State Dept. Calls Subversive Stable of Activist Geeks, “an underground railroad of trust”

U.S. Funds Help Democracy Activists Evade Internet Crackdowns 

By Nicole Gaouette and Brendan Greeley

April 20 (Bloomberg) — The U.S. State Department is set to announce $28 million in grants to help Internet activists, particularly in countries where the governments restrict e-mail and social networks such as those offered by Facebook Inc., Twitter Inc. and Google Inc.

The program, which has drawn Republican criticism and budget cuts, has produced software that is spreading widely in Iran and Syria, helping pro-democracy activists avoid detection, said Dan Baer, deputy assistant secretary of state for democracy, human rights and labor.

Secretary of State Hillary Clinton recently described web restrictions by more than 40 governments as a “disturbing trend.” Governments can’t escape the impact of today’s social networks and the U.S. is committed to helping people worldwide connect, she said in an April 12 speech.

“We will stand with those who exercise their fundamental freedoms of expression and assembly in a peaceful way, whether in person, in print, or in pixels on the Internet,” she said.

Governments have curtailed Internet freedom in two ways.

First, they’ve blocked foreign news and social networking sites. Facebook, for example, is frequently unavailable in China and Vietnam. Activists use circumvention software to route around these blocks.

Second, governments track, harass and arrest activists who meet online. Tunisia, before President Zine El Abidine Ben Ali’s fall from power on Jan. 14, spoofed Facebook and Gmail login pages to steal passwords. Egypt, before President Hosni Mubarak stepped down, arrested opposition bloggers.

Competing Approaches

Republicans in Congress said the U.S. should focus on helping activists get around government firewalls, such as China’s. The State Department has taken a broader approach, making training and protecting activists “perhaps the most critical part” of its mission, Michael Posner, Assistant Secretary of State for Democracy, Human Rights and Labor, said in a March 19 interview.

“There’s been one paradigm, that’s the Chinese firewall,” Posner said. “But there’s another piece of this, which has I think become more and more evident in the months since the Tunisian demonstrations began,” he said. “Governments are also effectively trying to attack people who are activists using the Internet.”

The State Department has built up a stable of technically able activists to help democracy movements in places including China and Iran. They have created firewall circumvention software and trained more than 5,000 people to avoid detection while using services such as San Francisco-based Twitter, Baer said.

‘Underground Railroad’

Training takes place through “an underground railroad of trust,” said Baer. “We’re opportunistic about going to places where people are, or taking them to places that are safe.”

By summer, Baer said, the department will have awarded grants of more than $50 million.

About $22 million already spent includes all funding from fiscal years 2008 and 2009 and some funding for fiscal year 2010. The $28 million in new grants, which the agency is soon expected to advise Congress about, is from fiscal year 2010.

One result has been creation of “panic button” technology for mobile phones, which activists can use to erase their address books if they are arrested, to avoid incriminating colleagues. Other programs help keep web sites running when governments attack them.

Posner said department officials are approaching funding of these projects “like venture capitalists,” doling out small amounts to a wide variety of companies in a competitive process through May, 2011.

Republican Criticism

Republicans including Arizona Senator Jon Kyl and Indiana Senator Richard Lugar, the ranking Republican on the Senate Foreign Relations Committee, have criticized the administration for not focusing exclusively on firewall circumvention.

Baer argues the broader approach is needed. “If the objective is to empower people on the ground, you have to keep them out of jail. That means they have to be able to circumvent any blocks, get out their message, communicate with people and have the self-defense training,” said Baer.

To only teach people how to circumvent firewalls “would be tantamount to painting a target on activists’ backs,” said Courtney Austrian, director of the State Department’s office of policy planning and public diplomacy.

Lugar also released a report Feb. 15 that faulted Clinton’s agency for not spending the $30 million Congress allocated last year more quickly.

Budget Cut

Last week, the Republican-controlled House cut the agency’s budget for Internet freedom by one third to $20 million this year, part of the plan to cut the federal deficit in fiscal 2011.

“Twelve months elapsed before the State Department moved to disburse some $30 million in funds specifically appropriated for Internet freedom promotion, including the development of Internet censorship circumvention technology. Such technology should be given a much higher priority by the U.S. government,” Lugar wrote.

