As Ye Sow, So Shall Ye Reap

Paul Craig Roberts

The year 2014 could be shaping up as the year that the chickens come home to roost.

Americans, even well-informed ones, don’t know all of the mistakes made by neoconized and corrupted Washington in the past two decades. However, enough is known to see that the US has lost economic and political power, and that the loss is irreversible.

The economic cost of this lost will be born by what remains of the middle class and the increasingly poverty-stricken lower class. The one percent will have offshore gold holdings and large sums of money in foreign currencies and other foreign assets to see them through.

In the political arena, the collapse of the Soviet Union presented Washington with the grand opportunity to reallocate the Pentagon budget to other uses. Part of the reduction could have been returned to taxpayers for their own use. Another part could have been used to improve worn out infrastructure. And another part could have been used to repair and improve the social safety net, thus insuring domestic tranquility. A final, but perhaps most important part, could have been used to begin repaying the Treasury IOUs in the Social Security Trust Fund from which Washington has borrowed and spent $2 trillion, leaving non-marketable IOUs in the place of the Social Security payroll tax revenues that Washington raided in order to fund its wars and current operations.

Instead, influenced by neoconservative warmongers who advocated America using its “sole superpower” status to establish hegemony over the world, Washington let hubris and arrogance run away with it. The consequence was that Washington destroyed its soft power with lies and war crimes, only to find that its military power was insufficient to support its occupation of Iraq, its conquest of Afghanistan, and its financial imperialism.

Now seen universally as a lawless warmonger and a nuisance, Washington’s soft power has been squandered. With its influence on the wane, Washington has become more of a bully. In response, the rest of the world is isolating Washington.

The prime minister of India, Manmohan Singh, recently declared China and Russia to be India’s “most important partners” with whom India shares “common strategic interests.” Prime Minister Singh said: “ India and Russia have always had a convergence of views on global and regional issues, and we value Russia’s perspective on international developments of mutual interest.”

India joined China in expressing concerns about the Federal Reserve’s practice of printing money in order to cover Washington’s vast red ink. The BRICS (Brazil, Russia, India, China, South Africa) are taking steps to create their own method of settling trade accounts in order to protect themselves from the looming dollar implosion,

China has forcefully called for a “de-Americanized world.” After watching the “superpower” offshore a large part of its GDP to China and then add to the diminished tax base the burden of $6 trillion in wars that brought no booty and served no US interest, China has concluded that American power is spent. The London Telegraph thinks “it is only a matter of time before the renminbi replaces the dollar as the primary currency for trading commodities and resources.”

The Obama regime attempted to attack Syria based on the sort of lies that the Bush regime used to invade Iraq, only to be slapped down by the British Parliament and Russian government. This rebuke was followed by the childishness of the government shutdown and threat of default. Consequently, the Washington morons have lost their monopoly on economic and political leadership. A few days ago the British government announced a historic agreement that permits British investors direct access to China’s markets and allows Chinese banks to expand their operations in Great Britain.

In Australia, the US dollar will no longer be used as the currency in which to settle the Australian trade accounts with China. Instead of dollars, trade will be settled in the Chinese currency.

Washington served as cheerleader, as did most economists and libertarians, while US corporations, greedy for short-term profits and executive bonuses, offshored US industry and manufacturing, calling it free trade. The obvious and predicted result is that China’s demand for resources needed to fuel its industrial and manufacturing power now dominates markets. This means that the US dollar is being displaced as world currency. The only market that America dominates is the market for financial fraud.

When industrial, manufacturing, and tradeable professional service jobs are offshored, they take US GDP and tax base with them. The foreign country gets the benefit of the relocated economic activity. Due to the revenues lost from jobs offshoring, there is a large gap between federal revenues and federal expenditures. As Washington’s irresponsible behavior has raised so many doubts about the dollar’s value and the government’s commitment to stand behind its massive debt, foreign countries with trade surpluses with the US are less and less willing to recycle those surpluses into the purchase of US Treasury debt.

