit or burned out.

What happens with the competent retire, burn out or opt out? It’s a question few bother to ask because the base assumption is that there is an essentially limitless pool of competent people who can be tapped or trained to replace those who retire, burn out or opt out, i.e. quit in favor of a lifestyle that doesn’t require much in the way of income or stress.

These assumptions are no longer valid. A great many essential services that are tightly bound to other essential services are cracking as the competent decide (or realize) they’re done with the rat-race.

The drivers of the Competent Opting Out are obvious yet difficult to quantify. Those retiring, burning out and opting out will deny they’re leaving for these reasons because it’s not politic to be so honest and direct. They will offer time-honored dodges such as “pursue other opportunities” or “family obligations.”

1. The steady increase in workloads, paperwork, compliance and make-work (i.e. work that has nothing to do with the institution’s actual purpose and mission) that lead to burnout. There is only so much we can accomplish, and if we’re burdened with ever-increasing demands for paperwork, compliance, useless meetings, training sessions, etc., then we no longer have the time or energy to perform our productive work.

I wrote a short book on my experience of Burnout. I believe it is increasingly common in jobs that demand responsibility and accountability yet don’t provide the tools and time to fulfill these demands. Once you’ve burned out, you cannot continue. That option no longer exists.

For others, the meager rewards simply aren’t worth the sacrifices required. The theme song playing in the background is the Johnny Paycheck classic Take this job and shove it.

Healthcare workloads, paperwork and compliance are one example of many. Failure to complete all the make-work can have dire consequences, so it becomes necessary to do less “real work” in order to complete all the work that has little or nothing to do with actual patient care. Alternatively, the workload expands to the point that it breaks the competent and they leave.

2. Loss of autonomy, control, belonging, rewards, accomplishment and fairness. Professor Christina Malasch pioneered research on the causes of burnout, which can be summarized as any work environment that reduces autonomy, control, belonging, rewards, accomplishment and fairness. Despite a near-infinite avalanche of corporate happy-talk (“we’re all family,”–oh, barf) this describes a great many work environments in the US: in a word, depersonalized. Everyone is a replaceable cog in a great impersonal machine optimized to maximize profits for shareholders.

3. The politicization of the work environment. Let’s begin by distinguishing between policies enforcing equal opportunity, pay, standards and accountability, policies required to fulfill the legal promises embedded in the nation’s social contract, and politicization, which demands allegiance and declarations of loyalty to political ideologies that have nothing to do with the work being done or the standards of accountability necessary to the operation of the complex institution or enterprise.

The problem with politicization is that it is 1) intrinsically inauthentic and 2) it substitutes the ideologically pure for the competent. Rigid, top-down hierarchies (including not just Communist regimes but corporations and institutions) demand expressions of fealty (the equivalent of loyalty oaths) and compliance to ideological demands (check the right boxes of party indoctrination, “self-criticism,” “struggle sessions,” etc.).

The correct verbiage and ideological enthusiasm become the basis of advancement rather than accountability to standards of competence. The competent are thus replaced with the politically savvy. Since competence is no longer being selected for, it’s replaced by what is being selected for, political compliance.

It doesn’t matter what flavor of ideological purity holds sway–conservative, progressive, communist or religious–all fatally erode competence by selecting for ideological compliance. Everyone knows the enthusiasm is inauthentic and only for show, but artifice and inauthenticity are perfectly adequate for the politicization taskmasters.

4. The competent must cover for the incompetent. As the competent tire of the artifice and make-work and quit, the remaining competent must work harder to keep everything glued together. Their commitment to high standards and accountability are their undoing, as the slack-masters and incompetent either don’t care (“I’m just here to qualify for my pension”) or they’ve mastered the processes of masking their incompetence, often by blaming the competent or the innocent for their own failings.

This additional workload crushes the remaining competent who then burn out and quit, go on disability or opt out, changing their lifestyle to get by on far less income, work, responsibility and far less exposure to the toxic work environments created by depersonalization, politicization and the elevation of the incompetent.