The cuts mean “we have less money than we had hoped to fund valuable programs,” said Posner in an e-mail. “But there is a great and growing interest in promoting Internet freedom and $20 million is no small amount of money these days. We’re going to use that money wisely to help embattled democracy and human rights activists. And we hope we’ll get more funds for this important work in 2012.”

Stable of Geeks

The delay in using the funding came because it took time to build up the stable of “geeks at the intersection of human rights and technology,” Baer said. Two and a half years ago, grant advertisements drew two applications. The latest advertisement drew 60, Baer said in a telephone interview.

“Money does matter in this space,” says Brett Solomon, executive director of Access Now, a private organization that supports Internet freedom. His organization does not accept money from governments because it can carry a stigma.

The wisdom of accepting government funds depends on where they are employed. “In Syria,” said Solomon, “how they frame the opposition as lackeys, a falsely generated movement, can actually put people at risk.” In Burma, by contrast, the regime does not rely on an anti-American narrative.

Republicans have pushed for more money for Internet circumvention to go to the Broadcasting Board of Governors, which oversees government media including Voice of America.

Last year the BBG funneled the $1.5 million it received for circumvention technology to the Global Internet Freedom Consortium, a group that provides anti-censorship software and is associated with the Falun Gong, a Buddhist spiritual sect banned in China.

Outside News Blocked

Posner described the work of the BBG and the State Department as “different, but complementary.” The BBG has a legitimate interest in tools that allow traffic to reach the Voice of America site and other Western news sources, he said.

A group of Internet activists, lawyers and academics, including senior researchers from MIT and Harvard’s Berkman Center for Internet & Society, recently wrote to Congress to urge them not to redirect money to the BBG. The BBG’s “overemphasis” on firewall circumvention efforts doesn’t meet the needs of on-the-ground activists, the letter said.

To contact the reporters on this story: Nicole Gaouette in Washington Brendan Greeley in Washington

To contact the editor responsible for this story: Mark Silva

Muslim Brotherhood and New Dark Ages

Protesters fill Egypt's Tahrir Square
Photo by: REUTERS/Mohamed Abd El-Ghany

Terra Incognita: The revolution wont’ be democratic


There was never a second Arab Awakening as it was never bounded by ideas, not even the democratic-Islamic ones.

There will be no great democratic revolutions in Egypt, Libya or Tunisia a year from now. What are the signs? Let’s start with the obvious. US President Barack Obama has wished the people of the Middle East a happy Passover. He claims that the story ofPessah is being relived today in the “modern stories of liberation” taking place in the Middle East: “This year, that ancient instruction is reflected in the daily headlines, as we see modern stories of social transformation and liberation unfolding in the Middle East and North Africa.”

If Obama said it, there’s good reason to think it won’t happen. It isn’t because I don’t like Obama. Obama is great; a great orator, a crowd pleaser, a man who warms the hearts of many. But he tends to speak rather than do, in the apparent belief that history will record his words and forget that they were empty. Obama won the Nobel Peace Prize without doing anything peaceful. He promised to close Guantanamo Bay, and that didn’t happen (it would have been a real Pessah miracle if he had brought terrorist inmates from the American base in Cuba to trial). He talked about getting America completely out of Iraq and doing something about Bin Laden in Pakistan, and that hasn’t transpired either.

But it isn’t just because Obama has been talking about freedom that we can be assured freedom is far away. If we go back and read the headlines about Egypt, we see that the usual good-natured, well-intentioned souls were telling us about how exciting it was to see what was happening in Tahrir square.

REMEMBER LARRY Derfner’s claim that “the incredibly brave people in Egypt inspire just about everyone in the world except us [Israelis].” Or Nicholas Kristof, of The New York Times, claiming that “a crude stereotype lingers that some people – Arabs, Chinese and Africans – are incompatible with democracy… [but] The record is that after some missteps, countries usually pull through.”

Let’s just put it mildly: those people who are inspired by the Egyptian revolution are the people I’d least trust to tell me which way the wind is blowing.

Why? Because they are so often wrong. Some of them are part of the same Michael Foucault dialectic that thought the Iranian revolution was going to produce progressiveliberal democracy. Today’s Foucault – the anti-Israel University of California feminist philosopher Judith Butler – has claimed that “If the Muslim Brotherhood is elected to positions in [the Egyptian] government, and the elections are free and unconstrained, then that is a democratic outcome.”

