Monday, March 28, 2005

Signs of the Economic Apocalypse 3-28-05

From Signs of the Times 3-28-05:

The dollar gained even more strength against the euro last week, closing at .7716 euros compared to last week’s .7510, a gain of 2.74%. Or, looking at it the other way around, the euro closed at 1.2960 dollars compared to last week’s 1.3314. Gold closed at $425.00 dollars an ounce, down sharply (3.46%) from last week’s $439.70. The price of gold rose in euros closing at 327.93 euros an ounce compared to 330.25 last week. Oil closed at $54.84 a barrel down 3.43% from last week’s close of 56.72 dollars a barrel. Oil in euros, however, was 42.31 down 0.69% from last week’s 42.60 euros a barrel. Comparing gold to oil, an ounce of gold on Friday would buy 7.75 barrels of oil, unchanged from last week. The Dow closed at 10,442.87 down 1.65% from last week’s close of 10,615.34. The NASDAQ closed at 1991.06 down 0.94% from last week’s 2009.79.

Most analysts see the dollar’s recent strength against other currencies coming about as a result of present and future interest rate increases by the Federal Reserve Board. U.S. stocks didn’t do so well, for the same reasons.

In case we are tempted in the United States to get a little optimistic based on short term rises of the currency, a look at the big picture is in order. This article by Phil Toler on Axis of Logic about the Neocon project is worth quoting at length because all the technical economic analysis means little for the United States when thinking of our economic future compared to the consequences of the Neocon project:

The Neocon Job May Backfire ... Big Time Redux
By Phil TolerMar 14, 2005

At the end of January 2004, my commentary entitled The Neocon Job May Backfire...Big Time was posted at http://www.americahelhostage.com/. While that site ceased to be updated shortly thereafter, it is still online and interested parties can read the full text of my piece. Briefly, it pointed out that US president George Bush had to bow to Grand Ayatollah Ali al-Sistani because of the fact that his people could not only make the occupation forces’ lives far more dangerous, they could also block the only real exit from Iraq into Kuwait. Therefore, it was clear the Neocons would have to agree to elections, whose outcome any schoolchild, possibly even Bush, could predict. But they figured that if they could rig two consecutive elections here at home, why not one in a country being occupied by US military forces? It appears they did fudge the numbers for the al-Sistani slate from close to 60% to below the point where there would have been a sufficient majority to instate a republic based on Islamic law. And so the Kurds were bolstered to the point that the train wreck would at least be slowed, for face-saving purposes if nothing else.

As with most ideologically-driven enterprises, not only have the wheels come completely off, but the dominos are assuredly now falling in quite the opposite direction as intended. The only reason the Neocons thought so little of the Shia is because they had been dominated for 1200 years by a Sunni minority. But they should have looked around the neighborhood a bit to see where this concept of ‘spreading Democracy’ (a backup rationale, though it was) would inevitably lead.

With Iran as a firm anchor, a now-aroused Shia majority in Lebanon and nothing but Shia majorities in between, it is patently clear the American adventures in the oil patch have backfired colossally. The Zionist dream to subjugate the entire area is now in tatters because everyone outside the US and Israel can easily see that the bluff has been called, and nothing short of all-out nuclear warfare, which, given the lad with his finger on the big trigger cannot be ruled out, will stand in the way of the completion of the Neocons’ greatest nightmare: an awakened Shia giant amidst the surrounding US-supported dictatorships that will lead, sooner or later, to collapse from within each client state.

Let us count the reasons for this prediction:

The US has been shown to be a paper tiger militarily by a few thousand ‘dead-enders’ in the Sunni triangle. Sure, the US military can level cities and massacre tens of thousands of non-combatants, but they have failed miserably to combat the element of the resistance that keeps it growing and becoming ever more successful. The Neocons have blundered into a trap from which there is no viable exit without a massive dinner of crow, a taste for which this crew has shown little appetite. The countdown has begun to the day a legitimate Iraqi government, dominated by the Shias, will politely ask the Americans to leave and take their bases with them. Once again, the spectre of a Sunni/Shia alliance with regard to the resistance would be too compelling to ignore. Thus, the Iranians know that there will be no general invasion of their homeland as long as their man in Iraq has the bulk of the US military locked down and using their long-time Sunni foes as the enforcers. The irony resonates on so many levels that I suspect historians of the future will have a difficult time suppressing a laugh or two as they contemplate the official beginning of the end of the American Empire.

