Jun 18 2009

The American Empire Is Bankrupt

(11:00AM EST – promoted by Nightprowlkitty)

I’ve been a fan of Chris Hedges ever since I first noticed him.  The guy is simply tuned in.

But this recent piece of his can leave you staring at the ceiling, wide awake, when you should be sleeping.  

The American Empire Is Bankrupt

Here’s a small sample:


To fund our permanent war economy, we have been flooding the world with dollars. The foreign recipients turn the dollars over to their central banks for local currency. The central banks then have a problem. If a central bank does not spend the money in the United States then the exchange rate against the dollar will go up. This will penalize exporters. This has allowed America to print money without restraint to buy imports and foreign companies, fund our military expansion and ensure that foreign nations like China continue to buy our treasury bonds. This cycle appears now to be over. Once the dollar cannot flood central banks and no one buys our treasury bonds, our empire collapses. The profligate spending on the military, some $1 trillion when everything is counted, will be unsustainable.

“We will have to finance our own military spending,” Hudson warned, “and the only way to do this will be to sharply cut back wage rates. The class war is back in business. Wall Street understands that. This is why it had Bush and Obama give it $10 trillion in a huge rip-off so it can have enough money to survive.”

The desperate effort to borrow our way out of financial collapse has promoted a level of state intervention unseen since World War II. It has also led us into uncharted territory.

“We have in effect had to declare war to get us out of the hole created by our economic system,” Lanchester wrote in the London Review of Books. “There is no model or precedent for this, and no way to argue that it’s all right really, because under such-and-such a model of capitalism … there is no such model. It isn’t supposed to work like this, and there is no road-map for what’s happened.”

The cost of daily living, from buying food to getting medical care, will become difficult for all but a few as the dollar plunges. States and cities will see their pension funds drained and finally shut down. The government will be forced to sell off infrastructure, including roads and transport, to private corporations. We will be increasingly charged by privatized utilities-think Enron-for what was once regulated and subsidized. Commercial and private real estate will be worth less than half its current value. The negative equity that already plagues 25 percent of American homes will expand to include nearly all property owners. It will be difficult to borrow and impossible to sell real estate unless we accept massive losses. There will be block after block of empty stores and boarded-up houses. Foreclosures will be epidemic. There will be long lines at soup kitchens and many, many homeless. Our corporate-controlled media, already banal and trivial, will work overtime to anesthetize us with useless gossip, spectacles, sex, gratuitous violence, fear and tawdry junk politics. America will be composed of a large dispossessed underclass and a tiny empowered oligarchy that will run a ruthless and brutal system of neo-feudalism from secure compounds. Those who resist will be silenced, many by force. We will pay a terrible price, and we will pay this price soon, for the gross malfeasance of our power elite.

Sweet dreams …..

22 comments

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    • Inky99 on June 18, 2009 at 08:02
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    • Viet71 on June 18, 2009 at 15:04
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    The future you depict is one of a devalued dollar.  It’s the future my broker forecasts.

    The alternative is one where the dollar is kept (relatively) strong by whatever means it takes to depress the rest of the world’s economies.  I’m betting on this scenario.

    Your scenario is too awful even for the power elite.

  3. three days after Hedge’s article, here are some results –

    Russia, China to Promote Ruble, Yuan Use in Trade

    The leaders of Russia and China agreed to expand use of the ruble and yuan in bilateral trade to lessen dependence on the U.S. dollar a day after they took part in the first summit of the so-called BRIC countries.

    “We agreed to take further steps in this direction, including, perhaps, by adjusting contracts and laws that already exist,” Russian President Dmitry Medvedev told reporters in the Kremlin today after talks with his Chinese counterpart Hu Jintao.

    Russia, the world’s biggest energy supplier, wants to start selling oil to China in rubles, said Deputy Prime Minister Igor Sechin, who is also chairman of OAO Rosneft, Russia’s biggest oil company. Energy sales in rubles are a “strategic” issue for Russia, he said, adding that oil exports to China over the next 20 years will surpass $100 billion.