The same progressive feminist philosopher has claimed “understanding Hamas, Hezbollah as social movements that are progressive, that are on the Left, that are part of a global Left, is extremely important.”

If the Butlers and Foucaults are so often on the side of totalitarian religious fanaticism in the guise of democratization, then it is hard to believe that we will see democracy in the Middle East, precisely because totalitarian religious fanaticism is not conducive to democratic institutions. In fact, this is what people have missed in Indonesia, which has often been held up as an example of where the Middle East might go.

Indonesia is not a great democracy. It is a country where ethnic and religious hatreds are common. Just recently, pornography was banned – not anti-democratic in itself, but part of a larger conquest of the public square by moralizing Islamists. A 19th-century Islamic religious movement called Ahmadiyya, that has many followers, has been banned in parts of the country. Democracies, at least the good ones, generally don’t ban whole religious sects.

The New York Times has done some excellent reporting on what the masses of inspired people got wrong about Egypt. Michael Slackman documented in late March that “religion has emerged as a powerful religious force” in politics, and the Muslim Brotherhood has been “transformed into a tacit partner with the military government.”

It turns out that all those who shouted, like canaries in the mine, about the role of the Brotherhood are being vindicated.

THE LATEST actions of the military in Egypt, banning Mubarak’s political party and jailing a blogger who “insulted” the military, are not very democratic. The same is true in Libya. The Times reporter C.J Chivers noted on April 6 that Libyan rebels are “less an organized force than the martial manifestation of a popular uprising.”

Fox News commentator Geraldo Rivera thinks “They are the worst army I’ve ever seen in the field, absolutely incompetent.”

How are things going in Tunisia? We don’t know. Syria? There, the nepotistic leaders are killing people, and neither Al- Jazeera nor the US State Department seem to care. Bahrain? The kingdom is on the brink of outlawing its Shia opposition, and is sending thugs house–to-house to roust them out. The failure of the revolutions in the Middle East is not the fault of all the well-wishers. It isn’t really the fault of the secularprogressive youths, the rock throwers, the Islamists or the feeble boastful rebels in Libya with their bulging ammo belts. The fault lies in the fact that there was never a second Arab Awakening. It was never bounded by ideas, not even the democratic-Islamic ones that Judith Butler tells us we should embrace. Sometimes riots produce successful revolutions, witness the Boston Tea Party in 1770 or the bread riots before the French Revolution.

But rebellion without ideas is like mortar without bricks – just a bunch of grey crap.

The writer has a PhD from Hebrew University, and is a fellow at the Jerusalem Institute for Market Studies.

French Reach-Out To American/British “Islamists”

[News items such as this confirm that we are definitely in the beginning of the “end game,” the period of turmoil when the “gloves (really) come off” and expediency becomes more important to the fascist Zionist global regimes than maintaining the image of benevolence.  The American war against the world began when Reagan’s plan to seize control of the world got underway with the first fabricated “Islamists” in Afghanistan, calling his mujahedeen “Freedom Fighters,” in the great tradition of American anti-colonialists.  The plan for global conquest then entered the next phase, after the fall of the Soviets, and expediency demanded that Western interests implement a state of “plausible deniability,” where it appeared that Americans had separated themselves from their “Islamist” creation.  

Now the great mind-twisters have determined that the “Islamists” are to regain their status as “freedom fighters,” as they come out of the shadows and openly serve Imperial plans.  If even the French feel safe enough to jump on the “Islamist” bandwagon, then it would appear the end is closer than we realize.  The great apparent contradiction seen in the new ploy of waging war against “al-Qaeda”-related groups in Afghanistan and Pakistan, while supporting other al-Qaeda related groups in Africa, is all the truth we need to expose the American state terrorism.  The problem arises in looking for allies against the great lying, mass-murdering tyranny.  As it is, we stand alone against the greatest, most subtle form of evil ever to plague mankind.  

The great question is–how do we use the American need to maintain the mask of benevolence to our greatest advantage, in the remaining time frame, before they bring the hammer down full-force?  After they are no longer restrained by the need to preserve the humanitarian image, there will be no other recourse but meting violence with violence.  Motivating the Mindless–is it even possible? ]

France in Major U-turn on Islamists

OnIslam & News Agencies
France, Islamists

“Let us speak to everyone, let us speak to the Muslim Brotherhood,” Juppe said

PARIS – In a major shift on Islamists following popular uprisings in the Arab world, France has said that it is open for talks with all Islamic groups, including the powerful Muslim Brotherhood.

