Friday, July 22, 2011

Casino


The anger, frustration, bewilderment, and desperation that hangs in the record-breaking scorching summer air above Washington D.C. is so palpable I can taste it right through my netbook. Every day brings the same charade: One paper says a deal on deficit reduction and the debt ceiling is immanent, and another reports the two sides (because there are only two) have never been farther apart. Cantor screams, Obama laughs, Boehner cries – it's like a really bad tella novella. So what the hell is really going on in Washington? Are we going to default? If we do, will it really be as bad as many claim? What exactly is the deal with the debt ceiling?

We've raised the federal debt ceiling dozens and dozens of times throughout our history. We've raised it eight times in the last decade. It was raised 18 times just during the presidency of Ronald Reagan. It generally requires the passage of a one sentence bill, and given the vital importance of our government's ability to pay our bills, it generally glides through congress without incident. There have been a few times in the past where it's had some bumpy rides, but never anything like the political theater before us now. So what is so different this time?

For starters, we are. The American people are, like never before, demanding some real fiscal responsibility from our government. For the last two years we've watched as the Fed, the Treasury Department, and the TBTF banks have lived high on the hog while we have suffered immensely due to the financial boondoggle that they created in the housing market. People are sick of living under unmanageable levels of credit card debt, college debt, mortgage debt, and government debt – not being able to feed their families and pay the bills while the financial fat cats fly into Bohemian Grove in their private planes. So we are to some degree happy to see our leaders being made to sweat it out and address the nation's budget problems in the same way we've had to address our own.

Also, it is certainly lost on no one that we have a relatively young Republican congress who see an excellent opportunity to score some big electoral points heading into campaign season by setting the agenda and blackmailing the Democrats into following it.

However, these are just the factors that make the debt ceiling debacle good television. To understand where we are and how we got here, and why this time it really is different, you have to understand the following:

“Until you change the way money works, you change nothing.” -Michael C. Ruppert.

All money is created out of debt. If all the outstanding debts were paid back today, there would not be a single dollar in circulation. The modern monetary paradigm is designed to continually create new debt, not to allow for the paying off of old debt. If you do not understand this, you will never understand the fragility of our current predicament. If you need a refresher on how money works, click here and scroll down to Part Two: Money.

Over the last half decade we, human industrialized civilization, have hit a number of peaks. We saw peak oil back in 2005, followed by peak coal, peak manufacturing, peak food, etc. Of course, all of those stem from the first, because everything we do is so inextricably tied to oil that without it there can be no growth. However, since the crash of 2008 we've kept the infinite growth paradigm on life support, compensating for our energy shortfalls by continually expanding outlandish amounts of debt.

And now we've hit peak debt. As we see in Greece and Spain and Italy and Portugal and England and Ireland and India and China and Saudi Arabia and Egypt and Turkey and on and on...we have so overextended ourselves that faith in all fiat currencies is evaporating all over the world. We've reached the point where no matter how many times TPTB alter or recalculate sovereign debt, bond yields, treasury ratings, the CPI, the GDP, or any other traditional measurement of growth and prosperity, people simply aren't buying it anymore. We're circling the drain, and we know it. A recent CNN poll found that 48% of Americans think we will be in another Great Depression by this time next year, and unfortunately they're right, except that this depression will rewrite the definition of the word.

And this brings us back to the debt ceiling and what is really happening on The Hill and at The White House. The jig is up, and everyone now realizes it. There is no growth. There is no recovery. There are no jobs. There is no money. All that remains is debt. Piles and piles of debt.

Ask yourself this question: How is it possible for every nation in the world to be absolutely broke or in financial distress simultaneously? Where did all the money go?

The representatives of the people and the policy makers in Washington realize that they cannot reduce deficit spending in any meaningful way without massively cutting social entitlements, gouging defense spending, and increasing taxes across the board. Of course, it would be political suicide for any of them to even suggest enacting legislation to accomplish such in a run up to an election year, so they are doing what they do best – a whole bunch of not shit.

U.S. Treasuries have always been regarded as the safest investment on the planet, and for good reason: Given the petrodollar's reserve currency status, we have always been able to simply print whatever money we need to pay our bills. Through commodity speculation, complex derivatives, compound interest, asset securitization, fractional reserve banking, and the completely unconstitutional and amoral taxation of citizens' labor, the Fed, the Treasury Department, and the Wall Street banks have built the ultimate casino - a perfect perpetual debt machine - with the debt ceiling being the only barrier between them and infinite debt.

