When globe-trotting journalist and keen geopolitical analyst Pepe Escobar refers to the United States as the “Empire of Chaos,” it may seem like hyperbole. But upon looking deeper at both Escobar’s coverage and the United States’ foreign policy itself, it is perhaps the most accurate title for this political entity and its means of operation, perhaps more apt than the name “The United States” itself.
In the wake of World War II, the US and its allies set out upon the reclamation of the West’s lost colonies, many of which took advantage of Europe’s infighting to either establish independence from their long-standing colonial masters, or begin the conflicts that would inevitably lead toward independence.
Perhaps the most well-known of these conflicts was the Vietnam War. The United States would involve itself in the dissolution of French Indochina at the cost of some 4 million lives in a conflict that would embroil not only Vietnam, but much of Southeast Asia, including Cambodia, Laos and Thailand. Covert coups and brutal insurgencies were underwritten by Washington across the planet, from the Middle East to South and Central America. And while this too seems chaotic, the goal always seemed to be the destruction of independent states, and the creation of viable client states.
These client states included the Shah’s Iran, Saudi Arabia, much, if not all of Western Europe and even to varying degrees, some of the enduring autocracies of the Middle East until for one reason or another they fell out of favor with Washington. The idea was to create an international order built upon the concept of globalization.
Globalization was meant to be a system of vast interdependencies governed by international institutions created by and for the United States and more specifically, the special interests that have long since co-opted America’s destiny.
However, the concept of globalization seems to have neglected any anticipation for rapid technological advances in both terms of information technology and manufacturing. There are very few real interdependencies left to stitch this vision of globalization together with many of them being artificially maintained at increasing costs. The idea of using sanctions to ‘starve’ a nation by isolating it from this global order has been exposed as more or less impotent by nations like Iran and North Korea who have sustained themselves for decades despite everything besides air and gravity being denied to them.
Indeed, nations understand the value of self-sufficiency in both terms of politics and the basic necessities which constitute any state’s infrastructure. Russia’s recent encounter with Western sanctions has caused it to look not only eastward, but inward, to secure its interests and to transcend sanctions wholly dependent on the concept of “globalization.”
As this “carrot and stick” method of working the world into Wall Street and Washington’s international order becomes less effective, some of the uglier and less elegant tools of the West’s geopolitical trade have taken a more prominent role on the global stage. It appears that if the West cannot rule this international order built upon the concepts of globalization, it will rule an international order built on chaos.
The Empire of Chaos
The unipolar geopolitical concepts that underpin globalization have eroded greatly. Nations no longer have to pick between an existence of lonely isolation and socioeconomic atrophy or subordination within this international order. Instead, they can pick to associate with the growing community of what the West calls “rogue states.” So large has this list grown that the US may soon find itself and Western Europe the last remaining members of its failed international order.
The real danger for an aspiring global empire is to find a planet that has suddenly begun to move in tandem out from under its shadow and moving on without them in relative peace and prosperity. To prevent this from happening we have seen a concerted effort focused on disrupting and destroying this emerging multi-polar world.
In Europe, the refugee crisis is being used to polarize European society and allow governments to increase their power domestically and further justify wars abroad. Along Western Europe’s borders, facing Russia, a relative stable balancing act maintained by former Soviet territories attempting to benefit from associating with both East and West has been turned into outright war.
Throughout North Africa and the Middle East, any nation that even so much as slightly resembles a sovereign nation state has been undermined and attempts to violently overthrow them pursued. The goal is no longer to create viable client states, but rather to Balkanize and leave them in ruins so as to never contest Western ambitions in the region again. This can be observed clearly in Libya, Syria, Iraq and Yemen where none of the groups backed by the US and its allies could ever realistically run a functioning nation state.
And in Asia, in state after state, those leading political parties marked by Washington for future client status are being removed from power and their leaders, long backed by the US, being either exiled or jailed.
Where these political gambits are crumbling, a steady stream of violence perpetrated by terrorist groups not even indigenous to the region has begun to build in strength.
Divide and Conquer
Divide and conquer is a geopolitical maxim that has served as empire’s bread and butter since the beginning of recorded human civilization. When the British could not subdue a targeted territory just beyond the grasp of its empire, it would divide and destroy them. A ruined nation that can be plundered and trampled may not be as desirable as a loyal client state run by a British viceroy, but it is better than a pocket of national sovereignty serving as an example for others of the merits of resisting “Great Britain.”
Today, it is clear that the idea of creating a client state in the midst of a general public increasingly aware of the features and fixations of modern empire is becoming ever more tenuous. Such client states are less likely to be accepted by a local population who, with minimum effort, can put up significant resistance against even the best funded of foreign proxies.
Globalism required more and more illusions to convince people they needed a global system controlled by far-off special interests to do what can now be done through advances in technology nationally and even locally. Now all that is left is the sowing of chaos to prevent people from leveraging this technology nationally and locally, to keep them divided and distracted for as long as possible, to perpetuate the West’s global hegemony for as long as possible.
Moving Beyond the Chaos
An empire built on chaos is not meant to last. Chaos, like the international order of globalization that preceded it, requires illusions and manipulation to perpetuate itself. Unfortunately, stirring chaos among a population is a lot easier than convincing them of the non-existent interdependencies of globalization.
Nations leading the way out of this chaos include those who have suffered the most because of it. Their leaders have realized the necessity of closing off the vectors through which the West feeds this chaos within their borders, which include socioeconomic disparity, foreign-funded propaganda, foreign-funded nongovernmental organizations (NGOs) and of course extremist groups used to carry out the actual terrorism and agitation required to create the worst sort of chaos.
Russia and China in particular have been busy creating alternatives not only for the remnants of the West’s globalization racket, but alternatives for the unipolar world the West was trying to create. They are both looking within and across their borders to create a patchwork of nations ready to move beyond the chaos and toward a more widespread balance of power.
By in turn, placing sanctions on the West, Russia is forcing itself to not only produce raw materials for export, but to become a more capable producer of finished goods. By doing so, Russia has begun a process that turns America’s sanctions game back onto itself. While many believe Washington drives American policy, it is unrealistic to discount Wall Street’s role. By cutting the corporations trading on Wall Street down to size, one cuts down their unwarranted power they wield on the global stage.
Nations choosing to trade rather than being forced to because of an ungainly system of globalization ensures that any given people have more control over not only what they buy and sell, but how and where their natural resources are used.
With the Empire of Chaos in terminal decline and with a new multi-polar order emerging, the only question left to ask is; will chaos spread and destroy faster than this new multi-polar order can be built? It is certainly a close race pushing both sides into acts of increasingly unimaginable confrontation.
A nightmare scenario of U.S. geopolitical strategists is coming true: foreign independence from U.S.-centered financial and diplomatic control. China and Russia are investing in neighboring economies on terms that cement Eurasian integration on the basis of financing in their own currencies and favoring their own exports. They also have created the Shanghai Cooperation Organization (SCO) as an alternative military alliance to NATO.[1] And the Asian Infrastructure Investment Bank (AIIB) threatens to replace the IMF and World Bank tandem in which the United States holds unique veto power.
More than just a disparity of voting rights in the IMF and World Bank is at stake. At issue is a philosophy of development. U.S. and other foreign investment in infrastructure (or buyouts and takeovers on credit) adds interest rates and other financial charges to the cost structure, while charging prices as high as the market can bear (think of Carlos Slim’s telephone monopoly in Mexico, or the high costs of America’s health care system), and making their profits and monopoly rents tax-exempt by paying them out as interest.
By contrast, government-owned infrastructure provides basic services at low cost, on a subsidized basis, or freely. That is what has made the United States, Germany and other industrial lead nations so competitive over the past few centuries. But this positive role of government is no longer possible under World Bank/IMF policy. The U.S. promotion of neoliberalism and austerity is a major reason propelling China, Russia and other nations out of the U.S. diplomatic and banking orbit.
On December 3, 2015, Prime Minister Putin proposed that Russia “and other Eurasian Economic Union countries should kick-off consultations with members of the SCO and the Association of Southeast Asian Nations (ASEAN) on a possible economic partnership.”[2] Russia also is seeking to build pipelines to Europe through friendly secular countries instead of Sunni jihadist U.S.-backed countries locked into America’s increasingly confrontational orbit.
Russian finance minister Anton Siluanov points out that when Russia’s 2013 loan to Ukraine was made, at the request of Ukraine’s elected government, Ukraine’s “international reserves were barely enough to cover three months’ imports, and no other creditor was prepared to lend on terms acceptable to Kiev. Yet Russia provided $3 billion of much-needed funding at a 5 per cent interest rate, when Ukraine’s bonds were yielding nearly 12 per cent.”[3]
What especially annoys U.S. financial strategists is that this loan by Russia’s National Wealth Fund was protected by IMF lending practice, which at that time ensured collectability by withholding credit from countries in default of foreign official debts, or at least not bargaining in good faith to pay. To cap matters, the bonds are registered under London’s creditor-oriented rules and courts.
