FOUNDATION FOR INDO-TURKIC STUDIES
Tel/Fax ; 43034706 Amb (Rtd) K Gajendra Singh
Emails; Gajendrak@hotmail.com A-44 ,IFS Apartments
KGSingh@Yahoo.com Mayur Vihar –Phase 1,
http://tarafits.blogspot.com/ Delhi 91, India .
22 October, 2010
NDC Seminar-'ROLE OF FORCE IN STRATEGIC AFFAIRS' Decline and Fall of the West !
I had made an observation for comments by the presiding deity led by Sir Lawrence Freedman (involved with Chilcot Enquiry that I have written as the usual British whitewash) in the session before lunch, on 21 October. I had compared the current decades to end 16 century East West confrontation when the Eastern power the Ottomans , successors of Aryans, Arabs ,Mongols,Tatars ,Turks and others had reached the maximum overstretch up to the gates of Vienna .Europe from 17 century , and then the US at head after WWII, they had rolled back eastern arms ,colonized and still exploit ruthlessly the nations of the east and south.After the collapse of the USSR in 1990, West and Nato installed pro-west rulers in Ukraine (,Yushchenko, removed early this year), in Georgia and got use of the airbase in Kyrgyzstan , but now the shift has begun for the decline (and fall) of the west .USSR collapsed because of high defense expenditure .US now spends $700 billions on defense ,as much as the rest of the world put together ,but its armed forces ( which former decorated Marine Murtha member of US Cong defense Committee said were broken)are caught in a quagmire in Iraq , with Tehran now calling the shots in Baghdad.(with acting Iraqi PM Maliki in Iran begging for help)
It may be recalled that after centuries of warfare between the Byzantine and Persian empires , both became exhausted .Then the Beduins from the deserts of Arabia ,with the new egalitarian ideology of Islam conquered almost all their territories .Moscow collapsed , now what about Washington?!
This was not seriously dealt with by the Chair .I had then left.
Unless we take into account the coming fast decline of the West ,India cannot formulate any realistic strategic policies .US has a debt of $ 8 trillion with GDP of around 13 trillion. India's strategic community is still ruled by US –UK theories and writings and propaganda and remains beholden to pre October 2009 era ( US decline proclaimed by the collapse of Lahman Brothers and Merryl Lynch .Basically the financiers have always ruled the world ad does the Wall Street and the City,London)).
On the subject of economic and financial decline and possible fall of the West here is my last piece on the subject. It has URLs of my earlier articles about the decline of the US led West with a piece Decline of the American Century written way back on 1 September 2002 .
Take care Gajendra Singh Tel 43034706 Delhi
FOUNDATION FOR INDO-TURKIC STUDIES
Tel/Fax ; 43034706 Amb (Rtd) K Gajendra Singh
Emails; Gajendrak@hotmail.com A-44 ,IFS Apartments
KGSingh@Yahoo.com Mayur Vihar –Phase 1,
http://tarafits.blogspot.com/ Delhi 91, India .
11 May .2010
The Looming Mother of all Economic and Social Crisis
http://www.mwcnews.net/focus/analysis/2405-k-gajendra-singh.html, http://www.boloji.com/analysis2/0596.html, http://intellibriefs.blogspot.com/.../looming-mother-of-all-economic-and.html etc
"Keynes's collective work amounted to a powerful argument that capitalism was by its very nature unstable and prone to collapse. Far from trending toward some magical state of equilibrium, capitalism would inevitably do the opposite. It would lurch over a cliff," --- Hyman Minsky.
On Thursday, May 6, 2010, ninety minutes before the end of the trading day, the U.S. stock market almost melted down. The Dow Jones Industrial Average dropped nearly 1,000 points. The market recovered before the end and closed down 348 points, or 3.2%, like a giant 747 narrowly averting a crash landing, but the questions of the day are: What happened? And what does it mean?
