"Happiness lies not in the mere possession of money; it lies in the joy of achievement,
in the thrill of creative effort. The joy, the moral stimulation of work no longer must be forgotten
in the mad chase of evanescent profits. These dark days, my friends, will be worth all they cost
us if they teach us that our true destiny is not to be ministered unto but to minister to ourselves,
to our fellow men.
Recognition of that falsity of material wealth as the standard of success goes hand in hand with
the abandonment of the false belief that public office and high political position are to be valued
only by the standards of pride of place and personal profit; and there must be an end to a conduct
in banking and in business which too often has given to a sacred trust the likeness of callous
and selfish wrongdoing.
Small wonder that confidence languishes, for it thrives only on honesty, on honor, on the sacredness
of obligations, on faithful protection, and on unselfish performance; without them it cannot live."
Franklin D. Roosevelt, First Inaugural Address, March 4, 1933
Globalization and free trade are fast becoming dirty words. That’s because they are culprits
for major shocks—like the 2008 financial crisis. In the United States alone, median household
income has been practically stagnant for about three decades, the labor market continues to be anemic,
manufacturing jobs have been lost, and many have experienced a significant deterioration in living standards.
Much of the post-Brexit and primary election conventional wisdom seems to be stuck in a political
narrative in which the Brexit vote and the rise of Trump_vs_deep_state in the United States are seen as symbols
of the populist revolution. These symbols are combined with a nationalist tide has been sweeping
not only the United Kingdom and the United States, but also many other parts of Europe, including
Poland, Hungary, France, The Netherlands and Scandinavia, not to mention, Russia, Turkey, India and
According to this narrative, economic insecurity and cultural anxiety that reflect sociodemographic
trends have given momentum to ethnonationalism and religious separatism in both the United States
and the United Kingdom. The Rust Belt is pitted against New York City, and the Midlands against London.
All this means that the crisis of neoliberalism, which started in 2008 now obtained political
dimension, when the institutions created by neoliberalism are under attacks from the disgruntled
population. The power of neoliberal propaganda, the power of brainwashing and indoctrination of
population via MSM, schools and universities to push forward neoliberal globalization started to
This is about the crisis of neoliberal ideology and especially Trotskyism part of it
(neoliberalism can be viewed as Trotskyism for the rich). The following integral elements of this
ideology no longer work well and are starting to cause the backlash:
High level of inequality as the explicit, desirable goal (which raises the productivity).
"Greed is good" or "Trickle down economics" -- redistribution of wealth up will create (via
higher productivity) enough scrapes for the lower classes, lifting all boats.
"Neoliberal rationality" when everything is a commodity that should be traded at specific
market. Human beings also are viewed as market actors with every field of activity seen as a
specialized market. Every entity (public or private, person, business, state) should be governed
as a firm. "Neoliberalism construes even non-wealth generating spheres-such as learning, dating,
or exercising-in market terms, submits them to market metrics, and governs them with market
techniques and practices." People are just " human capital" who must constantly tend to their own
present and future market value.
Extreme financialization or converting the economy into "casino capitalism" (under
neoliberalism everything is a marketable good, that is traded on explicit or implicit exchanges.)
The idea of the global, USA dominated neoliberal empire and related "Permanent war for
permanent peace" -- wars for enlarging global neoliberal empire via crushing non-compliant
regimes either via color revolutions or via open military intervention.
Downgrading ordinary people to the role of commodity and creating three classes of
citizens (moochers, or Untermensch, "creative class" and top 0.1%), with the upper class
(0.1% or "Masters of the Universe") being above the law like the top level of "nomenklatura" was
in the USSR.
"Downsizing" sovereignty of nations via international treaties like TPP, and making
transnational corporations the key political players, "the deciders" as W aptly said. Who
decide about the level of immigration flows, minimal wages, tariffs, and other matters that
previously were prerogative of the state.
So after 36 (or more) years of dominance (which started with triumphal march of neoliberalism in
early 90th) the ideology entered "zombie state". That does not make it less dangerous but its power
over minds of the population started to evaporate. Far right ideologies now are filling the vacuum,
as with the discreditation of socialist ideology and decimation of "enlightened corporatism" of the
New Deal in the USA there is no other viable alternatives.
The same happened in late 1960th with the Communist ideology. It took 20 years for the USSR to
crash after that with the resulting splash of nationalism (which was the force that blow up the
USSR) and far right ideologies.
It remains to be seen whether the neoliberal US elite will fare better then Soviet nomenklatura
as challenges facing the USA are now far greater then challenges which the USSR faced at the time.
Among them is oil depletion which might be the final nail into the coffin of neoliberalism and,
specifically, the neoliberal globalization.
Advocates of the neoliberalism constantly repeat the refrain that "there is no alternative" (TINA).
Brexit is a powerful demonstration that this is not true (Back to (our) Future)
A major crack has appeared in the edifice of globalization, and the neoliberal order that has
dominated the world’s economy since the end of World War II is now in danger.
That’s not necessarily a bad thing, by any means. But poisonous weeds are just as likely as green
shoots to grow up through those cracks. To paraphrase John F. Kennedy: Those who make constructive
evolution impossible may be making destructive devolution inevitable.
We now know that Great Britain, itself an amalgam of older nations, is divided. England and Wales
voted to leave Europe, while Scotland, Northern Ireland, and ethnically diverse London voted to remain.
This vote was a stunning rejection of Great Britain’s political establishment. “Leave” prevailed
despite opposition from all three major political parties. Prime Minister David Cameron, who will
now step down, called on voters to “Remain.” So did socialist Jeremy Corbin, the most left-wing Labor
leader in a generation. Barack Obama crossed the Atlantic to stand beside Cameron and offer his support.
Voters rejected all of them.
The uprising has begun. The question now is, who will lead it going forward?
Globalism’s Shadow Self
The world’s financial and political elites must now face the fact that resistance to their economic
order, which has shaped the world since the Bretton Woods conference of 1944, is a major phenomenon.
These elites are apparently more out of touch with the citizens of the industrialized world than
at any time in modern memory.
Make no mistake: The “Leave” vote was a rejection of globalization, at least as it’s currently
structured. This was a revolt of working class Britons who have seen their postwar prosperity erode
around them and their social contract eviscerated by the corporate and financial oligarchy.
But it was also the sign of a darker and more sinister worldwide phenomenon: the resurgence of
global nativism and xenophobia. This worldwide turn toward fear of the Other is globalization’s shadow
But this near-victory wasn’t won with leftist arguments about resisting the global oligarchy.
The left was too divided to make that case clearly or forcefully. It was largely won by stirring
up bigotry against immigrants, cloaked in flimsy arguments about excessive regulation. Legitimate
economic grievances were channeled into nationalist hostility.
Many “Leave” voters felt powerless, that they no longer had much of a say in their own destinies.
They weren’t wrong. The European Union was largely a creation of transnational financial forces driven
by a self-serving neoliberal ideology of “free” markets, privatization, and corporate economic governance.
But ,even at its worst, the EU is a symptom and not a cause. Great Britain’s citizens haven’t
been losing control over their fate to the EU. They’ve been losing it because their own country’s
leaders – as well as those of most other Western democracies – are increasingly in thrall to corporate
and financial interests.
The British people have lost more sovereignty to trade deals like NAFTA and the TPP then they
could have ever surrendered to the European Union. Their democratic rights are trampled daily, not
by faceless EU bureaucrats, but by the powerful financial interests that dominate their politics
and their economy.
Low Information Voters
This vote won’t help the middle class. British workers will no longer be guaranteed the worker
rights that come with EU membership. British corporations will be less regulated, which means more
environmental damage and more mistreatment of employees and customers. They will not, in the words
of William Blake, “build Jerusalem in England’s green and pleasant land.”
Most “Leave” voters probably don’t know that, because the media failed them too. Instead of being
given a balanced understanding of EU membership’s advantages and disadvantages, the British people
were fed a constant diet of terror fears and trivial anti-government anecdotes meant to reinforce
the notion that EU was needlessly and absurdly bureaucratic.
Martin Fletcher explains, Boris Johnson played a key role in degrading the performance of Britain’s
corporate press back in his days as a journalist. Other outlets were all to eager to mimic his anti-government
and anti-Europe stereotypes. And now? It’s as if Sean Hannity’s
deceptive sensationalism had made him a top presidential prospect.
Johnson and UKIP leader Nigel Farage played the same role in the Leave campaign that Donald Trump
is playing in US politics. Like Trump, they have used economic fears to stoke the anti-immigrant
fear and hatred that is their real stock in trade. Their slogan might just as well have been “Make
England Great Again.”
The campaign’s fearmongering and hate has already claimed a victim in Jo Cox, the Labor MP who
was violently martyred by a white British racist. Tellingly, her murder was not described as an act
of terrorism, which it clearly was. The decision to restrict the “terrorist” label to Muslims, in
Great Britain as in the United States, feeds precisely the kind of hatred that fuels movements like
Great Britain’s immigrant population
by 4.5 million under EU membership. But in a just economy, that would lead to growth for the
existing middle class. Britain’s immigrants didn’t wound that country’s middle class. They’re scapegoats
for rising inequality and the punishing austerity of the conservative regime.
What happens next? Markets are already reacting, retrenching in anticipation of new trade barriers
and political uncertainty.
Before the voting,
estimates of a Leave vote’s effect on Britain’s economy ranged from “negative” to outright “calamitous.”
The outcome will probably fall somewhere between the two.
Will the reprehensible Mr. Johnson, who pushed aggressively for Brexit, now lead his party -perhaps
even his country? How much will this boost UKIP? By rejecting the EU, will Great Britain soon experience
even harsher economic austerity measures than Cameron’s?
Scotland may once again pursue independence so that it can rejoin Europe. Sinn Fein is calling
again for the reunification of Ireland. Suddenly anything seems possible.
There are already calls for a similar referendum in France.
British workers are likely to be
worse off without EU protections, especially if the far right prevails in future elections as
the result of this vote.
Trade deals will need to be negotiated between Britain and the EU, along with the terms of separation.
Judging by its behavior toward Greece, Germany prefers to punish any nation impertinent enough to
try guiding its own economic destiny. These negotiations won’t be pleasant.
The New Resistance
The current order is unstable. The uprising has begun. But who will lead it?
All over the world there are Boris Johnsons and Nigel Farages poised to capitalize on the chaos.
The US has Trump, who was quick to
tie himself to the vote. Greece has Golden Dawn. Germany has the far-right, anti-immigrant AfD
party. Scandinavia has the Sweden Democrat Party and the Danish People’s Party. Hungary’s ruling
Fidesz party, itself nationalistic and totalitarian by nature, is in danger of being outdone by the
racist and anti-Semitic Jobbik party.
Hungary is already building a Trump-like wall, in fact, a barb-wired fence meant to keep Syrian
refugees out of the country and Jobbik out of political power.
There is also also a growing democratic counterforce, poised to resist both the global elites
and the nationalist bigots. It includes Syriza in Greece, Podemos in Spain, and the Corbin movement
in Great Britain (although Corbin’s fate is unclear in the wake of this vote). In the US it has been
seen in both the Occupy movement and, more recently, in the newly resurgent left inspired by Bernie
The global financial order is fracturing. But will it fall? It’s powerful and well organized.
Even if it does, what will replace it: a more humane global order, or a world torn by nationalism
and hate? Should these new progressive parties and factions form a transnational movement?
That’s the goal of economist
Yanis Varoufakis, among others. Varoufakis confronted the EU’s economic leadership directly when
he negotiated with them as Greece’s first Finance Minister under Syriza. They prevailed, and Varoufakis
is now a private citizen.
The Greeks chose economic autonomy when they voted for Syriza. They didn’t get it. The British
aren’t likely to get what they want from this vote either. No matter what happens, British citizens
will still be in thrall to corporate financial forces – forces that can rewrite the rules they go
Greece’s fate has been a cautionary tale for the world, a powerful illustration of the need for
worldwide coordinated resistance to today’s economic and political elites. We can vote. But without
economic autonomy, we aren’t truly free. In the months and years to come, the people of Great Britain
are likely to learn the truth: We are all Greece now.
"UK Prime Minister Theresa May suffered political humiliation in Salzburg, when European
Union (EU) leaders rebuffed her appeal to give at least conditional support to her Chequers
proposal for a "soft Brexit."
May was given only 10 minutes to address EU heads of state Wednesday, after dinner at the
informal summit, during which she appealed to her audience, "You are participants in our
debate, not just observers."
She said she had counted on at least supportive noises for her "serious and workable"
plan, given that she was seeking to head off a potential challenge from the
"hard-Brexit"/Eurosceptic wing of the Conservative Party. She warned that the UK could be
torn apart -- with respect to Northern Ireland and Scotland, as well as by social tensions;
that if her government fell, Jeremy Corbyn's Labour Party could win a general election; and
cited the potential damage to the EU itself of lost trade, investment and military support
from the UK.
Instead, her address was met with silence and her implied threats were stonewalled, as the
main players within the EU combined the next day to declare her proposals to be
No matter how these conflicts play out, Britain and the whole of Europe face a worsening
crisis that threatens to tear the EU apart. The growth of both inter-imperialist and social
antagonisms found dramatic form in Brexit, which the dominant sections of the City of London,
big business, all the major parties and Britain's allies in the US and Europe all opposed.
Yet two years later, May is fighting a desperate struggle against her anti-EU "hard-Brexit"
faction, the US is led by a president who has declared his support for the breakup of the EU,
and numerous far-right governments have taken power in part by exploiting popular hostility
to EU-dictated austerity."
"worsening crisis that threatens to tear the EU-(and hence NATO)- apart. " .
"... Popularity of National Socialism in capitalist country like Germany was exactly due to that process of corruption of working class who embassy stoped to question system as long as provided them with goods. ..."
"... Henceforth, most goods manufactured for US consumption were to be produced abroad, from Mexico to China. Once US based multinationals started down this road, European and even Japanese ones followed. This did not mean an increase in productive forces but a substitution of one labour force for another. ..."
"... Thus the rise of Chinese industry was as much a part of this process as the deindustrialisation of formerly prosperous parts of the US and the UK. This has nothing to do with the evolution of our species and everything to do with the evolution of capitalism. This is what I mean by globalisation. ..."
"... It has not eradicated national borders but is a major factor in the recent development of far right nationalism in Europe. It is a strong contributor to the restructuring of western economies so that only a minority of British workers have full time permanent jobs. It is also used as leverage to drive down wages in western economies. ..."
"... I do not believe what I mean by globalisation is progressive at all. It has been pushed by the most reactionary political forces in western societies as an integral part of what the WSWS calls a social counter revolution. As the WSWS again points out it makes the preservation of national welfare states or a decent standard of living for working class people impossible. I am not calling for this to be reversed under capitalism. ..."
"... "...globalised production is the exploitation of lower wage rates in developing countries." ..."
"... As if domestic production were not the same thing. The author is essentially arguing for "lesser evil" exploitation in the interests of society as a whole. Reformists always do. ..."
"... "The crisis also exposed in full glare another of the central myths of the capitalist order -- that the state is somehow a neutral or independent organisation committed to regulating social and economic affairs in the interests of society as a whole." - Ten years since the collapse of Lehman Brothers ..."
"... "Keynes was a reformist and capable of formulating policies which, if followed, would make capitalism more amenable to the interests of the majority of people." ..."
"... The most important theoretical source of his thinking is his own work "The General Theory of Employment, Money and Interest" which is available to read or download free online. ..."
"... The US wants to reinforce it's declining global hegemonic position at any cost. Now they started with economic war against countries they see as not cooperating to their demands, but under current conditions this could easily transform into Global war at some point in future. ..."
In the aftermath of the global financial crisis ten years ago, the leaders of the world's
major powers pledged that never again would they go down the road of protectionism which had
such disastrous consequences in the 1930s -- deepening the Great Depression and contributing
to the outbreak of world war in 1939.
Yesterday US President Donald Trump announced tariffs on $200 billion worth of Chinese
goods in what the Washington Post described as "one of the most severe economic
restrictions ever imposed by a US president."
A levy of 10 percent will be imposed starting from September 24 and will be escalated to
25 percent in 2019 if the US does not receive what it considers to be a satisfactory
agreement. The new tariffs, which will cover more than 1,000 goods, come on top of the 25
percent tariff already imposed on $50 billion worth of industrial products. Trump has
threatened further measures on the remaining Chinese exports to the US totalling more than
China has threatened retaliatory action including tariffs and other, as yet unspecified
measures, against the US, meaning that the world's number one and number two economies are
locked into a rapidly escalating trade war that will have global consequences.
Announcing the decision, Trump called on China to take "swift action" to end what he
called its "unfair trade practices" and expressed the hope that the trade conflict would be
But there is little prospect of such an outcome because, while the US is demanding that
the trade deficit with China be reduced, the conflict does not merely centre on that issue.
China has made offers to increase its imports from the US, all of which have been rejected.
The key US demand is that the Chinese government completely abandon its program of economic
development and remain subservient to the US in high-tech economic sectors.
As the position paper issued by Washington in May put it: "China will cease providing
market-distorting subsidies and other types of government support that can contribute to the
creation or maintenance of excess capacity in industries targeted by the Made in China 2025
In other words, China must completely scrap the foundational structures of its economy so
that it presents no threat to the economic dominance of US capitalism, a dominance which the
US intends to maintain, if it considers necessary, by military means. This was made clear
earlier this year when Washington designated China as a "strategic competitor," that is, a
potential military enemy. This is the inherent, objective, logic of the latest trade war
Their full significance can only be grasped when viewed with the framework of the
historical development of the global capitalist economy.
After the disastrous decade of the 1930s, and as the world plunged into war, leading
figures within the Roosevelt administration recognised that this situation was due in no
small measure to the division of the world into rival trade and economic blocs which tariff
and other trade restrictions had played a major role in creating.
Post-war planning centred on trying to overcome this contradiction between the global
economy and its division into rival great powers and blocs through the development of a
mechanism that ensured the expansion of world trade. This was the basis of the series of
measures set in place in the immediate aftermath of the war: the Bretton Woods monetary
system which tied major currencies to the dollar in fixed exchange rates, the General
Agreement on Tariffs and Trade that sought to bring down tariff barriers and the
establishment of the International Monetary Fund and the World Bank to ensure international
These measures, however, did not overcome the inherent contradictions of capitalism, above
all between the global economy and the nation-state system. Rather, they sought to contain
and mitigate them within a system based on the overwhelming economic dominance of the US.
But the growth of the world capitalist economy and the strengthening of the other major
powers undermined the very foundations on which they were based -- the absolute dominance of
the US. Within the space of a generation, the weakening of the US position was revealed in
August 1971 when it scrapped the Bretton Woods monetary system declaring that the dollar
would no longer be redeemable for gold.
The period since then has seen the ongoing weakening of the position of the US, which was
graphically revealed in the financial meltdown ten years ago when the US financial system was
shown to be a house of cards based on rampant speculation and outright criminal activity.
This situation has continued in the subsequent decade, threatening, another, even more
disastrous, financial crisis.
The US is now not only confronted with the economic power of its European rivals but a
major new one in the form of China. It is striving to reverse this situation. As Leon Trotsky
explained some eighty years ago, the hegemony of the US would assert itself most powerfully
not in conditions of boom but above all in a crisis when it would use every means -- economic
and military -- against all rivals to maintain its position.
The trade war measures against China are only one expression of this process. The US has
already carried out protectionist measures against Europe and Japan through the imposition of
tariffs on steel and aluminium and has threatened tariffs on cars and auto parts, which will
be invoked unless they join its push on China.
And as the China tariffs are imposed, top officials of the European Union are meeting to
discuss how they might overcome the financial sanctions the US will impose against European
companies if they maintain economic ties with Iran after November 4 following the unilateral
abrogation of the Iran nuclear deal.
The deal was not overturned because Iran had breached the agreement -- international
agencies found that it had fully complied. Rather, the United States unilaterally abrogated
the treaty in order to strengthen the strategic position of the US in the Middle East by
countering the influence of Iran, and because European corporations stood to benefit from the
opening up of new economic opportunities in that country at the expense of their US
Now the State Department has warned that European companies are "on the railroad tracks"
if they defy US sanctions and firms that deal with the "enemy" will be barred from access to
the US financial system.
Writing in the 1930s, Leon Trotsky explained that the interdependence of every country in
the global economy meant that the program of economic nationalism, of the kind now being
practised by the Trump administration, was a reactionary "utopia" insofar as it set itself
the task of harmonious national economic development on the basis of private property.
"But it is a menacing reality insofar as it is a question of concentrating all the
economic forces of the nation for the preparation of a new war," he wrote five years before
the outbreak of World War II.
This "menacing reality" is now once again expressed in the fact that the trade war
measures against China, as well as those against Europe and Japan, have all been invoked on
"national security" grounds. Just as the US prepares for war, so too do all the other major
powers. This drive does not arise from the heads of the capitalist politicians -- their
actions are only the translation into politics of the objective logic and irresolvable
contradictions of the capitalist system over which they preside.
But there is another more powerful logic at work. The very development of globalised
production, which has raised the contradiction of the outmoded nation-state system with its
rival great powers to a new peak of intensity, has laid the foundations for a planned world
socialist economy. And it has created in the international working class, unified at an
unprecedented level, the social force to carry it out.
The latest Trump trade war measures underscore the urgency for the political and
theoretical arming of the working class with the program of world socialist revolution,
fought for by the International Committee of the Fourth International, if civilisation is to
go forward and the plunge into barbarism averted.
Beams excellent piece included:
"As the position paper issued by Washington in May put it: "China will
cease providing market-distorting subsidies and other types of government support that can
contribute to the creation or maintenance of excess capacity in industries targeted by the
Made in China 2025 industrial plan."
This issue of "government support" in China is reflected in the U.S. but in a different
way. Nashville and Tennessee governments alone have given hundreds of millions of dollars
in "tax incentives," payment for worker training and outright "grants" to corporations in
Hospital Corporation of America (HCA) got millions for, of all things, furniture for new
offices which included thousands of dollars for a guitar-shaped table.
Gaylord's Opryland Resort got almost $14 million from the city to build a $90 million hotel
Waterpark that would only be open to hotel guests!
The state and its capitol are prepared to give Amazon more than $1.5 billion to have the
corporation move is second U.S. headquarters here.
Like the Chinese government and oligarchs, neither state nor city will reveal the details
or total amount.
As the WSWS has so correctly observed before, "the hypocrisy is breathtaking."
I should say I do not agree that globalised production is a beneficial or positive economic
development. I accept that as a by product there is a positive political result namely the
creation and expansion of the international working class. But the only reason for
globalised production is the exploitation of lower wage rates in developing countries. If
the cost of labour, taking into account currency exchange rates as well as wage levels,
were the same in every country and region, there would be no advantage in producing most
commodities in Asia for sale in North America or Europe (or vice versa). Also, I do not
accept that free trade is in everyone's interest. The only argument ever advanced in it's
favour by economists, the comparative advantage argument, is spurious. Even its
originators, Adam Smith and David Ricardo, accepted that the benefits would only apply if
capital was immobile across national boundaries, which hardly applies today. The US
economy's industrial growth, though the result of several factors, was only possible
because the US rejected free trade in favour of protective tariffs which protected its
infant industries from foreign competition. What is the central fallacy in the comparative
advantage argument is that the prosperity of the majority of a country's citizens under
capitalism depends on a strong, capital intensive, manufacturing sector, but which also
requires a large labour input. Only those jobs can pay a sufficiently high wage to workers.
Their spending power also invigorates the whole economy.
Thy major point about this issue global or local is often completely missed namely that
this dispute have nothing to do with Workers Socialist Revolution but to perhaps see ways
how to save capitalism in a way of sharing more wealth with working class, how to suppress
class struggle with Bread and Games or War, an old Roman method of divide and conquer.
Hence, capital controls, tarrifs , barriers, subsidies are instruments of having any
possibility of real social policies in capitalism system making it more livable and longer
lasting than in case of intensified pressure on working class and class struggle of
globalism versus nationalism.
Popularity of National Socialism in capitalist country like Germany was exactly due
to that process of corruption of working class who embassy stoped to question system as
long as provided them with goods.
Little did they know, that they were in 1930 confronted with no permanent political
solution to their class issues via improvement of standard of living and importance of
their labor on the propaganda spectrum,but with dead end politics of submission to one
political sellouts or another since their forced unity was just subordinated to capitalist
imperative of ufettered economic and military growth via extreme exploitation.
And that is what's wrong with nationalism namely it is shutting down paths of class
struggle toward class liberation, as it neuters this struggle.
There is a difference between the growth of global productive capacity and globalisation.
Prior to the latter process, manufacturing capacity was increased including by western
investment in developing countries, especially in Latin America. But production in those
countries was for local regional and national markets.
The US accepted competition from the German economy as a price to be paid for avoiding
the postwar threat of socialism. But the Japanese export driven model of growth was
eventually unacceptable. The US demanded the Japanese destroy this model by raising their
own currency to a level which made their exports much less competitive. The Japanese rich
were given financial opportunities in the US as compensation.
However, when the South Koreans and other nations copied the Japanese model, the US
government and US multinationals radically changed their economic policy. A conscious
choice was made by the Reagon administration to export manufacturing jobs en masse to
developing countries as well as attacking the incomes of US workers who had jobs.
Henceforth, most goods manufactured for US consumption were to be produced abroad,
from Mexico to China. Once US based multinationals started down this road, European and
even Japanese ones followed. This did not mean an increase in productive forces but a
substitution of one labour force for another.
Thus the rise of Chinese industry was as much a part of this process as the
deindustrialisation of formerly prosperous parts of the US and the UK. This has nothing to
do with the evolution of our species and everything to do with the evolution of capitalism.
This is what I mean by globalisation.
It has not eradicated national borders but is a major factor in the recent
development of far right nationalism in Europe. It is a strong contributor to the
restructuring of western economies so that only a minority of British workers have full
time permanent jobs. It is also used as leverage to drive down wages in western
Of course in recent years the Chinese and Indian economies have grown under these
policies so that there is now an increase of global capacity. Nor do I believe this process
has led to a genuinely more efficient system of production and distribution. To produce
products in one part of the world for distribution to another part half way around the
world is very inefficient, if the product could be made nearer to the point where it would
be used. It however becomes profitable if the labour used to produce it is much cheaper
than that available where the the object is to be sold.
I do not believe what I mean by globalisation is progressive at all. It has been
pushed by the most reactionary political forces in western societies as an integral part of
what the WSWS calls a social counter revolution. As the WSWS again points out it makes the
preservation of national welfare states or a decent standard of living for working class
people impossible. I am not calling for this to be reversed under capitalism.
That seems impossible. Only the overthrow of capitalism offers the possibility of
positive change. But under international socialism, globalised production chains will
finally be seen for what they are, an unnecessary and inefficient encumbrance on
I think you are largely confusing globalisation with imperialism. I think you are also
misunderstanding the wsws position. The wsws does not call for xenophobic or nationalist
policies to close borders and keep workers imprisoned in their home countries to be used as
a captive labor force by the domestic bourgeoisie. The wsws calls for an internationalist
and proletarian socialist movement in conformity with that advocated by the workers
movement ever since the publication of the communist manifesto.
I really could not care less what you call it. I just want people to start treating each
other better. What makes those with sticky fingers think that they are so G.D. better than
everyone else that they can condemn whole segments to poverty and even death, all for the
sake of their bits of imaginary ego-boosts?
ALL of the "isms" in the world have never worked out a justification for greed and the
lust for power. No matter what the system, crooked people always try to exploit others, and
blamejustify it all on their "good genes". (edited)
Capitalism is no better or worse because it just doesn't matter what the system is, the
crooks will always cheat that system to get more than everyone else.
An interesting theory to describe what is essentially creation of a world customs union
based on the model that created Germany in 1871, the Zollverein. Spreading the customs
union (Zollverein) worldwide was the reason for the two world wars--instead of maintaining
a world federation politically and economically. The United Nations was designed to be a
federation, but under post-1945 changes in the USA and subsequent pressures on the UN and
its member states, it began developing into a union, not a federation. This was accompanied
with creation of a global Zollverein, tariff free borders and free trade.
The difference politically between a union and a federation is that in a federation the
member states award limited operating powers to a central coordinating body which does what
the members want; in a union the central body holds all the powers and tells the members
what to do.
The United Nations "holds all the powers and tells the members what to do" ? That's news to
me. As far as I can tell, the members do what they damn well please. The UN is more like a
fractured federation with a nearly impotent central body - the so-called "Security Council"
- which issues edicts but has no enforcement power. Same with the World Court.
The UN was designed by the victors of WWII to be "crippled", mere window-dressing as a
calming salve for the developing nations. From the start, it was meant to be largely
ineffective as the world's policeman and justice system .
All the nation states with any significant power are still more interested in preserving
as much their own power and hegemonic control as possible.
"...globalised production is the exploitation of lower wage rates in developing
As if domestic production were not the same thing. The author is essentially arguing
for "lesser evil" exploitation in the interests of society as a whole. Reformists always
"The crisis also exposed in full glare another of the central myths of the
capitalist order -- that the state is somehow a neutral or independent organisation
committed to regulating social and economic affairs in the interests of society as a
whole." - Ten years since the collapse of Lehman Brothers
"However my fundamental advocacy of policy would be that of international socialism the
result of which would be the handing of power to the working class to be exercised
The "handing of power" from whom exactly?
As it is now, the minority holds the power. So it's reasonable to think you mean they
would hand the power over to the majority.
Which would be silly. But whether or not that was your meaning, "the handing of power to
the working class to be exercised democratically" besides being exactly backwards, is an
opportunist "understanding" of Marxism. It implies a perspective where the state does not
need to be destroyed.
"The crucial question for Marx was what was the social material force -- the class --
created by capitalist society itself, which would be the agency, the driving force, of this
transformation." - A promotion of the "life-style" politics of the pseudo-left
It's a version of the frequently and historically repeated goal of replacing one petty
bourgeoisie minority with another, betraying the material interests of the working class
and the revolution every time.
It seems like you might have just mentioned that phrase as an aside but it might
indicate the deeper problem.
Before you start analyzing which policies might be recommended (which seems to be mainly
what interests you) you have to understand the class nature of the problem. That doesn't
come down only to understanding that there are two classes in struggle in society
and then applying your everyday petty bourgeois thinking to it.
Have you read David North's Lenin, Trotsky and the Marxism of the October
Revolution ? It was written back in March yet it's still posted on the wsws main
page--for a reason.
It provides a concise explanation of some of the fundamental ideas and way of thinking
you have to understand if you want to have any kind of intelligent conversation
Nick Beams did not say that "globalised production chains employed represent a genuinely
beneficial development in some deep sense." He said that such an outcome is impossible
under capitalism and the system of competing nation-states.
The only "deep sense" is that he said it would be possible for globalization to
have a positive effect for humanity if the international working class were able to abolish
capitalism, the pursuit of private profit, warring nation-states, and institute
Thank you comrade Nick Beams. US's century is 20th and a bygone one. You finely point out
on the basis of Trotskysm the mortal danger that humanity faces resulting from the
inter-imperialist rivalry that is escalating by the day.
Besides, the US's taking up of its rival China, the second biggest economy, in trade war
pose a military confrontation to which Russia could be attracted on to China side.
Also Russia has been taken up by American imperialism independently as a target. Brexit
hard or soft would also confound economic nationalism that is gathering momentum hugely. US
sanctions on Iran is bound to sharpen the conflict between European imperialists. Also
India appears to be in crisis on whether to abide by US dictats as per its Iranian economic
connection especially on oil purchase. US's increasing protectionism has already gone out
of control as per its implications to global polity and military activity. In view of this
critical situation the role of the working class, national and international, should
determine the future of humanity. Role of the revolutionary triumvirate, ICFI/SEP/IYSSE, is
of paramount importance. I appeal to national working classes to build SEP as your national
party of the socialist revolution. I appeal to youth and students to build your national
chapters of the IYSSE in schools, universities etc. as quickly as possible. World war is
haunting. Very existannce of the humanity on this palnet is uncertain, if we unitedly as
workers, youth and students fail to empower the party of the world revolution, ICFI.
Victory to international socialist revolution. Death to protectionism whose major advocate
is US capitalism/imperialism. Down with the psudo left and the trade unions.
Keynes, who designed the Bretton Woods system, also proposed an international banking
system and currency (called the Bancor). The purpose was to prevent the kind of unbalanced
world trade which now dominates the global economy. Under his proposed system, countries
with chronic trade surpluses would be penalised, thus preventing a situation like the
present with some nations being massive exporters and others massive importers. Instead,
all countries would hover around balanced trade where their imports equaled their exports
in value. The US government told Keynes to shut up about this plan or they would cancel
their promised postwar loans to the UK. The reason was that at the time the US planned to
be a net exporter. Incidentally, Keynes warned that if the system of managed currency
exchange rates were abandoned, the financial markets would become a "virtual senate" which
would have the power to dictate economic policies to nation states.
"Keynes, who designed the Bretton Woods system, also proposed an international banking
system and currency (called the Bancor). The purpose was to prevent the kind of
unbalanced world trade which now dominates the global economy."
Perpetually caught in a "lesser evil" loop of some variety or another from which the
reformist never escapes, applying the same failed (ruling class) logic over, and over and
over and over...
"But this solves nothing because, as Marx's analysis showed, the crises of capitalism
cannot be overcome by reforms to the monetary system because, while they necessarily
express themselves there, they were rooted in the very foundations of the capitalist
economy, in its DNA so to speak -- that is, in the social relations based on profit and the
market system." -Ten years after Lehman: New financial crises in the making
Keynes' suggestion would have "solved" or rather prevented one problem, but not every
problem of capitalism. Keynes was a reformist and capable of formulating policies which, if
followed, would make capitalism more amenable to the interests of the majority of people.
He was consciously trying to save capitalism from itself and said so. But you rightly
point out there is a major problem with this thinking, namely that it ignores the self
interest of governments and capitalists alike, who ignore such concepts of "enlightened"
self interest in favour of short term advantage.
Political reality intruded in Keynes' well-intentioned designs immediately as I've
mentioned and the whole Bretton Woods edifice was knocked down as soon as it proved
inconvenient for US interests.
Similarly, I strongly suspect Keynes would have disapproved of financial deregulation,
but the underlying development of US capitalism led to unstoppable political pressure for
"Keynes was a reformist and capable of formulating policies which, if followed, would
make capitalism more amenable to the interests of the majority of people."
For the life of me I can't figure why you'd praise a policy that more effectively
persuades or controls the masses to their own detriment and to the economic benefit of a
minority--other than to conclude that like Keynes and the rest of the petty bourgeoisie,
you're a reformist.
The most important theoretical source of his thinking is his own work "The General
Theory of Employment, Money and Interest" which is available to read or download free
I only recently learned of his Bancor proposal in an article by George Monbiot
originally published in the Guardian. I read it on the Znet website, but I can't remember
As for his quote about the financial markets becoming a virtual senate, I read that in
some article about finance but don't remember the source. Sorry I can't be more helpful.
There could be other books on his theories but he is somewhat unfashionable as mainstream
economics has mostly reverted to a more ideologically driven right wing position.
"In January, while Trump was requesting Congress to allocate funds for the US-Mexico border
wall, China sent delegates to Chile, inviting Latin American leaders to participate in the
Belt and Road Initiative. Months later, as Trump bullied US allies at the NATO summit,
China was wrapping up the "16+1 summit" in Bulgaria, where Chinese investment and
diplomatic relations were marketed to Central and Eastern European leaders. And most
recently, Chinese President Xi Jinping wrapped up his travels throughout Africa, where he
was visiting with heads of state and deepening China's relationships with the continent of
the future, while America picks a one-sided trade fight with Rwanda."
The US "makes war" while China makes business deals. Pick your poison--two capitalists
countries controlled by oligarchs which can only offer the working-class continued
An Excellent piece of article that explains clearly the trajectory that got us into
US-China trade war, and what this means for the Global Capitalist System going forward. If
we remember when trade war topic was first brought into picture Trump administration
officials were saying imposing tariffs on China and Europe were the only way to correct the
unfair trade balances. However, as the months progressed it quickly became known that US
officials were using unfair trade practices of China as a scapegoat to demand further
concessions from the Chinese authorities. These concessions include complete dismantlement
of Made in China 2025 program and put a hold to their Silk Road initiative. In other words,
Donald Trump and the entire American ruling circles see China as an existential long term
threat and they are using trade war as a weapon to contain China's rising political and
For now Trump is increasing the tariffs so as to force the Chinese leadership to
acquiesce to his conditions. Of course, I would expect in the coming days Chinese
authorities to rebuff this latest round of sanctions and that they would retaliate their
On the other hand, the Trump administration has put Iran under severe sanctions, and
they also warned all big European Multinational corporations like Total and others to stop
doing business with Iran after November. So as we can see we are in a very precarious
Global situation right now due to rising contradictions between the needs of Global economy
and nation states.
The US wants to reinforce it's declining global hegemonic position at any cost. Now
they started with economic war against countries they see as not cooperating to their
demands, but under current conditions this could easily transform into Global war at some
point in future.
A confidential report by Belgian investigators confirms that British intelligence services
hacked state-owned Belgian telecom giant Belgacom on behalf of Washington, it was revealed on
Thursday (20 September).
The report, which summarises a five-year judicial inquiry, is almost complete and was
submitted to the office of Justice Minister Koen Geens, a source close to the case told AFP,
confirming Belgian press reports
The matter will now be discussed within Belgium's National Security Council, which
includes the Belgian Prime Minister with top security ministers and officials.
Contacted by AFP, the Belgian Federal Prosecutor's Office and the cabinet of Minister
Geens refused to comment .
NO. Shit. Sherlock.
So the real question is that if this has known since 2013, why now? BREXIT?
"... The EU is not perfect and has costs, but measured against what it has achieved, it is a great success. ..."
"... The EU has brought peace to Europe for the longest period since Pax Romana (and that was not entirely peaceful). ..."
"... You're funny. The EU makes war by other means. The burden of disease in Greece, health loss, risk factors, and health financing, 2000–16: an analysis of the Global Burden of Disease Study 2016 https://www.thelancet.com/pdfs/journals/lanpub/PIIS2468-2667(18)30130-0.pdf ..."
"... The mortality rate for Greece is up approximately 50,000. All so Merkel in Germany, and Sarkozy and Hollande didn't have to go before their electorates and admit they were bailing out French and German banks through the backdoor. ..."
"... I guess all those little Balkan unpleasantnesses, the former Czechoslovakia and Bosnia and such, are not wars -- but then those are layable at the feet of NATO (that collection, as I recall it, of what, now, 29 member countries including all the Great Powers of the West) and the US imperium. ..."
"... The NATO establishment is about "making war," ..."
"... All of which is linked in significant ways to the economic "health" of the EU, from which lots of weapons flow in exchange for favors and money from the Destabilizers. ..."
"... In the meantime, the various stages are set, the players in the game of statism and nationalism and authoritarianism and neoliberalism are on their marks, the house lights are going out, and the long slow rise of the curtain is under way ..."
"... The period from the end of WWII to the Balkan Wars is still the longest period of peace since the Romans. I doubt you have ever lived through a war so I can't expect you to appreciate the difference between the Horrors of the Brussels Bureaucracy and the Horrors of Shelling and Bombing. ..."
"... I am not defending poor governance per se for the sake of defending the EU. But it is facile and fun to criticize it because one can make up all kinds of counter fantasies about how wonderful life would be without it. ..."
"... in the real world ..."
"... in the real world ..."
"... Ultimately, it's that simple. Merkel, Sarkozy, Hollande, and whoever else among the EU elites who chose to be complicit in killing substantial numbers of people so they could maintain themselves in power are scum. They are scum. They are scum. ..."
"... Fine, our elected leaders are all scum, but why does this mean that the EU is evil specifically. Why single it out? Why not advocate the overthrow of all centralized or unifying government? Move out to Montana to a cult and buy lots of guns or something. ..."
"... Ons should be very aware that EU directives comes mainly from the member states and that especially bad things that would never fly past an election could – and often is – spun by local government as "Big Bad Bruxelles is forcing poor little us to do this terrible thing to you poor people". Ala the British on trade deal with India and immigration of east-european workers. ..."
"... The EU does not have that much in the way of enforcement powers, that part is down-sourced to the individual member states. When a member state doesn't give a toss, it takes forever for some measure of sanctioning to spin up and usually it daily fines unto a misbehaving government, at the taxpayers expense (which of course those politicians who don't give a toss, are fine with since most of their cronies are not great taxpayers anyway). ..."
"... The solution is, patently, Tories out of power. Which I think will happen, certainly between now and 31 March 2019. Now would be better. Anyone thinking strategically in other parties in the UK (an oxymoron of a formulation, to be sure) would call for a no confidence vote the instant May's feet are on British soil. ..."
"... I doubt that this is personal, but what do I know. May is a nincompoop. The other heads of state patently, and quite rightly, don't respect her. Her presence has been useful to them only insofar as she could deliver a deal. ..."
"... I'd agree with your analysis of what happened – just glancing through the news today it seems that Macron in particular just lost patience, and the other leaders were happy to help him put the boot in. The EU has been trying to shore May up for a long time – the December agreement was little more than an attempt to protect her from an internal heave. This is a common dynamic in the EU – however much the leaders may dislike each other, they will usually prefer the person at the seat than the potential newcomer. ..."
"... But I think the EU has collectively decided that May is simply incapable of delivering any type of agreement, so there is no point in mincing words. They simply don't care any more if the Tory government collapses, or if they put Rees Mogg or Johnson in power. It makes absolutely zero difference to them. In fact, it might make it easier for the EU if the UK goes politically insane as they can then wash their hands of the problem. ..."
"... A colleague told me today he knows of several Northern Irish Republicans who voted leave, precisely because they thought this would create constitutional havoc and lead to a united Ireland. It seems at least some people were thinking strategically . ..."
"... British politicians apparently were supposed to negotiate Brexit among themselves. And once they had reached a (tentative) consensus the foreigners (the EU) were apparently supposed to bow down and accept the British proposal. ..."
"... Which means I never understood why the British media was treating the Chequers proposal as a serious proposal? And spending lots of time and articles discussing on how to convince the EU / the member states. ..."
"... As a Scot can I point out that it is English politicians who are responsible for this mess? ..."
September 20, 2018 by Yves Smith Yves here. While the
specific observations in this post will be very familiar to readers (you've said the same
things in comments!), I beg to differ with calling the Government's Brexit negotiating stance a
strategy. It's bad habit plus lack of preparation and analysis.
And the UK's lack of calculation and self-awareness about how it is operating means it will
be unable to change course.
By Benjamin Martill, a Post-Doctoral Fellow at the Dahrendorf Forum where he focuses on
Europe after Brexit. He is based at LSE IDEAS, the London School of Economics's foreign policy
think tank. The Dahrendorf Forum is a joint research venture between LSE and the Hertie School
of Governance in Berlin. Originally published at
But is this the best strategy for advancing British interests? Here is the argument based on
the findings of a recent Dahrendorf
Forum working paper .
All eyes in British politics are on the negotiations between the UK and the EU over the
terms of the forthcoming British withdrawal from the Union, or Brexit. Surprisingly, questions
of bargaining strategy – once the preserve of diplomats and niche academic journals
– have become some of the most defining issues in contemporary British politics.
The New Politics of Bargaining
Cabinet disagreements over the conduct of the negotiations led to the resignation of David
Davis and Boris Johnson in early July 2018 and the issue continues to divide the ruling
Conservative party. Theresa May's most recent statements have all addressed the question of how
hard she has pushed Brussels in the talks.
But is the hard bargaining strategy appropriate, or will it ultimately harm the UK? The
salience of this question should occasion deeper analysis of the fundamentals of international
bargaining, given the extent to which the course of British politics will be determined by the
government's performance (or perceived performance) in the Brexit talks.
Driving a Hard Bargain
A hard-bargaining strategy isn't necessarily a poor one. To the extent it is workable, it
may even represent the sensible option for the UK.
Hard bargaining is characterised by negative representations of negotiating partners,
unwillingness to make concessions, issuance of unrealistic demands, threats to damage the
partner or exit the negotiations, representations of the talks in zero-sum terms, failure to
provide argumentation and evidence, and withholding of information. From diplomats' portrayal
of the EU as an uncooperative and bullying negotiating partner to a set of demands recognised
as unrealistic in Brussels and Britain alike, the UK's approach to the Brexit negotiations
scores highly on each of these measures.
The consensus in the academic literature is generally that hard bargaining works only
where a given party has a relative advantage . Powerful states have an incentive to engage
in hard bargaining, since by doing so they will be able to extract greater concessions from
weaker partners and maximise the chance of achieving an agreement on beneficial terms.
But weaker actors have less incentive to engage in hard bargaining, since they stand to lose
more materially if talks break down and reputationally if they're seen as not being backed by
So which is Britain?
The success of hard bargaining depends on the balance of power. But even a cursory
examination would seem to confirm that the UK does not hold the upper hand in the negotiations.
Consider three standard measures of
bargaining power: a country's economic and military capabilities, the available alternatives to
making a deal, and the degree of constraint emanating from the public.
When it comes to capabilities, the UK is a powerful state with considerable economic clout
and greater military resources than its size would typically warrant. It is the second-largest
economy in the EU (behind Germany) and its GDP is equal to that of the smallest 19 member
states. And yet in relative terms, the combined economic and military power of the EU27 dwarves
that of the UK: the EU economy is five times the size of the UK's.
Next, consider the alternatives. A 'no deal' scenario would be damaging for both the UK and
the EU, but the impact would be more diffuse for the EU member states. They would each lose one
trading partner, whereas the UK would lose all of its regional trading partners. Moreover, the
other powers and regional blocs often cited as alternative trading partners (the US, China, the
Commonwealth, ASEAN) are not as open as the EU economy to participation by external parties,
nor are they geographically proximate (the greatest determinant of trade flows), nor will any
deal be able to replicate the common regulatory structure in place in the EU. This asymmetric
interdependence strongly suggests that the UK is in greater need of a deal than the EU.
Finally, consider the extent of domestic constraints. Constraint enhances power by
credibly preventing a leader from offering too generous a deal to the other side. On the EU
side the constraints are clear: Barnier receives his mandate from the European Council (i.e.
the member states) to whom he reports frequently. When asked to go off-piste in the
negotiations, he has replied that he does not have the mandate to do so. On the UK side, by
contrast, there is no such mandate. British negotiators continually cite Eurosceptic opposition
to the EU's proposals in the cabinet, the Conservative party, and the public, but they are
unable to guarantee any agreement will receive legislative assent, and cannot cite any unified
Perceptions of Power
But the real power distribution is not the only thing that matters. While the EU is the more
powerful actor on objective criteria, a number of key assumptions and claims made by the
Brexiteers have served to reinforce the perception that Britain has the upper hand.
First, on the question of capabilities, the discourse of British greatness (often based on
past notions of power and prestige) belies the UK's status as a middle power (at best) and
raises unrealistic expectations of what Britain's economic and military resources amount to.
Second, on the question of alternatives, the oft-repeated emphasis on 'global Britain' and the
UK's stated aim to build bridges with its friends and allies around the globe understates the
UK's reliance on Europe, the (low) demand for relations with an independent Britain abroad, and
the value of free trade agreements or other such arrangements with third countries for the UK.
Third, on the question of domestic constraint, the post-referendum discourse of an indivisible
people whose wishes will be fulfilled only through the implementation of the Brexit mandate
belies the lack of consensus in British politics and the absence of a stable majority for
either of the potential Brexit options, including the 'no deal', 'hard', or 'soft' variants of
Brexit. Invoking 'the people' as a constraint on international action, in such circumstances,
is simply not credible.
Assumptions about Britain's status as a global power, the myriad alternatives in the wider
world, and the unity of the public mandate for Brexit, have contributed to the overstatement of
the UK's bargaining power and the (false) belief that hard bargaining will prove a winning
Britain desperately needs to have an honest conversation about the limits of the UK's
bargaining power. This is not 'treasonous', as ardent Brexiteers have labelled similar nods to
reality, but is rather the only way to ensure that strategies designed to protect the national
interest actually serve this purpose. Power is a finite resource that cannot be talked into
existence. Like a deflating puffer fish, the UK's weakness will eventually become plain to see.
The risk is that before this occurs, all bridges will be burned, all avenues exhausted, and all
The opinions expressed in this blog contribution are entirely those of the author and do
not represent the positions of the Dahrendorf Forum or its hosts Hertie School of Governance
and London School of Economics and Political Science or its funder Stiftung Mercator.
I tend to agree that there is no real strategy on the UK's part. May resembles a broken
record, where she says much the same thing over and over again, seemingly expecting a
different response each time. Although Einstein said that he probably never made the claim
about what insanity consists of, it is often attributed to him -- doing the same thing over
and over expecting different results is the very definition of insanity. How the government
expects that this sort of behavior will bring desirable results is beyond me.
Both UK and EU politicians are talking past each other. Neither side understands there are
two key issues. Firstly, not understanding the economic effects stemming from the failure to
understand how money is created and how it can be manipulated for global trading advantage.
Secondly, that the UK is high up the list for "cultural tightness" and the reasons for
The other element of course of a negotiation is getting potential allies to roll up behind
you. At the start of this the UK had a series of potential 'friends' it could call on –
eurosceptics governments in Eastern Europe, close historic friends and political like minded
governments in Spain, the Netherlands, Denmark and Ireland. And of course non-EU countries
like India or the US with historic links.
They somehow managed to anger or frustrate nearly all of those though its heavy handed
negotiations or laughable lack of political empathy.
It must be emphasised that the current Irish government is ideologically and instinctively
very pro-London. And yet, today RTE is
reporting about the latest meeting between May and Varadkar:
The source said there was "an open exchange of views" between both sides, with the Irish
delegation emphasising that the time was short and "we need to get to the stage where we
can consider a legal text" on the backstop.
The source described British proposals so far as "only an outline, and we haven't seen
specific proposals from the British side."
This can only be translated as 'what the hell are they playing at?'
The Indians of course were amusedly baffled by the British assumption that they would
welcome open trade (without lots of new visas for Indian immigrants). Trump just smelt the
blood of a wounded animal. The Russians are well
The British cited the EU's inability to conclude a free-trade agreement with India as one
example of the EU's failings a revitalized Global Britain would no longer be shackled by.
That's quite rich considering the FTA was torpedoed when the British Home Secretary vetoed
increased visas for the Indians. Her name was Theresa May.
They somehow managed to anger or frustrate nearly all of those
The brits basically said: We are special people, much, much better, richer and stronger
than you sorry lot of Peons to Brussels(tm), so now you shall see sense and give us what we
want this week; you can call it your tribute if you like (because we don't care what you like
Half the Danes are fed up with the whole thing and the other half would be egging on a
hard Brexit if only they could – knowing it will likely take out at least some of the
worst and most overleveraged (and gorged with tax-paid subsidies) Anti-Environmentalist
Danish industrial farmers, their bankers too. And diminish the power of their lobbyists:
"Landbrug & Fødevarer"!
The good part is that: the British and the Danish governments have managed to make "being
ruled by faceless bureaucrats in Brussels" look like a pretty much OK & decent deal,
considering the alternative options: Being ruled by our local crazies, straight-up nutters
and odious nincompoops (a word i like), half of whom, to top it up, are probably mere
soulless proxies for those ghouls that are running Washington DC.
It seems more and more to me, that never ending class warfare, and its current emphasis on
austerity, leaves us unable to envision alternate routes to economic health.
The neo-liberal consensus mandates that our ruling class never questions its own tactics,
ie dog-whistle racism to distract and divide the lower classes to enable all the looting.
So on both sides of the Atlantic, the rulers of English speakers stir up resentment
amongst those at the bottom in order to secure votes, and maintain power, while never
intending to follow through on promises to provide tangible material benefits to their
The looting goes on, the trail of broken promises grows longer, and the misery
The issue being ignored is that the folks at the bottom have reached the limit of their
ability to maintain life and limb in the face of downward economic pressure.
We've finally reached the end game, we in America have been driven to Trumpism, and in
Britain they've been driven to Brexit by the clueless efforts of pols to maintain power in
the face of electorates who have decided they have had enough, and will absolutely not take
the SOS anymore.
So we have the nonsensical situation of pols on both sides of the Atlantic flirting with
economic collapse, and even civil war rather than moderate their irrational fixation on
making the insanely rich even richer.
In both cases we have a cast of alternating villains robbing and beating us while waving
flags and loudly complaining that we aren't showing the proper level of enthusiasm.
Which leaves me with one question for those villains;
Why no one, especially the punditocracy seems to realize this, is astonishing.
I also cannot believe the Old Gray Lady killing millions of trees in its shrill efforts to
prove the Russians cost Hilary the election and nary a word about how totally fed up and
voiceless (with the exception of a single presidential vote) are those in the Great
Also find it amazing that the Beeb with rudimentary linguistic forensic analysis
identified Mike Pence as almost certainly the author of the scathing anti-Trump memo the NYT
published anonymously, without a single mention of this now widely-known fact.
On a related note, while this was about the tactics of leaving, there has been some
movement on the end state front, though not by the UK. Rather it seems that the EU has made
up it's mind, and in my mind definitively scrapped the EEA option.
Several EU leaders (Pms of Malta and the Czech republic) have clearly stated that they wish
to see a new referendum, and Macron said the following:
"Brexit is the choice of the British people pushed by those who predicted easy solutions.
Those people are liars. They left the next day so they didn't have to manage it," Macron said
on Thursday, vowing to "never" accept any Brexit deal, which would put the EU's integrity at
I think the bridges have been burned, now it's surrender or revocation that's left to the
UK, or stepping off the cliff edge.
It is astonishing to see that the UK still does not accept that the EU doesn't want it to
go on principle more than for practical reasons. May and the others cling to the notion that
without Great Britain, the EU will collapse or something. This is the same nation that has
been foot-dragging on everything about Europe and slagging off the continent at every turn
while pretending they are a Great Power and the BFF of the US. Trump does not care about
Great Britain unless he needs some sort of zoning permission for his gold course, in which
case he will cut a deal on trade or arms with May.
The Irish Border, assuming it remains open, is a massive concession and likely to lead to
future problems as other EU nations try to have open borders or trade with their pet
Brits on the Continent are worried about many things ranging from driver's licenses to
residency visas! Not every Brit wants to live on that damp little island! Some like the sun
and Continental cuisine.
Is the EU a Great Idea to be Protected and Advanced, one that will inexorably result in
ever greater benefits for the common people of the fainting nations that have been cat-herded
into submitting to the "political union" that many very personally interested parties are
always working toward? Like NATO is a Great Idea, not just a mechanism for global mischief
and chaos? NATO gives "warfighters" a place to sit and play their games. Brussels gives
"rules," at least some of which are sort of for public benefit, until the regulatory
capturers work their magic. Profit and impunity, always for the few.
What is the organizing principle in all this? Likely can't be stated. Just a lot of
interested parties squabbling over gobbets from the carcass torn from the planet
Maybe the 14th Century was not so very horrible after all? If one looks in "A Distant
Mirror" at it, given where humanity seems to be, on the increasingly fleshed-out timeline of
OF course, one can always summon up the demoness TINA, to trump any efforts to take
NATO was created to make war. The EU was created to make peace and prosperity. Comparing
one to the other is unjust.
