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Feb 23 2009

Apparently the Queen of England in her infinite wisdom asked the probing question: ‘Why did no one see the financial crisis coming?’ As much as I am sure we all sympathise with how upsetting the current crisis must be for her personally, I am not convinced the presupposition behind her question is altogether sound. Going out on a limb here I wonder if in the real world outside her castle there weren’t people who actually saw the crisis coming years in advance. Off the top of my head I can think of three people accurately predicting the crisis as inevitable over 10 years ago. The first is George Soros, the (as of late) philanthropist financier (good for some $18 billion) who became an international economic guru and the centre of attention in the economic forum Davos 1995 after having “broken the Bank of England” by accurately predicting seismic devaluation of the British pound and the Swedish crown in 1992. “Soros walked away with a profit of $1 billion from a couple of months’ work.

The unregulated market is a greater threat to an open society than any totalitarian ideology.

In The Crisis of Global Capitalism (1998) Soros argues that over the last 20 years, the emergence of “market fundamentalism” – that is, the idea that markets need only be regulated by the forces of profit and competition – has distorted the role of capital to the extent that it “is today a greater threat to open society than any totalitarian ideology.” As one reviewer comments: “It comes as a surprise that a person that has earned billions because of lack of regulation of the world economy has concluded that unless international regulations are established capitalism will collapse.”

One would have thought that Queen Elizabeth II would at least have taken notice of the man who made the biggest ever dent in that cute little face of hers which ornaments the pound coin.

Soros has a massive influence in the world, both by means of his philanthropic organization the Open Society Institute which sponsors projects that strengthen democratic, non-totalitarian regimes (from which he himself suffered, being a Jew and survivor of Nazi Germany), and by pumping millions of dollars into the previous anti-Bush campaigns, as well as decisive financial backing of Obama via moveon.org.

The second influential person I can think of is the British professor John Gray. No, not that one (although I wish more hockey mums had bought False Dawn thinking it was a continuation of Men are from Mars, Women are from Venus).  John N. Gray is a professor of European Thought at London School of Economics where Soros also studied, both under influence of the monumental philosopher Karl Popper.

An unfettered global free market economy will not spawn a self-regulating utopia, but increasing social instability and economic anarchy.

In False Dawn: The Delusions of Global Capitalism (1998) he argues along the same lines, claiming that the boom of the 1980s was an exception to the rule, and that a decline in state regulation leaves the society highly vulnerable once the bubble bursts. An economic system made up of individual amoral players who gamble for maximum profit cannot be expected to result in an over-all moral system. “An unfettered global free market economy will not spawn a self-regulating utopia, but increasing social instability and economic anarchy”.

It is in response to the Queens question The Guardian is organizing a debate on the theme Capitalism in Crisis Part Two – The global economy: Can we fix it? in London on 2 March, where Prof. Gray will present his case for anyone willing to listen. 

The third person I would promote is the British documentary maker Adam Curtis, who continues to explore and contextualize current events through his original and stylistic BBC productions. This is the fourth part of a series called The Mayfair Set (1999) which traces drama in UK corporate and political life from the 1960s to the present day.

 

10 YEARS LATER

At first sight it might appear that the current crisis was primarily caused by Americans home owners defaulting on their morgages, but digging deeper it doesn’t make sense since “only about 5 to 10 percent of these loans failed – not enough to cause systemic financial failure“.

“What did cause the crisis was the writing of credit derivatives. In theory, they were insurance policies for investors; in practice, they became a guarantee of global financial collapse.[...] About $2 trillion in credit derivatives in 1989 jumped to $8 trillion in 1994 and skyrocketed to $100 trillion in 2002.[...now standing at ] at $596 trillion. Credit derivatives are breaking and will continue to break the world’s financial system and cause an unending crisis of liquidity and gummed-up credit. Warren Buffett branded derivatives the ‘financial weapons of mass destruction.’”

It would have been the end of our economic system and our political system as we know it.

On 15 September, 2008, in the space of 2 hours the US Federal Reserve “noticed” a “draw down” (euphemisms galore) of $550 billion that suddenly “left” the money market. To me is shows how economy is really psychology, since nothing with real value would devalue that much that quickly. They immediately pumped $105 billion into the system, but realized they could not stem the tide. Instead they managed to stop the panic by offering some kind of guarantee on the accounts. “If they had not done that,” says Rep. Kanjorski 3 min into this interview, “their estimation was that by 2 o’clock that afternoon $5.5 trillion dollars would have been drawn out of the money market system of the United States, would have collapsed the entire economy of the United States and within 24h the world economy would have collapsed. [...] It would have been the end of our economic system and our political system as we know it.”