“We are willing to talk to everyone,” Foreign Minister Alain Juppe told a group of journalists in Paris, Reuters reported.

“Let us speak to everyone, let us speak to the Muslim Brotherhood,” he added, in reference to Egypt’s most powerful opposition group.

Established in 1928 in Egypt, the Muslim Brotherhood is a group working to promote Islamic values among people. It has affiliates in several countries.

For years, the Muslim Brotherhood was banned and its leaders were repressed by governments in countries as Egypt and Tunisia.

But the group is now expected to play a major political role in those countries after popular uprisings that toppled Egypt’s President Hosni Mubarak and Zine Al-Abidine Ben Ali in Tunisia.

France, like most Western countries, has long held a suspicious view of popular Islamic movements like the Muslim Brotherhood.

Western countries often supported Western-friendly Arab leaders as a bulwark against extremism.

But after popular protests that swept the Middle East, many Western states have begun to change their positions on Islamic groups.

Explaining the policy shift, Juppe said France had been duped by leaders who made Muslim movements out as the devil.

“We believed them and now we can see the result,” he said, referring to the slowness of France’s reaction to budding popular revolutions in Tunisia and Egypt.

Building Image

The U-turn is seen as a French bid to build early ties with political groups that could take power in some Middle East states once the dust settles from political upheaval.

“Alain Juppe is indeed trying to rebuild a positive image of France in the Arab world and in the hearts and minds of Arabs everywhere,” Pascal Boniface, a researcher at the Institute of International and Strategic Relations, told Reuters.

France, home to six million Muslims, has won the ire of many Arabs and Muslims around the world over laws restricting the Muslim code of dress.

In 2004, France banned hijab, an obligatory code of dress, in public places. Many European countries followed suit.

Earlier this month, France enforced a law banning the wearing of face-veil in public places.

Under late president Charles de Gaulle, France was long seen as a friend to Arab peoples due to criticism of Israeli policy and the sheltering of late Palestine Liberation Organization leader Yasser Arafat and opposition to the 2003 invasion of Iraq.

But France has since dispensed with this image.

President Nicolas Sarkozy has been an open supporter of Israel and took a so-called “pragmatic” position with regard to autocratic Arab leaders like deposed Tunisian president Ben Ali, who was often described in France as a moderate reformer.

France’s new diplomatic tone suggests Sarkozy is favoring democratic aspirations — and the hope of forming ties with a new generation of Arab leaders — over stability.

“The fact we favored stability brought by authoritarian regimes proves turned out not to be a good option because in the end, the stability disappeared,” a French diplomat said, speaking on the condition of anonymity.

A stronger accent on democratic aspirations is likely to please the United States, as long as it does not come at the expense of France’s support of Israel.

“It’s very much along the lines of what we’d like to hear,” a Western diplomat said.

The Lucifer Principle

The Lucifer Principle.pdf

Who is Lucifer?

Then Lucifer set forth to conquer the earth, using as his pawn a fresh godly invention, an innocent pair Jehovah had planted in a
garden–Adam and Eve. The Great Seducer tempted Eve with the apple of knowledge. She could not resist the Luciferian fruit. Eve’s sin
against God corrupted all mankind. Ever since that time, man has aspired to the Lord, but found himself a victim of the devil.
Marcion the heretic said God was responsible for evil. Mainstream Christians absolved the Almighty of responsibility by blaming all that’s
wrong on the Prince of Darkness and on man. But, in a strange way, Marcion had a better handle on the situation than the more
conventional followers of the church, for Lucifer is merely one of the faces of a larger force. "Evil" is a by-product, a component of
creation. In a world evolving into ever higher forms, hatred, violence, aggression and war are a part of the evolutionary plan. But where do
they fit? Why do they exist? What possible positive purpose could they serve? These are some of the questions behind The Lucifer
The Lucifer Principle is a complex of natural rules each working together to weave a fabric that sometimes frightens and appalls us. Every
one of the threads in that tapestry is fascinating. But the big picture is more astonishing still.
At its heart, The Lucifer Principle looks something like this. The nature scientists uncover has crafted our viler impulses into us–in fact,