The EU is not some sacrosanct construct that must be worshiped, but it has brought peace
to Europe for the longest period since Pax Romana (and that was not entirely peaceful). It
has also promoted trade and prosperity. Europe has been even farther ahead of economic and
regulatory integration than the US (phones and credit cards come to mind). Free movement of
labor and travel have dropped costs for businesses and individuals immensely.
Now, whether or not human foibles enter into it is really another discussion. Is Brussels
at times a giant Interest Machine and Bureaucratic Nightmare? Yes, but that is the negative
face we see portrayed by anti-Europeans like the Brexiteers. The EU does a terrible job of
self-promotion; citizens rarely know just how much the EU contributes to their lives. Perhaps
the EU is afraid of drawing attention to itself. But the people making up the EU are not
extraterrestrials; they are Europeans who make the same mistakes and commit the same fraud on
a national level.
Many Americans criticize Europe while vaunting their own Federation. Why should California
and Alabama share a currency, a passport and a Congress? There are more differences between
those states than between France and Belgium or Italy and Spain.
The EU is not perfect and has costs, but measured against what it has achieved, it is a
The mortality rate for Greece is up approximately 50,000. All so Merkel in Germany, and
Sarkozy and Hollande didn't have to go before their electorates and admit they were bailing
out French and German banks through the backdoor.
If you want to start accounting for economic death by economic war, we can look at the US
as recently as the financial crisis, though I doubt there are studies on the Homeland of this
sort. Or US embargoes of vital medication and food in Iraq which led to hundreds of thousands
of deaths. And so on.
My point is not that the EU is perfect, but there has not been a war in Western Europe since
1945. You are welcome to spin and fiddle and search for anything you like (Gosh, all that
free travel led to increases in traffic deaths! Ban the EU!). Of course, we would also need
to examine what the EU has done for Europe and how many lives have been saved by improved
infrastructure and exchange of information.
I am not defending poor governance per se for the sake of defending the EU. But it is facile
and fun to criticize it because one can make up all kinds of counter fantasies about how
wonderful life would be without it. Let's see how Great Britain does and then we can discuss
this in a few years.
I guess all those little Balkan unpleasantnesses, the former Czechoslovakia and Bosnia and
such, are not wars -- but then those are layable at the feet of NATO (that collection, as I
recall it, of what, now, 29 member countries including all the Great Powers of the West) and
the US imperium.
The NATO establishment is about "making war," largely now displaced to other Woggish and Hajji places where the huge number of refugees that are moving into Eurospace are
coming from (as a result of the largely economically driven (oil and other extraction
interests) and Israeli and Saudi-enhanced large scale destabilizing war prosecution.
which is linked in significant ways to the economic "health" of the EU, from which lots of
weapons flow in exchange for favors and money from the Destabilizers.
Yes, the EU notion of reducing the conflict generators of the past seems to be a good one.
But surprise! In practice, you got your German hegemon and your French strutters and now of
course the British bomb throwers pointing out, along with the renascent nationalism triggered
in part by the hegemon's bleeding of other nations via Brussels and EU institutions, like
Greece and Spain and Italy and so forth.
And of course the warring that the seamless
economies of the EU (that includes their particpation in NATO) foster and participate in that
drives the exodus of mopes from the Mideast and Africa. And how about the fun and games, with
possible nuclear war consequences, that are playing out with EU and NATO and of course US
Imperial Interests activity in Ukraine? And I see that the Krupp Werks has delivered a bunch
of warships to various places (hasn't that happened a couple of times in the past? Thinking
how particularly of Dolphin-class submarines paid for by Uncle Sucker, as in the US, and
delivered to the Israel -ites who have equipped them with many nuclear-warhead cruise
missiles? And thanks to the French, of course, and other Great Nations, the Israelis have
nuclear weapons in the first place.
It's nice that the science parts of the EU structure are sort of working to keep US-made
toxins and genetically modified crap and other bad stuff out of the Holy EU Empire. But hey,
how many VW diesel vehicles on the road (thanks to some combination of corruption and
incompetence on the part of the EU?) equals how much glyphosate and stacked-GM organisms
barred by EU regulations? Lots of argument possible around the margins and into the core of
the political economy/ies that make up the EU/NATO, and the Dead Empire across the Channel,
and of course the wonderful inputs from the empire I was born into.
I guess the best bet
would be to program some AI device to create a value structure (to be democratically studied
and voted on, somehow?) and measure all the goods and bads of the EU, according to some kind
of standard of Goodness to Mope-kind? Naw, power trumps all that of course, and "interests"
now very largely denominated and dominated by supranational corporations that piss on the EU
when not using its institutions as a means to legitimize their looting behaviors that sure
look to me like an expression of a death wish from the human species.
There are always winners and losers in any human game, because at anything larger than the
smallest scale, we do not appear wired to work from comity and commensalism. You sound from
the little one can see of you from your comment as a person among the winners. Which is fine,
all well and good, because of that "winners and losers" thing. Until either the mass vectors
of human behavior strip the livability out of the biosphere, or some provocation or mischance
leads to a more compendious and quicker, maybe nuclear, endpoint. Or maybe, despite the
activities of the Panopticon and the various powers with forces in the polity to tamp it
down, maybe there will be a Versailles moment, and "Aux Armes, Citoyens" will eventuate.
In the meantime, the various stages are set, the players in the game of statism and
nationalism and authoritarianism and neoliberalism are on their marks, the house lights are
going out, and the long slow rise of the curtain is under way
I suggest you read up on your recent European history. Czechoslovakia split entirely
peacefully and it had exactly zero to do with either NATO or USA.
Yugoslavia had its problems ever since it was Yugoslavia in early 20th century – all
Tito managed was to postpone it, and once he was gone, it was just a question of when, and
how violent it would be. Serbian apologistas like to blame NATO, conveniently ignoring any
pre-existing tensions between Croats and Serbs (not to mention ex-Yugoslavian muslims). Did
NATO help? No. But saying it was the cause of the Serbo-Croat war and all the Yugoslavian
fallout is ignorance.
What gets my goat is when someone blames everything on CIA, USA, NATO (or Russia and China
for the matter), denying the small peoples any agency. Especially when that someone tends to
have about zilch understanding of the regions in question, except from a selective
Yep, CIA and NATO and the Illuminati (and Putin, to put it on both sides) are the
all-powerful, all seeing, all-capable forces. Everyone else is a puppet. Right.
The period from the end of WWII to the Balkan Wars is still the longest period of peace
since the Romans. I doubt you have ever lived through a war so I can't expect you to
appreciate the difference between the Horrors of the Brussels Bureaucracy and the Horrors of
Shelling and Bombing. From your lofty armchair, they might be the same but then again,
perhaps you blame the socialists when your caramel latte is cold.
Lofty armchair? I actually volunteered and got the opportunity to go be a soldier in an
actual war, the Vietnam one. So I have a darn good idea what War is in actuality and from
unpleasant personal experience. And I don't have either the taste or the wealth for lattes.
And forgive my aging failure of typing Czech instead of Yugo -- my point, too, is that the
nations and sets of "peoples" living and involved in United Europe do in fact have "agency,"
and that is part of the fractiousness that the proponents of a federated Europe (seemingly
under mostly German lead) are working steadily at suppressing. Not as effectively as a
Federalist might want, of course.
TheScream wrote: I am not defending poor governance per se for the sake of defending
the EU. But it is facile and fun to criticize it because one can make up all kinds of counter
fantasies about how wonderful life would be without it.
Wake up. I'm talking about what the European elite in the real world deliberately
chose to do.
They chose to do a backdoor bailout of German and French banks specifically so
Merkel, Sarkozy and Hollande and the governments they led didn't have to go to their
electorates and tell them the truth. Thereby, they maintained themselves in power, and German
and French wealth structures -- the frickin', frackin banks -- as they were. And they did
this in the real world knowing that innocent people in Greece would die in
substantial numbers consequently.
This is not a counterfactual. This happened.
There's a technical term for people who plan and execute policies where many thousands of
people die so they themselves can benefit. That term is 'scum.'
Ultimately, it's that simple. Merkel, Sarkozy, Hollande, and whoever else among the EU
elites who chose to be complicit in killing substantial numbers of people so they could
maintain themselves in power are scum. They are scum. They are scum.
Don't get me started on people who defend such scum with threadbare waffle about 'I am not
defending poor governance per blah blah it is facile and fun to criticize blah blah.' Nor
interested in whataboutery about US elites, who as the main instigators of this 21st century
model of finance as warfare are also scum.
Fine, our elected leaders are all scum, but why does this mean that the EU is evil
specifically. Why single it out? Why not advocate the overthrow of all centralized or
unifying government? Move out to Montana to a cult and buy lots of guns or something.
My point is not that EU leaders are charming people working exclusively for the good of the
people. My point is that the EU is not as bad as most of you believe and no worse than most
other governments. It is simply an easy target because it is extra or supra-national. We can
get all frothy at the mouth blaming Nazis and Frogs for our woes and ignore our personal
I would love to insult you personally as you have insulted me, but I sense you are just
ranting out of frustration. You hate the EU (are you even European or just some right-wing
nutcase from America involving yourself in other's business?) and take it out on me. Go for
it. Your arguments are irrelevant and completely miss the point of my comments.
The EU does a terrible job of self-promotion; citizens rarely know just how much the EU
contributes to their live
The EU is, very simplistically, set up like a shared Civil Service. Civil Services are to
be seen rarely and never heard, less they take shine and glamour from the Government they
What "Bruxelles" can do is to advise and create Directives, which are instructions to
local government to create and enforce local legislation. The idea is that the legislation
and enforcement will be similar in all EU member states.
Ons should be very aware that EU directives comes mainly from the member states and that
especially bad things that would never fly past an election could – and often is
– spun by local government as "Big Bad Bruxelles is forcing poor little us to do this
terrible thing to you poor people". Ala the British on trade deal with India and immigration
of east-european workers.
The EU does not have that much in the way of enforcement powers, that part is down-sourced
to the individual member states. When a member state doesn't give a toss, it takes forever
for some measure of sanctioning to spin up and usually it daily fines unto a misbehaving
government, at the taxpayers expense (which of course those politicians who don't give a
toss, are fine with since most of their cronies are not great taxpayers anyway).
Dude, yes, sarcastic. And ironic. Doesn't change the horribleness of the present, does it
now? Or the coming horrors (say some of us) that may have been inevitably priced in to the
Great Global Market, does it
Donald Tusk, the European council president, has ratcheted up the pressure on Theresa
May by rejecting the Chequers plan and warning of a breakdown in the Brexit talks unless
she delivers a solution for the Irish border by October – a deadline the British
prime minister had already said she will not be able to meet.
The stark threat to unravel the talks came as the French president, Emmanuel Macron,
broke with diplomatic niceties and accused those of backing Brexit of being liars. "Those
who explain that we can easily live without Europe, that everything is going to be all
right, and that it's going to bring a lot of money home are liars," he said.
"It's even more true since they left the day after so as not to have to deal with it."
The comments came at the end of a leaders' summit in Salzburg, where May had appealed
for the EU to compromise to avoid a no-deal scenario. She had been hoping to take warm
words over Chequers into Conservative party conference.
Tusk, who moments before his comments had a short meeting with the prime minister, told
reporters that he also wanted to wrap up successful talks in a special summit in
But, in a step designed to pile pressure on the prime minister, he said this would not
happen unless the British government came through on its commitment to finding a "precise
and clear" so-called backstop solution that would under any future circumstances avoid a
hard border on the island of Ireland.
"Without an October grand finale, in a positive sense of this word, there is no reason
to organise a special meeting in November," Tusk said. "This is the only condition when it
comes to this possible November summit."
It seems the EU leaders aren't even pretending anymore. Its pretty clear they have run out
of patience, and May has run out of options. I wonder if they'll even bother with having the
If there's no November summit (which would make no-deal Brexit almost certainty), then the
game becomes fast a and furious, as sterling will drop like a stone – with all sorts of
repercussions. TBH, that can already be clear after the Tory party conference, it's entirely
possible that that one will make any October Brexit discussions entirely irrelevant.
I think that EU overestimated May in terms of sensibility, and now accept that there's no
difference between May and Johnson (in fact, with Johnson or someone like that, they will get
certainy, so more time to get all ducks in row. Entirely cynically, clear no-deal Brexit
Johnson would be better for EU than May where one has no idea what's going to happen).
Either way, this crop of politicians will make history books. Not sure in the way they
would like to though.
Announced post-summit in Salzburg: no November summit absent a binding exit deal on the
table by the end of October. So no: no November dealing.
I don't know that EU politicos overestimated May. She is what they had, and all they had,
so they did their absolute best to prop up Rag Sack Terry as a negotiating partner, hoping
that they could coax her to toddle over their red lines with enough willingness to listen to
her hopeless twaddle first. She just shuffled and circled in place. So they've given up on
her ability to deliver anything of value to them. One could see this coming in June, when she
couldn't even get the sound of one hand clapping to her chipper nonsense over dinner.
I think that deciding heads in Europe have accepted the probability that crashout is
coming. That was clear also in June. If something better happens, I suppose that they would
leap at it. Nothing in the last two years engenders any hope in that regard, so hard heads
are readying the winches to hoist the drawbridge on We're Dead to You Day.
If the Tories fall, which I think and have long thought is probable, it would be up to a
'unity government' to either initial a settlement surrender and keep the sham going, or
flinch. My bet has been on pulling together some kind of flinch mechanism on aborting exit.
It's the kind of year, as I model these, where wild swings of such kind are possible, but I
couldn't predict the outcome anymore than anyone else.
My feeling for a while is that the government would never fall, whatever happened, simply
because the Tories (and DUP) fear a Corbyn government too much, so would never, ever pull the
trigger, no matter how bad things got. But if May falls at the Party Conference and is
replaced with a hard Brexiter, I don't think its impossible that there may be a temptation
that to see if they could whip up a nationalistic mood for a snap election. Some of them are
gamblers by instinct. Anything could happen then.
I think Tory Remainers bolt, choosing keeping their own wallets rather than handing those
over to the worst of their lot with everything else. But they would find a unity coalition
more palatable than passing the microphone to Jerry the Red, yeah, so that's a bit sticky. A
snap election is the worst kind of crazy town, and wolldn't improve negotiating or decision
outcomes in the slightest -- so of course that may be the likeliest near term course! Won't
get settled in a few weeks. Probably not until 20 March 2019.
This is just wowsers. Tusk, Macron, and Merkel baldly state that Chequers is mated --
"unacceptable" -- and furthermore gave the Tories a drop-dead date of 31 October to initial
the divorce settlement. The process is a flat abandonment of Theresa May, concluding the
obvious, that she and her government are incapable of negotiating exit. Going over her head
to Parliament and public, in fact if not in pre-consisdered intent. -- And about time. I was
worried that the EU would eat fudge in November with the Brits again on another
pretend-to-agree accord like that of December 2017, which, as we have seen did nothing to
induce the Tories to negotiate a viable outcome.
What was May's reaction? That she's perfectly prepared to lead Britain over the crashout
cliff if the EU doesn't see fit to capitulate. I'd roll on the floor laughing but I can't
catch my breath.
The next two weeks are going to be lively times in Britain indeed. I can't see how
'Suicide Terry's' government can survive this situation. -- And about high time. Put the poor
brute out of her misery; she's delusional, can't they see how she's suffering? Push has come,
so it's time to shove. Crashout or Flinch, those are the outcomes, now plainer than ever. All
May can do is thrash and fabulate, so time to bag the body and swear in another fool; lesser
or greater, we shall see.
Yes, I wonder was that planned, or (as is suggested in the
latest Guardian articl e), motivated by anger at Mays criticism of Barnier?
EU sources said the move had been made on the bidding of Macron, who urged taking a hard
line over lunch. The French president had been infuriated by May's warning earlier in the
day to Varadkar that she believed a solution on the issue could not be found by October,
despite previous promises to the contrary.
The tone of the prime minister's address to the EU leaders on Wednesday night, during
which she attacked Michel Barnier, is also said by sources to have been the cause of
This obviously makes her very vulnerable at the party conference. Its hard to see what she
can do now. She is toast I think.
I can only think of two reasons that they've closed the door firmly in her face. Either
they have simply lost patience and now accept there is nothing can be salvaged, or they have
lost patience with May personally, and hope that a new leader might do a deal out of
desperation. The latter seems highly unlikely – a sudden Tory challenge is more likely
to bring a hardliner into power.
Whichever way you look at it, things look certain to come to a head very soon now. The EU
may have a hope that the UK will blink when staring into the abyss and agree to the backstop,
but I don't see how politically this a capitulation is possible, at least with the Tories in
The solution is, patently, Tories out of power. Which I think will happen, certainly
between now and 31 March 2019. Now would be better. Anyone thinking strategically in other
parties in the UK (an oxymoron of a formulation, to be sure) would call for a no confidence
vote the instant May's feet are on British soil.
I doubt that this is personal, but what do I know. May is a nincompoop. The other heads of
state patently, and quite rightly, don't respect her. Her presence has been useful to them
only insofar as she could deliver a deal. Macron looked at his watch and the date said, non on that. Just looking at his ambitions and how he operates, I would think he
wanted to go this route quite some time ago, but the 'softly, softly' set such as the Dutch
and Merkel wouldn't back that, and he was too smart to break ranks alone. That the Germans
have given up on May is all one really needs to know. This was May's no confidence vote by
the European Council, and she lost it over lunch.
I'd agree with your analysis of what happened – just glancing through the news today
it seems that Macron in particular just lost patience, and the other leaders were happy to
help him put the boot in. The EU has been trying to shore May up for a long time – the
December agreement was little more than an attempt to protect her from an internal heave.
This is a common dynamic in the EU – however much the leaders may dislike each other,
they will usually prefer the person at the seat than the potential newcomer.
But I think the EU has collectively decided that May is simply incapable of delivering any
type of agreement, so there is no point in mincing words. They simply don't care any more if
the Tory government collapses, or if they put Rees Mogg or Johnson in power. It makes
absolutely zero difference to them. In fact, it might make it easier for the EU if the UK
goes politically insane as they can then wash their hands of the problem.
At this point it might actually be a blessing if that happened. There is likely to be a
great deal of practical difference between a no-deal Brexit with six months of planning and
preparation and a no-deal Brexit that takes everyone by surprise at the very last minute.
(Yes, they will both be a nightmare, but some nightmares are worse than others). All this
pretense that the other side is bluffing and will roll over at the 11th hour is starting to
look like a convenient excuse for not facing reality. I don't think either side is
Comments like "Britain desperately needs to have an honest conversation about the limits
of the UK's bargaining power" might very well be true, but they're also irrelevant at this
point. Certainly it would have been very useful if it had happened two years ago. Right now
it's time to break out the life jackets.
Most Brits don't seem capable of mentally accepting how irrelevant they actually are
internationally. They are NOT a 'power' in any other respect than that they have nuclear
weapons under their launch authority (which they are never going to use). They have no
weight. The City is, really other people's money that predominantly foreign nationals at
trading desks play with, loose, steal, hide, and occasionally pay out. The UK economy isn't
of any international consequence. Brits are embedded in the international diplomatic
process, in a dead language speakers kind of way, which makes them seem important. But they
So there was never going to be a reassessment of the weaknesses of Britain's negotiating
position, nor will there be now exactly, because most in Britain cannot get their heads
around the essential premise to such a discussion, the Britain is now essentially trivial on
the power scale rather than of any real consequence. The Kingdom of Saud has more real power.
Turkey is a more consequential actor. Mexico has more people. &etc.
If one is to accept the convictions of master bloviator Niall Ferguson and other
Brexiteers, the issue is issue. Brexit is about immigration, period. The EU claims it will
not bend on free movement of people, Brexiteers will not accept anything less. There was such
a huge outcry when May mentioned the possibility of 'preferential' treatment for EU citizens
back in July she threatened any further public dissent in the party would result in sackings.
The EU insists there can be no trade deals, no freed movement of goods without free movement
of people, for good reasons. Hard to imagine them climbing down.
There's about as many reasons why people voted Brexit as there's different Brexits they
wanted. Immigration is just one of the convenient scapegoats peddled by both sides, although
for different reasons.
If you want a better (but still not complete) reason, try decreasing real income.
I'd like to know what those "many different reasons" are. Sovereignty? Well, that rolls
off the tongue more easily than "immigration" which, leavers know, sounds a bit racist.
"Control of borders" works for leavers like Nigell, although he went on at great length about
how it's all about immigration, after talking to all the 'real' folks in the provinces.
My Irish/Brit family's Own Private Brexit: the grandparents are entitled to naturalisation
and voted Leave, the children are subjects/citizens and voted Remain (and almost all vote
Tory), the grandchildren are compromised subjects/citizens and didn't have a vote. Everyone's
happy to be entitled to an EU passport. The Pakistan offshoot has a less complex variation
(fewer rights), but I believe their family voted Leave on balance. Life.
A colleague told me today he knows of several Northern Irish Republicans who voted leave,
precisely because they thought this would create constitutional havoc and lead to a united
Ireland. It seems at least some people were thinking strategically .
I don't believe it is either, you seem to think these views are my own. I am speculating,
with some basis, that a majority of leavers think so. Anti-immigration attitudes are
entrenched and growing. Just the other day a teacher, no less, spouted off about how
immigrants were causing crime and stealing jobs. This is in a blue city in a blue state. I
People come up with fantasy explanations when they've been reduced from realistic
assessments to fantastic ideologies. If there's a clear answer but you are ideologically
constrained from considering it, you need to invent some answer, the nuttier the better.
I think a major part of the problem is that British politicians and media seem to believe
that Brexit is mainly (or exclusively) a British topic.
One British politician publishes one proposal, another British politician shoots it down.
With the British media reporting about it gleefully for days. Newspaper articles, opinion
pieces. Without even mentioning what the EU might think about it. The EU seems to not exist
in this bubble.
Just remember the more than 60 "notices to stakeholders" published by the EU months ago.
And freely available for reading on the Internet. I´ve read British media online for a
long time now but somehow these notices never made any impact. It was only when the first
British impact assessments were published (not that long ago) that British media started to
report about possible problems after a no-deal Brexit. Problems / consequences that were
mentioned in the EU notices months ago.
It´s almost unbelievable. It looks like if something isn´t coming from London (or
Westminster) then it doesn´t exist in the British media.
And it´s the same with British politicians.
David Davis and the back-stop deal in late 2017?. He agreed with it during the negotiations,
returned home and then said that it wasn´t binding, just a letter of intent. Or Michael
Gove a few days ago? Regardless of what agreement PM T. May negotiates now with the EU, a new
PM can simply scrap it and negotiate a new deal? Or send government members to the EU member
states to try and undermine Barnier as reported in British media? How exactly is that
Have they never heard about the Internet? And that today even foreigners might read British
Brexit supporter Jacob Rees-Mogg might be the MP for the 18th century but surely they know
that today there are faster methods for messages than using pigeons?
What about foreign investment in the UK? The gateway to the EU? Japanese car
The drop in foreign investment was reported, to be sure. But after a few days it was
T. May according to British media articles apparently developed her Brexit strategy (and
her red lines) together with her two closest political advisers back in late 2016 / early
2017. No cabinet meeting to discuss the strategy, no ordering of impact assessments which
might have influenced the strategy (and the goals). And apparently – in my opinion
– no detailed briefing on how the EU actually works. What might be realistically
possible and what not.
The resignation of Ivan Rogers seems to support my speculations. Plus the newspaper
articles in early 2017 which mentioned that visitors to certain British government ministries
were warned not to criticize Brexit or warn about negative consequences. Such warnings would
result in no longer being invited to visit said ministry and minister.
If they actually went through with that policy they created an echo chamber with no
dissenting voices allowed.
Which might explain why they had no plan to deal with the EU.
British politicians apparently were supposed to negotiate Brexit among themselves. And once
they had reached a (tentative) consensus the foreigners (the EU) were apparently supposed to
bow down and accept the British proposal.
And now when the EU hasn´t followed the script they don´t know what to do?
I´m not an expert but it was pretty clear to me that the Chequers deal would never
work. It was pretty obvious even when EU politicians were somewhat polite about it when T.
May proposed it.
It might have been a good starting point for negotiations if she had introduced it in 2017.
But in July 2018? Just a few months before negotiations were supposed to be concluded? And
then claiming it´s the only realistic proposal? It´s my way or the highway?
It was obvious.
Which means I never understood why the British media was treating the Chequers proposal as a
serious proposal? And spending lots of time and articles discussing on how to convince the EU
/ the member states.
I really think the EU member states have finally concluded that T. May is incapable of
producing (and getting a majority in the House of Commons) for any realistic solution.
Therefore helping her with statements to keep her politically alive doesn´t make sense
any longer. The EU would probably really, really like a solution that gives them at least the
transition period. Another 21 months to prepare for Brexit. But fudging things only get you
that far .
The UK apparently never understood that it´s one thing to bend rules or fudge things to
get the agreement of a member state. It´s quite another thing with a soon -to-be
I am a German citizen, living in Germany.
The (German weekly printed newspaper) Zeit Online website did have three articles about
Brexit in the last few days. Which is noteworthy since they normally have 1-2 articles per
And the comments were noteworthy too.
Almost all of them now favor a hard-line approach by the EU.
The UK lost a lot of sympathy and support in the last two years. Not because of the
referendum result itself but because of the actions and speeches of British politicians
The UK had a rebate, opt-outs and excemptions. All because successive British governments
pointed to their EU-sceptic opposition. Now the population voted for Brexit the British want
a deal that gives them all (or most) of the advantages of EU membership without any of the
obligations. To reduce the economic consequences of their decision.
Actions have consequences.
And if it means we´ll have to support Ireland, we´ll do it.
The German commentators quite obviously have lost their patience with the UK.
This is the first article that I have seen that talks about power. The ability to
influence or outright control the behavior of people. Money has power. It is needed to eat,
heal and shelter in the West. But, it is never talked about. This is because it would raise
inconvenient truths. The wealthy are accumulating it and everyone else in the West is losing
it. The neo-liberal/neo-conservative ideologies are the foundation of this exploitation. It
is the belief that markets balance and there is no society. "Greed is good. Might is right."
Plutocrats rule the west. Democracy died. There are two versions of similar corporate
political parties in the USA. The little people matter not. Politicians are servants of the
oligarchs. Global trade is intertwined and not redundant. What will happen will be to the
benefit of the very few in power. Donald Trump is raising the price of all Chinese goods
shipped into the USA and sold at Walmart and Amazon. A Brexit crash seems inevitable.
Amen! It is ALWAYS about power. And the only way to deal with the elites is "Lord of the
their money must be cast into a financial version of Mount Doom, breaking their power once
and for all. You folks in the UK need to make douchebag Brexiteers like Nigel Farrage suffer
total loss of power for forcing this disaster on you.
There is a huge source of wealth that UK monopolises from Treasure Islands that operate
the City's tax havens. That money goes straight back to City banks and flows into the market
economy, independently of trade and commerce. It underwrites the derivatives biz that keeps
the market economy afloat, paying pensions and profits and Directors' options.
Leaving the EU might have an effect but not a big one. Is that why UK seems so blithely
The offshore wealth is certainly why the core hard Brexiters are unconcerned, because
thats where they store their cash. They don't care if the UK goes down.
But in the longer term, they are under threat – within the EU the UK consistently
vetoed any attempts to crack down on internal tax havens. The internal political balance of
the EU is now much more firmly anti tax avoidance with the UK gone, so there would be little
to stop a series of Directives choking off the Channel Island/Isle of Man option for money
Split Brain Syndrome: They seem think that the EU is Lucifer's Army Incarnate and then
they apparently also think at the same time, that "The Army of Darkness" once unleashed from
the responsible British leadership into the hands of those per-definition also demonic French
and Germans will still "play cricket" and not come after their tax-havens ASAP, like in 2020
May now demanding that the EU respect Great Britain. We are back to the beginning again.
May has no leverage beyond the EU wanting Britain to stay in . But if Britain goes out, then
it's out. The only way for May to get any concessions would be to offer to stay in! And even
then I am not sure the EU would accept since it would simply open the way for any member to
have a tantrum and demand better terms.
GB should leave, wallow in their loneliness a while and then ask to come back. I suspect
that the EU would reinstate them fully without the usual processes. Check back here in 24-36
the obligatory four freedoms of the EU are free movement of goods, services, persons and
capital throughout the Union. Open borders. That is the essence of the European Union, the
dogma of the Free Market.
The problem with the Open Border doctrine is that it doesn't know where to stop. Or it
doesn't stop anywhere. When Angela Merkel announced that hundreds of thousands of refugees were
welcome in Germany, the announcement was interpreted as an open invitation by immigrants of all
sorts, who began to stream into Europe. This unilateral German decision automatically applied
to the whole of the EU, with its lack of internal borders. Given German clout, Open Borders
became the essential "European common value", and welcoming immigrants the essence of human
Very contrasting ideological and practical considerations contribute to the idealization of
Open Borders. To name a few:
This combination of contrasting, even opposing motivations does not add up to a majority in
every country. Notably not in Hungary.
It should be noted that Hungary is a small Central European country of less than ten million
inhabitants, which never had a colonial empire and thus has no historic relationship with
peoples in Africa and Asia as do Britain, France, the Netherlands, and Belgium. As one of the
losers in World War I, Hungary lost a large amount of territory to its neighbors, notably to
Romania. The rare and difficult Hungarian language would be seriously challenged by mass
immigration. It is probably safe to say that the majority of people in Hungary tend to be
attached to their national identity and feel it would be threatened by massive immigration from
radically different cultures. It may not be nice of them, and like everyone they can change.
But for now, that is how they vote.
In particular, they recently voted massively to re
Like the Soviet Union, the European Union is not merely an undemocratic institutional
framework promoting a specific economic system; it is also the vehicle of an ideology and a
planetary project. Both are based on a dogma as to what is good for the world: communism for
the first, "openness" for the second. Both in varying ways demand of people virtues they may
not share: a forced equality, a forced generosity. All this can sound good, but such ideals
become methods of manipulation. Forcing ideals on people eventually runs up against stubborn
There are differing reasons to be against immigration just as to be for it. The idea of
democracy was to sort out and choose between ideals and practical interests by free discussion
and in the end a show of hands: an informed vote. The liberal Authoritarian Center represented
by Verhofstadt seeks to impose its values, aspirations, even its version of the facts on
citizens who are denounced as "populists" if they disagree. Under communism, dissidents were
called "enemies of the people". For the liberal globalists, they are "populists" – that
is, the people. If people are told constantly that the choice is between a left that advocates
mass immigration and a right that rejects it, the swing to the right is unstoppable.
Orban's reputation in the West as dictator is unquestionably linked to his intense
conflict with Hungarian-born financier George Soros
And not only Soros, of course:
'I know that this battle is difficult for everyone. I understand if some of us are also
afraid. This is understandable, because we must fight against an opponent which is different
from us. Their faces are not visible, but are hidden from view; they do not fight directly,
but by stealth; they are not honourable, but unprincipled; they are not national, but
international; they do not believe in work, but speculate with money; they have no homeland,
but feel that the whole world is theirs.' --
Economic liberals maintain that because Europe is aging, it needs young immigrant
workers to pay for the pensions of retired workers.
Not gonna happen. Their 80 IQ skills are uncompetitive and useless in Europe even before
Automation erases those low-skilled positions in the coming decade or two. Meanwhile, (real)
European youth unemployment rate is 20%. Young Europeans are not making babies because they
don't have a stable future. This can only get worse as the hostile invaders get preferential,
Affirmative Action treatment, in schools and workplaces. None of this is accidental.
There are, in my opinion, two reasons for letting the mass immigration happen:
- the Brussels belief, expressed in a 2009 official document, not secret, that the EU needs
60 million immigrants.
- a Merkel belief dat the Germans are bad, they caused two world wars and perpetrated the
holocaust, so the German people must be changed through mass immigration.
The Brussels belief seems to be based mainly on the increasing average age in the EU.
It is incomprehensible to me, at the same time fear that robots slowly will do all simple
The Merkel belief, on the other side of the Atlantic, where few understand German, and
cannot or do not watch German tv, I wonder how many understand that the 20th century
propaganda of the victors still is decisive in German daily life and politics.
The danger of neonazi's and fascism is everywhere.
Nationalism, the equivalent of building gas chambers.
The EU also is based on the 20th century fairy tales, only the EU prevented wars in Europe
The idea that Germans were victims in two world wars, and, until Hitler became power in 1933,
also between the world wars, in unthinkable.
The idea that Endlösung meant deportation to Madagaskar, even more unthinkable.
That jews, as one Rothschild wrote to another around 1890, have and had but one enemy,
themselves, the world unthinkable is too weak.
'From prejudice to destruction', Jacob Katz, 1980, Cambridge MA
explains it, things as 'close economic cooperation, intermarriage, ostentious behaviour'.
In this respect
'Christianity and the Holocaust of the Hungarian Jewry', Moshe Y Herclz, 1993 New York
also is a very interesting book, after jews in the thirties had been banned from many
intellectual professions not a single Hungarian newspaper could be published any more.
Soros trying to force Muslim immigrants on deeply catholic Hungary, he was born in
Hungary, experienced anti semitism, revenge ?
I was recently in Budapest on business and will likely be returning soon: It is the most
beautiful city I have ever seen, with stunning architectural restoration projects, almost
non-existent police and military presence, food and wines that rival those of Paris, and a
very friendly, non-bureaucratic and non-obsese (as opposed to the USA) population. I would
like to hear from others who have recently visited and have knowledge of the country.
Viszlát! -- John
When the fort of folly that Globalism is finally falls, Diana Johnstone's article will be
cited as exemplary in exposing its hidden grammar. That fall cannot be far off now given that
psy-ops can only work if people are ignorant of the manipulation afoot.
Great opening, Diana. For forty years the presstitude media have leaned on the use of
implication as argument to have the ninety-nine percent buy what they are selling. What was
not pointed out very well until now, is that their implications are all false. Now, only a
dummy among the dumbed-down cannot see it.
For those who have the patience to read the English subtitles, here is an excellent speech
given by Orbán in July. Here he outlines his thinking on the issues facing Hungary and
Viktor Orbán is a very intelligent leader, and he has the vast majority of the
Hungarian people behind him. History has taught those people many things, and they have had
enough. They are not fools. Look to them as an example for all of us.
@John Siman I was recently in Budapest on business and will likely be returning soon: It
is the most beautiful city I have ever seen, with stunning architectural restoration
projects, almost non-existent police and military presence, food and wines that rival those
of Paris, and a very friendly, non-bureaucratic and non-obsese (as opposed to the USA)
population. I would like to hear from others who have recently visited and have knowledge of
the country. Viszlát! -- John Wherever US influence is not yet overwhelming (and such
places are becoming fewer every day, unfortunately), you will still find "old-fashioned" ways
of interaction, few fatties, and decent food and drink.
People may become fat for many reasons, but most fatties these days in the Anglosphere
belong to the underclass. These wretches get fat from eating expensive trash at McDonald's
and other fast food outlets, and drinking Coca Cola and similar sugar-saturated garbage.
Their behavior may seem strange because their brains have largely withered away through
endless TV watching (mainly US or US-inspired visual trash), their hearing impaired by ear-
and mind numbing noise passing for music.
I am afraid the way out of that prison is long and tortuous for all victims of US
The usual anti-EU propaganda that Ms Johnstone has been peddling for at least a dozen years,
although she has recently moved from claiming to be a far-leftist to claiming to be a
far-rightest. Whatever pretext "proves" the EU to be evil is trotted out! However, she points
out very clearly Viktor Orban's dilemma. The choice for Hungary is between the EU and Putin's
tanks. After 40 years of occupation by a Soviet Union in which the ethnic Russians acted as
colonial overlords and the general contempt which Hungarians have for Slavs, choosing the
latter option would be political suicide for any Hungarian leader. Thus, Orban is stuck with
the EU whether he likes it or not and the other Member States are stuck with Orban whether
they like it or not. In addition, two of Ms Johnstone's factual claims need to be corrected.
The "EU" is taking no step whatsoever to strip Hungary of its political rights. The
(according to Ms Johnstone, "largely rubber stamp") European Parliament has adopted a
resolution calling on the Member States to sanction Hungary. The EP always does something
attention-grabbing in the run up to elections and since Ms Johnstone once worked for the
European Parliament (as a far-leftist!), I'm sure she knows that. Imposing sanctions, as
always in the EU, is a matter for the sovereign Member States and the decision has to be
unanimous. Poland has already said it will not vote for sanctions, so the whole thing is a
dead letter. Secondly, the claim that Hungary "never had a colonial empire" is untrue. It
never had a colonial empire outside Europe but before 1918, it ruled over Slovakia, most of
Croatia, Transylvania, now part of Romania, and the Vojvodina, now part of Serbia (so much
for Ms Johnstone's supposed "expertise" on ex-Yugoslavia!). In general, the frantic, almost
hysterical, tone of the article suggests that Ms Johnstone doesn't believe that Viktor Orban
is going to be the cause of the imminent and inevitable demise of the hated EU that she has
been predicting for as long as I have been reading her articles (and that goes back at least
@Michael Kenny The usual anti-EU propaganda that Ms Johnstone has been peddling for at
least a dozen years, although she has recently moved from claiming to be a far-leftist to
claiming to be a far-rightest. Whatever pretext "proves" the EU to be evil is trotted out!
However, she points out very clearly Viktor Orban's dilemma. The choice for Hungary is
between the EU and Putin's tanks. After 40 years of occupation by a Soviet Union in which the
ethnic Russians acted as colonial overlords and the general contempt which Hungarians have
for Slavs, choosing the latter option would be political suicide for any Hungarian leader.
Thus, Orban is stuck with the EU whether he likes it or not and the other Member States are
stuck with Orban whether they like it or not. In addition, two of Ms Johnstone's factual
claims need to be corrected. The "EU" is taking no step whatsoever to strip Hungary of its
political rights. The (according to Ms Johnstone, "largely rubber stamp") European Parliament
has adopted a resolution calling on the Member States to sanction Hungary. The EP always does
something attention-grabbing in the run up to elections and since Ms Johnstone once worked
for the European Parliament (as a far-leftist!), I'm sure she knows that. Imposing sanctions,
as always in the EU, is a matter for the sovereign Member States and the decision has to be
unanimous. Poland has already said it will not vote for sanctions, so the whole thing is a
dead letter. Secondly, the claim that Hungary "never had a colonial empire" is untrue. It
never had a colonial empire outside Europe but before 1918, it ruled over Slovakia, most of
Croatia, Transylvania, now part of Romania, and the Vojvodina, now part of Serbia (so much
for Ms Johnstone's supposed "expertise" on ex-Yugoslavia!). In general, the frantic, almost
hysterical, tone of the article suggests that Ms Johnstone doesn't believe that Viktor Orban
is going to be the cause of the imminent and inevitable demise of the hated EU that she has
been predicting for as long as I have been reading her articles (and that goes back at least
14 years!). Judging by your name, you are not a European, but an Englishman, or from
somewhere else in the Anglosphere. It is a good thing for England and especially the English
to be leaving the EuSSR, which is more of a prison than commonly realized. Ruled by a greedy
class of corrupt and, to make it worse, utterly mediocre, politicians, incompetent and stupid
bureaucrats (yes, I know this is an oxymoron) in the exclusive interest of ruthless big
corporations, human rights do not exist in the EuSSR.
Since the fall of the Berlin Wall, Europe has seen a wave of privatizations on a scale
only comparable to what happened in the former USSR. Nevertheless, taxation has increased to
a point where today, the average EuSSR "citizen" pays between 75% and 80% taxes on every Euro
he earns. The middle class is on its way to extinction. The judiciary is a joke, education
has been dismantled or stupidified, health care is a disaster, save in Southern Europe where
many doctors and nurses still have a sense of humanity.
The piece by Mrs. Johnstone may not be flawless, but it says what needs to be said.
70 years ago the Democrat party in the American South was the party of regular working
class White Southerners and promoted Southern heritage and Southern history including
Then things change.
Now the national Democrat party and the Democrat party in the South hates Whites
Southerners, hates Southern heritage and Southern history and are promoting the desecration
of Confederate monuments and confederate graves.
60 years ago Hungarian was under Soviet Communist domination and Hungarian patriots looked
to the West – especially American and Great Britain to help them achieve some personal
freedom from Communism.
Now things have completely changed. It's the Wester (EU) UK BBC, American mass media that
restricts freedom and National Christianity in Hungary and pretty much everywhere else.
Russia is once again a health European Christian nation. Nobody in Hungary, Eastern Europe or
Russia wants to allow their countries to be invaded by millions of 3rd world Muslim
So I living in Chicago IL (Obama was my neighbor) look to Hungary, Poland, Russia and
Eastern Europe for any small dose of freedom.
Not Pepe's best sauce, but always worth a read. He's best when he's reporting from the
field. His armchair geopolitics aren't that much better than anyone else's.
That said, Eurasian integration, Western Hemispheric energy independence, the populist
revolt against forced globalization/sovereignty elimination/kleptocracy and the outbreak of
global peace are all changing the chessboard profoundly. Most of the premises of traditional
imperialist power politics are simply blown away. Instead, a new 'Chinese Peace with Russian
Muscle' is the de facto hegemony in the vast bulk of the world, including parts of South
American and most of Africa. With the Brits and French too slow and stupid to react, the
Germans as weaselly and venal as ever, and the Japanese comatose, the hulk known as the G7 is
heeling over into full capsize mode. And, good riddance.
Now the G20 has to either stand up or collapse. Much depends on which outcome
However it works out, we can all stand and cheer that it is not a US dependent historical
course any more. We've ceded our moral and military leadership. Perhaps we can reform, even
if by bloody revolution, and re-emerge with something to give the rest of the world. Free
markets, liberty, democracy, freedom of thought......the future is now really a question of
whether any of these ideas will have a chance in a remade global order dominated, so far, by
dictatorship, corruption, and moral crime.
So, we tend to our own house now. Anyone got a pack of matches?
** We've ceded our moral and military leadership **
Kosovo, Iraq, Afghanistan, Benghazi, Libya, Syria, Ukraine, Georgia, NATO expansion, the
Clintoons, the Bush dynasty of mediocrity, our open border, offshoring, Muslim ass kissing,
free-ranging Antifa filth, media monopoly and lies, foreigners taking university slots,
sexual confusion, ass kissing homosexuals, groveling before bat shit crazy feminists,
destruction of our basic legal document through judicial usurpation, diseased leftists
spouting lies and delusion, excusing black dysfunction, fiscal incontinence, unaddressd
monopolies, attacks on free speech, criminal immunity for elites, a president who won't
exercise his authority and tolerates insubordination, an unaccountable bureaucracy, a loose
cannon prosecutor, Jewish political domination, slobbering over Israel as though Jerusalem is
our capitol not Washington, denigration of the white majority culture, celebration of
miscegenation, degradation of marriage, our diseased educational establishment, rampant vote
fraud, illegal and unconstitutional wars, chest beating about "exceptionalism," and a
generally crap culture all say you're right.
There will be no sudden and dramatic collapse. There will only be a slow, painful,
never-ending, degrading decay into nothingness, a death from one million pundits, a process
readily apparent (literally) all around us. Tune in to CNN, see for yourself.
I see your point, but I am not convinced bankers work independently. Bankers do not have a
monopoly on psychotics. The psychotics in gov have as much greed and craving for power as the
bankers and I believe they work around, with, and against each other for various reasons just
like everything else in the world works. Thus a one dimensional theory will not be complete -
and maybe that is what you are arguing: to include bankers in geopolitics. I agree the
bankers are a big part of the rotten problem but like when I am overseas - I watch the guys
with the guns.
Most of the planet has put up with a lot of shit from America It's good that it's finally
coming to an end.
"We have about 50% of the world's wealth but only 6.3% of its population... Our real task
in the coming period is to devise a pattern of relationships which will permit us to maintain
this position of disparity without positive detriment to our national security. To do so, we
will have to dispense with all sentimentality and daydreaming, and our attention will have to
be concentrated everywhere on our immediate national objectives. We need not deceive
ourselves that we can afford today the luxury of altruism and world benefaction... We should
cease to talk about vague and unreal objectives such as human rights, the raising of the
living standards, and democratization. The day is not far off when we are going to have to
deal in straight power concepts. The less we are then hampered by idealistic slogans, the
George Kennan, State Department memo, 1948
America never gave up on the idealistic slogans -- the figleaf for the Empire of Chaos.
Finally shutting the fuck up after the game is over will be welcome.
Alastair Crooke took a great
shot at deconstructing why Western global elites are terrified of the Russian
conceptualization of Eurasia.
It's because "they 'scent' a stealth reversion to the old, pre-Socratic values: for the
Ancients the very notion of 'man', in that way, did not exist. There were only men: Greeks,
Romans, barbarians, Syrians, and so on. This stands in obvious opposition to universal,
So it's Heraclitus versus Voltaire – even as "humanism" as we inherited it from the
Enlightenment, is de facto over.
Whatever is left roaming our wilderness of mirrors depends on
the irascible mood swings of the Goddess of the Market.
No wonder one of the side effects of
progressive Eurasia integration will be not only a death blow to Bretton Woods but also to
What we have now is also a remastered version of sea power versus land powers. Relentless
Russophobia is paired with supreme fear of a Russia-Germany rapprochement – as Bismarck
wanted, and as Putin
and Merkel recently hinted at. The supreme nightmare for the U.S. is in fact a truly
Eurasian Beijing-Berlin-Moscow partnership.
The Belt and Road Initiative (BRI) has not even begun; according to the official Beijing
timetable, we're still in the planning phase. Implementation starts next year. The horizon is
"... " One of the worst things that can happen to our country, is when Russia ever gets driven to China. We have driven them together – with the big oil deals that are being made. We have driven them together. That's a horrible thing for this country. We have made them friends because of incompetent leadership. I believe I would get along very nicely with Putin – okay? And, I mean [that] where we [the US] have the strength. I don't think we need the sanctions. I think that we would get along very, very well." ..."
"... Art of the Deal ..."
"... Identify a big goal (tax cuts, balanced trade, the wall, etc.). ..."
"... Identify your leverage points versus anyone who stands in your way (elections, tariffs, jobs, etc.). ..."
"... Announce some extreme threat against your opponent that uses your leverage. ..."
"... If the opponent backs down, mitigate the threat, declare victory and go home with a win. ..."
"... If the opponent fires back, double down. If Trump declares tariffs on $50 billion of good from China,and China shoots back with tariffs on $50 billion of goods from the U.S., Trump doubles down with tariffs on $100 billion of goods, etc. Trump will keep escalating until he wins." ..."
"... Eventually, the escalation process can lead to negotiations with at least the perception of a victory for Trump (North Korea) -- even if the victory is more visual than real. ..."
"... "The position of Europe is clear. It isn't a coincidence that Trump, while enumerating the enemies of the US (the EU, China, and Russia), made it clear that he considers Russia to be a smaller problem [than the EU], because there are practically no economic contradictions ("Nord Stream-2" doesn't count) with it. It's not China, with which the US has the biggest negative trade balance, but the EU, which Trump fairly defined as the main trade competitor, receiving unjustified economic benefits from political agreements with the US, and which is the main 'foe' of the US. ..."
"... "[Thus Trump] resolves his military-political contradictions with Russia, [and consequently] reduces the value of the EU as an ally for Washington, to zero Europe was accustomed to (and hoped to continue to use) its role of a springboard for the fight against Russia as [the primordial] argument that was supposed to keep Trump away from making the last step (complete separation with the EU). ..."
"... In recent days, Merkel, after the NATO summit, started talking literally [that Trump's hostility towards Europe is unjustified], because Europe battles with Russia for the interests of the US. ..."
"... "For the EU it was crucial that this argument continued to work. Otherwise, Washington indeed, would have more common ground with Moscow than with Brussels. And Europe isn't ready for a sharp confrontation with the US. Having rested on its laurels [i.e. on its conviction that it occupied, as it were, some 'moral high ground of values']. Europe wasn't engaged (in difference, for example, from China), in the diversification of economic ties and appeared to be strongly dependent on access to the American market. ..."
"... "Without having risked to be ahead of Trump in the question of normalising relations with Russia, EU leaders were fatally afraid that Trump and Putin, despite all difficulties, will do the impossible and reach an agreement, especially as both proved to be people who are ready to instantly make decisions that change the destiny of the world. ..."
"... "The position taken by the EU raised the value of the summit for Russia too. Moscow can wait until Washington is ready for reconciliation. But, taking into account the obvious intention of Europe to manoeuvre between Russia and the US, trying to preserve the geopolitical configuration that is profitable for itself, but doesn't suit either Trump nor Putin, Russia was also interested in showing to the whole world the success of the summit and good prospects for achieving definitive and comprehensive agreements." ..."
"... The latent hatred for Russia is unmistakeably revealed. This animosity will not be a surprise to Putin – though the extremity of the elite language used towards Trump will make Russians aware of their ..."
"... What does such language portend? The roots of American Russo-phobia go deep. It starts with American Trotskyist activists' on ground participation in the initial Trotskyist Bolshevik revolution – largely financed, and orchestrated by Wall Street. ..."
"... Of course, what rankles most in America, and amongst European liberal elites, is the apparent according of moral equivalence of Putin to America, and to America's intelligence capabilities. America believes it WON – it won the Cold War culturally, and in terms of its systems of government and economics. ..."
"... The western Establishment anger stems ultimately from Russia's refusal to acquiesce to their merited 'defeatism' (in this view): Putin rejected to merge Russia into the American-led global order, preferring Russia to remain somehow 'Russian', in its own Russian cultural way. ..."
"... And for Trump? The 'smart money' says that he will be indicted, or impeached, after the midterms. I doubt it. For all John Brennan's talk of "High Crimes and Misdemeanors" (the precise legal language of impeachment), there is no crime. If any, crimes per se ..."
Maybe we are misreading things. Not a small number of commentaries have suggested
that President Trump intended for Helsinki to re-set the Kissinger-esque triangulation
between the US, Russia and China. And there are good grounds for making such
a hypothesis. At a 2015 press conference, Trump, himself, took the Kissinger
line -- that the US should always try to keep Russia and China divided, and
never allied together against America):
" One of the worst things that can happen to our country, is when
Russia ever gets driven to China. We have driven them together – with the
big oil deals that are being made. We have driven them together. That's
a horrible thing for this country. We have made them friends because of
incompetent leadership. I believe I would get along very nicely with Putin
– okay? And, I mean [that] where we [the US] have the strength. I don't
think we need the sanctions. I think that we would get along very, very
This makes a lot of sense, but maybe in Helsinki Trump was doing something
a little less strategic and more down-to-earth – something more in line with
his Art of the Deal philosophy.
We have, over the decades, developed a fairly precise mental model of how
"Presidents are supposed to behave; and how the policymaking process is supposed
to be carried out. Obviously, Trump does not fit their model", Jim Rickards
writes . "[GW] Bush and Obama were totally process-driven. You could see
events coming a mile away as they wound their way through the West Wing and
Capitol Hill deliberative processes." With Trump, Rickards continues, "there
is a process, but it does not adhere to a timeline or existing template. Trump
seems to be the only process participant most of the time. No one else in Washington
thinks this way. Washington insiders try to avoid confrontation, avoid escalation,
compromise from the beginning, and finesse their way through any policy process."
"Here's the Trump process:
Identify a big goal (tax cuts, balanced trade, the wall, etc.).
Identify your leverage points versus anyone who stands in your way
(elections, tariffs, jobs, etc.).
Announce some extreme threat against your opponent that uses your
If the opponent backs down, mitigate the threat, declare victory
and go home with a win.
If the opponent fires back, double down. If Trump declares tariffs
on $50 billion of good from China,and China shoots back with tariffs on
$50 billion of goods from the U.S., Trump doubles down with tariffs on $100
billion of goods, etc. Trump will keep escalating until he wins."
Eventually, the escalation process can lead to negotiations with at least
the perception of a victory for Trump (North Korea) -- even if the victory is
more visual than real.
So, if we reframe the Helsinki meeting through this Art of the Deal lens,
what do we get? Seeing that thedivergencies of vision between Russia and the
US are so substantial, and the common ground is so small, there is very little
prospect for a 'strategic global deal'. In fact, President Trump has little
that he can offer Russia: sanctions relief is not in his gift (it is in the
maw of Congress), and he could not – at this stage – relinquish Ukraine, even
if Trump understands that the US and Europe bought a 'pig in a poke' with its
Maidan coup in Kiev.
"So", as Russian commentator, Rostislav Ishchenko, writes (in Russian, translation
here ): "We have a situation where both parties even prior to negotiations,
knew that they wouldn't be able to come to some arrangement, and they didn't
even prepare for such a thing (it wasn't planned to sign anything following
the results of negotiations). At the same time, both parties needed the event
to be successful". Ishchenko continues: "Trump obviously blackmails the European
Union with a possible agreement with Russia. But Putin also needs to show Europe
that there are other fish in the sea besides them."
"The position of Europe is clear. It isn't a coincidence that Trump,
while enumerating the enemies of the US (the EU, China, and Russia), made
it clear that he considers Russia to be a smaller problem [than the EU],
because there are practically no economic contradictions ("Nord Stream-2"
doesn't count) with it. It's not China, with which the US has the biggest
negative trade balance, but the EU, which Trump fairly defined as the main
trade competitor, receiving unjustified economic benefits from political
agreements with the US, and which is the main 'foe' of the US.
"[Thus Trump] resolves his military-political contradictions with
Russia, [and consequently] reduces the value of the EU as an ally for Washington,
to zero Europe was accustomed to (and hoped to continue to use) its role
of a springboard for the fight against Russia as [the primordial] argument
that was supposed to keep Trump away from making the last step (complete
separation with the EU).
In recent days, Merkel, after the NATO summit, started talking literally
[that Trump's hostility towards Europe is unjustified], because Europe battles
with Russia for the interests of the US.
"For the EU it was crucial that this argument continued to work.
Otherwise, Washington indeed, would have more common ground with Moscow
than with Brussels. And Europe isn't ready for a sharp confrontation with
the US. Having rested on its laurels [i.e. on its conviction that it occupied,
as it were, some 'moral high ground of values']. Europe wasn't engaged (in
difference, for example, from China), in the diversification of economic
ties and appeared to be strongly dependent on access to the American market.
"Without having risked to be ahead of Trump in the question of normalising
relations with Russia, EU leaders were fatally afraid that Trump and Putin,
despite all difficulties, will do the impossible and reach an agreement,
especially as both proved to be people who are ready to instantly make decisions
that change the destiny of the world.
"The position taken by the EU raised the value of the summit for
Russia too. Moscow can wait until Washington is ready for reconciliation.
But, taking into account the obvious intention of Europe to manoeuvre between
Russia and the US, trying to preserve the geopolitical configuration that
is profitable for itself, but doesn't suit either Trump nor Putin, Russia
was also interested in showing to the whole world the success of the summit
and good prospects for achieving definitive and comprehensive agreements."