Today the two largest holders of US Treasury debt are not investors or even foreign central banks. The two largest holders are the Federal Reserve and the Social Security Trust Fund.

As for those $6 trillion wars, that’s to pay for national defense to protect us from women, children, and village elders in far away countries devoid of air forces and navies, and to provide those recycled taxpayer monies from the military/security complex that find their way into political contributions.

The Wall Street gangsters sighed for relief over the last minute debt ceiling agreement. This shows how short-term Wall Street’s outlook is. All the October agreement did was to push off the crisis to January and February. The “debt ceiling agreement” did not produce a new debt ceiling that would last beyond February, and it did not resolve the large difference between federal revenues and expenditures. In other words, the can was again kicked down the road. A repeat of the October fiasco won’t play well.

Obamacare is causing the premiums on private insurance polices to rise substantially, almost doubling in some situations unless people move to the uncertain exchanges, and Obamacare’s raid on Medicare payroll tax revenues has resulted in a cut in Medicare payments to health care providers. The result is a further reduction in consumer discretionary income and a further drop in the economy.

This in turn means a larger federal budget deficit and the need for the Federal Reserve to purchase more debt.

Another reason the Federal Reserve is faced with increasing, not tapering, quantitative easing (money printing) is the decline in foreign purchases of US Treasury bills, notes, and bonds. As the instruments pay interest that is less than the rate of inflation, holding Treasury debt makes no sense when the dollar’s value and the potential of default are open questions.

According to reports, not only are foreign governments, such as China, ceasing to buy US Treasury debt, China has started to sell off its holdings, substituting gold in the place of US Treasury debt.

This means that the bonds must be purchased by the Fed or interest rates will rise as the increased supply of bonds on the market drives down bond prices. The only way the Fed can purchase a larger supply of bonds is by printing more money, that is, by more quantitative easing.

With the world moving away from using the dollar to settle international accounts, as the Fed prints more dollars the rate at which foreign holders of dollar assets sell off their holdings will rise.

To get out of dollars requires that the dollar proceeds from selling Treasuries, US stocks and US real estate be sold in the currency markets. The selling of dollars drives down the exchange value of the US dollar and results in rising US inflation. The Fed can print money with which to purchase Treasury debt, but it cannot print foreign currencies with which to purchase dollars.

The decline in the dollar’s exchange value and the domestic inflation that results will force the Fed to stop printing. What then covers the gap between revenues and expenditures? The likely answer is private pensions and any other asset that Washington can get its hands on.

Initially, private pensions will be taxed at a rate to recover the tax-free accumulation in the pensions. The second year a national emergency will be used to confiscate some share of pensions. Those relying on the pensions will find themselves with less income. Consumer spending will decline. The economy will worsen. The deficit will widen.

You can see where this is going, and there seems to be no way out. Policymakers, economists, and corporation executives are in denial about the adverse effects of offshoring, which they still, despite all the evidence, maintain is good for the economy. So nothing will be done about offshoring. Republicans will blame the budget deficit on welfare and entitlements, and if those are cut consumer spending will decline further, widening the budget deficit. Inflation will rise as incomes fall, and social cohesion will break down.

Now you know why Homeland Security purchased 1.6 billion rounds of ammunition, enough ammunition to fight the Iraq war for 12 years, has its own para-military force and 2,700 tanks. If you think the “terrorist threat” in America warrants a domestic armed force of this size, you are out of your mind. This force has been assembled to deal with starving and homeless people in the streets of America.

September employment report: According to the Bureau of Labor Statistics (BLS), September brought 148,000 new jobs, enough to keep up with population growth but not reduce the unemployment rate. Moreover, John Williams (shadowstats.com) says that one-third of these jobs, or 50,000 per month on average, are phantom jobs produced by the birth-death model that during difficult economic times overestimates the number of new jobs from business startups and underestimates job losses from business failures.

