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Empire - Jan 28

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Going Bankrupt: Why the Debt Crisis Is America's Greatest Threat

Chalmers Johnson, Tomdispatch via AlterNet
...going into 2008, the United States finds itself in the anomalous position of being unable to pay for its own elevated living standards or its wasteful, overly large military establishment. Its government no longer even attempts to reduce the ruinous expenses of maintaining huge standing armies, replacing the equipment that seven years of wars have destroyed or worn out, or preparing for a war in outer space against unknown adversaries. Instead, the Bush administration puts off these costs for future generations to pay -- or repudiate. This utter fiscal irresponsibility has been disguised through many manipulative financial schemes (such as causing poorer countries to lend us unprecedented sums of money), but the time of reckoning is fast approaching.

There are three broad aspects to our debt crisis. First, in the current fiscal year (2008) we are spending insane amounts of money on "defense" projects that bear no relationship to the national security of the United States. Simultaneously, we are keeping the income tax burdens on the richest segments of the American population at strikingly low levels.

Second, we continue to believe that we can compensate for the accelerating erosion of our manufacturing base and our loss of jobs to foreign countries through massive military expenditures -- so-called "military Keynesianism," which I discuss in detail in my book Nemesis: The Last Days of the American Republic. By military Keynesianism, I mean the mistaken belief that public policies focused on frequent wars, huge expenditures on weapons and munitions, and large standing armies can indefinitely sustain a wealthy capitalist economy. The opposite is actually true.

Third, in our devotion to militarism (despite our limited resources), we are failing to invest in our social infrastructure and other requirements for the long-term health of our country. These are what economists call "opportunity costs," things not done because we spent our money on something else. Our public education system has deteriorated alarmingly. We have failed to provide health care to all our citizens and neglected our responsibilities as the world's number one polluter. Most important, we have lost our competitiveness as a manufacturer for civilian needs -- an infinitely more efficient use of scarce resources than arms manufacturing. Let me discuss each of these.
(23 January 2008)
Although Mr. Johnson does not emphasize oil, the approaching scarcity of oil has implications both for the U.S. military and economy. -BA


An empire from a tub of goo

Erin Anderssen, Shawn McCarthy and Eric Reguly; Globe and Mail
... The world finally was acknowledging what Albertans had been saying for decades: that their oil sands rival any source of crude on Earth. “If you took all the oil in the south of the United States and all the oil in Alaska and all the oil in Mexico,” Mr. Smith points out, “it doesn't hold a candle to Alberta.”

With rising prices and prospects of a Mideast war prompting concerns about the security of the U.S. supply, media giants from CBS's 60 Minutes and The New York Times flocked to the tale of an oil bonanza so close to home. Enthusiasts outnumbered the skeptics and the phrase “second only to Saudi Arabia” went from speculation to conventional wisdom. Alberta had become a bankable star in the global oil game.

Or as Mr. Smith jokes: “It only took 40 years to become an overnight success.”

A decade earlier, the oil sands had resembled a massive boondoggle, backed by only a few believers who struggled to attract capital for faltering projects. And now the race to profit off that pile of dirt spread across an area the size of Florida is transforming the country.

Now, oil production in northern Alberta is expected to quadruple to more than four million barrels a day by about 2020, if all the projects proposed go ahead. Virtually every major oil company in the Western world has picked up a piece of the action, investing nearly $90-billion to create what promises to be the biggest industrial project on Earth and sparking predictions that Canada will become what Prime Minister Stephen Harper calls an “energy superpower.”
(26 January 2008)
Contributor CP writes:
This is the first of an eight-day series the Globe is publishing on the Alberta tar sands.


Waving Goodbye to Hegemony

Parag Khanna, New York Times
Turn on the TV today, and you could be forgiven for thinking it’s 1999. Democrats and Republicans are bickering about where and how to intervene, whether to do it alone or with allies and what kind of world America should lead. Democrats believe they can hit a reset button, and Republicans believe muscular moralism is the way to go. It’s as if the first decade of the 21st century didn’t happen - and almost as if history itself doesn’t happen. But the distribution of power in the world has fundamentally altered over the two presidential terms of George W. Bush, both because of his policies and, more significant, despite them. Maybe the best way to understand how quickly history happens is to look just a bit ahead.

It is 2016, and the Hillary Clinton or John McCain or Barack Obama administration is nearing the end of its second term. America has pulled out of Iraq but has about 20,000 troops in the independent state of Kurdistan, as well as warships anchored at Bahrain and an Air Force presence in Qatar. Afghanistan is stable; Iran is nuclear. China has absorbed Taiwan and is steadily increasing its naval presence around the Pacific Rim and, from the Pakistani port of Gwadar, on the Arabian Sea. The European Union has expanded to well over 30 members and has secure oil and gas flows from North Africa, Russia and the Caspian Sea, as well as substantial nuclear energy. America’s standing in the world remains in steady decline.

Why? Weren’t we supposed to reconnect with the United Nations and reaffirm to the world that America can, and should, lead it to collective security and prosperity? Indeed, improvements to America’s image may or may not occur, but either way, they mean little. Condoleezza Rice has said America has no “permanent enemies,” but it has no permanent friends either. Many saw the invasions of Afghanistan and Iraq as the symbols of a global American imperialism; in fact, they were signs of imperial overstretch. Every expenditure has weakened America’s armed forces, and each assertion of power has awakened resistance in the form of terrorist networks, insurgent groups and “asymmetric” weapons like suicide bombers. America’s unipolar moment has inspired diplomatic and financial countermovements to block American bullying and construct an alternate world order. That new global order has arrived, and there is precious little Clinton or McCain or Obama could do to resist its growth.
(27 January 2008)
Long excerpt from a book.

Related from the NY Times: A New France in the New Middle East: Forget Glory.


The Unraveling of Russia’s Europe Policy

Peter Zeihan, Stratfor
Russian President Vladimir Putin and his anointed successor, Dmitri Medvedev, were in Bulgaria on Jan. 17. The point of the trip was to put the crowning touch on a Russian effort to hook Europe into Moscow’s energy orbit. After a touch of bitter rhetoric about how Russia and Bulgaria were “doomed to be partners,” Putin agreed to grant equal rights to the South Stream natural gas pipeline Moscow hopes to lay through Bulgaria. Yet the tension of the meeting and the concessions that Putin had to make simply to get permission are symptomatic of a broad unraveling of Russian foreign policy toward Europe.
The Russian Scheme

Russia often has had a love-hate relationship with Europe. Dating back to the time of the czars, Moscow has had to aim for a mix of economic integration and military intimidation to make its voice heard. In the aftermath of the Cold War and the degradation of the Red Army, the military intimidation factor has largely fallen away, leaving economics as the primary method of impacting Europe. In this, Russia has forces at its disposal every bit as useful as Soviet tank divisions. Cold War-era infrastructure provides the 27-member European Union with roughly one-quarter of the natural gas and oil it consumes. Such dependence might not be sufficient to force European deference, but it certainly guarantees that Europe will hear Russia out.

Natural gas is unique among the various industrial and energy commodities. The combination of its gaseous nature and the sheer bulk that is required to power large economies (the European Union uses more than half a trillion cubic meters of the stuff a year) means that it can only be efficiently transported via pipeline.

...In short, Europe is reorienting its entire energy sector to eliminate the “Russian factor.” This is allowing the Europeans to take a firmer line on Russia in other areas as well.
(22 January 2008)
Contributor Ed writes:
Peter Zeihan is a senior analyst with Strategic Forecasting, Inc, (www.stratfor.com), a political, economic, and security consulting firm.

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