they are a part of the process she uses to create. Lucifer is the dark side of cosmic fecundity, the cutting blade of the sculptor’s knife.
Nature does not abhor evil; she embraces it. She uses it to build. With it she moves the human world to greater heights of organization,
intricacy and power.
Death, destruction and fury do not disturb the mother of our world. They are merely parts of her plan. Only we are outraged by the Lucifer
Principle’s consequences. And we have every right to be. For we are casualties of nature’s callous indifference to life, pawns who suffer
and die to live out her schemes.
One result: from our best qualities come our worst. From our urge to pull together comes our tendency to tear each other apart. From our
devotion to a higher good comes our propensity to the foulest atrocities. From our commitment to ideals come our excuses to hate. Since
the beginning of history, we have been blinded by evil’s ability to don a selfless disguise. We have failed to see that our finest qualities are
often the generators of the actions we most abhor–murder, torture, genocide and war.
For millennia men and women have looked at the ruins of their lost homes, at the people precious to them whom they will never see alive
again, and they have asked that spears be turned to pruning hooks and that mankind be granted the gift of peace. But prayers are not enough.
To dismantle the curse that mother nature has built into us we need a new way of looking at man, a new way of reshaping our destiny and
undoing the secret pleasure we take in the shedding of blood.
We must build a picture of the human soul that works. Not a romantic vision that nature will take us in her arms and save us from
ourselves, but a recognition that the enemy is within us, and that nature has deposited it there. We need to stare directly into nature’s
bloody face and realize that she has saddled us with evil for a reason. And we must understand that reason to outwit her.
For Lucifer is almost everything men like Milton imagined him to be. He is ambitious, an organizer, a force reaching out vigorously to
master even the stars of heaven. But he is not a demon separate from nature’s benevolence. He is a part of the creative force itself.
Lucifer, in fact, is mother nature’s alter ego.

Geopolitical Implications of the World Economic Crisis

Geopolitical Implications of the World Economic Crisis


Geopolitical Implications of the World Economic CrisisIntroduction

The world economic depression is a dire threat to the national security of the United States. To date, little or nothing has been done to address the causes of the depression and rebuild the economy. With the lack of leadership and vision in the western world, the depression will continue until the Anglo-American economic system known as the Washington Consensus self-destructs. This is occurring rapidly, and the Beijing Consensus is being asserted to replace it. At some point during this process the center of world politics, economics and military power will shift to North East Asia. This shift will not happen peacefully, and system wide warfare is the likely outcome if this breakdown crisis is allowed to run its course.

Let us be clear that we are in a depression on par with the Great Depression, not a downturn, a slowdown, a rough patch or a recession. Housing values have already fallen on average 26%, and during the Great Depression they fell 25.9% (1). We are not at the bottom for real estate by any means either. Unemployment the way it was measured back then was at least 24.9% (2). Today by those measures it stands at about 23% (3). Let there be no mistake, we are in an extreme crisis. The purpose of this passage is to emphasize the magnitude of the crisis. Calling it by other names and creating a false propaganda reality will only delay the actions needed to combat the depression. The longer our leaders delude themselves, the more severe the crisis will become.

Derivatives are the Cause of the Depression

The origin of the crisis lies in deregulated credit derivatives of various types. The proper way to understand derivatives is that they are some form of paper based on paper. Anytime we are more than one step removed from an underlying asset we are dealing with derivatives. The Bank of International Settlements admits that there are around ~$600 trillion in derivatives out there (4). This is more than ten times the entire GDP of the Earth, which is about ~$58 trillion. Other sources indicate that the outstanding amount of derivatives of all types approached ~$1.5 quadrillion, and has now fallen to a mere ~$1 quadrillion (5). A dangerous feature of derivatives is that they are zero sum instruments, in that there is always a winner and a loser. This means that every derivative represents some amount of debt that someone will have to pay at some point in the future, with the notional fulfillment value much higher than the market value of the instrument.