 

Perhaps the most shocking thing about this clip is not how close to a complete melt-down we are, or how unstable the system is when within 24h the equivalent of half  the US national debt could “disappear”, but how helpless and powerless the government appears to be when a member of congress asks a desperate hockey mum if she has any better idea on how to solve the problem, because “we don’t know”.

Yet this is supposed to be the liberal democratic system that will bring stability and wealth to the whole world. This is the system destined to end all other systems and establish the glorious New American Century.

BLINDED BY RELIGIOUS DELUSIONS OF GRANDEUR

The myth of the universal supremacy of the American way, and the apocalyptic myth of the return of Christ.

While “our boys overseas” have been fighting against fictitious weapons of mass destruction, the boys back home have been busy building real ones as well as unleashing the greatest global economic instability in at least 80 years. The neo-cons with their Project for the New American Century actually believe that the American regime is the ultimate system that will bring stability and safety to the world – or at least to Americans – but the masters of that system, the likes of Buffett and Soros, explicitly warned about the instabilities built into it. Why did those in power not listen to their own experts? Why did they ignore the facts? How could people like Peter Schiff be met with laughter and redicule? Possibly because they saw no other options, but more worryingly – maybe they did not want to. I would argue that they were blinded by a belief in their own version of Divine Providence, their own Cold War propaganda, the Good vs Evil mentality, where they had a destiny to fulfill. Deep in the neo-con psyche – and in the American public’s psyche in general – there are two utterly fictional myths that alone help to shed light on the world we live in; The myth of the universal supremacy of the American way, and the apocalyptic myth of the return of Christ. These are not just prophecies, but myths they actively try to turn into self-fulfilling prophecies by means of armed forces. Sheer greed is not enough to explain their profound blindness before reality. Economists are clever. The irrationality of the last decade is imbued with rationalised mythology, faulty reasoning, apocalyptic preaching and false certainties of the type we only find in religious circles. The religious attitude implies a deep unwillingness to face reality and is often in direct opposition to drawing rational conclusions thereof.

The Project for the New American Century is an American neo-conservative think-tank that freely published the most shocking expression of American hubris and overt self-interest. While the activity seems to have officially ceased the website is still available. Only by reading the views of American imperialism found therein can one understand the prophecies of world-domination that have fuelled the irrational behaviour of the last decade. PNAC was founded in 1997 by the likes of Jeb Bush, Dick Cheney, Paul Wolfowitz, William Kristol and Francis Fukuyama and their arrogant statement of principles is still available for all to see - not the least to militant Muslims.

• we need to increase defense spending significantly if we are to carry out our global responsibilities today and modernize our armed forces for the future;
• we need to strengthen our ties to democratic allies and to challenge regimes hostile to our interests and values;
• we need to promote the cause of political and economic freedom abroad;
• we need to accept responsibility for America’s unique role in preserving and extending an international order friendly to our security, our prosperity, and our principles.

The most extreme expression of the idea of how American liberal democracy is the inevitable winner in the global battle over how society should be organised can be found in Fukuyama’s The End of History and the Last Man, where history is seen as having an inevitable direction that culminates in the American regime. It is that kind of evangelical certainty that can underpin acts of extreme violence and stir up a religious fervour whose apocalyptic undertones suggest that the US cannot fail.

Which is the greatest myth in history? The myth of One Great Nation under God.

 The noble aim of the conservative approach is stability. But the questionable assumption is that a precondition for stability is to be found in national unity. This idea that in order for a state to be stable the masses need to have common myths to identify with, goes back to the theories of Wolfowitz’s teacher Leo Strauss, and ultimately to Plato’s Republic and the concept of The Noble Lie. Which is the greatest myth in history? The myth of One Great Nation under God. How do you strengthen that sense of group identity? By maintaining a constant enemy, be it Communists, atheists, Muslims or some abstract Terror concept.

