Posted by Big Gav
Alan Kohler has a look at the intersection of the Copenhagen negotiations, America's ballooning deficit and the ever-expanding "war on terror" - America Is Being Outplayed. You have to wonder if all the money being poured into the Afghanistan (or Af/Pak, if you want to be trendy) hole is worth it - maybe all that drug money is as important as the oil in Iraq after all. While the article in The Observer should get the tinfoil crowd chattering, I don't think there is anything unusual historically in huge sums of drug money becoming "respectable" - a lot of old money in Britain and America had its origins in the opium trade into China after all.
Barnaby Joyce said in a wild interview with The Age last week that the United States might default on its debt soon. But was the L-plate shadow minister revealing a truth normally unspoken by those in authority?
No – the US is not about to default. Greece, yes; Japan, maybe. But the US dollar is the world’s reserve currency, which means America can service its debts for quite a while with the money it prints. Japan, don’t forget, had its crisis in 1989 and even now, 20 years later, has not defaulted, even though debt is 200 per cent of GDP.
But that doesn’t mean the US out of the woods – far from it.
If you print more money, inflation makes each existing dollar worth less. That’s not a problem at the moment because the US is only now just being pulled out of recession by government debt and money printing, so prices are not rising. In fact many commentators are more worried about deflation.
When countries have to choose between the impoverishment of hyperinflation and defaulting on their debts, they frequently choose default.
And while it is hard to imagine the US facing such a choice, it has certainly taken a few steps down that path. What’s more, it seems not only mired in debt but also in the expensive obligations of global leadership.
It is borrowing money to send 40,000 extra troops to Afghanistan to try to win a war from which it will gain no real benefit.
And now China is openly gaming the climate change conference in Copenhagen to further impoverish and encircle the United States.
China, the world’s largest carbon polluter, is now holding the Copenhagen conference to ransom. To get an agreement, the US will have to borrow more money and 'compensate' China and other developed nations for its own past emissions so that China can keep increasing its own pollution.
The combination of its military obligations in Iraq and Afghanistan and the looming obligation of financing action on climate change with massive subsidies to the developing world are crushing burdens for a government already in deficit this year to the tune of $US1.4 trillion. ...
In other words, as China screws America over climate change, it will be screwing it on the interest on its debt as the largest creditor, and watching from afar with its own massive military machine idle, while the US tries to defeat global terrorism using borrowed money.
Bond rates have more impact on the interest rates on consumer and business debt in the US than the Fed funds rate. The Federal Reserve is currently staying at 0-0.25 per cent to try to boost the economy. If bond yields rose next year it would more than offset the equivalent cash rate cut, but in any case the Fed can’t cut rates any more – it is 'zero bound'.
So a bond demand shortfall will make it even harder for the US to create the new 300,000 jobs a month that Paul Krugman says it needs.
The US is beleaguered, truly an empire at risk. And although China is happily turning the screws and using the opportunity to gain ascendancy, America is the author of its own misery.
Speaking of Barnaby Joyce and his talk of American debt default, Guy Rundle at Crikey has an article pointing out that his seemingly random set of beliefs is actually pretty consistent with a long held political tradition - Crazy Barnaby shooting from the heartland.
Wow — just when conservatives thought that the chaos was over, they get hit with the full force that is Barnaby. Last Thursday your correspondent was dozing lightly, trying to gather the wherewithal to get up, when Joyce came on the Jon Faine show (Bruce Guthrie in the chair).
Crazy Barnaby, conscious of his new responsibilities as a member of the shadow cabinet, was trying his best to rein in madhouse and the whole thing there now that he is omigod shadow finance minister — but this appeared to consist of belting out the same whackness in sombre and modulated tone, which made him sound like he was on Haldol.
“Australians are subject to huge grocery price inflation because of a lack of competition” he mumbled, lachrymose, “it’s the same with the banks, it may be necessary to break them up.”
OK, so I was sure as hell up now. Though the interview returned, inexplicably in my view, back to the sideshow of Westpac’s banana smoothie email, the shadow finance minister in the Liberal-National coalition had just called for the breaking up of Australia’s banks.
Joyce, as everyone knows by now, had only just got started. It was only when he called for a ban on investment by Chinese state-owned companies that Tony Abbott pulled him in. The conservatoriat has been in uproar ever since, with the Oz sternly admonishing the shadow finance minister and Paul Kelly delivering one of his headmasterly talks disguised as an article, to school captain Abbott. They’ve scrambled quickly, and come up with a response: this is shoot-from-the-lip Barney.