Unfortunately for them, anyone with an elementary understanding of economics can now see how untenable the situation is. The derivatives bubble alone is 900 trillion dollars. That is the equivalent of about 15 years worth of the gross domestic product of the entire world. That kind of money can never and will never be paid off.

So our leaders in Washington are simply going to continue this bullshit spectacle of partisan bickering until we do in fact default, which will force us to prioritize spending and both sides will get the cuts they want without ever having to publicly vote on them. They're attempting to create a Hegelian Dialectic in which the economy will experience a short term crash (problem) scaring the hell out of the populous, and to save ourselves we will demand that everything be put on the table (reaction) and a deal, whatever its requirements, be worked out (solution). Of course, this method has been used to accomplish a vast array of ends in the past, but there is a glaring miscalculation that dooms it to failure this time – the systemic weakness of the dollar in the world today. There will be no rally, no stemming of the tide or stoppage of the bleeding. The next time the dollar plunges it will not stop until it gets all the way to the basement, and every other currency in the world will ride down with it.

And as the dollar falls, impervious to all attempts to save it, the partisan rhetoric will go into overdrive as an endless barrage of fingers are pointed in an attempt to lay the blame of the collapse at the feet of this group or that. The talking heads on the news networks will emblazon us with their simple and easy fixes that would surely right the ship if only they were heeded. In the end it will all be boiled down to ten-word answers, with no regard for nuance or the complexity of the situation.

And of course, the obvious fact will remain that this collapse was always inevitable, was very accurately foretold by many, all of whom have been all but ignored, going back 70 years, and that the real blame for it lies at the feet of a scam 600 years old – loaning people money that does not exist and charging them interest on it.

Ignaz Semmelweis was a Hungarian physician in the early 19th century who noticed an interesting phenomenon. He saw a correlation between deaths during childbirths and physicians not washing their hands after performing autopsies. He began to warn his colleagues that they should wash their hands before performing any medical procedure, and he was laughed at, ignored, discredited, and was eventually committed to an insane asylum where he died. Of course, many decades later Louis Pasteur published the Germ Theory of Disease, and the observations of Semmelweis were given their due credit.

All truth passes through three stages. First it is ridiculed. Next it is violently opposed. And finally it is accepted as self-evident. Just ask Galileo.

The global financial paradigm is, and has been for some time, run like a casino. But everyone knows that the axiom of casinos is “The house always wins.” And our planet is the house. The house cannot support a human population of seven billion people. It cannot tolerate a dominant species that demands more growth, more waste, and more destruction every single year. In nature, the only thing that continues to grow after the age of maturation is cancer, and the Earth can no longer sustain the proliferation of our human industrial cancer. Weather you ridicule it, violently oppose it, or accept it as self-evident, our modern way of life is dead, and these are but the initial stages of the greatest course correction in human history.

What happens when an unstoppable force meets an immovable object? Like it or not, we're all about to find out. May luck be on our side.

Y8PJZHNQ4SK2

Wednesday, July 6, 2011

Dusk


China is falling apart before our eyes, veiled though they may be.

Waves of violent civil unrest are sweeping across the country as migrant workers by the millions are increasingly finding themselves out of work due to declines in manufacturing. The Chinese people, not unlike the rest of the world, are also financially weakened from massive price inflation, caused by both monetary policy and a biosphere gone far awry. The country is experiencing the worst drought in decades and unprecedented flooding simultaneously. These climate anomalies are partially caused by the massive damns built along the Yangtze River to generate hydroelectric power, which have drastically altered natural ecosystems. This is decreasing generation output from the damns, which only compounds the energy problems they're already facing from a decline in coal extraction - causing the price of coal to rise while the government keeps the price of power fixed. This has brought about massive blackouts across major population areas, a harbinger of bad news for an already slowing manufacturing sector. This can and will only lead to decrease in output, trade imbalance, GDP decline, and further economic contraction.

But here in America we seem to want to make China out as the bad guy, the boogie man, the up-and-coming global superpower. We bested the Germans, destroyed the Russians, & slaughtered the terrorists, but we still have this huge military that needs an enemy, and China is a convenient target. There are an awful lot of Chinese people, they talk funny, they're Commies (although not really), and THEY TOOK OUR JOBS! Just look at these ads.