In short, Trump was using Helsinki to leverage "an extreme threat against
your opponent" (Europe), by voiding the European 'card' of its 'usefulness'
to America through its constant battling against Russia. Indeed the recent
NATO final comunique, reads almost precisely as an legal indictment of Russia
and its behavior.
Both Trump and Putin took a big political risk by staging this 'end
to Cold War – coup de théâtre'. Trump has unleashed extraordinary hysteria in
parts of the US, provoking numerous Washington Post op-eds to language such
as characterising Trump's words (at the press conference) as 'apostasy' and
'a cancer amongst us'. (Apostasy is the language used by violent jihadists against
The latent hatred for Russia is unmistakeably revealed. This animosity will
not be a surprise to Putin – though the extremity of the elite language used
towards Trump will make Russians aware of their risks – what
might ensue were Trump somehow be removed from office?
What does such language portend? The roots of American Russo-phobia go deep.
It starts with American Trotskyist activists' on ground participation in the
initial Trotskyist Bolshevik revolution –
largely financed, and orchestrated by Wall Street.
Not only did New York
bankers provide money, they also facilitated safe passage to Russia for revolutionaries
such as Trotsky and others. Stalin's ultimate killing of the Trotskyist killers
in the 1930s (and many others) is at the root of the Russian 'thuggery' language
still circulating in US (even if some have forgotten its origins). Stalin's
cleansing has never been forgiven by certain circles in the US.
Of course, what rankles most in America, and amongst European liberal elites,
is the apparent according of moral equivalence of Putin to America, and to America's
intelligence capabilities. America believes it WON – it won the Cold War culturally,
and in terms of its systems of government and economics. This 'End to History'
hubris voided – in this ecstatic state – the need to treat Russia as other than
a psychologically 'defeated people', (which they were not).
The western Establishment anger stems ultimately from Russia's refusal
to acquiesce to their merited 'defeatism' (in this view): Putin rejected to
merge Russia into the American-led global order, preferring Russia to remain
somehow 'Russian', in its own Russian cultural way.
What are the implications for Europe? For Europe this is a catastrophe. It
means that US dialogue with Putin will continue. Where to run for the EU – to
Washington or to Moscow? To remain loyal to an old suzerain or to try to adhere
to a new one, before others get there first?
Moreover, unlike Russia, Europe can't wait. By meeting Putin, Trump brought
the US out of zugzwang, having handed over to the European Union the right to
make this same move, which only risks complicating Euro politics – beyond its
And for Trump? The 'smart money' says that he will be indicted, or impeached,
after the midterms. I doubt it. For all John Brennan's talk of "High Crimes
and Misdemeanors" (the precise legal language of impeachment), there is no crime.
If any, crimes per se may emerge out from a very different quarter.
And Trump likely will survive the current hysterics.
"... I was not sure whether Trump was controlled opposition or simply a useful scapegoat for the economic crisis that globalists are clearly engineering. Now it appears that he is both. ..."
"... Many businessmen end up dealing with elitist controlled banks at some point in their careers. But when Trump entered office and proceeded to load his cabinet with ghouls from Goldman Sachs, JP Morgan, the Council on Foreign Relations and give Wilber Ross the position of Commerce Secretary, it became obvious that Trump is in fact a puppet for the banks. ..."
"... If one examines the history of fake coups, there is ALWAYS an element of orchestrated division, sometimes between the globalists and their own puppets. This is called 4th Generation warfare, in which almost all divisions are an illusion and the real target is the public psyche. ..."
"... the overall picture is not as simple as "Left vs. Right." Instead, we need to look at the situation more like a chess board, and above that chess board looms the globalists, attempting to control all the necessary pieces on BOTH sides. Every provocation by leftists is designed to elicit a predictable response from conservatives to the point that we become whatever the globalists want us to become. ..."
"... Therefore it is not leftists that present the greatest threat to individual liberty, but the globalist influenced Trump administration. A failed coup on the part of the left could be used as a rationale for incremental and unconstitutional "safeguards." And conservatives may be fooled into supporting these measures as the threat is overblown. ..."
At that time I was certain that the globalists would find great use for a Trump presidency,
more so in fact than a Clinton presidency. However, I was not sure whether Trump was controlled
opposition or simply a useful scapegoat for the economic crisis that globalists are clearly
engineering. Now it appears that he is both.
Trump's history was already suspicious. He was bailed out of his considerable debts
surrounding his Taj Mahal casino in Atlantic City in the early 1990s by
Rothschild banking agent Wilber Ross , which saved him from embarrassment and
possibly saved his entire fortune . This alone was not necessarily enough to deny Trump the
benefit of the doubt in my view.
Many businessmen end up dealing with elitist controlled banks at some point in their
careers. But when Trump entered office and proceeded to load his cabinet with ghouls from
Goldman Sachs, JP Morgan, the Council on Foreign Relations and give Wilber Ross the position of
Commerce Secretary, it became obvious that Trump is in fact a puppet for the banks.
Some liberty movement activists ignore this reality and attempt to argue around the facts of
Trump's associations. "What about all the media opposition to Trump? Doesn't this indicate he's
not controlled?" they say. I say, not really.
If one examines the history of fake coups, there is ALWAYS an element of orchestrated
division, sometimes between the globalists and their own puppets. This is called 4th Generation
warfare, in which almost all divisions are an illusion and the real target is the public
This is not to say that leftist opposition to Trump and conservatives is not real. It
absolutely is. The left has gone off the ideological deep end into an abyss of rabid frothing
insanity, but the overall picture is not as simple as "Left vs. Right." Instead, we need to
look at the situation more like a chess board, and above that chess board looms the globalists,
attempting to control all the necessary pieces on BOTH sides. Every provocation by leftists is
designed to elicit a predictable response from conservatives to the point that we become
whatever the globalists want us to become.
... ... ...
As this is taking place, conservatives are growing more sensitive to the notion of a leftist
coup, from silencing of conservative voices to an impeachment of Trump based on fraudulent
ideas of "Russian collusion."
To be clear, the extreme left has no regard for individual liberties or constitutional law.
They use the Constitution when it suits them, then try to tear it down when it doesn't suit
them. However, the far-left is also a paper tiger; it is not a true threat to conservative
values because its membership marginal, it is weak, immature and irrational. Their only power
resides in their influence within the mainstream media, but with the MSM fading in the face of
the alternative media, their social influence is limited. It is perhaps enough to organize a
"coup," but it would inevitably be a failed coup.
Therefore it is not leftists that present the greatest threat to individual liberty, but the
globalist influenced Trump administration. A failed coup on the part of the left could be used
as a rationale for incremental and unconstitutional "safeguards." And conservatives may be
fooled into supporting these measures as the threat is overblown.
I have always said that the only people that can destroy conservative principles are
conservatives. Conservatives diminish their own principles every time they abandon their
conscience and become exactly like the monsters they hope to defeat. And make no mistake, the
globalists are well aware of this strategy.
Carroll Quigley, a pro-globalist professor and the author of Tragedy and Hope, a book
published decades ago which outlined the plan for a one world economic and political system, is
quoted in his address ' Dissent: Do We Need It
"They say, "The Congress is corrupt." I ask them, "What do you know about the Congress? Do
you know your own Congressman's name?" Usually they don't. It's almost a reflex with them,
like seeing a fascist pig in a policeman. To them, all Congressmen are crooks. I tell them
they must spend a lot of time learning the American political system and how it functions,
and then work within the system. But most of them just won't buy that. They insist the system
is totally corrupt. I insist that the system, the establishment, whatever you call it, is so
balanced by diverse forces that very slight pressures can produce perceptible results.
For example, I've talked about the lower middle class as the backbone of fascism in the
future. I think this may happen. The party members of the Nazi Party in Germany were
consistently lower middle class. I think that the right-wing movements in this country are
pretty generally in this group."
Is a "failed coup" being staged in order to influence conservatives to become the very
"fascists" the left accuses us of being? The continuing narrative certainly suggests that this
is the game plan.
* * *
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"... For dessert today, I offer Russia's Grand Strategy Revisited published on the 24th. The Outlaw US Empire is in the midst of a Seldon Crisis but lacks the means to even recognize the spectacular mess its made for itself, much of which is quite visibly articulated in its NDS I linked to above. ..."
"... By every metric I've observed, the USA's citizenry from all political POVs wants a return to Reality for that's the only basis from which to address and solve the many domestic problems. ..."
Trump whines, threatens pullout from WTO again! After decades of bullying
nations and impoverishing their people, other nations are using the Outlaw
US Empire's WTO as a weapon against it, so Trump cries Unfair! As I wrote
above, Big Money's trapped within its own web.
The "Softies" are yet another entity in the Smoke & Mirrors Fun House
designed to fool and gain citizenry's consent to be robbed blind.
As with all politicians, you won't know what you elected until you learn
how your rep votes issues, although some can be anticipated by examining
their past behavior as with our pseudo Democrat-Socialist.
For dessert today, I offer Russia's
Grand Strategy Revisited published on the 24th. The Outlaw US
Empire is in the midst of a Seldon Crisis but lacks the means to even recognize
the spectacular mess its made for itself, much of which is quite visibly
articulated in its NDS I linked to above.
By every metric I've observed, the USA's citizenry from all political
POVs wants a return to Reality for that's the only basis from which to address
and solve the many domestic problems.
Big Money refuses as its addicted to Smoke & Mirrors since that's what
was used to gain its power and will now double-down.
The powerful always want more power.
-- -- -- -- -- -- -- -- -- -- -- -- -- –
June 26, 2016
"Brexit: Are The Serfs Finally Rebelling"?
The establishment are shocked that the ordinary people want out of the European Union
(EU). They just don't realize that people are fed up being used, abused, dictated to, lied
to, manipulated, and forced into an EU dictatorship by treacherous politicians.
These are some of the same politicians who scurry to the meetings of the so-called elites
in Davos, and also attend Bilderberg meetings. And many of them, when they leave politics,
finish up on the boards of banks and multi-national corporations with the rest of the
money-manipulating bandits that got bailed out with taxpayers' dollars, some of whom, I
believe, should be in jail .
"... But to an extent hardly imaginable in 2008, all the world's leading economies are locked in a perpetually escalating cycle of economic warfare. This global trade war is spearheaded by the Trump White House, which sees trade sanctions and tariffs, such as the onslaught it launched against Turkey, as an integral component of its drive to secure the United States' geopolitical and economic interests at the expense of friend and foe alike. ..."
"... But while they are deeply divided as to their economic and geo-political objectives, the capitalist ruling classes are united on one essential question. However the next stage of the ongoing breakdown of world capitalism proceeds, they will all strive by whatever means considered necessary to make the working class the world over pay for it. ..."
"... In 2008, capitalist governments around the world, above all in the US, derived enormous benefit from the decades-long suppression of the class struggle by the trade unions and the parties of the political establishment. The rescue operation they carried out on behalf of parasitic and criminal finance capital would not have been possible without it ..."
"But to an extent hardly imaginable in 2008, all the world's leading economies are locked
in a perpetually escalating cycle of economic warfare. This global trade war is spearheaded
by the Trump White House, which sees trade sanctions and tariffs, such as the onslaught it
launched against Turkey, as an integral component of its drive to secure the United States'
geopolitical and economic interests at the expense of friend and foe alike.
The character of world economy has undergone a major transformation in the past decade in
which economic growth, to the extent it that it occurs, is not driven by the development of
production and new investments but by the flow of money from one source of speculative and
parasitic activity to the next."
"But while they are deeply divided as to their economic and geo-political objectives, the
capitalist ruling classes are united on one essential question. However the next stage of the
ongoing breakdown of world capitalism proceeds, they will all strive by whatever means
considered necessary to make the working class the world over pay for it.
This is the lesson from the past decade which, in every country, has seen a deepening
attack on wages, social conditions and living standards as wealth is redistributed up the
income scale, raising social inequality to unprecedented heights.
In 2008, capitalist governments around the world, above all in the US, derived enormous
benefit from the decades-long suppression of the class struggle by the trade unions and the
parties of the political establishment. The rescue operation they carried out on behalf of
parasitic and criminal finance capital would not have been possible without it."
"... So why should you care? Why does that matter to you or me? Well, like most emerging market financial crisis there is the danger of contagion . ..."
"... Turkey's economy is four times the size of Greece, and roughly equal in size to Lehman Brothers circa 2008. ..."
"... Turkey's other borders face six nations: Georgia, Iran, Iraq, Syria, Armenia, and Nakhchivan, a territory affiliated with Azerbaijan. Five of those are involved in ongoing armed conflicts or outright war. ..."
"... NATO has long outlived its' usefulness. Cancel its' stipend and bring our soldiers, marines, sailors and airmen and women home! Put them to work here. Fighting fires. ..."
"... NATO only seems to be useful to the hegemony that supports it. Peace is not it's mission. ..."
By now you've probably heard that Turkey is having a financial crisis, and Trump appears to be pouring gasoline on it.
But you may not understand what is happening, or you may not know why it's important.
So let's do a quick recap
Turkey's currency fell to a new record low today. Year to date it's lost almost half its value, leading some investors and
lenders inside and outside of Turkey to lose confidence in the Turkish economy.
"Ninety percent of external public and private sector debt is denominated in foreign currencies," he said.
Here's the problem. Because of the country's falling currency, that debt just got a lot more expensive.
A Turkish business now effectively owes twice as much as it did at the beginning of the year. "You are indebted in the U.S.
dollar or euro, but your revenue is in your local currency," explained Lale Akoner, a market strategist with Bank of New York
Mellon's Asset Management business. She said Turkey's private sector currently owes around $240 billion in foreign debt.
This is all about hot money that has been washing around in a world of artificially low interest rates, and now, finally, an
external shock happened. As it
always happens .
The bid-ask spread, or the difference between the price dealers are willing to buy and sell the lira at, has widened beyond
the gap seen at the depth of the global financial crisis in 2008, following Lehman Brothers Holdings Inc.'s collapse.
So why should you care? Why does that matter to you or me? Well, like most emerging market financial crisis there is the
danger of contagion
The turmoil follows a similar currency crash in Argentina that led to a rescue by the International Monetary Fund. In recent
days, the Russian ruble, Indian rupee and South African rand have also tumbled dramatically.
Investors are waiting for the next domino to fall. They're on the lookout for signs of a repeat of the 1997-1998 Asian financial
crisis that began when the Thai baht imploded.
A minor currency devaluation of the Thai baht in 1997 eventually led to 20% of the world's population being thrust into poverty.
It led to Russia defaulting in 1998, LTCM requiring a Federal Reserve bailout, and eventually Argentina defaulting in 2001.
Turkey's economy is four times the size of Greece, and roughly equal in size to Lehman Brothers circa 2008.
The markets want Turkey to run to the IMF for a loan, but that would require a huge interest rate hike and austerity measures
that would thrust Turkey into a long depression. However, that isn't the
biggest obstacle .
The second is that Erdogan would have to bury his hatchet with the United States, which remains the IMF's largest shareholder.
Without U.S. support, Turkey has no chance of securing an IMF bailout program.
There is another danger, a political one and not so much an economic one, that could have dramatic implications.
If Erdogan isn't overthrown, or humbled, then there is an ironclad certainty that Turkey will
leave NATO and
Turkey, unlike Argentina, does not seem poised to turn to the International Monetary Fund in order to stave off financial collapse,
nor to mend relations with Washington.
If anything, the Turkish President looks to be doubling down in challenging the US and the global financial markets -- two
Turkey would probably no longer view the US as a reliable partner and strategic ally.
Whoever ends up leading the country, a wounded Turkey would most likely seek to shift the center of gravity away from the West
and toward Russia, Iran and Eurasia.
It would make Turkey less in tune with US and European objectives in the Middle East, meaning Turkey would seek to assert a
more independent security and defense policy.
Erdogan has warned Trump that Turkey would
"seek new friends" , although Russia and China haven't yet stepped up to the plate to bat for him.
Russia, Iran and China do have a common interest when in comes to undermining the
petrodollar . Pulling Turkey into their sphere of influence would be a coup.
Turkey lies at a historic, strategic crossroad. The
bridge between the peaceful West and the war-ridden dictatorships of the East that the West likes to bomb.
On its Western flank, Turkey borders Greece and Bulgaria, Western-facing members of the European Union. A few years ago, Turkey
-- a member of NATO -- was preparing the join Europe as a full member.
Turkey's other borders face six nations: Georgia, Iran, Iraq, Syria, Armenia, and Nakhchivan, a territory affiliated with
Azerbaijan. Five of those are involved in ongoing armed conflicts or outright war.
Losing Turkey would be a huge setback for NATO, the MIC, and the permanent war machine.
more struggling economies are starting to get it. Trade wealth for the rulers (IMF supporters) to be paid by the rest of us.
Fight back. Squeeze the bankers balls. Can't have our resources, now way, no how, without a fight.
in a flailing Turkey? Weren't there some outside potential takers encouraging China when it floated its currency proposal?
Nastarana on Tue, 08/14/2018 - 8:41pm
NATO has long outlived its' usefulness. Cancel its' stipend and bring our soldiers, marines, sailors and airmen and women home! Put them to work here. Fighting fires.
Patrolling our shores for drug running and toxic dumping. Teaching school, 10 kids per class maximum. Refurbishing buildings and
housing stock. Post Cold War, an military alliance with Turkey makes no sense.
Meanwhile going back to the ongoing escalation in political tensions between the US and
Turkey, one day after Erdogan vowed to boycott US electronics products, including the iPhone,
Ankara slapped an additional tax on imports of a broad range of American goods. Turkey
announced it would impose an additional 50% tax on U.S. rice, 140% on spirits and 120% on cars.
There are also additional charges on U.S. cosmetics, tobacco and some food products. The was Erdogan's latest retaliation for the Trump administration's punitive actions over the past few
weeks to pressure Turkey into releasing an American pastor.
calculated that the items listed in the decree accounted for $1 billion of imports last
year, similar to the amount of Turkish steel and aluminum exports that were subjected to higher
tariffs by President Donald Trump last week.
The decision shows Turkey giving a proportionate
response to American "attacks" on the Turkish economy, Vice President Fuat Oktay said in tweets
No matter how globalism is repackaged, it always smells the same way in the end.
For decades, the globalists have subtly (or sometimes not so subtly) been moving us toward a
world in which national borders have essentially been made meaningless . The ultimate goal, of
course, is to merge all the nations of the world into a "one world socialist utopia" with a
global government, a global economic system and even a global religion.
The European Union is a model for what the elite hope to achieve eventually on a global
scale . The individual nations still exist, but once inside the European Union you can travel
wherever you want, economic rules have been standardized across the Union, and European
institutions now have far more power than the national governments.
Liberty and freedom have been greatly restricted for the "common good", and a giant horde of
nameless, faceless bureaucrats constantly micromanages the details of daily life down to the
With each passing day the EU becomes more Orwellian in nature, and that is why so many in
Europe are completely fed up with it.
"... Trump in fact was not the consensus candidate of the American capitalist class back to the 2016 election. So with respect to these economic policies, especially about his trade protectionist measures, these new tariffs imposed on the Chinese goods, let's put it this way: These are not, certainly not the traditional kind of neoliberal economic policy as we know it. So some sections of the American manufacturing sector [capitalists] may be happy about this. But I would say the majority of the American capitalists probably would not approve this kind of trade war against China. ..."
"... So on the Chinese part, ironically, China very much depends on these overall what Martin Wolf called liberal global order, which might better be called the model of global neoliberal capitalism. So China actually much more depends on that. ..."
"... despite whatever happened to the U.S., China would still be committed to the model of openness, committed to privatization and the financial liberalization. The Chinese government has declared new measures to open up a few economic sectors to foreign investment. ..."
"... for China to rearrange towards this kind of domestic consumption-led model of economic development, the necessary condition is that you have income, wealth redistribution towards the workers, towards poor people. And that is something that the Chinese capitalists will resist. And so that is why and so far China has not succeeded in transforming itself away from this export-led model based on exploitation of cheap labor. ..."
"... first of all, China is not socialist at all today. So income of economic sector, the [space] sector accounts for a small number, a small fraction of the overall economy, by various measurements. ..."
"... And so it's expected China will also become the world's largest importer of natural gas by the year 2019. So you are going to have China to be simultaneously the largest importer of oil, natural gas, and coal. ..."
"... let's say the Chinese government right now, even though is led by the so-called Communist Party, is actually much more committed to the neoliberal global order that the Trump administration in the U.S. ..."
"... The Trump administration of this trade protectionist policy, although not justified, it reflects fundamental social conflicts within the U.S. itself, and that probably cannot be sorted out by the Americans' current political system. ..."
"... So the overall neoliberal regime has become much more unstable. ..."
PAUL JAY: Welcome to The Real News Network. I'm Paul Jay.
The Financial Times chief economic columnist Martin Wolf has called Trump's trade wars with
Europe and Canada, but obviously the big target is China, he's called this a war on the liberal
world order. Well, what does this mean for China? China's strategy, the distinct road to
socialism which seems to take a course through various forms of state hypercapitalism. What
does this mean for China? The Chinese strategy was developed in what they thought would be a
liberal world order. Now it may not be that at all.
Now joining us to discuss what the trade war means for China, and to have a broader
conversation on just what is the Chinese model of state capitalism is Minqi Li, who now joins
us from Utah. Minqi is the professor, is a professor of economics at the University of Utah.
He's the author of The Rise of China and the Demise of the Capitalist World Economy, and the
editor of Red China website. Thanks for joining us again, Minqi.
MINQI LI: Thank you, Paul.
PAUL JAY: So I don't think anyone, including the Chinese, was expecting President Trump to
be president Trump. But once he was elected, it was pretty clear that Trump and Bannon and the
various cabal around Trump, the plan was twofold. One, regime change in Iran, which also has
consequences for China. And trade war with China. It was declared that they were going to take
on China and change in a fundamental way the economic relationship with China and the United
States. And aimed, to a large extent, trying to deal with the rise of China as an equal, or
becoming equal, economy, and perhaps someday in the not-too-distant future an equal global
power, certainly as seen through the eyes of not just Trumpians in Washington, but much of the
Washington political and economic elites.
So what does this mean for China's strategy now? Xi Jinping is now the leader of the party,
leader of the government, put at a level virtually equal to Mao Tse-tung. But his plan for
development of the Chinese economy did not, I don't think, factor in a serious trade war with
the United States.
MINQI LI: OK. As you said, Trump was not expected. Which meant that Trump in fact was not
the consensus candidate of the American capitalist class back to the 2016 election. So with
respect to these economic policies, especially about his trade protectionist measures, these
new tariffs imposed on the Chinese goods, let's put it this way: These are not, certainly not
the traditional kind of neoliberal economic policy as we know it. So some sections of the
American manufacturing sector [capitalists] may be happy about this. But I would say the
majority of the American capitalists probably would not approve this kind of trade war against
Now, on the Chinese part, and we know that China has been on these parts, there was
capitalist development, and moreover it has been based on export-led economic growth model and
with exploitation of cheap labor. So on the Chinese part, ironically, China very much depends
on these overall what Martin Wolf called liberal global order, which might better be called the
model of global neoliberal capitalism. So China actually much more depends on that.
And so you have, indeed there are serious trade conflicts between China and U.S. that will,
of course, undermine China's economic model. And so far China has responded to these new
threats of trade war by promising that China, despite whatever happened to the U.S., China
would still be committed to the model of openness, committed to privatization and the financial
liberalization. The Chinese government has declared new measures to open up a few economic
sectors to foreign investment.
Now, with respect to the trade itself, at the moment the U.S. has imposed tariffs on, 25
percent tariffs on the worth of $34 billion of Chinese goods. And then Trump has threatened to
impose new tariffs on the additional $200 billion worth of Chinese goods. But this amount at
the moment is still a small part of China's economy, about 3 percent of the Chinese GDP. So the
impact at the moment is limited, but certainly has created a lot of uncertainty for the global
and the Chinese business community.
PAUL JAY: So given that this trade war could, one, get a lot bigger and a lot more serious,
and/or even if they kind of patch it up for now, there's a lot of forces within the United
States, both for economic and geopolitical reasons. Economic being the discussion about China
taking American intellectual property rights, becoming the new tech sector hub of the world,
even overpassing the American tech sector, which then has geopolitical implications; especially
when it comes to the military. If China becomes more advanced the United States in artificial
intelligence as applied to the military, that starts to, at least in American geopolitical
eyes, threaten American hegemony around the world.
There are a lot of reasons building up, and it's certainly not new, and it's not just Trump.
For various ways, the Americans want to restrain China. Does this start to make the Chinese
think that they need to speed up the process of becoming more dependent on their own domestic
market and less interested in exporting cheap labor? But for that to happen Chinese wages have
to go up a lot more significantly, which butts into the interests of the Chinese billionaire
MINQI LI: I think you are right. And so for China to rearrange towards this kind of domestic
consumption-led model of economic development, the necessary condition is that you have income,
wealth redistribution towards the workers, towards poor people. And that is something that the
Chinese capitalists will resist. And so that is why and so far China has not succeeded in
transforming itself away from this export-led model based on exploitation of cheap labor.
PAUL JAY: You know, there's some sections of the left in various parts of the world that do
see the Chinese model as a more rational version of capitalism, and do see this because they've
maintained the control of the Chinese Communist Party over the politics, and over economic
planning, that do see this idea that this is somehow leading China towards a kind of socialism.
If nothing else, a more rational planned kind of capitalism. Is that, is there truth to
MINQI LI: Well, first of all, China is not socialist at all today. So income of economic
sector, the [space] sector accounts for a small number, a small fraction of the overall
economy, by various measurements.
And then regarding the rationality of China's economic model, you might put it this way: The
Chinese capitalists might be more rational than the American capitalists in the sense that they
still use most of their profits for investment, instead of just financial speculation. So that
might be rational from the capitalist perspective. But on the other hand, regarding the
exploitation of workers- and the Chinese workers still have to work under sweatshop conditions-
and regarding the damage to the environment, the Chinese model is not rational at all.
PAUL JAY: My understanding of people that think this model works better, at least, than some
of the other capitalist models is that there's a need to go through this phase of Chinese
workers, yes, working in sweatshop conditions, and yes, wages relatively low. But overall, the
Chinese economy has grown by leaps and bounds, and China's position in the world is more and
more powerful. And this creates the situation, as more wealth accumulates, China is better
positioned to address some of the critical issues facing China and the world. And then, as bad
as pollution is, and such, China does appear to be out front in terms of developing green
technologies, solar, sustainable technology.
MINQI LI: OK. Now, Chinese economy has indeed been growing rapidly. It used to grow like
double-digit growth rate before 2010. But now China's growth rate has slowed down just under 7
percent in recent years, according to the official statistics. And moreover, a significant part
of China's growth these days derives rom the real estate sector development. And so there has
been this discussion about this growing housing market bubble. And it used to be that this
housing price inflation was limited to a few big cities. But for the first half of 2018,
according to the latest data, the national average housing price has grown by 11 percent
compared to the same period last year. And that translates into a pace of doubling every six
And so that has generated lots of social resentment. And so not only the working class these
days are priced out of the housing market. Moreover, even the middle class is increasingly
priced out of the housing market. So that is the major concern. And in the long run, I think
that China's current model of accumulation will also face the challenge of growing social
conflicts. Worker protests. As well as resources constrained and environmental damage. And
regarding the issue of China's investment in renewable energy, it is true. China is the largest
investor in renewable energy development, in the solar panels. And although China is of all the
largest investor in about everything.
And so China is still the largest emitter of greenhouse gases in the world, accounting for
almost 30 percent of the total carbon dioxide emissions in the world every year. And then
China's own oil production in decline, but China's oil consumption is still rising. So as a
result, China has become the world's largest oil importer. That could make the Chinese economy
vulnerable to the next major oil price shock.
PAUL JAY: And how seriously is climate change science taken in China? If one takes the
science seriously, one sees the need for urgent transformation to green technology. An urgent
reduction of carbon emission. Not gradual, not incremental, but urgent. Did the Chinese- I
mean, it's not, it's so not taken seriously in the United States that a climate denier can get
elected president. But did the Chinese take this more seriously? Because you don't get the
same, any sense of urgency about their policy, either.
MINQI LI: Well, yeah. So like many other governments, the Chinese government also pays lip
service to the obligation of climate stabilization. But unfortunately, with respect to policy,
with respect to mainstream media, it's not taken very seriously within China. And so although
China's carbon dioxide emissions actually stabilized somewhat over the past few years, but is
starting to grow again in 2017, and I expect it will continue to grow in the coming year.
PAUL JAY: I mean, I can understand why, for example, Russia is not in any hurry to buy into
climate change science. Its whole economy depends on oil. Canada also mostly pays lip service
because the Alberta tar sands is so important to the Canadian economy. Shale oil is so
important to the American economy, as well as the American oil companies own oil under the
ground all over the world. But China is not an oil country. You know, they're not dependent on
oil income. You'd think it'd be in China's interest to be far more aggressive, not only in
terms of how good it looks to the world that China would be the real leader in mitigating,
reducing, eliminating the use of carbon-based fuels, but still they're not. I mean, not at the
rate scientists say needs to be done.
MINQI LI: Not at all. Although China does not depend on all on oil for income, but China
depends on coal a lot. And the coal is still something like 60 percent of China's overall
energy consumption. And so it's still very important for China's energy.
PAUL JAY: What- Minqi, where does the coal mostly come from? Don't they import a lot of that
MINQI LI: Mostly from China itself. Even though, you know, China is the world's largest coal
producer, on top of that China is either the largest or the second-largest coal importer in the
world market as well. And then on top of that, China is also consuming an increasing amount of
oil and natural gas, especially natural gas. And so although natural gas is not as polluting as
coal, it's still polluting. And so it's expected China will also become the world's largest
importer of natural gas by the year 2019. So you are going to have China to be simultaneously
the largest importer of oil, natural gas, and coal.
PAUL JAY: The Chinese party, just to get back to the trade war issue and to end up with, the
idea of this Chinese nation standing up, Chinese sovereignty, Chinese nationalism, it's a
powerful theme within this new Chinese discourse. I'm not saying Chinese nationalism is new,
but it's got a whole new burst of energy. How does China, if necessary to reach some kind of
compromise with the United States on the trade war, how does China do that without looking like
it's backing down to Trump?
MINQI LI: Well, yes, difficult task for the Chinese party to balance. What they have been
right now is that on the one hand they promise to the domestic audience they are not going to
make concessions towards the U.S., while in fact they are probably making concessions. And then
on the other hand the outside world, and they make announcement that they will not change from
the reform and openness policy, which in practice means that they will not change from the
neoliberal direction of China's development, and they will continue down the path towards
financial liberalization. And so that is what they are trying to balance right now.
PAUL JAY: I said finally, but this is finally. Do the Americans have a case? Does the Trump
argument have a legitimate case that the Chinese, on the one hand, want a liberal world order
in terms of trade, and open markets, and such? On the other hand are not following intellectual
property law, property rights and law, the way other advanced capitalist countries supposedly
do. Is there something to that case?
MINQI LI: Well, you know, let's say the Chinese government right now, even though is led
by the so-called Communist Party, is actually much more committed to the neoliberal global
order that the Trump administration in the U.S. - but I don't want to make justifications
for the neoliberal global order. But let's put it this way: The Trump administration of
this trade protectionist policy, although not justified, it reflects fundamental social
conflicts within the U.S. itself, and that probably cannot be sorted out by the Americans'
current political system.
PAUL JAY: So the crisis- you know, when you look at the American side and the Chinese side,
including the deep debt bomb people talk about in China, there really is no sorting out of this
MINQI LI: So the overall neoliberal regime has become much more unstable.
PAUL JAY: All right. Thanks for joining us, Minqi. I hope we can pick this up again
MINQI LI: OK. Thank you.
PAUL JAY: Thank you for joining us on The Real News Network.
"... Gilbert Doctorow is an independent political analyst based in Brussels. His latest book, "Does the United States Have a Future?" was published on 12 October 2017. Both paperback and e-book versions are available for purchase on http://www.amazon.com and all affiliated Amazon websites worldwide. See the recent professional review http://theduran.com/does-the-united-states-have-a-future-a-new-book-by-gilbert-doctorow-review/ For a video of the book presentation made at the National Press Club, Washington, D.C. on 7 December 2017 see https://www.youtube.com/watch?v=ciW4yod8upg ..."
Tharoor quotes from New York Times columnist David Brooks who concluded that Trump's behavior was that "of a man who
wants the alliance to fail." He quotes extensively from Guy Verhofstadt, a former Belgian prime minister and leader of the Liberal
political fraction in the European Parliament fighting for a much more integrated EU, who sees Trump as the enemy of liberal internationalism
and ally of his own alt right enemies in Europe.
Tharoor also brings into play Martin Wolf of the Financial Times , who delivered a scathing attack on Trump for his rejection
of the West: " today the U.S. president appears hostile to core American values of democracy, freedom and the rule of law; he feels
no loyalty to allies; he rejects open markets; and he despises international institutions."
In the 23 July issue of "Today's World View," Tharoor takes advantage of the time gone by since Helsinki to refine the conclusions.
He offers a pithy commentary from Susan Glasser of The New Yorker : "We are witnessing nothing less than the breakdown of
American foreign policy."
In the same issue, Tharoor notes that public reaction to Trump in Helsinki is less pronounced than one might suppose from reading
the pundits. He offers the following remarks of colleagues on the results of a recent poll: "Most Americans do not feel Trump went
'too far' in supporting Puitn, and while more Americans say U.S. leadership has gotten weaker than stronger under Trump, his ratings
on this question are slightly improved from last fall."
If we go back in time to the days following Trump's visit to the NATO gathering in Brussels, we find in the headlines of the 11
July issue another take on what Trump is doing:
"Trump's NATO trip shows 'America First' is 'America Alone.'"
Here we read about Trump's insistence that America "stop footing Europe's bill" for its defense, namely his demand that all NATO
allies pay up 2% of GDP at once, not in the remote future; and that they prepare to double that to 4% very quickly. By intentional
abrasiveness, these moves by Trump are, Tharoor tells us, "undercutting the post-World War II order in pursuit of short-term, and
likely illusory, wins."
All of these comments address the question of what Trump opposes. However, Tharoor is unable to say what, if anything, Trump stands
for. There are only hints: continued US hegemony but without the ideological cover; might makes right; nationalism and the disputes
that lead to war.
Does this make sense? Or is it just another way of saying that Trump's foreign policy stance is an inconsistent patchwork, illogical
and doomed to fail while causing much pain and destruction along the way?
I fully agree with the proposition that Donald Trump is ripping up the post-Cold War international order and is seeking to end
NATO and the rest of the alliance system by which the United States has maintained its global hegemony for decades. But I believe
this destructive side is guided by a creative vision of where he wants to take US foreign policy.
This new foreign policy of Donald Trump is based on an uncompromising reading of the teachings of the Realist School of international
affairs, such as we have not seen since the days of President Teddy Roosevelt, who was its greatest practitioner in US history.
This is not isolationism, because Trump is acting to defend what he sees as US national interests in foreign trade everywhere
and in geopolitics in one or another part of the world. However, it is a world in which the US is cut free from the obligations of
its alliances which entail maintenance of overseas bases everywhere at the cost of more than half its defense budget. He wants to
end the risks of being embroiled in regional wars that serve our proxies, not core US national interests. And he is persuaded that
by a further build-up of military might at home, by adding new hi-tech materiel the US can secure its interests abroad best of all.
I reach these conclusions from the snippets of Trump remarks which appear in the newspapers of daily record but are intentionally
left as unrelated and anecdotal, whereas when slotted together they establish the rudiments of an integrated worldview and policy.
For example, I take his isolated remark that the United States should not be prepared to go to war to defend Montenegro, which
recently passed NATO accession, because Montenegro had been a trouble-maker in the past. That remark underwent virtually no analysis
in the media, though it could be made only by someone who understood, remarkably, the role of Montenegro at the Russian imperial
court of Nicholas II precisely as "troublemaker," whose dynastic family aided in their own small way the onset of WWI.
Donald Trump is not a public speaker. He is not an intellectual. We cannot expect him to issue some "Trump Doctrine" setting out
his Realist conception of the geopolitical landscape. All we get is Tweets. This inarticulate side of Trump has been used by his
enemies to argue he has no policy.
In fact, Trump is the only Realist on the landscape.
Going back to 2016, I thought he was being guided by Henry Kissinger during the campaign and then in the first months of his presidency,
I misjudged entirely. Trump is true to the underlying principles of Realism without compromise, whereas Henry K. made his peace with
the prevailing Wilsonian Idealism of the American Establishment a couple of decades ago in order to remain welcome in the Oval Office
and not to be entirely marginalized.
Trump's vision of Realism draws from the source in the Treaty of Westphalia, 1648 with its guiding concept of sovereign nation-states
that do not intervene in others' domestic affairs. It further draws on the notions of raison d'état or national interest
developed by the French court of Louis XIV and then taken further by "perfidious Albion" in the eighteenth century, with temporary
and ever changing combinations of states in balance of power realignments of competitors. The history of the Realist School
was set out magnificently by Kissinger in his 1994 work Diplomacy . It is a pity that the master himself strayed from true
In all of this, you have the formula for Trump's respect, even admiration for Putin, since that also is now Vladimir Vladimirovich's
concept of Russia's way forward: as a strong sovereign state that sets its own course without the constraints of alliances and based
on its own military might.
The incredible thing is how a man with such poor communication skills, a man who does not read much came to such an integrated
vision that outstrips the conceptual abilities of his enemies, his friends and everyone in between.
We are tempted to look for a mentor, and one who comes to mind is Steve Bannon, who is very articulate, razor-sharp in his intellect
and who provided Trump with much of the domestic content of his 2016 campaign from the alt right playbook. And though Bannon publicly
broke with Trump in their falling out over his ever diminishing role in the Administration, Bannon's ongoing project, in particular
his Movement to influence European politics and shift it to the Right by coordinating activities across the Continent during the
parliamentary elections of May 2019, very closely parallel what Trump's ambassador in Berlin seems to be doing in Trump's name.
It may well be that the President and his confidantes find it prudent for him to play the hapless fool, the clueless disrupter
of the global political landscape until he has the support in Congress to roll out the new foreign policy that is now in gestation.
The logical consequence of such a Realist approach to foreign policy will be to reach an understanding with the world's other
two principal military powers, Russia and China, regarding respective spheres of influence in their geographic proximity. But I do
not believe we will see a G-3 succeeding America's unipolar moment. Given the predispositions of both Russia and China, we are more
likely to see a broader board of governors of global policy in the form of the G-20, ushering in the multipolar age. In such a formulation,
regional conflicts will be settled locally by the interested parties and with the major powers involved only as facilitators, not
parties to conflict. That promises a much more stable and peaceful future, something which none of Donald Trump's detractors can
begin to imagine as his legacy.
trump has wrecked environmental policy, trade policy and domestic social policy....the
upshots will be: 1- a much more toxic environment & much higher level of respiratory
disease and cancerous related ailments; overall poorer health & health care for the
average citizen 2- higher prices for imported goods, lower level of trade exports, fewer US
based jobs and more off-shoring of US jobs 3- a substantial increase in the homeless
population in the urban areas of this country; increased rates of poverty for the poor, lower
economic prosperity for the lower and lower middle class income brackets; wage stagnation for
the middle & upper middle income brackets; less advanced education & lower worker
productivity and innovation to name just a few of the impacts created by this idiot....in
simple in English, Trump and his so-called initiatives are shafting this country in almost
every way possible
What part of international law is not just pissed on toiler paper strewn over the floors of a
urinal? Which post WWII president respected this law?
International law, since WWII failed. It failed in '47 when no referendum was held in
Palestine - against Chapter 1, Article 1 paragraph 2 of the UN Charter. It failed in Crimea,
when the results of such a referendum was spat on by the previous war criminal to sit in the
Oval Office. It fails now as sanctions are used unilaterally - being equivalent to the use of
force in result, they should be
But then let's not stop at after the war. The US is the only country to nuke civilians.
6/7 US four star generals at the time said the action had no strategic or tactical purpose
The US is what ISIS dreams to be, the sooner it falls into obscurity the better.
Pure nonsense. The Great Depression began on October 29, 1929. FDR was inaugurated on March
4, 1933 nearly 4 years after it began. Hoover had actually only been in office for just over
6 months before Black Tuesday. GDP began growing and unemployment began falling in 1933
shortly after FDR took office. The Depression officially came to an end in 1939 when GDP
returned to pre-Depression levels.
There is no long term US growth. There is a debt default after people realize the fact that
the top of the whole US government is incompetent. That it has chained itself to such
astronomic liabilities for useless wars (as the Empire has not succeeded in world hegemony),
is even sadder. It coould have spent the $5tn of Iraq and Afghanistan on building shit, but
instead it bombed shit.
Trump doesn't matter for US long run - in 5-10 years time the country will be only found
in history books.
Remember Kruschev's (sp?) last words on leaving office, and I'm paraphrasing: "Don't worry
about America, they'll spend themselves to death (just like we have)". Continued economic
growth is a wet dream of Wall Street origin. We are massively overpopulated and rapidly using
up earth's natural resources at an increasingly unsustainable rate. We must begin to reduce
our growth, not keep increasing it. Population density stress is killing us now and only
increasing every day along with the 220,000 new mouths to feed that we are turning out into a
world that has no room for 28,000,000 homeless migrants already. Just how crazy are we
really. If this article is to be believed, we are nuts. E.F. Schumacher is rolling in his
grave! Stress R Us
The contribution of a president to the national debt depends a bit on how you calculate it.
You could simply look at rhe dates of inauguration or go a step further and look at the
fiscal years. For the latter see :
In absolute terms Obama is indeed at the top of the list, percentagewise his predecessor
played a larger part. No matter how you look at it or what the causes were, under Bush and
Obama the U.S. debt seems to have spiralled out of of control and Trump is doing bugger all
to stop that trend.
For consider the fruits of free trade policy during the last 25 years : the frozen wages of
U.S. workers, $12 trillion in U.S. trade deficits, 55,000 factories lost, 6 million
manufacturing jobs gone, China surpassing the U.S in manufacturing, all causing a backlash that
pushed a political novice to the Republican nomination and into the presidency.
To maintain a belief in the superiority of free trade to economic patriotism, in the face of
such results, is to recognize that this belief system is impervious to contradictory proof.
The sad reality that I see all around is that Western civilization has been hijacked by
degenerate hyenas like Rome was sacked from within first before being sacked externally. The
institutions that once made the West a leader and a model, have been corrupted, tainted and
filled with anti-humanists and crony corporatists. Greed is out of control and "popular
culture" is spreading decay. The hollowing out will continue until these parasites find
another host to leech off. Will it be China? Will it be a global government? Will it be
another planet? Who knows.
Once upon a time figures like Rosenstein, Mueller, Brennan, Browder, Clapper, Clinton etc
would be just fucking taken out or punished. Instead of that, they get to wander their toxic
asses around like protected peacocks, all on tax payers dime, with their shitty agendas, and
their shitty handlers cheering on the degeneracy and assault on the truth and the people.
If this is what "civilization" has boiled down to, count me the fuck out of it. The 5000
year old human farming experiment is merely switching straight jackets. Its the same old
story that ever was, ever since we gave up the nomadic lifestyle. In a way, its probably an
inevitability, given our flawed human nature, and the size of the population....and average
intellect. The desire to be 'lead' by some ruling class, no matter what flavour of 'ism' it
is, eventually all turns to the same end result....shit. Unless this global awakening can
muster into a force to be reckoned with, and not be swayed by divide and conquer tactics,
nothing will change. So far with the toxic Left vs Right divide, and countless other divides,
the only beneficiaries of this are the ones at the top of the pyramid.
Pat Buchanan: Are Globalists Plotting A Counter-Revolution?
HopefulCynical : Is the sky blue? Is water wet? Is fire hot?
FFS, look at the goddamn purge on (((Social media))). Of COURSE the (((globalists))) are
attempting a counter-revolution.
We all need to move to alt-tech: Minds , Gab , Bitchute . Even if you don't have a
(((social media))) presence, consider getting an alt-media presence. We've been wondering
when the next phase would begin, whewn it would be time to take further action. Well, it's
First step in this next phase is to set up multiple lines of communication not under
(((establishment))) control. Even if you seldom use them, set up accounts; advise those you
know to do likewise. Wanna see the establishment panic? If they see the subscriber count for
the alt-tech sites suddenly quadruple (or more) in response to their purge, they'll shit
themselves. They'll probably attempt to pull domain registrars and financial processing
services from those sites.
But will "negotiations" and regulatory loosening on issues like the environment and worker
safety, which have gotten out of hand in the US to the disadvantage of underemployed
citizens, offset the extremely low wages offered to Asian and Latin American workers in the
countries where American-owned companies shipped over 6 million jobs, canceling out the
SS-retirement fund contributions that would have been made by American workers [and]
employers if the jobs had been kept here?
Cheap labor seems to TRUMP everything with US employers.
Running from the SS trust fund might be another reason for their abandonment of
Cheap labor Trumps everything here in the USA, too, and the cheap-labor pool is aided and
abetted by the welfare system. That is why US employers prefer an often extremely absentee
welfare and progressive-tax-code-subsidized labor market, receiving .gov-financed monthly
bills and up to $6,431 in refundable child-tax-credit cash for US-born instant-citizen
Contrary to myth, hard work, daily and all-day attendance and even work productivity, like
every-month quota meeting, is NOT preferred by American employers for most of the jobs left
here in the USA.
The welfare-eligible 42 million are (on the books) not hard workers, but part-time
workers, staying under the income limits for welfare programs. I KNOW that from working at
the Department of Human Services, where single moms and the womb-productive girlfriends of
illegal and legal immigrants MUST submit proof of a single-breadwinner's part-time, traceable
earnings to get the free stuff.
The earnings must fall below the income limits for welfare programs that ALWAYS reward
part-time work in womb-productive single-breadwinner households of citizens and noncitizens.
You cannot work full time in a minimum-wage job while meeting the income limits. When I
worked at DHS, both the EBT and monthly cash assistance income limits were BELOW $900 per
Even if Trump eventually lures US corporations back here with looser regulations and tax
cuts, rather than just unleashing a stock buy-back spree, it will not matter to the 101
million American citizens of working age who are out of the labor force and the 78 million
gig pieceworkers, not if this welfare-rigged labor market of citizens and noncitizens
continues to be the norm.
You cannot compete with a bigly labor market full of welfare-fetching citizens &
noncitizens who do not need pay sufficient to cover rent due to their womb production.
Only a Deplorables First immigration reform would address that issue, including a big
reduction in the number of welfare-eligible legal immigrants let in each year. The number 1.5
million is too many. This -- no more and no less than illegal immigration -- keeps wages
down, but the illegal immigration has the added bonus of making America more dangerous.
The impasse on the immigration issue is the reason why I am skeptical of the value of
current trade-war maneuvering, even though I am glad that Trump is addressing that general
The other thing that complicates this trade war is the way that globalist elites have sold
America out over the years, not just destroying the middle class with all of this offshoring
and welfare-supported illegal labor, but also getting the US economy 1) waist-deep in debt,
2) dependent on foreign investment and 3) subject to getting jerked around by Machiavellian
currency manipulation that non-math people, like me, really don't understand.
It sounds kind of dangerous, though, even just the argument that Stockman makes about
China being a house of cards that, if it came down, could have unintended consequences for
I have no idea. But I do know that many of the people who voted for Trump are pretty
adamant about the immigration issue, first and foremost, regarding it as an easier and less
risky thing to get done as well.
Maybe, the children-at-the-border Movie of the Week has convinced most Trump voters to
stay on the train, thinking something permanent has been done to contain the flow of
welfare-rewarded illegal immigration.
I think many of the teenagers, released into the country to live with extended family or
in foster care, will, in a few years, be entering the labor force as part-time workers,
producing instant-citizen kids and getting free monthly bills and refundable child-tax-credit
cash from .gov, while citizens like me will still face rent that eats up over half of our
monthly, earned-only income from low-wage churn jobs.
As much of an enthusiastic Trump voter as I have been, going back a long way, I am not
sure that I am going to vote in the mid-term general election. I am not going to vote for
this Tammany Hall II Democratic Party, but I may just stay home.
There are many populists out there, not just on the right either, who are disgruntled for
very real reasons, like this interesting article explains, so there will likely be wave after
wave of non-centrist populism until globalism's shoreline has been redefined.
Hmmm, weird, when I loaded the other link, it conformed to the format of this text box,
but then when I loaded the link above this last paragraph, it reverted to cutting off the
text on the side. Until I post it, I cannot see the full text after links are added.
"The few who understand the system, will either be so interested in its profits, or so
dependent on it favors that there will be no opposition from that class, while on the other
hand, the great body of people mentally incapable of comprehending the tremendous
advantages...will bear its burden without complaint and perhaps without suspecting that the
system is inimical to their best interests."
-Rothschild Brothers of London communique' to associates in New York June 25th, 1863.
June 16, 2010.
New-Cons. Love War & torture, increased regulations, tyranny and taxes; with our taxes
going to the plutocrats of the private banking community. They support governmental
destruction of our environment, under the pretender of protecting it. They, also, overtly
support corporatism (Fascism for Oligarchs) and any measures supported by the Republican
Party that enrich the private International Monetary / Banking Cartel at the expensive of
the. American People.
New- Libs. Love War & torture, increased regulations, tyranny and taxes; with our
taxes going to the plutocrats of the private banking community. They support governmental
destruction of our environment, under the pretender of protecting it. They, also, overtly
support corporatism (Socialism for Oligarchs) and any measures supported by the Democratic
Party that enrich the private International Monetary / Banking Cartel at the expensive of
the. American People.
The economics of the neoliberal era had a fundamental flaw.
The 1920s roared with debt based consumption and speculation until it all tipped over into
the debt deflation of the Great Depression. No one realised the problems that were building
up in the economy as they used an economics that doesn't look at private debt, neoclassical
I think Pat also gets this sentence wrong and if so I say he misses details we would like
This is truly economics uber alles, economy before country.
The University Economist programs/studies were more oriented toward people in the old
days. Economics today is used to justify Wall Street type finance and ideology. Economic
study was hijacked to serve only those looking to get rich any way they can. CFR agenda comes
to mind. Globalism comes to mind also and is an attack on all nations constitutions.
The Americans have been discovering the problems of running an economy with bad
Economics was always far too dangerous to be allowed to reveal the truth about the
The Classical economist, Adam Smith, observed the world of small state, unregulated
capitalism around him.
"The labour and time of the poor is in civilised countries sacrificed to the maintaining
of the rich in ease and luxury. The Landlord is maintained in idleness and luxury by the
labour of his tenants. The moneyed man is supported by his extractions from the industrious
merchant and the needy who are obliged to support him in ease by a return for the use of his
money. But every savage has the full fruits of his own labours; there are no landlords, no
usurers and no tax gatherers."
How does this tie in with the trickledown view we have today?
Somehow everything has been turned upside down.
The workers that did the work to produce the surplus lived a bare subsistence
Those with land and money used it to live a life of luxury and leisure.
The bankers (usurers) created money out of nothing and charged interest on it. The bankers
got rich, and everyone else got into debt and over time lost what they had through defaults
on loans, and repossession of assets.
Capitalism had two sides, the productive side where people earned their income and the
parasitic side where the rentiers lived off unearned income. The Classical Economists had
shown that most at the top of society were just parasites feeding off the productive activity
of everyone else.
Economics was always far too dangerous to be allowed to reveal the truth about the
How can we protect those powerful vested interests at the top of society?
The early neoclassical economists hid the problems of rentier activity in the economy by
removing the difference between "earned" and "unearned" income and they conflated "land" with
"capital". They took the focus off the cost of living that had been so important to the
Classical Economists to hide the effects of rentier activity in the economy.
The landowners, landlords and usurers were now just productive members of society
It they left banks and debt out of economics no one would know the bankers created the
money supply out of nothing. Otherwise, everyone would see how dangerous it was to let
bankers do what they wanted if they knew the bankers created the money supply through their
The problem is the US has lost citizenry-control. A shadow-government along with media
operatives work unseen to manipulate sentiment and events in-line with an overall globalist,
world-government objective (Neo-Marxism). The so-called elites behind the curtain are after
total control which is why we will continue toward totalitarian dictatorship. It will not be
a one-man show nor will it be readily recognizable as such, rather there will be a secretive
Cabal of select ultra-wealthy liberals who will negotiate with each other as to which levers
to pull and valves to turn in order to "guide" culture and civilization. But the tightknit
Cabal has more work to do to infiltrate deeper into US (and world) government. The EU's
Parliament is a proto-type test to tweak how they must proceed. As the Cabal coalesces their
power, more draconian rulership will become apparent. The noose will tighten slowly so as to
be un-noticeable and unstoppable. Certain events are planned that will cause citizenry to
demand totalitarianism (for safety reasons). For the Cabal, it'll be like taking candy from a
baby. This, in a nutshell, is the outline of how the US (and Western civilization) loses its
Understanding how trillions of trade dollars influence geopolitical policy we begin to
understand the three-decade global financial construct they seek to protect.
That is, global financial exploitation of national markets. FOUR BASIC ELEMENTS :
♦Multinational corporations purchase controlling interests in various national
outputs and industries of developed industrial western nations.
♦The Multinational Corporations making the purchases are underwritten by massive
global financial institutions, multinational banks.
♦The Multinational Banks and the Multinational Corporations then utilize lobbying
interests to manipulate the internal political policy of the targeted nation state(s).
♦With control over the targeted national industry or interest, the multinationals
then leverage export of the national asset (exfiltration) through trade agreements structured
to the benefit of lesser developed nation states – where they have previously
established a proactive financial footprint.
Pat must suffer from some kind of cognitive dissonance. There is no free trade, nor there
was before Trump. In a world of flexible exchange rates and central banking
backed-inflationary credit trade wars are the status quo. He willfully ignores all the
effects of credit inflation, unsound money, tax structures, subsidies, regulatory burdens
created internally and by those "trade deals" and last but not least the reserve status of
the fiat dollar which basically turned the US in a huge nothing-for-something economy
relative to its imports.
Completing the latest round of tariffs pledged against China, the US Trade Representative
announced on Tuesday (after the close of course) it will impose 25% tariffs on $16
billion-worth of Chinese imports starting August 23. The new round of tariffs completes Trump's
previously disclosed threat to impose $50 billion of import taxes on Chinese goods. The first
$34 billion-worth went into effect on July 6th.
According to the USTR statement, customs will collect duties on 279 product lines, down from
284 items on the initial list; as Bloomberg notes, this will be the second time the U.S. slaps
duties on Chinese goods in about the past month, overruling complaints by American companies
that such moves will raise business costs, tax US consumers and raise prices.
On July 6, the U.S. levied 25% duties on $34 billion in Chinese goods prompting swift
in-kind retaliation from Beijing.
Of course, China will immediately retaliate, having vowed before to strike back again,
dollar-for-dollar, on the $16 billion tranche.
