Monday, July 4, 2011

Post Sept 2008 Crippled Economy & US Strategic Decline (Part 1)

Post Sept 2008 Crippled Economy & US Strategic Decline (Part 1) 

Smoke and Storm Signals 

"Starting next month, we will be able to remove 10,000 of our troops from Afghanistan by the end of this year, and we will bring home a total of 33,000 troops by next summer, fully recovering the surge I announced at West Point (in December 2009)-- by 2014, this process of transition will be complete, and the Afghan people will be responsible for their own security," said President Barack Obama in a speech from the White House on 22 June, 2011. US was starting the drawdown from a position of strength and that al-Qaeda was under "more pressure" than at any time since 9/11, asserted Obama. 

"The Americans have the watches, but we have the time."  An Afghan Tribesman 

"Recent events surrounding Afghanistan shouldn't confuse anyone, --The US-NATO coalition has lost a war its political leaders never meant, or knew how, to win." Michael Scheuer, former head of the CIA's bin Laden unit. 

"The war in Iraq is a historic strategic and moral calamity undertaken under false assumptions – undermining America's global legitimacy – collateral civilian casualties, – abuses, – tarnishing America's moral credentials. Driven by Manichean impulses and imperial hubris, it is intensifying regional instability." Zbigniew Brzezinski, National Security Adviser to US President Jimmy Carter. 

 "United States air superiority is now so total that "war" no longer accurately describes its one-sided battles. With the risk to US fighter pilots almost as slight as for those flying unmanned drones from Nevada, the days of noble dogfights are over, as Afghans, Pakistanis and now Libyans face attack from a foe sophisticated and distant enough to be feared as a predatory, malign god.-- No knights of the air. No dogfights and sky-jousts. No valor. Just one-sided slaughter and targeted assassinations. That is where air power has ended up. "- Tom Engelhardt                                

(But it misleads political leaders who are seduced by power point projections of how air power can win as happened in Iraq war and even the Israeli-Hezbollah war of 2006-the author)  

"I think there is a risk that the U.S. debt default may happen," said Li Daokui of the People's Bank of China in Beijing in early June . "The result will be very serious and I really hope that they would stop playing with fire," he added . 

(The idea of a technical debt default ie delaying interest payments for a few days , gained backing from a growing number of mainstream Republicans to force the White House to slash spending. Any form of default could destabilize the global economy and sour relations with big U.S. creditors such as China, government officials and investors warn. China is holding more than $1 trillion in Treasury debt as of March, so its concerns carry considerable weight in Washington) 

 "Congressional Republicans, who played a major role in piling up the government's unsustainable debt in the first place, have thrown a tantrum and walked out of the debt limit talks. This bit of grandstanding has brought the nation closer to the financial crisis that Republicans have been threatening for weeks."New York Times Oped on 23 June, 2011. 

Asked about Peter Schiff's comments earlier on about the US defaulting ,John Embry, Chief Investment Strategist of the now $9 billion strong Sprott Asset Management, said:
"When you look at the financial condition of the United States at the federal level, at the state level and at the municipal level, to me I don't see any way out of this.  There's too much debt, interest rates are far too low.  If interest rates really reflected what's going on, this risk in the debt and the risk of inflation, they would be hundreds of basis points higher and under that event the debt couldn't be serviced.  So there will be some form of default."

According to Financial Times (London) of 27 June, 2011,the US dollar will lose its status as the reserve currency in 25 years and would be replaced by a portfolio of currencies according to a survey of central bank reserve managers who collectively control more than $8,000 billion ,unlike in the past when they  said the dollar would retain its status as the sole reserve currency.-- The dollar would be replaced by a portfolio of currencies within the next 25 years. Central banks have bought about 151 tonnes of gold so far this year, led by Russia and Mexico, according to the World Gold Council, and are on track to make their largest annual purchases of bullion since the collapse in 1971 of the Bretton Woods system, which pegged the value of the dollar to gold. The Yellow metal

would be the best performing asset class over the next year, citing sovereign defaults as the chief risk to the global economy. 

US debt now amounts to around $ 14 trillion , almost equal to its GDP .Even in this GDP , the financial industry contributes 40%.The economy is now 20-25 % of world GDP unlike 50% after WWII and is being artificially sustained by a stimulus of  $ 2.8 trillion .There are no green shoots of revival , unemployment continues to rise . US economy is in recession .The 1930s recession was overcome by WWII which allowed its protected ( from war) industry to run full steam and indebt European and other countries .With many industries disappearing or in decline , even the automobile one ,the economic downhill can only worsen. 

"First-quarter GDP growth clocked a meagre 1.8 per cent, the unemployment rate is over 9 per cent and the housing market remains moribund. The Fed, for one, acknowledges that growth for the year would be softer than expected earlier (it revised its forecasts for 2011 from 3.1-3.3 per cent range down to 2.7-2.9 per cent), but it expects "the pace of recovery to pick up over coming quarters. Besides, Fed Chairman Ben Bernanke and his cohorts at the central bank have been emphatic that QE2 was specifically designed to fend off deflation risks that had emerged last year. With a steady rise in both headline and core (shorn of energy and food prices) inflation figures, these risks have dissipated", Business Standard 28 June, 2011. 