The BLS reports that 22,000 of September’s jobs were new hires by state governments, which seems odd in view of the ongoing state budgetary difficulties.

In the private sector, wholesale and retail trade produced 36,900 new jobs, which seems odd in light of the absence of growth in real median family income and real retail sales.

Transportation and warehousing produced 23,400 new jobs, concentrated in transit and ground passenger transportation. This also seems odd unless the price of gasoline and pinched budgets are forcing people onto public transportation.

Professional and business services accounted for 32,000 jobs of which 63% are temporary help jobs.

So here you have the job picture that the presstitutes, hyping “the jobs gain,” don’t tell you. The scary part of the September job report is that the usual standby, the category of waitresses and bartenders, which has accounted for a large part of every reported jobs gain since I began reporting the monthly statistics, shows job loss. Seven thousand one hundred waitresses and bartenders lost their jobs in September. If this figure is not a fluke, it is bad news. It signals that fewer Americans can afford to eat and drink out.

The unemployment rate that is reported is the rate that does not count as unemployed discouraged workers who are unable to find jobs and cease to look. This favored rate, the darling of the regime in power, the presstitutes, and Wall Street, also is not adjusted for the category of “involuntary part-time workers,” those whose hours have been cut back or because they are unable to find a full-time job. Obamacare, as is widely reported, is causing employers to shift their work forces from full time to part time in order to avoid costs associated with Obamacare. The BLS places the number of involuntary part-time workers at 7,900,000.

The announced 7.2% unemployment rate is a meaningless number. The rate can decline for no other reason than people unable to find jobs drop out of the work force. You are not counted in the work force if you are discouraged about finding a job and no longer look for a job.

The phenomena of discouraged workers shows up in the measure of the labor force participation rate, which has declined in the 21st century. The opportunities for American labor are so restricted that a rising percentage of the working age population have given up looking for jobs.

Yet, the Obama regime, the Wall Street gangsters, and the pressitute media tell us how much better the economic situation is becoming as more small businesses close, as memberships decline in golf clubs, as more university graduates return home to live with their parents, who are drawing down their savings to live, as Fed Chairman Bernanke has made it impossible for them to live on interest payments on their savings.

According to the US census bureau, real median household income in 2012 was $51,017, down 9% from $56,080 in 1999, 13 years ago. In contrast, annual compensation in 2012 for US CEOs broke all records. Two CEOs were paid more than $1 billion, and the worst paid among the top ten took home $100 million. When the presstitutes speak of economic recovery, they mean recovery for the one percent.

America is in the toilet, and the rest of the world knows it. But the neocons who rule in Washington and their Israeli ally are determined that Washington start yet more wars to create lebensraum for Israel.

Early in the 21st century the liberal Democrat Senator from New York, Chuck Schumer, and I coauthored an article in the New York Times about the adverse effects on the US economy of jobs offshoring. The article caused a sensation. The Brookings Institution in Washington quickly convened a conference which was covered by C-SPAN. C-SPAN rebroadcast the conference several times. During the conference I said that if jobs offshoring continued, the US would be a third world economy in 20 years.

Wall Street quickly shut up Senator Schumer, but I am sticking by my forecast. Indeed, I think we are already there.

How Big Corporations are Unpatriotic

Welcome to Globalization
by RALPH NADER


Many giant profitable U.S. corporations are increasingly abandoning America while draining it at the same time.

General Electric, for example, has paid no federal income taxes for a decade while becoming a net job exporter and fighting its hard-pressed workers who want collective bargaining through unions like the United Electrical Workers Union (UE). GE’s boss, Jeffrey Immelt, makes about $12,400 an hour on an 8-hour day, plus benefits and perks, presiding over this global corporate empire.

Telling by their behavior, these big companies think patriotism toward the country where they were created and prospered is for chumps. Their antennae point to places where taxes are very low, labor is wage slavery, independent unions are non-existent, governments have their hands out, and equal justice under the rule of law does not exist. China, for example, has fit that description for over 25 years.

