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On September 16 1985, when the Commerce Department announced that the United States had become a debtor nation, the American Empire was as dead, theoretically, as its predecessor, the British. Our empire was seventy-one years old and had been in ill financial health since 1968. Like most modern empires, ours rested not so much on military prowess as on economic primacy.Bush's response to Iran's "Oil Bourse", his response to the end of American empire, is pre-stonge age in nature. Indeed, the US empire will collapse when the dollar collapses. Because we have an ape-man and not a real President, the consequences will be tragic.--Gore Vidal, Chapter Three of Imperial America (Nation Books, 2005)
A commenter to this blog used the term "sunset fuel" to describe oil and our dependence upon it. The world grows more dangerous as oil becomes increasingly hard to find, more expensive to produce and refine. We should have expected the world to become a much more dangerous place under those conditions. In its decline, oil becomes disproportionately important, nations more desperate, Bush more belligerent.
Monitoring the news today --it is clear that the Middle East cables were deliberately sabotaged and the effect has been to cut Iran off the internet. Isolating a nation by cutting off its systems of communication is a first step preceding a military attack. Bush no longer cares about even the pretense of pre-text! His charge that Iran has weaponized grade fuels is universally and credibly debunked. The real threat is to the poohbahs of US empire --the Military/Industrial complex. Bush doesn't care. Nuke Iran! Kill, kill!
Like the US today, Rome had currency problems, one of the reasons for its fall. When Rome attacked Dacia, it was for the gold. Much of the history of Rome is the history of how "empire" became "enterprise", how the Praetorian Guard become the Military/Industrial complex.
The first known Roman "money" was a lump of bronze aptly named "aes grave", literally, "a heavy lump of bronze". An "aes grave" weighed about seven pounds. Traded by weight, it required slaves to carry it around.
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By the mid 60s AD, Nero was alloying silver with cheaper metals, a process virtually impossible to detect. Nero thus set the precedent and standard not only for later emperors but politicians of almost every stripe. Briefly, Nero did what almost all politicians do. He swindled the people in order to put more coin into circulation.
By the time the Praetorian Guard auctioned off the empire to Didius Julianus, the transaction would be completed in Drachmas (Greek currency) not Roman the sestercius or the ass. The smart money had already dumped Roman coinage. In the late Empire, it was hoped that new coins --the silver "nummus" and the gold "aureus" -- would restore confidence during periods of devastating inflation.
Much is made of the "gold standard". In fact, it doesn't matter. If someone like Ron Paul restored the Gold Standard in the US, the economy would melt down for several reasons. First, economies must grow or die. Fixing the currency to a finite standard guarantees that it will be necessary to "debase" to accommodate a growing population, growing demand for money itself.
The "Gold Standard" is a myth that is easily demagogued. In fact, a nation's currency is backed up by its total productive capacity. If the nation is at work and productive, we could use monopoly money! And we have been for years. Who the hell cares for so long as we stay out of jail and pass "Go"? American prosperity had always "backed up" the strong dollar. Paulian thinking that we need only jack around with the currency to restore American prosperity is literally "backward". It doesn't work that way.
Productivity needs help. US economic expansion had always been fueled by an abundance of natural resources --land, timber, water, farm land, metals, et al. The nation's history was changed forever when oil was discovered first in Pennsylvania and, when that ran out, Spindletop in Texas. For over a century, US economic expansion was backed up by oil. The US was an oil producing nation. Oil was better than gold or silver in that it had much more intrinsic value than either metal. Oil not only lubricated the engines, it fueled them. In the process of turning it into gasoline, it was discovered that its plastic properties could make an almost unlimited number of doodads, some of which had utilitarian value and some only value as playthings and baubles.
On a personal note, landing at Kansas City International Airport the other day, my vision of America altered by my in-flight reading of Mr. Berman's remarkable work, I saw the landscape through new eyes, a landscape I now understood to have been systematically vandalized by the corporatocracy: big box stores, chain hotels and restaurants, strip malls and gas stations, a landscape everywhere repeated across the United States, a landscape we intend to impose upon the world in order to fulfill our destiny as bringer of freedom as expressed through consumption.From internet reaction to my previous article on the US v Iran:--Reader Review of Dark Ages America
It has everything to do with Neocons who are most certainly supporters of the Military/Industial Complex or, more accurately, the Military/Oil Exploitation complex. Neocons are all about empire and oil is at the heart of American empire. Israel is, in fact, just a convenient ally as were the various puppet, vassel states of Rome --many of which were in the Middle East.If Iran is attacked it will have nothing or next to nothing to do with the oil bourse. It will be because the PNACers have targeted Iran, because, like Iraq, it is not a puppet state, and, in the Neocon "mind" thus presents an "existential threat" to the greater Israel that they imagine.
Certainly, when oil is no longer traded in dollars, it is not only the dollar that will collapse. It means that the US --on the bad end of a huge balance of trade deficit --will no longer be able to afford to import goods or services. For a nation that long ago (Reagan years primarily; See Vidal, cited) gave up its role as a manufacturing nation, this collapse will be monumental, catastrophic. The fact that oil had been traded in dollars was the only thing propping up the dollar. That there was a demand for dollars because there was a demand for oil meant that you could continue to buy imported goods with dollars. Now --imagine a world in which no other country need "purchase" dollars in order to import oil! What if oil producing nations agree to accept other currencies? What if they refuse to accept dollars? Go to Wal-Mart or even your local supermarket. Almost everything on the shelves is imported. Imagine a shop owner refusing to accept as payment for anything in the shop your worthless dollars !
As Gore Vidal pointed out, the US empire ended in the eighties, when the US became a net debtor nation. GOP regimes since have only made the situation worse. Just as empire became the business of Rome, empire had become the "business" of the US which no longer produces enough to employ its population let alone export to the rest of the world. Most US consumer goods are imported from China, sold in Warl-Mart, discarded in America. America's best days are over. We live in the twilight of empire.
- Carta Blanc: The Meaning of Ron Paul
- The Day the American Empire Ran Out of Gas
- Roman Coins
- How the White House Snookered the 9/11 Commission
- The Commission: The Uncensored History of the 9/11 Investigation
Media Conglomerates, Mergers, Concentration of Ownership, Global Issues, Updated: January 02, 2009
46 comments:
I'm not yet sure in my mind whether the empire is over but I certainly agree that it is in serious decline.
I concluded yesterday that the cutting of the cables was probable the beginning of the war against Iran, though I'm not sure we'll see American boots landing in Tehran quite yet.