Most worrisome to U.S. strategists is that China and Russia are denominating their trade and investment in their own currencies instead of dollars. After U.S. officials threatened to derange Russia’s banking linkages by cutting it off from the SWIFT interbank clearing system, China accelerated its creation of the alternative China International Payments System (CIPS), and its own credit card system to protect Eurasian economies from the threats made by U.S. unilateralists.
Russia and China are simply doing what the United States has long done: using trade and credit linkages to cement their diplomacy. This tectonic geopolitical shift is a Copernican threat to New Cold War ideology: Instead of the world economy revolving around the United States (the Ptolemaic idea of America as “the indispensible nation”), it may revolve around Eurasia. As long as global financial control remains grounded in Washington at the offices of the IMF and World Bank, such a shift in the center of gravity will be fought with all the power of an American Century (and would-be American Millennium) inquisition.
Any inquisition needs a court system and enforcement vehicles. So does resistance to such a system. That is what today’s global financial, legal and trade maneuvering is all about. And that is why today’s world system is in the process of breaking apart. Differences in economic philosophy call for different institutions.
To U.S. neocons the specter of AIIB government-to-government investment creates fear of nations minting their own money and holding each other’s debt in their international reserves instead of borrowing dollars, paying interest in dollars and subordinating their financial planning to the U.S. Treasury and IMF. Foreign governments would have less need to finance their budget deficits by selling off key infrastructure. And instead of dismantling public spending, a broad Eurasian economic union would do what the United States itself practices, and seek self-sufficiency in banking and monetary policy.
Imagine the following scenario five years from now. China will have spent half a decade building high-speed railroads, ports, power systems and other construction for Asian and African countries, enabling them to grow and export more. These exports will be coming online to repay the infrastructure loans. Also, suppose that Russia has been supplying the oil and gas energy for these projects on credit.
To avert this prospect, suppose an American diplomat makes the following proposal to the leaders of countries in debt to China, Russia and the AIIB: “Now that you’ve got your increased production in place, why repay? We’ll make you rich if you stiff our adversaries and turn back to the West. We and our European allies will support your assigning your nations’ public infrastructure to yourselves and your supporters at insider prices, and then give these assets market value by selling shares in New York and London. Then, you can keep the money and spend it in the West.”
How can China or Russia collect in such a situation? They can sue. But what court in the West will accept their jurisdiction?
That is the kind of scenario U.S. State Department and Treasury officials have been discussing for more than a year. Implementing it became more pressing in light of Ukraine’s $3 billion debt to Russia falling due by December 20, 2015. Ukraine’s U.S.-backed regime has announced its intention to default. To support their position, the IMF has just changed its rules to remove a critical lever on which Russia and other governments have long relied to ensure payment of their loans.
The IMF’s role as enforcer of inter-government debts
When it comes to enforcing nations to pay inter-government debts, the IMF is able to withhold not only its own credit but also that of governments and global bank consortia participating when debtor countries need “stabilization” loans (the neoliberal euphemism for imposing austerity and destabilizing debtor economies, as in Greece this year). Countries that do not privatize their infrastructure and sell it to Western buyers are threatened with sanctions, backed by U.S.-sponsored “regime change” and “democracy promotion” Maidan-style. The Fund’s creditor leverage has been that if a nation is in financial arrears to any government, it cannot qualify for an IMF loan – and hence, for packages involving other governments. That is how the dollarized global financial system has worked for half a century. But until now, the beneficiaries have been U.S. and NATO lenders, not been China or Russia.
The focus on a mixed public/private economy sets the AIIB at odds with the Trans-Pacific Partnership’s aim of relinquishing government planning power to the financial and corporate sector, and the neoliberal aim of blocking governments from creating their own money and implementing their own financial, economic and environmental regulation. Chief Nomura economist Richard Koo, explained the logic of viewing the AIIB as a threat to the U.S.-controlled IMF: “If the IMF’s rival is heavily under China’s influence, countries receiving its support will rebuild their economies under what is effectively Chinese guidance, increasing the likelihood they will fall directly or indirectly under that country’s influence.”[4]
This was the setting on December 8, when Chief IMF Spokesman Gerry Rice announced: “The IMF’s Executive Board met today and agreed to change the current policy on non-toleration of arrears to official creditors.” Russian Finance Minister Anton Siluanov accused the IMF decision of being “hasty and biased.”[5] But it had been discussed all year long, calculating a range of scenarios for a sea change in international law. Anders Aslund, senior fellow at the NATO-oriented Atlantic Council, points out:
The IMF staff started contemplating a rule change in the spring of 2013 because nontraditional creditors, such as China, had started providing developing countries with large loans. One issue was that these loans were issued on conditions out of line with IMF practice. China wasn’t a member of the Paris Club, where loan restructuring is usually discussed, so it was time to update the rules.
The IMF intended to adopt a new policy in the spring of 2016, but the dispute over Russia’s $3 billion loan to Ukraine has accelerated an otherwise slow decision-making process.[6]
The target was not only Russia and its ability to collect on its sovereign loan to Ukraine, but China even more, in its prospective role as creditor to African countries and prospective AIIB borrowers, planning for a New Silk Road to integrate a Eurasian economy independent of U.S. financial and trade control. The Wall Street Journal concurred that the main motive for changing the rules was the threat that China would provide an alternative to IMF lending and its demands for crushing austerity. “IMF-watchers said the fund was originally thinking of ensuring China wouldn’t be able to foil IMF lending to member countries seeking bailouts as Beijing ramped up loans to developing economies around the world.”[7] So U.S. officials walked into the IMF headquarters in Washington with the legal equivalent of suicide vests. Their aim was a last-ditch attempt to block trade and financial agreements organized outside of U.S. control and that of the IMF and World Bank.
The plan is simple enough. Trade follows finance, and the creditor usually calls the tune. That is how the United States has used the Dollar Standard to steer Third World trade and investment since World War II along lines benefiting the U.S. economy. The cement of trade credit and bank lending is the ability of creditors to collect on the international debts being negotiated. That is why the United States and other creditor nations have used the IMF as an intermediary to act as “honest broker” for loan consortia. (“Honest broker” means being subject to U.S. veto power.) To enforce its financial leverage, the IMF has long followed the rule that it will not sponsor any loan agreement or refinancing for governments that are in default of debts owed to other governments. However, as the afore-mentioned Aslund explains, the IMF could easily
change its practice of not lending into [countries in official] arrears … because it is not incorporated into the IMF Articles of Agreement, that is, the IMF statutes. The IMF Executive Board can decide to change this policy with a simple board majority. The IMF has lent to Afghanistan, Georgia, and Iraq in the midst of war, and Russia has no veto right, holding only 2.39 percent of the votes in the IMF. When the IMF has lent to Georgia and Ukraine, the other members of its Executive Board have overruled Russia.[8]
After the rules change, Aslund later noted, “the IMF can continue to give Ukraine loans regardless of what Ukraine does about its credit from Russia, which falls due on December 20.[9]
The IMF rule that no country can borrow if it is in default to a foreign government was created in the post-1945 world. Since then, the U.S. Government, Treasury and/or U.S. bank consortia have been party to nearly every major loan agreement. But inasmuch as Ukraine’s official debt to Russia’s National Wealth Fund was not to the U.S. Government, the IMF announced its rules change simply as a “clarification.” What its rule really meant was that it would not provide credit to countries in arrears to the U.S. government, not that of Russia or China.
It remains up to the IMF board – and in the end, its managing director – whether or not to deem a country creditworthy. The U.S. representative can block any foreign leaders not beholden to the United States. Mikhail Delyagin, Director of the Institute of Globalization Problems, explained the double standard at work: “The Fund will give Kiev a new loan tranche on one condition: that Ukraine should not pay Russia a dollar under its $3 billion debt. … they will oblige Ukraine to pay only to western creditors for political reasons.”[10]
The post-2010 loan packages to Greece are a case in point. The IMF staff saw that Greece could not possibly pay the sums needed to bail out French, German and other foreign banks and bondholders. Many Board members agreed, and have gone public with their whistle blowing. Their protests didn’t matter. President Barack Obama and Treasury Secretary Tim Geithner pointed out that U.S. banks had written credit default swaps betting that Greece could pay, and would lose money if there were a debt writedown). Dominique Strauss-Kahn backed the hard line US- European Central Bank position. So did Christine Lagarde in 2015, overriding staff protests.[11]
Regarding Ukraine, IMF executive board member Otaviano Canuto, representing Brazil, noted that the logic that “conditions on IMF lending to a country that fell behind on payments [was to] make sure it kept negotiating in good faith to reach agreement with creditors.”[12] Dropping this condition, he said, would open the door for other countries to insist on a similar waiver and avoid making serious and sincere efforts to reach payment agreement with creditor governments.
A more binding IMF rule is Article I of its 1944-45 founding charter, prohibiting the Fund from lending to a member state engaged in civil war or at war with another member state, or for military purposes in general. But when IMF head Lagarde made the last loan to Ukraine, in spring 2015, she merely expressed a vapid token hope there might be peace. Withholding IMF credit could have been a lever to force peace and adherence to the Minsk agreements, but U.S. diplomatic pressure led that opportunity to be rejected. President Porochenko immediately announced that he would step up the civil war with the Russian-speaking population in the eastern Donbass region.
