|
Not
long ago, it would have been seen as something of a joke or the product of a
warped mind to ponder whether the United States is a declining empire, a
banana republic, a failed state -- or all three.
But
these days, there are plenty of serious and intelligent commentators,
including historians, ex-public servants, and journalists, who are not raving
lunatics, but who are nonetheless disturbed by what they see taking place in
this country.
Of
course, the fact that the U.S. is on the road to ruin won't be news to those
who have been regular visitors to Financial
Armageddon and When Giants Fall or who have read
my books, but for those who believe today's America
is the same as it always was, the following excerpts will be a real eye
opener:
"Niall Ferguson:
U.S. Empire in Decline, on Collision Course with China" (Yahoo!
Finance Tech Ticker
interview by Aaron Task)
The
U.S. is an empire in decline, according to Niall Ferguson, Harvard professor
and author of The Ascent
of Money.
"People
have predicted the end of America in the past and been wrong," Ferguson
concedes. "But let's face it: If you're trying to borrow $9 trillion to
save your financial system...and already half your public debt held by
foreigners, it's not really the conduct of rising empires, is it?"
Given
its massive deficits and overseas military adventures, America today is
similar to the Spanish Empire in the 17th century and Britain's in the 20th,
he says. "Excessive debt is usually a predictor of subsequent
trouble."
Putting
a finer point on it, Ferguson says America today is comparable to Britain
circa 1900: a dominant empire underestimating the rise of a new power. In
Britain's case back then it was Germany; in America's case today, it's China.
"When
China's economy is equal in size to that of the U.S., which could come as
early as 2027...it means China becomes not only a major economic competitor -
it's that already, it then becomes a diplomatic competitor and a military
competitor," the history professor declares.
"America’s
Banana Republic Economy" (Reuters
Blogs post by James Pethokoukis)
Is the
decline in the dollar merely a “return to normalcy” story, as
many bulls contend, and not a harbinger of a coming currency crisis?
Short
version: The 2008 financial crisis and ensuing collapse in confidence drove
investors to dollars and dollar-based instruments. And as the crisis has
ebbed, investors are rebalancing back toward riskier assets.
Thus
the falling dollar should rightly be interpreted as a sign of “new
economic optimism,” argues JPMorgan Chase economist Jim Glassman.
Then
again, perhaps future economic historians will look back at this stage of the
dollar’s decline as the currency calm before the storm. Because at some
point, investors may suddenly realize that America’s already somewhat
devalued currency should not be trusted.
As
Senator Judd Gregg, a New Hampshire Republican and noted budget hawk, said
recently, “We’re basically on the path to a banana-republic type
of financial situation in this country … You can’t keep throwing
debt on top of debt.”
"America the
Banana Republic" (Vanity
Fair commentary by
Christopher Hitchens)
The
ongoing financial meltdown is just the latest example of a disturbing trend
that, to this adoptive American, threatens to put the Land of the Free and
Home of the Brave on a par with Zimbabwe, Venezuela, and Equatorial Guinea.
In a
statement on the huge state-sponsored salvage of private bankruptcy that was
first proposed last September, a group of Republican lawmakers, employing one
of the very rudest words in their party’s thesaurus, described the
proposed rescue of the busted finance and discredited credit sectors as
“socialistic.” There was a sort of half-truth to what they said.
But they would have been very much nearer the mark—and rather more
ironic and revealing at their own expense—if they had completed the
sentence and described the actual situation as what it is: “socialism
for the rich and free enterprise for the rest.”
I have
heard arguments about whether it was Milton Friedman or Gore Vidal who first
came up with this apt summary of a collusion between the overweening state
and certain favored monopolistic concerns, whereby the profits can be
privatized and the debts conveniently socialized, but another term for the
same system would be “banana republic.”
What
are the main principles of a banana republic? A very salient one might be
that it has a paper currency which is an international laughingstock: a
definition that would immediately qualify today’s United States of
America. We may snicker at the thriller from Wasilla, who got her first
passport only last year, yet millions of once well-traveled Americans are now
forced to ask if they can afford even the simplest overseas trip when their
folding money is apparently issued by the Boardwalk press of Atlantic City.
But still, the chief principle of banana-ism is that of kleptocracy, whereby
those in positions of influence use their time in office to maximize their
own gains, always ensuring that any shortfall is made up by those
unfortunates whose daily life involves earning money rather than making it.