A proxy war is a more probable scenario, I think.
Great post, thanks.
You're right about troops; they are bogged down in Iraq. Bush would love to level Tehren, though. And, his conversation with B. Netanyahu may have tipped his hand.
Apart from the fact that humans are primates, simians, and part of the greater apes, calling Bush an ape-man is an insult to all apes. :)
LOL LOL Vierotchka, I might have known! You made my day.
I recall an interesting day at the Houston Zoo's simian habitat. My friends and I found ourselves watching a group of homo sapien primates taunting a huge gorilla over a waist high glass. The glass and a pit was all that separated the gorilla and the homo sapien primates. At last, it became apparent from his body language that the gorilla was a getting fed up with the taunts, the mocks the laughs and giggles. I suspected something was afoot when this huge gorilla, reached down with one huge hand and scooped up as much gorilla crap as he could grip. With a pitch worthy of any big league ball player, he flung the "stuff" right into the middle of the offending crowd.
My friends and I were lucky and missed the shower.
I think that gorilla taught the humans a valuable lesson in humility.
Paul is NOT for the gold standard:
A free society should shun this type of strong-arm action, and the Free Competition in Currency Act would take the necessary first steps to freeing the market for competing currencies. I urge my colleagues to support this bill.
The trick is to attempt to get
all money out of the hands
of everyone but the people who use
it.
When we go to War with Iran, you notice I said when, for there is little doubt its only when that is the unknown.
So there is little doubt that we will survive as a Nation. We are already a divided Nation, and after the people suffer the way we will suffer, I would be shocked to to see us survive, of course these are only feelings and fear, I could be wrong.
George Bush went to War with Iraq for the same reason Iraq taking the price of oil off the dollar to Euro.
It appears with the cutting of the cables, War with Iran is our next American nightmare experience!
jomama said...
Paul is NOT for the gold standard:
He had been. I know. I asked him about that personally in the mid-eighties. He still leans that way. He wants to provide tax incentives to folk to encourage them to buy metals i.e, dump the dollar. At this point, that will only hasten the dollars demise. And when oil is no longer traded in dollars, it won't matter anyone. NO ONE WILL TAKE YOUR DOLLARS IN EXCHANGE FOR PRECIOUS METALS...See the addendum to this article.
Diane B. said...
George Bush went to War with Iraq for the same reason Iraq taking the price of oil off the dollar to Euro.
Indeed! Everytime I read Vidal, I marvel at how prescient he was about almost everything. The nation should have listened to him. The nation would do well to TURN OFF the FOX, CNN and other network noise machines. As the X-files used to say: "The truth is out there!"
(I know, I know! That series ran on Fox. That and the Simpsons were the only programs redeeming them)
if the death of the current fiat dollar is inevitable anyways, why not try and go back to some sort of stable based currency?
Ron Paul is not for gold, per se... he is just for a solid, anti-inflationary based currency.
If i am not mistaken, the old "greenback" currency following the civil war era up until the early 20th century was a very good program.
The longer we hand on to this dying monetary policy the harder we are going to fall in the end.
Christopher, at this point, it's a chicken/egg question. But the conundrum is nothing new. The decision is one that everyone who finds himself on the downside of a falling market faces. In those cases, only short-sellers make out.
In any case, I object to subsidizing metals purchases with tax breaks that will most likely not benefit those who need it most, those who barely make enough to pay the rent. These are the folks who need help and, perhaps, a job. Not only will Paul's plan NOT save the dollar, it won't help the people who need it most anyway. Like every other GOP scheme, only the investor class will benefit. And --for all the rhetoric, the bucks, as you say will fall anyway only faster!
A sidelight, Confederate money is now worth something. If the US collapses, one might consider leaving some Washingtons and Lincolns to favorite heirs. They might be worth something one day.
I wish I had saved my Baseball card collection. Sigh....
AH! I DO have an almost complete set of Beatles LPs in pristine, mint condition.
This is an additional article on the Oil Bourse which I thought was interesting.
http://www.globalresearch.ca/index.php?context=va&aid=7998
Diane B. said...
This is an additional article on the Oil Bourse which I thought was interesting.
Mike Whitney has written some great articles. From the article you linked to:
“The bourse is considered a direct threat to the continued global dominance of the dollar because it will require that Iranian “oil, petrochemicals and gas” be traded in “non-dollar currencies”. (Press TV, Iran)
The petrodollar system is no different than the gold standard. Today's currency is simply underwritten by the one vital source of energy upon which every industrialized society depends---oil. If the dollar is de-linked from oil; it will no longer serve as the de-facto international currency and the US will be forced to reduce its massive trade deficits, rebuild its manufacturing capacity, and become an export nation again. The only alternative is to create a network of client regimes who repress the collective aspirations of their people so they can faithfully follow directives from Washington.”
Mike is right on target. It would appear the Bushies will continue to "empire" via client regimes. Just like Rome.
Giving more thought to "tax incentives". Rather than providing incentives to buy metals, I would think it prudent to undo the unfair legacy of Reagan/Bush tax cuts in general.
A more equitable taxation policy could be designed that would reverse the most egregious GOP trends: 1) exploding budget deficits 2) increased national debt 3) exponential increases in measurable disparities of both wealth and income. When this is done holistically, many factors now militating against the dollar will right themselves, not the least of which are income inequities.
Empirically, at least two failed US regimes prove the folly of "supply side economics". A sound tax policies based upon fairness rather than the exploitation of taxation to reward cronies would do much to restore the dollar in foreign markets. Coupled with a SANE foreign policy, America has one last chance to redeem itself and once again enjoy a measure of positive respect on the international stage.
re:
>>American prosperity was always
>>behind and had always "backed
>>up" the strong dollar.
President Kennedy once said that the only thing that scared him as much as the prospect of nuclear war was the possibility of a dollar collapse.
In June 2005 I read a small one paragraph filler from the newswire, in the Harrisburg, PA Patriot-News, that said Iran had decided to stop trading oil in dollars and would instead open its own bourse and trade in Euros.
'Nuff said.
Until very recently, I have seen NOTHING on this in the press or on the blogs I read daily.
I placed a video of Bill Clinton that was taken by me on February 4, 2008 you can view it on The Gemini Scrolls and you tube.
Fuzzflash implores...
LH: "America's best days are over. We live in the twilight of empire."
Would the last person leaving America please remember to switch-off the light. Cheers.