The most important IMF condition being violated is that continued warfare with the East prevents a realistic prospect of Ukraine paying back new loans. The Donbas is where most Ukrainian exports were made, mainly to Russia. That market is being lost by the junta’s belligerence toward Russia. This should have blocked Ukraine from receiving IMF aid. Aslund himself points to the internal contradiction at work: Ukraine has achieved budget balance because the inflation and steep currency depreciation has drastically eroded its pension costs. But the resulting decline in the purchasing power of pension benefits has led to growing opposition to Ukraine’s post-Maidan junta. So how can the IMF’s austerity budget be followed without a political backlash? “Leading representatives from President Petro Poroshenko’s Bloc are insisting on massive tax cuts, but no more expenditure cuts; that would cause a vast budget deficit that the IMF assesses at 9-10 percent of GDP, that could not possibly be financed.”[13]
By welcoming and financing Ukraine instead of treating as an outcast, the IMF thus is breaking four of its rules:
Not to lend to a country that has no visible means to pay back the loan. This breaks the “No More Argentinas” rule, adopted after the IMF’s disastrous 2001 loan.
Not to lend to a country that repudiates its debt to official creditors. This goes against the IMF’s role as enforcer for the global creditor cartel.
Not to lend to a borrower at war – and indeed, to one that is destroying its export capacity and hence its balance-of-payments ability to pay back the loan.
Finally, not to lend to a country that is not likely to carry out the IMF’s austerity “conditionalities,” at least without crushing democratic opposition in a totalitarian manner.
The upshot – and new basic guideline for IMF lending – is to split the world into pro-U.S. economies going neoliberal, and economies maintaining public investment in infrastructure n and what used to be viewed as progressive capitalism. Russia and China may lend as much as they want to other governments, but there is no global vehicle to help secure their ability to be paid back under international law. Having refused to roll back its own (and ECB) claims on Greece, the IMF is willing to see countries not on the list approved by U.S. neocons repudiate their official debts to Russia or China. Changing its rules to clear the path for making loans to Ukraine is rightly seen as an escalation of America’s New Cold War against Russia and China.
Timing is everything in such ploys. Georgetown University Law professor and Treasury consultant Anna Gelpern warned that before the “IMF staff and executive board [had] enough time to change the policy on arrears to official creditors,” Russia might use “its notorious debt/GDP clause to accelerate the bonds at any time before December, or simply gum up the process of reforming the IMF’s arrears policy.”[14] According to this clause, if Ukraine’s foreign debt rose above 60 percent of GDP, Russia’s government would have the right to demand immediate payment. But President Putin, no doubt anticipating the bitter fight to come over its attempts to collect on its loan, refrained from exercising this option. He is playing the long game, bending over backward to behave in a way that cannot be criticized as “odious.”
A more immediate reason deterring the United States from pressing earlier to change IMF rules was the need to use the old set of rules against Greece before changing them for Ukraine. A waiver for Ukraine would have provided a precedent for Greece to ask for a similar waiver on paying the “troika” – the European Central Bank (ECB), EU commission and the IMF itself – for the post-2010 loans that have pushed it into a worse depression than the 1930s. Only after Greece capitulated to eurozone austerity was the path clear for U.S. officials to change the IMF rules to isolate Russia. But their victory has come at the cost of changing the IMF’s rules and those of the global financial system irreversibly. Other countries henceforth may reject conditionalities, as Ukraine has done, as well as asking for write-downs on foreign official debts.
That was the great fear of neoliberal U.S. and Eurozone strategists last summer, after all. The reason for smashing Greece’s economy was to deter Podemos in Spain and similar movements in Italy and Portugal from pursuing national prosperity instead of eurozone austerity. “Imagine the Greek government had insisted that EU institutions accept the same haircut as the country’s private creditors,” Russian finance minister Anton Siluanov asked. “The reaction in European capitals would have been frosty. Yet this is the position now taken by Kiev with respect to Ukraine’s $3 billion eurobond held by Russia.”[15]
The consequences of America’s tactics to make a financial hit on Russia while its balance of payments is down (as a result of collapsing oil and gas prices) go far beyond just the IMF. These tactics are driving other countries to defend their own economies in the legal and political spheres, in ways that are breaking apart the post-1945 global order.
Countering Russia’s ability to collect in Britain’s law courts
Over the past year the U.S. Treasury and State Departments have discussed ploys to block Russia from collecting by suing in the London Court of International Arbitration, under whose rules Russia’s bonds issued to Ukraine are registered. Reviewing the excuses Ukraine might use to avoid paying Russia, Prof. Gelpern noted that it might declare the debt “odious,” made under duress or corruptly. In a paper for the Peterson Institute of International Economics (the banking lobby in Washington) she suggested that Britain should deny Russia the use of its courts as a means of reinforcing the financial, energy and trade sanctions passed after Crimea voted to join Russia as protection against the ethnic cleansing from the Right Sector, Azov Battalion and other paramilitary groups descending on the region.[16]
A kindred ploy might be for Ukraine to countersue Russia for reparations for “invading” it and taking Crimea. Such a claim would seem to have little chance of success (without showing the court to be an arm of NATO politics), but it might delay Russia’ ability to collect by tying the loan up in a long nuisance lawsuit. But the British court would lose credibility if it permits frivolous legal claims (called barratry in English) such as President Poroshenko and Prime Minister Yatsenyuk have threatened.
To claim that Ukraine’s debt to Russia was “odious” or otherwise illegitimate, “President Petro Poroshenko said the money was intended to ensure Yanukovych’s loyalty to Moscow, and called the payment a ‘bribe,’ according to an interview with Bloomberg in June this year.”[17] The legal and moral problem with such arguments is that they would apply equally to IMF and U.S. loans. They would open the floodgates for other countries to repudiate debts taken on by dictatorships supported by IMF and U.S. lenders.
As Foreign Minister Sergei Lavrov noted, the IMF’s change of rules, “designed to suit Ukraine only, could plant a time bomb under all other IMF programs.” The new rules showed the extent to which the IMF is subordinate to U.S. aggressive New Cold Warriors: “since Ukraine is politically important – and it is only important because it is opposed to Russia – the IMF is ready to do for Ukraine everything it has not done for anyone else.”[18]
In a similar vein, Andrei Klimov, deputy chairman of the Committee for International Affairs at the Federation Council (the upper house of Russia’s parliament) accused the United States of playing “the role of the main violin in the IMF while the role of the second violin is played by the European Union, [the] two basic sponsors of the Maidan – the … coup d’état in Ukraine in 2014.”[19]
Putin’s counter-strategy and the blowback on U.S.-European relations
Having anticipated that Ukraine would seek excuses to not pay Russia, President Putin refrained from exercising Russia’s right to demand immediate payment when Ukraine’s foreign debt rose above 60 percent of GDP. In November he even offered to defer any payment at all this year, stretching payments out to “$1 billion next year, $1 billion in 2017, and $1 billion in 2018,” if “the United States government, the European Union, or one of the big international financial institutions” guaranteed payment.[20] Based on their assurances “that Ukraine’s solvency will grow,” he added, they should be willing to put their money where their mouth was. If they did not provide guarantees, Putin pointed out, “this means that they do not believe in the Ukrainian economy’s future.”
Implicit was that if the West continued encouraging Ukraine to fight against the East, its government would not be in a position to pay. The Minsk agreement was expiring and Ukraine was receiving new arms support from the United States, Canada and other NATO members to intensify hostilities against Donbas and Crimea.
But the IMF, European Union and United States refused to back up the Fund’s optimistic forecast of Ukraine’s ability to pay in the face of its continued civil war against the East. Foreign Minister Lavrov concluded that, “By having refused to guarantee Ukraine’s debt as part of Russia’s proposal to restructure it, the United States effectively admitted the absence of prospects of restoring its solvency.”[21]
In an exasperated tone, Prime Minister Dmitry Medvedev said on Russian television: “I have a feeling that they won’t give us the money back because they are crooks … and our Western partners not only refuse to help, but they also make it difficult for us.” Accusing that “the international financial system is unjustly structured,” he nonetheless promised to “go to court. We’ll push for default on the loan and we’ll push for default on all Ukrainian debts,” based on the fact that the loan
was a request from the Ukrainian Government to the Russian Government. If two governments reach an agreement this is obviously a sovereign loan…. Surprisingly, however, international financial organisations started saying that this is not exactly a sovereign loan. This is utter bull. Evidently, it’s just an absolutely brazen, cynical lie. … This seriously erodes trust in IMF decisions. I believe that now there will be a lot of pleas from different borrower states to the IMF to grant them the same terms as Ukraine. How will the IMF possibly refuse them?[22]
And there the matter stands. On December 16, 2015, the IMF’s Executive Board ruled that “the bond should be treated as official debt, rather than a commercial bond.”[23] Forbes quipped: “Russia apparently is not always blowing smoke. Sometimes they’re actually telling it like it is.”[24]
Reflecting the degree of hatred fanned by U.S. diplomacy, U.S.-backed Ukrainian Finance Minister Natalie A. Jaresko expressed an arrogant confidence that the IMF would back the Ukrainian cabinet’s announcement on Friday, December 18, of its intention to default on the debt to Russia falling due two days later. “If we were to repay this bond in full, it would mean we failed to meet the terms of the I.M.F. and the obligations we made under our restructuring.”[25]
Adding his own bluster, Prime Minister Arseny Yatsenyuk announced his intention to tie up Russia’s claim for payment by filing a multibillion-dollar counter claim “over Russia’s occupation of Crimea and intervention in east Ukraine.” To cap matters, he added that “several hundred million dollars of debt owed by two state enterprises to Russian banks would also not be paid.”[26] This makes trade between Ukraine and Russia impossible to continue. Evidently Ukraine’s authorities had received assurance from IMF and U.S. officials that no real “good faith” bargaining would be required to gain ongoing support. Ukraine’s Parliament did not even find it necessary to enact the new tax code and budget conditionalities that the IMF loan had demanded.