The biggest question is whether there will be a far bigger tariff in the near future: as a
reminder, the USTR is currently also reviewing 10% tariffs on a further $200 billion in Chinese
imports, and may even raise the rate to 25%. Those tariffs could be implemented after a comment
period ends on Sept. 5. President Donald Trump has suggested he may tax effectively all imports
of Chinese goods, which reached more than $500 billion last year.
Over the weekend, Trump boasted that he has the upper hand in the trade war, while Beijing
responded through state media by saying it was ready to endure the economic fallout. Judging by
the US stock market, which has risen by $1.3 trillion since Trump launched his trade war with
China, which has crushed the Shanghai Composite, whose recent drop into a bear market has been
duly noted by Trump, the US president is certainly ahead now, even if the market's inability,
or unwillingness, to push US stocks lower has led many traders and analysts to scratch their
Exposing the growing backlash against Trump's trade policies, the
that "ticked-off Canadians", angered by U.S. metals tariffs and Trump's harsh words
for their prime minister,
are boycotting American products and buying Canadian.
Take Garland Coulson, a 58-year-old Alberta entrepreneur, who admits that while usually he doesn't
pay much attention to where the goods he buys are coming from, saying that "you tend to buy the
products that taste good or you buy the products that are low in price where taste isn't an issue",
he believes the tariffs from Canada's neighbor are a "slap in the face," and added that in recent
he has put more Canadian products into his shopping cart.
Or take Calgary resident Tracy Martell, who "replaced her Betty Crocker brownie mix with a
homemade recipe and hasn't visited the U.S. since shortly after President Trump's inauguration."
Or take Ontario resident Beth Mouratidis is trying out Strub's pickles as a replacement for her
longtime favorite, Bick's.
The push to " boycott America" and buy more Canadian products gained strength after the U.S.
levied 25% tariffs on Canadian steel and 10% on aluminum starting June 1 and President Trump called
Canadian Prime Minister Justin Trudeau "Very dishonest & weak" on Twitter following a Group of
Seven meeting the following week. Canada in turn imposed retaliatory tariffs on some U.S. products,
including foodstuffs such as ketchup, orange juice and yogurt.
"People sort of feel that we're getting a raw deal from the U.S. and we have to stick up for
ourselves," said Tom Legere, marketing manager for Ontario-based Kawartha Dairy Ltd., which has
seen more interest in its ice cream recently. "And this is their way at the supermarket of
trying to do so."
However, in their attempt to exclude US produce, Canadians have run into a problem:
is American, and what is really Canadian
The logistical spiderweb of global supply chains has made even something as simple as a boycott
surprisingly complex. It shouldn't be: after all, Canada is the U.S.'s top export market, taking a
little more than 18% of all U.S. exports. According to some estimates, roughly 40% to 60% of food
on Canada's grocery shelves is from the US, while closely linked production chains make it tough to
determine how much of any given item was produced domestically.
That has left would-be boycotters scratching their heads as they untangle how much of a given
product was made or grown outside the country.
The confusion has led to a mini cottage industry: tracing the origins of Canadian products.
"I'll swear up and down something is 100% Canadian," said Mouratidis, who curates a Facebook list
of Canadian household goods, food products and other items. Occasionally, she runs into surprises:
she was convinced Old Dutch chips were all-Canadian until she found out Old Dutch Foods Ltd. is a
subsidiary. The parent company, Old Dutch Foods Inc., is based in Minnesota.
This leads to occasional exclusions on the boycott list: the Old Dutch snack food remains on Ms.
Mouratidis's list because the Canadian company makes its chips in Canada.
It has also led to a sales boost for companies whose products are not "diluted" with traces of
American influence. A social-media post promoting Kawartha Dairy over "American" Haagen-Dazs ice
cream was criticized by a Facebook user who pointed out that Haagen-Dazs products sold in Canada
are made at a Canadian plant. The plant also uses Canadian dairy, Nestlé Canada Inc. confirmed.
Kawartha Dairy, which wasn't involved in the original post, received more than a hundred
emails and Facebook messages in recent weeks from Canadians asking where they could find the
company's ice cream.
Another product getting a boost from the "Buy Canadian" push: Hawkins Cheezies, a corn snack
that looks like a denser and crunchier version of Cheetos that is made with Canadian cheddar. W.T.
Hawkins Ltd., which makes the snack, said two large grocery-store chains recently increased their
The growing animosity to "Made in America" has made some traditional staples
Kraft Heinz has been a frequent target for Canadians since Heinz stopped producing ketchup
in Ontario in 2014.
A list circulating online recently that ranked consumers' best options for Canadian products
puts French's ketchup ahead of Heinz because it is manufactured in Canada.
Then again, unlike the Chinese where a
boycott really means a boycott
one wonder if for all the clamor, Canada's revulsion to US products is merely just another example
of virtue signaling. After all, one sector where the boycott efforts are failing miserably, is
travel. Although some people are deliberately staying away from the U.S., the WSJ notes that
according to official Canadian data,
overall cross-border car trips by Canadians were up
12.7% in June from the same month last year
China is willing to resolve differences with the United States
on an equal footing, the Chinese government's top diplomat said on Friday after meeting U.S.
Secretary of State Mike Pompeo, but added they did not address their trade war too
U.S. President Donald Trump on Wednesday instructed his trade officials to look at
increasing tariffs to 25 percent from 10 percent on $200 billion in Chinese imports into the
Trump, who has accused China and others of exploiting the United States in global trade, has
demanded that Beijing make a host of concessions to avoid the new duties, which could be
imposed in the weeks after a comment period closes on Sept. 5.
China, however, shows no sign of bending to Washington's pressure.
Speaking to reporters after meeting Pompeo on the sidelines of a regional summit in
Singapore, Chinese State Councillor Wang Yi said Pompeo told him he was "was willing to
maintain constructive contact".
"As two members of the U.N. Security Council and the world's largest two economies, we
should of course maintain talks at all times," Wang said.
"Cooperation is the only correct choice for the United States and China. It's the universal
expectation of the international community. Opposition can only bring dual loss and will hurt
the peaceful and stable development of the world," he added.
"We are willing to resolve the concerns of both sides via talks on the basis of an equal
footing and mutual respect. He (Pompeo) was accommodating on this as a direction, and said that
he does not want current frictions to continue," Wang said.
Answering a question about what was specifically said on trade, Wang said: "We did not speak
in such details. But actually, as journalists have noted, how can talks take place under this
Wang, who is also China's foreign minister, urged the United States on Thursday to calm down
and "carefully listen to the voices of U.S. consumers".
So far, the United States has imposed duties on $34 billion of imports from China as part of
a first tranche of sanctions on $50 billion of goods.
It wants China to stop stealing U.S. corporate secrets, abandon plans to boost its high-tech
industries at America's expense and stop subsidising Chinese companies with cheap loans that
enable them to compete unfairly.
China says the United States is trying to stop the rise of a competitor and it has imposed
its own tariffs on U.S. goods. The rising tensions have weighed on stock and currency markets,
with the Chinese yuan falling against the dollar.
The two countries have not had formal talks on their trade dispute since early June.
The views and opinions expressed herein are the views and opinions of the author and do
not necessarily reflect those of NASDAQ, Inc.
We are in the point when capitalist system (which presented itself as asocial system that created a large middle class)
converted into it opposite: it is social system that could not deliver that it promised and now want to distract people from this
The Trump adopted tax code is a huge excess: we have 40 year when corporation paid less taxes. This is last moment when they
need another gift. To give them tax is crazy excess that reminding
Louis XV of France. Those gains are going in buying of socks. And real growth is happening elsewhere in the world.
After WW2 there were a couple of decades of "golden age" of US capitalism when in the USA middle class increased considerably.
That was result of pressure of working class devastated by Great Depression. Roosevelt decided that risk is too great and he
introduced social security net. But capitalist class was so enraged that they started fighting it almost immediately after the
New Deal was introduced. Business class was enrages with the level of taxes and counterattacked. Tarp act and McCarthyism were
two successful counterattacks. McCarthyism converting communists and socialists into agents of foreign power.
The quality of jobs are going down. That's why Trump was elected... Which is sad. Giving your finger to the
neoliberal elite does not solve their problem
"... Finally, if everybody tries to save themselves (protection), we have a historical example: after the Great Depression that happened in Europe. And most people believe that it was a large part of what led to WWII after WWI, rather than a much saner collective effort. But capitalism doesn't go for collective efforts, it tends to destroy itself by its own mechanisms. There has to be a movement from below. Otherwise, there is no counter force that can take us in another direction. ..."
"... When Trump announced his big tariffs on China, we saw the stock market dropped 700 points in a day. That's a sign of the anxiety, the danger, even in the minds of capitalists, about where this is going. ..."
"... Everything is done to avoid asking the question to what degree the system we have in place - capitalism is its name - is the problem. It's the Russians, it's the immigrants, it's the tariffs, it's anything else, even the pornstar, to distract us from the debate we need to have had that we haven't had for a half a century, which puts us in a very bad place. We've given a free pass to a capitalist system because we've been afraid to debate it. And when you give a free pass to any institution you create the conditions for it to rot, right behind the facade. ..."
"... The Trump presidency is the last gasp, it's letting it all hang out. A [neoliberal] system that's gonna do whatever it can, take advantage of this moment, grab it all before it disappears. ..."
In another interesting interview with Chris Hedges, Richard Wolff explains why the Trump presidency is the last resort of a system
that is about to collapse:
Finally, if everybody tries to save themselves (protection), we have a historical example: after the Great Depression that happened
in Europe. And most people believe that it was a large part of what led to WWII after WWI, rather than a much saner collective effort.
But capitalism doesn't go for collective efforts, it tends to destroy itself by its own mechanisms. There has to be a movement from
below. Otherwise, there is no counter force that can take us in another direction.
So, absent that counter force we are going to see this system spinning out of control and destroying itself in the very way its
critics have for so long foreseen it well might.
When Trump announced his big tariffs on China, we saw the stock market dropped 700 points in a day. That's a sign of the anxiety,
the danger, even in the minds of capitalists, about where this is going. If we hadn't been a country with two or three decades of
a middle class - working class paid really well - maybe we could have gotten away with this. But in a society that has celebrated
its capacity to do what it now fails to do, you have an explosive situation.
Everything is done to avoid asking the question to what degree the system we have in place - capitalism is its name - is the problem.
It's the Russians, it's the immigrants, it's the tariffs, it's anything else, even the pornstar, to distract us from the debate we
need to have had that we haven't had for a half a century, which puts us in a very bad place. We've given a free pass to a capitalist
system because we've been afraid to debate it. And when you give a free pass to any institution you create the conditions for it
to rot, right behind the facade.
The Trump presidency is the last gasp, it's letting it all hang out. A [neoliberal] system that's gonna do whatever it can, take advantage
of this moment, grab it all before it disappears.
In the long run, the US has two distinct advantages that offset some of the vulnerabilities in the US economy, brought about
by 40 years of outsourcing. The US is energy independent to a very large extent, where China is greatly dependent on energy
imports, largely priced in dollars. The US has a global military advantage that will persist for the next decade or more.
Hard to say where this will lead. Best option is for the US and China to resume the trade talks that broke off months ago.
Economic mutually assured destruction is not a pleasant outcome, particularly at a moment when even the IMF is worrying about
emerging market debt, corporate debt defaults and other signs of another global financial crisis.
My sense is that the whole issue of trade disputes is not so much about trade and economics as much
as politics and sovereignty. Not a whole lot will have changed in economic terms when the dust
clears, but the underlying politics will have been altered unrecognizably. The whole idea of
creating international bureaucratic bodies to oversee and regulate international trade (e.g. WTO)
was to bypass the "normal" politics in the states involved. Long ago, the weaker countries cried
"modern day imperialism" over these because they felt (not entirely without justification) that
these arrangements took trade policy out of the hands of their domestic politics and unresponsive
to their needs, interests, and demands--and, in a sense, this was exactly the point, since
protectionism, even economically undesirable varieties, are product of "good" domestic politics.
But since 1980s and 90s, the pendulum seems to have swung in the opposite direction where
reclaiming a share of sovereignty over trade policy is preferred by many over trusting
international bureaucracy. While not exactly "trade" policy (but it is economic), the experiences
of the less well off countries in EU (as well as segments of the publics even in better off
countries) has to be a fairly widespread worldview in many countries these days--certainly enough
that it should make good politics to try to address them in some fashion, not try to override them
by fiat (the latter seeming to be the preferred approach of the cosmopolitan elite)
"My sense is that the whole issue of trade disputes is not so much about trade and economics as
much as politics and sovereignty."
That has to be right, and it certainly applies to small
countries. Small countries must always be aware that there is a loss of sovereignty implicit in
the very act of trading with larger ones. The greater weight of the large country can enable it
to impose trading terms that are sometimes disadvantageous to the smaller.
Tough. That's how it is. But the smaller country must always be on its guard against the very
real danger of allowing that to extend to loss of political sovereignty.
What I don't see is how this applies to the US. The US is not a small country and need not
fear any loss of political sovereignty attendant upon any lack of size or power. Therefore one
could perhaps see the current US trade negotiations in a different light.
That is, that Trump is not defending his country against any such threat. He is merely
attempting to level the playing field. For far too long that playing field has been tilted
against the US worker and, ultimately, the US economy. He was elected to rectify that and will,
I believe, be judged by his success in doing so.
If, in attempting that, he ruffles a few feathers - well, if he went the asking nicely route
they'd walk all over him.
That quibble aside, I couldn't agree more with your note.
I don't think the size of the country is the decisive factor.
International trade always
produces winners and losers. Depending on the particulars, the gains might be more widely
spread than losses, or vice versa. Both sides want to play the political game to shape the
terms of the trade in their favor. Generally, those who are in favor of more protection tend
to do well in domestic politics, while those who tend to gain more by opening up trade don't.
This is why international bureaucracy regulating trade winds up being set up, to bypass the
domestic political process in favor of the free traders.
I don't think there is a fundamental relationship between the size of the country and the
political conflict over free trade. It may be that smaller countries tend to be predisposed
more towards protectionist policies, but counterexamples are found easily (e.g. Singapore).
The real issue is that creation of and deference to international bureaucracy is a mechanism
through which the winners from free trade shift the venue of politics from the domestic to
the international and, in a sense, unfairly disadvantage their political enemies by depriving
them of the means to affect trade policy easily. Or, in other words, international trade
bureaucracy is NOT just a solution for trade conflict between nations, but a political weapon
directed at the skeptics at home. If the winners of free trade were willing to share their
gains with the losers, the conflict would not need to be so sharp. This has not been the case
in US: more than in most other developed countries, the winners of free trade kept the gains
only to themselves, claiming moral absolute of the free trade and their Mammon-given right to
hold on to everything. Those who lose from the free trade are not only aggrieved, but find
themselves at the wrong end of the political game specifically rigged to deprive them of
influence. They don't want to play by its rules if they can--and Trump is providing them this
In this sense, Trump's actions are re-domesticalizing the politics of free trade, making
trade policy responsive to domestic interests that were shunted side formerly. The
internationalists have only their own short-sightedness to blame: if they were willing to
build up a broader coalition, or at least, appease their domestic opponents better, the
opposition to free trade detached from domestic politics would not have become so
Personally, I think it's not a good development: walking back from free trade is not easy,
if at all possible--too many linkages have been built, too many sectors are dependent on
access to foreign inputs or markets, that actual protectionism will be near impossible to
bring back without major costs. Still, if you are creating international bureaucracy to
bypass domestic politics, you'd better not piss off folks back home enough that they'd start
with pitchforks, and this is among the many mistakes internationalists have made.
The analyst in the link below explained the myth US energy independence. Although it is not as
severe as china's need for foreign energy supply , but she got russian energy export via landline
as opposed as sealane gulf imports.
There also this constant propaganda of better unemployment
statistic , because of the way the data was processed to make it looks better (cooked)
-- -- -- -- --
From Srsroccoreport :
While the Mainstream media and the Whitehouse continue with the energy independent mantra, the
U.S. is still highly reliant upon a great deal of foreign oil.
, why would the U.S. import 8 million barrels of oil per day if
its shale oil production has surged over the past decade?
Well, it's quite simple. The U.S. Shale Oil Industry is producing way too much light tight oil,
with a high API Gravity, for our refineries that are designed for a lower grade. So, as U.S. shale
oil production exploded , the industry was forced to export a great deal more of this light oil
Thanks for your exposition.
China's import of oil in US funds is about equal to USA's net import in US$ - the rest is in ruble/yuan.
The armed force imbalance is of no value, as attack on China is certain to get A-bombs into play
[aside form danger to US ships both naval and other due to Chinese/Russian made anti ship missiles]
The USA can not maintain 25% duties on consumer goods for the simple reason that 75% of population
can not afford to be consumer -debt levels are too high.
The USA can not maintain high tariffs as such would greatly increase the inflation rate applicable
to the "deplorables" who are already on ropes [homelessness, welfare, food subsidies etc.] Notably
the Fed would have to raise rates if inflation increases with dire result for the bond market and
the federal deficit due to increased interest costs.
That the European satraps have bowed under US pressure is nothing new... there will be more changes
in governments in the next cycle - the present bunch is too ripe [or rotten].
I do not imply by the above that China will not suffer, however they have a trillion dollar kitty
to balance the external trade problems.
"75% of population can not afford to be consumer..."
They are in debt because they are consuming beyond thier income. "the Fed would have to raise
rates if inflation increases" The Fed has already raised rates twice this year. It was less than
ten days ago that Trump based the Fed for raising rates. The losers in that have always been
Americans at the bottom.
"... The borg, financed and sworn to the agenda of globalists and the military-industrial-media complex, has its orders and is acting on them. The globalists want more free trade agreements, no tariffs and more immigration to prevent higher wages. Capital does not have a national attachment. It does not care about the 'deplorables' who support Trump and his policies: ..."
"... Nearly three-fourths, or 73 percent, of Republicans and Republican-leaning independents who responded to a Pew Research survey out this week said they felt increased tariffs would benefit the country. ..."
"... Donald Trump is, indeed, a kind of traitor to the Washington Consensus, a hyper-militarized capitalist utopia of corporate dominated global supply chains that doubled the international wage-slave workforce in the last two decades of the 20th century and herded these desperate billions into a race to the bottom. The leadership of both corporate parties conspired to force U.S. workers into the global meat-grinder. ..."
"... The weapon industry and the military recognize that the 'war of terror' is nearing its end. To sell more they need to create an new 'enemy' that looks big enough to justify large and long-term spending. Russia, the most capable opponent the U.S. could have, is the designated target. A new Cold War will give justification for all kinds of fantastic and useless weapons. ..."
"... Trump grand foreign policy is following a realist assessment . He sees that previous administrations pushed Russia into the Chinese camp by aggressive anti-Russian policies in Europe and the Middle East. He wants to pull Russia out of the alliance with China, neutralize it in a political sense, to then be able to better tackle China which is the real thread to the American (economic) supremacy. ..."
President's Trump successful summit with President Putin was used by the 'resistance' and
the deep state to launch a coup-attempt against Trump. Their minimum aim is to put Trump into a
(virtual) political cage where he can no longer pursue his foreign policy agenda.
One does not have to be a fan of Trump's policies and still see the potential danger. A
situation where he can no longer act freely will likely be worse. What Trump has done so far
still does not add up to the
disastrous policies and crimes his predecessor committed.
The borg, financed and sworn to the agenda of globalists and the
military-industrial-media complex, has its orders and is acting on them. The globalists want
more free trade agreements, no tariffs and more immigration to prevent higher wages. Capital
does not have a national attachment. It does not care about the 'deplorables' who support
Trump and his policies:
[P]olls show that Trump appears to still have the support of the bulk of Republican voters
when it comes to tariffs. Nearly three-fourths, or 73 percent, of Republicans and
Republican-leaning independents who responded to a Pew Research survey out this week said
they felt increased tariffs would benefit the country.
Donald Trump is, indeed, a kind of traitor to the Washington Consensus, a
hyper-militarized capitalist utopia of corporate dominated global supply chains that doubled
the international wage-slave workforce in the last two decades of the 20th century and herded
these desperate billions into a race to the bottom. The leadership of both corporate parties
conspired to force U.S. workers into the global meat-grinder.
The weapon industry and the military recognize that the 'war of terror' is nearing its
end. To sell more they need to create an new 'enemy' that looks big enough to justify large and
long-term spending. Russia, the most capable opponent the U.S. could have, is the designated
target. A new Cold War will give justification for all kinds of fantastic and useless
Trump does not buy the
nonsense claims of 'Russian meddling' in the U.S. elections and openly says so. He does not
believe that Russia wants to attack anyone. To him Russia is not an enemy.
Trump grand foreign policy is following a
realist assessment . He sees that previous administrations pushed Russia into the Chinese
camp by aggressive anti-Russian policies in Europe and the Middle East. He wants to pull Russia
out of the alliance with China, neutralize it in a political sense, to then be able to better
tackle China which is the real thread to the American (economic) supremacy.
Former CIA chief John Brennan denounced Trump as a "traitor" who had "committed high crimes"
in holding a friendly summit with Putin.
It can't get more seditious than that. Trump is being denigrated by almost the entire
political and media establishment in the US as a "treasonous" enemy of the state.
Following this logic, there is only one thing for it: the US establishment is calling for
a coup to depose the 45th president. One Washington Post oped out of a total of five
assailing the president gave the following stark ultimatum: "If you work for Trump, quit
Some high ranking people working for Trump followed that advice. His chief of staff John
others against him:
According to three sources familiar with the situation, Kelly called around to Republicans on
Capitol Hill and gave them the go-ahead to speak out against Trump. (The White House did not
respond to a request for comment.) Senate Majority Leader Mitch McConnell and House Speaker
Paul Ryan held televised press conferences to assert that Russia did meddle in the election.
Others who attacked Trump over his diplomatic efforts with Russia
included the Director of National Intelligence Daniel Coats who used an widely distributed
interview for that:
The White House had little visibility into what Coats might say. The intelligence director's
team had turned down at least one offer from a senior White House official to help prepare
him for the long-scheduled interview, pointing out that he had known Mitchell for years and
was comfortable talking with her.
Coats was extraordinarily candid in the interview, at times questioning Trump's judgment
-- such as the president's decision to meet with Putin for two hours without any aides
present beyond interpreters -- and revealing the rift between the president and the
FBI Director Christopher Wray on Wednesday defended Special Counsel Robert Mueller as a
"straight shooter," and said the Russia investigation is no "witch hunt."
Speaking at the Aspen Security Forum in Colorado, Wray said he stood by his view that
Russia meddled in the 2016 presidential election in some capacity and that the threat
A day latter Secretary of Defense Mattis also issued a statement that contradicted his
Secretary of Defense James Mattis took his turn doing the implicit disavowing in a statement
about new military aid to Ukraine:
"Russia should suffer consequences for its aggressive, destabilizing behavior and its
illegal occupation of Ukraine. The fundamental question we must ask ourselves is do we wish
to strengthen our partners in key regions or leave them with no other options than to turn to
Russia, thereby undermining a once in a generation opportunity to more closely align nations
with the U.S. vision for global security and stability."
thinks that Trump should fire Coats, Wary and Rosenstein, the Deputy Attorney General who
is overseeing the Mueller investigation.
My advice is to spare Rosenstein, for now, as firing him would lead to a great uproar in
Congress. The Mueller investigation has not brought up anything which is dangerous to Trump and
is unlikely to do so in the immediate future. He and Rosenstein can be fired at a latter
But Wray and Coats do deserve a pink slip and so do Kelly and Mattis. They are political
appointees who work 'at the pleasure of the President'.
The U.S. has the legislative and the judicative as a counterweight to the president who
leads the executive. The 'deep state' and its moles within the executive should have no role in
that balance. The elected president can and must demand loyalty from those who work for
Those who sabotage him should be fired, not in a Saturday night massacre but
publicly, with a given reason and all at the same time. They do not deserve any warning. Their
rolling heads will get the attention of others who are tempted by the borg to act against the
lawful policy directives of their higher up.
All this is not a defense of Trump. I for one despise his antics and most of his policies.
But having a bad president of the United States implementing the policies he campaigned on, and
doing so within the proper process, is way better than having unaccountable forces dictating
their policies to him.
It will be impossible for Trump to get anything done if his direct subordinates, who work
'at his pleasure', publicly sabotage the implementation of his policies. Either he fires these
people or the borg will have won.
"... By Enrico Verga, a writer, consultant, and entrepreneur based in Milan. As a consultant, he concentrates on firms interested in opportunities in international and digital markets. His articles have appeared in Il Sole 24 Ore, Capo Horn, Longitude, Il Fatto Quotidiano, and many other publications. You can follow him on Twitter @enricoverga . ..."
"... Continuing flows of low-cost labor can be useful for cutting costs. West Germany successfully absorbed East Germany after the fall of the Berlin Wall, but the dirty secret of this achievement is the exploitation of workers from the former East, as Reuters reports . ..."
"... The expansion of the EU to Poland (and the failed attempt to incorporate the Ukraine) has allowed many European businesses to shift local production to nations where the average cost of a blue or white collar worker is much lower ( by 60-70% on average ) than in Western European countries. ..."
"... The middle class is a silent mass that for many years has painfully digested globalization, while believing in the promises of globalist politicians," explains Luciano Ghelfi, a journalist of international affairs who has followed Lega from its beginnings. Ghelfi continues: ..."
"... I think unrestrained globalization has taken a hit. In Italy as well, as we have seen recently, businesses are relocating abroad. And the impoverished middle class finds itself forced to compete for state resources (subsidies) and jobs which can be threatened by an influx of economic migrants towards which enormous resources have been dedicated – just think of the 4.3 billion Euros that the last government allocated toward economic migrants. ..."
"... In all of this, migrants are more victims than willing actors, and they become an object on which the fatigue, fear, and in the most extreme cases, hatred of the middle class can easily focus. ..."
"... If for the last twenty years, with only occasional oscillation, the pro-globalization side has been dominant in the West, elections are starting to swing the balance in a new direction. ..."
"... "Klein analyzes a future (already here to some degree) in which multinational corporations freely fish from one market or another in an effort to find the most suitable (i.e. cheapest) labor force." ..."
"... never export their way out of poverty and misery ..."
By Enrico Verga,
a writer, consultant, and entrepreneur based in Milan. As a consultant, he
concentrates on firms interested in opportunities in international and digital markets. His
articles have appeared in Il Sole 24 Ore, Capo Horn, Longitude, Il Fatto Quotidiano, and many
other publications. You can follow him on Twitter @enricoverga .
International commerce, jobs, and economic migrants are propelled by a common force:
In recent times, the Western middle class (by which I mean in particular industrial workers
and office employees) has lost a large number of jobs and has seen its buying power fall. It
isn't true that migrants are the source of all evil in the world. However, under current
conditions, they become a locus for the exasperation of the population at twenty years of
pro-globalization politics. They are tragically placed in the role of the straw that breaks the
Western businesses have slipped jobs overseas to countries with low labor costs, while the
middle class has been pushed into debt in order to try to keep up. The Glass-Steagall law and
other brakes on American banks were abolished by a cheerleader for globalization, Bill Clinton,
and these banks subsequently lost all restraints in their enthusiasm to lend. The cherry on top
of the sundae was the real estate bubble and ensuing crash of 2008.
A damning picture of the results of 20 years of globalization is provided by
Forbes , capitalism's magazine par excellence. Already in 2016, the surprise victory of
Trump led to questions about whether the blond candidate's win was due in part to the straits
of the American middle class, impoverished as a result of the pro-globalization politics of
figures like Clinton and Obama.
Further support for this thesis is furnished by the
New York Times , describing the collapse of the stars-and-stripes middle class. Its
analysis is buttressed by lengthy research from the very mainstream
Pew Center , which agrees that the American middle class is vanishing.
And Europe? Although the European middle class has been squeezed less than its American
counterpart, for us as well the picture doesn't look good. See for example the
analysis of the Brookings Institute , which discusses not only the flagging economic
fortunes of the European middle class, but also the fear of prosperity collapsing that
currently grips Europe.
Migrants and the Shock Doctrine
What do economic migrants have to do with any of this?
Far be it from me to criticize large corporations, but clearly they – and their
managers and stockholders – benefit from higher margins. Profits (revenue minus costs and
expenses) can be maximized by reducing expenses. To this end, the costs of acquiring goods
(metals, agricultural products, energy, etc.) and services (labor) need to fall steadily.
In the quest to lower the cost of labor, the most desirable scenario is a sort of blank
slate: to erase ongoing arrangements with workers and start over from zero, building a new
"happy and productive" economy. This operation can be understood as a sort of "shock
The term "economic shock therapy" is based on an analogy with electroshock therapy for
mental patients. One important analysis of it comes from Naomi Klein , who became
famous explaining in 2000 the system of fashion production through subsidiaries that don't
adhere to the safety rules taken so seriously in Western countries (some of you may recall the
Benetton and Rana Plaza , where more than a thousand workers at a Bangladesh factory
producing Benetton (and other) clothes were crushed under a collapsing building).
Klein analyzes a future (already here to some degree) in which multinational corporations
freely fish from one market or another in an effort to find the most suitable (i.e. cheapest)
labor force. Sometimes relocating from one nation to another is not possible, but if you can
bring the job market of other countries here in the form of a low-cost mass of people competing
for employment, then why bother?
The expansion of the EU to Poland (and the failed attempt to incorporate the Ukraine) has
allowed many European businesses to
shift local production to nations where the average cost of a blue or white collar worker
is much lower (
by 60-70% on average ) than in Western European countries.
The migrant phenomenon is a perfect counterpoint to a threadbare middle class, given its
role as a success story within the narrative of globalization.
Economic migrants are eager to obtain wealth on the level of the Western middle class
– and this is of course a legitimate desire. However, to climb the social ladder, they
are willing to do anything: from accepting low albeit legal salaries to picking tomatoes
as Alessandro Gassman, son of the famous actor, reminded us ).
The middle class is a silent mass that for many years has painfully digested globalization,
while believing in the promises of globalist politicians," explains Luciano Ghelfi, a
journalist of international affairs who has followed Lega from its beginnings. Ghelfi
This mirage has fallen under the blows it has received from the most serious economic
crisis since the Second World War. Foreign trade, easy credit (with the American real estate
bubble of 2008 as a direct consequence), peace missions in Libya (carried out by
pro-globalization French and English actors, with one motive being in my opinion the
diversion of energy resources away from [the Italian] ENI) were supposed to have created a
miracle; they have in reality created a climate of global instability.
Italy is of course not untouched by this phenomenon. It's easy enough to give an
explanation for the Five Stars getting votes from part of the southern electorate that is
financially in trouble and might hope for some sort of subsidy, but the North? The choice of
voting center right (with a majority leaning toward Lega) can be explained in only one way
– the herd (the middle class) has tried to rise up.
I asked him, "So in your opinion, is globalization in stasis? Or is it radically
changing?" He replied:
I think unrestrained globalization has taken a hit. In Italy as well, as we have seen
recently, businesses are relocating abroad. And the impoverished middle class finds itself
forced to compete for state resources (subsidies) and jobs which can be threatened by an
influx of economic migrants towards which enormous resources have been dedicated – just
think of the 4.3 billion Euros that the last government allocated toward economic
This is an important element in the success of Lega: it is a force that has managed to
understand clearly the exhaustion of the impoverished middle class, and that has proposed a
way out, or has at least elaborated a vision opposing the rose-colored glasses of
In all of this, migrants are more victims than willing actors, and they become an object on
which the fatigue, fear, and in the most extreme cases, hatred of the middle class can easily
What Conflicts Are Most Relevant Today?
At the same time, if we observe, for example in Italy, the positions taken by the
(pro-globalization?) Left, it becomes easier to understand why the middle class and also many
blue collar workers are abandoning it. Examples range from the unfortunate declarations of
deputy Lia Quartapelle on
the need to support the Muslim Brotherhood to the explanations of the former president of
the Chamber of Deputies, Laura Boldrini, on how the status of economic migrant should be seen as a model for the
lifestyle of all Italians . These remarks were perhaps uttered lightly (Quartapelle
subsequently took her post down and explained that she had made a mistake), but they are
symptomatic of a certain sort of pro-globalization cultural "Left" that finds talking to
potential voters less interesting than other matters.
From Italy to America (where
Hillary Clinton was rejected after promoting major international trade arrangements that
she claimed would benefit middle-class American workers) to the UK (where Brexit has been taken as a sort of
exhaust valve), the middle class no longer seems to be snoring.
We are currently seeing a political conflict between globalist and nationalist forces.
Globalists want more open borders and freer international trade. Nationalists want protection
for work and workers, a clamping down on economic migrants, and rules with teeth aimed at
controlling international trade.
If for the last twenty years, with only occasional oscillation, the pro-globalization side
has been dominant in the West, elections are starting to swing the balance in a new
Meanwhile, many who self-identify as on the Left seem utterly uninterested in the concerns
of ordinary people, at least in cases where these would conflict with the commitment to
If the distinction between globalism and nationalism is in practice trumping other
differences, then we should not let ourselves be distracted by bright and shiny objects, and
keep our focus on what really matters.
From the Forbes link:
"The first downside of international trade that even proponents of freer trade must
acknowledge is that while the country as a whole gains some people do lose."
More accurate to say a tiny, tiny, TINY percentage gain.
Nice how they use the euphemism "country as a whole" for GDP. Yes, GDP goes up – but
that word that can never be uttered by American corporate media – DISTRIBUTION –
that essentially ALL gains in GDP have gone to the very top. AND THAT THIS IS A POLITICAL
DECISION, not like the waves of the ocean or natural selection. There is plenty that could be
done about it – BUT it STARTS with WANTING to do something effective about it .
Nice how they use the euphemism "country as a whole" for GDP.
You have identified one of my pet peeves about economists and their fellow traveler
politicians. They hide behind platitudes, and the former are more obnoxious about that.
Economists will tell people that they just don't understand all that complexity, and that in
the name of efficiency, etc, free trade and the long slide toward neo-liberal hell must
I think the assertion that all economic gains have gone to the very top is not accurate.
According to 'Unintended Consequences' by Ed Conard, the 'composition of the work force has
shifted to demographics with lower incomes' between 1980 and 2005. If you held the workforce
of 1980 steady through 2005, wages would be up 30% in real terms, not including benefits.
I think the author has highlighted some home truths in the article. I once remember
several years ago just trying to raise the issue of immigration* and its impact on workers on
an Irish so-called socialist forum. Either I met silence or received a reply along the lines:
'that when socialists rule the EU we'll establish continental wide standards that will ensure
fairness for everyone'. Fairy dust stuff. I'm not anti immigrant in any degree but it seems
unwise not to understand and mitigate the negative aspects of policies on all workers. Those
chickens are coming home to roost by creating the type of political parties (new or
established) that now control the EU and many world economies.
During the same period many younger middle and upper middle class Irish extolled the
virtues, quite openly, of immigration as way of lowering the power and wages of existing
Irish workers so that the costs of building homes, labour intensive services and the like
would be concretely reduced; and that was supposed to be a good thing for the material well
being of these middle and upper middle classes. Sod manual labour.
One part of the working class was quite happy to thrown another part of the working class
under the bus and the Left**, such as it was and is, was content to let it happen. Then
established Leftist parties often facilitated the rightward economic process via a host of
policies, often against their own stated policies in election manifestos. The Left appeared
deceitful. The Irish Labour party is barely alive and subsisting on die-hard traditionalists
for their support by those who can somehow ignore the deceit of their party. Surreaslist
stuff from so-called working class parties,
And now the middle-middle classes are ailing and we're supposed to take notice. Hmmm. Yet,
as a Leftist, myself, it is incumbent upon us to address the situation and assist all
workers, whatever their own perceived status.
*I'm an immigrant in the UK currently, though that is about to change next year.
** Whether the "Left", such as the Irish Labour Party, was just confused or bamboozled
matters not a jot. After the financial crises that became an economic crisis, they zealously
implemented austerity policies that predominantly cleared the way for a right wing political
landscape to dominate throughout Europe. One could be forgiven for thinking that those who
called themselves Leftists secretly believed that only right wing, neo-liberal economic
policies were correct. And I suppose, being a bit cynical, that a few politicos were paid
handsomely for their services.
I think its easy to see why the more middle class elements of the left wing parties never
saw immigration as a problem – but harder to see why the Trade Unions also bought into
this. Partly I think it was a laudable and genuine attempt to ensure they didn't buy into
racism – when you look at much trade union history, its not always pleasant reading
when you see how nakedly racist some early trade union activists were, especially in the US.
But I think there was also a process whereby Unions increasingly represented relatively
protected trades and professions, while they lost ground in more vulnerable sectors, such as
I think there was also an underestimation of the 'balancing' effect within Europe. I think
a lot of activists understimated the poverty in parts of Europe, and so didn't see the
expansion of the EU into eastern Europe as resulting in the same sort of labour arbitrage
thats occurred between the west and Asia. I remember the discussions over the enlargement of
the EU to cover eastern Europe and I recall that there seemed to be an inbuilt assumption
(certainly in the left), that rising general prosperity would ensure there would be no real
migration impact on local jobs. This proved to be entirely untrue.
Incidentally, in my constituency (Dublin Central) in past elections the local Labour party
was as guilty as any of pandering to the frequent racism encountered on the doorsteps in
working class areas. But it didn't do them much good. Interestingly, SF was the only party
who would consistently refuse to pander (At least in Dublin), making the distinction between
nationalist and internationalist minded left wingers even more confusing.
Yes, one has to praise the fact that the Unions didn't pander to racism – but that's
about all the (insert expletive of choice) did correctly.
Your other points, as ever, are relevant and valid but (and I must but) I tend to think
that parties like Labour were too far "breezy" about the repercussions about labour
arbitrage. But that's water under the bridge now.
Speaking about SF and the North West in general, they have aggressively canvassed recent
immigrants and have not tolerated racism among their ranks. Their simple reasoning was that
is unthinkable that SF could tolerate such behaviour amongst themselves when they has waged a
campaign against such attitudes and practices in the six counties. (SF are no saints, often
fumble the ball badly, and are certainly not the end-all-be-all, but this is something they
It has to be understood that much of immigration is occurring because of war, famine,
collapsing societies (mostly due to massive wealth inequality and corrupt governments).
Immigration is not the cause of the economic issues in the EU, it's a symptom (or a feature
if you're on top). If you don't correct the causes – neo-liberalism, kleptocracy,
rigged game – what ever you want to call it, then you too will become an immigrant in
your own country (and it will be a third world country by the time the crooks on top are
Don't get caught up in the blame the other poor people game. It's a means to get the
powerless to fight among themselves. They are not in charge, they are victims just like
Having spent a lot of time in the Indian subcontinent and Afghanistan and Iraq I have to
say that rampant overpopulation plays a big part. Anyone who can get out is getting out. It
makes sense. And with modern communications they all know how life is in Europe or the US in
contrast to the grinding horror that surrounds them.
But Conan tells me that Haiti is a tropical paradise! (my brother too spent a lot of time
in Afghanistan and Iraq working with the locals during his deployments)
"Twitter liberalism" is doing itself by not recognizing that much of the developing world
IS a corrupt cesspool.
Instead of railing against Trump, the Twitter-sphere needs to rail against the bipartisan
policies that drive corruption, and economic dislocations and political dislocations. and
rail against religious fundamentalism that hinders family planning.
But if you actually do that, rail against bipartisan neoliberal policies on social media
and IRL, the conservatives are far less hostile than the die-hard Dems. This is especially
true now, with all the frothing at the mouth and bloodlust about Russia. Its raised their
"it's ALL *YOUR* FAULT"-ism by at least an order of magnitude.
However, it does seem that the policy of the EU, especially under the influence of Mutti
Merkel, signalled a free-for-all immigration stance over the last several years, completely
ignoring the plight of existing workers (many of whom would be recent immigrants themselves
and the children of immigrants). That the so-called Left either sat idly by or jumped on
Mutti's band wagon didn't do them any favours with working people. Every country or customs
union has and needs to regulate its borders. It also makes some sense to monitor labour
markets when unfavourable conditions appear.
It appears that only the wealthy are largely reaping the rewards of the globalist
direction trade has taken. These issues need to be addressed by the emerging Left political
parties in the West. Failure to address these issues must, I would contend, play into the
hands of the more right wing parties whose job is to often enrich the local rich.
But, bottom line, your are correct workers do not come out well when blaming other workers
for economies that have been intentionally created to produce favourable conditions for the
few over the many.
It's a blade with two sides.
There are push factors like the wars and poor countries. However neither of these causes can
be fixed. Not possible. Europe can gnash their teeth all they want, not even when they did
the unthinkable and put the US under sanctions for their warcrimes would the US ever stop.
First there would be color revolutions in western europe.
As important as the push factors are the pull ones. 90% or so of all refugees 2015 went to
Germany. Some were sent to other countries by the EU, these too immediately moved to Germany
and didn't stay where they were assigned. So the EU has to clean up their act and would need
to put the last 10 or so US presidents and administrations before a judge in Den Haag for
continued war crimes and crimes against humanity (please let me my dreams). The EU would also
need to clean up their one sided trade treaties with Africa and generally reign in their own
corporations. All that is however not enough by far and at most only half the battle. Even
when the EU itself all did these things, the poverty would remain and therefore the biggest
push factor. Humans always migrate to the place where the economy is better.
The pull factors is however at least as big. The first thing to do is for Germany to fix
their laws to be in sync with the other EU countries. At this point, Germany is utterly
alone, at most some countries simply don't speak out against german policy since they want
concessions in other areas. Main one here is France with their proposed EU and Euro reforms
but not alone by far.
Nationalists want protection for work and workers, a clamping down on economic
migrants, and rules with teeth aimed at controlling international trade.
Socialism in one country is a Stalinist theory, and falling back upon it in fear of
international capital is not only regressive but (assuming we aren't intentionally ignoring
history) relective of a defensive mentality.
In other words, this kind of thinking is the thinking of the whipped dog cringing before
the next blow.
Or perhaps they want to regulate and control the power of capital in their country. Which
is an entirely impossible proposition considering that capital can flee any jurisdiction and
cross any border. After all, transnational capital flows which were leveraged to the hilt in
speculative assets played an oversized role in generating the financial crisis and subsequent
It wouldn't be the first time I've been called a Stalinist though.
And why would we care whether it's a "Stalinist" theory? For that matter, although worker
ownership would solve some of these problems, we needn't be talking about socialism, but
rather about more functional capitalism.
Quite a leap in that last sentence; you haven't actually established anything of the
Personally, I believe capitalism needs to go away, but for it, or any other economic
system, to work, we would need a fair, equal, just, enforced rule of law that
everyone would be under, wouldn't we?
Right now the blessed of our various nations do not want this, so they make so that one
set is unfair, unequal, unjust, harshly enforced on most of their country's population while
they get the gentle rules.
For a society to function long term, it needs to have a fair and just set of rules that
everyone understands and follow, although the rules don't have to equal; people will tolerate
different levels of punishments and strictness of the rules. The less that is the case the
more dysfunctional, and usually the more repressive it is. See the Western Roman Empire, the
fall of just about every Chinese dynasty, the Russian Empire, heck even the American War of
Independence, and the American Civil War. In example, people either actively worked to
destroy the system or did not care to support it.
Thank you for the article, a pretty lucid analysis of the recent electoral results in
Italy and trends elsewhere. Although I would have liked to read something about people voting
the way they do because they are xenophobe fascist baby-eating pedophile racist Putin
friends. Just for fun.
Funny how the author's company promotes "Daily international job vacancies in UNDP, FAO,
UN, UNCTAD, UNIDO and the other Governative Organization, Non Governative Organization,
Multinationals Corporations. Public Relations, Marketing, Business Development."
Precisely the sort of jobs that infuriates the impoverishing middle classes.
As recently as 2015, Bernie Sanders defended not only border security, but also national
sovereignty. Asked about expanded immigration, Sanders flipped the question into a critique
of open-borders libertarianism: "That's a Koch brothers proposal which says essentially there
is no United States."
Unfortunately the ethnic division of the campaign and Hillary's attack seems to have led him
to change his mind.
That's probably due to the fact that just about everybody can't seem to differentiate
between immigration and mass migration. The latter issue is a matter of distributing the pain
of a collapsing order. state failure, and climate change while the former is simply engaging
in the comfortable rhetoric of politics dominated by the American middle class.
1 people vote they like. im not updated if the voters eat babies but i'll check and let u
2 My company is not dream job. It is a for free ( and not making a penny) daily bulleting
that using a fre soft (paper.li) collect international qualified job offers for whoever is
willing to work in these sector.
i'm not pro or contro migrants. i actually only reported simple fact collating differents
Economic migrants seek prosperity and are justified in doing so, yet they can also be
seen as pawns in an international strategy that destroys the negotiating leverage of
workers. The resulting contradictions potentially render conventional political
This appears on the homepage, but not here.
In any case, the 10% also seek prosperity. They are said to be the enablers of the 1%.
Until the left alters its thinking to reflect the crucial information presented in this
video, information more clearly and comprehensively spelled out in "Reclaiming the State" by
Mitchell and Fazi, resurgent rightwing nationalism will be the only outlet for those who
reject global neoliberalism's race to the bottom. It's that simple and sad.
To paint this as two pro-globalisation (within which you place the left) and
pro-nationalism is simplistic and repositions the false dichotomy of left vs right with
something just as useless. We should instead seek to speak to the complexities of the modern
political spectrum. This is an example of poor journalism and analysis and shouldn't have
been posted here, sorry Yves.
Thanks for your opinion. Check the format of this place: articles selected for information
or provoking thoughts, in support of a general position of driving toward betterment of the
general welfare, writ large.
The political economy is at least as complex as the Krebs or citric acid cycle that
biology students and scientists try to master. There are so many moving parts and
intersecting and competing interests that in the few words that the format can accommodate,
regarding each link, it's a little unkind to expect some master work of explication and
rhetorical closure every time.
The Krebs cycle is basically driven by the homeostatic thrust, bred of billions of years
of refinement, to maintain the healthy functioning and prolong life of the organism. There's
a perceivable axis to all the many parts of respiration, digestion, energy flows and such,
all inter-related with a clear organizing principle at the level of the organism. On the
record, it's hardly clear that at the level of the political economy, and all the many parts
that make it up, there is sufficient cohesion around a set of organizing principles that
parallel the drive, at the society and species level, to regulate and promote the energy
flows and interactions that would keep things healthy and prolong the life of the larger
entity. Or that their is not maybe a death wish built into the "cultural DNA" of most of the
Looks a lot to me that we actually have been invested (in both the financial and military
senses of the word) by a bunch of different cancer processes, wild and unregulated
proliferation of ecnomic and political tumor tissues that have invaded and undermined the
healthy organs of the body politic. Not so clear what the treatments might be, or the
prognosis. It is a little hopeful, continuing the biological analogy, that the equivalents of
inflammation and immune system processes appear to be overcoming the sneaky tricks that
cancer genes and cells employ to evade being identified and rendered innocuous.
Yes, "invested in a bunch of cancer processes" is a good description of allowing excessive
levels of predatory wealth. Thus you end up with a bunch of Jay Gould hyper capitalists whose
guiding principle is: I can always pay one half of the working class to kill the other half.
Divide and conquer rules.
The middle class does not really exist, it was a concept invented by capitalists to
distract the workers from their essential unity as fellow wage slaves. Some make more wages,
some make less wages but they all have their surplus value, the money left over after they
have enough to take care of themselves, taken by the capitalist and used for his ends even
though he may not have worked in the value creation process at all.
Economic migrants are members of the working class who have been driven from their home
country to somewhere else by the capitalist system. While the article does mention capitalist
shock doctrine methods for establishing imperialism and correctly notes that economic
migrants are victims, it then goes on to try to lay a weak and insidious argument against
them. The author goes on citing multiple different cases of worker wages being driven lower
or stagnating, many of these cases have differing and sometimes complex reasons for why this
happened. But migrants and globalization are to blame he says and that our struggle is
nationalism vs globalism. He refuses to see what is staring him in the face, workers produce
surplus value for society, more workers produce more surplus value. If society finds itself
wealthier with more workers then why do workers wage fall or stagnate? He does note correctly
that this is due to the workers now having a weaker bargaining position with the capitalist,
but he seems to conclude from this without stating outrightly that we should then reject the
economic migrants because of this.
However, we could instead conclude that if more workers produce more surplus value but yet
their wages fall because the capitalist takes a larger share of the overall pot, that the
problem is not more workers but instead the capitalist system itself which was rigged to
exploit workers everywhere. Plus the workers bargaining position only weakens with a greater
number of them if they are all just bargaining for themselves, but if they were to bargain
togather collectively then there bargaining position has actually only grown even
Also he falsly equates democratic party policies with leftists, instead of correctly
noting that the democratic party represents capitalist interests from a centrist position and
not the left. The strength of global capitalism can only be fought by a global coalition of
the working class. The struggle of Mexican and American workers are interrelated to each
other and the same goes for that of European and Middle Eastern workers. The time has come
for the left to raise the rallying cry of its great and glorious past.
You claim, as if it were obvious, that "economic migrants are members of the working class
who have been driven from their home country to somewhere else by the capitalist system."
Are all economic migrants therefore bereft of agency?
If the borders of the US were abruptly left completely open, a huge number of people would
enter the country tomorrow, for economic reasons. Would they all have been "driven" here, or
would they have some choice in the matter?
When you say, "he refuses to say what is staring him in the face, that [ ] more workers
produce more surplus value," you are not only taking a gratuitously pedantic tone, you are
actually not making a coherent critique. If economic migrants move from one country to
another, the total pool of workers in the world has not increased; while according to your
logic, if all the workers in the world were to move to Rhode Island, Rhode Island would
suddenly be swimming in the richness of surplus value.
When you say, "we could instead conclude that [..] the problem is not more workers but
instead the capitalist system itself which was rigged to exploit workers everywhere," you are
straw-manning the author but also making a purely rhetorical argument. If you think the
capitalist system can be replaced with a better one within the near future, then you can work
toward that; but in the meanwhile, nations, assuming that they will continue to exist, will
either have open borders or something short of that, and these decisions do affect
the lives of workers.
When you say he "falsly equates democratic party policies with leftists," the false
equivalence is coming from you. The article barely touches on the Democratic Party, and
instead draws most of its examples from Europe, especially Italy. In Italy, the public
figures he mentions call themselves part of the sinistra and are generally referred
to that way. You might perhaps feel that they are not entitled to that name (and in fact, the
article sometimes places "left" in quotation marks), but you should at least read the article
and look them up before discussing the matter.
From the article: "Meanwhile, many who self-identify as on the Left seem utterly
uninterested in the concerns of ordinary people, at least in cases where these would conflict
with the commitment to globalization."
To Be Fair, Verga clearly is skeptical about those claims to be "on the Left," as he
should be. Nonetheless, his initial mention of Democratic exemplars of globalization triggers
Something before this failed to post; was rejected as a double post.
In brief: corporate globalization is a conservative, Republican policy that Bill Clinton
imposed on the Dems, where it has since become doctrine, since it pays. It's ultimately the
reason I'm a Green, not a Democrat, and in a sense the reason there IS a Green Party in the
The author points to stagnant middle class income in USA and Western Europe but fail to
look the big picture. Middle class income has increased sharply in the past decades in Asia
and Eastern Europe. Overall the gain huge, even though life is tougher in richer
Overall the gain huge, even thought life is tougher in richer countries.
Please accept my apologies for saying this. I don't mean to offend. I just have to point
Many in the Democratic Party, as well as the left, are pointing to other countries and
peoples as well as the American 9.9% and saying things are great, why are you complaining?
With the not so hidden implications, sometimes openly stated that those who do are losers and
Saying that middle class incomes are merely stagnant is a sick, sick joke as well as an
untruth. As an American, I do not really care about the middle classes in Asia and Eastern
Europe. Bleep the big picture. The huge gains comes with a commensurate increase in homeless
in the United States, and a falling standard of living for most the of the population,
especially in the "wealthy" states, like my state of California. Most of us are using
fingernails to stay alive and homed. If those gains had not been caused by the losses, I
would be very please to see them. As it is, I have to live under President Trump and worry
about surviving. Heck, worry about the rest of my family doing so.
"Saying that middle class incomes are merely stagnant is a sick, sick joke as well as an
I mean I actually do care somewhat about the people of the world, but we here in "rich
countries" are being driven to homelessness at this point and told the goddamn lie that we
live in a rich country, rather than the truth that we live in a plutocracy with levels of
inequality approaching truly 3rd world. We are literally killing ourselves because we have to
live in this plutocracy and our one existence itself is not even worth it anymore in this
economic system (and we are lacking even a few of the positives of many other 3rd world
countries). And those that aren't killing ourselves still can't find work, and even if we do,
it doesn't pay enough to meet the most basic necessities.
1. It is unfortunate that Verga raises the rising cost of material inputs but fails to
meaningfully address the issue. One of the drivers of migration, as mentioned in Comments
above, is the population volcano currently erupting. Labor is cheap and globalization
possible in large part because the world population has grown from 2 Billion to over 7
Billion in the past 60-odd years. This slow-growing mountain of human beings has created
stresses on material inputs which are having a negative impact on the benefits derived from
declining labor costs. This becomes a death-spiral as capital seeks to balance the rising
cost of raw materials and agricultural products by driving down the cost of labor ever
2. Verga touches on the interplay of Nationalism and Racism in the responses of political
parties and institutions in Italy and elsewhere. Voters appear to be abandoning Left and
left-ish parties because the Left have been unable to come up with a definintion of national
sovereignty that protects worker rights largely due to the importance of anti-racism in
current Left-wing thought. Working people were briefly bought-off with cheap consumer goods
and easy credit, but they now realize that low-wage migrant and off-shore workers mean that
even these goodies are now out of reach. The only political alternative currently on offer is
a brand of Nationalism defined by Racism -- which becomes acceptable to voters when the
alternative is Third-World levels of poverty for those outside the 1% and their 9%
I don't see any simple solutions. Things may get very ugly.
I certainly see that policies tampering down free trade, both of capital and labor, can
benefit workers within a particular country. However, especially in the context of said
policies in "Western" countries, this can tend towards a, protect the working class within
the borders, leave those outside of it in impoverished squalor. Which doesn't mesh well with
the leftist goal of global class consciousness. Much like the racially segregated labor
policies of yesteryear, it's playing a zero-sum game with the working class while the
ownership class gets the "rising tide lifts all boats" treatment.
So how do we protect workers within the sovereign, while not doing so at the cost of the
workers outside of it? Schwieckart has an interesting idea, that tariffs on imports are used
to fund non-profits/higher education/cooperatives in the country of export. However, I think
we'd need something a bit more fine-tuned than that.
It has always baffled me that governments enable this global musical chairs game with the
labor market. Nearly all Western governments allow tax dodging by those who benefit the most
from their Navies, Armies, Patents, and Customs enforcement systems. However, it is the
working class that carries the brunt of that cost while corporations off-shore their
A simple-minded fix might be to start taxing foreign profits commensurate with the cost of
enabling those overseas profits.