Goodone, Fuzz. I am trying to be philosophical about the whole thing. A part of me remembers the plight of my maternal ancestors --marched across the south by Ol' Hickory to Oklahoma. No one should be forced to go to Oklahoma. The voices of those ancestors are not vengeful, though their gold was stolen as Iraqi's black gold is stolen now. Karma is never successfully cheated!
Diane, thanks for the heads up on the Big Dog vid.
Well... I have certain doubts about this article. Let me reason against some of the statements:
"First, economies must grow or die."
Do they? I we all decide to eat 10% less next year, drive 10% less next year, see 10% less movies etc, then the economy is down 10%... But everybody would also have a bit more free time to spend with family and friends, in other words: is this a real issue?
"Gold standard" vs "monopoly money"
Money is there as lubricant: it simply makes trade easier. Also, it makes it possible to produce more during part of your life consume it during another. Now, let's say you earn money to spend it years later. Oh no: it just lost half its value because the total amount is doubled in the meantime, you're basically robbed! Especially if you are forced to use monopoly money - as is the case in the USA. This limits your options in life planning, and thereby your happiness. Not a nice thing. Monopoly money is not evil itself, but it is too tempting to create more.
Just my 2c... Can't do nickname+email, so anonymous but I'm hjpoell@hotmail.com
The apple never falls falls far from the tree. I'd forgotten how Bush had given away $10B in gold to Barrick mining company -- and then proceeded to work for them for ten years afterwards. Chris Floyd reminded me that GHW had used an obscure 1872 law to sell valuable mining land to his pals at $5 an acre. Seems like Georgie Jnr remembered that particular law as well (even if he has trouble remembering the rest). His little gift to Bush "Pioneers" who had anted up $100,000 to his electoral campaigns: $155 million worth of federal land. What can you say? It's like a bank robbery in broad daylight.
"American prosperity was always behind and had always "backed up" the strong dollar. Paulian thinking that we need only jack around with the currency to restore American prosperity is literally "backward"...."
If its literal, why did you put it in quotes? You know the role the FED has played in the devaluation of the dollar, and the forces behind the FED (which are the same forces behind McCain, Romney, and Elmer Huckabee). You continue to slam Ron Pauls economic views, yet you propose no alternatives.
Leaving the FED and the IRS as the status quo, well you can see where that road is leading.
Would you have a globalist CFR lackey in the oval office? Personally, Im for an American president, something Ive never had in my lifetime.
I like your page, but on this issue you are chasing your own tail. Ron Paul was the last hope this nation had.
Now its down to Bilderbergers, AIPAC minions and CFR lackeys. All of whom are quite content with the FED.
Productivity huh? And the rich keep tryig to smuggle in wage slaves and sending our jobs to other countries, while they scream at our women to have more babies to fill their insatiable thirst for cheap labor and cannon fodder. You would think if they were concerned about this country they would at least support women in having and maintaining those babies they scream at them about. I guess though, after they ruin our country they can go live anywhere though, can't they? Great post!
Anonymous said...
Do they? I we all decide to eat 10% less next year, drive 10% less next year, see 10% less movies etc, then the economy is down 10%... But everybody would also have a bit more free time to spend with family and friends, in other words: is this a real issue?
Your scenario is incomplete and you are unclear. Are you positing a 10 'negative growth' each year? Let's assume that's what you had in mind, as opposed to only one year in which GDP shrinks some 10 percent! Negative growth is otherwise called recession or depression. An economy that shrinks by ten percent per year will eventually collapse. Admittedly, an economy that shrinks by ten percent this year will seem to shrink more slowly in the second year. That's simple math ten percent of something already shrunk by ten percent is smaller in real terms. But eventually, such an economy will cross an economic event horizon.
Money as "lubricant" is poetic but, in economic terms, money is simply whatever people are willing to accept in exchange for goods or services.
I used monopoly money as an example. Monopoly money is printed paper. The US dollar is printed paper. The difference is pure faith. That was true even when the US was on the gold standard. One had "faith" that the buck would be redeemed in Gold. If people had not had that faith, there would have been a run on Ft. Knox.
Later, the buck remained viable off the gold standard because folk had faith in the viability of the economy itself. When people are working, "putting food on their families", saving a bit, improving their lot in life, there is less chance that there will be a mass dumping of the medium of exchange.
Few people who indulge in FOREX, for example, ever expect to actually take possession of the foreign currencies that they sometimes find themselves possessing. They buy them on faith and/or confidence. They are sold or, rather, exchanged for other currencies in which one has greater confidence. When no one no longer has confidence in the buck, it will be dumped and, thus, collapse. I don't wish this to happen. I am only outlining the possibilities unless this nation changes its policies. At this point, it is fair to say that much of the dollar's current weakness is due to Bush's policies.
A final note --no one is forcing anyone to use bucks. That people have already dumped it for other currencies is proof of that. Most will keep it, however, as long as Wal-Mart continues to take it. You are not forced to use it. You use it because it is convenient. If you go to Switzerland, it will cease to be convenient and you will exchange your bucks for francs.
I smell Ron Paul behind the idea that one is FORCED to use a currency. Nonsense!
Ron Paul is clueless.
Hank said...
"American prosperity was always behind and had always "backed up" the strong dollar. Paulian thinking that we need only jack around with the currency to restore American prosperity is literally "backward"...."
If its literal, why did you put it in quotes?
I put in quotes --if you must know --because "backed up" is a vernacular term used to describe a real concept in economics. Ok?
I suspect that much would be gained if people spent less time listening to Ron Paul BS and at least as much time reading Adam Smith, David Ricardo, Karl Marx, John Maynard Keynes, John Kenneth Galbraith, Thorstein Veblen, Malthus, even Joseph A.Schumpeter.
But --especially Keynes.
Len, thank you for allowing me to post it, on your site!!
Thanks for the wonderful, informative analysis. Meanwhile,
this could interest:
UK Indymedia - Why the Dollar Bubble is about to Burst
Why the Dollar Bubble is about to Burst. Steve Masterson | 14.06.2006 16:28 | Analysis | Globalisation | Sheffield. London - 24 May, 2006 ...www.indymedia.org.uk/en/2006/06/342746.html
Of course, life will get pretty rough across the board when the US fiscal bubble bursts -- that is it will for all except those who don't much rely on anything hooked to $USDs (such as tribes that barter) and the ultra-wealthy class with its diversified funds and other assets. In any case, we have to keep struggling against the insane economic (capitalistic) system regardless of the plight of the $USD:
On Rejecting "The System" By Emily Spence. 08 January, 2008 Countercurrents.org
www.countercurrents.org/spence080108.htm
Thanks again, Len! Great piece!