For all the talk of freedom, if it is to be found anywhere it is in educated Europe. How can anyone claim that American society is one of freedom and democracy when it is made up of a homogenous population of Bible thumpers, has a two party system and a state utterly powerless before the real economic forces? According to a Newsweeek poll 67% of Americans say they believe that the entire story of Christmas is historically accurate – the Virgin Birth, the Angels, the Wise Men… the whole lot. If America was indeed the country of freedom, surely there would be at least a great diversity of faith where each followed the spiritual path best suited to their temperament. If the American democratic system is the ultimate system to be adopted universally, how come after having gone to their schools 67% still believe Satan is real, 39% that atheists will go to hell and 52 % that Christ will return?

The scary answer to the Queen’s question is that the signs were not only seen but that the turmoil is a welcome “proof” that we are living in the last days when Jesus shall return in all his glory. “Hallelujah!” The numbing of the critical faculties, the encouragement of evangelical rapture and glorification of Armageddon goes a long way towards explaining how war and destruction can be seen as something positive. More moderate Christians may object – please do so, loud and clear! - but what does actually remain of a Christianity without the idea of the return of Christ? Is it not bizarre that an intensely Christian nation is supporting Israel? What other importance can Jerusalem possibly have to neo-con evangelists? According to one controversial theory the militant support of Israel is not due to the Jewish influence in Washington, nor solidarity with any humanitarian cause or even military presence in the M.E., but to the mythological role to be played by some Jews in the Last Days. 

“Originally a belief of a small, elite group in Britain, messianic dispensationalism arrived in America in the later decades of the 19th century and became part and parcel of the worldview of many conservative Protestants in this country.[…] They consider the Jews to be continuers of historical Israel and heirs to the covenant between God and his people, and define the church as the body of true believers, those persons who have undergone genuine experiences of conversion and have accepted Jesus as their personal savior.
Dispensationalists assert that true Christian believers will be removed from earth to heaven at the beginning of the apocalypse, will be spared the turmoil of that tumultuous time, and will come back to earth at the end of the millennial period. For the Jews, however, that period will be “the time of Jacob’s trouble” prophesized by Jeremiah (30:7). They will encounter a period of persecutions launched by the Antichrist, a tyrannical Jewish leader and messianic imposter who will rebuild the temple in Jerusalem and reinstate the sacrificial system. Following an international battle at Armageddon, a site in northern Israel, the Antichrist’s reign will come to an end, and Jesus will come back to earth with the true believers and establish a global righteous kingdom with Jerusalem as its capital.”

Here we have one possible answer to the question as to why no one in power acted as to prevent the current crisis. Perhaps they were too busy believing in their own supremacy and pushing their disturbing prophecies along by means of an unprecedented privatised military arsenal. The forward planning spans either 50 years until the return of Christ, or the 100 years of The New American Century. Rational minds would have spotted the inherent tension between world domination and eschatology. Religious minds are not looking for contradictions.

I apologize for upsetting anyone with a healthy religious faith, but this is too serious to brush aside. I also sincerely regret having to be this critical towards USA, because I do love Americans and should distinguish between the native and the hative, the Californians and the Presbyterians, the New Yorkers and the rednecks, the Progressives and the Neo-Cons and so on, but taken as the democratic country that re-elected Bush, so much more is to be expected from its audacity and power. It is of no consolation that the Muslim antagonists and conspiracy theorists are no less apocalyptic. The American potential for world improvement is paralleled only by the potential disaster implicated in some of their fundamental myths. The world needs educated moral examples, not death glorifying evangelists.

One thing is sure Queen Elisabeth – God will not save you. Let’s see what Obamarama can pull out of his sleeve.

Oct 31 2008

This is a trailer of an upcoming movie about the meltdown of US economy.

Every ten years or so, the United States needs to pick up some small crappy little country and throw it against the wall, just to show we mean business.

Jonah Goldberg of National Review

According to ecological economist Lester Brown it would only cost $190 bln to save the planet which is about a third of the US annual military expenditure, and less than a third or its recent banking bailout. The rationale behind military spending must be to protect US citizens from threats. So you got to ask yourself what is the bigger threat? “Once you accept that climate change, population growth, spreading water shortages, rising food prices etcetera are threats to our security, it changes your whole way of thinking about how you use public resources,” Lester Brown told Reuters in an interview. With $10 trillion in national debt (it has grown more than a trillion since the trailer was made) how can you rationally justify those priorities? Who could help? Europe, China – the Saudis? Who would want to help? When it comes to making friends, using Hellfire missiles and calling it “self-defence” just isn’t fair play in anyone’s book. 

If the bully wants to make friends why is he hitting everybody?