Swans Commentary » swans.com February 27, 2006  



Eat, Drink And Be Merry, For Tomorrow . . .


by Philip Greenspan





(Swans - February 27, 2006)  The sole superpower's economic condition continues to deteriorate to levels that can only presage major problems ahead. The once number one creditor has now descended to the number one debtor. Last year's trade deficit hit an all-time high of $725.8 billion. The savings rate -- there ain't none -- has become negative, at minus 0.5 percent. Americans are now digging into their capital or are borrowing more heavily, spending $42 billion more than they earn. Only twice before in the depths of the depression, 1932 and 1933, did the savings rate become negative for an entire year. Bankruptcies rose to an all time high. The federal deficit with the increasing wartime expenses keeps soaring as well, now exceeding eight trillion dollars.

The conventional theories and predictions that directed US policies failed the test. Bush's tax cuts did not create the revival he predicted. Those unsound policies did not create jobs but have caused their loss. Income and wealth inequality between the richest and poorest keeps increasing. Poverty statistics keep increasing. Wages and incomes are not keeping pace with inflation. The infrastructure is badly in need of repair and updating. The country is rapidly approaching Third World status.

Of course, the government puts on an act of fiscal responsibility. To economize it cuts funds that are necessary for the well being of most of its citizenry while showering the fat cats with more and more moolah. And finances for the military-industrial gang, the arsenal of plutocracy, are so necessary that they are always readily available.

But where does overextended Uncle Sam get the dough? From major foreign governments that want to keep their factories humming and their products streaming into the US consumer megamarket. Sam's major nemesis, China, is doing so well -- its 2005 growth rate was a whopping 9.8 percent -- that it can afford a considerable slice of that debt. Eventually, China and those other creditors will turn off the tap. Such profligate spending will inevitably depreciate the currency.

Next month, Iran will set up an oil exchange that will compete with London's International Petroleum Exchange and the New York Mercantile Exchange. But while both those exchanges trade in dollars, the Iranian's will trade in euros, which is a more sensible denomination since Iran sells no oil to the US trade. However, a euro exchange is extremely threatening to the U.S. -- as long as the dollar is the standard reserve currency, the U.S. can more easily borrow and purchase its needs.

Saddam Hussein had also intended to sell his oil in euros, but before he could implement that plan Iraq was hit with "Shock and Awe." It's doubtful that the U.S. or Israel, its Middle East rep, will attack Iran soon enough to eliminate that potential competitor. But a successful start to Iran's new exchange could expedite the attack even if the forces are not quite ready.

As Professor Paul Kennedy indicated in his noteworthy book, The Rise and Fall of the Great Powers, the wealth of a nation and strength of its economy have a major impact on the maintenance of its military. Historically, major powers declined as their wealth eroded.

Contrary to the rosy reports emanating from the administration, the military is in a precarious position. Several people in the know like Congressman John Murtha, former director of the National Security Agency General William Odom, and head of the Army Reserve General James Helmly, have stated that the military is broken. It is unable to maintain necessary troop levels and it is bogged down in both Iraq and Afghanistan.

According to General Raymond Odierno, assistant to the Chairman of the Joint Chiefs of Staff, the War on Terrorism, officially renamed "The Long War," should last at least twenty more years. How can it continue for even a fraction of that length of time when they are already running short of personnel and money?

Is the government concerned? Are its citizens concerned? Hell, no. They are each pissing away money and carrying on like there is no tomorrow. They spent more than nine billion dollars, the latest year's figures, on -- would you believe it? -- WATER, yes water, bottled water! You would think they would be worried and take actions to forestall the imminent problems.

How come the highest animal form, the one with a highly developed brain -- a brain that has produced magnificent works of arts and science -- has become unconcerned with its plight and incompetent to address its problems? These immediate problems, serious though they are and as terrible as their consequences may be, are minor when one considers a more remote predicament -- the degradation of the environment. Global warming, one element of that problem, is currently gaining attention. Environmental degradation has resulted from man's irresponsible use of his technological advancements. His miraculous inventions had side effects that have already caused the loss of numerous plant and animal species and placed many in imminent danger. Cancers, infertility, congenital malformations, various illnesses will increasingly infect the planet. Thenceforth all higher level species including Homo sapiens himself, the guy who caused it all, could gradually be wiped out.

Had man never appeared on the earth, none, not one, nor any combination of those lower DUMB animals, those animals without the developed brain power to communicate so effectively, to think, to create and thereby greedily and irrationally destroy would have been able to effect the extermination of themselves.

Old King Midas took heed once he saw the consequences of his greed. Our great minds of today with millions of protesters endorsing their efforts have been unable to slow down, let alone stop or reverse, today's greedy reincarnations of Midas.

So why not eat, drink, and be merry for in the not too distant future, thanks to the brains of man, the greatest plague of all time will usher in pain, suffering and death to higher life species.


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Swans -- ISSN: 1554-4915
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Published February 27, 2006