Other than profiteering from selling Washington very expensive weapons of mass destruction, many multinational firms have little sense of true national security.

Did you know that about 80 percent of the ingredients in medicines Americans take now come from China and India where visits by FDA inspectors are infrequent and inadequate?

The lucrative U.S. drug industry – coddled with tax credits, free transfer of almost-ready-to-market drugs developed with U.S. taxpayer dollars via the National Institutes of Health – charges Americans the highest prices for drugs in the world and still wants more profits. Drug companies no longer produce many necessary medicines like penicillin in the U.S., preferring to pay slave wages abroad to import drugs back into the U.S.

Absence of patriotism has exposed our country to dependency on foreign suppliers for crucial medicines, and these foreign suppliers may not be so friendly in the future.

Giant U.S. companies are strip-mining America in numerous ways, starting with the corporate tax base. By shifting more of their profits abroad to “tax-haven” countries (like the Cayman Islands) through transfer pricing and other gimmicks, and by lobbying many other tax escapes through Congress, they can report record profits in the U.S. with diminishing tax payments. Yet they are benefitting from the public services, special privileges, and protection by our armed forces because they are U.S. corporations.

On March 27, 2013, the Washington Post reported that compared to forty years ago, big companies that “routinely cited U.S. federal tax expenses that were 25 to 50 percent of their worldwide profits,” are now reporting less than half that share. For instance, Proctor and Gamble was paying 40 percent of its total profits in taxes in 1969; today it pays 15 percent in federal taxes. Other corporations pay less or no federal income taxes.
Welcome to globalization. It induces dependency on instabilities in tiny Greece and Cyprus that shock stock investments by large domestic pension and mutual funds here in the U.S. Plus huge annual U.S. trade deficits, which signals the exporting of millions of jobs.

The corporate law firms for these big corporations were the architects of global trade agreements that make it easy and profitable to ship jobs and industries to fascist and communist regimes abroad while hollowing out U.S. communities and throwing their loyal American workers overboard. It’s not enough that large corporations are paying millions of American workers less than workers were paid in 1968, adjusted for inflation.

Corporate bosses can’t say they’re just keeping up with the competition; they muscled through the trade system that pulls down on our country’s relatively higher labor, consumer and environmental standards.

Corporate executives, when confronted with charges that show little respect for the country, its workers and its taxpayers who made possible their profits and subsidized their mismanagement, claim they must maximize their profits for their shareholders and their worker pension obligations.

Their shareholders? Is that why they’re stashing $1.7 trillion overseas in tax havens instead of paying dividends to their rightful shareholder-owners, which would stimulate our economy? Shareholders? Are those the people who have been stripped of their rights as owners and prohibited from even keeping a lid on staggeringly sky-high executive salaries ranging from $5,000 to $20,000 an hour or more, plus perks?

Why these corporate bosses can’t even abide one democratically-run shareholders’ meeting a year without gaveling down their owners and cutting time short. To get away from as many of their shareholder-owners as possible, AT&T is holding its annual meeting on April 26 in remote Cheyenne, Wyoming!

Pension obligations for their workers? The award-winning reporter for the Wall Street Journal Ellen E. Shultz demonstrates otherwise. In her gripping book Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of American Workers, she shows how by “exploiting loopholes, ambiguous regulations and new accounting rules,” companies deceptively tricked employees and turned their pension plans into piggy banks, tax shelters and profit centers.

Recently, I wrote to the CEOs of the 20 largest U.S. corporations, asking if they would stand up at their annual shareholders’ meetings and on behalf of their U.S. chartered corporation (not on behalf of their boards of directors), and pledge allegiance to the flag ending with those glorious words “with liberty and justice for all.” Nineteen of the CEOs have not yet replied. One, Chevron, declined the pledge request but said their patriotism was demonstrated creating jobs and sparking economic activity in the U.S.