    Brazil, Russia, India and China agreed yesterday to push for more clout in global financial institutions during what Medvedev called BRIC’s “historic” first summit in the Ural Mountains city of Yekaterinburg. China and Russia have called for a more diversified financial system to give emerging economies a bigger say in economic affairs, including the creation of alternatives to the U.S. dollar as a reserve currency.

    Hedge’s outcomes are pretty bleak, but very possible. What has resulted in Yekaterinburg certainly seems to signify  the end of American hegemony.

    Brazilian President Luiz Inacio Lula da Silva today denied that BRIC leaders discussed buying each other’s bonds at the Yekaterinburg summit, after Medvedev’s top economic adviser said the matter might be discussed.

    Keep an eye out for this.

    and this Russian-Chinese relations hinge on delicate balance of interests

    and be sure to look at these headlines from Pravda on the same page above, which are too funny to fathom

    Baby Cyclops born in India

    Atlantis found under Antarctica

    Russian fishermen catch squeaking alien and eat it

    mmmm, squeaking alien

    • lysias on June 18, 2009 at 17:17
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    crisis of the monarchy, when the nobility and clergy refused to give up their tax privileges.

    Once the Revolution had eliminated those privileges and confiscated the land of the Church, the new French Republic was able to finance not only its domestic operations, but ambitious military adventures across the borders.

  5. me I’d take it home and post pootie shots of it. Maybe it’s a good thing if the Empire collapses. Humans are adaptable and resiliant and perhaps if the nasty world order we have is broke community will have to develop. One thing about this scenario I don’t understand is where would the money to sustain the power elites and the useless corporations? Vicious run amok capitalism can only survive if it is fueled by consumption. I already see signs in my state of turning to local economic sustainability.  

    Some of this has already happened the the tv for instance is at this time exactly as he described it. We already are a feudalistic system, the rich crooks already live in compounds (gated communities). Their are no road maps anyway as far as this free market (LOL) capitalism goes. It’s just screw or get screwed, with no other goal but profit that is not even real.            

    • Edger on June 18, 2009 at 17:38
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  7. No one before in history has had an economy based on military spending unless they also are grabbing land, taxes, slaves,  and resources from the nations they have attacked.  

    The US has gotten next to nothing from the current wars.  Maybe some oil, but even that has gone to international companies, not back to the US.  

    So, they are transferring all the money from American’s taxes and even more into the pockets of the military and military industry.  This is exactly what happened with Japan in the 1930s during the Depression–ever increasing influence of the military, as they were the only sector that could offer jobs and money.

    Today, we have raised the age to join the Army to 42.  

  8. I’m speechless.

  10. John Taylor The overview goes like this;

    The federal debt was equivalent to 41 per cent of GDP at the end of 2008; the Congressional Budget Office projects it will increase to 82 per cent of GDP in 10 years. With no change in policy, it could hit 100 per cent of GDP in just another five years.

    Then comes the scary part;

    I believe the risk posed by this debt is systemic and could do more damage to the economy than the recent financial crisis. To understand the size of the risk, take a look at the numbers that Standard and Poor’s considers. The deficit in 2019 is expected by the CBO to be $1,200bn (€859bn, £754bn). Income tax revenues are expected to be about $2,000bn that year, so a permanent 60 per cent across-the-board tax increase would be required to balance the budget. Clearly this will not and should not happen. So how else can debt service payments be brought down as a share of GDP?

    Inflation will do it. But how much? To bring the debt-to-GDP ratio down to the same level as at the end of 2008 would take a doubling of prices. That 100 per cent increase would make nominal GDP twice as high and thus cut the debt-to-GDP ratio in half, back to 41 from 82 per cent. A 100 per cent increase in the price level means about 10 per cent inflation for 10 years. But it would not be that smooth – probably more like the great inflation of the late 1960s and 1970s with boom followed by bust and recession every three or four years, and a successively higher inflation rate after each recession.

    !0% Inflation compounded annually is, by definition, hyper inflation. That’s it… there is no alternative to this except to run trillion dollar deficits as far as the eye can see and hope our creditors don’t cut us off.

  11. …and prepare to abandon ship!

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