" One could take this a step further and argue that were the Fed to continue with quantitative easing, it would end up doing more harm than good. Easy dollar liquidity created by the Fed has helped push global commodity prices, setting off a global inflationary spiral and rising inflation expectations in the US. The latter has fed through to US interest rates, and bond yields are at the same level as they were at the start of QE2. More cash in the economy could, ironically, push up inflation expectations and interest rates further and defeat the very objective of an expansionary monetary policy — that of stimulating the economy through lower interest rates," added Business Standard 

Europe's Lehman moment : "As with Lehman Brothers in 2008, the size of Greek debt will not be the root cause of the next financial crisis, but merely the catalyst in an over-leveraged system based on trust that it is backstopped by government policymakers. Archimedes would understand,"Doug Noland. (the much heralded "bailout" bond for Greece , issued in January 2011, on the opening day plummeted to two-thirds of its value and since then has only traded down to a now-derisory price of 50%, implying that over a five-year period investors would be expected to lose half their original principal)  

"As European economies wilt under unchecked fiscal imprudence and fears of contagious sovereign defaults, it seems absurd that Britain and France are leading a depleted North Atlantic Treaty Organization (NATO) coalition to militarily attack Libya. Financially imperiled states facing mass protests from irate citizens are puzzlingly prosecuting war in North Africa" Sreeram Chaulia in Asia Times. 

"Imperialism has been the most powerful force in world history over the last four or five centuries, carving up whole continents while oppressing indigenous peoples and obliterating entire civilizations, "Michael Parenti--" the subject of imperialism has been sanitized, so that empires become "commonwealths," and colonies become "territories" or "dominions". Imperialist military interventions become matters of "national defense," "national security," and maintaining "stability" (Or civilizing missions, saving the souls and more recently ," Operation enduring freedom "in Afghanistan, 'Operation Iraqi Freedom' and 'Humanitarian intervention' in Libya)   

"So I think for all our three countries, China, India and Pakistan we should have new perspective concerning international situation and we should shake our cold war mentality," Ma Zhengang, head of the Ambassador's group of Chinese State Institute of International Studies, on China's policy perspectives in next 5 years. "If the bilateral (ties) between India and Pakistan can make breakthroughs it is a great pleasure for Chinese people too," he added "So I think for all our three countries, China, India and Pakistan we should have new perspective concerning international situation and we should shake our cold war mentality," continued Zhengang. 

In end 1993 , along with six ambassadors resident in Ankara I flew to Baku , capital of Azerbaijan , to present our first letters of credence to president Haidar Aliev , a former senior member of the Soviet Politburo , from Azerbaijan ,who had recently captured power after the last head of state Elcibey , had left the capital . After the letters ceremony and calls on ministers , I called on resident ambassadors in Baku .The new US embassy was quite large and imposing , the British, smaller undergoing renovation; the Israeli , extensive extensions and renovation . 

But I was in for a shock when I called on the Russian ambassador , whose Residence consisted of a couple of rooms in an Intourist hotel . Russians were the masters of Azerbaijan till it broke away a few years earlier ,because of policies of glasnost and perestroika by a somewhat naïve Mikhail Gorbachev .(He  recently moaned that Washington could have saved the Russian economy after the break-up. Can there be a more unrealistic thought. See below) . 

The point I want to make is that the Russians who lorded over Azerbaijan till recently were reduced to such straits that its Ambassador Extraordinary and Minister Plenipotentiary was confined to a suite in a two star hotel you find near old Delhi Railway station .But this kind of thing is not new in history . After all USSR had lost the Cold War , which was a tabletop nuclear war exercise between the two mighty adversaries .Moscow just could not match huge sums Washington poured into military expenditure . 

Further ,President Ronald Reagan hoodwinked Gorbachev by threatening Moscow with Star Wars ( on which hundreds of billions of dollars have been sunk without a proved destruction of an incoming missile yet ) .Obedient US corporate media flattered Gorbachev daily as a great democrat ( The Russians rebuffed him when he got 0.50 % of votes against his successor Boris Yeltsin , mostly drugged or drunk , in the 1996 presidential elections for the Russian Federation ) 

Since the break-up of USSR it is believed that under the charade of globalization ,between $400 billion to $ one trillion wealth was transferred from Russia to the West on advice by throngs of Harvard trained and other business experts in league with complicit Russians, mostly former Communists . The Soviet Union's collapse was ruthlessly exploited by US led West .Its capitalist controlled media sang praises of economic reforms and democratization which brought economic disintegration and ruination to Russia and the worst kind of depression in modern history with economic losses more than twice those suffered by USSR in World War II. Russian GDP was trimmed to half and capital investment fell by 80 percent. People were reduced to penury and misery, death rates soared and the population shrank. According to an estimate an extra million Russians died. And in August 1998, the Russian financial system collapsed. 

In what has been described as the Piratization of Russia ,the plunder of its natural resources is a story of intrigue, adventure, and of the incestuous relationship between government leaders, corporate directors, and bankers. It is about insider deals, golden parachutes, corporate jets, villas in the south of France and Spain, and instant millionaire status for those who shrewdly played the game. It created seven ( six Jews) Oligarchs , half of whom have escaped or do not live in Russia and one remains jailed in Siberia for trying to take over the country on behalf of Western bankers and financiers. 

The cold war ended in Moscow, but not in Washington. 