Said Robert Reich on his blog on May 6, "at this point no one knows why. Some say it was a sudden burst of worries about Greece's debt and the increasing possibility of a default that might cause a run by global investors. Others point to a "trading error." Giant high-speed computers generate millions in trade based on instructions embedded in computer programs designed to move fast enough to beat everyone else."
Again on Friday, May 7, Dow fell another 140 points in a wild trading day. The decline wiped out US market gains for the year. The Dow closed down to 10,380!
World's capital markets: an out-of-control computerized Casino!
"Regardless of why it happened, it's further evidence that the nation's and the world's capital markets have become a vast out-of-control casino in which fortunes can be made or lost in an instant—which would be fine except for the fact that most of us have put our life savings there. Pension funds, mutual funds, school endowments—the value of all of this depends on a mechanism that can lose a trillion dollars in minutes without anyone having a clear idea why. So much of the market now depends on computer programs and mathematical models that no one fully understands, so much trading is in the hands of a few people whose fat thumbs or momentary carelessness might sink the economy, so much of global wealth now depends on who can move their money quickest at the slightest provocation—that we are toying with financial disaster every day. The luck or foolishness of a few traders, and inside knowledge and information that some possess and others don't, combined with ultra high-speed computers, put us all at the whim of a system whose risk is way out of proportion to any public benefits," concluded Reich.
Greek Sickness Infects EU -PIGS to Slaughter
The austerity plans and the bailout packet for Greece which have adversely dented the ruling coalition of Chancellor Angela Merkel's party in the just concluded regional elections in Germany, because Berlin has to foot the bill, would spread around Europe and beyond. It believed that the debt of five EU members Portugal, Ireland, Greece and Spain (PIGS) totals around $3.9 trillion. Britain's debt is larger than any one of them.
Well-known US economist and political activist Lyndon H. LaRouche, Jr. voiced strong condemnation "the British swine have once again imposed a 1923-style hyperinflationary collapse on modern Germany, with the trillions-dollar bailout scheme imposed on the Euro zone this past weekend. Only the immediate enactment of a Glass-Steagall law could prevent the United States itself from falling into the same fate now destined for continental European victims such as, above all other targets for total destruction, the Federal Republic of Germany."
Bank of England Chief King paints a disastrous future for the country
London's financially precarious position, which has been known for quite some time, was further unveiled by Edmund Conway, the Economics Editor of the Telegraph, UK. Conway revealed that US economist David Hale, who recently met with Mervyn King, Bank of England boss, was told by the latter that, "whoever wins this election will be out of power for a whole generation because of how tough the fiscal austerity will have to be."
Edmund Conway went on to further expose the untenable crisis awaiting UK:
"…no one yet comprehends just how tough the next five years will be. For obvious reasons: we have not experienced anything like it in our lifetimes. We have been insulated from the full pain of the financial/economic crisis so far by unprecedented low interest rates and by the bank bailouts. At some point, the anaesthetic will wear off and we will face a period of austerity that may well make the ruling party so unpopular that it effectively becomes unelectable for decades. There will be strikes; there will be stagnation; there will probably be a double dip of some variety. But this time the pain will be unmistakably imposed by the politicians."
This analysis was further strengthened by former British minister, Michael Portillo, who said that the "financial crisis ravaging Britain would take 20 years to resolve, but the next five years would be critical!"
The Institute for Fiscal Studies had earlier warned that all three parties were hiding the full details of their plans to cut the deficit from voters. It said that the scale of cuts following the election could be the deepest since comparable records began just after World War II.
"Instability is an inherent and inescapable flaw of capitalism."
Hyman Minsky, a hitherto obscure macroeconomist, who saw what was coming, predicted, decades ago, almost exactly the kind of meltdown that is hammering the global economy.
Minsky believed in capitalism, but he also believed it had almost a genetic weakness. Modern finance, he argued, was far from the stabilizing force that mainstream economics portrayed: rather, it was a system that created the illusion of stability while simultaneously creating the conditions for an inevitable and dramatic collapse.