The world is now at war financially, and all that seems to matter is whether, as U.S. Defense Secretary Donald Rumsfeld had put matters, “you are for us or against us.” As President Putin remarked at the 70th session of the UN General Assembly regarding America’s support of Al Qaeda, Al Nusra and other allegedly “moderate” ISIS allies in Syria: “I cannot help asking those who have caused this situation: Do you realize now what you have done? … I am afraid the question will hang in the air, because policies based on self-confidence and belief in one’s exceptionality and impunity have never been abandoned.”[27]
The blowback
America’s unilateralist geopolitics are tearing up the world’s economic linkages that were put in place in the heady days after World War II, when Europe and other countries were so disillusioned that they believed the United States was acting out of idealism rather than national self-interest. Today the question is how long Western Europe will be willing to forego its trade and investment interests by accepting U.S.-sponsored sanctions against Russia, Iran and other economies. Germany, Italy and France already are feeling the strains.
The oil and pipeline war designed to bypass Russian energy exports is flooding Europe with refugees, as well as spreading terrorism. Although the leading issue in America’s Republican presidential debate on December 15, 2015, was safety from Islamic jihadists, no candidate thought to explain the source of this terrorism in America’s alliance with Wahabist Saudi Arabia and Qatar, and hence with Al Qaeda and ISIS/Daish as a means of destabilizing secular regimes in Libya, Iraq, Syria, and earlier in Afghanistan. Going back to the original sin of CIA hubris – overthrowing the secular Iranian Prime Minister leader Mohammad Mosaddegh in 1953 – U.S. foreign policy has been based on the assumption that secular regimes tend to be nationalist and resist privatization and neoliberal austerity.
Based on this assumption, U.S. Cold Warriors have aligned themselves against democratic regimes seeking to promote their own prosperity and resist neoliberalism in favor of maintaining their own traditional mixed public/private economies. That is the back-story of the U.S. fight to control the rest of the world. Tearing apart the IMF’s rules is only the most recent chapter. Arena by arena, the core values of what used to be American and European social democratic ideology are being uprooted by the tactics being used to hurt Russia, China and their prospective Eurasian allies.
The Enlightenment’s ideals were of secular democracy and the rule of international law applied equally to all nations, classical free market theory (of markets free from unearned income and rent extraction by special interests), and public investment in infrastructure to hold down the cost of living and doing business. These are all now to be sacrificed to a militant U.S. unilateralism. Putting their “indispensable nation” above the rule of law and parity of national interests (the 1648 Westphalia treaty, not to mention the Geneva Convention and Nuremburg laws), U.S. neocons proclaim that America’s destiny is to prevent foreign secular democracy from acting in ways other than in submission to U.S. diplomacy. Behind this lie the special U.S. financial and corporate interests that control American foreign policy.
This is not how the Enlightenment was supposed to turn out. Industrial capitalism a century ago was expected to evolve into an economy of abundance worldwide. Instead, we have American Pentagon capitalism, with financial bubbles deteriorating into a polarized rentier economy and a resurgence of old-fashioned imperialism. If and when a break comes, it will not be marginal but a seismic geopolitical shift.
The Dollar Bloc’s Financial Curtain
By treating Ukraine’s repudiation of its official debt to Russia’s National Wealth Fund as the new norm, the IMF has blessed its default. President Putin and foreign minister Lavrov have said that they will sue in British courts. The open question is whether any court exist in the West not under the thumb of U.S. veto?
America’s New Cold War maneuvering has shown that the two Bretton Woods institutions are unreformable. It is easier to create new institutions such as the AIIB than to retrofit the IMF and World Bank, NATO and behind it, the dollar standard – all burdened with the legacy of their vested interests.
U.S. geostrategists evidently thought that excluding Russia, China and other Eurasian countries from the U.S.-based financial and trade system would isolate them in a similar economic box to Cuba, Iran and other sanctioned adversaries. The idea was to force countries to choose between being impoverished by such exclusion, or acquiescing in U.S. neoliberal drives to financialize their economies under U.S. control.
What is lacking here is the idea of critical mass. The United States may arm-twist Europe to impose trade and financial sanctions on Russia, and may use the IMF and World Bank to exclude countries not under U.S. hegemony from participating in dollarized global trade and finance. But this diplomatic action is producing an equal and opposite reaction. That is the Newtonian law of geopolitics. It is propelling other countries to survive by avoiding demands to impose austerity on their government budgets and labor, by creating their own international financial organization as an alternative to the IMF, and by juxtaposing their own “aid” lending to that of the U.S.-centered World Bank.
This blowback requires an international court to handle disputes free from U.S. arm-twisting. The Eurasian Economic Union accordingly has created its own court to adjudicate disputes. This may provide an alternative to Judge Griesa’s New York federal kangaroo court ruling in favor of vulture funds derailing Argentina’s debt settlements and excluding that country from world financial markets.
The more nakedly self-serving U.S. policy is – from backing radical fundamentalist outgrowths of Al Qaeda throughout the Near East to right-wing nationalists in Ukraine and the Baltics – then the greater the pressure will grow for the Shanghai Cooperation Organization, AIIB and related institutions to break free of the post-1945 Bretton Woods system run by the U.S. State, Defense and Treasury Departments and their NATO superstructure of coercive military bases. As Paul Craig Roberts recently summarized the dynamic, we are back with George Orwell’s 1984 global fracture between Oceania (the United States, Britain and its northern European NATO allies as the sea and air power) vs. Eurasia as the consolidated land power.
Footnotes:
[1] The SCO was created in 2001 in Shanghai by the leaders of China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan. India and Pakistan are scheduled to join, along with Iran, Afghanistan and Belarus as observers, and other east and Central Asian countries as “dialogue partners.”
[2] “Putin Seeks Alliance to Rival TPP,” RT.com (December 04 2015). The Eurasian Economic Union was created in 2014 by Russia, Belarus and Kazakhstan, soon joined by Kyrgyzstan and Armenia. ASEAN was formed in 1967, originally by Indonesia, Malaysia the Philippines, Singapore and Thailand. It subsequently has been expanded. China and the AIIB are reaching out to replace World Bank. The U.S. refused to join the AIIB, opposing it from the outset.
[8] Anders Åslund, “Ukraine Must Not Pay Russia Back,” Atlantic Council, November 2, 2015 (from Johnson’s Russia List, November 3, 2015, #50).
[9] Anders Aslund, “The IMF Outfoxes Putin,” op. cit.
[10] Quoted in Tamara Zamyantina, “IMF’s dilemma: to help or not to help Ukraine, if Kiev defaults,” TASS, translated on Johnson’s Russia List, December 9, 2015, #9.
[11] I provide a narrative of the Greek disaster in Killing the Host (2015).
[15] Anton Siluanov, “Russia wants fair rules on sovereign debt,” Financial Times, op. cit.. He added: “Russia’s financing was not made for commercial gain. Just as America and Britain regularly do, it provided assistance to a country whose policies it supported. The US is now supporting the current Ukrainian government through its USAID guarantee programme.”
“Lavrov: U.S. admits lack of prospects of restoring Ukrainian solvency,” November 7, 2015, translated on Johnson’s Russia List, December 7, 2015, #38.[21]
[24] Kenneth Rapoza, “IMF Says Russia Right About Ukraine $3 Billion Loan,” Forbes.com, December 16, 2015. The article added: “the Russian government confirmed to Euroclear, at the request of the Ukrainian authorities at the time, that the Eurobond was fully owned by the Russian government.”
The matrix-media will have us believe that the global economy is only experiencing a temporary glitch and that everything will be fine, however that is simply an outright lie. After several decades of saturating the world with unbacked currency and mountains of debt, the can we’ve been kicking has finally run out of road.
As you would know, stocks are plummeting across the globe and since their peak in around mid 2015, individual regions have lost 10-40% in stock value. In total, on the 20th of January the MSCI global stock market index reflected that the world’s markets had officially entered a bear market, which is 20% or more. This is just the beginning, too.