But when corporate lobbyists try to destroy our right of trial by jury for wrongful injuries – misnamed tort reform – when they destroy our freedom of contract – through all that brazenly one-sided fine print – when they corrupt our constitutional elections with money and unaccountable power, when they commercialize our education and patent our genes, and outsource jobs to other countries, the question of arrogantly rejected patriotism better be front-and-center for discussion by the American people.

The Virtual Recovery

October 29, 2012 | Paul Craig Roberts

Since mid-2009 the US has been enjoying a virtual recovery courtesy of a rigged inflation measure that understates inflation. The financial Presstitutes spoon out the government’s propaganda that prices are rising less than 2%. But anyone who purchases food, fuel, medical care or anything else knows that low inflation is no more real that Saddam Hussein’s weapons of mass destruction or Gadhafi’s alleged attacks on Libyan protesters or Iran’s nuclear weapons. Everything is a lie to serve the power-brokers.

During the Clinton administration, Republican economists pushed through a change in the way the CPI is measured in order to save money by depriving Social Security retirees of their cost-of-living adjustment. Previously, the CPI measured the change in the cost of a constant standard of living. The new measure assumes that consumers adjust to price increases by lowering their standard of living by substituting lower quality, lower priced items. If the price, for example, of New York strip steak goes up, consumers are assumed to substitute the lower quality round steak. In other words, the new measure of inflation keeps inflation down by reflecting a lowered standard of living.

Statistician John Williams (shadowstats.com), who closely follows the collecting and reporting of official US economic statistics, reports that consumer inflation, as measured by the 1990 official government methodology has been running at about 5%. If the 1980 official methodology for measuring the CPI is used, John Williams reports that the current rate of US inflation is about 9%.

The 9% figure is more consistent with people’s experience in grocery stores.

Officially the recession that began in 2007 ended in June 2009 after 18 months, making the Bush Recession the longest recession since World War II. However, John Williams says that the recession has not ended. He says that only the GDP reporting, distorted by an erroneous measurement of inflation, shows a recovery. Other, more reliable measures of economic activity, show no recovery.

Williams reports that the economy began turning down in 2006, falling lower in 2008 and 2009, and bottom-bouncing ever since. Not only is there no sign of any recovery, but “the economic downturn now is intensifying once again.” The absence of an economic recovery “is evident in the [official] reporting of nearly all major economic series. Not one of these series shows a pattern of activity that confirms the recovery [shown] in the GDP series.”

Williams concludes that “the official recovery simply is a statistical illusion created by the government’s use of understated inflation in deflating the GDP.” In other words, the reported gains in GDP are accounted for by price increases, not increases in real output.

The result of the US government’s economic deception is the same as the deception Washington has used to start wars all over the Middle East. The government propaganda produces a make-believe virtual reality that bears no relationship to real reality. In history there have been many governments who have prevailed by deceiving the people, but Washington has moved this success to a new peak. As long as Americans believe anything Washington says, they are doomed.

It is easy to see why there is no economic recovery and cannot be an economic recovery. Look at the chart below (courtesy of John Williams, shadowstats.com).



Real median household income at the end of 2011 is back where it was in 1967-68. Moreover, Williams has deflated household income to get its real value by using the official inflation measure, which substantially understates inflation. If Williams had used the 1990 or 1980 official government methodology for calculating the consumer price index, the real median incomes of households would show a larger decline.

Moreover, the low 2011 real median household income is the summation, in most cases, of two household earners, whereas in 1967-68 one earner could produce the same real income. As Nobel economist Gary Becker, my former colleague as Business Week columnist, pointed out, when both husband and wife have to work in order to maintain the same purchasing power, household income from the wife’s in-kind household services is eliminated. Therefore, the monetary measure of the dual household income overstates income, because it is not adjusted for the lost benefits formerly provided by the wife who at home managed the household.

