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Archive for June, 2011

Western Imperialism Strikes Again                                                           June 16, 2011

In his 2005 exposé, Confessions of an Economic Hit Man, John Perkins describes his life as an economic hit man in the 1970s.   As a chief economist for the consulting firm Chas. T. Main, Perkins worked with U.S. intelligence agencies and multinational corporations to convince foreign leaders to build infrastructure projects in their countries financed by billions of dollars of loans from the World Bank and other lending institutions.  Perkins’ job was to provide phony or exaggerated predictions of the economic benefits of such programs for the country undertaking the massive loans.  Once hooked into loans it ultimately could not repay, the victimized country was then used as a pawn to further U.S. foreign policy and economic interests.

In the classic one hand washes the other and both hands wash the face scheme, the loans were given with the stipulation that the construction and engineering contracts for the projects were awarded to American companies.  In return, handsome bribes and kickbacks were provided to the signatories (heads of state).  Those on the hook were the taxpayers in the developing countries who were stuck with massive debt they could not repay.  Not only did the imperialistic scheme destroy any hope the world’s poor had for developing their countries, when default happened the U.S. or the International Monetary Fund would move in and dictate the terms of bankruptcy which included everything from control of its budget to dictating its United Nations votes to security agreements.

According to Perkins, from time to time there were foreign heads of state that refused to play ball, refused to accept financial remuneration for acquiescing to loans that would enrich American companies and ultimately place their countries in bankruptcy with the U.S. government acting as receiver.  When that happened jackals were sent in to eliminate the obstruction.  Perkins mentions at least two leaders, President Jaime Roldos Aguilera of Ecuador and General Omar Torrijos of Panama who were assassinated because they put the best interest of their countries ahead of their personal greed.  If assassination were not possible pretences for full military invasion were produced to bring the rogue leader to justice.  Panama’s Manuel Noriega was “brought to justice” in this manner.

And that brings us to our current involvement in Libya.  It is a well-known fact that Muammar Gadaffi has been an international pariah for most of his 42 years ruling Libya.  However, in 2004 after Gadaffi ended his quest for weapons of mass destruction, President Bush lifted sanctions against Libya.  Since then American companies have invested heavily in Libya.  For instance, energy giants ConocoPhillips and Marathon have each invested about $700 million.  Everything seemed to be going great.

However, let’s not forget that Gadaffi has always marched to his own tune.   Over time Gadaffi began demanding tougher contract terms, big bonuses up front, and most remarkably he demanded that global oil companies operating in Libya pay the $1.5 billion bill for Libya’s role in the attack on Pan Am Flight 103 and other terrorist attacks or face “serious consequences” for their oil leases.  But perhaps the last straw for American imperialists was Gadaffi’s plan to unite African and Arab states under a new currency to rival the dollar and Euro.  Under the proposal, oil and other resources would be sold only for gold dinars.  The economic implications for the West would be immense.

All of these moves by Gadaffi have not only made it difficult for western oil companies to operate in Libya, his gold dinar proposal could be the beginning of the end for western currency hegemony.  Gadaffi had not held up his end of the deal with western corporatists.  He was not “playing ball”.  Western special operations forces on the ground in Libya were unable to covertly assassinate the Libyan leader.  Thus, under the pretense of protecting civilians, NATO instituted a military “no-fly zone” over Libya.  Make no mistake about it, military operations in the skies over Libya have always been about regime change in Libya.  NATO forces care about the civilians on the ground in Libya about as much as American forces cared about the more than one million Iraqis who have been killed as a result of our eight year war of “liberation” in that country.

At the end of the day, the Libyan experience doesn’t fit perfectly into the Economic Hit Man box but it does prove that western imperialism is alive and well in Libya.  President Obama brilliantly employed Rahm Emanuel’s mantra “….never let a serious crisis go to waste” by using the protection of civilians as a pretense to eliminate a foreign leader who wouldn’t “play ball” with western corporate interests.  Like Noriega before him, Gadaffi will go down in history as a leader who defied the global elite, escaped assassination but fell to military invasion.  Anyone who doesn’t believe history repeats itself is a fool.

Article first published as Western Imperialism Strikes Again on Blogcritics.

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What does Bernanke have up his Sleeve after QE2?

One thing is for sure, Federal Reserve chairman Ben Bernanke’s second round of quantitative easing (QE2) will come to an end sometime this month.  Since November of last year the Fed has pumped close to $600 billion into the economy by buying treasury bonds from the balance sheets of banks.  This was intended to keep interest rates low, encourage lending by banks, stabilize housing prices, and consequently stimulate growth in our economy.  As of yesterday, interest rates are still low and banks have begun to lend some, but housing prices are lower than before QE2 began, economic growth has slowed, price inflation is significantly higher, and unemployment has climbed back up to 9.1 percent.  For the average American trying to eke out a living, QE 2 has been an utter disaster.  Of course for Wall Street banks it has been another bonanza courtesy of the Creature from Jekyll Island.

After all, Chase, Wells Fargo, Goldman Sachs and Bank of America are all doing fairly well given the general economic misery still experienced by the rest of us.  Interest bearing reserves of depository institutions held at the Fed are way up and the Dow Jones Industrial Average is 1100 points higher than it was at the end of the first month of QE2.  Why are these two facts so important?  You see even though banks still are not lending a lot to businesses and ordinary Americans they are making huge amounts of profits using our money courtesy of the Fed to save at the Fed and invest in the stock market.  Once again Bernanke inflates, his buddies on Wall Street cash in, and the rest of us are left holding the tab in the form of higher debt and prices.

The big question is what comes next?  After QE2 expires will we see a QE3?  Chances are good.  Let’s be honest, the economy is still in awful shape.  This is because Washington did not allow it to liquidate all the mal-investments from the financial crisis of 2008.  The only thing that has kept the economy afloat is the monetary and fiscal stimulus coming out of Washington.  The fact is that if Uncle Scam had let nature take its course and permitted the economy to crash there would have been intense short-term pain, but by now we would be well on the way to recovery.  Instead, Bernanke and first Bush then Obama have pumped trillions into the economy to “stimulate” it back to health.   What has transpired are new bubbles notably in the stock market and mergers and acquisitions.

And that is why I believe we will see QE3.  When QE2 ends the money supply’s rate of growth will slow.  Somewhat similar to an interest rate hike the end of Bernanke’s largess will put pressure on the new bubbles.   Given that a presidential election is just around the corner and member banks will see their bottom lines slashed, Bernanke will accommodate his benefactors in the White House and on Wall Street by commencing QE3 to stave off the next crisis.  The can will be kicked down the road at least until after Election Day 2012.  Hundreds of billions of dollars more will be pumped into the economy.  If you think price inflation is bad now you ain’t seen nothing yet.

The bottom line is that whichever course Bernanke chooses QE3 or no QE3 the economy will eventually have to crash.  Because it was not allowed to do so in 2008 the crash will be bigger and probably longer in duration.  So I guess I was wrong at the outset of this article.  Two things are for sure.  QE2 will end in June and  inevitably Americans are screwed economically.

Kenn Jacobine teaches internationally and maintains a summer residence in North Carolina

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