Minsky's vision might have been dark, but he was not a fatalist; he believed it was possible to craft policies that could blunt the collateral damage caused by financial crises.
In his writings, Minsky looked to his intellectual hero, Keynes, arguably the greatest economist of the 20th century. But where most economists drew a single, simplistic lesson from Keynes--that government could step in and micromanage the economy, smooth out the business cycle, and keep things on an even keel--Minsky had no interest in what he and a handful of other dissident economists came to call "bastard Keynesianism."
Instead, Minsky drew his own far darker lessons from Keynes's landmark writings, which dealt not only with the problem of unemployment, but with money and banking. Although Keynes had never stated this explicitly, Minsky argued that Keynes's collective work amounted to a powerful argument that capitalism was by its very nature unstable and prone to collapse. Far from trending toward some magical state of equilibrium, capitalism would inevitably do the opposite. It would lurch over a cliff.
Minsky's "Financial Instability Hypothesis"
In the wake of a depression, he noted, financial institutions are extraordinarily conservative, as are businesses. With the borrowers and the lenders who fuel the economy all steering clear of high-risk deals, things go smoothly: loans are almost always paid on time, businesses generally succeed, and everyone does well. That success, however, inevitably encourages borrowers and lenders to take on more risk in the reasonable hope of making more money. As Minsky observed, "Success breeds a disregard of the possibility of failure."
As people forget that failure is a possibility, a "euphoric economy" eventually develops, fueled by the rise of far riskier borrowers--what he called speculative borrowers, whose income would cover interest payments but not the principal; and those he called "Ponzi borrowers," whose income could cover neither, and could only pay their bills by borrowing still further. As these latter categories grew, the overall economy would shift from a conservative but profitable environment to a much more freewheeling system dominated by players whose survival depended not on sound business plans, but on borrowed money and freely available credit. Once that kind of economy developed, any panic could crash the market. The failure of a single firm, for example, or the revelation of a staggering fraud, could trigger fear and a sudden economy-wide attempt to shed debt.
"Minsky Moment"
This watershed moment - later dubbed the "Minsky moment" - would create an environment deeply inhospitable to all borrowers. The speculators and Ponzi borrowers would collapse first, as they lost access to the credit they needed to survive. Even the more stable players might find themselves unable to pay their debt without selling off assets; their forced sales would send asset prices spiraling downward, and inevitably, the entire rickety financial edifice would start to collapse. Businesses would falter, and the crisis would spill over to the "real" economy that depended on the now-collapsing financial system. (Note: the write up on Minsky has been extracted from "Why Capitalism Fails"by Stephen Mihm in the Boston Globe of 14 September, 2009.)
"Humanity faces the most serious crisis in modern history."
In a book titled "The Global Economic Crisis, the Great Depression of the XXI Century," edited by Prof Michel Chossudovsky and Andrew Gavin Marshall (to be released by end May), over a dozen distinguished economists and writers, Ellen Brown, Tom Burghardt, Michel Chossudovsky, Richard C. Cook, Shamus Cooke, John Bellamy Foster, Michael Hudson, Tanya Cariina Hsu, Fred Magdoff, Andrew Gavin Marshall, James Petras, Peter Phillips, Peter Dale Scott, Bill Van Auken, Claudia von Werlhof and Mike Whitney look under the glittering facade of western Capitalism and reveal a complex web of deceit and media distortion which serves to conceal the workings of the global economic system and its devastating impact on people's lives.
Despite the diversity of viewpoints and perspectives presented within this volume, all of the contributors ultimately come to the same conclusion: humanity is at the crossroads of the most serious economic and social crisis in modern history.
The economic recession is deep-seated in all major regions of the world, resulting in mass unemployment, the collapse of state social programs and the impoverishment of millions of people. The crisis—in tandem with a worldwide process of militarization, a "war without borders" led by Washington and its NATO allies—is intimately related to the restructuring of the global economy. The global financial architecture sustains strategic and national security objectives of the US-led West and their powerful business elites which control and dominate the functions of civilian government.
