Thursday, September 27, 2007

Debt and the Destruction of America

"The real truth of the matter is, as you and I know, that a financial element in the larger centers has owned the Government ever since the days of Andrew Jackson."
-- A letter written by FDR to Colonel House, November 21st, l933

Congress is once again heading for another rubber stamping of a requested of $190 billion to keep the war afloat for another year. When approved, Congress would have appropriated more than $760 billion for the two wars, having already approved of $450 billion for Iraq and $127 billion for Afghanistan. This already far exceeds the Congressional Budget Office's 2005 projection for the war to cost $600 billion by 2010.

Of course, fellow citizens, you and I will be asked to pay off the creditors who loaned the money to the government for a war we never asked for or wanted. And, according to our creditors, we (and not just those pod people on Capital Hill) must pay the money back, with interest. If we don't, the creditors will sell our country from under our feet.

Debt Crisis Sparks Another War

The oft heard response by most people in the left is that the war is about oil, and this is true to some extent, however, it is not the principle reason for war. Here is a telling statement from the U.S. Network for Global Economic Justice, a network committed to ending the neo-liberal economic programs of international finance:
"The economic restructuring of Iraq to benefit foreign investors was most likely one of the main motivations for the U.S. invasion and occupation of Iraq – or at least a highly profitable windfall. The fact that Paul Wolfowitz, the newly appointed president of the World Bank, was one of the major architects of the invasion only heightens the probability of a conscious plan on the part of the Bush administration."
And, here Ed Kinane gives us an example of how countries lose their sovereignty when they go into debt:
"In 2003, the United States invaded Iraq and deposed Saddam. Most Iraqis were greatly relieved. But even apart from the ensuing occupation, their ordeal – their captivity – was far from over. Saddam's creditors, Saddam's former allies, have forced Iraqis to pay billions annually in debt service. If the United States and other world powers have their way, the Iraqis will keep being bled dry – and having their oil hijacked – paying off Saddam's loans for decades to come.

In an interesting wrinkle, the United States is simultaneously seeking to have some loans "forgiven." The United States isn't being altruistic; the price would be more IMF “reforms” and “privatization.” "In exchange [for some debt forgiveness], Iraq will surrender its economic sovereignty to global financial institutions, provide foreign investors greater access to Iraqi natural resources, and increase investment opportunities for multinational corporations." [Brian Dominick, “New Standard”]"

Hmmm, "surrender its economic sovereignty to global financial institutions."

Is there any doubt that the U.S. is heading in precisely the same direction as Iraq?

We are systematically being pillaged by the bankers and creditors who have no problem giving the U.S. government loans to carry out a criminal, illegal war in Iraq. That high priest of Mammon, Alan Greenspan, doesn't see any problems with the war (with the exception that it was being mismanaged) or the tax-cuts to the wealthy as long as other programs like Social Security, and public education were slashed. How kind of him. Americans can lose it all, but the investors of the Fed will demand that they get paid back...or else.

Or else.... there is a doctrine called "Odious Debt" that creditors dread to hear. This doctrine states that "when creditors lend to a dictatorial regime which they know is not using the loans to benefit the population, then debt payments cannot be demanded of those people once they are free."

Since most Americans didn't want this war and we repeatedly asked congress to put a halt to funding it (with congress ignoring us), we should feel no obligation to pay off the creditors who are financing it.

Of course, debt forgiveness is what many Iraqis have demanded to no effect. The International Monetary Fund (IMF) and the Paris Club have concluded that the Iraqis must sell off most of their assets and privatize their economy to help pay off their creditors. If Iraqis seem a little pissed off about this it is pretty understandable.

What will happen when the creditors of this country start to demand payback of the loans for this evil war that our government (and the creditors) are perpetrating? Are we going to see a free-fall fire-sell of America's assets and public institutions at rock bottom prices? or are we going to do what the Iraqis are doing and fight back?

Either way, it looks increasingly bleak for America.

For further reading:

addendum: a recent comment from radio talk show host Mike Malloy recently posted on

September 26, 2007

Under the radar, quietly hidden behind his disastrous foreign policy failures and trillion-dollar bloody affair in Iraq, the U.S. economy under Bush’s fiscal “leadership” is a speeding train heading into a brick wall. So far the major news networks have only been reporting on this around the fringes, but that’s about to change as recession and perhaps full-blown depression are looming around the corner.

Alex S. Gabor, writing for The American Chronicle put it this way: “Bush's military adventurism, not to mention his administration's exorbitant tax cuts for the wealthy, gutted the surplus of $128 billion Clinton handed him in 2001 into a deficit of well over $1 trillion today. Bush has simultaneously increased the national debt by over $3 trillion effectively nailing each and every US citizen with a bill for almost $30,000. The foreign bankers know that its time to wean America off its free debt ride and that any further debt will never be repaid. The greatest (Ponzi) scheme in the history of mankind is rapidly, within the next decade, completely unwinding.”

Want more good news? The U.S. unemployment rate is climbing, as is the poverty rate, there’s almost no such thing as an American manufacturing job, the personal savings rate is at a negative number, big corporations continue to ship jobs overseas with no restrictions or oversight, mortgage companies are going bankrupt, and the home ownership rate is at its lowest point in two decades. Worse, increasing numbers of foreclosures are depressing home prices all over the U.S., adding to the buildup of unsold inventory and further harming the already damaged housing market.

Meanwhile, despite recent rate cuts by the Fed, the dollar has fallen to par with the Canadian dollar with no bottom in sight. The national debt is now beyond $10 trillion. Foreign bankers have been shifting from dollar denominated oil contracts into Euro denominated exchanges such as the one recently established in Iran, and gradually shifting out of the US Treasury market along with the Chinese who have already shifted billions out of dollar denominated assets.

US taxpayers have spent over $450 billion on Iraq alone, while Bush/Cheney cronies continue making a killing from military contracts. Bush says he’s plenty capable of “being wise about the money.” ‘Fraid not Chucklenutz. You're not equal to managing a lemonade stand, much less the (formerly) largest economy on the planet. You've never been wise about anything and managing the huge budget surpluses Clinton left in your greasy hands is no exception.

We’re in serious financial trouble, Truthseekers."