5. As the competent leadership leaves, the incompetent takes the reins, blind to their own incompetence. It all looked so easy when the competent were at the helm, but reality is a cruel taskmaster, and all the excuses that worked as an underling wear thin once the incompetent are in leadership roles.

By this terminal stage, the competent have been driven out, quit or burned out. There’s only slack-masters and incompetent left, and the toxic work environment has been institutionalized, so no competent individual will even bother applying, much less take a job doomed to burnout and failure.

This is why systems are breaking down before our eyes and why the breakdowns will spread with alarming rapidity due the tightly bound structure of complex systems.

‘Give War a Chance’ – A ‘War That Even Pacifists Can Get Behind’

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By Alastair Crooke

Source: Strategic Culture Foundation

The West is now waking up to the reality of the emerging, polycentric and fluid global order, Alastair Crooke writes.

More than a year into Russia’s Special Operation, the initial burst of European excitement at western push-back on Russia has dissipated. The mood instead has turned to “existential dread, a nagging suspicion that [western] civilisation may destroy itself”, Professor Helen Thompson writes.

For an instant, a euphoria had coalesced around the putative projection of the EU as a world power; as a key actor, about to compete on a world scale. Initially, events seemed to play to Europe’s conviction of its market powers: Europe was going to bring down a major power – Russia – by financial coup d’état alone. The EU felt ‘six feet tall’.

It seemed at the time a galvanising moment: “The war re-forged a long-dormant Manichaean framing of existential conflict between Russia and the West, assuming ontological, apocalyptic dimensions. In the spiritual fires of the war, the myth of the ‘West’ was rebaptised”, Arta Moeini suggests.

After the initial disappointment at the lack of a ‘quick kill’, the hope persisted – that if only the sanctions were given more time, and made more all-embracing, then Russia surely would ultimately collapse. That hope has turned to dust. And the reality of what Europe has done to itself has begun to dawn – hence Professor Thomson’s dire warning:

“Those who assume that the political world can be reconstructed by the efforts of human Will, have never before had to bet so heavily on technology over [fossil] energy – as the driver of our material advancement”.

For the Euro-Atlanticists however, what Ukraine seemed to offer – finally – was validation for their yearning to centralise power in the EU, sufficiently, to merit a place at the ‘top table’ with the U.S., as partners in playing the Great Game.

Ukraine, for better or worse, underlined Europe’s profound military dependence on Washington – and on NATO.

More particularly, the Ukraine conflict seemed to open the prospect for consolidating the strange metamorphosis of NATO from military alliance to an enlightened, Progressive, peace alliance! As Timothy Garton Ash effused in the Guardian in 2002, “NATO has become a European peace movement” where one could watch “John Lennon meet George Bush”.

The Ukraine war is portrayed, in this vein, as the “war­ that even former pacifists can get behind. All its proponents seemed to be singing is “Give War a Chance””.

Lily Lynch, a Belgrade-based writer, argues that,

“…especially in the past 12 months, telegenic female leaders such as the Finnish Prime Minister, Sanna Marin, German Foreign Minister, Annalena Baerbock, and Estonian Prime Minister, Kaja Kallas, have increasingly served as the spokespersons of enlightened militarism in Europe … ”

“No political party in Europe better exemplifies the shift from militant pacifism to ardent pro-war Atlanticism than the German Greens. Most of the original Greens had been radicals during the student protests of 1968 … But as the founding members entered middle age, fissures began to appear in the party – that would one day tear it apart”.

“Kosovo then changed everything: The 78-day NATO bombing of what remained of Yugoslavia in 1999, ostensibly to halt war crimes committed by Serbian security forces in Kosovo, would forever transform the German Greens. NATO for the Greens became an active military compact concerned with spreading and defending values such as human rights, democracy, peace, and freedom – well beyond the borders of its member states”.