Vladimir Putin finally let go , at the 43rd annual International Security Conference held in Munich on 10 February, 2007, accusing Washington of provoking a new nuclear arms race by developing ballistic missile defenses, undermining international institutions, trying to divide modern Europe and making the Middle East more unstable through its clumsy handling of the Iraq war. 

Stephen F. Cohen in an article "The New American Cold War " wrote in 10 July 2006 issue of US magazine ,'The Nation" that since 1990s ,Washington has followed hypocritical policy of "strategic partnership and friendship," with presidents being on first name basis but underneath, all US administrations have followed a ruthless policy of undermining Russia " accompanied by broken American promises, condescending lectures and demands for unilateral concessions. USA has been even more aggressive and uncompromising than was Washington's approach to the Soviet Communist Russia." 

With growing military encirclement of Russia, on and near its borders, by US and NATO bases, which are already ensconced or being planned in at least half the fourteen other former Soviet republics, from the Baltics and Ukraine to Georgia, Azerbaijan and the new states of Central Asia. US has built reverse iron curtain and the remilitarization of American-Russian relations.

" A tacit (and closely related) US denial that Russia has any legitimate national interests outside its own territory, even in ethnically akin or contiguous former republics such as Ukraine, Belarus and Georgia." Late Richard Holbrooke, former US point man for Af-Pak had condemned Russia for promoting a pro-Moscow government in neighboring Ukraine, where Russia has centuries of shared linguistic, marital, religious, economic and security ties and declared ' that far-away Slav nation part of "our core zone of security."

"Even more, a presumption that Russia does not have full sovereignty within its own borders, as expressed by constant US interventions in Moscow's internal affairs since 1992 -- included an on-site crusade by swarms of American "advisers," to direct Russia's "transition" from Communism; endless missionary sermons from afar, often couched in threats, on how that nation should and should not organize its political and economic systems; and active support for Russian anti-Kremlin groups, some associated with hated Yeltsin-era oligarchs." 

It was even suggested that Putin be overthrown by the kind of US-backed "color revolutions" carried out since 2003 in Georgia, Ukraine and Kyrgyzstan, and attempted this year in Belarus. (Do proponents of "democratic regime change" in Russia care what it might mean destabilizing a nuclear state?) -- Underpinning these components of the real US policy are familiar cold war double standards, condemning Moscow for doing what Washington does - such as seeking allies and military bases in former Soviet republics, using its assets (oil and gas in Russia's case) as aid to friendly governments and regulating foreign money in its political life. 

"More broadly, when NATO expands to Russia's front and back doorsteps, gobbling up former Soviet-bloc members and republics, it is "fighting terrorism" and "protecting new states"; when Moscow protests, it is engaging in "cold war thinking." When Washington meddles in the politics of Georgia and Ukraine, it is "promoting democracy"; when the Kremlin does so, it is "neo-imperialism." 

" When in the 1990s the US-supported Yeltsin overthrew Russia's elected Parliament and Constitutional Court by force, gave its national wealth and television networks to Kremlin insiders, imposed a constitution without real constraints on executive power and rigged elections, it was "democratic reform"; when Putin continues that process, it is "authoritarianism." 

So history never ended. After the fall of the Berlin Wall , U.S.-led West along with its military arm NATO ,moved first stealthily , then rampantly to roll back Russia from the strategic space it occupied as WWII victor in central and eastern Europe , beginning with the removal of Milosevic of Serbia ,an Orthodox Slav people ,traditional friends of Orthodox Slav Russians, after having encouraged divisions in the Yugoslav republics and then bombings ,with help from West European countries like Germany with old imperial memories .   

Democracy and Washington's hypocrisy

 Washington then brought about regime changes in Georgia and Ukraine and installed its puppets .The Guardian, Globalsearch , New Statesman and other websites have documented covert and overt supporters of regime change .Some of these are the National Endowment for Democracy (NED), the Carnegie Endowment for International Peace, Freedom House and George Soros' Open Society Institute. The NED has four affiliate institutes: The International Republican Institute (IRI), the National Democratic Institute for International Affairs (NDI), the Center for International Private Enterprise (CIPE), and the American Center for International Labor Solidarity (ACILS). They" provide technical assistance to aspiring democrats worldwide."  

Oil Prices – A rigged game

F. William Engdahl an eminent expert on politics of oil says that the oil price is by and large driven by massive speculation? For example in October last year the daily volume of crude traded on New York MEX was over 1 billion barrels per day while the total daily global demand was only 83 million barrels per day. Thus the amount traded on one single exchange is more than 10 times total daily consumption. It is a giant casino with prices being driven up by speculators ( with stimulus funds and derivatives at hand ) and consumers having to pay through their nose .In 2008 when price per barrel was spiked-up to $ 147 per barrel and Goldman Sachs was issuing client-advisories that it was going quickly to $ 200, and JP Morgan was advising the Chinese government that China 'buy all the physical crude it could since it was going to be $ 200 , Engdahl wrote that roughly 60-70% of the price of oil then was pure speculation, manipulated by the GSCI, the Goldman Sachs Commodity Index. Thus Wall Street controls the oil price irrespective of supply and demand .The crucial ingredient these days is not the NYMEX for the global oil price benchmark, but the ICE Futures in London, a daughter company of the International Commodity Exchange of Atlanta in Georgia, owned by Goldman Sachs, Morgan Stanley, JP Morgan Chase etc. – the big oil banks that benefit enormously from the inside. There is absolutely no serious regulation of the ICE. 