At all costs, therefore, the one principle that must not operate is the
principle of accountability. In fact, if possible, even the similar-sounding
term (deriving from the same root) of accountancy must be jettisoned as well.
Just listen to Christopher Cox, chairman of the Securities and Exchange
Commission, as he explained how the legal guardians of fair and honest play
had made those principles go away. On September 26, he announced that
“the last six months have made it abundantly clear that voluntary
regulation does not work.” Now listen to how he enlarges on this
somewhat lame statement. It seems to him on reflection that
“voluntary
regulation” was fundamentally flawed from the beginning, because
investment banks could opt in or out of supervision voluntarily. The fact
that investment bank holding companies could withdraw from this voluntary
supervision at their discretion diminished the perceived mandate of the
program and weakened its effectiveness.
Yes, I
think one might say that. Indeed, the “perceived mandate” of a
parole program that allowed those enrolled in it to take off their ankle
bracelets at any time they chose to leave the house might also have been open
to the charge that it was self-contradictory and wired for its own
self-destruction. But in banana-republicland, like Alice’s Wonderland,
words tend to lose their meaning and to dissolve into the neutral,
responsibility-free verbiage of a Cox.
And
still, in so many words in the phrasing of the first bailout request to be
placed before Congress, there appeared the brazen demand that, once passed,
the “package” be subject to virtually no more Congressional
supervision or oversight. This extraordinary proposal shows the utter
contempt in which the deliberative bodies on Capitol Hill are held by the
unelected and inscrutable financial panjandrums. But welcome to another
aspect of banana-republicdom. In a banana republic, the members of the
national legislature will be (a) largely for sale and (b) consulted only for
ceremonial and rubber-stamp purposes some time after all the truly important
decisions have already been made elsewhere.
I was
very struck, as the liquefaction of a fantasy-based system proceeded, to read
an observation by Professor Jeffrey A. Sonnenfeld, of the Yale School of
Management. Referring to those who had demanded—successfully—to
be indemnified by the customers and clients whose trust they had betrayed,
the professor phrased it like this:
These
are people who want to be rewarded as if they were entrepreneurs. But they
aren’t. They didn’t have anything at risk.
That’s
almost exactly right, except that they did have something at risk. What they
put at risk, though, was other people’s money and other people’s
property. How very agreeable it must be to sit at a table in a casino where
nobody seems to lose, and to play with a big stack of chips furnished to you
by other people, and to have the further assurance that, if anything should
ever chance to go wrong, you yourself are guaranteed by the tax dollars of
those whose money you are throwing about in the first place! It’s
enough to make a cat laugh. These members of the “business
community” are indeed not buccaneering and risk-taking innovators. They
are instead, to quote my old friend Nicholas von Hoffman about another era,
those who were standing around with tubas in their arms on the day it began
to rain money. And then, when the rain of gold stopped and the wind changed,
they were the only ones who didn’t feel the blast. Daniel Mudd and
Richard Syron, the former bosses of Fannie Mae and Freddie Mac, have departed
with $9.43 million in retirement benefits. I append no comment.
Another
feature of a banana republic is the tendency for tribal and cultish elements
to flourish at the expense of reason and good order. Did it not seem quite
bizarre, as the first vote on the rescue of private greed by public money was
being taken, that Congress should adjourn for a religious holiday—Rosh
Hashanah—in a country where the majority of Jews are secular? What does
this say, incidentally, about the separation of religion and government? And
am I the only one who finds it distinctly weird to reflect that the last head
of the Federal Reserve and the current head of the Treasury, Alan Greenspan
and Hank “The Hammer” Paulson, should be respectively the votaries
of the cults of Ayn Rand and Mary Baker Eddy, two of the battiest females
ever to have infested the American scene? That Paulson should have gone down
on one knee to Speaker Nancy Pelosi, as if prayer and beseechment might get
the job done, strikes me as further evidence that sheer superstition and
incantation have played their part in all this. Remember the scene at the end
of Peter Pan, where the children are told that, if they don’t shout out
aloud that they all believe in fairies, then Tinker Bell’s gonna fucking
die? That’s what the fall of 2008 was like, and quite a fall it was, at
that.