Americans are far more oppressed by the power brokers in Washington than statistics display. Moreover, the young are born into the oppressive, exploitative American system and do not know any different. They are fed by the Presstitute media with endless propaganda about how fortunate they are and how indispensable their wonderful country is. Americans are kept in a constant state of amusement, and many never grasp the loss of their civil liberties, job and career opportunities, and respect that the US won during the decades-long cold war with Soviet Communism.

On September 13, Federal Reserve Chairman Ben “Helicopter” Bernanke announced Quantitative Easing 3. Bernanke said that the recovery is weak and needs more Fed stimulus. He said the Fed will purchase $40 billion of mortgage bonds per month in order to drive interest rates further below the rate of inflation and help to sell more houses.

But how do you sell houses to households who are getting by with 1967-68 levels of real income and who have absolutely no job security? Their company can be taken over and offshored tomorrow or they can be replaced by foreign workers on H-1B visas. Housing prices have dropped, but not to 1967-68 levels.

Bernanke’s announcement that the Fed’s purchase of mortgage bonds is to spur housing and the economy is disinformation. Bernanke is purchasing the bonds in order to boost the values of the derivatives and debt instruments in the banks’ portfolios. Lower interest rates raise the value of the debt instruments on the banks’ balance sheets. By depriving American savers of a real interest rate on their savings, Bernanke makes the busted banks look solvent.

This is what is happening in “freedom and democracy” America. The vast majority of Americans, especially the retired, are forced to consume their savings and draw down their capital because they can get no real interest on their savings. The beneficiaries are the banksters, who can borrow at near zero interest rates, charge consumers 16% on their credit cards, and use the Federal Reserve’s largess to speculate on interest rate swaps and credit default swaps. The American taxpayers hold the bag for the banksters’ uncovered gambles.

Would you not gamble if the American taxpayers had to cover your bets, but your winnings were yours alone?

The future of the American political order is in doubt. The Bush and Obama regimes have so badly abused the Constitution and statutory law, that the America that Ronald Reagan left to us no longer exists. America is on the path to collapse or tyranny.

Suppose that a miracle produces an economic recovery. What becomes of the enormous excess bank reserves that the Federal Reserve has provided the banks?

If these bank reserves are used for expanding loans, the money supply will outstrip the production of goods and services, and inflation will rise.

If the Fed tries to take the excess reserves out of the banking system by selling bonds, interest rates will rise, thus destroying the wealth of bond holders and draining liquidity from the stock market. In other words, another depression that wipes out the remaining American wealth.

The Federal Reserve’s announcement of QE3 shows that the Fed will continue to create new money in order to protect the values of the insolvent banks’ questionable assets. The Federal Reserve represents the banksters, not the American public. Like every other American government institution, the Federal Reserve is far removed from concerns about American citizens.

In my opinion, the Federal Reserve’s purchase of bonds in order to drive down interest rates has produced a bond market bubble that is larger than the real estate and derivative bubbles. Economically, it is nonsensical for a bond to carry a negative real interest rate, especially when the government issuing the bond is running large budget deficits that it seems unable to reduce and when the central bank is monetizing the debt.

The bubble has been protected by the euro “crisis,” which possibly is more of a virtual crisis than a real one. The euro crisis has caused money to seek refuge in dollars, thus supporting the dollar’s value even while the Federal Reserve prints money with which to purchase the never-ending flow of the governments’ bonds to finance trillion dollar plus annual budget deficits–about 5 times the “Reagan deficits” that Wall Street alleged would wreck the US economy.

Indeed, the US dollar’s exchange value is itself a bubble waiting to pop. The sharp rise in the dollar price of gold and silver since 2003 indicates a flight from the US dollar. (The chart is courtesy of John Williams, shadowstats.com.)

The bond market bubble will pop if the dollar bubble pops. The Federal Reserve can sustain the bond market bubble by purchasing bonds, and there are no limits on the Federal Reserve’s ability to purchase bonds. However, the endless monetization of debt, even if the new money is stuck in the banks and does not find its way into the economy, can spook foreign holders of dollar-denominated assets.