Speculation puts massive political pressure on Germany, EU, China and others. The emerging giant, Beijing, many in Washington feel is acting too independently. Engdahl also explains lucidly the myth behind 'Peak Oil' theory , stating that there is enough oil and also the Western scare about climate change to curtail economic progress in the East and also to benefit from it. 

For a fascinating analyses of oil politics read an interview of FWEngdahl 

In the Caspian energy region ,Washington allowed Ilham Aliev to succeed his father Haidar Aliev, an ally , in a disputed 2003 election. In this 21st century struggle for the control of strategic space, energy sources and raw materials, US built up a million barrel a day Baku-Tibilsi-Ceyhan pipeline, an energy corridor to squeeze Russia and Iran out from energy transportation to Europe . Stationing of troops in Georgia and Azerbaijan to guard it is a strategic menace in the region, specially for Azerbaijan's southern neighbour Iran, part of the US Axis of Evil and on its hit list off and on. But West is coming out second best in the control over energy resources in the Caspian and central Asia and its transfer to Europe. Germany is going ahead with energy cooperation with Russia .In any case where else Europe can buy oil or gas.( India is succumbing to US pressure on its oil purchases from Iran. India lies supine before Washington when asked to bend, whatever the colour of the coalition government in New Delhi ) Control of energy resources and manipulation of its price is a potent weapon in Wall Street's hands to browbeat opponents and even allies. 

Shanghai Cooperation Organisation (SCO) 

But when the US financed street revolutions to bring about regime changes to install puppets reached into the very heart of central Asia ie Kyrgyzstan and Uzbekistan, it was too close for comfort not only for Russia but also for Kyrgyzstan's eastern neighbour China , which is also facing US moves to hem it in from east and south (Formosa, South Korea, Maynamar & others ) 

Shanghai Cooperation Organization was founded in 2001 by the great powers of Eurasia: Russia, China and the various former Soviet republics, Uzbekistan, Kazakhstan, Kyrgyzstan, Turkmenistan

( with India, Pakistan and Iran as observers later on ), as a dialogue forum for cooperation on terrorism incubated down south .It might end up like the European Union ( some Union except as a an US outpost and a fortress to keep out their former native subjects long exploited and looted), but is a beginning for some kind of cohesive policies affecting them. It certainly has the West worried which is determined that the idea of coming together of the great powers of Eurasia has to be prevented at all cost . Sir Halford Mackinder, the British geographer in his famous essay in 1904, "The Geographical Pivot of History", talked about Russia and its landmass as "the Heartland" of the world. Brzezinski and Kissinger both students of Mackinder and schooled in the British geopolitics strategy agree .It is the ultimate Halford Mackinder nightmare for American geopolitics, because as Brzezinski wrote quite openly: The only place on this globe that has the human resources, the scientific base, the industrial base, the energy raw materials base to present a challenge to American global power is Eurasia. 

So after the 2005 SCO meeting , along with the announcement of massive joint Russian Chinese military exercises in the wake of notice to USA by Tashkent that its base would not be available ,SCO also set a time table for withdrawal US troops from bases in central Asia. Similar strategic moves and countermoves have been made on the Eurasian chess board since then. Russia has separated the Collective Security Treaty Organization (CSTO) from the Commonwealth of Independent States (CIS) into a core group which with measures to transform it into a full-fledged collective security organization.  

Unprecedented joint military exercises by China and Russia;   

In a clear message to the United States and others , in an unprecedented move China and Russia carried out a joint military exercises from August 18 to 25 near Russia's far-east port city of Vladivostok, before moving to the Yellow Sea and then to an area off the coastal Chinese province of Shandong. Apart from 2000 Russian troops, the exercises involved Russia's Il-76 transport planes with paratroopers, Tu-95MS bombers firing cruise missiles at targets in the sea and Su-27SM fighter jets simulating coverage of ground forces. 

Darkness under the Lamp 

Even 20 years after the Fall of the Berlin Wall ,the neo-liberal or neo-cons are still celebrating but are still clueless how and why it then happened , in spite of massive budget of CIA , think tanks and Kremlinologists in universities and elsewhere .In mid 1980s Henry Kissinger is alleged to have confided that US will have to live with the Soviet Union system. One of the architects of the U.S. strategy in the Cold War, George Kennan, wrote soon after the collapse that, in reviewing the entire "history of international affairs in the modern era," he found it "hard to think of any event more strange and startling, and at first glance inexplicable, than the sudden and total disintegration and disappearance … of the great power known successively as the Russian Empire and then the Soviet Union." Richard Pipes, perhaps the leading American historian of Russia and an advisor to President Reagan, called the collapse "unexpected." 

In a June 20'2011 article in magazine Foreign Policy titled 'Everything You Think You Know About the Collapse of the Soviet Union is Wrong', Leon Aron, one of the Neo-cons , the infamous tribe that with their hubris laden  plan to control and dominate the world ,revisits the fall of USRR. 

"A new moral atmosphere is taking shape in the country," Gorbachev told the Central Committee at the January 1987 meeting where he declared glasnost -- openness -- and democratization to be the foundation of his perestroika, or restructuring, of Soviet society. "A reappraisal of values and their creative rethinking is under way." Later, recalling his feeling that "we couldn't go on like that any longer, and we had to change life radically, break away from the past malpractices," he called it his "moral position." According to prime minister Nikolai Ryzhkov, the "moral state of the society" in 1985 was its "most terrifying" feature: [We] stole from ourselves, took and gave bribes, lied in the reports, in newspapers, from high podiums, wallowed in our lies, hung medals on one another. And all of this -- from top to bottom and from bottom to top." 