The exceptionally poor start to stocks in 2016 has somewhat been driven by ‘fears’ about China’s economic troubles, but really it is because many of the fundamentals of the global economy are extremely weak. For example, oil, which sustains the financial health of many countries and industries, has crashed over 70% in the last 2 years, whilst the Baltic Dry Index, which measures the amount of raw materials being shipped around the planet, is at a record low of 298 (to put this into context, just before the great recession of 2008 is was over 11,000).
More examples are that in early 2016, North Atlantic cargo shipping almost came to a halt and the U.S. orders in the trucking industry “for Class 8 trucks – the big rigs that haul freight on North American highways – plunged 48% from a year ago”. Furthermore, the retail sector is falling apart, with tens of thousands of job cuts and shop doors closing at an alarming rate.
Given the ‘faith’ that stakeholders need to have in this economic system to keep it from imploding, the governmental data and the mainstream media cannot be truthful in what they report to the world, otherwise news of doom would be a self-fulfilling prophecy. It’s ridiculous to design an economic model in this way, yet regardless of the epic failure of Keynesian economics and the Wall Street casino, any investor who doesn’t recognize this by now is unfortunately in line for some serious financial loss.
To solidify the point, all official numbers in the U.S. and elsewhere are manipulated; shadow stats have made that abundantly clear. For example, real unemployment in the U.S. is above 20% and many of those who are actually working are in low-paying, part-time jobs.
Brazil, Canada, Russia and other countries are already in recession, amplified by the collapse of oil and commodity prices. Unofficial figures suggest the US is too. Canada in particular has seen massive inflation in food and other necessities, so it is likely that we can expect that to emerge in other countries as well.
This shit is really getting serious.
WHO IS AT FAULT?
Unfortunately, the masses don’t yet understand that most central banks around the world are private companies owned by private families i.e. the oligarchs. Essentially, this and the other banking organisations that they own is a century-old scam that robs the people of their riches.
Simply, the U.S. Government has effectively been taken over by an oligarchy, as evidenced by this Princeton University study in 2014. It’s no surprise then that this small group of so-called elites benefited from the largest transfer of wealth in human history, which happened in the 2008 GFC.
The 1%, particularly the 0.1%, economically prospered from the illegal, unethical and unprecedented bank bailouts, whilst the 99% suffered with losses in superannuation, savings, homes and employment. Many also lost their lives due to overdose, suicide and other self-abuse, which was due to their loss of livelihood and economic independence brought about by the global monetary scam.
This time though, it appears the shadow order (who have monopolized the banking and corporate sectors and effectively control western foreign and domestic policy) are not quite ready for another recessionary/depressionary round because they don’t yet have all their mechanisms in place to offer ‘the solution’ (i.e. global currency, trade agreements and governance).
They’ve got processes such as High Frequency Trading that prop up stocks by buying them back with the money they manifest from nothing (Plunge Protection Teams). They’ve been in overdrive trying to keep it afloat, but to no avail, because the real economy is drying up. As mentioned, global trade is tanking and many businesses are either going into liquidation or laying off thousands of workers each, so it’s easy to imagine that we’re going to hear about a major corporation going bust any day now.
This might just be the black swan event that ‘officially’ triggers the next crisis.
History indicates what will likely happen next: war. When a superpower and their economic hegemony is in collapse (such as the end of petrodollar and the U.S. Dollar as the world’s reserve currency), going to war can distract the populace from the true reasons of an economic crash and the associated suffering that emerges as a result. Essentially, the blame can be shifted to foreign entities.
This is why a high probability exists for a massive false flag to occur over the coming weeks/months to convince the masses to go to war with Russia, China and/or Iran. Saudi Arabia and Iran’s tensions are high right now so they might use that platform; it may in fact be orchestrated for this aim.
In the very short term, however, expect more dramatic policy measures, such as more mass money creation (QE) and even negative interest rates by the Federal Reserve (just like they’ve recently done at Japan’s central bank). They might even attempt widespread bank bail-ins, as already implemented in Italy, Portugal and Cyprus.
“so-called bail-ins typically mean wiping out creditors’ investments, slashing their value or converting them into shares in the bank. Uninsured depositors could get caught along with professional investors”.
In other words, they’re once again planning to steal the hard-earned cash of the little guy, but instead of doing it via tax-funded bail-outs as they did in 2008, they’re going to do it directly by commandeering the financial assets that people house in banks.
Yet, no matter what they do in the short term, they cannot stop the massive bubbles in debt, derivatives (over 1.5 quadrillion dollars), real estate, stocks, and bonds from inevitably popping. It might happen tomorrow or it might hold off for another year, yet regardless of the exact timing, any one of these or other triggers could easily send the global economy into a severe and sustained global depression.
Preparing accordingly, therefore, is nothing short of wise.
WHAT TO DO NEXT?
The potential for it to get seriously ugly over the coming months and years is very real, so both individually and collectively, we should be taking this very seriously.
Whatever does happen though, I do feel it will be in our collective favor. Their matrix of control is crashing; so many more people are now aware of the agenda to create a global governance, as well as the propaganda narratives they convey through the mainstream media that they either own or control.
In other words, we need to accept that all ‘official truths’ are a farce and they’ve been unarguably exposed and documented for the world to see as clear as day. Excitingly, the mainstream ‘truths’ are even beginning to be viewed by the masses as the bullshit of a pathological liar.
To prepare financially, many alternative economists recommend to exit all high risk investments such as stocks. For example, do you know where your superannuation is invested? There will no doubt be massive swings in stocks in the coming weeks, but the risk is high that they will continue to decrease at the least, and dramatically crash at the worst.
Also, to prepare physically, have you secured food and water insurance? Just like we get insurance for our health, car, home contents etc., in these times we should do the same with our basic necessities. I’m sure those in Canada are wishing they stocked up on essential goods because now they’re spending all their hard earned cash on just surviving.
These are exciting times because the western world is waking up to the lies and deceptions they’ve been force-fed (much of it is of course common knowledge in places like Russia and parts of Europe etc.). The mainstream narrative in every way you could possibly imagine is a complete fabrication to elicit your consent, especially for war. Yet, even though all of this is driving the awakening needed for humanity’s evolution, there are real risks for all of us.
Organizing our lives in as many self-sufficient ways as possible is simply being street smart. Arming ourselves with the right information is not just for the benefit of ourselves, but our family, friends and community as a whole. And of course, don’t feed the fear machine; we’re electro-magnetic beings in an electro-magnetic universe and how we think and feel does ripple out into the waters.
Make sure it’s worthy energy.
And remember, the banking sector is the head of the snake. This is the fundamental control mechanism of the powers-that-will-no-longer-be that we need to disassemble, because everything else of importance will naturally follow suit. For further information on how to create a better world for our personal future, as well as the future of humanity, see the articles linked below.
ABOUT THE AUTHOR
Phillip J. Wattlives in Australia. His written work deals with topics from ideology to society, as well as self-development. Follow him on Facebookor visit his website.
Toward the end of his 250-page hymn to digital-age innovation, The Industries of the Future, Alec Ross pauses to offer a rare cautionary note. Silicon Valley may have incubated all the wonders and conveniences one can imagine—and oh, so many more! But for the international business elites looking to remake their emerging market economies in the Valley’s gleaming, khaki-clad image, there’s some bad news: It can no longer be done. A “decades-long head start” has granted too great a competitive advantage to the charmed peninsula along the Northern California coast.
Not to worry, though! On-the-make tech globalists can still make a go of it, provided they’re prepared to embrace “specific cultural and labor market characteristics that can contradict both a society’s norms and the more controlling impulses of government leaders.”
Stripped of the vague and glowing techno-babble, this is a prescription for good old-fashioned neoliberal market discipline. Everywhere Ross looks across the radically transformed world of digital commerce, the benign logic of market triumphalism wins the day. When Terry Gou—the Taiwanese CEO of Foxconn, the vast Chinese electronics sweatshop that doubles as an incubator for worker suicides—plans to eliminate the headache of supervising an unstable human workforce by replacing it with “the first fully automated plant” in manufacturing history, why, he’s simply “responding to pure market forces”: i.e., an increase in Chinese wages that cuts into Foxconn’s ridiculously broad profit margins. And you and I might see the so-called sharing economy as a means to casualize service workers into nonunion, benefit-free gigs that transfer economic value on a massive scale to a rentier class of Silicon Valley app marketers. But bouncy New Economy cheerleaders like Ross see “a way of making a market out of anything, and a microentrepreneur out of anyone.”
When confronted with the spiraling of income inequality in the digital age, Ross, like countless other prophets of better living through software, sagely counsels that “rapid progress often comes with greater instability.” Sure, the “wealthy generally benefit over the short term,” but remember, kids: “Innovations have the potential to become cheaper over time and spread throughout the greater population.”
Ross first stormed into political prominence as an architect of Barack Obama’s “technology and innovation plan” during his 2008 presidential campaign, and he has spent four years captaining his own charmed, closed circle of tech triumphalism as the White House’s “senior advisor for innovation” under Secretary of State Hillary Clinton. This renders The Industries of the Future something more than another breathless, Tom Friedman-style tour of the wonderments being hatched in startups, trade confabs and gadget factories. Ross’ book is also a tech-policy playbook for the likely Democratic presidential nominee, who has spared no effort in soliciting the policy input—and landing the campaign donations—of the Silicon Valley mogul set. As such, it should give any Hillary-curious supporter of economic justice considerable pause.