This book explains how the Federal Reserve (a private body), the Council on Foreign Relations, the Bank for International Settlements, and corporate boardrooms on Wall Street take far-reaching financial transactions routinely from computer terminals linked up to major stock markets, at the touch of a mouse button.
"The meltdown of financial markets in 2008-2009 was the result of institutionalized fraud and financial manipulation. The "bank bailouts" were implemented on the instructions of Wall Street, leading to the largest transfer of money wealth in recorded history, while simultaneously creating an insurmountable public debt."
This process of economic decline is cumulative. The payments system of money transactions is in disarray. Payments of wages are no longer implemented, credit is disrupted and capital investments are at a standstill. Meanwhile, in Western countries, the "social safety net" inherited from the welfare state, which protects the unemployed during an economic downturn, is also in jeopardy.
The Myth of Economic Recovery
While the existence of a "Great Depression" on the scale of the 1930s is often acknowledged, it is veiled by false claims: "The economy is on the road to recovery". (The US recovered from the 1930s depression by the booming economic industrial production during and posts WWII, when it had a vibrant and expanding industrial economy with European powers dependent on it–a process carried on after the War's end, which shifted the financial centre from London to Wall Street.)
The financial meltdown is not simply composed of the housing real estate bubble--which has already burst--but there are many more bubbles, all of which dwarf the housing bubble burst of 2008.
Regarding the so called economic recovery, already in early 2010, the "recovery" of the US economy has been predicted and confirmed through a carefully worded barrage of media disinformation. The social plight of increased unemployment in the US has been scrupulously camouflaged. Economists view bankruptcy as a microeconomic phenomenon. The media reports on bankruptcies fail to provide an overall picture of what is happening at the national and international levels. When all these simultaneous plant closures in towns and cities across the land are added together, a very different picture emerges: entire sectors of a national economy are closing down.
Public opinion continues to be misled as to the causes and consequences of the economic crisis, not to mention the policy solutions. People are led to believe that the economy has a logic of its own which depends on the free interplay of market forces, hiding the role of powerful financial actors who pull the strings in the corporate boardrooms and have willfully influenced the course of economic events.
"The American Dream" morphs into a nightmare for the majority
The relentless and fraudulent appropriation of wealth is upheld as an integral part of "the American dream", a means of spreading the benefits of economic growth. A myth becomes entrenched that "without wealth at the top, there would be nothing to trickle down." This is pure hogwash.
Media disinformation largely serves the interests of a handful of global banks and institutional speculators who use their command over financial and commodity markets to amass vast amounts of wealth. The "bank bailouts", presented to the public as a requisite for economic recovery, have facilitated and legitimized a further process of appropriation of wealth. With inside information and foreknowledge, major financial players, using the instruments of speculative trade, have the ability to fiddle and rig market movements to their advantage, precipitate the collapse of a competitor and wreak havoc on the economies of developing countries. These tools of manipulation have become an integral part of the financial architecture; they are embedded in the system.
The Failure of Mainstream Economics
The economics profession rarely addresses the actual "real world" functioning of markets. Theoretical constructs centered on mathematical models serve to represent an abstract, fictional world far removed from reality. By failing to examine the interplay of powerful economic actors in the "real life" economy, the processes of market rigging, financial manipulation and fraud get overlooked. The concentration and centralization of economic decision-making, the role of the financial elites, the economic thinks tanks, the corporate boardrooms: none of these issues are examined in the universities' economics programs. The theoretical construct is dysfunctional; it cannot be used to provide an understanding of the economic crisis.
Economic science has become an ideological construct to camouflage and justify the New World Order. The powers of market manipulation which serve to appropriate vast amounts of wealth are rarely addressed. And when they are acknowledged, they are considered to belong to the realm of sociology or political science. This means that the policy and institutional framework behind this global economic system, which has been shaped in the course of the last thirty years, is rarely analyzed by corporate hired economists.