Diane, I should be thanking YOU...and am. I hope ; )
em said..
Of course, life will get pretty rough across the board when the US fiscal bubble bursts -- that is it will for all except those who don't much rely on anything hooked to $USDs (such as tribes that barter) and the ultra-wealthy class with its diversified funds and other assets.
Sadly, Bush has played chicken with the world. Bush has more to lose by forcing the issue. Iran --unless it is nuked --with open the Bourse. Eventually, no one will trade oil in dollars and the NEOCONS will have lost control of the price of oil.
I say "sadly" because I care about what happens to innocent people who had nothing to do with Bush's coup. I could give a damn what happens to the bloody criminal who seized the White House.
BTW -- the URL is apparently not working. I will try some google searches for a mirror site at Indymedia. In the meantime, if you should find another URL to that info, I am sure we will all find it interesting.
Thanks for posting it here.
Thanks for the post...
You are scaring the living S$$t out of me but I've been troubled by the almost total news blackout about both teh Oil Bourse and the cable cuts....
Are we being set up for a "Don't change horses in midstream? theme to the presidential campaigns?
Why the hell has John McCain been so all-fired cocky about war and military?
I don't like this...
not one little bit...
hizzhoner
Just in passing, I found misha's global economic analysis very helpful. Some interesting stuff.
Here are some alternative ways to access Masterson's analysis:
Paste "Why the Dollar Bubble is about to Burst Steve Masterson" or one of the following links in your search bar.
http://www.indymedia.org.uk/en/2006/06/342746.html
http://craagz.blogspot.com/2008/02/why-dollar-bubble-is-about-to-burst.html
This particular site has further writing by Masterson and others:
http://archives.econ.utah.edu/archives/marxism/2006w26/msg00169.htm
In addition, please look at this following link. Perhaps anyone reading this comment would like to attend this conference as a presenter or simply as a member of the audience. There is a great lineup of speakers (listed at the site) so far:
http://www.wpaconference.org
In addition, you might like these two sites at which a number of us progressives have our writings posted:
http://countercurrents.org/
http://www.worldproutassembly.org
-Emily Spence
"I don't like this...
not one little bit..." -Hizzoner
I'm with you on this one...the media will be selling McCain as a "Maverick" along with the don't change horses...they will try to convince Americans that the Dems will be capitulating, rather then revamping our policies and procedures (something I would hope to get from Obama or even Clinton)
McCain is no "maverick" five minutes of research will reveal his background, upper middle class military family, his father was an admiral, these people do not drive fords, nor do they worry about inflation. McCain is from the same ilk as GW, (spoiled country clubbers) he just had balls and more brains GW, and did end up involved with a truly intense life drama in his experience as a POW. I would guess some of the Senators keenest insights were reveled during that period, as would be true for most. McCain has a military legacy background, GW has a political legacy background...but they serve the same people. If it is war they want, it is war they will be given, John McCain: "Bomb bomb bomb, bomb bomb Iran" ; " We will stay 100 years if we have to" (answer to question on how long we will be in Iraq)
Not much hope of change there.
Great article Len...I am weak in economics, I mostly have viewed it's history, development, and adaptations as nothing more then a convoluted way for the wealthy to get the mass of people to produce the wealth, while figuring out clever ways to keep the producer and the gains separated.
benmerc
hizzoner said...
You are scaring the living S$$t out of me but I've been troubled by the almost total news blackout about both the Oil Bourse and the cable cuts....
I chalked it up to the MSM being asleep at the switch aggravated by its being a tool!
benmerc said...
economics, I mostly have viewed it's history, development, and adaptations as nothing more then a convoluted way for the wealthy to get the mass of people to produce the wealth, while figuring out clever ways to keep the producer and the gains separated.
I was not a business major but wound up with two hard core economics courses and a semester of American History which the prof had billed as emphasizing US economic history. In retrospect, those courses have been much more helpful than I could have imagined.
No economist, I can, at least, tell when politicians like R. Reagan and Bush try to snow me! As a reporter, I could ask tougher questions of politicians and even cconomists. I interviewed folk like MITs Morris Adelman and Milton Friedman. Friedman seemed offended by one of my questions, premised upon the notion that Reagan's policies had exported jobs. He failed to convince me that Reagan's policies had not done precisely that.
Friedman's name is forever associated with "monetarism" hence, his appeal to Reagan devotees and other conservatives. Friedman and Keynes are popularly thought to be opposites when, in fact, both were "conservative". Their differences were disagreements about details.
So influential was Friedman, that in the sixties, even Texas politicians were quoted in Time magazine espousing Friedmanesque theories, specifically, the idea that if the Fed merely increased the money supply at the same rate as the increase in real GNP (now called GDP) increased, inflation would simply disappear. Trouble is, no one seems to be able to predict that.
Admittedly, there is common sense appeal to the idea that value of the money supply (in dollars, for our purposes) divided by total GDP equals the value of money. A simple example: if the money supply equals 100 dollars and GDP 100 dollars, a "dollar" is worth --guess what? --a dollar!
Rarely have dollars been worth more than a dollar and, fortunately, it is rare that dollars are worth less than the paper they are printed on, but it has happened. Jimmy Carter's curse --inflation --is said to have occurred when the money supply outstriped productivity. But the figures from the CB seem to contradict that and disprove Carter's most vocal critics.
In a worst case scenario, the government prints money willy nilly while no one produces anything. Just as bad is the other extreme: people and employers are extremely productive but the government doesn't print money. Obviously, something will have to give. A nation cannot be productive if the money supply fails to keep pace. Friedman, for example, attributed the Great Depression to what he called "...a monetary policy that permitted the quantity of money to decline by one-third from 1929 to 1933." Certainly, the "Depression" was characterized by an almost universal lack of money. I am reminded of the great film starring James Stewart --"It's a Wonderful Life". It was also a wonderful lesson in basic economics.
Thanks em, for the great links. I recommend everyone read these. My position, somewhat over-simplistically, is that over that period of time in which the US was an oil producing country, a time before it became a net debtor nation in the Reagan years, oil was an important component of US GDP. As long as US GDP was strong, so, too, the dollar. The dollar had remained strong because of its convenience as an international medium of exchange. The "demand" for the dollar, abundantly clear in the various exchange rates, is now under threat. When other nations find it more convenient to use competing currencies to buy oil, the "demand" for the dollar will fall. An Iranian oil bourse will inevitably result in a decline, perhaps a precipitous decline, in the demand and hence the value of the buck!