These derivatives are controlled by globalized finance oligarchs based primarily in New York and London. These oligarchs dominate the governments of most western countries, and they have abused their power by making the sole mission of the state that of propping them up. All of the other concerns of the nation states of the world are regarded as secondary to the effort to rehabilitate the cancerous mass of $600 trillion-$1.5 quadrillion of derivatives. The United States cannot recover until Wall Street is stopped and put into receivership by the federal government, and the derivatives are liquidated in bankruptcy proceedings. The Special Inspector General of the Troubled Asset Relief Program (SIGTARP) Neil Barofsky reported to Congress that as of 2009 the potential public liabilities from the banking bailouts of various types were already at $23.7 trillion just for the United States (6). The Wall Street banking cartel, and the London oriented Inter-Alpha Group of Banks are already bankrupt. They exist as economic wards of the state, and survive only because of vast amounts of public money. The deregulated markets that they need in order to operate are also responsible for tremendous instability around the world. Here is the example of Federal Reserve (The Fed) Chairman Bernanke’s Quantitative Easing II (QE2) bailout program, and how it is contributing to the destabilization of the world.

Banker Bailouts Destabilize the World

QE2 is by no means the only liquidity vehicle being used to recapitalize the banks, but it is a discrete example that can be used in the space available here. All of the money coming from the other unmentioned credit facilities is subject to the same logic presented here on QE2. QE2 involves the Federal Reserve engaging in open market operations to monetize ~$110 billion per month of treasury securities in the 7-10 year range, and this is ongoing. This means they print the money and give it to the banks, and the treasury securities go onto the Fed balance sheet.

The money that the banks get is not regulated, and they can use it anyway that they want to. Since the Fed maintains its interest rate at .25%, the banks have a hard time making any money in the United States. This money becomes flight capital because of this. The banks send it to speculate in emerging markets, commodities exchanges, foreign exchange markets and derivatives. Emerging markets are experiencing speculative booms and busts because of this hot money, and this is destroying jobs and social order across the third world. This constant huge influx of flight capital is driving up the currencies of exporting nations like Brazil and Japan, and stoking high inflation in China because of the Renminbi peg to the dollar. The Finance Minister of Brazil has stated that currency war has already broken out around the world (7). This analysis of QE2 is supported by Joseph Stiglitz in an interview with the London Telegraph (8).

When this money hits deregulated commodities markets we see speculative booms in prices to unprecedented levels, and this includes food stuffs. Food prices are at all time highs, and have risen dramatically in the last year (9). Much of the unrest across North Africa and in the Middle East is the result of massive increases in food prices. In areas where large sections of the population survive on $2 per day or even less, this is a matter of life and death. Chairman Bernanke’s banking bailout activity is destroying the geostrategic position of the United States around the world as friendly regimes fall, or are destabilized and weakened. America’s influence throughout the entire third world is now seen to be in decline because of the depression. The growing un-governability in the United States may drastically accelerate the crisis as well.

The approaching danger here lies in the destabilization of the US Treasury market. Brief explanation is required. The only source of US dollars in the world is here in the US, not in China, or anywhere else. Congress first appropriates money into existence to do various things, and second authorizes bonds to be issued by the treasury. The media deceives people into believing that it is the other way around, and this leads to confusion. Part of the money appropriated into existence goes to fund the trade deficit with China. The bonds that are issued from the treasury allow China a place to invest those dollars without driving up prices in other markets. Limiting the availability of bonds to soak up these dollars is dangerous to the international currency system, and the mass of derivatives associated with it.

The House Republicans are playing a game of brinksmanship with President Obama and the Democrats over the US debt ceiling this spring. This is an ideological and demagogic exercise. If the ceiling is not raised, no new bonds can be issued. This does not stop congress from spending money, because the government is the sole source of new dollars in the world. It also does not stop the trade deficit from continuing either. It just means that as the deficit continues, and treasury bonds are naturally redeemed over time, there will not be enough new bond issues to roll over into. In order to have economic stability in a situation like this the federal deficit would have to quickly fall to an amount equal to interest payments on the debt plus bond redemptions, and there would have to be no trade deficit. This would allow enough month to month roll over room to keep the current dollar supply locked up in bonds.

Since that level of cutting cannot and should not happen, it means that hundreds of billions of dollars that are currently locked up in the secondary treasury market will suddenly be forced to start competing for scarce goods and services around the world. This could cause a dramatic currency crisis, and bring a new wave of mass panic to nations around the world. With the world economic system already battered from the depression, there is no telling how the system would react to this potentially huge shock. Our leaders would be wise to back away from the abyss, and not test the theory.