Foreign central banks can decide that they want to hold fewer dollars and more precious metals as their reserves. Other countries, sensing the US dollar’s demise,



are organizing to conduct their trade without the use of the world’s reserve currency. Brazil, Russia, India, China, and South Africa intend to conduct their trade with one another in their own currencies. China and Japan have also negotiated to settle their trade balances with one another in their own currencies.

These agreements substantially reduce the use of the US dollar in international trade and, thus, the demand for dollars. When demand falls, so does price, unless the supply shrinks. But the Federal Reserve has announced, essentially, unlimited supply of US dollars. So we are faced with a paradox. The US dollar is supposed to remain valuable despite its enormous increase in supply

In addition, China, America’s largest creditor and in the past a reliable purchaser of US Treasury bonds, holds some two trillion in dollar-denominated assets, primarily Treasury bonds. How is Washington treating its largest foreign creditor? Not with appreciation or deference. Washington is surrounding China with naval and air bases, interfering in China’s disputes with other countries, and bringing contrived actions against China in the World Trade Organization. Washington claims that US corporations are deserting the US not because of the lower cost of labor in China, but because of Chinese “subsidies” to the relocated US firms.

In my April 30 column, “Brewing a Conflict with China,” I wrote that Washington would like to substitute a cold war with China for the hot wars in the Middle East. The problem with the hot wars is the loss of superpower face from Washington’s inability to prevail after eleven years, and although the hot wars are profitable for the military/security complex, the wars don’t generate the level of profits that would flow from a high-tech arms race with China. Moreover, Washington believes that diverting Chinese investment from the economy into a military buildup would slow the rate at which the Chinese economy is overtaking the US economy.

What if instead of taking the bait from Washington, China targets Washington’s Archilles heel–the dollar’s role as reserve currency–and decides it is cheaper to dump one trillion dollars of US Treasury debt on the bond market than to commit to a 30 year arms race? To keep the price of Treasuries from collapsing, the Federal Reserve could print the money to buy the bonds. But if China then dumps the printed one trillion dollars in the foreign exchange markets, Washington cannot print euros, British pounds, Russian rubles, Swiss francs, and other currencies in order to buy up the dollars.

Frantic, Washington would try to arrange currency swaps with foreign countries in order to acquire the foreign exchange with which to buy up the dollars that, otherwise, will drive down the dollar exchange rate and destroy the Federal Reserve’s control over interest rates.

But if the Chinese don’t want the dollars, will other countries want to swap their currencies for the abandoned US dollar?

Some of Washington’s puppet states will comply, but the wider world will rejoice in the termination of Washington’s financial hegemony and refuse the offer.

Sooner or later the dollar will collapse from Washington’s abuse of the dollar’s role as reserve currency, and the dollar will lose its “safe haven” status. US inflation will rise, and US political stability, along with America’s hegemonic power, will wane.

The rest of the world will sigh with relief. And China will have defeated the superpower without an arms race or firing a shot.

Unsurvivable - The Newest Thermonuclear War Threat taking place NOW

Obama's deployment of a major portion of the U.S. thermonuclear capabilities in multiple theaters threatening both Russia and China is basically daring them to respond in kind. If they do, that's it, game over. We are as close to nuclear annihilation as we've ever been, and we cheer for our demise so loud, we drown out any cries of dissent.

How Apple Rules America

Romney Has a Jobs Plan ... for China

Thursday, September 27, 2012 by TruthDig.com
by Amy Goodman

Freeport, Ill., is the site of one of the famous Lincoln-Douglas debates. On Aug. 27, 1858, Abraham Lincoln and Stephen Douglas debated there in their campaign for Illinois’ seat in the U.S. Senate. Lincoln lost that race, but the Freeport debate set the stage for his eventual defeat of Douglas in the presidential election of 1860, and thus the Civil War. Today, as the African-American president of the United States prepares to debate the candidate from the party of Lincoln, workers in Freeport are staging a protest, hoping to put their plight into the center of the national debate this election season.