And
before we leave the theme of falls and collapses, I hope you read the
findings of the Department of Transportation and the Federal Highway
Administration that followed the plunge of Interstate 35W in Minneapolis into
the Mississippi River last August. Sixteen states, after inspecting their own
bridges, were compelled to close some, lower the weight limits of others, and
make emergency repairs. Of the nation’s 600,000 bridges, 12 percent
were found to be structurally deficient. This is an almost perfect metaphor
for Third World conditions: a money class fleeces the banking system while
the very trunk of the national tree is permitted to rot and crash.
"U.S. Joins Ranks
of Failed States"
(Commentary by Syndicated Columnist Paul Craig Roberts)
The
U.S. has every characteristic of a failed state.
The
U.S. government's current operating budget is dependent on foreign financing
and money creation.
Too
politically weak to be able to advance its interests through diplomacy, the
U.S. relies on terrorism and military aggression.
Costs
are out of control, and priorities are skewed in the interest of rich
organized interest groups at the expense of the vast majority of citizens.
For example, war at all cost — which enriches the armaments industry,
the officer corps and the financial firms that handle the war's financing
— takes precedence over the needs of American citizens. There is no
money to provide the uninsured with health care, but Pentagon officials have
told the Defense Appropriations Subcommittee in the House that every gallon
of gasoline delivered to U.S. troops in Afghanistan costs American taxpayers
$400.
"It
is a number that we were not aware of, and it is worrisome," said Rep.
John Murtha, chairman of the subcommittee.
According
to reports, the U.S. Marines in Afghanistan use 800,000 gallons of gasoline
per day. At $400 per gallon, that comes to a $320,000,000 daily fuel bill for
the Marines alone. Only a country totally out of control would squander
resources in this way.
While
the U.S. government squanders $400 per gallon of gasoline in order to kill
women and children in Afghanistan, many millions of Americans have lost their
jobs and their homes and are experiencing the kind of misery that is the
daily life of poor Third World peoples. Americans are living in their cars
and in public parks. America's cities, towns and states are suffering from
the costs of economic dislocations and the reduction in tax revenues from the
economy's decline. Yet, Obama has sent more troops to Afghanistan, a country
halfway around the world that is not a threat to America.
It
costs $750,000 per year for each soldier we have in Afghanistan. The
soldiers, who are at risk of life and limb, are paid a pittance, but all of
the privatized services to the military are rolling in excess profits. One of
the great frauds perpetuated on the American people was the privatization of
services that the U.S. military traditionally performed for itself.
"Our" elected leaders could not resist any opportunity to create at
taxpayers' expense private wealth that could be recycled to politicians in
campaign contributions.
Republicans
and Democrats on the take from the private insurance companies maintain that
the U.S. cannot afford to provide Americans with health care and that cuts
must be made even in Social Security and Medicare.
So how can the U.S. afford bankrupting wars, much less totally pointless wars
that serve no American interest?
The
enormous scale of foreign borrowing and money creation necessary to finance
Washington's wars are sending the dollar to historic lows. The dollar has
even experienced large declines relative to currencies of Third World
countries such as Botswana and Brazil. The decline in the dollar's value
reduces the purchasing power of Americans' already declining incomes.
...
The
regulatory agencies have been corrupted by private interests.
"Frontline" reports that Alan Greenspan, Robert Rubin and Larry
Summers blocked Brooksley Born, the head of the Commodity Futures Trading
Commission, from regulating derivatives. President Obama rewarded Larry
Summers for his idiocy by appointing him director of the National Economic
Council. What this means is that profits for Wall Street will continue to be
leeched from the diminishing blood supply of the American economy.
An
unmistakable sign of Third World despotism is a police force that sees the
pubic as the enemy. Thanks to the federal government, our local police forces
are now militarized and imbued with hostile attitudes toward the public. SWAT
teams have proliferated, and even small towns now have police forces with the
firepower of U.S. Special Forces.
...
In any
failed state, the greatest threat to the population comes from the government
and the police. That is certainly the situation today in the U.S.A. Americans
have no greater enemy than their own government. Washington is controlled by
interest groups that enrich themselves at the expense of the American people.
The 1
percent that comprise the superrich are laughing as they say, "Let them
eat cake."
Michael
J. Panzner
Editor, Financialarmageddon.com
Also
by Michael J. Panzner
Michael J. Panzner is a
25-year veteran of the global stock, bond, and currency markets and the
author of Financial Armageddon: Protecting Your Future from Four Impending
Catastrophes, published by Kaplan Publishing.
| 