To Russian thinkers and leaders, a moral resurrection was essential. Not merely an overhaul of the Soviet political and economic systems, not merely an upending of social norms, but a revolution on the individual level: a change in the personal character of the Russian subject. Mikhail Antonov declared in a seminal 1987 essay, "So What Is Happening to Us?" in the magazine Oktyabr, the people had to be "saved" -- not from external dangers but "most of all from themselves, from the consequences of those demoralizing processes that kill the noblest human qualities." 

"The best investment [the state can make in man] is Liberty and the Rule of Law. And respect for man's Dignity. It was the same intellectual and moral quest for self-respect and pride that, beginning with a merciless moral scrutiny of the country's past and present, within a few short years hollowed out the mighty Soviet state, deprived it of legitimacy, and turned it into a burned-out shell that crumbled in August 1991. The tale of this intellectual and moral journey is an absolutely central story of the 20th century's last great revolution." Concludes Leon Aron vainly and satifyingly. 

But what about the crushing moral and economic degeneration and strategic decline of early 21 century's hyper power. 

US leaders have no such moral .political or economic qualms or doubts or even hesitations , at least publicly and continue to misguide the US economy , dragging and forcing the rest of the world with its military might to frighten and invade illegally because of assumed economic infallibility after the Bretton Woods ,like in the film' Runaway Train' towards a worldwide economic wreck . 

Decline and 'Break-up' of USA predicted in 1998 ! 

But the moral degeneration, decline and fall of the New Rome, is taking place in front of our own eyes .Why ,a Russian economist Prof Igor Panarin had predicted so far back in 1998 at an international conference in Linz , Austria . Prof Panarin , shocked 400 delegates by dramatically asserting US break up into five entities by 2010. After charts and graphs ,"When I pushed the button on my computer and the map of the United States disintegrated, hundreds of people cried out in surprise," Panarin  recalls . Most in the audience were skeptical and didn't believe him , although many got him to autograph copies of a dismembered U.S. map. But after the September 2008 US economic crisis, which continues to get worse by the day ,people have begun revisiting his thesis . 

Panarin  based his forecast on classified data and analyses supplied by various Russian agencies .He maintains that economic, financial and demographic trends will provoke a political and social crisis in the U.S. Wealthier states will withhold funds from the federal government and effectively secede from the Union. Social unrest, even a civil war could follow. The U.S. will then split along ethnic lines, and foreign powers will move in. 

California will form the nucleus of what he calls "The Californian Republic," and will be part of China or under Chinese influence. Texas will be the heart of "The Texas Republic," a cluster of states that will go to Mexico or fall under Mexican influence. Washington, D.C., and New York will be part of an "Atlantic America" that may join the European Union. Canada will grab a group of Northern states, Prof. Panarin calls "The Central North American Republic." Hawaii, he suggests, will be a protectorate of Japan or China, and Alaska will return to Russia. 

"It would be reasonable for Russia to lay claim to Alaska; it was part of the Russian Empire for a long time," says Prof Panarin .He even has a framed satellite image of the Bering Strait that separates Alaska from Russia like a thread hanging from his office wall. "It's not there for no reason," he says meaningfully. 

The whole thing may appear somewhat farfetched but who had thought or forecast demise of the mighty Soviet Union. In the case of USA there are clear signs of decline and decay for all to see.

But Panarin insists this is no cause for celebration . Russia is too dependent on the dollar and trade. But he considers the United States foreign debt a "pyramid scheme" and says "China and Russia would take up Washington's role as a global financial regulator." Groupings like Brics ( Brazil, Russia ,India, China, South Africa ) are seriously contemplating to move away from the corroding ,inequitable and debilitating tyranny of the US Dollar , which lacks backing of gold or goods. 

Fifty year old Panarin is now dean of the Russian Foreign Ministry's academy for training diplomats and began his career in the KGB ( Putin is also from KGB) in 1976 .He has a doctorate in political science, has studied U.S. economics, and worked for FAPSI, the Russia's National Security Agency. He says he did strategy forecasts for President Yeltsin. 

US September 2008 Economic Crisis ; the First shoe Falls 

My piece on the September, 2008 crisis was written in end March 2008 based on analyses and forecasts by non-corporate economists and think tanks, mostly in US and even Europe ,although my first piece ,'The Decline of the American Century' for Asia Times was published on 11 September , 2002 , the first anniversary of the attacks on the symbols of US economic and military might  .There is now a growing body of data and experts who believe that it was a false flag operation or at least allowed to happen to provide an excuse to first invade Afghanistan and establish its hold on south west Asia and continue to threaten Russia and China and for transport of energy via Afghanistan and Pakistan from central Asia to the Indian ocean and South Asia , deficit in energy. This still remains Washington's core objective. 