Joseph Cannon has some new views on the internet cable cuts. There have been 8 cables cut(!) and not all of them affect Iran, some are Egyptian. He points out that any disruptions would likely last only a couple of hours, so we're really still left wondering why anyone would do it. Joseph suggests two possible reasons: (1) to have the "right" people conduct the repair operations -- with a view to better on-going spying -- and (2) to install remote control destruct devices for possible use in time of war. No matter the reason, these are clearly not accidents.
Wonderful, thought-provoking post. I regret time I wasted not going to your site more often - except, of course, most of it was wasted attempting to make enough of that soon-to-be-dumped currency to stay afloat in our liquid economy, and to pay more for supposed future "social security" than current expenses in that logic-free tax system. Maybe that's what they mean by freedom - freedom from logic.
The timing of this internet-breach with the Oil Bourse is indeed suspicious. Your site is seriously one of the very best on the net.
I, further, recommend these:
http://www.worldproutassembly.org/archives/2008/02/the_bush_bust_o.html
Some of the writings by Peter Goodchild and some of the other "econo-environmentalists" at www.countercurrents.org and growthmadness.org.
People DO need to prepare themselves for the simultaneous fiscal, environmental, oil and other crashes... Two of my assessments of the looming difficulties are at: http://www.countercurrents.org/spence121207.htm and http://www.countercurrents.org/spence300707.htm. Perhaps they will be helpful in giving a sense of the troubles that we are about to face.
Sorry about that. Here's the whole link:
http://www.worldproutassembly.org/archives/2008/02/the_bush_bust_o.html
The site won't take whe whole link, it seems. Here is the ending the the link:
the_bush_bust_o.html
It is Mike Whitney's latest article, which just posted at World Prout Assembly site...
The Bush Bust of '08: “It's All Downhill From Here, Folks”
On January 14, 2008 the FDIC web site began posting the rules for reimbursing depositors in the event of a bank failure. The Federal Deposit Insurance Corporation (FDIC) is required to “determine the total insured amount for each depositor....as of the day of the failure” and return their money as quickly as possible. The agency is “modernizing its current business processes and procedures for determining deposit insurance coverage in the event of a failure of one of the largest insured depository institutions.” The implication is clear, the FDIC has begun the “death watch” on the many banks which are currently drowning in their own red ink. The problem for the FDIC is that it has never supervised a bank failure which exceeded 175,000 accounts. So the impending financial tsunami is likely to be a crash-course in crisis management. Today some of the larger banks have more than 50 million depositors, which will make the FDIC's job nearly impossible. Good luck. - Mike Whitney
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By Mike Whitney
World Prout Assembly
02/08/08 - "World Prout Assembly" - "I just saw a picture of Bernanke stripped to the waist in the boiler-room shoveling greenbacks into the furnace.” Rob Dawg, Calculated Risk blog-site
On January 14, 2008 the FDIC web site began posting the rules for reimbursing depositors in the event of a bank failure. The Federal Deposit Insurance Corporation (FDIC) is required to “determine the total insured amount for each depositor....as of the day of the failure” and return their money as quickly as possible. The agency is “modernizing its current business processes and procedures for determining deposit insurance coverage in the event of a failure of one of the largest insured depository institutions.” (http://www.fdic.gov/news/news/financial/2008/fil08002.html#body)
The implication is clear, the FDIC has begun the “death watch” on the many banks which are currently drowning in their own red ink. The problem for the FDIC is that it has never supervised a bank failure which exceeded 175,000 accounts. So the impending financial tsunami is likely to be a crash-course in crisis management. Today some of the larger banks have more than 50 million depositors, which will make the FDIC's job nearly impossible.
Good luck.
It's worth noting that, due to a rule change by Congress in 1991, the FDIC is now required to use “the least costly transaction when dealing with a troubled bank. The FDIC won't reimburse uninsured depositors if it means increasing the loss to the deposit insurance fund....As a result, uninsured depositors are protected only if a bank acquiring the failed bank will pay more for all of the deposits than it would for insured deposits only.” (MarketWatch)
Great. That's reassuring. And there's more, too. FDIC Chairman Shiela Bair warned that “as of Sept. 30, there were 65 institutions with assets of $18.5 billion on its list of "problem" institutions;” although she wouldn't give names.
So, what does it all mean?
It means there's going to be an unprecedented wave of bank closures in the US and that people who want to hold on to their life savings are going have to be extra vigilant as the situation continues to deteriorate. And it is deteriorating very quickly.
Right now, many of the country's largest investment banks are holding $500 billion in mortgage-backed securities and other structured investments that are steadily depreciating in value. As these assets wear-away the banks' capital, the likelihood of default becomes greater. This week, Fitch Ratings announced that it will (probably) cut ratings on the 5 main bond insurers (Ambac, MBIA, FGIC, CIFG,SCA) “regardless of their capital levels”. This seemingly innocuous statement has roiled markets and put Wall Street in a panic. If the bond insurers lose their AAA rating (on an estimated $2.4 trillion of bonds) then the banks could lose another $70 billion in downgraded assets. That would increase their losses from the credit crunch--which began in August 2007---to $200 billion with no end in sight. It would also impair their ability to issue loans to even credit worthy customers which will further dampen growth in the larger economy. Structured investments have been the banks' “cash cow” for nearly a decade, but, suddenly, the trend has shifted into reverse. Revenue streams have dried up and capital is being destroyed at an accelerating pace. The $2 trillion market for collateralized debt obligations (CDOs) is virtually frozen leaving horrendous debts that will have to be written-down leaving the banks' either deeply scarred or insolvent. It's a mess.
There were some interesting developments in a case involving Merrill Lynch last week which sheds a bit of light on the true “market value” of these complex debt-pools called CDOs. The Massachusetts Secretary of State has charged Merrill with “fraud and misrepresentation” for selling them a CDO that was "highly risky and esoteric" and "unsuitable for the City of Springfield.” (Most cities are required by law to only purchase Triple A rated bonds) The city of Springfield bought the CDO less than a year ago for $13.9 million. It is presently valued at $1.2 million---MORE THAN A 90% LOSS IN LESS THAN A YEAR.
