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Apr 2, 2006

Denial, it’s not just a river in Egypt
By Mike Whitney
Online Journal Contributing Writer
Mar 27, 2006, 01:27

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A lot of rubbish has been written lately about “religious faith.” The fact is, there’s a force that’s more powerful than faith; the power of denial. America is drowning in denial. Most people would rather keep their heads stuck in the sand than face the disaster right before their eyes.

Congress just voted to spend another $92 billion for a war that no one supports and, yet, there's not a whimper of protest from the American people. They’ve raised the national debt to a whopping $9 trillion, every penny of which will be paid off by our children and their children’s children. Still, not a peep from the public.

Do the American people care? No way; a few soothing bromides from our lobotomized commander in chief and they’re lulled back to sleep.

It’s called “denial.” D-E-N-I-A-L.

Maybe you’ve already figured out that the Bush administration is fudging the numbers to make them look good? You’re right. Walter J. Williams (Dartmouth, BA in Economics and an MBA; economic consultant for Fortune 500 companies) has compiled the data and found that “real unemployment is running at 12 percent, real CPI (Consumer Price Index) is running at 8 percent, and real GDP (Gross Domestic Product) is in contraction. The country is already in a recession and headed for much worse.

No one believes this can go on forever. The administration has racked up another $3 trillion in debt in just five years, most of it going to Bush’s well-heeled friends via the “tax cuts.” At the same time, they’ve made the tax cuts &ldquoermanent,” knowing it will increase deficits by $400 to 500 billion per year. Deficit spending has become a permanent function of government.

The only thing that keeps interest rates from skyrocketing is the massive and “unsustainable” trade deficit.

When Reagan initiated his tax cuts the budget deficits soared to $200 billion the first year. That pushed interest rates up to 9.5 percent, killing the real estate market and causing the deepest recession since the Great Depression. Greenspan bailed him out by raising Social Security payments and then diverting that new revenue into the general fund. (SS has basically been a flat tax ever since) Our Social Security dollars now pay for roads, social programs, and endless war.

Last year the trade deficit climbed to a new high of $725 billion and is headed for $800 billion this year. Foreign countries now hold so much of our debt that Dubai can afford to buy our ports and China can snatch up Fannie Mae. China alone has an $800 billion account surplus; 75 percent of which is US debt and securities.

The Bush team likes this arrangement because it fits with their belief that national sovereignty should be transferred to the multinational corporations. As for the rest of us, who think that our ports, public lands, water, and resources should be the sovereign property of the people of the US, well, we’re out of luck, because $3 trillion worth of those assets now belong to China, Japan, and Saudi Arabia.

The other reason the American people haven’t felt the pinch of excessive government spending yet, is because of the unique relationship between the greenback and the sale of oil on the global market. Countries are forced to keep stockpiles of US currency in their central banks because oil is only denominated in dollars. This creates a de facto monopoly which ensures that dollars will continue to circulate on a massive scale whether the face value of the greenback goes up or down. (It is estimated that approximately $2.3 trillion are constantly circulated in oil transactions) It is the perfect confidence-game run by the hucksters at the Federal Reserve.

Most countries would prefer to purchase oil in their own currency (or in the more stable euro) rather than using the greenback which is buckling beneath $9 trillion of debt. Regrettably, any move to the euro is tantamount to a declaration of war against the United States and bound to invite “shock and awe-type” reprisals.

Washington will defend the “greenback-hegemony” with every weapon in its arsenal. That’s why Iran is in the crosshairs right now. Their threat to open an oil exchange (that would trade in euros) is a direct challenge to the dollar’s dominance as the world’s reserve currency. The Bush administration will never let that happen. An Iran Bourse would allow the central banks around the world to ship boatloads of unwanted dollars back to America and put the greenback into a death-spiral.

America’s economic future requires that we continue to control this “global extortion-racket” while producing humongous trade deficits which are mortgaging our country to foreign lenders.

There’s only one problem with this scheme; the American consumer is broke. Wages have been flat since the 1970s (in fact they have gone down by 2.3 percent since Bush took office) personal savings are at 0 percent, and housing prices (which generated $600 billion in additional spending last year) have flattened out. The American consumer represents 70 percent of GDP and has also been the major engine for growth in the global economy. Unfortunately, he’s “tapped out,” overextended and penniless.

That explains why so many corporations are packing up and headed for more promising markets in Southeast Asia. Hell, the Bush administration has even created tax incentives for them to leave.

The corporate exodus from America is not simply about high paying, high tech jobs leaving the country. It is also about the massive flight of capital and the destruction of the manufacturing sector. Right now, the only thing that keeps the US on its precipice is the teetering housing market which is headed for the dumpster. When the bubble bursts, we’ll see why Bush devoted so much time to building his police state apparatus.

Under Bush, we’ve seen a shocking acceleration of globalization. The major corporations have already loaded the boats, shifted the jobs, and drained every farthing from the public till. The Federal Reserve has cobbled together a dollar-system that allows it to print worthless script in exchange for the wealth and resources of foreign nations. It’s a plan that addresses the needs of America’s plutocrats and bigwigs, but leaves 99 percent of the people to fend for themselves while facing increasing scarcity and hardship.

This is why we fight; to defend this system of corporate larceny and extortion. This is the “noble cause” for which Casey Sheehan and thousands of others have given their lives.

Isn’t it time we pulled our heads out of the sand?

Mike Whitney lives in Washington state. He can be reached at:

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Posted: Apr 2, 2006 11:01pm


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