To be sure, Ross raises some vague concerns about how, for example, the runaway growth of the sharing economy drains workers of job security, healthcare benefits, pensions and the like. He avers that “as the sharing economy grows … the safety net needs to grow with it,” but, much like his politically savvy boss, he offers nothing in the way of policy specifics besides the inarguable yet unactionable truism that if the sharing economy “generates enormous amounts of wealth for the platform owners, then the platform owners can and should help pay for added costs to society.”
The larger point for Ross, in any event, is that the innovative megafirms of tomorrow will come to spontaneously serve the public good. Not to mention that many IPO investors “are pension funds,” Ross coos, which “manage the retirement funds for people in the working class like teachers, police officers, and other civil servants.” Never mind, of course, that the neoliberal logic of the Uber model means that we’re creating a workforce that’s unlikely ever to come within shouting distance of a pension benefit again.
This kind of terminal Silicon Valley myopia also accounts for the vast economic and political blindspots that continually undermine Ross’ relentlessly chipper TED patter. To take just one instructive instance, in a book that devotes considerable real estate to the innovations of “fintech” (the streamlining of global digital currency exchanges and investment transactions) nowhere does the author acknowledge the pivotal role that tech-savvy Wall Street analysts—the “quants” as they’re known in Street argot—played in stoking the early-aughts housing bubble that led to the near-meltdown of the global economy.
That’s because it’s an axiomatic faith for this brand of techno-prophecy that innovation can never actually make anything worse—in just the same fashion that the quants were insisting, right up until the end, that there could never be a downturn in the national housing market. If this is the kind of wisdom Hillary Clinton relied on to promote her global innovation agenda at the State Department, one shudders to think of how it might run riot through the White House come next January.
I, Michael Hudson, John Perkins, and a few others have reported the multi-pronged looting of peoples by Western economic institutions, principally the big New York Banks with the aid of the International Monetary Fund (IMF).
Third World countries were and are looted by being inticed into development plans for electrification or some such purpose. The gullible and trusting governments are told that they can make their countries rich by taking out foreign loans to implement a Western-presented development plan, with the result being sufficient tax revenues from economic development to service the foreign loan.
Seldom, if ever, does this happen. What happens is that the plan results in the country becoming indebted to the limit and beyond of its foreign currency earnings. When the country is unable to service the development loan, the creditors send the IMF to tell the indebted government that the IMF will protect the government’s credit rating by lending it the money to pay its bank creditors. However, the conditions are that the government take necessary austerity measures so that the government can repay the IMF. These measures are to curtail public services and the government sector, reduce public pensions, and sell national resources to foreigners. The money saved by reduced social benefits and raised by selling off the country’s assets to foreigners serves to repay the IMF.
This is the way the West has historically looted Third World countries. If a country’s president is reluctant to enter into such a deal, he is simply paid bribes, as the Greek governments were, to go along with the looting of the country the president pretends to represent.
When this method of looting became exhausted, the West bought up agricultural lands and pushed a policy on Third World countries of abandoning food self-sufficiency and producing one or two crops for export earnings. This policy makes Third World populations dependent on food imports from the West. Typically the export earnings are drained off by corrupt governments or by foreign purchasers who pay little while the foreigners selling food charge much. Thus, self-sufficiency is transformed into indebtedness.
With the entire Third World now exploited to the limits possible, the West has turned to looting its own. Ireland has been looted, and the looting of Greece and Portugal is so severe that it has forced large numbers of young women into prostitution. But this doesn’t bother the Western conscience.
Previously, when a sovereign country found itself with more debt than could be serviced, creditors had to write down the debt to an amount that the country could service. In the 21st century, as I relate in my book, The Failure of Laissez Faire Capitalism, this traditional rule was abandoned.
The new rule is that the people of a country, even a country whose top offiials accepted bribes in order to indebt the country to foreigners, must have their pensions, employment, and social services slashed and valuable national resources such as municipal water systems, ports, the national lottery, and protected national lands, such as the protected Greek islands, sold to foreigners, who have the freedom to raise water prices, deny the Greek government the revenues from the national lottery, and sell the protected national heritage of Greece to real estate developers.
What has happened to Greece and Portugal is underway in Spain and Italy. The peoples are powerless because their governments do not represent them. Not only are their governments receiving bribes, the members of the governments are brainwashed that their countries must be in the European Union. Otherwise, they are bypassed by history. The oppressed and suffering peoples themselves are brainwashed in the same way. For example, in Greece the government elected to prevent the looting of Greece was powerless, because the Greek people are brainwashed that no matter the cost to them, they must be in the EU.
The combination of propaganda, financial power, stupidity and bribes means that there is no hope for European peoples.
The same is true in the United States, Canada, Australia, and the UK. In the US tens of millions of US citizens have quietly accepted the absence of any interest income on their savings for seven years. Instead of raising questions and protesting, Americans have accepted without thought the propaganda that their existence depends upon the success of a handful of artificially created mega-banks that are “too big to fail.” Millions of Americans are convinced that it is better for them to draw down their savings than for a corrupt bank to fail.
To keep Western peoples confused about the real threat that they face, the people are told that there are terrorists behind every tree, every passport, under every bed, and that all will be killed unless the government’s overarching power is unquestioned. So far this has worked perfectly, with one false flag after another reinforcing the faked terror attacks that serve to prevent any awareness that this a hoax for accumulating all income and wealth in a few hands.
Not content with their supremacy over “democratic peoples,” the One Percent has come forward with the Trans-Atlanta and Trans-Pacific partnerships. Allegedly these are “free trade deals” that will benefit everyone. In truth, these are carefully hidden, secret, deals that give private businesses control over the laws of sovereign governments.
For example, it has come to light that under the Trans-Atlantic partnership the National Health Service in the UK could be ruled in the private tribunals set up under the partnership as an impediment to private medical insurance and sued for damages by private firms and even forced into abolishment.
For any citizen of any Western country who is so stupid or brainwashed as not to have caught on, the entire thrust of “their” government’s policy is to turn every aspect of their lives over to grasping private interests.
In the UK the postal service was sold at a nominal price to politically connected private interests. In the US the Republicans, and perhaps the Democrats, intend to privatize Medicare and Social Security, just as they have privatized many aspects of the military and the prison system. Public functions are targets for private profit-making.
One of the reasons for the escalation in the cost of the US military budget is its privatization. The privatization of the US prison system has resulted in huge numbers of innocent people being sent to prison, where they are forced to work for Apple Computer, IT services, clothing companies that manufacture for the US military, and a large number of other private businesses. The prison laborers are paid as low as 69 cents per hour, below the Chinese wage.
This is America today. Corrupt police. Corrupt prosecutors. Corrupt judges. But maximum profits for US Capitalism from prison labor. Free market economists glorified private prisons, alleging that they would be more efficient. And indeed they are efficient in providing the profits of slave labor for capitalists.
The UK Guardian, which often has to prostitute itself in order to maintain a bit of independence, describes the anger that the British people feel toward the government’s secrecy about an issue so fundamental to the well being of the British people. Yet, the British continue to vote for political parties that have betrayed the British people.
All over Europe, the corrupt Washington-contolled governments have distracted people from their sellout by “their” governments by focusing their attention on immigrants, whose presence is a consequence of the European governments representing Washington’s interests and not the interest of their own peoples.
Somthing dire has happened to the intelligence and awareness of Western peoples who seem no longer capable of comprehending the machinations of “their” governments.
Accountable government in the West is history. Nothing but failure and collapse awaits Western civilization.
While the economic implosion progresses this year, there will be considerable misdirection and disinformation as to the true nature of what is taking place. As I have outlined in the past, the masses were so ill informed by the mainstream media during the Great Depression that most people had no idea they were actually in the midst of an “official” depression until years after it began. The chorus of economic journalists of the day made sure to argue consistently that recovery was “right around the corner.” Our current depression has been no different, but something is about to change.
Unlike the Great Depression, social crisis will eventually eclipse economic crisis in the U.S. That is to say, our society today is so unequipped to deal with a financial collapse that the event will inevitably trigger cultural upheaval and violent internal conflict. In the 1930s, nearly 50% of the American population was rural. Farmers made up 21% of the labor force. Today, only 20% of the population is rural. Less than 2% work in farming and agriculture. That’s a rather dramatic shift from a more independent and knowledgeable land-utilizing society to a far more helpless and hapless consumer-based system.
What’s the bottom line? About 80% of the current population in the U.S. is more than likely inexperienced in any meaningful form of food production and self-reliance.
The rationale for lying to the public is certainly there. Economic and political officials could argue that to reveal the truth of our fiscal situation would result in utter panic and immediate social breakdown. When 80% of the citizenry is completely unprepared for a decline in the mainstream grid, a loss of savings through falling equities and a loss of buying power through currency destruction, their first response to such dangers would be predictably uncivilized.