Poverty and Social InequalityThe global political economy thus enriches the very few at the expense of the vast majority. The crisis has contributed to widening social inequalities both within and between countries. Under global capitalism, mounting poverty is not the result of a scarcity or a lack of human and material resources. The structures of social inequality have, quite deliberately, been reinforced, leading not only to a generalized process of impoverishment but also to the demise of the middle and upper middle income groups.
Bankruptcies have hit several of the most vibrant sectors of the consumer economy. The middle classes in the West have, for several decades, been subjected to the erosion of their material wealth. It exists in theory, built and sustained by household and other debts. With the demise of the civilian economy, the development of America's war economy, supported by a whopping near-trillion dollar defense budget, has reached new heights. As stock markets tumble and the recession unfolds, the advanced weapons industries, the military and national security contractors and the up-and-coming mercenary companies (among others) have experienced a thriving and booming growth of their various activities.
War and the Economic Crisis
Wars lead to the impoverishment of people at home and around the world. The provision of essential goods and services to meet basic human needs has been replaced by a profit-driven "killing machine" in support of America's "Global War on Terror". While the poor are made to fight in Iraq and elsewhere, wars enrich the upper class, which control industry, the military, oil and banking. "Western nations, particularly the United States, spend hundreds of billions of dollars a year to murder innocent people in far-away impoverished nations, while the people at home suffer the disparities of poverty, class, gender and racial divides."
An outright "economic war" resulting in unemployment, poverty and disease is carried out through the free market. In the last twenty years, the global "free market" economy has brought poverty and social destitution to the lives of millions of people. Instead of tackling the impending social catastrophe, Western governments, to serve the interests of the economic elites, have installed a "Big Brother" police state, with a mandate to confront and repress all forms of opposition and social dissent. George Orwell's 1984 are being created in USA.
The economic and social crisis has by no means reached its climax, and entire countries, including Greece and Iceland, are at risk. One need only look at the escalation of the Middle East Central Asian war and the US-NATO threats to China, Russia and Iran to witness how war and the economy are intimately related.
The Decline of the West and a Depressing Scenerio
In the blog Global Guerilla, John Robb, writing on The Decline of the West states, "the current sovereign debt crisis is another battle in a war for dominance between "our" integrated, impersonal global economic system and traditional nation-states. At issue is whether a nation-state serves the interests of the governed or the interests of a global economic system.
The global economic system is winning. The 2008 financial crisis, the first real battle of this war (as opposed to the early losses in skirmishes in Russia, Argentina, the Balkans, etc) was a resounding defeat for nation-states. The current crisis in the EU will almost certainly end with the same results.
When this war ends, and it won't be long, the global economic and financial system will be the victor. The nation-states of the West will join with those of the global south, mere shells of states that serve only to enforce the interests of the global economic system. More market-states than nation-states, citizens' incomes will fall to developing world levels (made easy to due highly portable productivity), and wealth will stratify. Regulatory protections will be weak. Civil service pensions will be erased and corruption will reign. The once-dominant militaries of the West will be reduced to a small fraction of their current size, and their focus will be on the maintenance of internal control rather than on external threats. The clear and unambiguous message to every citizen of the West will be "you're on your own."
It will fragment society and lead to perpetual stagnation/depression, endemic violence/corruption, and squalor. New sources of order will see the rise of the criminal entrepreneur, whether they are the be-suited corporate gangster or the gang tattooed thug. For in the world of hollow states (without a morality that limits behavior) and limitless connectivity to the global economic system, these criminal entrepreneurs quickly become dominant, violently coercing or corrupting everyone in the path to their enrichment. (In former socialist states of east and central Europe, local and migrant mafias form an important segment of the new ruling elites.)
Recap
The author has kept a watch and written about the decline and fall of US hegemony since 11 September, 2002, when a declining US empire appeared at its most dazzling, like the afternoon sun past its prime.