It also provided a trumped up pretext along with fake accusations and unadulterated lies to invade Iraq illegally , in the words of UN Secretary General Kofi Annan , in a barbaric show of 'shock and awe' for the natives .The US then spent $ 600 billion on its military , while Iraq spent $ 5 billion and its defense and human needs had been degraded by UN sanctions, because of which half a million Iraqi children died , forcing two UN administrators of 'Food for Oil' program to resign in disgust . The death of children was described by Madeiline not so (Al ) Bright as worth it .But US led West lectures the world on its so called culture and civilization  .Occupation of Iraq for its energy resources and for control of the region was planned much earlier and publicly proclaimed in the "Project for the New American Century'( PNAC) 

PNAC is a Washington-based neo-cons think tank created in 1997 with the objective of  establishing  a global American empire to bend the will of all nations. So ,in order to create the global empire Washington must: 

* Reposition permanently based forces to Southern Europe, Southeast Asia and the Middle East; 
* Modernize U.S. forces, including enhancing our fighter aircraft, submarine and surface fleet capabilities; 
* Develop and deploy a global missile defense system, and develop a strategic dominance of space; 
* Control the "International Commons" of cyberspace; 
* Increase defense spending to a minimum of 3.8 percent of gross domestic product, up from the 3 percent currently spent. 

Most ominously, this PNAC document described four "Core Missions" for the American military. The US forces must be able to "fight and decisively win multiple, simultaneous major theater wars," and to "perform the 'constabulary' duties associated with shaping the security environment in critical regions." ( WHAT MORE PROOF OF HUBRIS) Note that the US military must fight these wars one way or the other to establish American dominance for all to see ie wars of choice , illegal if need be as the invasion of Iraq and its brutal occupation. Iraq's economy has been destroyed , its environment poisoned , perhaps for ever with unlawful use of depleted Uranium arms and ammunition .Even barbaric Halagu Khan would concede that Americans have done a more thorough job than him .US led corporate media and its copy cat Indian media rarely refer to the colossal disaster brought upon the hapless people of Iraq .


Some consequences of invasion of Iraq and its brutal invasion, in brief , are ;


Number Of Iraqis Killed In US War And Occupation Of Iraq "1,455,590" ( One million widows created along with 4 million orphans , as well as 5 million refugees inside Iraq and outside )

 Number of U.S. Military Personnel Sacrificed (Officially acknowledged) In U.S. War And Occupation Of Iraq 4,780

Number of U.S. Military Personnel  injured, maimed and psychologically disturbed with suicides, homicides over 80,000

 Number Of International Occupation Force Troops killed In Afghanistan : 2,541

 Cost of War in Iraq & Afghanistan

Total ; $1,210,450,550,239 (Over $ 780 billion in Iraq and over $420 billion in Afghanistan)

 Nathan Hughes recently outlined in Stratfor , a covert intelligence think tank ,the massive logistics problems and cost of US mission in Afghanistan, one of the most isolated places on Earth , and a landlocked country almost in the heart of Central Asia. Hundreds of shipping containers and fuel trucks must enter the country every day from Pakistan ( hence Washington's reliance on Islamabad ) and from the north to sustain the nearly 150,000 US and allied forces stationed in Afghanistan, about half the total number of Afghan security forces. Supplying a single gallon of gasoline in Afghanistan reportedly costs the US military an average of $400, while sustaining a single US soldier runs around $1 million a year (by contrast, sustaining an Afghan soldier costs about $12,000 a year).   

The author having spent most of his diplomatic career in middle East with a ringside view from Amman of the 1991 war to vacate Iraq's occupation of Kuwait and ten years in Ankara , has written over 50 in depth articles for the world media on US led illegal invasion of Iraq and its occupation ,

 predicting in July 2003 that Paul Bremer's regime will end up like Sir Percy Cox's in 20th century after WWI and forecasting in January ,2004 that an Iraqi resistance will emerge as in Turkey under Kemal Ataturk and in Algeria under FNL after WWII , at a time when Western media was celebrating and gloating at 'the End of history' and of transforming Iraq into a subservient protectorate like Germany and Japan . WWII was over in 1945 but US GIs remain stationed in the two countries. Occupation troops do not leave unless forced to. 

Looking at the blunders  of George Bush administration ,under the mal-influence of his vice president Dick Cheney , surrounded and nose led by a cabal of neo-cons with their racist Straussian policies, which kept the former Texas governor away from possible advice from his father George Bush Sr, and advisers, I wrote my 2nd piece on US decline 'Beginning of the end of the American Empire', based on how the Ottoman empire was saved; citing an example of 15th century Ottoman Sultan Murat II who had arranged for his wild and disobedient brat Mehmet II , not the favourite son , to be trained in the art of governing as Sultan at Edirne under an able Grand Vizier. But Mehmet II fell under the unwholesome influences, fought with the Grand Vizier and the military Janissaries rebelled. Before Mehmet II could create further mess, Murat II returned from Manisa, where he had retired for spiritual pursuits and took back the reins of the empire.

But alas , George Bush, sidelined secretary of state Gen Colin Powell and succeeded in making an unholy mess and even Papa George W. H Bush prodded bipartisan Baker-Hamilton Commission, failed to salvage the remains of his son's Presidency, or to arrest the fast decline of the hyper power. But still with enormous powers of destruction, US continues to spread destruction around the world , the latest victims being the people of Libya. And the serial US perpetrator now in Barack Obama , a Nobel Peace Prize awardee to boot.

 September 2008 Economic crisis and Paralyses

 The Decline and Coming Fall of US Hegemony, March 30, 2008


The most frightening forecast so far comes from the Global Europe Anticipation Bulletin (GEAB), "The end of the third quarter of 2008 (thus late September, a mere seven months from now) will be marked by a new tipping point in the unfolding of the global systemic crisis. 