Of course, the powers-that-be are not really interested in protecting the American people from themselves. They are interested only in positioning their own finances and resources in the most advantageous investments while using our loss and fear to extract more centralization, more control and more consent. Thus, the hiding of economic decline is enacted because the decline itself is useful to the elites.
And just to be clear for those who buy into the propaganda, the U.S. is indeed in a speedy decline.
In ‘Lies You Will Hear As The Economic Collapse Progresses’, published in summer of last year, I predicted that “Chinese contagion” would be used as the scapegoat for the downturn in order to hide the true source: American wealth destruction. Today, as the Dow and other markets plummet and oil markets tank due to falling demand and glut inventories, all we seem to hear from the mainstream talking heads and the people who parrot them in various forums is that the U.S. is the “only stable economy by comparison” and the rest of the world (mainly China) is a poison to our otherwise exemplary financial health. This is delusional fiction.
The U.S. is the No. 1 consumer market in the world with a 29% overall share and a 21% share in energy usage, despite having only 5 percent of the world’s total population. If there is a global slowdown in consumption, manufacturing, exports and imports, then the first place to look should be America.
Trucking freight in the U.S. is in steep decline, with freight companies pointing to a “glut in inventories” and a fall in demand as the culprit.
Morgan Stanley’s freight transportation update indicates a collapse in freight demand worse than that seen during 2009.
The Baltic Dry Index, a measure of global freight rates and thus a measure of global demand for shipping of raw materials, has collapsed to even more dismal historic lows. Hucksters in the mainstream continue to push the lie that the fall in the BDI is due to an “overabundance of new ships.” However, the CEO of A.P. Moeller-Maersk, the world’s largest shipping line, put that nonsense to rest when he admitted in November that “global growth is slowing down” and “[t]rade is currently significantly weaker than it normally would be under the growth forecasts we see.”
Maersk ties the decline in global shipping to a FALL IN DEMAND, not an increase in shipping fleets.
This point is driven home when one examines the real-time MarineTraffic map, which tracks all cargo ships around the world. For the past few weeks, the map has remained almost completely inactive with the vast majority of the world’s cargo ships sitting idle in port, not traveling across oceans to deliver goods. The reality is, global demand has fallen down a black hole, and the U.S. is at the top of the list in terms of crashing consumer markets.
To drive the point home even further, the U.S. is by far the world’s largest petroleum consumer. Therefore, any sizable collapse in global oil demand would have to be predicated in large part on a fall in American consumption. Oil inventories are now overflowing, indicating an unheard-of crash in energy use and purchasing.
U.S. petroleum consumption was actually lower in 2014 than it was in 1997 and 25% lower than earlier projections predicted. A large part of this reduction in gas use has been attributed to fewer vehicle miles traveled. Though oil markets have seen massive price cuts, the lack of demand continued through 2015.
This collapse in consumption is reflected partially in newly adjusted 4th quarter GDP forecasts by the Federal Reserve, which are now slashed down to 0.7%. And remember, Fed and government calculate GDP stats by counting government spending of taxpayer money as “production” or “commerce”. They also count parasitic programs like Obamacare towards GDP as well. If one were to remove government spending of taxpayer funds from the equation, real GDP would be far in the negative. That is to say, if the fake numbers are this bad, then the real numbers must be horrendous.
And finally, let’s talk about Wal-Mart. There is a good reason why mainstream pundits are attempting to marginalize Wal-Mart’s sudden announcement of 269 store closures, 154 of them within the U.S. with at least 10,000 employees being laid off. Admitting weakness in Wal-Mart means admitting weakness in the U.S. economy, and they don’t want to do that.
Wal-Mart is America’s largest retailer and largest employer. In 2014, Wal-Mart announced a sweeping plan to essentially crush neighborhood grocery markets with its Wal-Mart Express stores, building hundreds within months. Today, those Wal-Mart Express stores are being shut down in droves, along with some supercenters. Their top business model lasted around a year before it was abandoned.
Some in the mainstream argue that this is not necessarily a sign of economic decline because Wal-Mart claims it will be building 200 to 240 new stores worldwide by 2017. This is interesting to me because Wal-Mart just suffered its steepest stock drop in 27 years on reports that projected sales will fall by 6% to 12% for the next two years.
It would seem to me highly unlikely that Wal-Mart would close 154 stores in the U.S. (269 stores worldwide) and then open 240 other stores during a projected steep crash in sales that caused the worst stock trend in the company’s history. I think it far more likely that Wal-Mart executives are attempting to appease shareholders with expansion promises they do not plan to keep.
I am going to call it here and now and predict that most of these store sites will never see construction and that Wal-Mart will continue to make cuts, either with store closings, employee layoffs or both.
As the above data indicates, global demand is disintegrating; and the U.S. is a core driver.
The best way to sweep all these negative indicators under the rug is to fabricate some grand idea of outside threats and fiscal dominoes. It is much easier for Americans to believe our country is being battered from without rather than destroyed from within.
Does China have considerable fiscal issues including debt bubble issues? Absolutely. Is this a catalyst for global collapse? No. China’s problems are many but if there is a first “domino” in the chain, then the U.S. economy claims that distinction.
China is the largest exporter in the world, not the largest consumer. If anything, a crash in China’s economy is only a REFLECTION of an underlying collapse in U.S. demand for Chinese goods (among others). That is to say, the mainstream dullards have it backward; a crash in China is a herald of a larger collapse in U.S. markets. A crash in China is a symptom of the greater fiscal disease in America. The U.S. is the primary cause; it is not the victim of Chinese contagion. And the crisis in the U.S. will ultimately be far worse by comparison.
“Market turmoil is a guarantee given the fact that banks and corporations have been utterly reliant on near-zero interest rates and free overnight lending from the Fed. They have been using these no-cost and low-cost loans primarily for stock buybacks, purchasing back their own stocks and reducing the number of shares on the market, thereby artificially elevating the value of the remaining shares and driving up the market as a whole. Now that near-zero lending is over, these banks and corporations will not be able to afford constant overnight borrowing, and the buybacks will cease. Thus, stock markets will crash in the near term.
This process has already begun with increased volatility leading up to and after the Fed rate hike. Watch for far more erratic stock movements (300 to 500 points or more) up and down taking place more frequently, with the overall trend leading down into the 15,000-point range for the Dow in the first two quarters of 2016. Extraordinary but short lived positive increases in the markets will occur at times (Christmas and New Year’s tend to result in positive rallies), but shock rallies are just as much a sign of volatility and instability as shock crashes.”
Markets moved immediately into crash territory after the new year began. This was an easy prediction to make and one that I have been reiterating for months — just as the timing of the Fed rate hike was an easy prediction to make, based on the Fed’s history of deliberately increasing instability through bad policy as the economy moves into deflationary spirals. The Fed did it during the Great Depression and is doing it again today.
It is no coincidence that global markets began to tank after the first Fed rate hike; no-cost overnight lending to banks and corporations was the key to maintaining equities in a relatively static position. As the U.S. loses momentum, the world loses momentum. As the Fed ends outright stimulation and manipulation, the house of cards falls.
I have said it many times and I’ll say it yet again: If you think the Fed’s motivation is to prolong or protect the U.S. economy and currency, then you will never understand why it takes the policy actions it does. If you understand and accept the fact that the Fed is a saboteur working carefully and incrementally toward the destruction of the U.S. to make way for a new globally centralized system, everything falls into place.
To summarize, the U.S. economy as we know it is not slated to survive the next few years. Read my article ‘The Economic Endgame Explained’ for more in-depth information on why a collapse is being engineered and what the openly admitted goal is, including the referenced 1988 article from The Economist titled “Get Ready A World Currency In 2018,” which outlines the plan for a reduction of the dollar and the U.S. system in order to make way for a global basket reserve currency (Special Drawing Rights).
It is astonishingly foolish to assume that even though the U.S. has held the title of king of global consumption share for decades, that our economy is somehow not a primary faulty part in the sputtering global economic engine. Economies are falling because demand is falling. Demand is falling because Americans are not buying. Americans are not buying because Americans are broke. Americans are broke because central bank policy has created an environment of wealth destruction. This wealth destruction in the U.S. has been ongoing, but only now is it becoming truly visible. The volatility we see in developing nations is paltry compared to the financial chaos we now face. Anyone who attempts to dismiss the dangers of a U.S. breakdown or the threat to the unprepared public is either an idiot, or they are trying to divert and distract you from reality. The coming months will undoubtedly verify this.
While the impact of sanctions leveled against Russia is being debated, one fact is perfectly clear; the dangerous interdependence cultivated by the concept of “globalization” leaves nations vulnerable amid a global order dominated by hegemonic special interests that use such interdependence as a weapon.
Two rounds of sanctions have been leveled against Russia targeting Russian banking, arms manufacturing, and oil industries. Even as the sanctions are marketed to the world as Russia “paying a price” for its role in “destabilizing” Ukraine, Russia has been busy cultivating ties and expanding markets that are increasingly found outside the West’s spheres of influence and therefore, beyond the reach of these sanctions. Russia is also looking inward to diversify its markets and seek socioeconomic independence.