That’s a great solution — it has the appearance of being critical, while it’s actually nothing of the sort. Joyce may have an aleatoric way of putting things across, but the suggestion that he’s making it up as he goes along is bulldust. The trouble for the coalition is not that he says the first thing that comes into his mind — it’s that he’s speaking from the heart. And from the heartland.
The depth of historical knowledge in Australian political commentary is so appallingly low that I can well believe that many in the press gallery really believe that none of Barney’s stuff hangs together. When they judge someone as whacko because he professes a belief in capitalism and free enterprise, and a desire to break up the banks, you know that they are missing the coalition’s deep dilemma for want of a knowledge of the 20th century. So let’s look at the history (and some actual class analysis, big shout out to my bro J. Passant, aright? Word.)
Joyce’s thoughts — on everything from sports-only student unions to the defaulting of US debt — comes from a Right that is older than the recent neoliberal/neoconservative confection, and that is in many ways more inimical to the corporate/executive Liberal Party than is Labor. When the man from St George speaks, we hear a voice of rural Australia, and the urban petit-bourgeoisie — a voice like old music on a distant gramophone, saying things out of the 1920s and ’30s, because that is the last time that class was socially dominant.
Largely though not exclusively Catholic, barred from advancement by sectarian prejudice and class immobility, squeezed from below by the organised labour movement, the experience of shopkeepers, small farmers, tradesmen and the like tended to be one of isolated work life, family and then church as the only collective identity, an adherence to particular and symbolic social meanings — the cross and the flag — rather than abstract ones, a promise of hard-won frugal security that is also uniquely precarious, subject to the movement of forces over which they have not the slightest control.
With the Australian class system consolidating in the ’20s, and the Left becoming an international force, this class began to produce organisational expressions of its beliefs — the Country Party, the League of Rights, and the nascent Catholic Social Movements. For this class, the true society is one in which capitalism is largely bound within something else — the bonds of kin, religion, race and locality, as expressed in family businesses, local towns, etc.
These things are more important than abstract notions of rights, freedoms, philosophy, etc, and they generate a set of virtues — self-reliance, independence from experts, a disdain for larger processes or collectives. Market and state are a means to the end of keeping social relations frozen that way for ever, and there is no hesitation in using the latter, whether it is expressed through the Grain Elevators Board or the Commonwealth Censor.
Such attitudes effortlessly generate a belief in disaster, conspiracy, threat and sophiaphobia, as a multiple expression of a single great fear. That can easily be rolled over from real conflicts — with banks, that is — into the stuff we all joke about, such as a suspicion of water fluoridation. Fluoridation is a form of adulteration of the natural and given — just as is usurious interest or collective bargaining. The dominant way in which this sort of thinking proceeds is to collapse abstract and mass forces into particular and conspiratorial ones — thus conflict of and suspicion of finance capital is transferred into anti-Semitism, and capital’s pitiless rapacity becomes the character of The International Jew.
That, of course, is the title of League of Rights founder Eric Butler’s 1946 book, published at the start of Butler and the League’s half-century of tireless rural organising, often as entryist groups within the Country and then National Party. Butler once was asked what his greatest triumph was — “survival” he replied, and he was right.
Though he would complain about Pauline Hanson stealing his thunder, a map of League of Rights activity with an overlay of One Nation strongholds would show a pretty tight fit. And the themes — banks, China, etc — that Joyce is raising are coming straight from the League of Rights playbook (with the exception of anti-Semitism — there is no indication that Joyce is anti-Semitic).
Take Barney’s recent pronouncements on American debt levels, and the possibility that the country might default. Your correspondent has written at length about what a parlous state the US is in, in a manner largely hidden by consumption of ever-increasing levels of crap, but that problem is one of growing underdevelopment and low social investment. Default isn’t on the cards, because it would be the end of the global financial system — and of China’s markets. US debt will simply be restructured in whatever way keeps things circulating. Where would Barney get a crazy idea about default from?
From Eric Butler and the LOR — which, like all such organisations, adopted the “Social Credit” ideas of C.H. Douglas in the ’30s. Explaining Social Credit would take the whole of this edition of Crikey, but the short version is that Douglas thinks that many of our economic woes come from a radical misunderstanding of the nature of money, which has been allowed to float free of any measure of real social wealth, and autonomously dictate production levels.