Interesting that a corporation is a person just like us mortals when it is to their
advantage, but unlike us humans, they can legally escape taxation on much of their income
whereas a human being who is a US citizen cannot. A human citizen is generally taxed by the
US on all income regardless of its source. OTOH, corporations (among other means) routinely
transfer intellectual property to a non tax jurisdiction and then pay artificial payments to
that entity for the rights to use such property. It is a scam akin to a human creating a tax
deduction by transferring money from one pocket to another. Yes, proper taxation of
corporations is a simple-minded fix which is absolutely not simple to legislate. Nice try
though. Something else to ponder: Taxation without representation was said to be a major
factor in our war of independence from Britain. Today no one seems to be concerned that we
have evolved into representation without taxation. Doesn't see right to me.
FWIW I don't think it's productive to talk about things like immigration in (or to) the US
in terms of just the here – as in what should/could we be doing here
to fix the problem. It's just as much if not more about the there . If we
view the global economic order as an enriched center feeding off a developing periphery, then
fixing the periphery should be first aim. #Wall or #NoBorders are largely incendiary
extremes. Ending Original Sin and creating some
sort of supranational
IOU/credit system (not controlled by World Bank or IMF!) will end the economic imbalance
and allow countries who will never export their way out of poverty and misery a way
to become equal first world nation states. With this equality, there will be less economic
migration, less peripheral poverty and potentially less political unrest. It's a gargantuan
task to be sure, but with rising Socialist sentiment here and abroad, I'd like to think we
are at least moving in the right direction.
I may indeed have taken a gratuitously pedantic tone and could have chosen a better one,
for that i apologise. I do however believe that much of my critique still stands, I will try
to go through your points one by one.
"Are all economic migrants therefore bereft of agency?"
Not all but many are, especially the ones that most people are complaining about. Many of
them are being driven from their home countries not simply for a better life but so they can
have something approaching a life at all. While to fully prove this point would require an
analysis of all the different migrants and their home country conditions, I do feel that if
we are talking about Syrian refugees, migrants from Africa risking their lives crossing the
Mediteranian sea, or CentralAmerican refugees than yes i do think these people to an extent
have had their agency taken from them by global events. For Syrians, by being caught in an
imperialist power struggle which while the civil war may not have been caused by it, it
certainly has been prolonged because of it. Not too mention America played a very significant
role in creating the conditions for ISIS, and western European powers don't have completely
clean hands either due to their long history of brutal imperialism in the mideast. Africa of
course also has an extensive past of colonization and suffers from a present of colonization
and exploitation as well. For Central Americans there is of course the voracious american
drug market as well as our politicians consistent appetite for its criminalisation to blame.
There is also of course global climate change. Many of these contributing conditions are not
being dealt with and so i believe that the migrations we have witnessed these last few years
are only the first ining of perhaps even greater migrations to come. How we deal with it now,
could determine whether our era is defined by mass deaths or something better. So to the
extent that i believe many of these migrants have agency is similiar to how a person climbing
onto the roof of there house to escape a flood does.
If the borders of the US were left completely open then, yes, there would most likely be a
rush of people at first but over time they would migrate back and forth according to their
needs, through the opening of the border they would gain agency. People often think that a
country not permitting its citizens to leave is wrong and immoral, but if most countries
close their borders to the people of a country going through great suffering, then it seems
to me that is essentially the same even if the rhetoric may be different. The likeliness of
this is high if the rich countries close there borders, since if the rich countries like the
US and Italy feel they can not take them in, then its doubtful countries on the way that are
much poorer will be able to either.
At the begining of your article you stated that "International commerce, jobs, and
economic migrants are propelled by a common force: profit." This is the capitalist system,
which is a system built upon the accumulation of capital, which are profits invested in
instruments of labor, aka machines and various labor enhancements. Now Rhode island is quite
small so there are geographical limitations of course, but if that was not an issue then yes.
Wage workers in the capitalist system produce more value than they consume, if this was not
the case they would not be hired or be hired for long. So if Rhode Island did not have the
geographical limitations that it does, then with more workers the overall pot of valuable
products and services would increase per capita in relation to the population. If the workers
are divided and not unified into cohesive and responsive institutions to fight for there
right share of the overall pie, which I believe should be all of it, then most of the gain to
society will go to the capitalist as increased profits. So it is not the migrant workers who
take from the native but instead actually the capitalist who exploits and trys to magnify
there difference. So if the capitalist system through imperialism helped to contribute to the
underlying conditions driving mass migration, and then it exploits there gratitude and
willingness to work for less than native workers, than I believe it follows that they will
wish to drive native anger towards the migrants with the ultimate goal of allowing them to
exploit the migrant workers at an even more severe level. This could be true within the
country, such as the US right now where the overarching result of anti-immigrant policies has
been to not get rid of them but to drive there exploitation more into the shadows, or through
mass deportations back to their home country followed by investments to exploit their
desperation at super low wages that will then compete with the rich country workers, it is
also possible they will all just die and everyone will look away. Either way the result will
still be lower wages for rich country workers, it seems to me the only way out of the impass
is for the native workers to realize their unity with migrant workers as exploited workers
and instead of directing that energy of hostility at each other instead focus it upon the
real root which is the capitalists themselves. Without the capitalists, more workers, held
withing certain geographic limitations of course, would in fact only enrich each other.
So while nations may indeed continue to exist for awhile, the long term benefit of native
workers is better served by making common cause with migrants against their mutual oppressors
then allowing themselves to be stirred up against them. Making this argument to workers is
much harder, but its the most beneficial if it can be made successfully.
This last point i do agree i may have been unfair to you, historically I believe the left
generally referred to anarchists, socialists and communists. So I often dislike the way
modern commentators use the left to refer to anything from a center right democrat like
Hillary Clinton all the way to the most hard core communist, it can make understanding
political subtleties difficult since anarchists, socialists and communists have radically
different politics than liberals, much more so than can be expressed along a linear line. But
as you point out you used quotes which i admit i did not notice, and of course one must
generally use the jargon of the times in order to be understood.
Overall i think my main critique was that it seemed that throughout your article you were
referencing different negative symptoms of capitalism but was instead taking that evidence
for the negatives of globalism. I may come from a more radical tradition than you may be used
to, but i would consider globalism to be an inherent aspect of capitalism. Capitalism in its
algorithmic quest for ever increasing profits generally will not allow its self to be bound
for long by people, nations, or even the physical and environmental limitations of the earth.
While one country may be able to restrict it for a time unless it is overcome completely it
will eventually reach out globally again. The only way to stop it is a prolonged struggle of
the international working class cooperating with each other against capitalism in all its
exploitive forms. I would also say that what we are seeing is not so much globalism vs
nationalism but instead a rearrangement of the competing imperial powers, Russia, China, US,
Germany and perhaps the evolution of multiple competing imperialisms similiar in nature to
pre- world war times but that may have to wait for later.
A great deal of your article did indeed deal with Italy which I did not address but I felt
that your arguments surrounding migrants was essentially of a subtle right wing nature and it
needed to be balanced by a socialist counter narrative. I am very glad that you took the time
to respond to my critique I know that putting analysis out there can be very difficult and i
am thankful for your response which has allowed me to better express and understand my
viewpoint. Once again I apoligise if I used some overly aggressive language and i hope your
able to get something out of my response as well.
I appreciate the more reflective tone of this reply. I believe there are still some
misreadings of the article, which I will try to clarify.
For one thing, I am not the author of the article! Enrico Verga is the author. I merely
translated the article. Enrico is Italian, however, and so for time zone reasons will be
unable to respond to your comments for a while. I am happy to write a bit on this in the
You make two arguments.
The first is that many or most migrants are fleeing desperate circumstances. The article
speaks however consistently of "economic migrants" – there are some overlapping issues
with refugees, but also significant differences. Clearly there are many people who are
economically comfortable in their home countries and who would still jump at a chance to get
US citizenship if they could (look up EB-5 fraud for one example). Saying this does not imply
some sort of subtle critique of such people, but they are not a myth.
I actually found your second argument more thought-provoking. As I understand you, you are
suggesting something like the following. You support completely open borders. You acknowledge
that this would lead at first to massive shifts in population, but in the long run you say
things would stabilize. You acknowledge that this will lead to "lower wages for rich country
workers," but say that we should focus on the fact that it is only within the capitalist
system that this causality holds. You also suggest that it would probably lead, under current
conditions, to workers having their anger misdirected at migrants and therefore supporting
more reactionary policies.
Given that the shift to immediate open borders would, by this analysis, be highly
detrimental to causes you support, why do you favor it? Your reasons appear to be (1) it's
the right thing to do and we should just do it, (2) yes, workers might react in the way
described, but they should not feel that way, and maybe we can convince them not to feel that
way, (3) things will work themselves out in the long run.
I am a bit surprised at the straightforwardly idealistic tone of (1) and (2). As for (3),
as Keynes said, in the long run we are all dead. He meant by this that phenomena that might
in theory equilibrate over a very long time can lead to significant chaos in the short run;
this chaos can meanwhile disrupt calculations about the "long term" and spawn other
significant negative consequences.
Anyone who is open to the idea of radically new economic arrangements faces the question
of how best to get there. You are perhaps suggesting that letting global capital
reign supreme, unhindered by the rules and restrictions of nation-states, will in the long
run allow workers to understand their oppression more clearly and so increase their openness
to uniting against it. If so, I am skeptical.
I will finally point out that a part of the tone of your response seems directed at the
impression that Enrico dislikes migrants, or wants other people to resent them. I see nothing
in the article that would suggest this, and there are on the other hand several passages in
which Enrico encourages the reader to empathize with migrants. When you suggest that his
arguments are "essentially of a subtle right wing nature," you are maybe reacting to this
misreading; in any case, I'm not really sure what you are getting at, since this phrase is so
analytically imprecise that it could mean all sorts of things. Please try to engage with the
article with arguments, not with vague epithets.
There is a bit of a dissonance here. Human rights has been persistently used by
neoliberals to destabilize other regions for their own ends for decades now with little
protest. And when the standard playbook of coups and stirring up trouble does not work its
war and total destruction as we have seen recently in Iraq, Libya and Syria for completely
Since increased migration is the obvious first consequence when entire countries are
decimated and in disarray one would expect the countries doing the destruction to accept the
consequences of their actions but instead we have the same political forces who advocate
intervention on 'human rights grounds' now demonizing migrants and advocating openly racist
One can understand one mistake but 3 mistakes in a row! And apparently we are not capable
of learning. The bloodlust continues unabated for Iran. This will destabilize an already
destabilized region and cause even more migration to Europe. There seems to be a fundamental
contradiction here, that the citizens of countries that execute these actions and who who
protest about migrants must confront.
Maybe they should pay trillions of dollars of reparations for these intervention so these
countries can be rebuilt and made secure again so migrants can return to their homes. Maybe
the UN can introduce a new fund with any country considering destabilizing another country,
for instance Iran, to first deposit a trillion dollars upfront to deal with the human
fallout. Or maybe casually destabilizing and devastating entire countries, killing millions
of people and putting millions more in disarray should be considered crimes against humanity
and prosecuted so they are not repeated.
Globalization is not a one-dimensional phenomenon, and some of its aspects are still intact.
Hollywood dominance, Internet, English language dominance, West technological dominance, will
not reverse any time soon.
What is under attack by Trump, Brexit, etc. is neoliberal globalization, and, especially
financial globalization, free movement of labor and outsourcing of manufacturing and services
Neoliberal globalization was also based on the dollar as world reserve currency (and oil
trading in dollars exclusively). But this role of dollar recently is under attack due to the
rise of China. Several "anti-dollar" blocks emerged.
Trump tariffs are also anathema for "classic neoliberalism" and essentially convert
"classic neoliberalism" into "national neoliberalism" on the state level. BTW it looks like
Russia switched to "national neoliberalism" earlier than the USA. No surprise that Trump
feels some affinity to Putin ;-)
Attacks against free labor movement also on the rise and this is another nail in the
coffin of classic neoliberalism. In several countries, including the USA the neoliberal elite
(especially financial elite after 2008, despite that no banksters were killed by crowds) does
not feel safe given animosity caused by the promotion of immigration and resorts of
conversion of the state into national security state and neo-McCarthyism to suppress
I think those attacks will continue, immigration will be curtailed, and "classic
neoliberalism" will be transformed into something different. Not necessarily better.
Several trends are also connected with the gradual slipping of the power of the USA as the
chief enforcer of the neoliberal globalization. Which is partially happened due to the
stupidity and arrogance of the USA neoliberal elite and neocons.
Another factor in play is the total, catastrophic loss of power of neoliberal propaganda
-- people started asking questions, and neoliberal myths no longer hold any spell on
population (or at least much less spell). The success of Bernie Sanders during the last
election (DNC was forced to resort to dirty tricks to derail him) is one indication of this
trend. This "collapse of ideology" spells great troubles for the USA, as previously it spells
great troubles for the USSR.
"Trumpism" as I understand it tried to patch the situation by two major strategies:
(1) splitting Russia from China
(2) Attempt to acquire dominant position in regions rick in hydrocarbons (Iraq, Iran,
Libya, Venezuela, etc)
But so far the decline of neoliberalism looks like Irreversible. It never fully recovered
from the deep crisis of 2008 and there is no light at the end of the tunnel.
Another powerful factor that works against neoliberal globalization is the end of cheap
oil. How it will play out is unclear, Much depends whether we will have a Seneca cliff in oil
production or not. And if yes, how soon.
This is the end of classic neoliberalism, no question about it, and the collapse of
neoliberal globalization is just one aspect of it
"... Two U.S. 'realists', Henry Kissinger and Zbigniew Brzezinski, had always warned that the 'west' must keep China and Russia apart if it wants to keep its leading global position. Nixon went to China to achieve that. ..."
"... Years later the U.S. fell for the myth that it had 'won' the Cold War. It felt invincible, the 'sole superpower' and sought to 'rule them all'. It woke up from that dream after it invaded Iraq. The mighty U.S. military was beaten to pulp by the 'sand niggers' it despised. A few years later U.S. financial markets were in shambles. ..."
"... Crude attempts to further encircle Russia led to the Chinese-Russian alliance that now leads the SCO and soon, one might argue, the world. There will be no photo like the above from the SCO summit. The Chinese President Xi calls Russia's President Putin 'my best friend'. ..."
"... Agreed! But what will the US psychopaths do to maintain their grip when they realize they are really losing it? Nuclear war? ..."
"... Watching the two meetings play out has really been interesting, that the West is dead is not in question. And once it started it seems to be gaining momentum. I don't know how many readers here watch CGTN but it is amazing. My IQ goes up every time I watch. Astonishing how much more valuable information you get from a "heavily censored" Chinese news compared to MSM. The website is a little slow at times but it is well worth the wait. ..."
G-7 summits are supposed to symbolize "the west", its unity and its power. The summits pretended to set policy directions for
the world. We are happy to see that they are dead.
Trump was obviously not inclined to compromise.
Before attending the summit Trump trolled his colleagues by inviting Russia to rejoin the G-7/G-8 format without conditions. Russia
had been kicked out after Crimea voted to join its motherland. Merkel, who had negotiated the Minsk agreement with Russia, was furious.
She wants to use such an invitation as an element of future negotiations. (It is stupid talk. Russia is not interested in rejoining
the G-7/G-8 format.)
There are now many fields where the U.S. and its allies disagree: climate change, the Iran deal, trade are only the major ones.
As he prepared to depart early from the G-7 summit in Charlevoix, Canada, to head to Singapore ahead of his planned meeting with
North Korean leader Kim Jong Un, Trump delivered an ultimatum to foreign leaders, demanding that their countries reduce trade
barriers for the U.S. or risk losing market access to the world's largest economy.
"They have no choice. I'll be honest with you, they have no choice," Trump told reporters at a news conference, adding that
companies and jobs had left the U.S. to escape trade barriers abroad. "We're going to fix that situation. And if it's not fixed,
then we're not going to deal with these countries. "
The row at the G-7 meeting was in stark contrast to the more important other meeting that happened today, the 18th Shanghai Cooperation
Organization (SCO) summit in Qingdao, China:
Dazzling against the city skyline of Qingdao, fireworks lit up the faces of guests who traveled across the vast Eurasian continent
to the coast of the Yellow Sea for the 18th Shanghai Cooperation Organization (SCO) summit, on Saturday night.
It is the first such summit since the organization's expansion in June 2017 when India and Pakistan joined as full members.
The Shanghai Spirit of mutual trust, mutual benefit, equality, consultation, respect for diverse civilizations and pursuit
of common development , was stated in the Charter of the SCO, a comprehensive regional organization founded in 2001 by China,
Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan and later expanded to eight member states.
This weekend Xi will chair the summit for the first time as Chinese president, which is attended by leaders of other SCO member
states and four observer states, as well as chiefs of various international organizations.
The SCO has grown to be an organization covering over 60 percent of the Eurasian landmass, nearly half the world's population
and over 20 percent of global GDP.
Two U.S. 'realists', Henry Kissinger and Zbigniew Brzezinski, had always warned that the 'west' must keep China and Russia
apart if it wants to keep its leading global position. Nixon went to China to achieve that.
Years later the U.S. fell for the myth that it had 'won' the Cold War. It felt invincible, the 'sole superpower' and sought
to 'rule them all'. It woke up from that dream after it invaded Iraq. The mighty U.S. military was beaten to pulp by the 'sand niggers'
it despised. A few years later U.S. financial markets were in shambles.
Crude attempts to further encircle Russia led to the Chinese-Russian alliance that now leads the SCO and soon, one might argue,
the world. There will be no photo like the above from the SCO summit. The Chinese President Xi calls Russia's President Putin 'my
The 'west' has lost in Eurasia.
The U.S. is reduced to a schoolyard bully who beats up his gang members because their former victims have grown too big. Trump is off to Singapore to meet Kim Yong-un. Unlike Trump North Korea's supreme leader will be well prepared. It is likely that
he will run rings around Trump during the negotiations. If Trump tries to bully him like he bullies his 'allies', Kim will pack up
and leave. Unlike the U.S. 'allies' he has no need to bow to Trump. China and Russia have his back. They are now the powers that
can lead the world.
The 'west' is past. The future is in the east.
Posted by b on June 9, 2018 at 03:14 PM |
Yeah, I was just thinking that. Trump is running full-speed into isolation. It's an ancient policy, which recalls the 1920s. What
does America need of the outside world? Good question.
I would think we will hear in the not too distant future of a European replacement of the US exchange systems, such as VISA.
The Americans have become too unreliable. Obviously the Russians and Chinese do have their own systems, but that won't do for
Independence is going to be forced, and the consequences will be permanent.
Watching the two meetings play out has really been interesting, that the West is dead is not in question. And once it started
it seems to be gaining momentum. I don't know how many readers here watch CGTN but it is amazing. My IQ goes up every time I watch. Astonishing how much more
valuable information you get from a "heavily censored" Chinese news compared to MSM. The website is a little slow at times but
it is well worth the wait.
Last year during the border standoff with India they had on strident Indian voices arguing the Indian position every day. Imagine
if CNN had on Mexican reps regarding the wall - never happen.
Because Iran was under sanctions levied by the United Nations earlier, it was blocked from admission as a new member of the Shanghai
Cooperation Council [SCO]. The SCO stated that any country under UN sanctions could not be admitted. After the UN sanctions were
lifted, Chinese president Xi Jinping announced its support for Iran's full membership in SCO during a state visit to Iran in January
2016.Iran must join the SCO ASAP it is also a military alliance and should prepare itself for a big effort at regime change by
the US and lackeys. The moral of the story unless they hang together, the US will hang them separately.
Well, China as the text books say was always ' half the human story' - only eclipsed by Western connivance in the 1860's .I remember
my father argueing with high ranking Australian government and commercial figures in 1970.
My father argued Australia needed
to find its own voice with China and Chinese policy . They replied sneeringly '' Ralph , their just red communists and will never
amount to anything ' . Shortly thereafter Nixon flew to Beijing and my father sat back in his living room with a sardonic look
on his face !
You may like Freedland's article yesterday, which unusually I agreed with, that in fact Trump is a poor negotiator, and gives
away tricks he doesn't have to. Why no concession from Israel, over the move of the US embassy to Jerusalem? Why give away the
honour to NK of a one-to-one with the US president? I'd be surprised if NK surrenders, when they know what will happen if they
"President Putin is the leader of a great country who is influential around the world," Xi said. "He is my best, most intimate
friend." Xi promised Russia and China would increase their coordination in the international arena.
Putin expressed his thanks for the honor and said he saw it as an "evaluation" of his nation's efforts to strengthen its relationship
with its southern neighbor.
"This is an indication of the special attention and respect on which our mutual national interests are based, the interests
of our peoples and, of course, our personal friendship," Putin said.
Interesting that Trump has said Russia should be invited back into the west's G7/G8 at this time. In cold war 1.0, Soviet Union
was the main enemy of the US and China was split away from the Soviet Union. In this war, Trump sees China's economy as the main
threat to the US and is trying but failing to pull Russia away from China.
They did win the Cold War. That's how they became the'sole superpower'.
If winning the Cold War is about vanquishing communism, they flat out lost. Because, while they were concentrating on the end
of the USSR and celebrating, China was going up and up and up. They never saw her coming, yet to this day and for the foreseeable
future, China is a socialist, Marxist country.
So the new, desperate Western spin is to try to argue that China has "succumbed" to capitalism. Yeah, right, a country where
all the private companies have to have members of the CPC on their board and hand over enough shares to the state to grant it
veto powers, not to mention the Central bank and all its major companies are state-owned... Lol.
After the collapse of the USSR the consensus - even of the alt-media (what little of it existed) was that a new American century
was on the way and the whole world would be better off for it. A decade later in 2003 the consensus (post 'shock & awe' Gulf War
2) was that America had the ability to re-structure the Asian /African world and that it would all be for good.
15 years later we are all sick of the fruit of that delusion. So we look to another power to save us... Do we understand nothing?
Without the accountability of multi-polarity, Western supreme power all became security-obsessed privilege, self-aggrandizement,
blatant plunder and total disregard for moral value and life. Power corrupts - it knows no exceptions.
If the West is truly dead, the East will be no different.
Interesting that Trump has said Russia should be invited back into the west's G7/G8 at this time.
Thought of a moment to annoy the Europeans. It is obvious that Trump was pissed off about having to attend, and left at the earliest
opportunity. The Europeans heard that, and will draw the inevitable conclusions.
Lea @ 13 Socialist, Marxist, Capitalist, what does it matter: it seems to work for China, at least for the time being. It's success
makes me think that a bit more government control of corporations might not be such a bad thing.
The summit with Kim will be fascinating to observe. In my view, NK has finessed the US and the Trump administration to a degree
I would not have thought possible, even from native US insiders. To do it long range from the other side of the world speaks to
me a lot about the power of Asia, and the clarity of view from there.
I agree with Laguerre @9 that Trump is a terrible negotiator (forgive that I didn't read the Guardian piece). I would take
this much further and say that all the US institutions themselves are culturally crippled in terms of understanding what's happening
in the ascendancy of Asia. All of their negotiation is feeble, because their grasp on their own true position is based on yesterday's
view of their power. You cannot go into negotiation without knowing what you hold.
Every day, I become more confident in the ability of the elder nations to put the young western empires to rest without their
being triggered into death spasms.
Red Ryder @11 - I see China's full-on drive for the one Road as its way of waging total war, its strategic masterstroke to
render the enemy powerless without the enemy's realizing that it is being attacked. Russia as the other half of the Double Helix
mesmerizes the west with weaponry while China undercuts the ground. Both countries are fully at war, and winning, while unseeing
commenters complain that it's time for them to "do something." How superb the silk rope drawn so softly around the throat.
It's a beautiful play. I very much hope - and truly expect - that we can all survive to be able to sit back and admire it as
the years unfold.
I have a small quibble with b's wording but thank him for following and reporting on our evolving world.
The U.S. is reduced to a schoolyard bully who beats up his gang members because their former victims have grown too big.
The global elite have their US puppet acting like a schoolyard bully who beat up his gang members because their former victims
have grown too big.
The West is trying to consolidate power and control while they still have some ghost of a chance. How they hold countries after
this global divorce will be interesting.
At his time the West has little to offer humanistically except its vice grip on most economic interaction and the tools including
banking underpinning the "system". The elite have deluded the public in the West for centuries about private finance behind the
scenes of all/most conflict......pointing to other religions but never their own.
It sure is getting interesting. IMO, the two Koreas are going to announce a reconciliation that requires the removal of America
military forces/bases et al, which fits in with the fake nationalism efforts of Trump.
That the US and the EU and their respective camps are at loggerheads over trade and perhaps other economic issues should not (I
hope) lead readers to assume that one side has the interests of the public it represents uppermost in mind. As the US and the
Anglosphere is dominated by one set of neoliberals, so Germany and the lackey EU nations following Berlin are dominated by another
set of neoliberals in thrall to an export-led mercantilist ideology. Just as the elites in charge of US power structures are only
interested in enriching themselves, the same can be said for those in charge of power structures in Europe. Whether under the
US or the EU, the public suffers.
Notice that Germany benefits from being the major economic power in the EU while its fellow EU nations around the Atlantic
and Mediterranean rim flail under a huge debt (and Greece is being punished back into the impoverished colonial status it held
under Nazi German occupation) and eastern European EU members are following suit running their economies into the ground and having
to beg NATO into setting up bases in their territories to attract money. At the same time German workers are becoming poorer,
they are not benefiting from Berlin's economic policies, they are not reproducing fast enough so Berlin needs to bring in more
foreign workers in the guise of "refugees" to prop up factories and keep wages low.
@ Madderhatter67: The US did not win the Cold War because the Cold War was only ever a propaganda front for the secret war
waged by US / UK elites against Russia and China to dominate and rob these nations and their neighbours of their natural resources.
thanks b - and for the laugh with the marjorie and homer pic for comparison!
i think this parallel you draw is a good one.. the west is certainly floundering... i am not sure how global finance responds
here... i can't imagine the 1% being on the wrong side of a bet on the direction of things here either..
@6 harry law.. did iran make it into the sco? it sounds like it did.. good!
@14 les7.. regarding your last line - i tend to agree with that viewpoint..
@19 jen... do you think it will be somehow different if the power shifts to russia/china? i guess i am not so sanguine over
power, regardless of who holds it.
Very well put, only issue that as to be dealt with is all those Stan Countries, they are a hibernating and breeding ground for
Terrorists and Arms dealers , who don't care who they sell arms to and how they get them to rogue regimes.
I see China's full-on drive for the one Road as its way of waging total war, its strategic masterstroke to render the enemy
powerless without the enemy's realizing that it is being attacked.
I do think you're exaggerating there.
China's past history has been one of a country very contented with itself, much like the US, because defended geographically
by vast deserts. A longer history, so some foreigners did traverse the deserts.
The Chinese exported their products by foreign ships (Arabo-Persian) arriving at Canton, and buying cargoes, or camel caravans
arriving in the north and buying silk. The Chinese themselves did not travel abroad very much, and so didn't know very much about
surrounding countries, or the rest of the world. There was a fleet of Chinese junks which arrived in the Gulf in the 14th century,
but it was the only one.
Today's situation is not so different. There are Chinese interventions in Africa, but their diplomacy is pretty ham-fisted.
The Belt-and-Road initiative is in fact intended to bring up to speed Central Asian countries like Tajikistan. Fine, Tajikistan
needs it, but it's not world-changing.
The rail freight from Beijing to Frankfurt works better as an intermediate between sea and air freight, but essentially it
is what has always happened - foreigners export Chinese products. The Chinese don't know how to run a foreign policy.
from their body language, I would say that Japan is surely 'with' Trump and the US, but that's only because that arch-reactionary
Abe is in power.....and when he goes, and go he will, there will be a big period of adjustment...some day.
The scambastic Trump could be inclined to make a slightly more fair deal in Singapore just to make a deal, but he is going extra
early (no jet lag) and will be controlled by Pompeo with his 'Grim Reaper' CIA-dog/warhawk/translator/born & raised S. Korean
with multiple relations in their South KCIA (NIS) and cabinet leadership, Andrew Kim (born Kim Sung-hyun). Kim's purpose will
be to control Trump's spontaneaous decision making, inform him on what he reads as N. Korea's intent, and give baseline hawkish
color to the translations for his own hawkish viewpoint.
bjd, bolton is trump's overseer, making sure he doesn't step out of line.
Trump is a poor negotiator, and gives away tricks he doesn't have to. Why no concession from Israel, over the move of the
US embassy to Jerusalem?
Laguerre, you have it backwards. the embassy move, the iran deal, and the appointment of bolton are all concessions trump made,
as payback for adelson's millions to both the gop and his campaign. possibly also has a little something to do cambridge analytica,
honey traps or whatever.
The imprint of the 84-year-old's political passions is seen in an array of Donald Trump's more controversial decisions, including
violating the Iran nuclear deal, moving the American embassy in Israel to Jerusalem, and appointing the ultra-hawkish John
Bolton as national security adviser.
......The New York Times reported that Adelson is a member of a "shadow National Security Council" advising Bolton
James @ 21: I think one should always be a bit suspicious of those who hold power, especially those who find themselves holding
the uppermost hand in power as a result of victory in war (whether in the form of actual military combat, trade war or other wars
in soft power).
Russia under Vladimir Putin and China under Xi Jinping may be fine but will their successors know not to abuse the power they
may gain from the New Silk Road projects encompassing Eurasia and Africa?
Of course, it is about Iran. It's the Iranian deal that the EU needs to continue. They benefit as the biggest vendors to Iran.
They want to get inside that developing 70 million person market, also.
Bolton wants regime change. The EU knows that will be worse than Iraq. And economically, the EU will be in the dumps for 2
decades if there's another war they are forced to join. And they will be forced to join. They cannot say No to the Hegemon.
The EU 2, Germany and France, are at a historic moment of truth.
They could have a great future with Russia, China, Iran, the BRICS, SCO, OBOR and EAEU or they could be crippled by the Empire.
"...But Canada, which pushed for Russia to get the boot in 2014, is not onside. 'Russia was invited to be part of this club
and I think that was a very wise initiation, and an invitation full of goodwill,'[FM Chrystia Freeland] she told reporters at
the summit. 'Russia, however, made clear that it had no interest in behaving according to the rules of Western democracies..."
it's kind of wonderful to see all these imperialist and former neo-colonial powers fighting among themselves.
unfortunately, like the old African proverb goes, when the elephants fight it's the grass and small animals that suffer.
I see no reason for optimism for the peoples of europe at this point, as the stranglehold of the Trioka is perhaps as strong
as ever, and hundreds of millions of people are suffering; the people simply have to get organized at all levels and take back
their sovereignty at least as a start
The US still has the power of the dollar in its arsenal. The UK and EU, and any nation that deals with Wall Street, are addicted
to US investment in dollars. Since the EU is run by the banks, and western banks can't function with the dollar, any statements
by the EU that they're going to avoid US sanctions over Iran are meaningless.
The equation is essentially this: you can have your sovereignty or you can have the benefits of the dollar that make your 1%
very rich. You can't have both. Since the EU is ruled by the 1% banker/investor class they will forestall any attempts to regain
sovereignty by the people. In a sense, Europe is like Russia 10-15 years ago, thinking that the US is the key to the golden calf.
Russia learned the hard way they needed to establish some independence (although to this day Russia doesn't have nearly the financial
independence one might hope), and China saw from Russia's example they needed to do so as well. This led them to team up on many
economic initiatives while seeking to reduce the dominance of the dollar.
Perhaps someday Europe will learn this lesson. But as long as the EU exists, I kind of doubt it. The EU-crats will cry and
criticize Trump but the bankers love US money too much to let them actually do anything serious.
If the West is dead and the East is the future, then why are so many Chinese buying houses and living part time in Canada, Australia,
and the USA? Why is there so much emphasis put on Western education facilities by Asians?
there is only a bunch of paid of administrators running the countries and the corporations that pay them.
Trumps quid pro quo is deals that benefit his family. I don't thinks he cares one bit about the GOP and how the party fundraises.
He cares about advancing his family and keeping the loot.
maybe we should realize that the concepts of east and west, as much as neo liberalism or neo conservatism or any other moniker
that we could apply to loot and steal - legally and without shame under the guise of trade - are concepts of the past.
the future is for the strongest, irrespective of their origins or philosophy. we are burning this planet down with a vengeance
and we - the people - are to numerous and too expensive to keep.
while we debate and some even chuckle with delight as to how the west is treated by trump, or how much the west deserves to
be made redundant and all hail the Russians and the Chinese - the king is dead, long live the king - it is us who dies in the
wars, it is our children that are being kidnapped and locked up in prison when arriving on the border seeking asylum, it is us
who will watch the women in our live die in childbirth because of lack of medical care, it is us who will die of black lung, hunger,
thirst and general malice.
and while we gossip, they laugh all the way to the bank.
b, we have no doubt that the North Korean leadership is ready for the Americans and know the score with a rising Eurasia and a
sinking NATO. However, your last assumption of Kim being more than ready to go toe-to-toe with DJT smacks of some of the worst
tendencies of many posters here who are ready to venerate Kim without him ever even making formal address of more than a few words
to a) his people, 2) his allies, or D) even the world. This is a laughable assumption from you and it would be like having the
most beautifully-made garment handy for a long while, desperate for anyone to come along so you could fling it on them to prove
they were the most amazing supreme leader in all the world!
This is not to say I do not want the NoKos to succeed in their endeavors of getting a fair deal...hardly: I think they will
succeed eventually because they are shrewd. But this is an attempt to squash the unbelievably propagandistic (or naive) attempts
to place the mantle of imperviousness, all-knowingness, utterly-innocentness, and insurmountably-cleverousness onto the boy that
would be king. DJT could eat a boy like Kim for breakfast if left alone from their advisors.
If Europe is to break free from the Outlaw US Empire, Merkel must be jettisoned and independent-minded leaders must take control
of Germany and EU. I'm not at all surprised with how events went in Canada. However, I see the Policy as the Bully, not Trump,
the policy still being the attempt to gain Full Spectrum Domination. What's most important, IMO, is this spectacle will not go
unnoticed by the rest of the world. The Outlaw US Empire cannot make it any plainer that it's the primary enemy state of all except
the Zionist Abomination. I think Abe wonders why he's there and not in Qingdao.
Although this item focuses on Kashmir , it should be read after the longer article linked above. There's little news as of
yet coming from Qingdao other than who's cooking what and sideline meets. I expect more coming out beginning Monday. Of course,
Kim-Trump begins now, it being the 10th in Singapore already.
The difference between the two projects- the western Empire and the Eurasian schemes exemplified by OBOR- is that the former,
as 500 years of experience teaches us, relies on ethnic divisions, wars and competition while the latter requires peace and co-operation.
In a sense that answers Jen @ 32. It really doesn't matter who runs the governments of China and Russia, provided that they
can prevent the imperialists from distracting them into rivalry. It was that which, thanks to plenty of stupidity on both sides,
gave rise to the tensions of which Nixon and Kissinger took advantage.
Had the USSR and China ironed out their small differences on the sixties- and Vietnam gave them a perfect excuse to do so,
history would have been very different and probably much less bloody.
The truth is that, as b asserts, the SCO is already much more important than the G7- America and the Six Dwarfs. How much more
important is shown by the role of Freeland (the neo-Nazi Ukrainian apologist) in insisting on holding the line against Russia's
re-admission to a club that it almost certainly does not want to rejoin.
Trump may not be a 'good negotiator' but he has a position of relative strength vis a vis the rest of the G7 who cannot negotiate
because they do as they are told. If they won't do what Trump tells them to do they will be on the lookout for someone else to
give them orders-they have no idea of independence or sovereignty. Just watch most of them scuttle back to Brussels for ideas,
or set up back channels to Moscow- once a puppet always a puppet.
The Sino-Soviet Split occurred while Stalin was still alive--he refused to allow the Chinese to develop "Communism with Chinese
Characteristics" just like any other European Orientalist. And as the Monthly Review article I linked, the Chinese must
beware of becoming/being seen as Imperialistic in their zeal to push BRI--Imperialist behavior will kill the Win-Win concept as
it will revert to just another Zero-sum Game.
One of the factors which has been killing the 'Democratic' West is that its bribed & blackmailed leaders have alienated themselves
from The People whose views they were elected to represent.
No-one living in a so-called democracy is prepared to tolerate a leader who spends too much time praising, and making excuses
for, the crimes of the racist-supremacist Zionist Abomination (h/t karlof1) and its Piece Process in Palestine. It can be persuasively
argued that embrace of and fealty to the Z.A. is the only factor which Western Leaders have in common. And it's neither a coincidence
Grrr! I still don't get why so many humans believe anything good comes from chucking aside one greedy oppressive arsehole then
replacing it with another. Sure the SCO has a founding document laden with flowery words and seemingly wonderful concepts but
I say "So what" check out the UN charter or the amerikan constitution and you'll find the same.
These issues of justice & equity
cannot be fixed by swapping bosses because every society has its share of pathologically fucked up greedies who have the means
and lack of empathy to destroy anything and everyone in their lust for whatever it is they imagine they need.
We have to accept that will never change and that trying to purge the planet of those types just creates more of them from
within the structure most successful in effecting the swap.
I know I sound like a scratched disc but the only fix that could hope to work is one that smashes the conglomerations into
tiny shards, reducing the world to thousands of small self governing entities; sure some places will still end up being taken
over by low self esteem motivated arseholes, but not only will they not be able to do as much damage, arseholes stand out in a
small society where more 'normal' humans interact with them - currently all the pr1cks coagulate in spots such as the G7 and few
non-pr1cks ever get close enough to see them for what they are. A low count on the old degrees of seperation register makes it
much more difficult for the scum to rise. Making sure that no chunk is sufficiently big to force its will on another would also
That won't fix everything, but who outside some totally screwed up anal regressive would want that anyway? I just want to live
in a world where no one cops it like the entire Yemeni population currently is. I see no benefit in moving the horror from Yemen
to Uigar-land or whatever place the new bosses decide should be their fun palace of hate, murder and misery.
The Congo and/or Nigeria another coupla sites of misery for money. Timor Leste aka East Timor, now that the Portuguese expats
in the form of the man with the Nobel stamp of obeisance to the monied
Jose Ramos Horta have done over the
locals, something Xanana Gusmão always said could happen. Horta's arseholeness made the wealthiest nation in the world (divide
resources by population) riven by poverty, lack of health and education services plus of course old favourite, racist oppression.
Check out these kids here untroubled
by issues like getting a decent phone signal or their ranking on Twitch - wondering where their next decent feed is coming from
is prolly their most pressing issue.
Swapping SCO for G7 will do SFA for them or anyone else unlucky enough to be living on top of whatever the current 'must have'
is deemed to be.
Humanity either learns how to live with itself on an equal basis or it will perish; it's really that simple. The likes of the
Outlaw US Empire, its NATO vassals and the Zionist Abomination are shining examples of what MUST be exorcised for ever more.
Leaders are routinely confronted with philosophical dilemmas. Here's a classic one for our Trumptopian times: If you make enemies
out of your friends and friends out of your enemies, where does that leave you? What does winning (or losing) really look like? Is
a world in which walls of every sort encircle America's borders a goal worth seeking? And what would be left in a future fragmented
international economic system marked by tit-for-tat tariffs, travel restrictions, and hyper-nationalism? Ultimately, how will such
a world affect regular people? Let's cut through all of this for the moment and ask one crucial question about our present cult-of-personality
era in American politics: Other than accumulating more wealth and influence for himself,
, and the
Trump family empire , what's Donald J. Trump's end game as president? If his goal is to keep this country from being, as he likes
to complain, " the world's
piggy bank ," then his words, threats, and actions are concerning. However bombastic and disdainful of a history he appears to
know little about, he is already making the world a less stable, less affordable, and more fear-driven place. In the end, it's even
possible that, despite the upbeat economic news of the moment, he could almost single-handedly smash that piggy bank himself, as
he has many of his own
ventures . Still, give him credit for one thing: Donald Trump has lent remarkable new meaning to the old phrase "the imperial
presidency." The members of his administration, largely a set of aging white men, either conform to his erratic wishes or get fired.
In other words, he's running domestic politics in much the same fashion as he oversaw the boardroom on his reality-TV show The
Apprentice . Now, he's begun running the country's foreign policy in the same personalized, take-no-prisoners, you're-fired
style. From the moment he hit the Oval Office, he's made it clear at home and abroad that it's his way or the highway. If only,
of course, it really was that simple. What he will learn, if "learning process" and "President Trump" can even occupy the same sentence,
is that "firing" Canada, the European Union (EU), or for that matter China has a cost. What the American working and the middle classes
will see (sooner than anyone imagines) is that actions of his sort have unexpected global consequences. They could cost the United
States and the rest of the world big-time. If he were indeed emperor and his subjects (that would be us) grasped where his policies
might be leading, they would be preparing a revolt. In the end, they -- again, that's us -- will be the ones paying the price in
this global chess match.
The Art of Trump's Deals
So far, President Trump has only taken America out of trade deals or threatened to do so if other countries don't behave
in a way that satisfies him. On his
third day in the White House, he honored his campaign promise to remove the United States from the Trans-Pacific Partnership,
a decision that opened space for our allies and competitors, China in particular, to negotiate deals without us. Since that grand
exit, there has, in fact, been a boom in side deals involving China and other Pacific Rim countries that has weakened, not strengthened,
Washington's global bargaining position. Meanwhile, closer to home, the Trump administration has engaged in a barrage of NAFTA-baiting
that is isolating us from our regional partners, Canada and Mexico.
Conversely, the art-of-the-deal aficionado has yet to sign a single new bilateral trade deal. Despite steadfast claims that he
would serve up the best deals ever, we have been left with little so far but various tariffs and an onslaught against American trading
partners. His one claim to bilateral-trade-deal fame was the
renegotiation of a six-year-old
deal with South Korea in March that doubled the number of cars each US manufacturer could export to South Korea (without having to
pass as many safety standards).
As White House Press Secretary Sarah Sanders
it , when speaking of Kim Jong-un's North Korea, "The President is, I think, the ultimate negotiator and dealmaker when it comes
to any type of conversation." She left out the obvious footnote, however: any type that doesn't involve international trade.
In the past four months, Trump has imposed tariffs, exempting certain countries, only to reimpose them at his whim. If trust were
a coveted commodity, when it came to the present White House, it would now be trading at zero. His supporters undoubtedly see this
approach as the fulfillment of his many campaign promises and part of his
classic method of keeping both friends and enemies guessing until he's ready to go in for the kill. At the heart of this approach,
however, lies a certain global madness, for he now is sparking a set of trade wars that could, in the end,
cost millions of American jobs.
On May 31st, Commerce Secretary Wilbur Ross
confirmed that Canada, Mexico, and the EU would all be hit with 10 percent aluminum and 25 percent steel tariffs that had first
made headlines in March. When it came to those two products, at least, the new tariffs bore no relation to the previous average 3
percent tariff on US-EU traded goods.
In that way, Trump's tariffs, initially supposed to be
China (a country whose president he's praised to the skies and whose trade policies he's lashed out at endlessly), went global.
And not surprisingly, America's closest allies weren't taking his maneuver lightly. As the verbal-abuse level rose and what looked
like a possible race to the bottom of international etiquette intensified, they threatened to strike back.
In June, President Trump ordered
that a promised 25 percent tariff on
$50 billion worth of imported
goods from China also be imposed. In response, the Chinese, like the Europeans, the Canadians, and the Mexicans, immediately
promised a massive response in kind. Trump countered by threatening another
$200 billion in tariffs against China. In the meantime, the White House is targeting its initial moves largely against products
related to that country's "
Made in China 2025 " initiative, the Chinese government's strategic plan aimed at making the country a major competitor in advanced
industries and manufacturing.
Meanwhile, Mexico began adopting retaliatory tariffs on American imports. Although it has a far smaller economy than the United
States, it's still the second-largest importer of US products, buying a whopping
$277 billion of them last year. Only Canada buys
more. In a mood of defiance stoked by the president's
hostility to its people, Mexico
executed its own trade gambit, imposing
$3 billion in 15
percent–25 percent tariffs against US exports, including pork, apples, potatoes, bourbon, and cheese.
While those Mexican revenge tariffs still remain limited, covering
just 1 percent
of all exports from north of the border, they do target particular industries hard, especially ones that seem connected to President
Trump's voting "base." Mexico, for instance, is by far the largest buyer of US pork exports, 25 percent of which were sold there
last year. What its 20 percent tariff on pork means, then, is that many US producers will now find themselves unable to compete in
the Mexican market. Other countries may follow suit. The result: a possible loss of up to 110,000 jobs in the pork industry.
Our second North American Free Trade Agreement (NAFTA) partner (for whose prime minister, Justin Trudeau, there is "
a special place in hell ," according to a key Trumpian trade negotiator) plans to invoke tariffs of up to 25 percent on about
$13 billion in US products beginning on July 1st. Items impacted
range "from ballpoint
pens and dishwasher detergent to toilet paper and playing cards sailboats, washing machines, dish washers, and lawn mowers." Across
the Atlantic, the EU has similarly announced retaliatory tariffs of 25 percent on 200 US products, including such American-made classics
as Harley-Davidson motorcycles, blue jeans, and bourbon.
Trump Disses the Former G7
As the explosive Group of Seven, or G7, summit in Quebec showed, the Trump administration is increasingly isolating itself from
its allies in palpable ways and, in the process, significantly impairing the country's negotiating power. If you combine the economies
of what might now be thought of as the G6 and add in the rest of the EU, its economic power is collectively larger than that of the
United States. Under the circumstances, even a small diversion of trade thanks to Trump-induced tariff wars could have costly consequences.
President Trump did try one "all-in" poker move at that summit. With his game face on, he first suggested the possibility of wiping
out all tariffs and trade restrictions between the United States and the rest of the G7, a bluff met with a healthy dose of skepticism.
Before he left for his meeting with North Korean leader Kim Jong-un in Singapore, he even suggested that the G7 leaders "consider
removing every single tariff or trade barrier on American goods." In return, he claimed he would do the same "for products from their
countries." As it turned out, however, that wasn't actually a venture into economic diplomacy, just the carrot before the stick,
and even it was tied to lingering
threats of severe penalties.
The current incipient trade war was actually launched by the Trump administration in March in the name of American "
." What should have been highlighted, however, was the possible "national insecurity" in which it placed the country's (and the
world's) future. After all, a similar isolationist stance in the 1920s and the subsequent market crash of 1929 sparked the global
opening the way for the utter devastation of World War II.
European Union countries were
incredulous when Trump insisted, as he had many times before, that the "U.S. is a victim of unfair trade practices," citing the
country's trade deficits, especially with
Germany and China. At the G7 summit, European leaders did their best to explain to him that his country isn't actually being
treated unfairly. As French President Emmanuel Macron
explained , "France runs trade
deficits with Germany and the United Kingdom on manufactured goods, even though all three countries are part of the EU single market
and have zero tariffs between them."
"... The official who described this to me said Trump believes that keeping allies and adversaries alike perpetually off-balance necessarily benefits the United States, which is still the most powerful country on Earth. ..."
"... "No," the official said. "There's definitely a Trump Doctrine." "What is it?" I asked. Here is the answer I received: "The Trump Doctrine is 'We're America, Bitch.' That's the Trump Doctrine." ..."
In an interview with "CBS Evening News" anchor Jeff Glor in Scotland on Saturday, President
Trump named the European Union -- comprising some of America's oldest allies -- when asked to
identify his "biggest foe globally right now."
"Well, I think we have a lot of foes. I think the European Union is a foe, what they do to us
in trade. Now, you wouldn't think of the European Union, but they're a foe. ..."
The second-best self-description of the Trump Doctrine I heard was this, from a senior
national-security official: "Permanent destabilization creates American advantage." The
official who described this to me said Trump believes that keeping allies and adversaries
alike perpetually off-balance necessarily benefits the United States, which is still the most
powerful country on Earth.
The best distillation of the Trump Doctrine I heard, though, came from a senior White
House official with direct access to the president and his thinking. I was talking to this
person several weeks ago, and I said, by way of introduction, that I thought it might perhaps
be too early to discern a definitive Trump Doctrine. "No," the official said. "There's
definitely a Trump Doctrine." "What is it?" I asked. Here is the answer I received: "The
Trump Doctrine is 'We're America, Bitch.' That's the Trump Doctrine."
I think Trump simply has a very prosaic, very sincere even, view about the world: he treats
his equals equally (e.g. Putin, Xi, Kim) and his unequals unequally (NATO countries'
leaders, Abe etc.).
That is, he simply views his allies for what they really are: clients. And when you go
visit clients, you expect them to stop, lower their heads, listen and obey you: that's why
he probably found strange the fact that the Europeans were insulted by his behavior during
the NATO summit and the individual countries official visits. He must have been
particularly thunderstruck over the popular protests in Scotland: from his point of view,
Scotland owes everything they have now to the USA (NATO), so he, as chief of State of the
USA, has every right to go there and play golf whenever he pleases to do so. And the fact
is he's right to think so: the European peninsula is an American protectorate, a
"subState", inhabited by second-class citizens (like the peoples of Latin status of the
As for the destabilization doctrine (Trump Doctrine), it's absolutely correct: peace,
right now, is nocive to the USA. That's why Russia and China are trying to descalate: peace
(and time) is on their side. If the USA doesn't manage to trigger WWIII soon, it will start
to eat itself up, because the world didn't recover from the 2008 meltdown. The clock is
ticking for the Americans (and, by extension, for the Europeans and the Japanese).
Last, I agree completely with the theory that May is a remainer who's trying to implode
brexit without appearing to do so. She was a remainer during the camapaign, that's the
reason she was elected as Cameron's successor (it was she or Leadsom or Johnson, both
hardcore brexiters). The British elite is holding her while it can, and she is only in
office right now because she has the elite's full weight behind her: if it was a Labour MP,
he/she would've already fallen.
There is one significant weakness to Putin's patient, restrained and reasonable response
to US/NATO aggression and intimidation...
Posted by: les7 | Jul 15, 2018 12:17:17 PM | 2
If you watch the last 8 minutes of Episode 3 of Oliver Stone's Putin Interviews it'll cure
you of the habit of confusing Putin's "Our Partners" diplo-speak with the hair-raising
reality experienced by the crew of the Donald Cook in the Black Sea a couple of years ago.
It'll also dissuade you from imagining that Putin/Russia has a 'weak' or 'reasonable'
attitude toward NATO military provocations.
Imo Trump would have either watched them himself or been briefed on their contents by
someone who has.
Trump is acting out the good cop bad cop role all in one. He comes in with slashing attacks
and praise. The media only prints the slashing attacks. By placing his adversaries off
balance he seeks to gain something. I would say that he is operating like a corporate
raider. The weak kneed euro leaders just do not know how to handle this stuff.
He will not try that with Putin because he respects him. Putin is operating with a weak
hand and he cannot and will not take on the Europe on his borders conventionally when he
can possibly get what he wants in time with no bloodshed. Libya is his next target.
Putin and his family are from Stalingrad and Putin will cut off the head of the Snake
(US) before he lets that happen again. How? Think bright glowing mushroom clouds. It is
Trump wants to bring Russia back into Europe. The Anglo Europeans want more control over
Russia's vast resources and companies that control them. Offering then a role in NATO would
Putin is being conflated into an enemy of the world by a mass propaganda campaign.
Crimea and Ukraine was NATO pushing to hard to make Putin act with aggression. Crimea fell
without a shot being fired. As an independent republic full of Russians it can choose who
it wants to affiliate with.
All in all this can be solved diplomatically but not by the current crop of deep state
Trump's declaration that "trade wars are good, and easy to win" is an instant classic, right up there with Herbert Hoover's "prosperity
is just around the corner."
Trump obviously believes that trade is a game in which he who runs the biggest surplus wins, and that America, which imports more
than it exports, therefore has the upper hand in any conflict. That's also why Peter Navarro predicted that
nobody would retaliate against Trump's
tariffs. Since that's actually not how trade works, we're already facing plenty of retaliation and the strong prospect of escalation.
But here's the thing: Trump's tariffs are badly designed even from the point of view of someone who shares his crude mercantilist
view of trade. In fact, the structure of his tariffs so far is designed to inflict maximum damage on the U.S. economy, for minimal
gain. Foreign retaliation, by contrast, is far more sophisticated: unlike Trump, the Chinese and other targets of his trade wrath
seem to have a clear idea of what they're trying to accomplish.
The key point is that the Navarro/Trump view, aside from its fixation on trade balances, also seems to imagine that the world
still looks the way it did in the 1960s, when trade was overwhelmingly in final goods like wheat and cars. In that world, putting
a tariff on imported cars would cause consumers to switch to domestic cars, adding auto industry jobs, end of story (except for the
In the modern world economy, however, a large part of trade is in intermediate goods – not cars but car parts. Put a tariff on
car parts, and even the first-round effect on jobs is uncertain: maybe domestic parts producers will add workers, but you've raised
costs and reduced competitiveness for downstream producers, who will shrink their operations.
So in today's world, smart trade warriors – if such people exist – would focus their tariffs on final goods, so as to avoid raising
costs for downstream producers of domestic goods. True, this would amount to a more or less direct tax on consumers; but if you're
afraid to impose any burden on consumers, you really shouldn't be getting into a trade war in the first place.
But almost none of the Trump tariffs are on consumer goods.
Chad Bown and colleagues
have a remarkable chart showing the distribution of the Trump China tariffs: an amazing 95 percent are either on intermediate goods
or on capital goods like machinery that are also used in domestic production: KS
Is there a strategy here? It's hard to see one. There's certainly no hint that the tariffs were designed to pressure China into
accepting U.S. demands, since nobody can even figure out what, exactly, Trump wants from China in the first place.
looks very different. It doesn't completely eschew tariffs on intermediate goods, but it's mostly on final goods. And it's also
driven by a clear political strategy of hurting Trump voters; the Chinese, unlike the Trumpies, know what they're trying to accomplish:
What about others?
is complicated by its direct response to aluminum and steel tariffs, but those industries aside it, too, is following a far more
sophisticated strategy than the U.S.:
Except for steel and aluminum, Canada's retaliation seemingly attempts to avoid messing up its engagement in North American
supply chains. In broad terms, Canada is not targeting imports of American capital equipment or intermediate inputs, focusing
instead on final goods.
And like China, Canada is clearly trying to inflict maximum political damage.
Trade wars aren't good or easy to win even if you know what you're trying to accomplish and have a clear strategy for getting
there. What's notable about the Trump tariffs, however, is that they're so self-destructive.
[M]any District contacts expressed concern about the possible adverse effects of tariffs and other proposed trade restrictions,
both domestically and abroad, on future investment activity; contacts in some Districts indicated that plans for capital spending
had been scaled back or postponed as a result of uncertainty over trade policy. Contacts in the steel and aluminum industries
expected higher prices as a result of the tariffs on these products but had not planned any new investments to increase capacity.
So Trump and company don't actually have a plan to win this trade war. They may, however, have stumbled onto a strategy that will
lose it even more decisively than one might have expected.
Note to readers: please click the share buttons above
On Tuesday, his trade representative Robert Lighthizer released a list of $10% tariffs
to be imposed on $200 billion worth of Chinese goods.