[youtube=http://www.youtube.com/watch?v=XFsqkI5gg84]

[youtube=http://www.youtube.com/watch?v=OTSQozWP-rM]

This is an attempt to paint the picture of a dominant, unified, prosperous, hegemonic China that has the United States under its thumb, when the truth is quite the opposite. The people of China are not dissimilar from those of Greece or Spain or Egypt or Ireland or Syria. They have had enough of widespread blatant government corruption. They have had enough of watching a very few get fabulously rich while they struggle in squalor. They have had enough of religious oppression and economic malfeasance. And they are aware, just like many other impoverished peoples around the globe, that we, the United States, are a large part of the cause of their strife, their anguish, their futility, and their distress. The actions of our Wall Street banks, to which we gave the keys to the kingdom, directly and with purpose caused their monetary woes for a nice profit. And yet we have the righteous indignation to hold malice towards them for taking our jobs, for prospering in our despair, and for burgling our American Dream.

That politicized picture is testament to a nice piece of advertising by the "Fair & Balanced" cable news networks (both self-professed and not), but it is just another in a long line of loads of crap force fed to us via the clicker.

The truth of course is that the CEO's of formerly "American" but now "Multinational" companies and the traders (traitors) on Wall Street caused China's financial mess just as they caused ours.

They are the ones who sent this plague of corporatized industrialized slavery around the world. It wasn't the Chinese who "took our jobs" - lending to some vague propagandized visual of an Asian man literally snatching them from underneath us while we were out to lunch.

They are the ones who's salaries have increased by outrageous orders of magnitude profiting from their institutionalized global slave trade while we have lost our jobs, our homes, our savings, our futures, and our dignity.

They were the ones who saw the American worker, empowered through unity (the stem of the term "Union" that we've somehow grown to loathe) as an adversary to be conquered, and decided to move their operations elsewhere to further bolster that all-important bottom line.

They are the ones who show no regard or respect for our communities, our local economies, or our individual prosperity, and certainly no remorse over their destruction.

They are the ones who made possible Bopal, Chernobyl, Texas City, Hinkley, & Deepwater Horizon, and then tried their best to wriggle out of any blame for their hubris.

They are the ones who have morphed our once just and fair legal system into one that encourages bribery through political contributions, requires corporations to maximize profits by any means available, and equates cash with speech.

They are the ones who continually and aggressively foster the ever widening inequality we so clearly see throughout the world - and particularly here at home.

Best articulated by the Dropkick Murphy's, "...our skills are not needed, they've streamlined the job, and with sliderule and stopwatch our pride they have robbed."

[youtube=http://www.youtube.com/watch?v=uU5Fx2WqNkE]

The Chinese workers, along with the Indian, Taiwanese, Filipino, Mexican, Honduran, Hatian, (et. al.) ones, have been just as used, abused, manipulated, and discarded as American workers. They, like we, were offered the "American Dream" - the ability to invest their own hard work in a better future for themselves, to provide for their families, and to own their small piece of the world. Those principles were codified by the founders of our nation as inalienable rights, not as lofty ambitions, and the same greedy fucks that sucked the wealth and spirit out of us have done the same to them.

Historical precedent and common sense demonstrate that it is much easier to get people to do your bidding, regardless of the costs, if you can make them believe that eventually it will work out in their favor. But the Chinese version of the American Dream is not different than the domestic one in that it is exactly that: a dream. In the words of George Carlin, "You'd have to be asleep to believe it."
And I'm certain some will read this and think "At least it's China and not us."

But it is us. The only real threats are ones that effect all of us equally. In a world where every economy, every ecosystem, and every life are inextricably tied, there is no Chinese problem, no Greek problem, no American problem. There is only a human problem. Our human problem is that the people we've long allowed to run the place are doing it very badly - to the continual detriment of the overwhelming majority and for the obtuse benefit of a fraction of a percentage.

Thomas Jefferson once said, "If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that grow up around them will deprive the people of all property, until their children wake up homeless on the continent their fathers conquered."

I cannot think of a more eloquent or succinct way to articulate what has become of America than that. Unfortunately, through globalization it is also what has become of the rest of the world. We are necessarily all in it together now.

China is the only economic engine still powering the global economy. It is the only domino left between what is left of industrialism and the post-petroleum abyss, and it is clearly toppling. Now all we can do is sit back and watch dusk descend on the Empire of the Sun, and prepare as best we can for nightfall.