For Douglas, stimulus packages such as those of Australia and the US are the worst possible answer because they generate cycles of “super-production”, leading to trade wars, which become real wars.
So when Barnaby Joyce talks about bank break-up, the rampaging Chinese state, a US default and a world currency, he’s not riffing — he’s elucidating the various aspects of a complete, consistent, and clearly long and deeply held philosophy, one that matches the preoccupations of his constituents and supporters. Climate change takes the place of fluoridation as a perversion of plain common-sense (“any man on the land will tell you that the weather goes in cycles”), inevitably expressing itself in plans for a new tax and One World government, being mooted at Copenhagen. It all fits together so well, how could it not be true.
This is much, much worse for the coalition than him being Crazy Barny, because it means that Tony Abbott is now offering us a potential finance minister whose political philosophy is drawn deeply from a tradition that believes finance per se to be the problem. Personally, I don’t have a problem with that — a lot of what Douglas said about overproduction, military spending and the drift to war seems spot on to me, but the ideas are going in the opposite direction not merely of neoliberal economics, but of the whole foundation of modern business and international commerce.
So Abbott has a big problem — trying for a gonzo, wild-west shadow cabinet, he’s allowed the League of Rights their greatest entryist triumph to date, even though Joyce isn’t a member of that group (or so we presume). Given what he’s said two weeks in, it seems unlikely that he’ll stop now. His belief in the things he talks about, and his conviction that he is representing the people from which he comes — both go far deeper than his affiliation to the National Party, much less the coalition.
Abbott will have to sack him eventually, which will seriously damage his leadership credentials, and the longer he keeps him in the centre of the shadow Cabinet, the more damage he can do to any sort of consistent message. Joyce’s elevation was an unbelievable screw-up, another gift to Labor from a leader whose neurological capacity for risk assessment has probably been damaged by his sustained endorphin addiction. If Abbott was lost in golden slumbers from his runner’s high, you can bet he’s awake and listening now.
Moving further out into the realm of conspiracy and collapse, prominent American movie reviewer Roger Ebert has an enthusiastic look at the Mike Ruppert based movie "Collapse" - Collapse.
I have no way of assuring you that the bleak version of the future outlined by Michael Ruppert in Chris Smith's "Collapse" is accurate. I can only tell you I have a pretty good built-in B.S. detector, and its needle never bounced off zero while I watched this film. There is controversy over Ruppert, and he has many critics. But one simple fact at the center of his argument is obviously true, and it terrifies me. ...
Ruppert is a man ordinary in appearance, on the downhill slope of middle age, a chain smoker with a mustache. He is not all worked up. He speaks reasonably and very clearly. "Collapse" involves what he has to say, illustrated with news footage and a few charts, the most striking of which is a bell-shaped curve. It takes a lot of effort to climb a bell-shaped curve, but the descent is steep and dangerous.
He recites facts I knew, vaguely. Many things are made from oil. Everything plastic. Paint. There are eight gallons of oil in every auto tire. Oil supplies the energy to convert itself into those byproducts. No oil, no plastic, no tires, no gas to run cars, no machines to build them. No coal mines, except those operated by men and horses.
Alternative energies and conservation? The problem is the cost of obtaining and using it. Ethanol requires more energy than it produces. Hybrid and battery cars need engines, tires and batteries. Nuclear power plants need to be built with oil. Electricity from wind power is most useful near its source. It is transmitted by grids built and maintained by oil. Wave power is expensive to collect. Solar power is cheap and limitless, but we need a whole hell of a lot more solar panels and other collecting devices.
Like I say, you do the math. Ruppert has done his math, and he concludes that our goose is cooked. He doesn't have any answers. We're passing the point of diminishing returns on the way to our rendezvous with the point of no return. It was nice while it lasted. People lived happily enough in the centuries before oil, electricity and steam, I guess. Of course, there were fewer than 6 billion of us. In this century, Ruppert says, there will be a lot fewer than 6 billion again. It won't be a pretty sight.
I'm not going to mention his theories about global warming, because that's a subject that inflames too many zealots. About peak oil, his reasoning is clear, simple and hard to refute.
The movie may well be worth seeing, but if your BS detector doesn't go off when listening to Mike talk, you probably don't have a functioning one (exercise for the reader - go back and read a few year's worth of "From the Wilderness" and see how many predictions Mike made with absolute assurance which turned out to be complete hokum).