A senior Trump regime official falsely said it's "roughly equal to their exports to" the
US. It's around 40% of the 2017 total.
Newly announced tariffs won't take effect before completion of a two-month review process,
concluding at end of August. Trump warned he may order tariffs on $500 billion worth of Chinese
In 2017, imports from China were $506 billion, US exports to the country $130 billion. The
trade deficit was $375 billion last year.
It's because so much of industrial America was offshored to China and other low-wage
countries, millions of US jobs lost, Washington under Republicans and undemocratic Dems
permitting what demands opposition.
The Investment-State Dispute Settlement (ISDS) system incorporated into US trade deals like
NAFTA and others, letting a corporate controlled extrajudicial tribunal resolve disputes,
promotes offshoring of US jobs.
China called the latest announced tariffs "totally unacceptable" bullying, urging other
countries to unite against Trump's trade policy, promising to retaliate in kind.
Along with earlier duties on $50 billion worth of Chinese goods, newly announced ones raise
the total to half of Chinese imports – maybe all of them to be targeted ahead if China
retaliates in kind as expected.
China Association of International Trade senior fellow Li Yong believes one Beijing
retaliatory measure may be a greater push to attract foreign investment other than from the US,
Trump "closed the door for negotiations. It's up to (him) to open the door again."
Trade policy expert Eswar Prasad believes
"(t)he internal political dynamics in both countries make it unlikely that either side
will stand down and offer conciliatory measures that could deescalate tensions and lead to a
resumption of negotiations."
Economist Stephen Roach called trade wars "not easy to win easy to lose, and the US is on
track to lose (its) trade war" with China, adding:
"This is live ammunition. This is not just rhetorical discussion anymore. We're in the
early stages of fighting skirmishes in a real, live trade war."
"The question is, how far does it go? And how significant will the ammunition be in the
Roach believe China has lots of ammunition to hold firm and fight back with.
"The US is hugely dependent on China as a source for low-cost goods to make ends meet for
American consumers. We're hugely dependent on China to buy our Treasuries to fund our budget
deficits," he explained.
Beijing has lots of ways to retaliate against Washington besides imposing duties on US
Beijing "will never back down when faced with threats and blackmail, neither will it waver
its resolution in safeguarding the global free trade and multilateral trade system,"
"The US is undermining global trade rules and causing problems for the global economy.
(Its) mentality not only brings negative impacts to both parties directly involved, but also
to every country on the global industrial chain."
China's Global Times called Trump's trade policy "extortion," stressing "countermeasures"
will be taken.
Markets believe both sides eventually will show restraint. There's no sign of it so far
– just the opposite.
Stephen Lendman is a Research Associate of the CRG, Correspondent of Global Research
based in Chicago.
Trump's declaration that "trade wars are good, and easy to win" is an instant classic, right up there with Herbert Hoover's "prosperity
is just around the corner."
Trump obviously believes that trade is a game in which he who runs the biggest surplus wins, and that America, which imports more
than it exports, therefore has the upper hand in any conflict. That's also why Peter Navarro predicted that
nobody would retaliate against Trump's
tariffs. Since that's actually not how trade works, we're already facing plenty of retaliation and the strong prospect of escalation.
But here's the thing: Trump's tariffs are badly designed even from the point of view of someone who shares his crude mercantilist
view of trade. In fact, the structure of his tariffs so far is designed to inflict maximum damage on the U.S. economy, for minimal
gain. Foreign retaliation, by contrast, is far more sophisticated: unlike Trump, the Chinese and other targets of his trade wrath
seem to have a clear idea of what they're trying to accomplish.
The key point is that the Navarro/Trump view, aside from its fixation on trade balances, also seems to imagine that the world
still looks the way it did in the 1960s, when trade was overwhelmingly in final goods like wheat and cars. In that world, putting
a tariff on imported cars would cause consumers to switch to domestic cars, adding auto industry jobs, end of story (except for the
In the modern world economy, however, a large part of trade is in intermediate goods – not cars but car parts. Put a tariff on
car parts, and even the first-round effect on jobs is uncertain: maybe domestic parts producers will add workers, but you've raised
costs and reduced competitiveness for downstream producers, who will shrink their operations.
So in today's world, smart trade warriors – if such people exist – would focus their tariffs on final goods, so as to avoid raising
costs for downstream producers of domestic goods. True, this would amount to a more or less direct tax on consumers; but if you're
afraid to impose any burden on consumers, you really shouldn't be getting into a trade war in the first place.
But almost none of the Trump tariffs are on consumer goods.
Chad Bown and colleagues
have a remarkable chart showing the distribution of the Trump China tariffs: an amazing 95 percent are either on intermediate goods
or on capital goods like machinery that are also used in domestic production:
Is there a strategy here? It's hard to see one. There's certainly no hint that the tariffs were designed to pressure China into
accepting U.S. demands, since nobody can even figure out what, exactly, Trump wants from China in the first place.
looks very different. It doesn't completely eschew tariffs on intermediate goods, but it's mostly on final goods. And it's also
driven by a clear political strategy of hurting Trump voters; the Chinese, unlike the Trumpies, know what they're trying to accomplish:
What about others?
is complicated by its direct response to aluminum and steel tariffs, but those industries aside it, too, is following a far more
sophisticated strategy than the U.S.:
Except for steel and aluminum, Canada's retaliation seemingly attempts to avoid messing up its engagement in North American
supply chains. In broad terms, Canada is not targeting imports of American capital equipment or intermediate inputs, focusing
instead on final goods.
And like China, Canada is clearly trying to inflict maximum political damage.
Trade wars aren't good or easy to win even if you know what you're trying to accomplish and have a clear strategy for getting
there. What's notable about the Trump tariffs, however, is that they're so self-destructive.
[M]any District contacts expressed concern about the possible adverse effects of tariffs and other proposed trade restrictions,
both domestically and abroad, on future investment activity; contacts in some Districts indicated that plans for capital spending
had been scaled back or postponed as a result of uncertainty over trade policy. Contacts in the steel and aluminum industries
expected higher prices as a result of the tariffs on these products but had not planned any new investments to increase capacity.
So Trump and company don't actually have a plan to win this trade war. They may, however, have stumbled onto a strategy that will
lose it even more decisively than one might have expected.
The trend is definitely against EU. But Britain may be crushed, like Brazil and Argentina into accepting neoliberal world order
"... Maybe Johnson the Brexiter can now launch an inner party coup and push Theresa May out. According to a YouGov poll she lost significant support within her conservative party. Besides the Brexit row she botched a snap election, lost her party's majority in parliament and seems to have no clear concept for anything. It would not be a loss for mankind to see her go. ..."
"... Boris the clown, who wins within his party on 'likability' and 'shares my political outlook', would then run the UK. A quite amusing thought. Johnson is a man of no principles. While he is currently pretending to hold a pro-Brexit position he would probably run the same plan that May seems to execute: Delay as long as possible, then panic the people into a re-vote, then stay within the EU. ..."
"... There is an excellent piece in the Boston Review on the EU- https://bostonreview.net/class-inequality/j-w-mason-market-police ..."
"... Iy makes the point that "The European Union offers the fullest realization of the neoliberal political vision. Its incomplete integration -- with its confusing mix of powers -- is precisely the goal." ..."
"... It traces the neo-liberal project, designed to prevent democracy from controlling economic policy, back to von Mises and Hayek. Nothing is more mistaken for critics of imperialism than to buy the line that the EU represents internationalism in any sense. The fact that some racists oppose the EU-just as others support it as a 'white" bastion -- is no reason to give an institution which is profoundly and purposefully undemocratic the benefit of the doubt. ..."
"... It is a wondrous sight to see Western [neo]Liberal Democracy crumbling before our eyes. Have a look at the very founders and protectors of "freedom" corrupt to the very marrow of their bones. ..."
"... Anything bad that can happen to the UK is well-deserved. The home, the womb of Russophobia, lies and illegal wars, as well as the hub of spying against American citizens, is exposed as thoroughly bankrupt politically. ..."
"... EU is bound to collapse but Britain might be tempted to wait it out, and maybe it is the game in London: not to be the first. The most dynamic destructive work in progress is the Euro that benefit to none of its 18 members (the euro-zones) but Geramny and Nederland. Italy has understood it but is using the refugees crisis to enlarge the contestation to non-euro zone countries (Visegrad group and more). ..."
"... As Nato is the real and only cement in this enlarged un-united Europe, in an epoch of accelerating change (collapse maybe) the famous Wait and see of the Brits has just muted in a slow fox-trot. ..."
"... But the puffed up Brits do not even see this danger and would blithely fall into the arms of the mafiosi from across the pond. ..."
"... Brexit is rebellion against the US imposed world order. London money has gone along and profited from the US imposed order, but the ordinary Brits may not have. They may not know where they are going, but they do know where they do not want to be. ..."
"... ditto... status of colony... isn't that what the globalists, corporations, neo liberals and etc want? get rid of any national identity as it gets in the way of corporations having the freedom to rape and pillage as needed.. ..."
"... Trump has reversed some 70 years of US strategy to gain nothing. It is quite remarkable. Strategic vandalism is a good description. ..."
"... The thing about UK and the EU is the UK is basically the US 51st state and the US is a defacto commonwealth nation. The colonization of Europe by the US was never meant to encompass the UK and the City. As they are basically one and the same. ..."
"... EU could not possibly have been a US/CIA idea as it actually works. Yes it is undemocratic, usurps national aspirations, perverts local economies, coddles oligarchs, and all that. But that does not mean it is a US idea. ..."
"... Single union political aspirations have been around for centuries and in many countries. Dare I suggest that it is actually based on the Soviet Union of peoples and most likely a Leninist or Trotskyist plot!! :)))) ..."
"... What do the City of London, the Vatican and Washington DC have in common? Actually, Jerusalem shares many of the same traits. Bonus points for the most creative euphemism for "usurious bank." ..."
"... From my perspective, Nation-States have not been the loci of power for some time (if they ever really were). The US, with its awesome military might and (former) industrial capabilities has served as the enforcement arm of that usurious supra-national cabal throughout "the American Century." ..."
"... Obtainimg strong mandate Cameron went to Brussels to supposedly negotiate better deal with EU ESPECIALLY for security while in fact he went there trying to bully the shape future EU integration especially in political realm and even more in realm of banking Union and integration and coordination of banking rules, laws and unified controlling authorities, via threatening Brexit which would be a deadly blow to EU propaganda glue that holds together this melting pot of divided as never before nations and never since medieval times united national elites integrated in EU ruling bureaucracy. ..."
"... First it was devastating impact of further EU integration on UK banking as London has become legal under U.K. law illegal in EU, money laundering capital of the world and criminal income is huge part of the revenue of the City , US is second. ..."
"... At the passage of Brexit I believed the purpose to be to allow the City of London (the bankers) unlimited financial freedom, perhaps especially in their entering into agreements with the Chinese. This could not be the case under the original EU rules. It will be interesting to see how this works out. ..."
"... The reality of the brexit which the Tory government is determined to raiload through has been designed by elites to better oppress the hoi polloi and to sell it to the masses it has been marketed as a means of restoring 'white power'. ..."
"... That is really saying something because the current version of the UK is one of the sickest, greed is good and devil take the hindmost societies I have ever experienced -- up there with contemporary israel and the US, 1980's South Africa and by the sound of it (didn't experience it firsthand like the other examples, all down to not existing at the time) 1940's Germany. ..."
"... Brexit is nether the problem or the solution, it was just another distraction to keep the mass occupied, whilst they assist stripped the uk and a large part of the world! ..."
"... Every brexiteer I've asked why they voted for out, begins by saying "For once they had to listen to us" and that's usually followed by "there's too many people here" or "it's the E.Europeans". (My response to the europhiles is that you knew the EU was finished a dozen years ago, when all the Big Issue sellers turned into Romanian women.) UK cities are thick with destitute E.Europeans. ..."
...Hours before Boris Johnson quit his position, Brexit Secretary David Davis resigned from Prime Minister May's cabinet.
On July 6 the British government held a cabinet meeting at Chequers, the private seat of the prime minister. Following the meeting
a paper (pdf) that took a weird position towards exiting the European Union. If it would be followed, Britain would practically
end up with staying in the EU, accepting nearly all its regulations and court decisions, but without any say over what the EU decides.
The paper was clearly written by the 'Remain' side. The two top Brexiters in May's cabinet felt cheated and resigned. More are likely
The majority of the British people who voted to leave the EU must feel duped.
My hunch is that Prime Minister Theresa May was tasked with 'running out the clock' in negotiations with the EU. Then, shortly
before the March 2019 date of a 'hard Brexit' would arrive without any agreement with the EU, the powers that be would launch a panic
campaign to push the population into a new vote. That vote would end with a victory for the 'Remain' side. The UK would continue
to be a member of the European Union.
No matter how the Brexit vote will go, the powers that are will not allow Britain to exit the European Union.
Is that claim still justified?
Maybe Johnson the Brexiter can now launch an inner party coup and push Theresa May out. According to a YouGov poll she
support within her conservative party. Besides the Brexit row she botched a snap election, lost her party's majority in parliament
and seems to have no clear concept for anything. It would not be a loss for mankind to see her go.
Boris the clown, who wins within his party on 'likability' and 'shares my political outlook', would then run the UK. A quite
amusing thought. Johnson is a man of no principles. While he is currently pretending to hold a pro-Brexit position he would probably
run the same plan that May seems to execute: Delay as long as possible, then panic the people into a re-vote, then stay within the
Then again - Boris may do the unexpected.
How do the British people feel about this?
Posted by b on July 9, 2018 at 11:43 AM |
Did you notice how quickly th E U sided with the U K over Salisbury ? That was the deal.
Remain in EU and we're back you!
Then again could have been we'l create a false flag you back us and we'll stay , a suttle nuonce.
The likelihood is that the blairite faction in the Parliamentary Labour Party-which has no real political differences with the
Tories and is fanatically pro EU, as all neo-liberals are- will prop up the May government. Or a Tory government headed by another
Remainer, with Blairites in the Cabinet.
This will prevent the General Election which Tories of all parties fear.
Iy makes the point that "The European Union offers the fullest realization of the neoliberal political vision. Its incomplete
integration -- with its confusing mix of powers -- is precisely the goal."
It traces the neo-liberal project, designed to prevent democracy from controlling economic policy, back to von Mises and
Hayek. Nothing is more mistaken for critics of imperialism than to buy the line that the EU represents internationalism in any
sense. The fact that some racists oppose the EU-just as others support it as a 'white" bastion -- is no reason to give an institution
which is profoundly and purposefully undemocratic the benefit of the doubt.
@Jeff - #1 - You are correct. There will not be another referendum.
I would add that there is some chance, however small, that on March 29th the British government will tell the EU that they
just have no way to meet the requirements of Article 50 and would the EU please allow them to continue as a member of the EU and
forget about all the shenanigans of the past 2 years. The EU has said previously that they will accept such a result and allow
the UK to continue as a member. The Brexiteers will have a total meltdown, and May will most likely be thrown out of office, but
most businesses and many individuals will be quite happy for this whole thing to just go away.
It is a wondrous sight to see Western [neo]Liberal Democracy crumbling before our eyes. Have a look at the very founders
and protectors of "freedom" corrupt to the very marrow of their bones.
In the US Trump, in the UK the Torys the democracies are now openly imperial and openly corrupt. Rule of law - ask the Skripals.
Brexit, Russia, Skripals, Russia, junkies and poisons Russians - minority government - ministers resigning right and left deadlines
looming no solutions in sight.
Western civilization is based on the Enlightenment and the Enlightenment and all its ideas of "democracy" are failing. Democracy
is not a religion, it is not the end of history, it is not sacred and immutable - checks and balances have failed utterly. This
sweetly written little essay says it all.
Look for countries to unilaterally bail from the EU with little or no advance notice. They will simply abrogate and that will
trigger an avalanche of others joining in. There are various good economic reasons why they would do that, but I think the groundswell
of populism fueled by anger over the open borders cataclysm will be the prime driver.
Anything bad that can happen to the UK is well-deserved. The home, the womb of Russophobia, lies and illegal wars, as well
as the hub of spying against American citizens, is exposed as thoroughly bankrupt politically.
The current path to chaos
is well-trod. Now, we can expect national attention is on the team in Russia in the semi-finals, while the government crumbles
and tumbles. But afterward, especially if Kane fails to bring the Cup home? Oh, the chaos. Of course, it will all be Putin and
UK. Despicable. How long it has taken for folks to realize Theresa May always has been a stalking horse. Highly Likely the
UK will stew in its own piss. Put that in their White Hall dossiers, and stamp it "Kremlin Plot".
Britain won't be staying in the EU and nor will the EU be accepting May's fantasy ideas for a future relationship giving the UK
free trade on everything it needs. There's a remote possibility that a new UK government could begin working on re-joining the
EU (Article 49), but there are plenty in Europe who would not let the UK re-join, at least not in the near future.
13th is coming soon, scary stuff ?
The "Don't take No for an answer" is rather misleading. Made to vote again ..only after changes to the Treaty. France's vote
against the EU Constitution was accepted and when the Dutch also rejected it, it didn't happen.
EU is bound to collapse but Britain might be tempted to wait it out, and maybe it is the game in London: not to be the first.
The most dynamic destructive work in progress is the Euro that benefit to none of its 18 members (the euro-zones) but Geramny
and Nederland. Italy has understood it but is using the refugees crisis to enlarge the contestation to non-euro zone countries
(Visegrad group and more).
Now we have this Nato meeting coming and the abomination of Donald meeting Vlad that scares the whole neo-lberals, borgists,
russian haters, warmongers.
As Nato is the real and only cement in this enlarged un-united Europe, in an epoch of accelerating change (collapse maybe)
the famous Wait and see of the Brits has just muted in a slow fox-trot.
Brits, especially the Leave voters, have no real idea what the consequences of leaving the EU are, nor do they care that much.
What is uppermost in their minds is they do not want is to be in a union with "losers". Every single country on the Continent
is a loser and thus the object of contempt. The only country in Europe that is not a loser (meaning they have never lost a war)
is the United Kingdom of Roast Beef and God Save The Queen.
This British loser-phobia also explains the island nation's guttural hatred of Russia, which has bailed out Europe, and so
by definition the Brits as well, twice, thereby taking away some of the British luster. (OK the last time around they got a bit
of help from their old colonies, the Yanks, but its all the same. Yanks and Brits are the same stock.) As far as EU goes the Brits
can leave, no problem. Except that what the Continent would then be faced with was an American armed camp a few miles off shore,
not an appealing prospect to say the least. But the puffed up Brits do not even see this danger and would blithely fall into
the arms of the mafiosi from across the pond.
Boris Johnson's resignation letter. Well written.
Makes the same argument over the Checkers paper that I made above. If Johnson gets 48 back benchers on his side he could launch
a vote on no-confidence against May and possibly become PM. The Conservatives in Parliament seem quite upset over all of this.
Brexit is rebellion against the US imposed world order. London money has gone along and profited from the US imposed
order, but the ordinary Brits may not have. They may not know where they are going, but they do know where they do not want to
Dominic Raab is the new UK Brexit point-man. The previous guy, Davies, just resigned. But Raab's appointment, I think, points
to what Brexit has been about all along -- namely, labour market reform beyond the rest of Europe, and to do this the UK must
be free of the European Human Rights council and other protections it provides for workers in the member states.
@23 psychohistorian... ditto... status of colony... isn't that what the globalists, corporations, neo liberals and etc want?
get rid of any national identity as it gets in the way of corporations having the freedom to rape and pillage as needed..
it was interesting reading near the end of bjs comments "Over the last few months they have shown how many friends this country
has around the world, as 28 governments expelled Russian spies in an unprecedented protest at the attempted assassination of the
Skripals." Guilty first - we will prove it later... maybe he really ought to consider rule from Brussels or where ever, if he
can't fathom the concept of innocent until proven guilty...
The French populace rejected the EU Constitution in 2005 during the Chirac years, and you are correct that after some changes
it was accepted under the Sarkozy government.But that happened because it was the Assembly (the parliament, i.e., the political
class) that voted on it, not the people. Can't have those deplorable citizens deciding important matters like that, now can we?
@51 pft... in so far as the cia work for the financial complex - yeah, probably.. how to create a currency - the eu - that no
one has any real control over, to compete with the us$ and yen... makes sense on that level..
Western civilization is based on the Enlightenment and the Enlightenment and all its ideas ...
When we discuss ALL ideas of the Enlightenment, we must remember this:
Wikipedia: "Enlightened absolutism is the theme of an essay by Frederick the Great, who ruled Prussia from 1740 to 1786, defending
this system of government.
When the prominent French Enlightenment philosopher Voltaire fell out of favor in France, he eagerly accepted Frederick's invitation
to live at his palace. He believed that an enlightened monarchy was the only real way for society to advance.
Frederick the Great was an enthusiast of French ideas. Frederick explained: "My principal occupation is to combat ignorance
and prejudice ..."
In relatively short time, the List of enlightened despots included almost all absolute monarchs in Europe.
The awful truth for the Leave campaign is that the governing establishment of the entire Western world views Brexit as strategic
vandalism. Whether fair or not, Brexiteers must answer this reproach. A few such as Lord Owen grasp the scale of the problem.
Most seemed blithely unaware until Mr Obama blew into town last week.
Donald Trump, the presumptive Republican nominee for president, has come out in support of Brexit, saying the UK would be "better
off" outside of the European Union and lamenting the consequences of migration in the continent.
The billionaire, who secured the backing of Republican voters on a staunchly anti-immigration platform, said that his support
for the UK leaving the EU was a personal belief and not a "recommendation".
"I think the migration has been a horrible thing for Europe," Trump told Fox News late on Thursday. "A lot of that was pushed
by the EU. I would say that they're better off without it, personally, but I'm not making that as a recommendation. Just my
Donald Trump accuses Angela Merkel of making 'catastrophic mistake' on refugees. President-elect tells The Times and Bild that
EU has become 'a vehicle for Germany'.
US President-elect Donald Trump said in a newspaper interview published on Sunday that German Chancellor Angela Merkel had
made a "catastrophic mistake" with a policy that let a wave of more than one million migrants into her country.
In a joint interview with The Times and the German newspaper Bild, Trump also said the European Union had become "a vehicle
for Germany" and predicted that more EU member states would vote to leave the bloc as Britain did last June.
"I think she made one very catastrophic mistake, and that was taking all of these illegals," Trump said of Merkel, who in
August 2015 decided to keep Germany's borders open for refugees, mostly Muslims, fleeing war zones in the Middle East.
Trump has reversed some 70 years of US strategy to gain nothing. It is quite remarkable. Strategic vandalism is a good
Even when the 'light' (read truth about Brexit) is revealed, many here choose to ignore it out of sheer ignorance. For a good
description of the MOA comment section, one should consult Plato's Allegory of the Cave. And the 'left' blames external elements
for its inaptitude and demise when many it has only itself to blame.
The thing about UK and the EU is the UK is basically the US 51st state and the US is a defacto commonwealth nation. The
colonization of Europe by the US was never meant to encompass the UK and the City. As they are basically one and the same.
Its presence in the EU was never really a problem though and was useful in terms of providing a guiding hand, so long as it remained
free of the Eurozone. So I am not really sure its a change in strategy. Just another fork in the road.
It remains to be seen how it all works out. Perhaps the UK Brexit is meant to send a message to the other EU states as to the
consequences of leaving. One benefit to the US neoliberals might be that UK scraps or at least scales back its NHS due to the
economic consequences of a hard Brexit. The 0.1% will be fine at the end of the day and they are the only group that matters .
The rest are just pawns on the board.
As for Germany. Immigration in the EU was all about divide and rule and leaving fewer Euros for social programs. All part of
the neoliberal blueprint. Divide and rule is an age old tactic perfected by the British to rule the colonies. The EU and Germany
being controlled by the Anglo-American ruling elite , and basically occipied by US controlled NATO opened the doors. Reversing
this immigration can provide a plausible reason for more terrorism in Europe to empower the EU to become more of a security-police
state like US and UK.
On a side note its interesting the head of the ECB and BOE are both former Goldman Sachs employees.
Another related link suggesting the EU also serves a purpose of isolating Russia economically.
EU could not possibly have been a US/CIA idea as it actually works. Yes it is undemocratic, usurps national aspirations,
perverts local economies, coddles oligarchs, and all that. But that does not mean it is a US idea.
Zero Hedge is polishing turds now it seems.
Single union political aspirations have been around for centuries and in many countries. Dare I suggest that it is actually
based on the Soviet Union of peoples and most likely a Leninist or Trotskyist plot!! :))))
"In relatively short time, the List of enlightened despots included almost all absolute monarchs in Europe."
You are right, and that included Catherine the Great for whom Samuel Bentham worked for some years. His brother Jeremy spent
some time with him there and was a great admirer of Catherine and Potemkin. He was a key figure in the development of liberal
ideology and political economy.
'The Enlightenment' is an historical concept which obscures more than it explains. To suggest that representative democracy's
origins lie in this nebulous thing is completely misleading -- the truth is that democracy is as old as community. If anything
'The Enlightenment' movements are the beginning of the current system whereby the trappings of popular government are hung on
the reality of a kleptocrats' oligarchy.
Just in time for Emperor Trump's arrival in Britain! I do not understand Great Britain's "democracy," (the very concept
of an aristocratic House of Lords Peerage makes my head explode... and what's this about the Monarch having the authority to appoint
a Prime Minister if he/she doesn't like the one selected?). But doesn't the party with the majority get to anoint the Prime Minister?
Wouldn't that be Labour right now if Missy May is shown the door?
Furthermore, the assertion that the UK will stay in the EU is entirely plausible. I heard, early in the days after the vote, that
the govt had not expected it to go the way it did. Plans were made for a show of Brexit but that 'the idea is that everything
stays the same' , i.e., no change. Sadly for the UK, the EU will not allow that to happen. In all probability, another vote
will indeed be called. Otherwise, it's going to be a disaster for an already divided UK for many, many years to come!
The main problem with Brexit is that it is so complex that neither the officials who were set the task of drafting it knew
little more than the Ministers themselves! NOBODY knew what the fuck to do! And they still don't!
There is every chance a Vote of No Confidence is going to be called on May's government and she will finally fall, as she must
as she is the most inept PM there has probably ever been!
What do the City of London, the Vatican and Washington DC have in common? Actually, Jerusalem shares many of the same traits.
Bonus points for the most creative euphemism for "usurious bank."
Are terms such as "The Five Eyes" and "The AZ Empire"
'trumped' by all this nationalistic furor?
From my perspective, Nation-States have not been the loci of power for some time (if they ever really were). The US, with
its awesome military might and (former) industrial capabilities has served as the enforcement arm of that usurious supra-national
cabal throughout "the American Century."
But really, does anyone here really believe that a New York City conman or the latest British "mophead" is more powerful than
the dynastic power of the Rothschilds, Warburgs or Morgans... or even the nouveau riche like the Rockefellers or Carnegies?
These are dynasties so wealthy and powerful that they don't even appear on Forbes lists of "The Richest" and no one dare mention
their names when plotting the next global conflagration.
@33 -- "...and Western Australia were separate British colonies that all began as penal settlement."
Not entirely correct. Western Australia started as a capitalist investment venture (c. 1828) but suffered chronic labor shortages
as slavery was closed down (c. 1833). The colony then resorted to convict imports for a time. Much of the myth about 'criminal'
can be re-framed as political prisoners such as the Welsh Chartists (see Chartism in Wales).
One can only be confused if one ignores public and secret reasons while Cameron threatened Brexit vote already in 2015 and went
through it in 2016. Officially it was about antiterrorism, security and hence controlling immigration flagship of Tory political
campaign that brought them overwhelming electoral win as well as some noises that EU rules and laws stifle economic development
and the British lose more in EU payments than they gain.
Obtainimg strong mandate Cameron went to Brussels to supposedly
negotiate better deal with EU ESPECIALLY for security while in fact he went there trying to bully the shape future EU integration
especially in political realm and even more in realm of banking Union and integration and coordination of banking rules, laws
and unified controlling authorities, via threatening Brexit which would be a deadly blow to EU propaganda glue that holds together
this melting pot of divided as never before nations and never since medieval times united national elites integrated in EU ruling
What Cameron was scared of as far as direction of future of EU?
First it was devastating impact of further EU integration on UK banking as London has become legal under U.K. law illegal
in EU, money laundering capital of the world and criminal income is huge part of the revenue of the City , US is second.
And second point is future of British monarchy which further integration of EU into superstate would require to be abandoned
in UK as elsewhere as states were to loose all even symbolic sovereignty and turn into regions and provinces as in Roman Empire
. Needles to say that UK still powerful landed aristocracy want nothing of that sort.
Hence Cameron went to Brussels make special deal for UK and was essentially, with some meaningless cosmetic changes, rebuked
into binary decision in EU or out of it no special deal and hence he escalated with calling Brexit vote as a negotiating tool
only to increase political pressure to rig elections toward remain if deal reached . In fact as latest scandal revealed results
of exit polls were released to stock market betting hedge funds just minutes before polls were closed concluding guess what, that
remain campaign won while electoral data in hours showed Brexiters wining simply because to the last moment before closing polls
they expected EU to cave in, they did not so they continued pressure by closing openly pro Brexit win.
The pressure continues now while Cameron had to pay political price as he openly advocated staying in EU under phony deal even
Tory did not buy, and hence this seeming chaos now fooling people that there is other way but hard Brexit to keep monarchy sovereignty
and profits from global money laundering or surrender and humiliation degradation U.K. into EU colony as BJ just said.
Of course which way it goes ordinary Brits will pay but also big crack will widen in EU as national movements will have impact
of shattering dreams of quit ascending to EU superstate.
At the passage of Brexit I believed the purpose to be to allow the City of London (the bankers) unlimited financial freedom,
perhaps especially in their entering into agreements with the Chinese. This could not be the case under the original EU rules.
It will be interesting to see how this works out.
The Chinese, as they are intended to be the regional governor of Asia under the evolving global governance are key to the entire
tyrannical plan. The AGW hoax, paid for by Western oligarchs, is the public relations for the UN's Agenda 21, currently being
enforced at the local level in many parts of the US.
The Chinese oligarchs are so delighted with its tyrannical land-use provisions that they are actually calling their projects
"China's Agenda 21". You may search for it.
@ 62: Thanks for the Pilger article, a good read. There are many today, who would return us all to those days.
Herman J Kweeblefezer , Jul 10, 2018 1:05:09 AM |
The reality of the brexit which the Tory government is determined to raiload through has been designed by elites to better
oppress the hoi polloi and to sell it to the masses it has been marketed as a means of restoring 'white power'. Bevin
& co can whine on about the injustices of the eu for as long as their theoretical view of the world sustains them, but the brexit
which will be delivered is based on 'pragmatic realism' developed by a really nasty gang of avaricious lying c**tfaces and will
create a society far more unjust, divided and impoverished than the one that currently exists.
That is really saying something
because the current version of the UK is one of the sickest, greed is good and devil take the hindmost societies I have ever experienced
-- up there with contemporary israel and the US, 1980's South Africa and by the sound of it (didn't experience it firsthand like
the other examples, all down to not existing at the time) 1940's Germany.
Jezza was great in the house last night but he didn't
call for an immediate general election which would be pretty much SOP for any opposition facing as tattered a government (Seven
cabinet 'resignations') as bereft of ideas as the Maybot machine.
The reason he didn't - couldn't in fact, is that the UK left is as divided and dug into their positions as that tory bunch
of bastards. Far too many opposition politicians insist that a 'deal' on brexit comes first ahead of sorting out poverty and homelessness,
woeful education outcomes (unless you believe wildly juked stats) and the horror show that has been created by three decades of
relentless attacks on the health service.
We see it here from the brexiters so convinced of the rightness of their cause they ignore the institutionalised racism that
will certainly follow a tory brexit. Or the remoaners who also ignore the unsavory aspects of eu policy to try and render the
labour left impotent. Those latter types simply don't give a damn about anything which flows from this debate and division other
than killing momentum, they consider even losing the next 5 elections to tories an agreeable sacrifice for ridding the party of
Corbyn and co.
Corbyn has recognized the destructive divisiveness of Brexit and tries to ignore it because he holds with fixing the mess so
many people are in as being much more important than theoretical arguments which will change nothing for the better regardless
of impassioned exhortations by ninnies on both sides of the argument.
The thing which really pisses me off about the lefty brexiters, is that they behave as if it is a now or never situation, when
it is anything but. There is nothing to prevent a more united Labour Party who have got their mandate by actually delivering a
better life for people rather than irrelevant concepts, returning to sorting out the UK's position in the EU at a later date,
ideally at a time when the EU's intransigent support for corporate welfare has run bang smack into a leftist UK Labour government's
determination to restore public ownership of natural monopolies (rail, water, power, mail delivery etc).
The lefty brexiters claim the lefty remainers won't allow it, while the lefty remainers claim it is the lefty brexiters clogging
the works. In fact it is both gangs of selfish egotistical assholes.
NotBob @ 35.
The EU Constitution never happened. The Lisbon Treaty came along a couple of years later and this time round the Irish people
voted against it. It got amended and the Irish people accepted it. The French and Dutch (and every other EU) country chose not
to "ask the people" and left the decision to the peoples' chosen represtentatives.
The Irish Constitution has a bit in it making
it necessary to ask the people before any changes can be made to that Constitution, so every time the EU adds some bits to the
EU Treaty that require the Irish to change their own Constitution there's trouble, as those 3 million or so Irish people have
the power to scupper anything and everything for the other 500 million EU citizens. Holding a national referendum to make decisions
affecting the entire Union doesn't seem to be either fair or democratic. A single EU-wide referendum could be held when there's
a major change to the Treaties.
Political correctness is a social disease very similar to syphilis - it fucks with the brain. You really should take precautions
if socializing in those circles. Precautionary measures are available at all chemists and most public toilets.
I click on MoA now and see a pic of Boris the clown hanging from a rope. If the Brits were smart, they would connect that rope
to a weather balloon and allow Boris to ascend to the stratosphere and cruise the jet stream.
The EU is first and foremost a massive attack on democracy. At the same time it attempts to establish technocracy as the mode
of government of the future. But right only racists and overly idealistic assholes oppose the EU...
"Democracy" only being possible locally? Numbers I posted on another thread:
Members of the Shanghai Cooperation Organisation - population of 3 Billion+
EU Members - population of 500 million.
United States - population of 326 million
GDP of United States - 18.57 trillion USD
GDP of European Union - 17.1 trillion USD
GDP China, India, Russia combined (Shanghai Cooperation Organisation) -
- close to 15 trillion
You think EU countries have got a competitive chance if on their own? Or - democracy in Switzerland enables them to decide
on their relations with the outside world? Like not being part of the "single market" - they are -including free movement of people
- yes you can live and work in Switzerland if you are a EU citizen.
But right only racists and overly idealistic assholes oppose the EU
Brexit is nether the problem or the solution, it was just another distraction to keep the mass occupied, whilst they assist
stripped the uk and a large part of the world! The people we are scared to mention are the true people killing and oppressing
us. I thank Daniel@66 for naming them ! Rothchild family ect ect I would add the Rothermere family and Murdoch ! Politics are
debated, but history is made on the streets. We need to regain our sense of moral outrage (where did that go ?) there are 70 million
displaced people in the world ! It could be. You or I next !
Peter AU 1 @ 83: I agree with ADKC and IMO. There were convicts transported to the Australian colonies whose crimes can be considered
political crimes. The Tolpuddle Martyrs who came to the Sydney colony in the 1830s are one example: they were transported for
the crime of demanding an extension of voting rights to all men, among other demands. Such convicts were a small minority though.
Alan @ 88
I am in total agreement with you on your comment regarding Boris Johnson ! His childish buffoonery, is a commen system / tactic
of a psychopath . It hides a callous disregard for human life , wins gullible friends which the psychopath manipulates to exploit
there power and influence! They are very good at scheming there own self interested plan. But (and here's the crunch ) are totally
useless at for seeing the consequences of there actions . And no regard for the victim of there actions!!! Do we want that in
charge of the nuclear button ?
There is nothing wrong/inconsistent with the idea of an interconnected world of sovereign (independent) states. The idea that
a treaty or a trade agreement means that a state is no-longer independent is ridiculous. As ridiculous as believing that an individual
who purchases a pack of polo mints is no longer free because of the need of a local shop and a manufacturer.
You are basically pushing the idea that there should be no nation states, no borders and all trade free and therefore no need
for treaties. From this comes no regulation, a poisoned environment, uncontrolled and rapacious capitalism, no rights for people,
no benefits, no protection, just work til' you die and polished off sharpish if you are no longer productive.
I don't object to an EU as a grouping of independent states acting collectively. I do object to an EU that erodes and undermines
the nation state, that seeks to remove state leaders and interfere in state elections/policies. The EU that we have is the latter
and there is no practical way to reform it to the former.
@ B. You have too high an opinion of the competence of the main political figures in the UK Governing Party.
Boris Johnson has
never been a serious contender for PM. He's good at giving a rousing speech to the Party faithful but that's it. The blue rinses
enjoy the titillation of his infidelities but they don't want someone so amoral coming anywhere near their daughters, or representing
You knew Theresa May had no judgment the first day of her premiership, when she made BoJo her Foreign Secretary. A selection
that could kindly be described as risible. He indicated no suitability for the role before his appointment nor has since. Quite
the opposite. It was at that decision you knew all was hopeless. Brexit was going to be hopeless. Everything she was going to
be involved in was hopeless.
And so it has proved.
The vox pop that I encounter ..... the Remainers are reconciled to Brexit and just want to get on with it. The Brexiteers are
sick to death with hearing about it but not seeing anything done. Everyone had made their minds up before the election in 2015.
The Referendum campaign was a few weeks of premium entertainment watching the most reviled political figures in the land trying
to tear each others' throats out.
Every brexiteer I've asked why they voted for out, begins by saying "For once they had to listen to us" and that's usually
followed by "there's too many people here" or "it's the E.Europeans". (My response to the europhiles is that you knew the EU was
finished a dozen years ago, when all the Big Issue sellers turned into Romanian women.) UK cities are thick with destitute E.Europeans.
There's a huge disconnect between Parliament (+ media) and the people. A further example of this is the official narrative
on the Salisbury poisonings. Ask people in the street and they say "yeah, it was Vlad with the doorknob" and then they crease
up laughing. The Govt has no credibility with its "only plausible explanation".
My prediction, since the day BoJo was appointed minister for the exterior, is that the situation is so catastrophic the EU
will have to lead us by the hand through the process of brexit. The EU's priority will be the stability of the Euro. They won't
want us beggared on their doorstep and as they export 15% of their stuff to us they'll want to keep on doing that. We'll have
to have what we're given and be grateful.
The political situation in the UK is so far beyond surreal that a man dragging a piano with a dead horse on it would appear
- It doesn't matter who the prime minister is. The UK has already adopted A LOT OF EU regulations/laws and that will make it nearly
impossible to perform a "Hard Brexit". The UK still exports A LOT OF stuff to the Eurozone and then it simply has to follow EU
regulations, no matter what the opinion of the government is. In that regard, the current EU regulation simply provides a good
framework, even for the UK. No matter what one Mrs. May or Mr. Johnson.
- As time goes by the UK can change parts of the EU
regulations to what the UK thinks those regulations should be.
- And do I think that Mrs. May and her ministers have drawn that same conclusion.
The much anticipated resignation letter penned by the former UK Foreign Minister Boris
Johnson has been released, and in as expected, he does not mince his words in unleashing a
brutal attack on Thersa May, warning that "we have postponed crucial decisions -- including the
preparations for no deal, as I argued in my letter to you of last November -- with the result
that we appear to be heading for a semi-Brexit, with large parts of the economy still locked in
the EU system, but with no UK control over that system ."
He then adds that while "Brexit should be about opportunity and hope" and "a chance to do
things differently, to be more nimble and dynamic, and to maximise the particular advantages of
the UK as an open, outward-looking global economy", he warns that the " dream is dying,
suffocated by needless self-doubt. "
He then compares May's proposal to a submission even before it has been received by the EU,
noting that "what is even more disturbing is that this is our opening bid. This is already how
we see the end state for the UK -- before the other side has made its counter-offer . It is as
though we are sending our vanguard into battle with the white flags fluttering above them."
And his punchline: the UK is headed for the status of a colony:
In that respect we are truly headed for the status of colony -- and many will struggle to
see the economic or political advantages of that particular arrangement
Explaining his decision to resing, he then says that "we must have collective
responsibility. Since I cannot in all conscience champion these proposals, I have sadly
concluded that I must go."
It remains to be seen if his passionate defense of Brexit will stir enough MPs to indicate
they are willing to back a vote of no confidence, and overthrow Theresa May in what would be
effectively a coup, resulting in new elections and chaos for the Brexit process going
Meanwhile, as Bloomberg adds, the fact that Boris Johnson, or those around him, made sure
his resignation statement came out in time for the evening news - before it was formally issued
in the traditional way by May's office, hints at his continued interest in leading the
His full letter is below (highlights ours):
It is more than two years since the British people voted to leave the European Union on an
unambiguous and categorical promise that if they did so they would be taking back control of
They were told that they would be able to manage their own immigration policy, repatriate
the sums of UK cash currently spent by the EU, and, above all, that they would be able to
pass laws independently and in the interests of the people of this country.
Brexit should be about opportunity and hope. It should be a chance to do things
differently, to be more nimble and dynamic, and to maximise the particular advantages of the
UK as an open, outward-looking global economy.
That dream is dying, suffocated by needless self-doubt.
We have postponed crucial decisions -- including the preparations for no deal, as I argued
in my letter to you of last November -- with the result that we appear to be heading for a
semi-Brexit, with large parts of the economy still locked in the EU system, but with no UK
control over that system.
It now seems that the opening bid of our negotiations involves accepting that we are not
actually going to be able to make our own laws. Indeed we seem to have gone backwards since
the last Chequers meeting in February, when I described my frustrations, as Mayor of London,
in trying to protect cyclists from juggernauts. We had wanted to lower the cabin windows to
improve visibility; and even though such designs were already on the market, and even though
there had been a horrific spate of deaths, mainly of female cyclists, we were told that we
had to wait for the EU to legislate on the matter.
So at the previous Chequers session we thrashed out an elaborate procedure for divergence
from EU rules. But even that now seems to have been taken off the table, and there is in fact
no easy UK right of initiative. Yet if Brexit is to mean anything, it must surely give
Ministers and Parliament the chance to do things differently to protect the public. If a
country cannot pass a law to save the lives of female cyclists -- when that proposal is
supported at every level of UK Government -- then I don't see how that country can truly be
Conversely, the British Government has spent decades arguing against this or that EU
directive, on the grounds that it was too burdensome or ill-thought out. We are now in the
ludicrous position of asserting that we must accept huge amounts of precisely such EU law,
without changing an iota, because it is essential for our economic health -- and when we no
longer have any ability to influence these laws as they are made.
In that respect we are truly headed for the status of colony -- and many will struggle to
see the economic or political advantages of that particular arrangement.
It is also clear that by surrendering control over our rulebook for goods and agrifoods
(and much else besides) we will make it much more difficult to do free trade deals. And then
there is the further impediment of having to argue for an impractical and undeliverable
customs arrangement unlike any other in existence.
What is even more disturbing is that this is our opening bid. This is already how we see
the end state for the UK -- before the other side has made its counter-offer. It is as though
we are sending our vanguard into battle with the white flags fluttering above them. Indeed, I
was concerned, looking at Friday's document, that there might be further concessions on
immigration, or that we might end up effectively paying for access to the single market.
On Friday I acknowledged that my side of the argument were too few to prevail, and
congratulated you on at least reaching a Cabinet decision on the way forward. As I said then,
the Government now has a song to sing. The trouble is that I have practised the words over
the weekend and find that they stick in the throat.
We must have collective responsibility. Since I cannot in all conscience champion these
proposals, I have sadly concluded that I must go.
I am proud to have served as Foreign Secretary in your Government. As I step down, I would
like first to thank the patient officers of the Metropolitan Police who have looked after me
and my family, at times in demanding circumstances.
I am proud too of the extraordinary men and women of our diplomatic service. Over the last
few months they have shown how many friends this country has around the world, as 28
governments expelled Russian spies in an unprecedented protest at the attempted assassination
of the Skripals. They have organised a highly successful Commonwealth summit and secured
record international support for this Government's campaign for 12 years of quality education
for every girl, and much more besides. As I leave office, the FCO now has the largest and by
far the most effective diplomatic network of any country in Europe -- a continent which we
will never leave.
"... By David Llewellyn-Smith, founding publisher and former editor-in-chief of The Diplomat magazine, now the Asia Pacific's leading geo-politics website. Cross posted from MacroBusiness ..."
"... Captains of the German auto industry kowtowing to US ambassador Grenell make a remarkable scene, not unlike the Chinese capitulating to the British and handing over Hong Kong in the opium wars. ..."
Isolates China Trade Cheat Posted on July 7,
2018 by Yves
Smith Yves here. I'm faithfully replicating the MacroBusiness headline as an indicator of
unhappiness in some circles in Australia about the degree to which the government has opened
the floodgates since I was there to investment from China, particularly in real estate. When I
lived in Sydney in 2002 to 2004, property struck me as awfully fully priced by global
standards, and it's been on a moon shot trajectory since then, in part due to Australia also
liberalizing immigration. When I was there, the intent of policy was to have immigration in
certain skilled categories, and then with an eye to maintaining population levels, not goosing
them. Since then, the population in Australia has grown from 20 million to over 24 million.
But in addition, even though imposing tariffs on cars and car parts would hurt quite a few
US employers, it would also hurt European multinationals (many of whom happen to be US
employers), to the degree that they've pushed the European officialdom to see if they can cut a
deal with Trump. If that happens, Trump gets a win he can brandish for the midterms and the
tariff brinksmanship presumably eases off a bit, potentially a lot.
By David Llewellyn-Smith, founding publisher and former editor-in-chief of The Diplomat
magazine, now the Asia Pacific's leading geo-politics website. Cross posted from MacroBusiness
Recall that China has tried to play Europe for the chump, via
China is putting pressure on the European Union to issue a strong joint statement against
President Donald Trump's trade policies at a summit later this month but is facing
resistance, European officials said.
In meetings in Brussels, Berlin and Beijing, senior Chinese officials, including Vice
Premier Liu He and the Chinese government's top diplomat, State Councillor Wang Yi, have
proposed an alliance between the two economic powers and offered to open more of the Chinese
market in a gesture of goodwill.
One proposal has been for China and the European Union to launch joint action against the
United States at the World Trade Organization.
But the European Union, the world's largest trading bloc, has rejected the idea of allying
with Beijing against Washington, five EU officials and diplomats told Reuters, ahead of a
Sino-European summit in Beijing on July 16-17.
Instead, the summit is expected to produce a modest communique, which affirms the
commitment of both sides to the multilateral trading system and promises to set up a working
group on modernizing the WTO, EU officials said.
"China wants the European Union to stand with Beijing against Washington, to take sides,"
said one European diplomat. "We won't do it and we have told them that."
Despite Trump's tariffs on European metals exports and threats to hit the EU's automobile
industry, Brussels shares Washington's concern about China's closed markets and what Western
governments say is Beijing's manipulation of trade to dominate global markets.
"We agree with almost all the complaints the U.S. has against China, it's just we don't
agree with how the United States is handling it," another diplomat said.
But it's China that looking more isolated today, via
The US may have been accused by China of "opening fire on the world" with its punitive
trade tariffs, but it looks like officials may be making more progress in Europe's largest
Richard Grenell, the US ambassador to Germany, has caused quite a stir since he arrived in
Berlin in May, lecturing German companies to stop trading with Iran, and saying he planned to
"empower" anti-establishment conservatives in Europe. However, with the threat of punitive US
tariffs on its cars looming, Grenell certainly has the attention of Germany's powerful car
German business daily Handelsblatt reports (link in German) that Grenell met Daimler CEO
Dieter Zetsche, BMW CEO Harald Krüger, and VW CEO Herbert Diess on Wednesday evening to
discuss both sides abolishing all tariffs on each others car imports. Right now, the European
Union adds a 10% tax on imported US cars, and the US puts 2.5% on EU car imports, and is
threatening to ramp that up to 25%. As part of the deal, president Donald Trump would
reportedly want German carmakers to invest more in the US.
Last night's meeting was not the first time the carmakers and Grenell have talked about
abolishing two-way tariffs. The Wall Street Journal (paywall) reported on June 20 that the
ambassador had been meeting with all Germany's most important car companies, and that they
were already behind the idea.
Chancellor Angela Merkel is worried about the damage a car trade war could do to one of
Germany's core industries. "We now have tariffs on aluminum and steel and we have a
discussion that is far more serious," she told parliament, referring to auto tariffs. "It's
worth every effort to try to defuse this conflict so it doesn't turn into a war."
German Chancellor Angela Merkel said Thursday she would back opening talks with trading
partners on lowering automobile tariffs, in what appeared to be an olive branch to US
President Donald Trump as the EU battles to dissuade him from imposing hefty levies on
But Merkel said that any negotiations on lowering tariffs in one area could only be
conducted with "all the countries with which we have trade in cars," rather than just with
the United States.
A deal with the US alone "would not conform with WTO" rules, she said.
"We can either have negotiations about a wide range of tariffs, for 90 percent of goods,"
Merkel said in a reference to the stalled talks for a transatlantic free-trade deal known as
"Or we can talk about one type of goods, but then we must accord the same treatment to all
trading partners of the world. That's an option I could imagine," she added.
Interestingly, Nomura sees it all as deflationary:
US pursuit of beggar thy neighbor policies: is it leading to a whole new world for global
Automakers have set up an intricate web of suppliers and assembly plants globally to
leverage the benefits of trade agreements, while keeping FX risks at acceptable levels. The
pursuit of beggar thy neighbour policies by a large, connected, and heretofore open Now 3
mths 12 mths US Europe Japan Korea Brazil Russia India China Thailand Indonesia Nomura |
Global Autos Outlook 4 June 2018 4 economy such as the US threatens to upend this
In this edition of the Global Autos Outlook, we therefore look at trade-related challenges
(and opportunities) facing global automakers, possible strategies they could adopt to cope,
and potential winners and losers over the near-to-medium term. Risk of "No NAFTA" has risen,
although our base case remains NAFTA 2.0 Trump's openly protectionist policies have increased
the risk of a "No NAFTA" outcome, although our base case still remains that NAFTA will be
Nearly 25 years of NAFTA have integrated the North American auto industry very tightly. If
NAFTA is dissolved, it will impact all automakers operating in North America. In particular,
we think GM and FCA could be hit the hardest (higher import tariffs cut 40% of GM's FY2018E
EBIT, 23% of that for FCA). In our opinion, it increasingly appears that the US President's
decision-making is centered on autoworkers, even if that is to the detriment of the
automakers. Thus, US automakers getting hurt might not hold back Trump from making such a
Auto industry staring at global excess capacity, no matter what the outcome of the Section
The US Department of Commerce has started a Section 232 investigation into US imports of
autos and auto parts. Under the worst case scenario, this may result in broadbased import
tariffs slapped on US automotive imports after the investigation concludes and reports back
to the President in several months. US imports of new passenger vehicles and auto parts
totaled $333bn in 2017. Import duties on such a large volume of goods would be highly
disruptive and impact all the major car exporting countries/regions such as Mexico, Canada,
Japan, the EU, and South Korea.
While we think that the threat of tariffs is largely Trump's negotiation tactic to get a
better NAFTA deal, we caution investors to pay attention, as the tail risk (of import tariffs
materializing) is not negligible. Furthermore, no matter whether new auto tariffs are imposed
or not, global carmakers, irrespective of nationality, are feeling pressured to build plants
and increase employment in the US. This is likely to lead to increased capacity in the US,
where car demand is no longer growing.
On the other hand, non-US carmakers are unlikely to cut capacity at home or elsewhere,
leading to excess capacity globally. This will impact most markets except for relatively
closed ones such as China, India, and Southeast Asia, due to their existing high import
tariffs. For global automakers, we therefore see a binary outcome from a growing list of
protectionist measures being deployed by the US. Neither outcome is good news, with
automakers staring at excess global capacity in either case:
If Section 232 tariffs are imposed, it (largely) cuts off imports into the
domestic US market. However, that would mean that there is excess capacity outside the US, as
existing foreign plants supplying to the US (7.88mn/$192bn new PVs, 8.2% of global volume,
and $141bn auto parts in 2017) have to find markets elsewhere.
If new tariffs are not imposed, we still have additional capacity coming up in
the US as automakers are goaded into doing so to avoid political pressure. This also leads to
a global supply-demand imbalance in the auto industry.
Although US protectionism is a real threat, we see a couple of silver linings. China
announced an import tariff cut for autos, from 25% currently to 15% beginning 1st July 2018.
The Japan-EU Economic Partnership Agreement (JEEPA) was agreed upon last December and is
likely to become effective in spring 2019, benefiting Japanese car exporters. One of the
biggest beneficiaries from both China and the EU's tariff cuts would be Toyota Motor.
"US lure carmakers with tariff offer – but the proposal is illegal"
That's the title in WirtschaftsWoche. A premier german language trade and economics
magazine. It had an interview(in German) with Ewald Pum attorney at internal law firm
Wirtschaftskanzlei Rödl & Partner.
He states that what Ambassador Grenell proposed is illegal under international WTO law,
and the EU could therefore not support it. Also, the EU had historically supported rules
based free trade, and this could only be accomplished via an bilateral trade deal in goods,
what he called TTIP on a diet.
' Nomura sees it all as deflationary: the pursuit of beggar thy neighbour policies by a
large, connected, and heretofore open economy such as the US threatens to upend this
So does UK-based Russell Napier, who sees the US obsession with shrinking its trade
deficit provoking a seismic shift in China:
Investors need to prepare for a formal widening of the trading bands for the RMB
relative to its basket and the problems such a move will create for all emerging markets.
That first move in the RMB is inherently deflationary. This is no counter-punch in a trade
war; it is the beginning of the creation of a new global monetary system.
The ability of China to extend the cycle has come to an end as its current account
surplus has all but evaporated. It has also come to an end because Jay Powell has warned
China, and other emerging markets, that he will not alter the course of US monetary policy
to assist with any credit disturbances outside his own jurisdiction.
Who can run the current account deficits necessary to make their currency an attractive
anchor for smaller countries seeking to run current account surpluses?
It seems well nigh impossible to believe, following almost 40 years of mercantilism,
that China would opt to become a country running large current account deficits. Such a
change in mindset may seem revolutionary, but it is just another necessary shift in the
long game in the attempt to make China the pre-eminent global economy.
The initial shift to a more flexible Chinese exchange rate is deflationary and
dangerous. The USD selling price of Chinese exports will likely fall, putting pressure on
all those who compete with China – EMs [Emerging Markets] but also Japan. The USD
will rise, putting pressure on all those, particularly EMs, who have borrowed USD without
having USD cash flows to service those debts. With world debt-to-GDP at a record high, such
a major deflationary dislocation can easily trigger another credit crisis.