A few years later, in 2002, an EU functionary (Robert Cooper) could envisage Europe as a new ‘liberal imperialism’. The ‘new’ was that Europe eschewed hard military power, in favour of weaponising both a controlled ‘narrative’ and controlled participation in its market. He advocated for ‘a new age of empire’, in which Western powers no longer would have to follow international law in their dealings with ‘old fashioned’ states; they could use military force independently of the United Nations; and could impose protectorates to replace regimes which ‘misgovern’.

The German Greens’ Foreign Minister, Annalena Baerbock, has continued with this metamorphosis, scolding countries with traditions of military neutrality, and imploring them to join NATO. She has invoked Archbishop Desmond Tutu’s line: “If you are neutral in situations of injustice, you have chosen the side of the oppressor”. And the European Left has been utterly captivated. Major parties have abandoned military neutrality and opposition to war – and now champion NATO. It is a stunning reversal.

All this may have been music to the ears of the Euro-élites anxious for the EU to rise to Great Power status, but this soft-power European Leviathan was wholly underpinned by the unstated (but essential) assumption that NATO ‘had Europe’s back’. This naturally implied that the EU had to tie itself ever closer to NATO – and therefore to the U.S. which controls NATO.

But the flip-side to this Atlanticist aspiration – as President Emmanuel Macron noted – is its inexorable logic that Europeans simply end by becoming American vassals. Macron was trying rather, to rally Europe towards the coming ‘age of empires’,hoping to position Europe as a ‘third pole’ in a concert of empires.

The Atlanticists were duly enraged by Macron’s remarks (which nonetheless drew support of other EU states). It could even seem (to furious Atlanticists) that Macron actually was channelling General de Gaulle who had called NATO a “false pretence” designed to “disguise America’s chokehold over Europe”.

There are however, two related schisms that flowed out from this ‘re-imagined’ NATO: Firstly, it exposed the reality of internal European rivalries and divergent interests, precisely because the NATO lead in the Ukraine conflict sets the interests of the Central East European hawks wanting ‘more America, and more war on Russia’ up and against that of the original EU western axis which wants wanting strategic autonomy (i.e. less ‘America’, and a quick end to the conflict).

Secondly, it would be predominantly the western economies that would have to bankroll the costs and divert their manufacturing capacity towards military logistic chains. The economic price, non-military de-industrialisation and high inflation, potentially, could be enough to break Europe – economically.

The prospect of a pan-European cohesive identity might be both ontologically appealing – and be seen to be an ‘appropriate accessory’ to an aspiring ‘world actor’ – yet such identity becomes caricature when mosaic Europe is transformed into an abstract de-territorialised identity that reduces people to their most abstract.

Paradoxically, the Ukraine war – far from consolidating the EU ‘identity’, as first imagined – has fractured it under the stresses of the concerted effort to weaken and collapse Russia.

Secondly, as Arta Moeini, the director of the Institute for Peace and Diplomacy, has observed:

“The American push for NATO expansion since 1991 has enlarged the alliance by adding a host of faultline states from Central and Eastern Europe. The strategy, which began with the Clinton administration but was fully championed by the George W. Bush administration, was to create a decidedly pro-American pillar on the continent, centred on Warsaw – which would force an eastward shift in the alliance’s centre of gravity away from the traditional Franco-German axis”.

“By using NATO enlargement to weaken the old power centres in Europe that might have occasionally stood up to [Washington] such as in the run-up to the invasion of Iraq, Washington ensured a more compliant Europe in the short-term. The upshot, however, was the formation of a 31-member behemoth with deep asymmetries of power and low compatibility of interests” – that is much weaker and more vulnerable – than it believes itself to be”.

Here is the key: “the EU is much weaker than it believes it to be”. The outset of the conflict was defined by a cast of mind entranced by the notion of Europe as a ‘mover and shaker’ in world affairs, and mesmerised by Europe’s post-war prosperity.