The decline of the American Century Sept 11, 2002 Atimes: http://www.atimes.com/atimes/Middle_East/DI11Ak06.html
The US Empire –Beginning of the End Game 24 Nov, 2006 http://www.informationclearinghouse.info/article15729.htm
The Decline and Coming Fall of US Hegemony March 30, 2008 http://www.uruknet.de/?p=m42600&hd=&size=1&l=e
-- An editorial titled 'Collapse of U.S. economy' in Belleville Intelligencer of 27 Feb, 2008 confirms the by now generally accepted ill health of US economy. Harry Koza in the Globe and Mail recently quoted Bernard Connelly, the global strategist at Banque AIG in London that the likelihood of a Great Depression is growing by the day. Martin Wolf of U.K.'s Financial Times cited Dr. Nouriel Roubini of the New York University's Stern School of Business, who outlines how the losses of the American financial system will grow to more than $1 trillion, an amount equal to all the assets of all American banks.
The next domino to fall will be credit card defaults, and after that...who knows? There are so many exotic funds out there, with trillions of dollars in paper--or rather computer-screen money--and all about to disintegrate into nothingness. Over the next couple of years, scores of banks that have thrived on these devices, based on quickly disappearing equities, will fail.
The most frightening forecast so far comes from the Global Europe Anticipation Bulletin (GEAB), "The end of the third quarter of 2008 will be marked by a new tipping point in the unfolding of the global systemic crisis. In the United States, this new tipping point will translate into - get this - a collapse of the real economy, (the) final socio-economic stage of the serial bursting of the housing and financial bubbles and of the pursuance of the U.S. dollar fall. The collapse of U.S. real economy means the virtual freeze of the American economic machinery: private and public bankruptcies in large numbers, companies and public services closing down."
We are not experiencing a "remake" of the 1929 crisis or a repetition of the 1970s oil crises or 1987 stock market crisis. What we will have, instead, is truly a global momentous threat - a true turning point affecting the entire planet and questioning the very foundations of the international system upon which the world was organized in the last decades."
Western Military-Capitalist Civilization in Disarray September 25, 2008 http://www.uruknet.de/?p=m47513; http://www.boloji.com/analysis2/0386.htm
"Credit easing does not and cannot substitute for earnings, wages or tax revenues."---Max Fraad Wolff
"The [US] financial system is out of control and has led the economy into a wildly turbulent sea of heavily leveraged speculation. … The road ahead is dark and unknown." Steve Fraser author of" Wall Street: America's Dream Palace."
"Before the US economy can truly begin to expand again, the savings rate must rise to pre-bubble levels of 8pc--$2 trillion of household debt must be eliminated",---Economist David Rosenberg
Corporate Culture and Greed Sink the American Republic 17 May, 2009 http://www.boloji.com/analysis2/0442.htm
"Over-grown military establishments are. Under any form of government inauspicious to liberty, and are to be regarded as particularly hostile to republican liberty."--George Washington (1732-1799), First US President.
"It is part of the general pattern of misguided policy that our country is now geared to an arms economy which was bred in an artificially induced psychosis of war hysteria and nurtured upon an incessant propaganda of fear." --General Douglas MacArthur, Speech, May 15, 1951
"[The] conjunction of an immense military establishment and a large arms industry is new in the American experience. . . . In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist." --Dwight D. Eisenhower (1890-1969), 34th US President, Farewell Address, Jan. 17, 1961
Confirmation of Pressure on Dollar and US Decline 8 October, 2009 http://www.boloji.com/analysis2/0493.html
And finally,
Falling Empires and their Currencies Rome, France, England and the USA Part 2: From England to the United States of America Rolf Nef January 16, 2007 http://www.financialsense.com/fsu/editorials/2007/0116.html
K Gajendra Singh, Indian ambassador (retired), served as ambassador to Turkey and Azerbaijan from August 1992 to April 1996. Prior to that, he served terms as ambassador to Jordan, Romania and Senegal. He is currently chairman of the Foundation for Indo-Turkic Studies. Copy right with the author. http://tarafits.blogspot.com/
Take care Gajendra Singh Tel 43034706 Delhi
