The dollar system and US economic reality post-Iraq war

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United States - Feb 25

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Bali Confirmed the Shift: Nation Is On Board Now

Roscoe Bartlett and Michael Shank, Richmond Times-Dispatch
WASHINGTON -- It's missing the point to think about the United Nations climate change conference in Bali last December based upon on whether specific targets were agreed upon or not. This point ignores dramatic historical changes in the world concerning climate change-related attitudes and approaches. Bali is not Kyoto. The new consensus among the U.S. Congress, President George Bush, and leaders of formerly recalcitrant countries such as India, China, and Australia is this: The international community recognizes climate change, recognizes our shared contribution to it and its impact on all of us, and recognizes our shared responsibility in tackling it.

This is new. This may feel like baby steps, but it is a significant accomplishment. Take a look back at Kyoto and compare notes. The difference in attitude and approach toward climate change then, particularly within the U.S. but also within the international community, was vastly different.

Congress, for example, was ardently against Kyoto. In 1997, the Senate voted in overwhelming opposition, 95-0, to prevent U.S. protocol participation unless developing nations like India and China were bound to similar targets and timetables.

TEN YEARS later, much has changed. Concurrent with the Bali deliberations, the Senate Committee on Environment and Public Works passed the Climate Security Act, a bill co-authored by Republican Sen. John Warner and independent Sen. Joe Lieberman, which committed the U.S. to greenhouse gas emissions reductions of 15 percent by 2020. In the House of Representatives, the stalwarts representing the automobile manufacturing industry -- such as Rep. John Dingell, whose conversion was compelled by compassion and concern for our children's future -- are calling for aggressive greenhouse-gas emissions targets. The climate in Congress is radically different now. It is no longer a political liability to go green; in fact the opposite is true.
(22 February 2008)
Rep. Roscoe Bartlett is the point man for peak oil in the U.S. Congress.


GM exec stands by calling global warming a "crock"

Reuters
General Motors Corp Vice Chairman Bob Lutz has defended remarks he made dismissing global warming as a "total crock of s---," saying his views had no bearing on GM's commitment to build environmentally friendly vehicles.

Lutz, GM's outspoken product development chief, has been under fire from Internet bloggers since last month when he was quoted as making the remark to reporters in Texas.

In a posting on his GM blog on Thursday, Lutz said those "spewing virtual vitriol" at him for minimizing the threat of climate change were "missing the big picture."

"What they should be doing in earnest is forming opinions, not about me but about GM and what this company is doing that is ... hugely beneficial to the causes they so enthusiastically claim to support," he said in a posting titled, "Talk About a Crock."

GM, the largest U.S. automaker by sales and market share, has been trying to change its image after taking years of heat for relying too much on sales of large sport-utility vehicles like the Hummer and not moving faster on fuel-saving hybrid technology.

"My thoughts on what has or hasn't been the cause of climate change have nothing to do with the decisions I make to advance the cause of General Motors," he wrote.
(23 February 2008)
Also at Common Dreams.


The Dollar System and US economic reality post-Iraq War

F. William Engdahl, Oil Geopolitics
It's accepted wisdom that the United States, despite recent problems, is still the strongest growth locomotive for the world economy, the pillar of the global system. What if we were to discover that, instead of being the pillar, that the United States was, in fact, the heart of a dysfunctional economic system, which is spreading instability, unemployment, and depression globally?

No other nation on earth comes near to the commanding US military superiority in smart bombs, military IT, or in sheer force capabilities. The US position in the world since 1945, and especially since 1971, has rested on two pillars, however: The superiority of the US military over all, and, the role of the dollar as world reserve currency. That dollar is the Achilles heel of American hegemony today.

In my view, the world has entered a new, highly dangerous phase since the collapse of the US stock market bubble in 2001. I am speaking about the unsustainable basis of the very Dollar System itself. What is that Dollar System?

... This is a kind of Dollar Imperialism more slick than anything the British Empire even dreamed of. It is a part of the current America "Empire" debate no one mentions. Instead of the US investing in colonies like England to earn profits on the trade, the money comes from the client states into the US economy. The problem is that Washington has allowed this perverse system to get out of all control to the point today it threatens to bring the entire world to the point of collapse. Had the US instead promoted long-term policy of investing in the economic growth and self-sufficiency of countries like Argentina or Congo, rather than bleeding them in repayment of unpayable dollar debts, the world would look far less unstable today.

The question is if the Dollar System is reaching its real limits? The Dollar System for the past 30 years has been built on growing dollar debt. What if the rest of the world decides it no longer wants to give its savings to the US Treasury to finance its deficits or its wars? What if China decides that it should diversify its risk by buying Euro debt? Or Japan or Russia? That day may come sooner than we think.

... Oil and food, and money as strategic weapon

The fundamental reason for the Iraq war, beyond agendas of Richard Perle or other hawks, is hence, strategic in my view. US economic hegemony in this distorted Dollar System increasingly depends on a rising rate of support from the rest of the world to sustain US debt levels. Like the old Sorcerers' Apprentice. But the point is past where this can be gotten easily. That is the real significance of the US shift to unilateralism and military threats as foreign policy. Europe can no longer be given a piece of the Third World debt pie as in the 1980's. Japan has to cough up even more, as does China now.

Even ordinary Americans have to give up their pension promises. If the Dollar System is to remain hegemonic, it must find major new sources of support. That spells likely destabilization and wars for the rest of the world.

Could it be that in this context, some long-term thinkers in Washington and elsewhere have devised a strategy of establishing US military control of all strategic sources of oil for the one potential power rival, Eurasia, from Brussels to Berlin to Moscow and Beijing? The dollar vulnerability and debt problems are well known in leading policy circles.

As Henry Kissinger once noted, "Who controls the food supply controls the people; who controls the energy can control whole continents; who controls money can control the world."
(September 2003)
An oldie that continues to be relevant, especially in light of the opening of the Iranian oil bourse. Nice quote from Mr. Kissinger. -BA

Contributor Steven Lesh writes:
Official and media explanations for the invasion and subsequent occupation of Iraq never made sense to anyone familiar with the national security issues involved. An even cursory examination of the history of US and British involvement in the Middle East - and for that matter official US pronouncements, e.g. The Carter Doctrine, made oil stand out like a sore thumb.

However, as Engdahl explains, those oil reserves have been a 'red herring', distracting attention from the fundamental issues of national power - political and economic - at stake in Iraq. Those issues include: the ability of the US government to continue financing its military domination of the world; and the value of all the 'wealth' - denominated in US dollars – accumulated by foreign central banks and wealthy investors in the years since the US went off the gold-based Bretton Woods international monetary system.

The international monetary system is a HUGE issue for anyone interested in peace and a sustainable world! Until the current broken system is fixed, there is little reason to expect any meaningful change from the democratic political processes - controlled as they are by the world's wealthy.

For additional reading on this subject, see Michael Hudson's "Super Imperialism" and "Global Fracture".

UPDATE (Feb 26). Changed Stephen Lesh's comments at his request. -BA

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