Merrill has quietly settled out of court for the full amount and seems genuinely confused by the Massachusetts Secretary of State's apparent anger. A Merrill spokesman said blandly, “We are puzzled by this suit. We have been cooperating with the Secretary of State Galvin's office throughout this inquiry.”
Is it really that hard to understand why people don't like getting ripped of?
This anecdote shows that these exotic mortgage-backed securities are real stinkers. They're worthless. The market for structured debt-instruments has evaporated overnight leaving a massive hole in the banks' balance sheets. The likely outcome will be a rash of defaults followed by greater consolidation of the major players. (re: banking monopolies) The Fed's multi-billion bailout plan; the “Temporary Auction Facility” (TAF) is a quick-fix, but not a permanent solution. The real problem is insolvency, not liquidity.
The smaller banks are dire straights, too. They're bogged down with commercial and residential loans that are defaulting faster than any time since the Great Depression. The Comptroller of the Currency,John Dugan--who is presently investigating commercial real estate loans---discovered that commercial banks “wrote off $524 million in construction and development loans in the third quarter of 2007, almost nine times the amount of 2006”. The commercial real estate market is following residential real estate off a cliff and will undoubtedly be the next shoe to drop.
Dugan found out that, “More than 60% of Florida banks have commercial real estate loans worth more than 300% of their capital, a level that automatically attracts more attention from examiners.” (Wall Street Journal) He said that his office was prepared to intervene if banks with large real estate exposure maintained unreasonably low reserves for bad loans. Dugan is forecasting a steep “increase in bank failures.”
According to Reuters: “Dozens of U.S. banks will fail in the next two years as losses from soured loans mount and regulators crack down on lenders that take too much risk, especially in real estate and construction," predicts Gerard Cassidy, RBC Capital Markets analyst. Apart from the growing losses in commercial and residential real estate, the banks are carrying over $150 billion of “unsyndidated” debt connected to leveraged buyout deals (LBOs) which are presently stuck in the mud. Like CDOs, there's no market for these sketchy transactions which require billions in cheap, easily available credit. They've just become another anvil dragging the banks under.
On January 31, Bloomberg News reported: “Losses from securities linked to subprime mortgages may exceed $265 billion as regional U.S. banks, credit unions and overseas financial institutions write down the value of their holdings.” Standard and Poor's added that “it may cut or reduce ratings of $534 billion of subprime-mortgage securities and CDOs as default rates rise.” Another blow to the banks withering balance sheets. Is it any wonder why the "new loans" spigot has been turned off?
Surprisingly, there's an even bigger threat to the financial system than these staggering losses at the banks. A default by one of the big bond insurers could trigger a meltdown in the credit-default swaps market, which could lead to the implosion of trillions of dollars in derivatives bets. The inability of the under-capitalized monolines (bond insurers) to “make good” on their coverage is likely to set the first domino in motion by increasing the number of downgrades on bond issues and intensifying the credit-paralysis which already is spreading throughout the system.
MSN Money's financial analyst Jim Jubak summed it up like this:
"Actually, I'm worried not so much about the junk-bond market itself as the huge market for a derivative called a credit-default swap, or CDS, built on top of that junk-bond market. Credit-default swaps are a kind of insurance against default, arranged between two parties. One party, the seller, agrees to pay the face value of the policy in case of a default by a specific company. The buyer pays a premium, a fee, to the seller for that protection.
This has grown to be a huge market: The total value of all CDS contracts is something like $450 trillion..... Some studies have put the real credit risk at just 6% of the total, or about $27 trillion. That puts the CDS market at somewhere between two and six times the size of the U.S. economy.
All it will take in the CDS market is enough buyers and sellers deciding they can't rely on this insurance anymore for junk-bond prices to tumble and for companies to find it very expensive or impossible to raise money in this market." (Jim Jubak's Journal; "The Next Banking Crisis is on the Way", MSN Money)
Jubak really nails it here. In fact, this is what Wall Street is really worried about. $450 trillion in cyber-credit has been created through various off balance sheets operations which neither the Fed nor any other regulatory body can control. No one even knows how these abstruse, credit-inventions will perform in a falling market. But, so far, it doesn't look good.
The enormity of the derivatives market ($450 trillion) is the direct result of Greenspan's easy-credit monetary policies as well as the reconfiguring of the markets according to the “structured finance” model. The new model allows banks to run off-balance sheets operations that, in effect, create money out of thin air. Similarly, “synthetic” securitization, in the form of credit default swaps (CDS) has turned out to be another scam to avoid maintaining sufficient capital to cover a sudden rash of defaults. The bottom line is that the banks and non-bank institutions wanted to maximize their profits by keeping all their capital in play rather than maintaining the reserves they'd need in the event of a market downturn.
In a deregulated market, the Federal Reserve cannot control the creation of credit by non-bank institutions. As the massive derivatives bubble unwinds, it is likely to have real and disastrous effects on the underlying-productive economy. That's why Jubak and many other market analysts are so concerned. The persistent rise in home foreclosures, means that the derivatives which were levered on the original assets (sometimes exceeding 25-times their value) will vanish down a black hole. As trillions of dollars in virtual-capital are extinguished by a click of the mouse; the prospects of a downward deflationary spiral become more likely.
As economist Nouriel Roubini said:
“One has to realize that there is now a rising probability of a 'catastrophic' financial and economic outcome, i.e. a vicious circle where a deep recession makes the financial losses more severe and where, in turn, large and growing financial losses and a financial meltdown make the recession even more severe. That is why the Fed has thrown caution to the wind and taken a very aggressive approach to risk management.” (Nouriel Roubini EconoMonitor)
"In the fourth quarter of 2007, new foreclosures averaged 2,939 a day, double the pace of a year earlier." (RealtyTrac Inc.) The banks are presently cutting back on home equity loans which provided an additional $600 billion to homeowners last year for personal consumption. Bush's $150 billion “stimulus package” will barely cover a quarter of the amount that is lost. As consumer spending slows and the banks become more constrained in their lending; businesses will face overproduction problems and will have to limit their expansion and lay off workers. This is the downside of “low interest” bubble-making; a painful descent into deflation.
Capital is now being destroyed at a faster pace than it is being created. That's why the Fed is looking for solutions beyond mere rate cuts. Bernanke wants direct government action that will provide immediate stimulus. But that takes political consensus and there's still debate about the gravity of the upcoming recession. The pace of the economic contraction is breathtaking. This week's release of the Institute for Supply Management's Non-Manufacturing Index (ISM) was a shocker. It showed steep declines in all areas of the nation's service sector---including banks, travel companies, contractors, retail stores etc—The Business Activity Index, the New Orders Index, the Employment Index, and the Supplier Delivery Index have all contracted at a “historic” pace. Everyone took a hit.