"At that time indeed, the cumulated impact of the various sequences of the crisis will reach its maximum strength and affect decisively the very heart of the systems concerned, on the front line of which (is) the United States, epi-centre of the current 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 nor 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."    

The June Standard & Poor's/Case-Shiller index for June 2011 showed that housing prices in all but two of the 20 major metro areas it tracks hit new post-bubble lows in March. It signaled a double-dip for the housing sector, where prices have fallen eight straight months. With prices in most places back to 2002 levels, it has wiped out nearly a decade's worth of equity for owners. 

The most depressing part of the report was that house prices have fallen further than during the Great Depression, when they took 19 years to recover their losses. The difference is the U.S. in the 1930s was a manufacturing and petroleum superpower facing deflation and underutilized capacity. World War II and the postwar boom fixed that. By the mid-2000s, the U.S. economy was housing to a historic degree. It was our last big factory that couldn't be sent to Mexico or China. 

During the last few centuries Western hegemony over the East and South was first exercised by rapacious and brutal European colonialists and then from Washington .After the end of the cold war in the wake of the two World Wars ,Western decline is now morphing into a fall because of the forces unleashed by the US led invasions of Afghanistan and Iraq and now in Libya .The two debt financed wars have brought US economy to a recession . Forces and changes have been set into motion which will completely alter the existing international financial and strategic structures and result in a new dynamics. 

Contrary to the self proclaimed congratulatory triumphalism of neo-liberals after the collapse of Communism and Socialism in end 1980s, celebrated from house tops by the so called philosophers , think tanks  and analysts with delusions of permanent world domination of Western financiers and corporate houses based on dubious theories of 'the End of History 'or 'the Clash of Civilizations' and even claims of  Washington- the new Rome with absolute control the whole thing will end in a blowback .Now ,come lately, London and Paris, without much military or financial wherewithal are leading the so called' humanitarian intervention' in Libya, which is killing thousands of civilians. 

It would appear that Moscow under Medvedev did not veto the now misused and abused UN Resolution 1973 to let the Euro-Nato get ensnared into the Libyan quagmire .This will divert US and European attention away from Ukraine, Georgia, the Black Sea and Kyrgyzstan .For good effect , the good cop prime minister Putin described the intervention as a crusade and his foreign minister Lavrov keeps on making noises about misinterpretation and misuse of the Resolution . 

Western influence in North Africa and Middle East 

The importance of petroleum in warfare as strategic raw material and economy became obvious even before the Second World War.  By 1940s , the British who dominated the Middle East and still ruled over India, realising the importance of oil and the strategic importance of Middle East and as lifeline to India, had created military alliances with most of the countries of the Middle East including Iran ,to also protect its oil wells from the Soviet Union.  The British created a weak and dependent Pakistan as a bulwark against any USSR intrusion into the Gulf since India under Mahatma Gandhi and Nehru would not have joined Western alliances against Moscow or China. After WWII, USA was formally anointed the leader of the Western Christian nations although following WWI the financial power had started shifting towards the Wall Street from the City of London, but the latter still has great leverage for manipulation and mischief. 

From 1950s onwards , USSR made inroads into many Arab states led by secular, and nationalist leaders like Gamal Nasser of Egypt and Saddam Hussein of Iraq. West used religion and conservative and hereditary rulers to counter the egalitarian waves of socialism sweeping the Middle East, Asia and north Africa. The battle lines for influence and control between the West and USSR ( and China) saw many ups and downs . A very vital change occurred when Iran was lost in 1979 and US ally the Shah of Iran was overthrown by Khomeini led Shia revolution , threatening the Sheikhdoms and Kingdoms in the region. Western world and its frightened allies in the region, taken a back , encouraged and helped financially and militarily Saddam Hussein to douse the leaping flames from the volcano of  Shia revolution with its belief in martyrdom. Iran and Iraq lost over a million young men ; the 1980s Iraq –Iran war only protected the vested interests of the West and its allies in the region. Soon with help from its allies , specially Kuwait ,US envoy in Baghdad misled Saddam Hussein to move his troops into Kuwait . 

Then began the Western project to trim Saddam's power after the 1991war and destroy a rich and thriving nation, following the 2003 invasion ,now lying supine under US F-16s, Apache helicopters and other arms .One of the reasons for the 1991 war was Kuwait's insistence that Baghdad repay $ 10 billion it had advanced to brother Saddam Hussein to fight Iran .Kuwait ,Saudi Arabia, other Gulf states and even Japan and Germany ended up bearing the costs of the 1991 war to the tune of  $ 150 to 200 billion basically to protect US interests and hegemony in the region. 

From the Middle East , Western strategic lever to manipulate and control the region and its resources extended into South West Asia through an axis between the USA, Saud dynasty, obscurantist Wahabi ideology and Pakistan military and ISI .  This axis along with support from UK and Europe and many Muslim countries and even China fathered , nurtured , trained and financed with billions of dollars ,the present monster of militants and Jihadis in Af-Pak region to battle and force out the Soviet forces from Afghanistan .The nurseries of terrorism were left behind intact with its offshoots Al Qaeda and Talebans , the latter formed with full support from Pakistan and some of the Gulf rulers and US acquiescence .Washington wanted a 'stable' Afghanistan for its multinational pipelines to carry energy from central to South Asia and beyond. That project did not fructify. 