The US is broke, and using the sentiment of the population as a gauge, it has only Israel to count on. This is a little like Dad counting on his kids when he goes broke betting it all at the track. The number of actors who are able to begin the US-dollar panic are hard to fully account for when one considers that Warren Buffet has made close to two billion in profits betting against the viability of US currency. With great regret, of course.

With an eroding industrial base, lagging agricultural output, and an insatiable consumer beast, the country is completely at the mercy of foreigners to sustain the illusion of a wealthy and economically healthy US. They will do this only as long as it takes to reduce their exposure to a vanishing dollar, which most central banks are quietly doing as I write. The Chinese are not-so-quietly turning their massive stockpile of US-dollar-based assets into commodities, such as Canadian mining and energy firms. It will be only be too clear when the time comes for foreigners to pull the plug on the credit-addicted US government and their equally leveraged citizenry, when the prop of having its currency as the world reserve standard collapses under the pressure of free-market traders, who know a thing or two about supply and demand. Many European houses no longer deal in US dollars at any exchange rate whatsoever!

As the dollar sinks, the price of oil will begin to affect ever-greater swaths of the US economy, and its legion of energy-hungry SUV owners. While oil company shills are shrilly promoting the ‘Peak Oil’ hoax to explain the crushing rise in energy costs, the reality is that the only thing that has peaked is cheap oil, and recovery costs are irrelevant to this equation. The simple fact is that the US and Britain have been using bribes and gun barrels to subsidize the cost of oil. When the Shia revolution set in motion by the Neocons spreads throughout the Middle East, tinhorn dictators from Kuwait to Qatar will escape to the West with whatever they can steal. At that point, oil will be priced to the advantage of the seller, as opposed to the buyer and oil-rich countries will impose their own version of an oil-depletion allowance. At that point, the American public will either go gently into that fascist good night, or stage a little rebellion of their own. For this question, I demure from a prediction.

The alliance of Europe, Russia, China, India, Brazil and Venezuela that has become a new reality, gives the lie to the myth of the US role as sole superpower. It is a fool who thinks the US can forcibly dictate to the combined economic and military power of that global anti-US bloc. The sad fact is that it really didn’t have to [come to] this, but Neocon arrogance once again undercut the old reliable divide-and-conquer strategy the US has counted on to keep these kinds of alliances from congealing. Now that Pandora’s Box is open, I suspect the US will be subject to some rather harsh repayment for its past behaviour. No doubt the Neocons will blame it all on Bill Clinton, who is, of course, a Neocon himself.

The United States, therefore, is a failure internationally. It is also turning into a “failed state” domestically as well. The Signs on Friday had a piece detailing the deterioration of the US infrastructure. The Black Commentator published an article showing how the Republican domestic political initiatives are characteristic of failed states:

The U.S. Is Becoming a “Failed State”

“Privatization of social security is a road to government abdication, the cause of failed statehood.” – Henry C.K. Liu, “The Business of Private Security,” AsiaTimes.

…Social Security – a public prize too fabulously rich to destroy, outright – is to be milked dry by Wall Street under one or another of the privatizing proposals floating around Republican and Democratic Leadership Council circles. “All these proposals have one thing in common,” writes Henry C.K. Liu, Asia Times contributor and chairman of the New York-based Liu Investment Group, in his series, “World Order, Failed States and Terrorism.” “They all try to change Social Security into social risk. The only party to benefit will be the financial-services industry that provides the investment advice and trades.”

Once entrenched in the system, it will be near-impossible to disentangle corporations from Social Security without trillions of dollars in indemnification by the federal treasury against corporate “losses.” This is part of what “social risk” – as opposed to private, corporate risk – is all about, and how the public sphere is swallowed whole and irrevocably. Don’t write your congressperson, after-the-fact. She won’t be able to do a damn thing about it.