“The numbers are so terrible, it's beyond belief,” said Scott Anderson, senior economist at Wells Fargo & Co.
The $2 trillion that has been wiped out from falling home prices, the slowdown in lending activity at the banks, the loss $600 billion in home equity loans, and the faltering stock market have all contributed to a noticeable change in the public's attitudes towards spending. Traffic to the shopping malls has slowed to a crawl. Retail shops had their worst January on record. Homeowners are hoarding their earnings to cover basic expenses and to make up for their lack of personal savings. The spending-spigot has been turned off. America's consumer culture is in full-retreat. The slowdown is here. It is now. We are likely to see the sharpest decline in consumer spending in US history. Bush's $150 billion will be too little too late.
America's place in the world has been guaranteed not by what it produces but by what it consumes. The American consumer has been the locomotive that drives the global economy. Now that engine has been derailed by the reckless monetary policies of the Fed and by shortsighted financial innovation. When equity bubbles collapse; everybody pays. Demand for goods and services diminishes, unemployment soars, banks fold, and the economy stalls. That's when governments have to step in and provide programs and resources that keep people working and sustain business activity. Otherwise there will be anarchy. Middle class people are ill-suited for life under a freeway overpass. They need a helping hand from government. Big government. Good-bye, Reagan. Hello, F.D.R.
The Bush stimulus plan is a drop in the bucket. It'll take much, much more. And, we're not holding our breath for a New Deal from George Walker Bush.
"I put in quotes --if you must know --because "backed up" is a vernacular term used to describe a real concept in economics. Ok?"
Ok sure, I see where/how you phrased "backed up", I got that part. The use of literally and then "backwards" in quotes is what puzzled me. If its backwards, its simply that, and doesnt need the rabbit ears. Not trying to be a syntax Nazi. If Im personally going to be literal about something, Im not going to use quotes. I suppose Ive gotten your attention as a Ron Paul person, and Im not writing to aggravate you. I just honestly would like to know.
I do like your page an awful lot, and check it daily, so please dont take my comments as overly critical. Not trying to rub you the wrong way.
I have read a little Mathus, and Keynes, who I find suspect. I find myself with many questions concerning this fellow. Why does the Fed engage in Keynesian monetary policies when Keynes could not explain stagflation in the 1970's, or Reaganomics in the 1980's? Why did the Fed stop reporting M3 last year when the figure reached 10 Trillion? (Im also not a big fan of the FED. My first exposure to the truth of this was the late Aaron Russo's "Freedom to Fascism". What are your thoughts on this film? I would be eager to hear them).
Im not trying to provoke you, or criticize your hero (if thats what he is). Ill check back, if you want to take time to explain this to me (if not, its all good).
Ron Paul makes sense to me. In my mind hes the singularity - the only real conservative running for office (the only American, for that matter). McCain doesnt have a conservative bone in his body.
I really have learned a lot from your page, but your obvious bias against Ron Paul strikes me as a red flag. It seems that dont simply disagree, but that you have a severe disdain for the man. If you disagree on his monetary policy, does that mean he earns nothing but your disrespect? You seem to have as much disdain for him as you do for W, the way you write when his name comes up. Do you see him as a threat to our nation?
It just confuses me that you would slam the only non-globalist candidate out there. The only anti-immigration, non-CFR owned candidate. I just dont get that.
The remaining candidates (other than RP) are pro-war. You may not agree with his policies, but the alternatives to this man (for president) are unthinkable. These folks are setting the stage to make Bush "2nd Place" for worse president of all time. Or at least the 2nd-to-last president that America ever had.
thanks for your column, look forward to more,
Hank
Hank, I get ornery from time to time. Almost eight years of Bush-shit will do that to one! If I unfairly pegged you "Paulian", please accept my apologies.
My position with regard to Paul is this: he's the ONLY Republican I've ever met who would tell you what he sincerely believes to be the truth. Now --that doesn't mean it is the truth. Just that he believes it to be.
That's still better than every other Republican living. Like Bush, they will screw up a sincere face and tell you a bald faced lie knowing that its a bald faced lie. John McCain is of this type. He's just a lot better at it than Bush. Bush is successful at at least one thing: for a LOUSY liar, he's fooled even more people than the really good liars like McCain.
Romney is out of the race. He was not a good enough liar.
Back to Paul. Back in Houston --I liked Paul with whom I spoke personally from time to time. But that doesn't mean I would vote for him. Paul was right about the war but he is dead wrong about the economy and many other things as well. Paul has been described as a Libertarian and that's the term we used to characterize him back in Houston. Houston, by the way, is only conservative in the suburbs. It is very, very liberal inside the loop. The great Barbara Jordan was from Houston, and later, Mickey LeLand who died in a plane crash like Paul Wellstone and Mel Carnahan.
Keynes, by the way, is not my hero. He's actually too conservative (in the economic sense) for me. I used the term "especially" because Keynes was the only economist to have accurately assessed the effect of reparations on Germany after WWI. His Economic Consequences of the Peace was prophetic.
I am toying with the idea that all economies are Ponzi schemes. All have failed --eventually. I think Bush's incompetence and dishonesty hastened our fall. When I've given this a lot more thought I will write an article about it.
Sorry I can't agree that is has been 7 years since we had a real or competent President.
Unless competency is defined as carrying Bush1's NAFTA bucket to the well.
Unless signing the law overturning the Depression era Glass-Steagal Act, whick led DIRECTLY to the financial turmoil we see degrading our economy.
Unless adding 100,000 more damn fascist cops "on the beat" while America leads the world in incarceration.
Sorry that I was hood-winked into voting twice for that damn liar. Now, I see the herding technique used to channel us into the polls, to "choose" between the Overt Fascist party nominee and the Covert Fascist nominee, members of the same party.
Bill also enjoys taunting those asking the intelligent questions regarding the events of 9/11/01, ridicules them in point of fact.
So, I suppose "competent and real" are tags we could label Bill C with.
I prefer other labels.
farang
One more thing: What is with all the debate over whether Carter created inflation during his one term?
Am I the ONLY one that remembers the asinine "W.I.N." program started by Ford?
Know what that stands for? Know who preceded Carter at the White House?
jebus.