For his cooperation ,Pakistan President Gen Zia- ul- Haq was suitably rewarded with money and military aid which emboldened Islamabad to carry out an invasion in Kargil in India .Pakistan also used terror outfits like Lashkar-e Taiba to haraas and pin down India .With abundance of arms ,Pakistan acquired a Kalashnikov culture of violence while increased opium production in Afghanistan , with Pakistan as an accomplish and as a exit route left millions of it citizens addicted to the drug. Gen Zia Islamised Pak polity and completed nuclear bomb program with acquiescence and even support from the West. 

But Al Qaeda chief Osama Ben Laden , chosen for the Jihad in Afghanistan by the Saudi rulers  nurtured dreams of taking over Muslim states gone astray from Wahabi ideology and conquer other peoples too. The victims were India and newly independent central Asian states like Tajikistan , Kyrgyzstan and Uzbekistan and even Arab states which had supported and sent volunteers to fight in Afghanistan. In its strategy to defeat and roll back the Christian West and the Crusaders from the Middle East , including the sacred soil of Arabia after the 1991 war on Iraq , Al Qaeda first attacked US missions in East Africa .

 But the stunning events of  9/11 showed up the fundamental contradictions in the US-Saudi –Pak axis , with 14 of the 19 hijackers being of Saudi origin ,led by an Egyptian with Al Qaeda's octopus like tentacles deeply embedded in Pak military, ISI and the establishment , with long term ramifications still emerging after the US assassination of ben Laden, ensconced in Pak military Cantonment of Abbotabad under ISI protection. The list of terror attacks on Karachi Meran Naval base , brutal killing of journalist Saleem Shahzad and earlier regular attacks against Pakistan's military, police and establishments are a blowback of the policies laid by Gen Zia ul Haq and carried out by succeeding ruling dispensations in Pakistan, willingly or unwillingly.  

This Faustian transaction is acutely true in US-Saudi relations with the latter, being the leading Sunni Muslim state , protecting the holy Islamic shrines in Mecca and Medina and blessed with vast oil resources. Riyadh is now on the back foot. Its power and prestige have been eroded as a result of its rival Shia power Iran's strengthened position in Iraq and the region , just the opposite of what Washington had foolishly hoped for after invading Iraq. President George Bush did not even know the difference between Shia and Sunni Islam before the invasion of Iraq .Ahmet Chalebi ,a wily Iraqi ,exiled after the 1958 overthrow of the Hashemite dynasty , had sold to Neo-Cons and the willing in the Pentagon the charade that US troops would be welcomed with flowers by the Iraqis .Nobody in decision making cared or bothered to read the history of Iraq or the region. Funded by military-industry and other corporate interests , think tanks tailored reports like of PNAC , with some jokers playing God and believing they were changing the realty on the ground in Iraq . 


The Kingdom of Afghanistan was accepted as a de facto buffer state by the British and Russian empires at the end of 'the Great Game' in Central Asia in 19th century .Between the middle and the end of the 20th century , the British and Russian empires in Asia got dismantled and many new states emerged out of them. Thus the very raison d'etre for that buffer state no longer holds good.  Since early 1980s the Afghan territory has been under control of different armed groups , foreign and local , with Washington installed President Hamid Karzai, with US mercenaries as his bodyguards,in the capital city of Kabul. 

Look at the new states which have sprung from former Russian and British empires now , at Europe after the two world wars and at the end of the Cold War . State and national boundaries are always waxing and waning, sometimes changing drastically and dramatically. So what is new if Pakistan breaks apart .Policies of Washington and Islamabad ( or lack of it ) are pointing in that direction .The Pushtoon frontier areas of Pakistan are aflame , Baluchistan has been rebellious , Pak military and ISI have been infiltrated by Jihadis gone rogue or under outside control with plans to create Islamic state in Pakistan and around it . Little effort has been made by Pakistan leaders since 1947 to even develop a territory based nationalism. Punjab with 55% population with some leavening of Pushtoons dominate the state. 

 Latin America

 In its backyard Latin America, Washington had maintained its dominance under Monroe doctrine except for defiant Cuba under Fidel Castro as a beacon of hope for those resisting neo-liberalism. But of late Washington is losing its sway and total control, the resistance first led against it by Hugo Chavez of Venezuela and other leaders who represent and implement aspirations of their people and not of the old elites in cahoots with corporate interests in USA and Europe. 

US attempt for a colonial style control of its oil has been brought to a halt by fierce Iraqi resistance and non-cooperation .Defied by Iran and outclassed Washington will be forced to even engage with Tehran .There are limitations to what Washington, now caught in the Iraqi quagmire , can do in Latin America .  With a defiant nuclear North Korea, and China, an emerging economic power house, the policies of Japan, now the third economic industrial power in the world which can quickly transmute its formidable industrial base into a lethal military machine, the situation in East Asia remains pregnant with many unpredictable possibilities.  But certainly the US writ and influence are on the wane everywhere.

To be followed by

Post Sept 2008 Crippled Economy & US Strategic Decline (Part 1)Is it Too Late for a Strategic Dunkirk or even a Munich like Agreement ?


Ambassador ( Retd) K.Gajendra Singh, 4 July, 2011.Mayur Vihar, Delhi