Following the great dislocation, China will be free to reflate the world.
' Free to reflate the world ' much as the US did post-WW II with its Great
Inflation that flooded the world with dollars.
But getting from here to there is the tricky bit. As Napier insists, a deflationary ditch
lies between. Combine Llewellyn-Smith's comments on the auto industry's overcapacity and
supply-chain disruption with a deflationary break in the global economy, and you've got the
recipe for a nasty little crisis and perhaps a second bankruptcy in GM, whose long-term debt
is rising rapidly.
Flake-o-nomics may be creative destruction, but folks are not going to like the interim
results. The purblind Hoover-Trump will be blamed, rightly.
This whole tariff fight really seems to be about derailing China's plans to be a world
leader with its 'Made in China 2025' plan. Maybe Trump and his advisers reckon that if this
fight is not carried to the Chinese soon, then it will be too late. Europe, though under
attack by Trump, is also seeing the dangers where the EU will be eclipsed by a single
It may be that Europe is giving Trump a message that if he plays nice with Europe's
tariffs, then the EU will cooperate with the US against China. I hope that the calculation is
not to push China into financial chaos as serving Europe's and Trump's interests. Supply
chains are far too meshed to make that a good option and I can easily see a recession in the
making which will hit the world hard.
China may have a long term advantage in that it has invested in infrastructure, transport,
education and training whereas the west has been devaluing these things due to neoliberal
policies for decades now. They may start pulling their money back which will hit places like
Australia, Canada and the US hard as to my eye Chinese money keeps things like property
values high in those places. We'll find out soon enough.
I've been following CGTN on the tariff war, and it looks like China is going to go the
'proportional reciprocity' route, just as Russia has with sanctions.
The latter has benefited from sanctions, while Europe has lost billions in trade.
As for the 'five EU officials' – all anonymous – cited in Reuters' report, I
would take their statements with a large dose of salt.
EU is in ferment, and Merkel is not doing well in the polls.
There is strong anti-US sentiment in Germany, albeit not reported in the media. A
combination of Trump's policies and the perpetual wars – now implicated in the greatest
mass migrantion crisis since WWII – has led to a disenchantment with US.
Then there is OBOR, with various interest groups – particularly in European industry
– beginning to look East rather than West.
Thus there is no real unified resolve at EU level to warrant such claims.
Dedollarization is continuing apace too, and new alliances are emerging like the SCO and
the reported deals between the major oil producing countries like Russia and Saudi.
China plays a much longer game than the US, so it is hard to estimate what the consequence
will be within the short – tern assessment models used by the Western powers.
I've gotten into the habit of rolling my eyes whenever an establishment media outlet
quotes "anonymous sources". Looking at the prospects in the global automotive sector, surely
the smart money is on the east (and other emerging markets) being where the long term growth
is going to emerge, so why the EU would bet on a jockey riding a horse that's falling behind
the pace would be rather difficult to fathom. One assumes that CEOs of the big three German
automakers play as long a game as anyone, so being brow beaten into an anti-china stance by a
US ambassador would be incredibly shortsighted, to say nothing of raising investor ire
Captains of the German auto industry kowtowing to US ambassador Grenell make a
remarkable scene, not unlike the Chinese capitulating to the British and handing over Hong
Kong in the opium wars.
But Germany is an occupied and humbled nation, with tens of thousands of US troops
garrisoned on its soil for three generations now. And Grenell, a product of the John F
Kennedy School of Gubmint at Hahhhhhvid, was born to rule.
It's good to be king ambassador.
*summons his liveried steward to fetch oysters and mimosas for brunch*
I agree that this is looking like creative destruction -- but more like intentional
creative destruction. Bringing down the dinosaur auto industry – now that's definitely
a step in the right direction, imo. So it's curious that Trump has such a strategic focus,
no? And he just started Space Force.
So clearly that is where the technology is. I do not agree that this is hyper-nationalism
(that's just the cover) and it seems absurd for anyone to suggest that Trump is actually
doing anything to benefit domestic auto workers he's just not that dumb. And of course Merkel
is in a tizzy. She's going to do everything she can to soften the impact of the
Ha! As discussed and promised 'round the table at D4 last night ;-) #ChicagoNCMeetup
Thanks again Yves!
Part of me wants to believe that the capitalist nations were always destined to circle
the wagons against communist China, despite all the hand wringing about Trump. The
political aspect of this is more interesting to me at the moment. Given all we know about the
loyalty Trump still enjoys from those who put him in office, a yuge trade "win" this
year will play to the theme of tempered expectations of a "Blue Wave".
Many historians have suggested that the 1929 stock market crash
was not the cause of the Great Depression. If anything, the 1929 crash was
the technical reflection of the inevitable fate of an overblown bubble
economy. Yet, stock market crashes can recover within a relatively short time
with the help of effective government monetary measures, as demonstrated by
the crashes of 1987 (23% drop, recovered in 9 months), 1998 (36% drop,
recovered in 3 months) and 2000-2 (37% drop, recovered in 2 months).
Structurally, the real cause of the Great Depression, which lasted more than
a decade, from 1929 till the beginning of the Second World War in 1941, was
the 1930 Smoot-Hawley tariffs that put world trade into a tailspin from which
it did not recover until World War II began. While the US economy finally
recovered from war mobilization after the Japanese attack on Pearl Harbor on
December 7, 1940, most of the world's market economies sunk deeper into
war-torn distress and never fully recovered until the Korea War boom in
Barely five years into the 21st century, with
a globlaized neo-liberal trade regime firmly in place in a world where market
economy has become the norm, trade protectionism appears to be fast
re-emerging and developing into a new global trade war of complex dimensions.
The irony is that this new trade war is being launched not by the poor
economies that have been receiving the short end of the trade stick, but by
the US which has been winning more than it has been losing on all counts from
globalized neo-liberal trade, with the EU following suit in locked steps.
Japan of course has never let up on protectionism and never taken competition
policy seriously. The rich nations needs to recognize that in their effort to
squeeze every last drop of advantage out of already unfair trade will only
plunge the world into deep depression. History has shown that while the poor
suffer more in economic depressions, the rich, even as they are fianancially
cushioned by their wealth, are hurt by political repercussions in the form of
either war or revolution or both.
During the Cold War, there was no international free trade. The
economies of the two contending ideology blocks were completely disconnected.
Within each block, economies interact through foreign aid and memorandum
trade from their respective superpowers. The competition was not for profit
but for the hearts and minds of the people in the two opposing blocks as well
as those in the non-aligned nations in the Third World. The competition
between the two superpowers was to give rather than to take from their
separate fraternal economies.
The population of the superpowers worked hard to help the poorer
people within their separate blocks and convergence toward equality was the
policy aim even if not always the practice. The Cold War era of foreign aid
and memorandum trade had a better record of poverty reduction in either camps
than post-Cold War globalized neo-liberal trade dominated by one single
superpower. The aim was not only to raise income and increase wealth, but
also to close income and wealth disparity between and within economies.
Today, income and wealth disparity is rationalized as a necessity for capital
formation. The New York Time reports that from 1980 to 2002, the total income
earned by the top 0.1% of earners in the US more than doubled, while the
share earned by everyone else in the top 10% rose far less and the share of
the bottom 90% declined.
For all its ill effects, the Cold War achieved two formidable ends:
it prevented nuclear war and it introduced development as a moral imperative
into superpower geo-political competition with rising economic equality
within each block. In the years since the end of the Cold War, nuclear
terrorism has emerged as a serious threat and domestic development is
pre-empted by global trade even in the rich economies while income and wealth
disparity has widened everywhere.
Since the end of the Cold War some fifteen years ago, world economic
growth has shifted to rely exclusively on globalized neo-liberal trade
engineered and led by the US as the sole remaining superpower, financed with
the US dollar as the main reserve currency for trade and anchored by the huge
US consumer market made possible by the high wages of US workers. This growth
has been sustained by knocking down national tariffs everywhere around the
world through supranational institutions such as the World Trade Organization
(WTO), and financed by a deregulated foreign exchange market working in
concert with a global central banking regime independent of local political
pressure, lorded over by the supranational Bank of International Settlement
(BIS) and the International Monetary Fund (IMF).
Redefining humanist morality, the US asserts that world trade is a
moral imperative and as such trade promotes democracy, political freedom and
respect for human rights in trade participating nations. Unfortunately,
income and wealth equality are not among the benefits promoted by trade. Even
if the validity of this twisted ideological assertion is not questioned, it
clearly contradicts US practice of trade embargo against countries the US
deems undemocratic, lacking in political freedom and deficient in respect for
human rights. If trade promotes such desirable conditions, such practice of
linking trade to freedom is tantamount to denying medicine to the
President George W Bush defended his free trade agenda in moralistic
terms. "Open trade is not just an economic opportunity, it is a moral
imperative," he declared in a May 7, 2001 speech. "Trade creates jobs for the
unemployed. When we negotiate for open markets, we're providing new hope for
the world's poor. And when we promote open trade, we are promoting political
freedom." Such claims remain highly controversial when tested by actual
Phyllis Schlafly, syndicated conservative columnist, responded
three weeks later in an article: Free Trade is an Economic Issue, Not a
Moral One . In it, she notes while conservatives should be happy to
finally have a president who adds a moral dimension to his actions, "the
Bible does not instruct us on free trade and it's not one of the Ten
Commandments. Jesus did not tell us to follow Him along the road to free
trade. Nor is there anything in the U.S. Constitution that requires us to
support free trade and to abhor protectionism. In fact, protectionism was the
economic system believed in and practiced by the framers of our Constitution.
Protective tariffs were the principal source of revenue for our federal
government from its beginning in 1789 until the passage of the 16th
Amendment, which created the federal income tax, in 1913. Were all those
public officials during those hundred-plus years remiss in not adhering to a
"moral obligation" of free trade?" Hardly, argues Schlafly whose views are
noteworthy because US politics is currently enmeshed in a struggle between
strict-constructionist paleo-conservatives and moral-imperialist
neo-conservatives. Despite the ascendance of neo-imperialism in US foreign
policy, protectionism remains strong in US political culture, particularly
among conservatives and in the labor movement.
Bush also said China, which reached a trade agreement with the
US at the close of the Clinton administration, and became a member of the WTO
in late 2001, would benefit from political changes as a result of liberalized
trade policies. This pronouncement gives clear evidence to those in China who
see foreign trade as part of an anti-China "peaceful evolution" strategy
first envisioned by John Forster Dulles, US Secretary of State under
Eisenhower in the 1950s. It is a strategy of inducing through peaceful trade
the Communist Party of China (CPC) to reform itself out of power and to
eliminate the dictatorship of the proletariat in favor of bourgeois
liberalization. Almost four decades later, Deng Xiaoping criticized CPC
Chairman Hu Yaobang and Premier Zhao Ziyang for having failed to contain
bourgeois liberalization in their implementation of China's modernization
policy. Deng warned in November 1989, five months after the Tiananmen
incident: "The Western imperialist countries are staging a third world war
without guns. They want to bring about the peaceful evolution of socialist
countries towards capitalism." Deng's handling of the Tiananmen incident
prevented China from going the catastrophic route of the USSR which dissolved
Yet it is clear that political freedom is often the first
casualty of a garrison state mentality and such mentality inevitably results
from hostile US economic and security policy toward any country the US deems
as not free. Whenever the US pronounces a nation to be not free, that nation
will become less free as a result of US policy. This has been repeatedly
evident in China and elsewhere in the Third World. Whenever US policy toward
China turns hostile, as it currently appears to be heading, political and
press freedom inevitably face stricter curbs. For trade to mutually and truly
benefit the trading economies, three conditions are necessary: 1) the
de-linking of trade from ideological/political objectives, 2) equality must
be maintained in the terms of trade and 3) recognition that global full
employment at rising, living wages is the prerequisite for true comparative
advantage in global trade.
The developing rupture between the sole superpower and its
traditionally deferential allies lies in mounting trade conflicts. The US has
benefited from an international financial architecture that gives the US
economy a structural monetary advantage over those of the EU and Japan, not
to mention the rest of the world. Trade issues range from government
subsidies disputes between Airbus and Boeing, banana, sugar, beef, oranges,
steel, as well as disputes over fair competition associated with mergers and
acquisition and financial services. If either government is found to be in
breach of WTO rules when these disputes wind through long processes of
judgment, the other will be authorized to retaliate. The US could put tariffs
on other European goods if the WTO rules against Airbus and vice versa. So if
both governments are found in breach, both could retaliate, leading to a
cycle of offensive protectionism. When the US was ruled to have unfairly
supported its steel industry, tariffs were slapped by the EU on Florida
oranges to make a political point in a politically important state in US
Trade competition between the EU and the US is spilling over
into security areas, allowing economic interests to conflict with ideological
sympathy. Both of these production engines, saddled with serious
overcapacity, are desperately seeking new markets, which inevitably leads
them to Asia in general and China in particular, with its phenomenal growth
rate and its 1.2 billion eager consumers bulging with rapidly rising
disposable income. The growth of the Chinese economy will lift all other
economies in Asia, including Australia which has only recently begun to
understand that its future cannot be separated from its geographic location
and that its prosperity is interdependent with those of other Asian
economies. Australian iron ores, beef and dairy products are destined for
China, not the British Isles. The EU is eager to lift its 15-year-old arms
embargo on China, much to the displeasure of the US. Israel faces similar
dilemma in its close relations with the US on military sales to China. Even
the US defense establishment has largely come around to the view that US arms
industry must export, even to China, to remain on top. The Bangkok Post
reported on June 7 that Rumsfeld tried to sell to Thailand F-16 warplanes
capable of firing advanced medium-range air-to-air missiles (AMRAAMs) two
days after he lashed out in Singapore at China for upgrading its own military
when no neighboring nations are threatening it. The sales pitch was in
competition with Russian-made Sukhoi SU-30s and Swedish JAS-39s. The open
competition in arms export had been spelled out for Congress years earlier by
Donald Hicks, a leading Pentagon technologist in the Reagan administration.
"Globalization is not a policy option, but a fact to which policymakers must
adapt," he said. "The emerging reality is that all nations' militaries are
sharing essentially the same global commercial-defense industrial base." The
boots and uniforms worn by US soldiers in Afghanistan and Iraq were made in
The WTO is the only global international organization dealing
with the rules of trade between its 148 member nations. At its heart are the
WTO agreements, known as the multilateral trading system, negotiated and
signed by the majority of the world's trading nations and ratified in their
parliaments. The stated goal is to help producers of goods and services,
exporters, and importers conduct their business, with the dubious assumption
that trade automatically brings equal benefits to all participants. The
welfare of the people is viewed only as a collateral aim based on the
doctrinal fantasy that "balanced" trade inevitably brings prosperity equally
to all, a claim that has been contradicted by facts produced by the very
terms of trade promoted by the WTO itself.
Two decades of neo-liberal globalized trade have widened income
and wealth disparity within and between nations. Free trade has turned out
not to be the win-win game promised by neo-liberals. It is very much a
win-lose game, with heads, the rich economies win, and tails, the poor
economies lose. Domestic development has been marginalized as a hapless
victim of foreign trade, dependent on trade surplus for capital. Foreign
trade and foreign investment have become the prerequisite engines for
domestic development. This trade model condemns those economies with trade
deficits to perpetual underdevelopment. Because of dollar hegemony, all
foreign investment goes only to the export sector where dollars can be
earned. Even the economies with trade surpluses cannot use their dollar trade
earnings for domestic development, as they are forced to hold huge dollar
reserves to support the exchange rate of their
In the fifth WTO Ministerial Conference held in Cancun in
September 2003, the richer countries rejected the demands of poorer nations
for radical reform of agricultural subsidies that have decimated Third World
agriculture. Failure to get the Doha round back on track after the collapse
of Cancun runs the danger of a global resurgence of protectionism, with the
US leading the way. Larry Elliott reported on October 13, 2003 in The
Guardian on the failed 2003 Cancun Ministerial meeting: "The language of
globalization is all about democracy, free trade and sharing the benefits of
technological advance. The reality is about rule by elites, mercantilism and
selfishness." Elliot noted that the process is full of paradoxes: why is it
that in a world where human capital is supposed to be the new wealth of
nations, labor is treated with such contempt?
Sam Mpasu, Malawi's commerce and industry minister, asked at
Cancun for his comments about the benefits of trade liberalization, replied
dryly: "We have opened our economy. That's why we are flat on our back."
Mpasu's comments summarize the wide chasm that divides the perspectives of
those who write the rules of globalization and those who are powerless to
Exports of manufactures by low-wage developing countries have
increased rapidly over the last 3 decades due in part to falling tariffs and
declining transport costs that enable outsourcing based on wage arbitrage. It
grew from 25% in 1965 to nearly 75% over three decades, while agriculture's
share of developing country exports has fallen from 50% to under 10%. Many
developing countries have gained relatively little from increased
manufactures trade, with most of the profit going to foreign capital. Market
access for their most competitive manufactured export, such as textile and
apparel, remains highly restricted and recent trade disputes threaten further
restrictions. Still, the key cause of unemployment in all developing
economies is the trade-related collapse of agriculture, exacerbated by the
massive government subsidies provided to farmers in rich economies. Many poor
economies are predominantly agriculturally based and a collapse of
agriculture means a general collapse of the whole
The Doha Development Agenda (DDA) negotiations, sponsored by the
WTO, collapsed in Cancun, Mexico over the question of government support for
agriculture in rich economies and its potential impacts on causing more
poverty in developing countries. The Doha negotiations since Cancun are
focused on the need to better understand the linkages between trade policies,
particularly those of the rich economies, and poverty in the developing
world. While poverty reduction is now more widely accepted by establishment
economists as a necessary central focus for development efforts and has
become the main mission of the World Bank and other development institutions,
very little effective measures have been forthcoming. The UN Millennium
Development Goals (UNMDG) commits the international community to halve world
poverty by 2015, a decade from now. With current trends, that goal is likely
to be achievable only through death of half of the poor by starvation,
disease and local conflicts. The UN Development
Program warns that 3 million children will die in sub-Saharan Africa alone by
2015 if the world continues on its current path of failing to meet the UNMDG
agreed to in 2000 . Several key venues to this goal are located in
international trade where the record of poverty reduction has been
exceedingly poor, if not outright negative. The fundamental question whether
trade can replace or even augment socio-economic development remains unasked,
let alone answered. Until such issues are earnestly addressed, protectionism
will re-emerge in the poor countries. Under such conditions, if democracy
expresses the will of the people, democracy will demand protectionism more
than government by elite.
While tariffs in the past decade have been coming down like
leaves in autumn, flexible exchange rates have become a form of virtual
countervailing tariff. In the current globalized neo-liberal trade regime
operating in a deregulated global foreign exchange market, the exchanged
value of a currency is regularly used to balance trade through government
intervention in currency market fluctuations against the world's main reserve
currency – the dollar, as the head of the international monetary
Purchasing power parity (PPP) measures the disconnection between
exchange rates and local prices. PPP contrasts with the interest rate parity
(IRP) theory which assumes that the actions of investors, whose transactions
are recorded on the capital account, induces changes in the exchange rate.
For a dollar investor to earn the same interest rate in a foreign economy
with a PPP of four times, such as the purchasing power parity between the US
dollar and the Chinese yuan, local wages would have to be at least 4 time
lower than US wages.
<>PPP theory is based
on an extension and variation of the "law of one price" as applied to the
aggregate economy. The law of one price says that identical goods should sell
for the same price in two separate markets when there are no transportation
costs and no differential taxes applied in the two markets. But the law of
one price does not apply to the price of labor. Price arbitrage is the
opposite of wage arbitrage in that producers seek to make their goods in the
lowest wage locations and to sell their goods in the highest price markets.
This is the incentive for outsourcing which never seeks to sell products
locally at prices that reflect PPP differentials.
What is not generally noticed is that price deflation in an economy
increases its PPP, in that the same local currency buys more. But the
cross-border one price phenomenon applies only to certain products, such as
oil, thus for a PPP of 4 times, a rise in oil prices will cost the Chinese
economy 4 times the equivalent in other goods, or wages than in the US. The
larger the purchasing power parity between a local currency and the dollar,
the more severe is the tyranny of dollar hegemony on forcing down wage
Ever since 1971, when US president Richard Nixon, under pressure from
persistent fiscal and trade deficits that drained US gold reserves, took the
dollar off the gold standard (at $35 per ounce), the dollar has been a fiat
currency of a country of little fiscal or monetary discipline. The Bretton
Woods Conference at the end of World War II established the dollar, a solid
currency backed by gold, as a benchmark currency for financing international
trade, with all other currencies pegged to it at fixed rates that changed
only infrequently. The fixed exchange rate regime was designed to keep
trading nations honest and prevent them from running perpetual trade
deficits. It was not expected to dictate the living standards of trading
economies, which were measured by many other factors besides exchange
Bretton Woods was conceived when conventional wisdom in international
economics did not consider cross-border flow of funds necessary or desirable
for financing world trade precise for this reason. Since 1971, the dollar has
changed from a gold-back currency to a global reserve monetary instrument
that the US, and only the US, can produce by fiat. At the same time, the US
continued to incur both current account and fiscal deficits. That was the
beginning of dollar hegemony.
With deregulation of foreign exchange and financial markets, many
currencies began to free float against the dollar not in response to market
forces but to maintain export competitiveness. Government interventions in
foreign exchange markets became a regular last resort option for many trading
economies for their preserving export competitiveness and for resisting the
effect of dollar hegemony on domestic living standards.
World trade under dollar hegemony is a game in which the US produces
paper dollars and the rest of the world produce real things that paper
dollars can buy. The world's interlinked economies no longer trade to capture
comparative advantage; they compete in exports to capture needed dollars to
service dollar-denominated foreign debts and to accumulate dollar reserves to
sustain the exchange value of their domestic currencies in foreign exchange
markets. To prevent speculative and manipulative attacks on their currencies
in deregulated markets, the world's central banks must acquire and hold
dollar reserves in corresponding amounts to market pressure on their
currencies in circulation. The higher the market pressure to devalue a
particular currency, the more dollar reserves its central bank must hold.
This creates a built-in support for a strong dollar that in turn forces all
central banks to acquire and hold more dollar reserves, making it stronger.
This anomalous phenomenon is known as dollar hegemony, which is created by
the geopolitically constructed peculiarity that critical commodities, most
notably oil, are denominated in dollars. Everyone accepts dollars because
dollars can buy oil. The denomination of oil in dollars and the recycling of
petro-dollars is the price the US has extracted from oil-producing countries
for US tolerance of the oil-exporting cartel since 1973.
By definition, dollar reserves must be invested in dollar-denominated
assets, creating a capital-accounts surplus for the US economy. A
strong-dollar policy is in the US national interest because it keeps US
inflation low through low-cost imports and it makes US assets denominated in
dollars expensive for foreign investors. This arrangement, which Federal
Reserve Board chairman Alan Greenspan proudly calls US financial hegemony in
congressional testimony, has kept the US economy booming in the face of
recurrent financial crises in the rest of the world. It has distorted
globalization into a "race to the bottom" process of exploiting the lowest
labor costs and the highest environmental abuse worldwide to produce items
and produce for export to US markets in a quest for the almighty dollar,
which has not been backed by gold since 1971, nor by economic fundamentals
for more than a decade. The adverse effects of this type of globalization on
the developing economies are obvious. It robs them of the meager fruits of
their exports and keeps their domestic economies starved for capital, as all
surplus dollars must be reinvested in US treasuries to prevent the collapse
of their own domestic currencies.
The adverse effect of this type of globalization on the US economy is
also becoming clear. In order to act as consumer of last resort for the whole
world, the US economy has been pushed into a debt bubble that thrives on
conspicuous consumption and fraudulent accounting. The unsustainable and
irrational rise of US equity and real estate prices, unsupported by revenue
or profit, had merely been a de facto devaluation of the dollar. Ironically,
the recent fall in US equity prices from its 2004 peak and the anticipated
fall in real estate prices reflect a trend to an even stronger dollar, as it
can buy more deflated shares and properties for the same amount of dollars.
The rise in the purchasing power of the dollar inside the US impacts its
purchasing power disparity with other currencies unevenly, causing sharp
price instability in the economies with freely exchangeable currencies and
fixed exchange rates, such as Hong Kong and until recently Argentina. For the
US, falling exchange rate of the dollar actually causes asset prices to rise.
Thus with a debt bubble in the US economy, a strong dollar is not in the US
national interest. Debt has turned US policy on the dollar on its
The setting of exchange values of currencies is practiced not only by
sovereign governments on their own currencies as a sovereign right. The US,
exploiting dollar hegemony, usurps the privilege of dictating the exchange
value of all foreign currencies to support its own economic nationalism in
the name of global free trade. And US position on exchange rates has not been
consistent. When the dollar was rising, as it did in the 1980s, the US, to
protect its export trade, hailed the stabilizing wisdom of fixed exchange
rates. When the dollar falls as it has been in recent years, the US, to
deflect the blame of its trade deficit, attacks fixed exchange rates as
currency manipulation, as it targets China's currency now which has been
pegged to the dollar for over a decade, since the dollar was lower. How can a
nation manipulate the exchange value of its currency when it is pegged to the
dollar at the same rate over long periods? Any manipulation came from the
dollar, not the yuan.
The recent rise of the euro against the dollar, the first
appreciation wave since its introduction on January 1, 2002, is the result of
an EU version of the 1985 Plaza Accord on the Japanese yen, albeit without a
formal accord. The strategic purpose is more than merely moderating the US
trade deficit. The record shows that even with the 30% drop of the dollar
against the euro, the US trade deficit has continued to climb. The strategic
purpose of driving up the euro is to reduce the euro to the status of the
yen, as a subordinated currency to dollar hegemony. The real effect of the
Plaza Accord was to shift the cost of support for the dollar-denominated US
trade deficit, and the socio-economic pain associated with that support, from
the US to Japan.
What is happening to the euro now is far from being the beginning of
the demise of the dollar. Rather, it is the beginning of the reduction of the
euro into a subservient currency to the dollar to support the US debt bubble.
Six and a half years since the launch of European Monetary Union, the
eurozone is trapped in an environment in which monetary policy of sound money
has in effect become destructive and supply-side fiscal policy unsustainable.
National economies are beginning to refuse to bear the pain needed for
adjustment to globalization or the EU's ambitious enlargement. The European
nations are beginning to resist the US strategy to make the euro economy a
captive supporter of a rising or falling dollar as such movements fit the
shifting needs of US economic nationalism.
It is the modern-day monetary equivalent of the brilliant Roman
strategy of making a dissident Jew a Christian god, to pre-empt Judaism's
rising cultural domination over Roman civilization. Roman law, the foundation
of the Roman Empire, gained in sophistication from being influenced by if not
directly derived from Jewish Talmudic law, particularly on the concept of
equity - an eye for an eye. The Jews had devised a legal system based on the
dignity of the individual and equality before the law four century before
Christ. There was no written Roman law until two centuries B.C. The Roman law
of obligatio was not conducive to finance as it held that all
indebtedness was personal, without institutional status. A creditor could not
sell a note of indebtedness to another party and a debtor did not have to pay
anyone except the original creditor. Talmudic law, on the other hand,
recognized impersonal credit and a debt had to be paid to whoever presented
the demand note. This was a key development of modern finance. With the
Talmud, the Jews under the Diaspora had an international law that spans three
continents and many cultures.<>
The Romans were faced with a dilemma. Secular Jewish ideas and values
were permeating Roman society, but Judaism was an exclusive religion that the
Romans were not permitted to join. The Romans could not assimilate the Jews
as they did the more civilized Greeks. Early Christianity also kept its
exclusionary trait until Paul who opened Christianity to all. Historian
Edward Gibbon (1737-94) noted that the Rome recognized the Jews as a nation
and as such were entitled to religious peculiarities. The Christians on the
other hand were a sect, and being without a nation, subverted other nations.
The Roman Jews were active in government and when not resisting Rome against
social injustice, fought side by side with Roman legionnaires to preserve the
empire. Roman Jews were good Roman citizens. By contrast, the early
Christians were social dropouts, refused responsibility in government and
civic affairs and were conscientious objectors and pacifists in a militant
culture. Gibbon noted that Rome felt that the crime of a Christian was not in
what he did, but in being who he was. Christianity gained control of Roman
culture and society long before Constantine who in 324 A.D. sanctioned it
with political legitimacy and power after recognizing its power in helping to
win wars against pagans, the way Pope Urban II in 1095 used the crusade to
keep Papal temporal power longer. When early Christianity, a secular Jewish
dissident sect, began to move up from the lower strata of Roman society and
began to find converts in the upper echelons, the Roman polity adopted
Christianity, the least objectionable of all Jewish sects, as a state
religion. Gibbons estimated that Christians killed more of their own members
over religious disputes in the three centuries after coming to secular power
than did the Romans in three previous centuries. Persecution of the Jews
began in Christianized Rome. The disdain held by early Christianity on
centralized government gave rise to monasticism and contributed to the fall
of the Roman Empire.
By allowing a trade surplus denominated in dollars to be accumulated
by non-dollar economies, such as yen, euro, or now the Chinese yuan, the cost
of supporting the appropriate value of the dollar to sustain perpetual
economic growth in the dollar economy is then shifted to these non-dollar
economies, which manifests themselves in perpetual relative low wages and
weak domestic consumption. For already high-wage EU and Japan, the penalty is
the reduction of social welfare benefits and job security traditional to
these economies. For China, now the world's second largest creditor nation,
it is reduced to having to ask the US, the world's largest debtor nation, for
capital denominated in dollars the US can print at will to finance its export
trade to a US running recurring trade deficits.<>
The IMF, which has been ferocious in imposing draconian fiscal and
monetary "conditionalities" on all debtor nations everywhere in the decade
after the Cold War, is nowhere to be seen on the scene in the world's most
fragrantly irresponsible debtor nation. This is because the US can print
dollars at will and with immunity. The dollar is a fiat currency not backed
by gold, not backed by US productivity, not back by US export prowess, but by
US military power. The US military budget request for Fiscal Year 2005 is
$420.7 billion. For Fiscal Year 2004, it was $399.1 billion; for 2003, $396.1
billion; for 2002, $343.2 billion and for 2001, $310 billion. In the first
term of the Bush presidency, the US spent $1.5 trillion on its military. That
is bigger than the entire GDP of China in 2004. The US trade deficit is
around 6% of its GDP while it military budget is around 4%. In other words,
the trading partners of the US are paying for one and a half times of the
cost of a military that can someday be used against any one of them for any
number of reasons, including trade disputes. The anti-dollar crowd has
nothing to celebrate about the recurring US trade deficit.
It is pathetic that US Secretary of Defense Donald H Rumsfeld tries
to persuade the world that China's military budget, which is less that one
tenth of that of the US, is a threat to Asia, even when he is forced to
acknowledge that Chinese military modernization is mostly focused on
defending its coastal territories, not on force projection for distant
conflicts, as is US military doctrine. While Rumsfeld urges more political
freedom in China, his militant posture toward China is directly
counterproductive towards that goal. Ironically, Rumsfeld chose to make his
case about political freedom in Singapore, the bastion of Confucian
Normally, according to free trade theory, trade can only stay
unbalanced temporarily before equilibrium is re-established or free trade
would simply stop. When bilateral trade is temporarily unbalanced, it is
generally because one trade partner has become temporarily uncompetitive,
inefficient or unproductive. The partner with the trade deficit receives more
goods and services from the partner with the trade surplus than it can offer
in return and thus pays the difference with its currency that someday can buy
foods produced by the deficit trade partner to re-established balance of
payments. This temporary trade imbalance is due to a number of socio-economic
factors, such as terms of trade, wage levels, return on investment,
regulatory regimes, shortages in labor or material or energy,
trade-supporting infrastructure adequacy, purchasing power disparity, etc. A
trading partner that runs a recurring trade deficit earns the reputation of
being what banks call a habitual borrower, i.e. a bad credit risk, one who
habitually lives beyond his/her means. If the trade deficit is paid with its
currency, a downward pressure results in the exchange rate. A flexible
exchange rate seeks to remove or moderate a temporary trade imbalance while
the productivity disparities between trading partners are being addressed
Dollar hegemony prevents US trade imbalance from returning to
equilibrium through market forces. It allows a US trade deficit to persist
based on monetary prowess. This translates over time into a falling exchange
rate for the dollar even as dollar hegemony keeps the fall at a slow pace.
But a below-par exchange rate over a long period can run the risk of turning
the temporary imbalance in productivity into a permanent one. A continuously
weakening currency condemns the issuing economy into a downward economic
spiral. This has happened to the US in the last decade. To make matters
worse, with globalization of deregulated markets, the recurring US trade
deficit is accompanied by an escalating loss of jobs in sectors sensitive to
cross-border wage arbitrage, with the job-loss escalation climbing up the
skill ladder. Discriminatory US immigration policies also prevent the
retention of low-paying jobs within the US and exacerbate the illegal
Regional wage arbitrage within the US in past decades kept the US
economy lean and productive internationally. Labor-intensive US industries
relocated to the low-wage South through regional wage arbitrage and despite
temporary adjustment pains from the loss of textile mills, the Northern
economies managed to upgrade their productivity, technology level, financial
sophistication and output quality. The Southern economies in the US also
managed to upgrade these factors of production and in time managed to narrow
the wage disparity within the national economy. This happened because the
jobs stay within the nation. With globalization, it is another story. Jobs
are leaving the nation mercilessly. According to free trade theory, the US
trade deficit is supposed to cause the dollar to fall temporarily against the
currencies of its trading partners, causing export competitiveness to
rebalance to remove or reduce the US trade deficit or face the collapse of
its currency. Either case, jobs that have been lost temporarily are then
supposed to return to the US.
But the persistent US trade deficit defies trade theory because of
dollar hegemony. The current international finance architecture is based on
dollar hegemony which is the peculiar arrangement in which the US dollar, a
fiat currency, remains as the dominant reserve currency for international
trade. The broad trade-weighted dollar index stays in an upward trend,
despite selective appreciation of some strong currencies, as highly-indebted
emerging market economies attempt to extricate themselves from
dollar-denominated debt through the devaluation of their currencies. While
the aim is to subsidize exports, it ironically makes dollar debts more
expensive in local currency terms. The moderating impact on US price
inflation also amplifies the upward trend of the trade-weighted dollar index
despite persistent US expansion of monetary aggregates, also known as
monetary easing or money printing.
Adjusting for this debt-driven increase in the exchange value of
dollars, the import volume into the US can be estimated in relationship to
expanding monetary aggregates. The annual growth of the volume of goods
shipped to the US has remained around 15% for most of the 1990s, more than 5
times the average annual GDP growth. The US enjoyed a booming economy when
the dollar was gaining ground, and this occurred at a time when interest
rates in the US were higher than those in its creditor nations. This led to
the odd effect that raising US interest rates actually prolonged the boom in
the US rather than threatened it, because it caused massive inflows of
liquidity into the US financial system, lowered import price inflation,
increased apparent productivity and prompted further spending by US consumers
enriched by the wealth effect despite a slowing of wage increases. Returns on
dollar assets stayed high in foreign currency terms.
This was precisely what Federal Reserve Board chairman Alan Greenspan
did in the 1990s in the name of pre-emptive measures against inflation.
Dollar hegemony enabled the US to print money to fight inflation, causing a
debt bubble of asset appreciation. This data substantiated the view of the US
as Rome in a New Roman Empire with an unending stream of imports as the free
tribune from conquered lands. This was what Greenspan meant by US "financial
The Fed Funds rate (ffr) target has been lifted eight times in steps
of 25 basis points from 1% in mid 2004 to 3% on May 3, 2005. If the same
pattern of "measured pace" continues, the ffr target would be at 4.25% by the
end of 2005. Despite Fed rhetoric, the lifting of dollar interest rate has
more to do with preventing foreign central banks from selling
dollar-denominated assets, such as US Treasuries, than with fighting
inflation. In a debt-driven economy, high interest rates are themselves
inflationary. Rising interest rate to fight inflation could become the
monetary dog chasing its own interest rate tail, with rising rate adding to
rising inflation which then requires more interest rate hikes. Still,
interest rate policy is a double edged sword: it keeps funds from leaving the
debt bubble, but it can also puncture the debt bubble by making the servicing
of debt prohibitively expensive.
To prevent this last adverse effect, the Fed adds to the money
supply, creating an unnatural condition of abundant liquidity with rising
short-term interest rate, resulting in a narrowing of interest spread between
short-term and long-term debts, a leading indication for inevitable recession
down the road. The problem of adding to the money supply is what Keynes
called the liquidity trap, that is, an absolute preference for liquidity even
at near zero interest-rate levels. Keynes argued that either a liquidity trap
or interest-insensitive investment draught could render monetary expansion
ineffective in a recession. It is what is popularly called pushing on a
credit string, where ample money cannot find credit-worthy willing borrowers.
Much of the new low cost money tends to go to refinancing of existing debt
take out at previously higher interest rates. Rising short-term interest
rates, particularly at a measured pace, would not remove the liquidity trap
when long term rates stay flat because of excess liguidity.
The debt bubble in the US is clearly having problems, as evident in
the bond market. With just 14 deals worth $2.9 billion, May 2005 was the
slowest month for high-yield bond issuance since October 2002. The late-April
downgrades of the debt of General Motors and Ford Motor to junk status roiled
the bond markets. The number of high-yield, or junk bond deals fell 55% in
the March-to-May 2005 period, compared with the same three months in 2004.
They were also down 45% from the December-through-February period. In dollar
value, junk bond deals totaled $17.6 billion in the March-to-May 2005 period,
compared with $39.5 billion during the same three months in 2004 and $36
billion from December through February 2005. There were 407 deals of
investment-grade bond underwriting during the March-to-May 2005 period,
compared with 522 in the same period 2004 - a decline of 22%. In dollar
volume, some $153.9 billion of high-grade bonds were underwritten from March
to May 2005, compared with $165.5 billion in the same period in 2004 - a 7%
decline. Oil at $50, along with astronomical asset price appreciation,
particularly in real estate, is giving the debt bubble additional borrowed
time. But this game cannot go on forever and the end will likely be triggered
by a new trade war's effect on reduced trade volume. The price of a reduced
US trade deficit is the bursting of the US debt bubble which can plunge the
world economy into a new depression. Given such options, the US has no choice
except to ride the trade deficit train for as long as the traffic will bear,
which may not be too long, particularly if protectionism begins to gather
The transition to offshore outsourced production has been the source
of the productivity boom of the "New Economy" in the US in the last decade.
The productivity increase not attributable to the importing of other nations'
productivity is much less impressive. While published government figures of
the productivity index show a rise of nearly 70% since 1974, the actual rise
is between zero and 10% in many sectors if the effect of imports is removed
from the equation. The lower productivity values are consistent with the
real-life experience of members of the blue-collar working class and the
white collar middle class who have been spending the equity cash-outs from
the appreciated market value of their homes. World trade has become a network
of cross-border arbitrage on differentials in labor availability, wages,
interest rates, exchange rates, prices, saving rates, productive capacities,
liquidity conditions and debt levels. In some of these areas, the US is
becoming an underdeveloped economy.
The Bush Administration continues to assure the public that the state
of the economy is sound while in reality the US has been losing entire
sectors of its economy, such as manufacturing and information technology, to
foreign producers, while at the same time selling off the part of the nation
to finance its rising and unending trade deficit. Usually, when unjustified
confidence crosses over to fantasized hubris on the part of policymakers,
disaster is not far ahead.
To be fair, the problems of the US economy started before the second
Bush Administration. The Clinton Administration's annual economic report for
2000 claimed that the longest economic expansion in US history could continue
"indefinitely" as long as "we stick to sound policy", according to Chairman
Martin Baily of the Council of Economic Advisors (CEA) as reported in the
Wall Street Journal . The New York Times report differed
somewhat by quoting Baily as saying: "stick to fiscal policy." Putting the
two newspaper reports together, one got the sense that the Clinton
Administration thought that its fiscal policy was the sound policy needed to
put an end to the business cycle. Economics high priests in government,
unlike the rest of us mortals who are unfortunate enough to have to float in
the daily turbulence of the market, can afford to aloofly focus on long-term
trends and their structural congruence to macro-economic theories. Yet,
outside of macro-economics, long-term is increasingly being re-defined in the
real world. In the technology and communication sectors, long-term evokes
periods lasting less than 5 years. For hedge funds and quant shops, long-term
can mean a matter of weeks.
Two factors were identified by the Clinton CEA Year 2000 economic
report as contributing to the "good" news: technology-driven productivity and
neo-liberal trade globalization. Even with somewhat slower productivity and
spending growth, the CEA believed the economy could continue to expand
perpetually. As for the huge and growing trade deficit, the CEA expected
global recovery to boost demand for US exports, not withstanding the fact
that most US exports are increasingly composed of imported parts. Yet the US
has long officially pursued a strong dollar policy which weakens world demand
for US exports. The high expectation on e-commerce was a big part of
optimism, which had yet to be substantiated by data. In 2000, the CEA
expected the business to business (B2B) portion of e-commerce to rise to $1.3
trillion by 2003 from $43 billion in 1998. Goldman Sachs claimed in 1999 that
B2B e-commerce would reach $1.5 trillion by 2004, twice the size of the
combined 1998 revenues of the US auto industry and the US telecom sector.
Others were more cautious. Jupiter Research projected that companies around
the globe would increase their spending on B2B e-marketplaces from US$2.6
billion in 2000 to only $137.2 billion by 2005 and spending in North America
alone would grow from $2.1 billion to only $80.9 billion. North American
companies accounted for 81% of the total spending in 1998, but by 2005, that
figure was expected to drop to 60% of the total. The fact of the matter is
that Asia and Europe are now faster growth market for communication and
Reality proved disappointing. A 2004 UN Conference on Trade and
Development (UNCTAD) report said: In the United States, e-commerce between
enterprises (B2B), which in 2002 represented almost 93% of all e-commerce,
accounted for 16.28% of all commercial transactions between enterprises.
While overall transactions between enterprises (e-commerce and non
e-commerce) fell in 2002, e-commerce B2B grew at an annual rate of 6.1%. As
for business-to-consumer (B2C) e-commerce, UNCTAD reported that sales in the
first quarter of 2004 amounted to 1.9 per cent of total retail sales, a
proportion that is nearly twice as large as that recorded in 2001. The annual
rate of growth of retail e-commerce in the US in the year to the end of the
first quarter of 2004 was 28.1%, while the growth of total retail in the same
period was only 8.8%. Dow Jones reported on May 20, 2005 that first-quarter
retail e-commerce sales in the U.S. rose 23.8% compared with the year-ago
period to $19.8 billion from $16 billion, according to preliminary numbers
released by the Department of Commerce. E-commerce sales during the first
quarter rose 6.4% from the fourth quarter, when they were $18.6 billion.
Sales for all periods are on an adjusted basis, meaning the Commerce
Department adjusts them for seasonal variations and holiday and trading-day
differences but not for price changes.
E-commerce sales accounted for 2.2% of total retail sales in the
first quarter of 2005, when those sales were an estimated $916.9 billion,
according to the Commerce Department. Walmart, the low-priced retailer that
imports outsourced goods from overseas, grew only 2%, indicating spending
fatigue on the part of low-income US consumers, while Target Stores, the
upscale retailer that also imports outsourced goods, continues to grow at 7%,
indicating the effects of rising income disparity.
The CEA 2000 report did not address the question whether e-commerce
was merely a shift of commerce or a real growth. The possibility exists for
the new technology to generate negative growth. It happened to IBM –
the increased efficiency (lower unit cost of calculation power) of IBM big
frames actually reduced overall IBM sales, and most of the profit and growth
in personal computers went to Microsoft, the software company that grew on
business that IBM, a self-professed hardware manufacturer, did not consider
worthy of keeping for itself. The same thing happened to Intel where Moore's
Law declared in 1965 an exponential growth in the number of transistors per
integrated circuit and predicted that this trend would continue the doubling
of transistors every couple of years. But what Moore's Law did not predict
was that this growth of computing power per dollar would cut into company
profitability. As the market price of computer power continues to fall, the
cost to producers to achieve Moore's Law has followed the opposite trend:
R&D, manufacturing, and test costs have increased steadily with each new
generation of chips. As the fixed cost of semiconductor production continues
to increase, manufacturers must sell larger and larger quantities of chips to
remain profitable. In recent years, analysts have observed a decline in the
number of "design starts" at advanced process nodes. While these observations
were made in the period after the year 2000 economic downturn, the decline
may be evidence that the long-term global market cannot economically sustain
Moore's Law. Is the Google Bubble a replay of the AOL fiasco?
Schumpeter's creative destruction theory, while revitalizing the
macro-economy with technological obsolescence in the long run, leaves real
corporate bodies in its path, not just obsolete theoretical concepts.
Financial intermediaries and stock exchanges face challenges from Electronic
Communication Networks (ECNs) which may well turn the likes of NYSE into
sunset industries. ECNs are electronic marketplaces which bring buy/sell
orders together and match them in virtual space. Today, ECNs handle roughly
25% of the volume in NASDAQ stocks. The NYSE and the Archipelago Exchange
(ArcaEx) announced on April 20, 2005 that they have entered a definitive
merger agreement that will lead to a combined entity, NYSE Group, Inc.,
becoming a publicly-held company. If approved by regulators, NYSE members and
Archipelago shareholders, the merger will represent the largest-ever among
securities exchanges and combine the world's leading equities market with the
most successful totally open, fully electronic exchange. Through Archipelago,
the NYSE will compete for the first time in the trading of NASDAQ-listed
stocks; it will be able to indirectly capture listings business that
otherwise would not qualify to list on the NYSE. Archipelago lists stocks of
companies that do not meet the NYSE's listing standards.
On fiscal policy, US government spending, including social programs
and defense, declined as a share of the economy during the eight years of the
Clinton watch. This in no small way contributed to a polarization of both
income and wealth, with visible distortions in both the demand and supply
sides of the economy. This was the opposite of the FDR record of increasing
income and wealth equality by policy. The wealth effect tied to bloated
equity and real estate markets could reverse suddenly and did in 2000, bailed
out only by the Bush tax cut and the deficit spending on the War on Terrorism
after 2001. Private debt kept making all time highs throughout the 1990s and
was celebrated by neo-liberal economists as a positive factor. Household
spending was heavily based on expected rising future earnings or paper
profits, both of which might and did vanished on short notice. By election
time in November 1999, the Clinton economic miracle was fizzling. The
business cycle had not ended after all, and certainly not by
self-aggrandizing government policies. It merely got postponed for a more
severe crash later. The idea of ending the business cycle in a market economy
was as much a fantasy as Vice President Cheney's assertion in a speech before
the Veterans of Foreign Wars in August 26, 2002 that "the Middle East expert
Professor Fouad Ajami predicts that after liberation, the streets in Basra
and Baghdad are sure to erupt in joy ."
In their 1991 populist campaign for the White House, Bill Clinton and
Al Gore repeatedly pointed out the obscenity of the top 1% of Americans
owning 40% of the country's wealth. They also said that if you eliminated
home ownership and only counted businesses, factories and offices, then the
top 1% owned 90% of all commercial wealth. And the top 10%, they said, owned
99%. It was a situation they pledged to change if elected. But once in
office, Clinton and Gore did nothing to redistribute wealth more equally -
despite the fact that their two terms in office spanned the economic joyride
of the 1990s that would eventually hurt the poor much more severely than the
rich. On the contrary, economic inequality only continued to grow under the
Democrats. Reagan spread the national debt equally among the people while
Clinton gave all the wealth to the rich.
Geopolitically, trade globalization was beginning to face complex
resistance worldwide by the second term of the Clinton presidency. The
momentum of resistance after Clinton would either slow further globalization
or force the terms of trade to be revised. The Asian financial crises of 1997
revived economic nationalism around the world against US-led neo-liberal
globalization, while the North Atlantic Treaty Organization (NATO) attack on
Yugoslavia in 1999 revived militarism in the EU. Market fundamentalism as
espoused by the US, far from being a valid science universally, was
increasingly viewed by the rest of the world as merely US national ideology,
unsupported even by US historical conditions. Just as anti-Napoleonic
internationalism was essentially anti-French, anti-globalization and
anti-moral-imperialism are essentially anti-US. US unilateralism and
exceptionism became the midwife for a new revival of political and economic
nationalism everywhere. The Bush Doctrine of monopolistic nuclear posture,
pre-emptive wars, "either with us or against us" extremism, and no compromise
with states that allegedly support terrorism, pours gasoline on the
smoldering fire of defensive nationalism everywhere.
Alan Greenspan in his October 29, 1997 Congressional testimony on
Turbulence in World Financial Markets before the Joint Economic
Committee said that "it is quite conceivable that a few years hence we will
look back at this episode [Asian financial crisis of 1997] . as a salutary
event in terms of its implications for the macro-economy." When one is
focused only on the big picture, details do not make much of a difference:
the earth always appears more or less round from space, despite that some
people on it spend their whole lives starving and cities get destroyed by war
or natural disasters. That is the problem with macroeconomics. As Greenspan
spoke, many around the world were waking up to the realization that the
turbulence in their own financial markets was viewed by the US central banker
as having a "salutary effect" on the US macro-economy. Greenspan gave anti-US
sentiments and monetary trade protectionism held by participants in these
financial markets a solid basis and they were no longer accused of being mere
Ironically, after the end of the Cold War, market capitalism has
emerged as the most fervent force for revolutionary change. Finance
capitalism became inherently democratic once the bulk of capital began to
come from the pension assets of workers, despite widening income and wealth
disparity. The monetary value of US pension funds is over $15 trillion, the
bulk of which belong to average workers. A new form of social capitalism has
emerged which would gladly eliminate the worker's job in order to give
him/her a higher return on his/her pension account. The capitalist in the
individual is exploiting the worker in same individual. A conflict of
interest arises between a worker's savings and his/her earnings. As Pogo used
to say: "The enemy: they are us." This social capitalism, by favoring return
on capital over compensation for labor, produces overinvestment, resulting in
overcapacity. But the problem of overcapacity can only be solved by high
income consumers. Unemployment and underemployment in an economy of
overcapacity decrease demand, leading to financial collapse. The world
economy needs low wages the way the cattle business need foot and mouth
The nomenclature of neo-classical economics reflects, and in turn
dictates, the warped logic of the economic system it produces. Terms such as
money, capital, labor, debt, interest, profits, employment, market, etc, have
been conceptualized to describe synthetic components of an artificial
material system created by the power politics of greed. It is the capitalist
greed in the worker that causes the loss of his/her job to lower wage earners
overseas. The concept of the economic man who presumably always acts in his
self-interest is a gross abstraction based on the flawed assumption of market
participants acting with perfect and equal information and clear
understanding of the implication of his actions. The pervasive use of these
terms over time disguises the artificial system as the logical product of
natural laws, rather than the conceptual components of the power politics of
Just as monarchism first emerged as a progressive force against
feudalism by rationalizing itself as a natural law of politics and eventually
brought about its own demise by betraying its progressive mandate, social
capitalism today places return on capital above not only the worker but also
the welfare of the owner of capital. The class struggle has been internalized
within each worker. As people facing the hard choice of survival in the
present versus wellbeing in the future, they will always choose survival,
social capitalism will inevitably go the way of absolute monarchism, and make
way for humanist socialism.
Global trade has forced all countries to adopt market economy. Yet the market
is not the economy. It is only one aspect of the economy. A market economy
can be viewed as an aberration of human civilization, as economist Karl
Polanyi (1886-1964) pointed out. The principal theme of Polanyi's Origins
of Our Time: The Great Transformation (1945) was that market economy was
of very recent origin and had emerged fully formed only as recently as the
19th century, in conjunction with capitalistic industrialization. The current
globalization of markets following the fall of the Soviet bloc is also of
recent post-Cold War origin, in conjunction with the advent of the electronic
information age and deregulated finance capitalism. A severe and prolonged
depression can trigger the end of the market economy, when intelligent human
beings are finally faced with the realization that the business cycle
inherent in the market economy cannot be regulated sufficiently to prevent
its innate destructiveness to human welfare and are forced to seek new
economic arrangements for human development. The principle of diminishing
returns will lead people to reject the market economy, however
Prior to the coming of capitalistic industrialization, the market played only
a minor part in the economic life of societies. Even where market places
could be seen to be operating, they were peripheral to the main economic
organization and activities of society. In many pre-industrial economies,
markets met only twice a month. Polanyi argued that in modern market
economies, the needs of the market determined social behavior, whereas in
pre-industrial and primitive economies the needs of society determined market
behavior. Polanyi reintroduced to economics the concepts of reciprocity and
redistribution in human interaction, which were the original aims of trade.
Reciprocity implies that people produce the goods and services they are
best at and enjoy most in producing, and share them with others with joy.
This is reciprocated by others who are good at and enjoy producing other
goods and services. There is an unspoken agreement that all would produce
that which they could do best and mutually share and share alike, not just
sold to the highest bidder, or worse to produce what they despise to meet the
demands of the market. The idea of sweatshops is totally unnatural to human
dignity and uneconomic to human welfare. With reciprocity, there is no need
for layers of management, because workers happily practice their livelihoods
and need no coercive supervision. Labor is not forced and workers do not
merely sell their time in jobs they hate, unrelated to their inner callings.
Prices are not fixed but vary according to what different buyers with
different circumstances can afford or what the seller needs in return from
different buyers. The law of one price is inhumane, unnatural, inflexible and
unfair. All workers find their separate personal fulfillment in different
productive livelihoods of their choosing, without distortion by the need for
money. The motivation to produce and share is not personal profit, but
personal fulfillment, and avoidance of public contempt, communal ostracism,
and loss of social prestige and moral standing.
This motivation, albeit distorted today by the dominance of money, is
still fundamental in societies operating under finance capitalism. But in a
money society, the emphasis is on accumulating the most financial wealth,
which is accorded the highest social prestige. The annual report on the
world's richest 100 as celebrities by Forbes is a clear evidence of this
anomaly. The opinion of figures such as Bill Gates and Warren Buffet are
regularly sought by the media on matters beyond finance, as if the possession
of money itself represents a diploma of wisdom. In the 1960s, wealth was an
embarrassment among the flower children in the US. It was only in the 1980s
that the age of greed emerged to embrace commercialism. In a speech on June 3
at the Take Back America conference in Washington, D.C, Bill Moyers drew
attention to the conclusion by the editors of The Economist , all
friends of business and advocates of capitalism and free markets, that "the
United States risks calcifying into a European-style class-based society." A
front-page leader in the May 13, 2005 Wall Street Journal concluded that "as
the gap between rich and poor has widened since 1970, the odds that a child
born in poverty will climb to wealth - or that a rich child will fall into
middle class - remain stuck....Despite the widespread belief that the U.S.
remains a more mobile society than Europe, economists and sociologists say
that in recent decades the typical child starting out in poverty in
continental Europe (or in Canada) has had a better chance at prosperity."