Carter inherited Nixon and Ford's inflationary economies. Where were you guys???
Oh, and am I the only one that ENJOYED THE HELL out of earning 14% on my HARD EARNED savings under Carter?????
farang
You are correct, farang. And somewhat relatedly, the origins of Bush's drive to create a Presidency that is literally above the law, likewise, began under Ford of W.I.N. fame. I had completely forgotten about WIN. Thanks for the reminder.
What Len Hart does not realize in his assertion the American Empire is in its twilight is in the popular superstition the empire is nation-based. Ever since the Economic Report to the President in Jan 2003 let slip that outsourcing was good, it should be obvious to all that "global" means everywhere and there is no geographical hq, only places, economies and cultures to suck dry. Imperialism is not subject to dying when the parasite drains its host. Control becomes that much stronger when the semi-powerful Middle becomes the powerless Poor. The masters are stateless (uberstatist). Jingoism is facade. "America" is for the trailer trash, to keep them rooting for the "home team" that is killing them in broad daylight. Why should anyone, Len especially, think that just because the economy is melting, those who cooked it are going to shrink in power?!? Like they're all supposed to live in Arkansas in a big WalMart, and when the locals begin to tighten their belts their power becomes tumescent? They will work for even lower wages, and accept less, as their sustenance is drained by the ever-increasingly powerful Global Inside Group. The jetsetting pigs live above it all, in Penthouse Earth, wherever on Earth they damn well please, unaffected by the economic condition negatively affecting their "fellow" Americans. They've been de-industrializing and bankrupting America since their boy Reagan took power, how can anyone think their dismantling of the middle class, which is visibly beginning to turn America into a 3rd world basket case, see the Closed and For Sale signs and their concomitantly depressed wages, could accordingly have not been planned, or that doing so did not and does not benefit them?? The masters of the American universe are better off with a bowing, scraping slave class to serve them, not economically independent units comfortably in charge of their own lives.
Au contraire, the contracting American economy is about greater local/national/global control, not shrinking empire, as far from that as is imnaginable.
What Len Hart does not realize in his assertion the American Empire is in its twilight is in the popular superstition the empire is nation-based.
I never succumbed to that superstition and never wrote anything that would have given you that idea. The US is an 'empire' by proxy the administration of which compares very closely to that of Rome which ruled via 'puppet regimes' throughout the Middle East. Ever hear of King Herod? Numerous other writers agree --including Gore Vidal.
Ever since the Economic Report to the President in Jan 2003 let slip that outsourcing was good, it should be obvious to all that "global" means everywhere and there is no geographical hq, only places, economies and cultures to suck dry. Imperialism is not subject to dying when the parasite drains its host.
I maintained that the US 'was' an empire (perhaps still is, for awhile, at least); I did not say that it was a good or effective one. In any case, you do not address the question: who is sucking who? I submit that the US, had its leadership been competent, might have prevented the 'outsourcing' of jobs that might have kept the domestic population employed.
Moreover, had American leadership been competent or --better --had it been independent of a ruling elite which alone benefited from outsourcing, the US might not have become dependent upon the far flung reaches of empire. The analogy with Rome still holds.
Control becomes that much stronger when the semi-powerful Middle becomes the powerless Poor.
Again --I have never claimed the American empire was competent. Just that it was 'empire'. I have, likewise, denounced absurd income inequalities and have written as much if not more about it than even even Kevin Phillips. I have oulined their origins, the devastating effects on society, specific policies (primarily GOP) that cause them. Really --you simply cannot credibly accuse me of 'sins of omission' when, in fact, you 'omitted' to read me!
The masters are stateless (uberstatist). Jingoism is facade. "America" is for the trailer trash, to keep them rooting for the "home team" that is killing them in broad daylight.
No one here said that Bush was, in any way, 'loyal' to the idea of the US! Nor --his 'base' among the nation's elite of elites, the S&B, and the robber barons of big oil. They don't give a shit!
Roman Legions were looked down upon as 'barbarians' themselves in older, more mature civilizations. Persia (Iran), for example, was more advanced than Rome culturally, technologically, and, in terms of scientific or academic achievements. Rome was nouveau riche and all that that implies. Rome was the 'ugly American' of its day.
Why should anyone, Len especially, think that just because the economy is melting, those who cooked it are going to shrink in power?!?
I never said or implied as much. What the fuck did you read? I never said that. In fact, as the dollar prepares to collapse, the US is more dangerous ---just as was Rome. When Rome invaded Dacia, it was for the Gold. That tells me that Rome had currency problems.
Like they're all supposed to live in Arkansas in a big WalMart, and when the locals begin to tighten their belts their power becomes tumescent?
You misstate me and misunderstand me. Read again!
They will work for even lower wages, and accept less, as their sustenance is drained by the ever-increasingly powerful Global Inside Group. The jetsetting pigs live above it all, in Penthouse Earth, wherever on Earth they damn well please, unaffected by the economic condition negatively affecting their "fellow" Americans.
GOP policies which pay off their 'base' work in various ways. Tax cuts --sold by transparent lies to the gullible --are a primary mechanism by which wealth is 'trickled up' to pay off the base. No-bid contracts to the Military/Industrial complex are another. Same thing happened with Rome. The Praetorian Guard was the Blackwater of its day, perhaps, it was the entire Military/Industrial complex. America is the new Rome.
They've been de-industrializing and bankrupting America since their boy Reagan took power, how can anyone think their dismantling of the middle class, which is visibly beginning to turn America into a 3rd world basket case, see the Closed and For Sale signs and their concomitantly depressed wages, could accordingly have not been planned, or that doing so did not and does not benefit them??
Of course they have! I have written as much if not more about that than anyone. Before you falsely accuse me, you should read me!
The masters of the American universe are better off with a bowing, scraping slave class to serve them, not economically independent units comfortably in charge of their own lives.
That's another article. The focus here is narrow: other nations are weary of having to purchase dollars in order to buy oil. The demand for OIL is real; the demand for dollars --not! That fact will be proven beyond a shadow of a doubt when other nations can simply buy oil in other currencies. The demand, hence the value of the dollar will fall, perhaps finding a level that can be sustained by US productive capacity. If the US had not succumbed years ago to the GOP and other Pied Pipers of Globalization, it might have retained an industrial base, it might have maintained a level of domestic productivity.
Alas --after decades of GOP incompetence and missrule, the US economy I'm afraid will prove to be but a shadow of what it might have become had Ronald Reagan never assumed the office.
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