July 21, 2003
Only a few years ago financial expectations were most favorable. The
stock market was soaring to new heights and the experts were almost
unanimous in predicting even higher prices. They only differed in the
varying heights they felt the next phase would bound to. But the future
did not unfold according to what seemed like a reasonable continuation
of the existing trend. As we look back in history it seems that more
often than not prevailing outlooks of the future turn out to be wrong.
Remember when the Japanese economy was growing so strong that they could
buy up at higher and higher prices American corporations, real estate,
and art? Their continued financial dominance was considered almost
certain. The hangover from those excesses is still felt in the home
islands. Before that there was the precious metal boom. Gold and silver
prices kept rising with no end in sight. But they crashed faster than
their rapid upward rise. A rise in oil price was another false prediction.
When the price reached a peak at $40 a barrel, industry experts were
claiming that in a couple of years it would be $100 a barrel.
Accompanying that rise was the fear that America's assets would be
bought up and controlled by the Arabs in a few years. Right now the sole
superpower has captured the scene. Its dominance is expected to last
well into the future. But don't be surprised if its collapse occurs
soon. One of the lessons of the Vietnam War was that strong public
support for war must be maintained.
Lies and distortions were employed to justify the war against Iraq. With their disclosure, the support that the administration enjoyed when it appeared that a quick liberating victory had been achieved is eroding. A Washington Post-ABC News poll finds that ten weeks after the war ended only 57 percent feel the Iraq war was worth the sacrifice -- a drop of 13 percentage points.
Not only is the public turning against the war policies, but the GIs and their families, always a reflection of the public, are complaining as well. Reports have been appearing in various papers that morale of the troops in Iraq has plummeted. The soldiers want out. Their families are unhappy that they have not returned home. Congressmen are receiving letters from GIs requesting repatriation of their outfits; the Red Cross is getting an increase in letters claiming a need for soldiers to come home; wives, who expected their husbands' return with the end of hostilities, are angry and complaining.
This is troublesome for the military. It knows that during the Vietnam War the troops became so disgruntled that hundreds of fraggings (murders or attempted murders of unpopular or aggressive officers and NCOs) occurred.
Both Iraqis and Afghans are unhappy. Bad as their situation was before the U.S. came in, it is worse now. They want the invaders out. As long as the military remains the news will be bad. Casualties of GIs and innocent civilians will continue.
But the administration has no intention of withdrawing from either country. However, there are insufficient troops available to police those theatres of operation. To augment those numbers the U.S. has offered to pay the troops of allied countries that provide assistance. The few allies that responded have offered only token numbers.
Although the media sanitizes the news the negatives slip through. With the realization of how desperate the situation is opposition will appear from formerly supportive sources to stall the hawks.
To counter that slippage and goose up support the hawks will bamboozle the public again. Threats and bombings will conveniently erupt from those dastardly terrorists and their alleged sponsors: Iran, Syria, Palestine, North Korea, Cuba, and others to be named as circumstances develop. The 9/11 Syndrome creating fear and anxiety works well. It will be tried again and again as long as it's effective.
The U.S. commitment for war is unprecedented. It outspends the next several powers combined and its budget is many times greater than all potential enemies combined. Its troops are stationed in over 750 posts in more than 130 countries.
As Professor Paul Kennedy pointed out in The Rise and Fall of the Great Powers, when too much of the resources of the state are diverted to the military the power of the state will be undermined.
Unfortunately for the military the US infrastructure is in a deplorable condition.
Over the years government short-changed many supportive public services. This administration's corrupt and incompetent management has exacerbated that condition. Vital public services have been cut to feed a voracious military complex, greedy corporations, and favored political contributors. Legislation favoring the favored and harming the general public has been enacted.
States throughout the union are facing deficits. School programs are being cut, teachers and supporting staff are being discharged. Roads and bridges are in dire need of maintenance. Mass transit -- rails, airlines, etc. -- are financially strapped. Clean water in many areas is no longer plentiful. Garbage and waste keep piling up.
Medical care is deteriorating as costs keep rising beyond affordable levels for the millions who are uninsured and underinsured.
Personal indebtedness continually increases. Homelessness continually increases. Personal bankruptcies also increase and the remedies, under new laws for those who must seek it, become more onerous for the unfortunate debtors.
The U.S. has achieved the deplorable number one ranking in both income and wealth inequality. Another deplorable number one ranking is a prison population of over two million.
The segment of society suffering the most from this deterioration is the underclass that provides the grunts for the military. Its loyalty will be short lived if there is not much to fight for.
The US dollar is recognized throughout the world as the primary reserve currency. It has maintained that position because of its strength, a reflection of a strong US economy. But that premier position is slipping because of the factors above as well as adverse fiscal and monetary policies.
This administration's tax cuts and military spending has reversed a budget surplus into constantly increasing deficits.
The nation's balance of payments has remained in deficit for years.
These deficits are supported by foreign loans that were extended because they were backed by the strong dollar. But the value of the dollar has eroded against both the euro and the yen. More and more international transactions are employing the euro, as foreign creditors have lost confidence in the US currency.
That weakening dollar and the withdrawal of foreigners from support of the US debts will cause a collapse in the financial strength of the U.S., already suffering from the aftereffects of the stock market drop.
With the shrinkage of the dollar, the deterioration of the infrastructure, and the resulting the loss of confidence and support of the public, the U.S. will join all those historical greats, the ex-superpowers!
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America the 'beautiful' on Swans
Philip Greenspan on Swans (with bio).
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