No goods to deliver

We are witnessing the domestic version of a phenomenon well known in the Third World: the deliberate creation of “failed states,” national governments that have been maneuvered or coerced into impotence by the World Bank, International Monetary Fund, trade agreements with the United States – any combination of capital and military coercion. These states have become irrelevant to the needs of their own people and, therefore, in a very real sense, illegitimate. As Henry C.K. Liu explains, such states cannot deliver the goods: “Failed states provide only substandard political goods, if any at all. Weak failed states involuntarily forfeit, and strong failed states do so voluntarily, the responsibility for delivering political goods, and leave it to non-state actors, i.e. the private sector through the market mechanism. Privatization of the public sector is more than the outsourcing of state functions. It is the selling off of state prerogatives.”

The Bush regime has summoned the failed state chicken home to roost, with a vengeance, as it attempts to strip away every social obligation of the state to the people. However, the legitimacy of American governments at all levels has long been eroding, as defined by their capacity to provide political goods to the citizenry. For decades, heavily Black cities have busily sold off their “prerogatives” – their assets, tax bases and sovereign powers – to corporations or regional authorities. (See the five-part series, “A Plan for the Cities to Save Themselves,” beginning August 14, 2003.) Forty years after passage of the Voting Rights Act, the act of voting becomes ever more irrelevant to people’s everyday lives.

Even the coercive organs of the state – prisons, policing, the military – pass rapidly into private hands, evidence of advanced state failure. And no one should doubt that the American Gulag, comprising one quarter of the world’s prison inmates, half of them Black, is prima facie proof of massive state failure – a government that delivers incarceration, rather than liberty, to a huge portion of its citizens.

“Another political good,” writes Liu, “is the provision of universal health care and education, the maintenance of a vibrant economy of full employment at living wages that will allow workers to afford decent housing and secure retirement, and a clean environment, without which all rhetoric about liberty becomes irrelevant.” These are, in fact, fundamental attributes and aspirations of civilization as it has evolved in modern times.

Last week, in the context of social spending, we mentioned that corporations can be seen as psychopaths. Here’s a chilling example of the possible consequences of corporate psychopathy from a German biotech company from the book, Food for Thought by John Robbins:

A few years ago, a German biotech company genetically modified a common soil bacterium, Klebsiella planticula, to enable it to break down vegetative waste and produce ethanol.

It seemed like a huge accomplishment -- ethanol could be used as a gasoline alternative and the rest of the biomass as compost for farming. Hopes were high and it was field-tested at Oregon State University.

But when the genetically modified bacterium was added to living soil, the seeds planted in the soil (to produce the vegetable matter to be broken down) sprouted but then died. The genetically modified Klebsiella was a feisty little guy, knocking out a fungus that plants need to extract nutrients from the soil. Without it, plants can't survive.

More frightening, the genetically modified bacteria persisted in the soil. Had it been released, it could have become virtually impossible to eradicate, says author John Robbins in his newest book The Food Revolution (Conari Press, $28.95).

"It could have ended all plant life on this continent," geneticist David Suzuki says in the book. "The implications of this case are nothing short of terrifying."

These are the kinds of things corporations mess with just to make a profit. Here’s more from the same book:

Another problem is Monsanto's "terminator technology," in which seeds are rendered sterile after one planting. Currently 80 per cent of crops in developing countries use saved seeds, but with this new technology seeds must be purchased each year.

Robbins says another company has patented a genetic process that makes seed germination and growth dependent upon repeated doses of the company's own chemicals. Yet another patent turns off the genes plants depend on to fight viral and bacterial infection -- only the company's own chemicals will turn the genes back on.

Experiments in the biotech food industry have included inserting flounder genes into tomatoes, human genes into salmon, and rat and bacteria genes into broccoli. Labs around the world are researching splicing genes into fish from chickens, humans, cattle and rats.

When genes shuttle between a wide variety of species, they can take with them genetic parasites such as viruses, usually kept in check by species barriers, Robbins says. "It's deeply troubling."