Anglo-American Institutions in Crisis

The post-WWII international financial institutions dominated by the Anglo-Americans are also collapsing. The World Bank, dominated by the Washington Consensus, has fallen behind the Chinese in lending to developing countries. The World Bank loaned out ~$100 billion from mid-2008 to mid-2010. The Chinese Development Bank and Export Import Bank lent ~$110 billion during a comparable period of time (10). This means that western influence is waning all across the third world. Africa, Latin America and South Asia are turning increasingly to Beijing and not Washington for economic development. This translates directly to loss of strategic position and influence around the world.

China is overtaking the United States economically at an alarming rate. Chinese financial institutions have overtaken the World Bank in lending to developing countries. In 2010 China surpassed America in total energy consumption (11). China is projected to pass America in manufacturing either this year or in the next few (12). America has been the greatest manufacturing nation in the world for 110 years, and when we took the crown from Britain we became the greatest nation in the world. America will cease to be the greatest nation in the world when it is surpassed in industrial capability by China.

The GDP measurement appears to give America some breathing room with the US at $14.6 trillion and China at $5.7 trillion. GDP measurement should not fool anyone though, because it is a fraudulent measure of economic strength. This is because GDP counts everything that goes on in an economy. In the world of physical economy and national greatness many things do not count: narcotics trafficking, money laundering, gambling, pimping and prostitution, lawsuits, and generally all forms of Wall Street related speculative activity. In real physical terms the Washington Consensus is being defeated by the Beijing Consensus, and the change over in domination of the world system is not likely to be peaceful.

John Mearsheimer argues convincingly that potential military power derives from economic power, and potential economic power derives from population size. The unproductive activities listed above contribute to GDP, but not to potential military power and therefore should not be counted economically from the point of view of strategy. If American leaders make the mistake of believing the GDP measure, they will believe that the nation possesses more potential military power than it actually does. When leaders believe that they have significantly more power than they actually do, it is easy for otherwise rational actors to commit huge blunders.

China, Russia, and the many nations looking to them for help and protection will assert their national interests more and more against the United States over the coming years. As the crisis deepens in these countries, problems will have to be blamed on someone. Some of the problems will really be their own fault, some really will be America’s fault and it will not matter which is which. In America similar demagogic things are happening already. The obsessive, compulsive focus on the Chinese Renminbi exchange rate is a prime example. This is a mask for the larger problems of free trade, globalism and deregulation that lie at the heart of the system here. These problems will not be addressed, so there must be a suitable stand in to be blamed for all of our ills. Years of this type of propaganda on both sides sets the stage for escalating levels of confrontation. The danger of system wide warfare is real.

There is no certainty in how this conflict will play out. Of course, the apocalyptic scenarios are possible, featuring direct confrontation between great powers. The more likely scenario is already in play, and involves decades of low level guerilla war and regional scale war. The first decade of this is already completed, and in the books. These wars will prohibit industrialization and economic development across the third world, and allow the real culprits behind the crisis to fade into the background unpunished. China and Russia will begin to intervene by proxy in these brushfire wars and coups across the third world. As time goes on, the reasons for the collapse of world civilization will become less and less clear as the wars take on lives of their own. An entire generation doomed to falling standards of living, and even immiseration, will fight a thousand small endless wars as fascist corporatism dominates the formerly free nations of the West.

The only way for the United States to avoid this fate is to return to its economic traditions. End globalization, the free trade mania and bring back the protective tariff. Break up finance capital with a new Glass-Steagall Act. Bringing industrial development back to this country will automatically put tremendous internal pressures on rival nations when they are no longer able to rob America blind for free. This will preserve the reserve currency status of the dollar, and stabilize markets around the world. Force the Chinese economic engine to fuel itself, and the Chinese Miracle will be shown to be an empty illusion.

(1) Curnutte, Katie. “Home Value Declines Surpass Those of Great Depression”, 1/11/2011. Accessed on 2/11/2011.
(2) Vangiezen, Robert and Schwenk, Albert. “Compensation from before World War I through the Great Depression”. Bureau of Labor Statistics, 1/30/2003. Accessed on 2/11/2011.
(3) Williams, John. “Unemployment (U3 & U6) vs SGS Alternate”, 1/2011 data. Shadow Government Statistics. Accessed on 2/11/2011.
(4) Bank of International Settlements. “Table 19: Amounts Outstanding of over-the-counter (OTC) derivatives”. Accessed on 2/11/2011.
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SourceStrategic Culture Foundation