EU leaders convinced themselves that this prosperity had bequeathed it the clout and the economic depth to contemplate war – and to weather its reversals – with panglossian sanguinity. It has produced rather, the converse: It has put its project in jeopardy.

In John Raply and Peter Heather’s The Imperial Life Cycle, the authors explain the cycle:

“Empires grow rich and powerful and attain supremacy through the economic exploitation of their colonial periphery. But in the process, they inadvertently spur the economic development of that same periphery, until it can roll back and ultimately displace its overlord”.

Europe’s prosperity in this post-war era, thus was not so much one of its own making, but drew benefit from the tail-end of accumulations hewn from an earlier cycle – now reversed.

“The fastest-growing economies in the world are now all in the old periphery; the worst-performing economies are disproportionately in the West. These are the economic trends that have created our present landscape of superpower conflict — most saliently between America and China”.

America may think of itself as exempt from the European colonial mould, yet fundamentally, its model is

“an updated cultural-political glue that we might call “neoliberalism, NATO and denim”, which follows in the timeless imperial mould: The great wave of decolonisation that followed WW2 was meant to end that. But the Bretton Woods system, which created a trading regime that favoured industrial over primary producers and enshrined the dollar as the global reserve currency – ensured that the net flow of financial resources continued to move from developing countries to developed ones. Even when the economies of the newly-independent states grew, those of the G7 economies and their partners grew more”.

A once-mighty empire is now challenged and feels embattled. Taken aback by the refusal of so many developing countries to join with isolating Russia, the West is now waking up to the reality of the emerging, polycentric and fluid global order. These trends are set to continue. The danger is that economically weakened and in crisis, western countries attempt to re-appropriate western triumphalism, yet lack the economic strength and depth, so to do:

“In the Roman Empire, peripheral states developed the political and military capacity to end Roman domination by force… The Roman Empire might have survived – had it not weakened itself with wars of choice – on its ascendant Persian rival”.

The final ‘transgressive’ thought goes to Tom Luongo: “Allowing the West to keep thinking they can win – is the ultimate form of grinding out a superior opponent”.

Interesting!

America’s Addiction to War Comes with a 15 Trillion Dollar Price Tag

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To surmount the debt crisis, America needs to stop feeding the Military-Industrial Complex, the most powerful lobby in Washington.

By Jeffrey D. Sachs

Source: Information Clearing House

In the year 2000, the U.S. government debt was $3.5 trillion, equal to 35% of the Gross Domestic Product (GDP). By 2022, the debt was $24 trillion, equal to 95% of GDP. The U.S. debt is soaring, hence America’s current debt crisis. Yet both Republicans and Democrats are missing the solution: stopping America’s wars of choice and slashing military outlays.

Suppose the government’s debt had remained at a modest 35% of GDP, as in 2000. Today’s debt would be $9 billion, as opposed to $24 trillion. Why did the U.S. government incur the excess $15 trillion in debt?

The single biggest answer is the U.S. government’s addiction to war and military spending. According to the Watson Institute at Brown University, the cost of U.S. wars from fiscal year 2001 to fiscal year 2022 amounted to a whopping $8 trillion, more than half of the extra $15 trillion in debt. The other $7 trillion arose roughly equally from budget deficits caused by the 2008 financial crisis and the Covid-19 pandemic.

Facing down the military-industrial lobby is the vital first step to putting America’s fiscal house in order.

To surmount the debt crisis, America needs to stop feeding the Military-Industrial Complex (MIC), the most powerful lobby in Washington. As President Dwight D. Eisenhower famously warned on January 17, 1961, “In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.” Since 2000, the MIC led the U.S. into disastrous wars of choice in Afghanistan, Iraq, Syria, Libya, and now Ukraine.