Instead of viewing the sanctions as an impassable obstacle requiring capitulation to Wall Street and London, Russia has viewed them as a challenge to sever reliance on unstable markets. More so, Russia’s quest for alternative markets is a means of applying its own form of pressure back upon the West. While the West attempts to portray the sanctions as “cutting off Russia,” the restrictions do at least as much to isolate the West itself.
Multipolar World Vs Western Hegemony
In a unipolar world, supranational geopolitical blocs like the EU (European Union), the African Union, ASEAN (Association of Southeast Asian Nations), and regional free trade agreements serve to consolidate and open up the collective socioeconomic potential of the planet to those at the top of this international order. Currently, this constitutes the special interests on Wall Street, in the city of London, and among the special interests converging in Brussels. Interdependence is intentionally cultivated among the various members of individual blocs and between supranational blocs themselves. This ensures that leverage is constantly maintained over each individual national entity, making individual nations incapable of sidestepping collective initiatives of the blocs they are a part of.
In the European Union, this can be clearly seen as individual nations benefiting from ties with Moscow are attempting with limited success to rebel against broader EU sanctions against Russian industries.
The use of sanctions across several supranational blocs, including North America, the EU, and to a lesser extent, the West’s proxies in nations like East Asia’s Japan, had at one point critically threatened those nations targeted by them. Nations like Iran or Cuba who have suffered under Western sanctions for decades are clearly behind because of them. Behind, but not out.
As technology enables each individual nation to procure wealth on its own it once depended on trade with other nations for, the impact of sanctions is diminishing. The impact of sanctions is also undermined by a growing alternative international order outside of the West’s unipolar paradigm. BRICS, the nations of Brazil, Russia, India, China, and South Africa, constitute the leading edge of the rise of the developing world. No longer satisfied with subservience to the Wall Street-London global order, nor eager to find themselves entangled beneath another global empire led by another global superpower, these nations are attempting to redefine international relations in more traditional, multilateral terms.
Becoming self-sufficient economically while redefining international ties in a less interdependent manner, appears to be the defining aspect of the emerging multipolar world BRICS is attempting to create. The creation of international trade outside the traditional framework of the IMF, the World Trade Organization, and other institutions created by the West, for the West, has gradually eroded the impact of sanctions, penalties, and monopolies empowered by Western domination over international finance and global trade.
More to Do
While Russia seems to be taking Western sanctions in stride, the fact that the United States and Europe are targeting Russia in the first place is a warning to all members of BRICS as well as to developing nations around the world. In the capitals of nations residing outside the Wall Street-London international order, the possibility that any one of them could be next should be at the center of economic planning and the future of their respective foreign policy.
Creating alternative markets outside this international order could be a short-term stop gap. In Russia’s case, growing ties with China in terms of energy exports ensures a lasting alternative market for Russian natural gas that is set only to grow in the future as the West attempts to cutoff and isolate both Moscow and Beijing.
Seeking to create economic opportunities and progress domestically could be a more long-term and lasting solution. Russia’s decision to ban the import of food products from nations targeting it with recent sanctions gives BRICS an opportunity to expand in the void left by European, American, and Australian agricultural industries. It also gives an opportunity for Russian producers to expand their operations domestically. In the immediate aftermath of Russia banning imports from the West, stocks in Russia’s agricultural industry soared. While such spikes are more due to speculation than an actual jump in value, the fact that these producers now have an incentive to expand may create long-term value to justify investor confidence today.
But rather than waiting for sanctions to begin disrupting the socioeconomic status quo of a nation residing outside Western hegemony, a disruption the sanctions are designed specifically to create, why shouldn’t BRICS and other developing nations begin the process of developing their domestic markets and alternative international trading regimes beforehand?
If Russia, the largest nation geographically, the ninth most populous, and with one of the most formidable conventional and nuclear military forces on Earth, can be targeted for sanctions aimed to cripple its economy, then any nation can be targeted. Russia, with its resources and leadership is able to cope and adapt to these sanctions and even perhaps come out stronger in spite of them. Other nations might not weather such adversity so gracefully. Across BRICS and other nations in the developing world, a concerted effort must be made to move away from the interdependence of globalization and back toward greater multilateral trade regimes and greater domestic economic self-sufficiency.
Ulson Gunnar is a New York-based geopolitical analyst and writer especially for the online magazine “New Eastern Outlook”
Studies that link Genetically Modified (GM) food to multiple human health ailments are not the only thing that has millions of people questioning the production of GM food. The fact that previously classified secret government documents show how the Bush administration developed ways to retaliate against countries that were refusing to use GM seeds is another. If documents regarding our food are required to be concealed from the public domain, something is not right, and it’s great to have an organization like WikiLeaks shed some light into the world that’s been hidden from us for so many years.
Targeting Certain Countries
The cables reveal that the State Department was lobbying all over the world for Monsanto, and other major biotech corporations. They reveal that American diplomats requested funding to send lobbyists for the biotech industry to meet with politicians and agricultural officials in “target countries.” These included countries in Africa, Latin America and some European countries.
A non-profit consumer protection group called Food & Water Watch published a report showing the details of the partnership between the federal government and a number of biotech companies who have pushed their GMO products on multiple countries for a number of years.
“The United States has aggressively pursued foreign policies in food and agriculture that benefit the largest seed companies. The U.S. State department has launched a concerted strategy to promote agricultural biotechnology, often over the opposition of the public and government, to the near exclusion of other more sustainable, more appropriate agricultural policy alternatives. The U.S. State department has also lobbied foreign governments to adopt pro-agricultural biotechnology politics and laws, operated a rigorous public relations campaign to improve the image of biotechnology and challenged common sense biotechnology safeguards and rules – even including opposing laws requiring the labeling of genetically engineered (GE) foods.” (source)
HERE Is a 2008 cable that summarizes a French documentary called “The World According to Monsanto which attacks the U.S. biotech industry and the fact that Monsanto and the U.S. Government constantly swap employees and positions, below is a excerpt from the cable:
Corporations Dictate Government Policy
“The film argues that Monsanto exerted undue influence on the USG. Former Secretary of Agriculture Dan Glickman is interviewed saying he had felt that he was under pressure and that more tests should have been conducted on biotech products before they were approved. Jeffrey Smith, Director, Institute for Responsible Technology, who is interviewed says that a number of Bush Administration officers were close to Monsanto, either having obtained campaign contributions from the company or having worked directly for it: John Ashcroft, Secretary of Justice, received contributions from Monsanto when he was re-elected, as did Tommy Thompson, Secretary of Health; Ann Veneman, Secretary of Agriculture, was director of Calgene which belonged to Monsanto; and Donald Rumsfeld, Secretary of Defense, was CEO of Searle, a Monsanto subsidiary; and Justice Clarence Thomas was a former lawyer for Monsanto.”
This is one example (out of many) that clearly show how giant corporations pretty much dictate government policy. When it comes to these food corporations, they are responsible for forcing independent agriculturists to go out of business, controlling the world’s seed supply and forcing farmers to become dependent on their seed. Monsanto and corporations like them have created this seed, and have prevented farmers from seed saving and sharing, which results in a dependence on Monsanto’s patented GMO seeds.
“The state department sent annual cables to ‘encourage the use of agricultural biotechnology,’ encouraging every diplomatic post worldwide to ‘pursue an active biotech agenda’ that promotes agricultural biotechnology, encourages the export of biotech crops and foods and advocated for pro-biotech policies and laws.” (source)
“The US Department of State is selling seeds instead of democracy. This report provides a chilling snapshot of how a handful of giant biotechnology companies are unduly influencing US foreign policy and undermining our diplomatic efforts to promote security, international development and transparency worldwide. This report is a call to action for Americans because public policy should not be for sale to the highest bidder.” – Wenonah Hauter, Food & Water Watch Executive (source)
One of the most revealing cables is from 2007, with regards to French efforts to ban a Monsanto GM corn variety. HERE is a cable that shows Craig Stapleton, former ambassador to France under the Bush administration, asking Washington to punish the EU countries that did not support the use of GM crops:
“Country team Paris recommends that we calibrate a target retaliation list that causes some pain across the EU since this is a collective responsibility, but that also focuses in part on the worst culprits. Moving to retaliation will make clear that the current path has real costs to EU interests and could help strengthen European pro-biotech voices.” (see source in above paragraph)
The U.S. government was not only working for the biotech industry, they were also threatening other governments who did not comply. Think about that for a moment. Over the years the United States government and Monsanto have collectively pushed their GMO agenda upon the rest of the world. Why? Do you really think it is to help feed the world? This could easily be done if we came together and pooled our resources. The entire planet could easily be fed organic food, and it could be done for free.
The World’s Resistance To GMOs
The past two years alone has seen millions of people from across the globe gather to show their opposition towards Monsanto and similar corporations. The “March Against Monsanto” is clear evidence of this. The people of the world are starting to see through the veil that’s been blinding the masses for years, and our food industry is one small, but large and important area where the veil is being lifted.
Activism and awareness has contributed to the banning of GMO products and the pesticides that go with them in multiple countries across the planet, it’s time for North America to follow suit.
After the Crash 