The corporation as psychopath idea became widely discussed last year with the release of a documentary, The Corporation by Mark Achbar, Jennifer Abbott, and Joel Bakan and a book, The Corporation: The Pathological Pursuit of Profit and Power, by Joel Bakan (Free Press, 2004). The facts are hard to refute, even for pro-corporate outlets like The Economist :

The lunatic you work for

May 6th 2004

From The Economist print edition

If the corporation were a person, would that person be a psychopath?

TO THE anti-globalisers, the corporation is a devilish instrument of environmental destruction, class oppression and imperial conquest. But is it also pathologically insane? That is the provocative conclusion of an award-winning documentary film, called “The Corporation”, coming soon to a cinema near you. People on both sides of the globalisation debate should pay attention. Unlike much of the soggy thinking peddled by too many anti-globalisers, “The Corporation” is a surprisingly rational and coherent attack on capitalism's most important institution.

It begins with a potted history of the company's legal form in America, noting the key 19th-century legal innovation that led to treating companies as persons under law. By bestowing on them the rights and protections that people enjoy, this legal
innovation gave the company the freedom to flourish. So if the corporation is a person, ask the film's three Canadian co-creators, Mark Achbar, Joel Bakan and Jennifer Abbott, what sort of person is it?

The answer, elicited over two-and-a-half hours of interviews with left-wing intellectuals, right-wing captains of industry, economists, psychologists and philosophers, is that the corporation is a psychopath. Like all psychopaths, the firm is singularly self-interested: its purpose is to create wealth for its shareholders. And, like all psychopaths, the firm is irresponsible, because it puts others at risk to satisfy its profit-maximising goal, harming employees and customers, and damaging the environment. The corporation manipulates everything. It is grandiose, always insisting that it is the best, or number one. It has no empathy, refuses to accept responsibility for its actions and feels no remorse. It relates to others only superficially, via make-believe versions of itself manufactured by public-relations consultants and marketing men. In short, if the metaphor of the firm as person is a valid one, then the corporation is clinically insane.

There is a tendency among anti-globalisers to demonise captains of industry. But according to “The Corporation”, the problem with companies does not lie with the people who run them. Sir Mark Moody-Stuart, a former boss of Shell, comes across in the film as a sympathetic and human character. At one point, he and his wife greet protesters camped on the front lawn of their English cottage with offers of a cup of tea and apologies for the lack of soya milk for the vegans among them. The film gives Sam Gibara, boss of Goodyear, time to air his opinions, which are given a reasonably neutral edit. Ray Anderson, boss of Interface (which claims, with psychopathic grandiosity, to be the world's largest commercial carpetmaker) is given the hero treatment. Having experienced an “epiphany” about the destructive and unsustainable nature of modern capitalism, Mr. Anderson has donned the preacher's cloth to spread the religion of environmental sustainability among his peers.

The main message of the film is that, through their psychopathic pursuit of profit, firms make good people do bad things. Lucy Hughes of Initiative Media, an advertising consultancy, is shown musing about the ethics of designing marketing strategies that exploit the tendency of children to nag parents to buy things, before comforting herself with the thought that she is merely performing her proper role in society. Mark Barry, a “competitive intelligence professional”, disguises himself as a headhunter to extract information for his corporate clients from rivals, while telling the camera that he would never behave so deceitfully in his private life. Human values and morality survive the onslaught of corporate pathology only via a carefully cultivated schizophrenia: the tobacco boss goes home, hugs his kids and feels a little less bad about spreading cancer. Company executives and foot soldiers alike will identify instantly with this analysis, because it is accurate.

One wonders whether human values and morality really do survive corporate rule. No doubt it is true that all corporate officers are not themselves psychopaths, but those who are may find their rise to the top easier.

Here is where American Libertarianism runs aground. Libertarians in the United States believe that corporations should also enjoy liberty and that the only threat to our liberties comes from the government. On a day-to-day basis, our liberties are infringed upon much more by corporations than by government. Furthermore, corporate governance is authoritarian, not democratic. And when you add to that the fact that, in true fascist fashion, corporations control the government, there is not much liberty left, no matter what the Constitution says.

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