The Military-Industrial Complex long ago adopted a winning political strategy by ensuring that the military budget reaches into every Congressional district. The Congressional Research Service recently reminded Congress that, “Defense spending touches every Member of Congress’s district through pay and benefits for military servicemembers and retirees, economic and environmental impact of installations, and procurement of weapons systems and parts from local industry, among other activities.” Only a brave member of Congress would vote against the military-industry lobby, yet bravery is certainly no hallmark of Congress.

America’s annual military spending is now around $900 billion, roughly 40% of the world’s total, and greater than the next 10 countries combined. U.S. military spending in 2022 was triple that of China. According to Congressional Budget Office, the military outlays for 2024-2033 will be a staggering $10.3 trillion on current baseline. A quarter or more of that could be avoided by ending America’s wars of choice, closing down many of America’s 800 or so military bases around the world, and negotiating new arms control agreements with China and Russia.

Yet instead of peace through diplomacy, and fiscal responsibility, the MIC regularly scares the American people with a comic-book style depictions of villains whom the U.S. must stop at all costs. The post-2000 list has included Afghanistan’s Taliban, Iraq’s Saddam Hussein, Syria’s Bashar al-Assad, Libya’s Moammar Qaddafi, Russia’s Vladimir Putin, and recently, China’s Xi Jinping. War, we are repeatedly told, is necessary for America’s survival.
 

A peace-oriented foreign policy would be opposed strenuously by the military-industrial lobby but not by the public. Significant public pluralities already want less, not more, U.S. involvement in other countries’ affairs, and less, not more, US troop deployments overseas. Regarding Ukraine, Americans overwhelmingly want a “minor role” (52%) rather than a “major role” (26%) in the conflict between Russia and Ukraine. This is why neither Biden nor any recent president has dared to ask Congress for any tax increase to pay for America’s wars. The public’s response would be a resounding “No!”

While America’s wars of choice have been awful for America, they have been far greater disasters for countries that America purports to be saving. As Henry Kissinger famously quipped, “To be an enemy of the United States can be dangerous, but to be a friend is fatal.” Afghanistan was America’s cause from 2001 to 2021, until the U.S. left it broken, bankrupt, and hungry. Ukraine is now in America’s embrace, with the same likely results: ongoing war, death, and destruction.

The military budget could be cut prudently and deeply if the U.S. replaced its wars of choice and arms races with real diplomacy and arms agreements. If presidents and members of congress had only heeded the warnings of top American diplomats such as William Burns, the U.S. Ambassador to Russia in 2008, and now CIA Director, the U.S. would have protected Ukraine’s security through diplomacy, agreeing with Russia that the U.S. would not expand NATO into Ukraine if Russia also kept its military out of Ukraine. Yet relentless NATO expansion is a favorite cause of the MIC; new NATO members are major customers of U.S. armaments.

The U.S. has also unilaterally abandoned key arms control agreements. In 2002, the U.S. unilaterally walked out of the Anti-Ballistic Missile Treaty. And rather than promote nuclear disarmament—as the U.S. and other nuclear powers are required to do under Article VI the Nuclear Non-Proliferation Treaty—the Military-Industrial Complex has sold Congress on plans to spend more than $600 billion by 2030 to “modernize” the U.S. nuclear arsenal.

Now the MIC is talking up the prospect of war with China over Taiwan. The drumbeats of war with China are stoking the military budget, yet war with China is easily avoidable if the U.S. adheres to the One-China policy that properly underpins U.S.-China relations. Such a war should be unthinkable. More than bankrupting the U.S., it could end the world.

Military spending is not the only budget challenge. Aging and rising healthcare costs add to the fiscal woes. According to the Congressional Budget Office, debt will reach 185 percent of GDP by 2052 if current policies remain unchanged. Healthcare costs should be capped while taxes on the rich should be raised. Yet facing down the military-industrial lobby is the vital first step to putting America’s fiscal house in order, needed to save the U.S., and possibly the world, from America’s perverse lobby-driven politics.