The New York Times ran a 12-day series in June 2005 under the heading
of "Class Matters" which observed that class is closely tied to money
in the US and that " the movement of families up and down the economic ladder
is the promise that lies at the heart of the American dream. But it does not
seem to be happening quite as often as it used to." The myth that free
markets spread equality seems to be facing challenge in the heart of market
People trade to compensate for deficiencies in their current state of
development. Free trade is not a license for exploitation. Exploitation is
slavery, not trade. Imperialism is exploitation by systemic coercion on an
international level. Neo-imperialism after the end of the Cold War takes the
form of neo-liberal globalization of systemic coercion. Free trade is
hampered by systemic coercion. Resistance to systemic coercion is not to be
confused with protectionism. To participate in free trade, a trader must have
something with which to trade voluntarily in a market free of systemic
coercion. All free trade participants need to have basic pricing power which
requires that no one else commands monopolistic pricing power. That tradable
something comes from development, which is a process of self-betterment. Just
as equality before the law is a prerequisite for justice, equality in pricing
power in the market is a prerequisite for free trade. Traders need basic
pricing power for trade to be free. Workers need pricing power for the value
of their labor to participate in free trade.
Yet trade in a market economy by definition is a game to acquire
overwhelming pricing power over one's trading partners. Wal-Mart for example
has enormous pricing power both as a bulk buyer and a mass retailer. But it
uses its overwhelming pricing power not to pay the highest wages to workers
in factories and in its store, but to deliver the lowest price to its
customers. The business model of Wal-Mart, whose sales volume is greater than
the GDP and trade volume of many small countries, is anti-development. The
trade off between low income and low retail price follows a downward spiral.
This downward spiral has been the main defect of trade de-regulation when low
prices are achieved through the lowering of wages. The economic purpose of
development is to raise income, not merely to lower wages to reduce expenses
by lowering quality. International trade cannot be a substitute for domestic
development, or even international development, although it can contribute to
both domestic and international development if it is conducted on an equal
basis for the mutual benefit of both trading partners. And the chief benefit
is higher income.
The terms of international trade needs to take into consideration local
conditions not as a reluctant tolerance but with respect for diversity.
Former Japanese Vice Finance Minister for International Affairs, Eisuke
Sakakibara, in a speech "The End of Market Fundamentalism" before the
Foreign Correspondent's Club, Tokyo, Jan. 22, 1999, presented a coherent and
wide ranging critique of global macro orthodoxy. His view, that each national
economic system must conform to agreed international trade rules and
regulations but needs not assimilate the domestic rules and regulations of
another country, is heresy to US-led one-size-fits-all globalization. In a
computerized world where output standardization has become unnecessary, where
the mass production of customized one-of-a-kind products is routine,
one-size-fit all hegemony is nothing more than cultural imperialism. In a
world of sovereign states, domestic development must take precedence over
international trade, which is a system of external transactions made
supposedly to augment domestic development. And domestic development means
every nation is free to choose its own development path most appropriate to
its historical conditions and is not required to adopt the US development
model. But neo-liberal international trade since the end of the Cold War has
increasingly preempted domestic development in both the center and the
periphery of the world system. Quality of life is regularly compromised in
the name of efficiency.
This is the reason the French and the Dutch voted against the EU
constitution, as a resistance to the US model of globalization. Britain has
suspended its own vote on the constitution to avoid a likely voter rejection.
In Italy, cabinet ministers suggested abandoning the euro to return to an
independent currency in order to regain monetary sovereignty. Bitter battles
have erupted between member nations in the EU over national government
budgets and subsidies. In that sense, neo-liberal trade is being increasingly
identified as an obstacle, even a threat, to diversified domestic development
and national culture. Global trade has become a vehicle for exploitation of
the weak to strengthen the strong both domestically and internationally.
Culturally, US-style globalization is turning the world into a dull market
for unhealthy MacDonald fast food, dreary Walt-Mart stores, and automated
Coca Cola and ATM machines. Every airport around the world is a replica of a
giant US department store with familiar brand names, making it hard to know
which city one is in. Aside from being unjust and culturally destructive,
neo-liberal global trade as it currently exists is unsustainable, because the
perpetual transfer of wealth from the poor to the rich is unsustainable
anymore than drawing from a dry well is sustainable in a drought, nor can a
stagnant consumer income sustain a consumer economy. Neo-liberal claims of
fair benefits of free trade to the poor of the world, both in the center and
the periphery, are simply not supported by facts. Everywhere, people who
produce the goods cannot afford to buy the same goods for themselves and the
profit is siphoned off to invisible investors continents away.
Trade and Money
Trade is facilitated by money. Mainstream monetary economists view
government-issued money as a sovereign debt instrument with zero maturity,
historically derived from the bill of exchange in free banking. This view is
valid only for specie money, which is a debt certificate that entitles the
holder to claim on demand a prescribed amount of gold or other specie of
value. Government-issued fiat money, on the other hand, is not a sovereign
debt but a sovereign credit instrument, backed by government acceptance of it
for payment of taxes. This view of money is known as the State Theory of
Money, or Chartalism. The dollar, a fiat currency, entitles the holder to
exchange for another dollar at any Federal Reserve Bank, no more, no less.
Sovereign government bonds are sovereign debts denominated in money.
Sovereign bonds denominated in fiat money need never default since sovereign
government can print fiat money at will. Local government bonds are not
sovereign debt and are subject to default because local governments do not
have the authority to print money. When fiat money buys bonds, the
transaction represents credit canceling debt. The relationship is rather
straightforward, but of fundamental importance.
Credit drives the economy, not debt. Debt is the mirror reflection of
credit. Even the most accurate mirror does violence to the symmetry of its
reflection. Why does a mirror turn an image right to left and not upside down
as the lens of a camera does? The scientific answer is that a mirror image
transforms front to back rather than left to right as commonly assumed. Yet
we often accept this aberrant mirror distortion as uncolored truth and we
unthinkingly consider the distorted reflection in the mirror as a perfect
representation. Mirror, mirror on the wall, who is the fairest of them all?
The answer is: your backside.
In the language of monetary economics, credit and debt are opposites but
not identical. In fact, credit and debt operate in reverse relations. Credit
requires a positive net worth and debt does not. One can have good credit and
no debt. High debt lowers credit rating. When one understands credit, one
understands the main force behind the modern finance economy, which is driven
by credit and stalled by debt. Behaviorally, debt distorts marginal utility
calculations and rearranges disposable income. Debt turns corporate shares
into Giffen goods, demand for which increases when their prices go up, and
creates what Federal Reserve Board Chairman Alan Greenspan calls "irrational
exuberance", the economic man gone mad. <> If fiat money is not
sovereign debt, then the entire financial architecture of fiat money
capitalism is subject to reordering, just as physics was subject to
reordering when man's world view changed with the realization that the earth
is not stationary nor is it the center of the universe. For one thing, the
need for capital formation to finance socially useful development will be
exposed as a cruel hoax. With sovereign credit, there is no need for capital
formation for socially useful development in a sovereign nation. For another,
savings are not necessary to finance domestic development, since savings are
not required for the supply of sovereign credit. And since capital formation
through savings is the key systemic rationale for income inequality, the
proper use of sovereign credit will lead to economic democracy.
Sovereign Credit and Unemployment
In an economy financed by sovereign credit, labor should be in perpetual
shortage, and the price of labor should constantly rise. A vibrant economy is
one in which there is a persistent labor shortage and labor enjoys basic,
though not monopolistic, pricing power. An economy should expand until a
labor shortage emerges and keep expanding through productivity rise to
maintain a slight labor shortage. Unemployment is an indisputable sign that
the economy is underperforming and should be avoid as an economic
The Phillips curve, formulated in 1958, describes the systemic
relationship between unemployment and wage-pushed inflation in the business
cycle. It represented a milestone in the development of macroeconomics .
British economist A. W. H. Phillips observed that there was a consistent
inverse relationship between the rate of wage inflation and the rate of
unemployment in the United Kingdom from 1861 to 1957. Whenever unemployment
was low, inflation tended to be high. Whenever unemployment was high,
inflation tended to be low. What Phillips did was to accept a defective labor
market in a typical business cycle as natural law and to use the tautological
data of the flawed regime to prove its validity, and made unemployment
respectable in macroeconomic policymaking, in order to obscure the
irrationality of the business cycle. That is like observing that the sick are
found in hospitals and concluding that hospitals cause sickness and that a
reduction in the number of hospitals will reduce the number of the sick. This
theory will be validated by data if only hospital patients are counted as
being sick and the sick outside of hospitals are viewed as "externalities" to
the system. This is precisely what has happened in the US where an oversupply
of hospital beds has resulted from changes in the economics of medical
insurance, rather than a reduction of people needing hospital care. Part of
the economic argument against illegal immigration is based on the overload of
non-paying patients in a health care system plagued with overcapacity.
Nevertheless, Nobel laureates Paul Samuelson and Robert Solow led an army
of government economists in the 1960s in using the Phillips curve as a guide
for macro-policy trade-offs between inflation and unemployment in market
economies. Later, Edmund Phelps and Milton Friedman independently challenged
the theoretical underpinnings by pointing out separate effects between the
"short-run" and "long-run" Phillips curves, arguing that the
inflation-adjusted purchasing power of money wages, or real wages, would
adjust to make the supply of labor equal to the demand for labor, and the
unemployment rate would rest at the real wage level to moderate the business
cycle. This level of unemployment they called the "natural rate" of
unemployment. The definitions of the natural rate of unemployment and its
associated rate of inflation are circularly self-validating. The natural rate
of unemployment is that at which inflation is equal to its associated
inflation. The associated rate of inflation rate is that which prevails when
unemployment is equal to its natural rate.
A monetary purist, Friedman correctly concluded that money is all
important, but as a social conservative, he left the path to truth half
traveled, by not having much to say about the importance of the fair
distribution of money in the market economy, the flow of which is largely
determined by the terms of trade. Contrary to the theoretical relationship
described by Phillips curve, higher inflation was associated with higher, not
lower, unemployment in the US in the 1970s and contrary to Friedman's claim,
deflation was associated also with high unemployment in Japan in the 1990s.
The fact that both inflation and deflation accompanied high unemployment
ought to discredit the Phillips curve and Friedman's notion of a natural
unemployment rate. Yet most mainstream economists continue to accept a
central tenet of the Friedman-Phelps analysis that there is some rate of
unemployment that, if maintained, would be compatible with a constant rate of
inflation. This they call the "non-accelerating inflation rate of
unemployment" (NAIRU), which over the years has crept up from 4% to 6%.
It is hard to see how sound money can ever lead to full employment when
unemployment is necessary to keep money sound. Within limits and within
reason, unemployment hurts people and inflation hurts money. And if money
exists to serve people, then the choice between inflation and unemployment
becomes obvious. The theory of comparative advantage in world trade is merely
Say's Law internationalized. It requires full employment to be operative.
Wages and Profit
And neoclassical economics does not allow the prospect of employers having
an objective of raising wages, as Henry Ford did, instead of minimizing wages
as current corporate management, such as General Motors, routinely practices.
Henry Ford raised wages to increase profits by selling more cars to workers,
while Ford Motors today cuts wages to maximize profit while adding to
overcapacity. Therein resides the cancer of market capitalism: falling wages
will lead to the collapse of an overcapacity economy. This is why global wage
arbitrage is economically destructive unless and until it is structured to
raise wages everywhere rather than to keep prices low in the developed
economies. That is done by not chasing after the lowest price made possible
by the lowest wages, but by chasing after a bigger market made possible by
rising wages. The terms of global trade need to be restructured to reward
companies that aim at raising wages and benefits globally through
internationally coordinated transitional government subsidies, rather than
the regressive approach of protective tariffs to cut off trade that exploits
wage arbitrage. This will enable the low-wage economies to begin to be able
to afford the products they produce and to import more products from the high
wage economies to move towards balanced trade. Eventually, certainly within a
decade, wage arbitrage would cease to be the driving force in global trade as
wage levels around the world equalize. When the population of the developing
economies achieves per capita income that matches that in developed
economies, the world economy will be rid of the modern curse of overcapacity
caused by the flawed neoclassical economics of scarcity. When top executives
are paid tens of million of dollars in bonuses to cut wages and worker
benefits, it is not fair reward for good management; it is legalized theft.
Executives should only receive bonuses if both profit and wages in their
companies rise as a result of their management strategies.
Sovereign Credit and Dollar Hegemony
In an economy that can operate on sovereign credit, free from dollar
hegemony, private savings are needed only for private investment that has no
clear socially redeeming purpose or value. Savings are deflationary without
full employment, as savings reduces current consumption to provide investment
to increase future supply. Savings for capital formation serve only the
purpose of bridging the gap between new investment and new revenue from
rising productivity and increased capacity from the new investment. With
sovereign credit, private savings are not needed for this bridge financing.
Private savings are also not needed for rainy days or future retirement in an
economy that has freed itself from the tyranny of the business cycle through
planning. Say's Law of supply creating its own demand is a very special
situation that is operative only under full employment, as eminent
post-Keynesian economist Paul Davidson has pointed out. Say's Law ignores a
critical time lag between supply and demand that can be fatal to a
fast-moving modern economy without demand management. Savings require
interest payments, the compounding of which will regressively make any
financial system unsustainable by tilting it toward overcapacity caused by
overinvestment. The religions forbade usury also for very practical reasons.
Yet interest on money is the very foundation of finance capitalism, held up
by the neoclassical economic notion that money is more valuable when it is
scarce. Aggregate poverty then is necessary for sound money. This was what
President Reagan meant when he said that there is always going to be poor
The Bank of International Finance (BIS) estimated that as of the end of
2004, the notional value of global OTC interest rate derivatives is around
$185 trillion, with a market risk exposure of over $5 trillion, which is
almost half of US 2004 GDP. Interest rate derivatives are by far the largest
category of structured finance contracts, taking up $185 trillion of the
total $250 trillion of notional values. The $185 trillion notional value of
interest rate derivatives is 41 times the outstanding value of US Treasury
bonds. This means that interest rate volatility will have a disproportioned
impact of the global financial system in ways that historical data cannot
Fiat money issued by government is now legal tender in all
modern national economies since the 1971 collapse of the Bretton Woods regime
of fixed exchange rates linked to a gold-backed dollar. The State Theory of
Money (Chartalism) holds that the general acceptance of government-issued
fiat currency rests fundamentally on government's authority to tax.
Government's willingness to accept the currency it issues for payment of
taxes gives the issuance currency within a national economy. That currency is
sovereign credit for tax liabilities, which are dischargeable by credit
instruments issued by government, known as fiat money. When issuing fiat
money, the government owes no one anything except to make good a promise to
accept its money for tax payment.
A central banking regime operates on the notion of government-issued fiat
money as sovereign credit. That is the essential difference between central
banking with government-issued fiat money, which is a sovereign credit
instrument, and free banking with privately issued specie money, which is a
bank IOU that allows the holder to claim the gold behind it.
With the fall of the USSR, US attitude toward the rest of the world
changed. It no longer needs to compete for the hearts and minds of the masses
of the Third /Fourth Worlds. So trade has replaced aid. The US has embarked
on a strategy to use Third/Fourth-World cheap labor and non-existent
environmental regulation to compete with its former Cold War Allies, now
industrialized rivals in trade, taking advantage of traditional US anti-labor
ideology to outsource low-pay jobs, playing against the strong pro-labor
tradition of social welfare in Europe and Japan. In the meantime, the US
pushed for global financial deregulation based on dollar hegemony and emerged
as a 500-lb gorilla in the globalized financial market that left the Japanese
and Europeans in the dust, playing catch up in an un-winnable game. In the
game of finance capitalism, those with capital in the form of fiat money they
can print freely will win hands down.
The tool of this US strategy is the privileged role of the dollar as the
key reserve currency for world trade, otherwise known as dollar hegemony. Out
of this emerges an international financial architecture that does real damage
to the actual producer economies for the benefit of the financier economies.
The dollar, instead of being a neutral agent of exchange, has become a weapon
of massive economic destruction (WMED) more lethal than nuclear bombs and
with more blackmail power, which is exercised ruthlessly by the IMF on behalf
of the Washington Consensus. Trade wars are fought through volatile currency
valuations. Dollar hegemony enables the US to use its trade deficits as the
bait for its capital account surplus.
Foreign direct investment (FDI) under dollar hegemony has changed the face
of the international economy. Since the early 1970s, FDI has grown along with
global merchandise trade and is the single most important source of capital
for developing countries, not net savings or sovereign credit. FDI is mostly
denominated in dollars, a fiat currency that the US can produce at will since
1971, or in dollar derivatives such as the yen or the euro, which are not
really independent currencies. Thus FDI is by necessity concentrated in
exports related development, mainly destined for US markets or markets that
also sell to US markets for dollars with which to provide the return on
dollar-denominated FDI. US economic policy is shifting from trade promotion
to FDI promotion. The US trade deficit is financed by the US capital account
surplus which in turn provides the dollars for FDI in the exporting
economies. A trade spat with the EU over beef and bananas, for example, risks
large US investment stakes in Europe. And the suggestion to devalue the
dollar to promote US exports is misleading for it would only make it more
expensive for US affiliates to do business abroad while making it cheaper for
foreign companies to buy dollar assets. An attempt to improve the trade
balance, then, would actually end up hurting the FDI balance. This is the
rationale behind the slogan: a strong dollar is in the US national
Between 1996 and 2003, the monetary value of US equities rose around 80%
compared with 60% for European and a decline of 30% for Japanese. The 1997
Asian financial crisis cut Asia equities values by more than half, some as
much as 80% in dollar terms even after drastic devaluation of local
currencies. Even though the US has been a net debtor since 1986, its net
income on the international investment position has remained positive, as the
rate of return on US investments abroad continues to exceed that on foreign
investments in the US. This reflects the overall strength of the US economy,
and that strength is derived from the US being the only nation that can enjoy
the benefits of sovereign credit utilization while amassing external debt,
largely due to dollar hegemony.
In the US, and now also increasingly so in Europe and Asia, capital
markets are rapidly displacing banks as both savings venues and sources of
funds for corporate finance. This shift, along with the growing global
integration of financial markets, is supposed to create promising new
opportunities for investors around the globe. Neo-liberals even claim that
these changes could help head off the looming pension crises facing many
nations. But so far it has only created sudden and recurring financial crises
like those that started in Mexico in 1982, then in the UK in 1992, again in
Mexico in 1994, in Asia in 1997, and Russia, Brazil, Argentina and Turkey
The introduction of the euro has accelerated the growth of the EU
financial markets. For the current 25 members of the European Union, the
common currency nullified national requirements for pension and insurance
assets to be invested in the same currencies as their local liabilities, a
restriction that had long locked the bulk of Europe's long-term savings into
domestic assets. Freed from foreign-exchange transaction costs and risks of
currency fluctuations, these savings fueled the rise of larger, more liquid
European stock and bond markets, including the recent emergence of a
substantial euro junk bond market. These more dynamic capital markets, in
turn, have placed increased competitive pressure on banks by giving
corporations new financing options and thus lowering the cost of capital
within euroland. How this will interact with the euro-dollar market is still
indeterminate. Euro-dollars are dollars outside of US borders everywhere and
not necessarily Europe, generally pre-taxed and subject to US taxes if they
return to US soil or accounts. The term also applies to euro-yens and
euro-euros. But the idea of French retirement accounts investing in
non-French assets is both distasteful and irrational for the average French
worker, particularly if such investment leads to decreased job security in
France and jeopardizes the jealously guarded 35-hour work-week with 30 days
of paid annual vacation which has been part of French life.
Take the Japanese economy as an example, the world's largest creditor
economy. It holds over $800 billion in dollar reserves in 2005. The Bank of
Japan (BoJ), the central bank, has bought over 300 billion dollars with yen
from currency markets in the last two years in an effort to stabilize the
exchange value of the yen, which continued to appreciate against the dollar.
Now, BoJ is faced with a dilemma: continue buying dollars in a futile effort
to keep the yen from rising, or sell dollars to try to recoup yen losses on
its dollar reserves. Japan has officially pledged not to diversify its dollar
reserves into other currencies, so as not to roil currency markets, but many
hedge funds expect Japan to soon run out of options.
Now if the BoJ sells dollars at the rate of $4 billion a day, it will take
some 200 trading days to get out of its dollar reserves. After the initial 2
days of sale, the remaining unsold $792 billion reserves would have a market
value of 20% less than before the sales program began. So the BoJ will suffer
a substantial net yen paper loss of $160 billion. If the BoJ continues its
sell-dollar program, everyday Y400 billion will leave the yen money supply to
return to the BoJ if it sells dollars for yen, or the equivalent in euro if
it sells dollars for euro. This will push the dollar further down against the
yen or euro, in which case the value of its remaining dollar reserves will
fall even further, not to mention a sharp contraction in the yen money supply
which will push the Japanese economy into a deeper recession.
If the BoJ sells dollars for gold, two things may happen. There would be
not enough sellers because no one has enough gold to sell to absorb the
dollars at current gold prices. Instead, while price of gold will rise, the
gold market may simply freezes with no transactions. Gold holders will not
have to sell their gold; they can profit from gold derivatives on notional
values. Also, the reverse market effect that faces the dollar would hit gold.
After two days of Japanese gold buying, everyone would hold on to their gold
in anticipation for still higher gold prices. There would be no market
makers. Part of the reason central banks have been leasing out their gold in
recent years is to provide liquidity to the gold market. The second thing
that may happen is that price of gold will sky rocket in currency terms,
causing a great deflation in gold terms. The US national debt as of June 1,
2005 was $7.787 trillion. US government gold holding is about 261,000,000
ounces. Price of gold required to pay back the national debt with US-held
gold is $29,835 per ounce. At that price, an ounce of gold will buy a car.
Meanwhile, market price of gold as of June 4, 2005 was $423.50 per ounce.
Gold peaked at $850 per ounce in 1980 and bottom at $252 in 1999 when oil was
below $10 a barrel. At $30,000 per ounce, governments then will have to made
gold trading illegal, as FDR did in 1930 and we are back to square one. It is
much easier for a government to outlaw the trading of gold within its borders
than it is for it to outlaw the trading of its currency in world markets. It
does not take much to conclude that anyone who advices any strategy of
long-term holding of gold will not get to the top of the class.
Heavily indebted poor countries need debt relief to get out of virtual
financial slavery. Some African governments spend three times as much on debt
service as they do on health care. Britain has proposed a half measure that
would have the IMF sell about $12 billion worth of its gold reserves, which
have a total current market value of about $43 billion to finance debt
relief. The US has veto power over gold decisions in the IMF. Thus Congress
holds the key. However, the mining industry lobby has blocked a vote. In
January, a letter opposing the sale of IMF gold was signed by 12 US senators
from Western mining states, arguing that the sale could drive down the price
of gold. A similar letter was signed in March by 30 members of the House of
Representatives. Lobbyists from the National Mining Association and gold
mining companies, such as Newmont Mining and Barrick Gold Corp, persuaded the
Congressional leadership that the gold proposal would not pass in Congress,
even before it came up for debate. The BIS reports that gold derivatives took
up 26% of the world's commodity derivatives market yet gold only composes 1%
of the world's annual commodity production value, with 26 times more
derivatives structured against gold than against other commodities, including
oil. The Bush administration, at first apparently unwilling to take on a
congressional fight, began in April to oppose gold sales outright. But
President Bush and UK Prime Minister Tony Blair announced on June 7 that the
US and UK are "well on their way" to a deal which would provide 100% debt
cancellation for some poor nations to the World Bank and African Development
Fund as a sign of progress in the G-8 debate over debt cancellation.
Jude Wanniski, a former editor of the Wall Street Journal, commenting in
his Memo on the Margin on the Internet on June 15, 2005, on the headline of
Pat Buchanan's syndicated column of the same date: Reviving the Foreign-Aid
Racket, wrote: "This not a bailout of Africa's poor or Latin American
peasants. This is a bailout of the IMF, the World Bank and the African
Development Bank . The second part of the racket is that in exchange for
getting debt relief, the poor countries will have to spend the money they
save on debt service on "infrastructure projects," to directly help their
poor people with water and sewer line, etc., which will be constructed by
contractors from the wealthiest nations What comes next? One of the worst
economists in the world, Jeffrey Sachs, is in charge of the United Nations
scheme to raise mega-billions from western taxpayers for the second leg of
this scheme. He wants $25 billion A YEAR for the indefinite future, as I
recall, and he has the fervent backing of The New York Times , which
always weeps crocodile tears for the racketeers. It was Jeffrey Sachs, in
case you forgot, who, with the backing of the NYTimes persuaded Moscow
under Mikhail Gorbachev to engage in "shock therapy" to convert from
communism to capitalism. It produced the worst inflation in the history of
Russia, caused the collapse of the Soviet federation, and sank the Russian
people into a poverty they had never experienced under communism."
The dollar cannot go up or down more than 20% against any other major
currencies within a short time without causing a major global financial
crisis. Yet, against the US equity markets the dollar appreciated about 40%
in purchasing power in the 2000-02 market crash, so had gold. And against
real estate prices between 2002 and 2005, the dollar has depreciated 60% or
more. According to Greenspan's figures, the Fed can print $8 trillion more
fiat dollars without causing inflation. The problem is not the money
printing. The problem is where that $8 trillion is injected. If it is
injected into the banking system, then the Fed will have to print $3 trillion
every subsequent year just to keep running in place. If the $8 trillion is
injected into the real economy in the form of full employment and higher
wages, the US will have a very good economy, and much less need for paranoia
against Asia or the EU. But US wages cannot rise as long as global wage
arbitrage is operative. This is one of the arguments behind protectionism. It
led Federal Reserve Chairman Alan Greenspan to say on May 5 he feared what
appeared to be a growing move toward trade protectionism, saying it could
lessen the US and the world's economy ability to withstand shock. Yet if
democracy works in the US, protectionism will be unstoppable as long as free
trade benefits the elite at the expense of the voting masses.
Fiat Money is Sovereign Credit
Money is like power: use it or lose it. Money unused (not circulated) is
defunct wealth. Fiat money not circulated is not wealth but merely pieces of
printed paper sitting in a safe. Gold unused as money is merely a shiny metal
good only as ornamental gifts for weddings and birthdays. The usefulness of
money to the economy is dependent on its circulation, like the circulation of
blood to bring oxygen and nutrient to the living organism. The rate of money
circulation is called velocity by monetary economists. A vibrant economy
requires a high velocity of money. Money, like most representational
instruments, is subject to declaratory definition. In semantics, a
declaratory statement is self validating. For example: "I am King" is a
statement that makes the declarer king, albeit in a kingdom of one citizen.
What gives weight to the declaration is the number of others accepting that
declaration. When sufficient people within a jurisdiction accept the kingship
declaration, the declarer becomes king of that jurisdiction instead of just
his own house. When an issuer of money declares it to be credit it will be
credit, or when he declares it to be debt it will be debt. But the social
validity of the declaration depends on the acceptance of
Anyone can issue money, but only sovereign government can
issue legal tender for all debts, public and private, universally accepted
with the force of law within the sovereign domain. The issuer of private
money must back that money with some substance of value, such as gold, or the
commitment for future service, etc. Others who accept that money have
provided something of value for that money, and have received that money
instead of something of similar value in return. So the issuer of that money
has given an instrument of credit to the holder in the form of that money,
redeemable with something of value on a later date.
When the state issues fiat money under the principle of Chartalism, the
something of value behind it is the fulfillment of tax obligations. Thus the
state issues a credit instrument, called (fiat) money, good for the
cancellation of tax liabilities. By issuing fiat money, the state is not
borrowing from anyone. It is issuing tax credit to the economy.
Even if money is declared as debt assumed by an issuer who is not a
sovereign who has the power to tax, anyone accepting that money expects to
collect what is owed him as a creditor. When that money is used in a
subsequent transaction, the spender is parting with his creditor right to buy
something of similar value from a third party, thus passing the "debt" of the
issuer to the third party. Thus no matter what money is declared to be, its
functions is a credit instrument in transactions. When one gives money to
another, the giver is giving credit and the receiver is incurring a debt
unless value is received immediately for that money. When debt is repaid with
money, money acts as a credit instrument. When government buys back
government bonds, which is sovereign debt, it cannot do so with fiat money it
issues unless fiat money is sovereign credit.
When money changes hands, there is always a creditor and a debtor.
Otherwise there is no need for money, which stands for value rather than
being value intrinsically. When a cow is exchanged for another cow, that is
bartering, but when a cow is bought with money, the buyer parts with money
(an instrument of value) while the seller parts with the cow (the substance
of value). The seller puts himself in the position of being a new creditor
for receiving the money in exchange for his cow. The buyer exchanges his
creditor position for possession of the cow. In this transaction, money is an
instrument of credit, not a debt.
When private money is issued, the only way it will be accepted generally
is that the money is redeemable for the substance of value behind it based on
the strong credit of the issuer. The issuer of private money is a custodian
of the substance of value, not a debtor. All that is logic, and it does not
matter how many mainstream monetary economists say money is debt.
Economist Hyman P Minsky (1919-1996) observed correctly that money is
created whenever credit is issued. He did not say money is created when debt
is incurred. Only entities with good credit can issue credit or create money.
Debtors cannot create money, or they would not have to borrow. However, a
creditor can only be created by the existence of a debtor. So both a creditor
and a debtor are needed to create money. But only the creditor can issue
money, the debtor accepts the money so created which puts him in debt.
The difference with the state is that its power to levy taxes exempts it
from having to back its creation of fiat money with any other assets of
value. The state when issuing fiat money is acting as a sovereign creditor.
Those who took the fiat money without exchanging it with things of value is
indebted to the state; and because taxes are not always based only on income,
a tax payer is a recurring debtor to the state by virtue of his citizenship,
even those with no income. When the state provides transfer payments in the
form of fiat money, it relieves the recipient of his tax liabilities or
transfers the exemption from others to the recipient to put the recipient in
a position of a creditor to the economy through the possession of fiat money.
The holder of fiat money is then entitled to claim goods and services from
the economy. For things that are not for sale, such as political office,
money is useless, at least in theory. The exercise of the fiat money's claim
on goods and services is known as buying something that is for sa <>
There is a difference between buying a cow with fiat money and buying a
cow with private IOUs (notes). The transaction with fiat money is complete.
There is no further obligation on either side after the transaction. With
notes, the buyer must either eventually pay with money, which cancels the
notes (debt) or return the cow. The correct way to look at sovereign
government-issued fiat money is that it is not a sovereign debt, but a
sovereign credit good for canceling tax obligations. When the government
redeems sovereign bonds (debt) with fiat money (sovereign credit), it is not
paying off old debt with new debt, which would be a Ponzi scheme.
Government does not become a debtor by issuing fiat money, which in the US
is a Federal Reserve note, not an ordinary bank note. The word "bank" does
not appear on US dollars. Zero maturity money (ZMM), which grew from $550
billion in 1971 when Nixon took the dollar off gold, to $6.63 trillion as of
May 30, 2005 is not a Federal debt. It is a Federal credit to the economy
acceptable for payment of taxes and as legal tender for all debts, public and
private. Anyone refusing to accept dollars within US jurisdiction is in
violation of US law. One is free to set market prices that determine the
value, or purchasing power of the dollar, but it is illegal on US soil to
refuse to accept dollars for the settlement of debts. Instruments used for
settling debts are credit instruments. When fiat money is used to buy
sovereign bonds (debt), money cannot be anything but an instrument of
sovereign credit. If fiat money is sovereign debt, there is no need to sell
government bonds for fiat money. When a sovereign government sells a
sovereign bond for fiat money issues, it is withdrawing sovereign credit from
the economy. And if the government then spends the money, the money supply
remains unchanged. But if the government allows a fiscal surplus by spending
less than its tax revenue, the money supply shrinks and the economy slows.
That was the effect of the Clinton surplus which produce the recession of
2000. While run-away fiscal deficits are inflationary, fiscal surpluses lead
to recessions. Conservatives who are fixated on fiscal surpluses are simply
uninformed on monetary economics. <>
For euro-dollars, meaning fiat dollars outside of the US, the reason those
who are not required to pay US taxes accept them is because of dollar
hegemony, not because dollars are IOUs of the US government. Everyone accept
dollars because dollars can buy oil and all other key commodities. When the
Fed injects money into the US banking system, it is not issuing government
debt; it is expanding sovereign credit which would require higher government
tax revenue to redeem. But if expanding sovereign credit expands the economy,
tax revenue will increase without changing the tax rate. Dollar hegemony
exempts the dollar, and only the dollar, from foreign exchange implication on
the State Theory of Money. To issue sovereign debt, the Treasury issues
treasury bonds. Thus under dollar hegemony, the US is the only nation that
can practice and benefit from sovereign credit under the principle of
Money and bonds are opposite instruments that cancel each other. That is
how the Fed Open Market Committee (FOMC) controls the money supply, by buying
or selling government securities with fiat dollars to set a fed funds rate
target. The fed funds rate is the interest rate at which banks lend to each
other overnight. As such, it is a market interest rate that influences market
interest rates throughout the world in all currencies through exchange rates.
Holders of a government bond can claim its face value in fiat money at
maturity, but holder of a fiat dollar can only claim a fiat dollar
replacement at the Fed. Holders of fiat dollars can buy new sovereign bonds
at the Treasury, or outstanding sovereign bond in the bond market, but not at
the Fed. The Fed does not issue debts, only credit in the form of fiat money.
When the Fed FOMC buys or sells government securities, it does on behalf of
the Treasury. When the Fed increases the money supply, it is not adding to
the national debt. It is increasing sovereign credit in the economy. That is
why monetary easing is not deficit financing.
Money and Inflation
It is sometimes said that war's legitimate child is revolution and war's
bastard child is inflation. World War I was no exception. The US national
debt multiplied 27 times to finance the nation's participation in that war,
from US$1 billion to $27 billion. Far from ruining the United States, the war
catapulted the country into the front ranks of the world's leading economic
and financial powers. The national debt turned out to be a blessing, for
government securities are indispensable as anchors for a vibrant credit
Inflation was a different story. By the end of World War I, in 1919, US
prices were rising at the rate of 15% annually, but the economy roared ahead.
In response, the Federal Reserve Board raised the discount rate in quick
succession, from 4 to 7%, and kept it there for 18 months to try to rein in
inflation. The discount rate is the interest rate charged to commercial banks
and other depository institutions on loans they receive from their regional
Federal Reserve Bank's lending facility--the discount window. The result was
that in 1921, 506 banks failed. Deflation descended on the economy like a
perfect storm, with commodity prices falling 50% from their 1920 peak,
throwing farmers into mass bankruptcies. Business activity fell by one-third;
manufacturing output fell by 42%; unemployment rose fivefold to 11.9%, adding
4 million to the jobless count. The economy came to a screeching halt. From
the Fed's perspective, declining prices were the goal, not the problem;
unemployment was necessary to restore US industry to a sound footing, freeing
it from wage-pushed inflation. Potent medicine always came with a bitter
taste, the central bankers explained.
At this point, a technical process inadvertently gave the New York Federal
Reserve Bank, which was closely allied with internationalist banking
interest, preeminent influence over the Federal Reserve Board in Washington,
the composition of which represented a more balanced national interest. The
initial operation of the Fed did not use the open-market operation of
purchasing or selling government securities to set interest rate policy as a
method of managing the money supply. The Fed could not simply print money to
buy government securities to inject money into the money supply because the
dollar was based on gold and the amount of gold held by the government was
relatively fixed. Money in the banking system was created entirely through
the discount window at the regional Federal Reserve Banks. Instead of buying
or selling government bonds, the regional Feds accepted "real bills" of
trade, which when paid off would extinguish money in the banking system,
making the money supply self-regulating in accordance with the "real bills"
doctrine to maintain the gold standard. The regional Feds bought government
securities not to adjust money supply, but to enhance their separate
operating profit by parking idle funds in interest-bearing yet super-safe
government securities, the way institutional money managers do today.
Bank economists at that time did not understand that when the regional
Feds independently bought government securities, the aggregate effect would
result in macro-economic implications of injecting "high power" money into
the banking system, with which commercial banks could create more money in
multiple by lending recycles based on the partial reserve principle. When the
government sold bonds, the reverse would happen. When the Fed made open
market transactions, interest rates would rise or fall accordingly in
financial markets. And when the regional Feds did not act in unison, the
credit market could become confused or become disaggregated, as one regional
Fed might buy while another might sell government securities in its open
Benjamin Strong, first president of the New York Federal Reserve Bank, saw
the problem and persuaded the other 11 regional Feds to let the New York Fed
handle all their transactions in a coordinated manner. The regional Feds
formed an Open Market Investment Committee, to be run by the New York Fed for
the purpose of maximizing overall profit for the whole system. This committee
became dominated by the New York Fed, which was closely linked to big-money
center bank interests which in turn were closely tied to international
financial markets. The Federal Reserve Board approved the arrangement without
full understanding of its full implication: that the Fed was falling under
the undue influence of the New York internationalist bankers. For the US,
this was the beginning of financial globalization. This fatal flaw would
reveal itself in the Fed's role in causing and its impotence in dealing with
the 1929 crash.
The deep 1920-21 depression eventually recovered by the lowering of the
Fed discount rate into the Roaring Twenties, which, like the New Economy
bubble of the 1990s, left some segments of economy and the population in them
lingering in a depressed state. Farmers remained victimized by depressed
commodity prices and factory workers shared in the prosperity only by working
longer hours and assuming debt with the easy money that the banks provided.
Unions lost 30% of their membership because of high unemployment in boom
time. The prosperity was entirely fueled by the wealth effect of a
speculative boom in the stock market that by the end of the decade would face
the 1929 crash and land the nation and the world in the Great Depression.
Historical data showed that when New York Fed president Strong leaned on the
regional Feds to ease the discount rate on an already overheated economy in
1927, the Fed lost its last window of opportunity to prevent the 1929 crash.
Some historians claimed that Strong did so to fulfill his internationalist
vision at the risk of endangering the national interest. It is an issue of
debate that continues in Congress today. Like Greenspan, Strong argued that
it was preferable to deal with post-crash crisis management by adding
liquidity than to pop a bubble prematurely with preventive measures of tight
money. It is a strategy that requires letting a bubble to pop only inside a
The speculative boom of easy credit in the 1920s attracted many to buy
stocks with borrowed money and used the rising price of stocks as new
collateral for borrowing more to buy more stocks. Broker's loans went from
under $5 million in mid 1928 to $850 million in September of 1929. The market
capitalization of the 846 listed companies of the New York Stock Exchange was
$89.7 billion, at 1.24 times 1929 GDP. By current standards, a case could be
built that stocks in 1929 were in fact technically undervalued. The 2,750
companies listed in the New York Stock Exchange had total global market
capitalization exceeding $18 trillion in 2004, 1.53 times 2004 GDP of $11.75
On January 14, 2001, the DJIA reached its all time high to date at 11,723,
not withstanding Greenspan's warning of "irrational exuberance" on December
6, 1996 when the DJIA was at 6,381. From its August 12, 1982 low of 777, the
DJIA began its most spectacular bull market in history. It was interrupted
briefly only by the abrupt and frightening crash on October 19, 1987 when the
DJIA lost 22.6% on Black Monday, falling to 1,739. It represented a
1,020-point drop from its previous peak of 2,760 reached less than two months
earlier on August 21. But Greenspan's easy money policy lifted the DJIA to
11,723 in 13 years, a 674% increase. In 1929 the top came on September 4,
with the DJIA at 386. A headline in The New York Times on October 22,
1929, reported highly-respected economist Irving Fisher as saying: "Prices of
Stocks Are Low." Two days later, the stock market crashed, and by the end of
November, the New York Stock Exchange shares index was down 30%. The index
did not return to the 9/3/29 level until November, 1954. At its worst level,
the index dropped to 40.56 in July 1932, a drop of 89%. Fisher had based his
statement on strong earnings reports, few industrial disputes, and evidence
of high investment in research and development (R&D) and in other
intangible capital. Theory and supportive data not withstanding, the reality
was that the stock market boom was based on borrowed money and false
optimism. In hindsight, many economists have since concluded that stock
prices were overvalued by 30% in 1929. But when the crash came, the overshoot
dropped the index by 89% in less than three years <> .
Money and Gold
When money is not backed by gold, its exchange value must be managed by
government, more specifically by the monetary policies of the central bank.
No responsible government will voluntarily let the market set the exchange
value of its currency, market fundamentalism notwithstanding. Yet central
bankers tend to be attracted to the gold standard because it can relieve them
of the unpleasant and thankless responsibility of unpopular monetary policies
to sustain the value of money. Central bankers have been caricatured as party
spoilers who take away the punch bowl just when the party gets going.
Yet even a gold standard is based on a fixed value of money to gold, set
by someone to reflect the underlying economical conditions at the time of its
setting. Therein lies the inescapable need for human judgment. Instead of
focusing on the appropriateness of the level of money valuation under
changing economic conditions, central banks often become fixated on merely
maintaining a previously set exchange rate between money and gold, doing
serious damage in the process to any economy temporarily out of sync with
that fixed rate. It seldom occurs to central bankers that the fixed rate was
the problem, not the dynamic economy. When the exchange value of a currency
falls, central bankers often feel a personal sense of failure, while they
merely shrug their shoulders to refer to natural laws of finance when the
economy collapses from an overvalued currency.
The return to the gold standard in war-torn Europe in the 1920s was
engineered by a coalition of internationalist central bankers on both sides
of the Atlantic as a prerequisite for postwar economic reconstruction.
Lenders wanted to make sure that their loans would be repaid in money equally
valuable as the money they lent out, pretty much the way the IMF deals with
the debt problem today. President Strong of the New York Fed and his former
partners at the House of Morgan were closely associated with the Bank of
England, the Banque de France, the Reichsbank, and the central banks of
Austria, the Netherlands, Italy, and Belgium, as well as with leading
internationalist private bankers in those countries. Montagu Norman, governor
of the Bank of England from 1920-44, enjoyed a long and close personal
friendship with Strong as well as ideological alliance. Their joint
commitment to restore the gold standard in Europe and so to bring about a
return to the "international financial normalcy" of the prewar years was well
documented. Norman recognized that the impairment of British financial
hegemony meant that, to accomplish postwar economic reconstruction that would
preserve pre-war British interests, Europe would "need the active cooperation
of our friends in the United States."
Like other New York bankers, Strong perceived World War I as an
opportunity to expand US participation in international finance, allowing New
York to move toward coveted international-finance-center status to rival
London's historical preeminence, through the development of a commercial
paper market, or bankers' acceptances in British finance parlance, breaking
London's long monopoly. The Federal Reserve Act of 1913 permitted the Federal
Reserve Banks to buy, or rediscount, such paper. This allowed US banks in New
York to play an increasingly central role in international finance in
competition with the London market.
Herbert Hoover, after losing his second-term US presidential election to
Franklin D Roosevelt as a result of the 1929 crash, criticized Strong as "a
mental annex to Europe", and blamed Strong's internationalist commitment to
facilitating Europe's postwar economic recovery for the US stock-market crash
of 1929 and the subsequent Great Depression that robbed Hoover of a second
term. Europe's return to the gold standard, with Britain's insistence on what
Hoover termed a "fictitious rate" of US$4.86 to the pound sterling, required
Strong to expand US credit by keeping the discount rate unrealistically low
and to manipulate the Fed's open market operations to keep US interest rate
low to ease market pressures on the overvalued pound sterling. Hoover, with
justification, ascribed Strong's internationalist policies to what he viewed
as the malign persuasions of Norman and other European central bankers,
especially Hjalmar Schacht of the Reichsbank and Charles Rist of the Bank of
France. From the mid-1920s onward, the US experienced credit-pushed
inflation, which fueled the stock-market bubble that finally collapsed in
Within the Federal Reserve System, Strong's low-rate policies of the
mid-1920s also provoked substantial regional opposition, particularly from
Midwestern and agricultural elements, who generally endorsed Hoover's
subsequent critical analysis. Throughout the 1920s, two of the Federal
Reserve Board's directors, Adolph C Miller, a professional economist, and
Charles S Hamlin, perennially disapproved of the degree to which they
believed Strong subordinated domestic to international considerations.
The fairness of Hoover's allegation is subject to debate, but the fact
that there was a divergence of priority between the White House and the Fed
is beyond dispute, as is the fact that what is good for the international
financial system may not always be good for a national economy. This is
evidenced today by the collapse of one economy after another under the
current international finance architecture that all central banks support
instinctively out of a sense of institutional solidarity. The same issue has
surfaced in today's China where regional financial centers such as Hong Kong
and Shanghai are vying for the role of world financial center. To do this,
they must play by the rules of the international financial system which
imposes a cost on the national economy. The nationalist vs. internationalist
conflict, as exemplified by the Hoover vs. Strong conflict of the 1930s, is
also threatening the further integration of the European Union. Behind the
fundamental rationale of protectionism is the rejection of the claim that
internationalist finance places national development as its priority. The
Richardian theory of comparative advantage of free trade is not the
The issue of government control over foreign loans also brought the Fed,
dominated by Strong, into direct conflict with Hoover when the latter was
Secretary of Commerce. Hoover believed that the US government should have
right of approval on foreign loans based on national-interest considerations
and that the proceeds of US loans should be spent on US goods and services.
Strong opposed all such restrictions as undesirable government intervention
in free trade and international finance and counterproductively
protectionist. Businesses should be not only allowed, but encouraged to buy
when it is cheapest anywhere in the world, including shopping for funds to
borrow, a refrain that is heard tirelessly from free traders also today. Of
course, the expanding application of the law of one price to more and more
commodities, including the price of money, i.e. interest rates adjusted by
exchange rates, makes such dispute academic. The only commodity exempt from
the law of one price is labor. This exemption makes the trade theory of
comparative advantage a fantasy.
In July and August 1927, Strong, despite ominous data on mounting market
speculation and inflation, pushed the Fed to lower the discount rate from 4
to 3 percent to relieve market pressures again on the overvalued British
pound. In July 1927, the central bankers of Great Britain, the United States,
France, and Weimar Germany met on Long Island in the US to discuss means of
increasing Britain's gold reserves and stabilizing the European currency
situation. Strong's reduction of the discount rate and purchase of 12 million
pound sterling, for which he paid the Bank of England in gold, appeared to
come directly from that meeting. One of the French bankers in attendance,
Charles Rist, reported that Strong said that US authorities would reduce the
discount rate as "un petit coup de whisky for the stock exchange".
Strong pushed this reduction through the Fed despite strong opposition from
Miller and fellow board member James McDougal of the Chicago Fed, who
represented Midwestern bankers, who generally did not share New York's
Frank Altschul, partner in the New York branch of the transnational
investment bank Lazard Freres, told Emile Moreau, the governor of the Bank of
France, that "the reasons given by Mr Strong as justification for the
reduction in the discount rate are being taken seriously by no one, and that
everyone in the United States is convinced that Mr Strong wanted to aid Mr
Norman by supporting the pound." Other correspondence in Strong's own files
suggests that he was giving priority to international monetary conditions
rather than to US export needs, contrary to his public arguments. Writing to
Norman, who praised his handling of the affair as "masterly", Strong
described the US discount rate reduction as "our year's contribution to
reconstruction." The Fed's ease in 1927 forced money to flow not into the
overheated real economy, which was unable to absorb further investment, but
into the speculative financial market, which led to the crash of 1929. Strong
died in October 1928, one year before the crash, and was spared the pain of
having to see the devastating results of his internationalist policies.
Scholarly debate still continues as to whether Strong's effort to
facilitate European economic reconstruction compromised the US domestic
economy and, in particular, led him to subordinate US monetary policies to
internationalist demands. In 1930, the US economy had yet to dominate the
world economy as it does now. There is, however, little disagreement that the
overall monetary strategy of European central banks had been misguided in its
reliance on the restoration of the gold standard. Critics suggest that the
ambitious but misguided commitment of Strong, Norman, and other
internationalist bankers to returning the pound, the mark, and other major
European currencies to the gold standard at overly-high parities to gold,
which they were then forced to maintain at all costs, including indifference
to deflation, had the effect of undercutting Europe's postwar economic
recovery. Not only did Strong and his fellow central bankers through their
monetary policies contribute to the Great Depression, but their continuing
fixation on gold also acted as a straitjacket that in effect precluded
expansionist counter-cyclical measures.
The inflexibility of the gold standard and the central bankers'
determination to defend their national currencies' convertibility into gold
at almost any cost drastically limited the policy options available to them
when responding to the global financial crisis. This picture fits the
situation of the fixed-exchange-rates regime based on the fiat dollar that
produced recurring financial crises in the 1990s and that has yet to run its
full course by 2005. In 1927, Strong's unconditional support of the gold
standard, with the objective of bringing about the rising financial
predominance of the US which had the largest holdings of gold in the world,
exacerbated nascent international financial problems. In similar ways, dollar
hegemony does the same damage to the global economy today. Just as the
international gold standard itself was one of the major factors underlying
and exacerbating the Great Depression that followed the 1929 crash, since the
conditions that had sustained it before the war no longer existed, the
breakdown of the fixed-exchange-rates system based on a gold-backed dollar
set up by the Bretton Woods regime after World War II, without the removal of
the fiat dollar as a key reserve currency for trade and finance, will cause a
total collapse of the current international financial architecture with
equally tragic outcomes. Stripped of its gold backing, the fiat dollar has to
rely on geopolitical factors for its value, which push US foreign policy
towards increasing militaristic and belligerent unilateralism. With dollar
hegemony today, as it was with the gold standard of 1930, the trade war is
fought through currencies valuations on top of traditional tariffs.
The nature of and constraints on US internationalism after World War I had
parallels in US internationalism after World War II and in US-led
globalization after the Cold War. Hoover bitterly charged Strong with
reckless placement of the interests of the international financial system
ahead of US national interest and domestic development needs. Strong
sincerely believed his support for European currency stabilization also
promoted the best interests of the United States, as post-Cold War
neo-liberal market fundamentalists sincerely believe its promotion enhances
the US national interest. Unfortunately, sincerity is not a vaccine against
Strong argued relentlessly that exchange rate volatility, especially when
the dollar was at a premium against other currencies, made it difficult for
US exporters to price their goods competitively. As he had done during the
war, on numerous later occasions, Strong also stressed the need to prevent an
influx of gold into the US and the consequent domestic inflation, by the US
making loans to Europe, pursuing lenient debt policies, and accepting
European imports on generous terms. Strong never questioned the gold parities
set for the mark and the pound sterling. He merely accepted that returning
the pound to gold at prewar exchange rates required British deflation and US
efforts to use lower dollar interest rates to alleviate market pressures on
sterling. Like Fed chairman Paul Volcker in the 1980s, but unlike Treasury
Secretary Robert Rubin in the 1990s, Strong mistook a cheap dollar as serving
the national interest, while Rubin understood correctly that a strong dollar
is in the national interest by sustaining dollar hegemony. In either case,
the price for either an over-valued or under-valued dollar is the same:
global depression. Dollar hegemony in the 1990s pushed Japan and Germany into
prolonged depression. <>
The US position in 2005 is that a strong dollar is still in the US
national interest, but a strong dollar requires an even stronger Chinese yuan
in the 21 st century. Just as Strong saw the need for a strong
British pound paid for by deflation in Britain in exchange for the carrot of
continuing British/European imports to the US, Bush and Greenspan now want a
stronger Chinese yuan, paid for with deflation in China in exchange for
curbing US protectionism against Chinese imports. The 1985 Plaza Accord to
force the appreciation of the Japanese yen marked the downward spiral of the
Japanese economy via currency-induced deflation. Another virtual Plaza Accord
forced the rise of the euro that left Europe with a stagnant economy. A new
virtual Plaza Accord against China will also condemn the Chinese economy into
a protracted period of deflation. Deflation in China at this time will cause
the collapse of the Chinese banking system which is weighted down by the BIS
regulatory regime that turned national banking subsidies to
state-own-enterprises into massive non-performing loans. A collapse of the
Chinese banking system will have dire consequences for the global financial
system since the robust Chinese economy is the only engine of growth in the
world economy at this time.
When Norman sent Strong a copy of John Maynard Keynes' Tract on
Monetary Reform (1923), Strong commented "that some of his [Keynes']
conclusions are thoroughly unwarranted and show a great lack of knowledge of
American affairs and of the Federal Reserve System." Within a decade, Keynes,
with his advocacy of demand management via deficit financing, became the most
influential economist in post-war history.
The major flaw in the European effort for post-World War I economic
reconstruction was its attempt to reconstruct the past through its attachment
to the gold standard, with little vision of a new future. The democratic
governments of the moneyed class that inherited power from the fall of
monarchies did not fully comprehend the implication of the disappearance of
the monarch as a ruler, whose financial architecture they tried to continue
for the benefit of their bourgeois class. The broadening of the political
franchise in most European countries after the war had made it far more
difficult for governments and central bankers to resist electoral pressures
for increased social spending and the demand for ample liquidity with low
interest rates, as well as high tolerance for moderate inflation to combat
unemployment, regardless of the impact of national policies on the
international financial architecture. The Fed, despite its claim of
independence from politics, has never been free of US presidential-election
politics since its founding. Shortly before his untimely death, Strong took
comfort in his belief that the reconstruction of Europe was virtually
completed and his internationalist policies had been successful in preserving
world peace. Within a decade of his death, the whole world was aflame with
World War II. <>
But in 1929, the dollar was still gold-backed. The government fixed the
dollar at 23.22 grains of gold, at $20.67 per troy ounce. When stock prices
rose faster than real economic growth, the dollar in effect depreciated. It
took more dollars to buy the same shares as prices rose. But the price of
gold remained fixed at $20.67 per ounce. Thus gold was cheap and the dollar
was overvalued and the trading public rushed to buy gold, injecting cash into
the economy which fueled more stock buying on margin. Price of gold mining
shares rose by 600%. But with a gold standard, the Fed could not print money
beyond its holding of gold without revaluing the dollar against gold. The
Quantity Theory of Money caught up with the financial bubble as prices for
equity rose but the quantity of money remained constant and it came into play
with a vengeance. Because of the gold standard, there reached a time when
there was no more money available to buy without someone first selling. When
the selling began, the debt bubble burst, and panic took over. When the stock
market collapsed, panic selling quickly wiped out most investors who bought
shares instead of gold. As gold price was fixed, it could not fall with the
general deflation and owners of gold did exceptionally well by comparison to
What Strong did not figure was that when the Fed lowered the discount rate
to relieve market pressure on the overvalued British pound sterling after its
gold convertibility had been restored in 1925, the world economy could not
expand because money tied to gold was inelastic, leaving the US economy with
a financial bubble that was not supported by any rise in earnings. The
British-controlled gold standard proved to be a straightjacket for world
economic growth, not unlike the deflationary Maastricht "convergence
criteria" based on the strong German mark of the late 1990's. The speculation
of the Coolidge-Hoover era was encouraged by Norman and Strong to fight
gold-induced deflation. The accommodative monetary policy of the US Federal
Reserve led to a bubble economy in the US, similar to Greenspan's bubble
economy since 1987. There were two differences: the dollar was gold-backed in
1930 while in 1987 it was a fiat currency; and in 1930, the world monetary
system was based on sterling pound hegemony while today it is based on dollar
hegemony. When the Wall Street bubble was approaching unsustainable