A group of workers from Sensata Technologies have set up their tents in a protest encampment across the road from the plant where many of them have spent their adult lives working. Sensata makes high-tech sensors for automobiles, including the sensors that help automatic transmissions run safely. Sensata Technologies recently bought the plant from Honeywell, and promptly told the more than 170 workers there that their jobs and all the plant’s equipment would be shipped to China.

You may never have heard of Sensata Technologies, but in this election season, you’ve probably heard the name of its owner, Bain Capital, the company co-founded and formerly run by Mitt Romney. When they learned this, close to a dozen Sensata employees decided to put up a fight, to challenge Romney to put into practice his very campaign slogans to save American jobs. They traveled to Tampa, Fla., joining in a poor people’s campaign at a temporary camp called Romneyville (after the Hoovervilles of the Great Depression). They organized a petition drive, getting 35,000 people to join their demand for Romney to call on his former colleagues to save their jobs. Since Freeport is close to two swing states, Iowa and Wisconsin, they traveled to a Romney rally and appealed directly to him there (Ironically, for appealing to Romney to save their jobs from being sent to China, the Sensata workers were jeered as communists at the rally, and removed by U.S. Secret Service).

Then the workers established Bainport. Set up at the Stephenson County Fairgrounds, with the full support of the community, the workers have spent more than two weeks camped out, with a dozen tents, a large circus-style tent serving as a covered gathering space and command center, and an outdoor kitchen. They built a stage with a banner reading, “Mitt Romney: Come to Freeport” and signs like “Romney does have a jobs plan ... too bad it’s for China.” Behind the stage they have built a small bridge that carries the workers across a gully to and from their remaining shifts at the plant.

One night last week, we arrived at Bainport at 10:30. A group of workers and their supporters were sitting around the campfire. I talked to them, one by one, before they made their way to their tents. Dot Turner had to be at work at 5 a.m. I asked her how long she’d been at the plant. “For 43 years. I started in 1969. I was 18 at the time,” she told me. Her message to Romney was clear: “If he was really concerned about the American people and if he was concerned about creating jobs, the 12 million jobs that he always uses as his stump speech, he could create this job by leaving it here."

While Romney has yet to visit Freeport, a campaign spokesman addressed the issue of Sensata, turning the issue around onto President Barack Obama: “Despite the president being invested in Sensata through his personal pension fund, and the government owning a major Sensata customer in GM, President Obama has not used his powers to help this situation in any way.”

Obama didn’t respond to the specific charge, but on the campaign trail, he hits Romney hard on Bain outsourcing jobs to China: “When you see these ads he’s running, promising to get tough on China, it feels a lot like that fox saying, “You know, we need more secure chicken coops.”

Freeport Mayor George Gaulrapp visited Bainport on the morning that we broadcast our “Democracy Now!” news hour from the camp. He told me about his hopes for the workers, reflecting on his hometown’s long history: “Freeport is the home of the Lincoln-Douglas debate site. We’ve invited both campaigns, President Obama and Governor Romney, to come to Freeport and debate in an old-style campaign. It would be a perfect opportunity for him, the architect who mastered how to send jobs over offshore, to come back here and reverse the trend. We’re 65 miles from Paul Ryan’s hometown of Janesville. It’s a perfect location to come, have your feet on the ground and meet a cross-section of America.”

Iran: Attack Could Trigger World War III

Remember, Russia and China have already pledged to support Iran if the US and Israel attack Iran. Russia and China import most of Iran's oil exports. If we fuck with their oil supplier, they will defend them: WWIII.--jef

Sunday, September 23, 2012 by Common Dreams

With tensions high, US leads massive military minesweeping exercise in Persian Gulf

The navies from more than three dozen nations have converged in the Persian Gulf around Bahrain for a massive military minesweeping excercise.

"This war is likely to degenerate into World War III," says Iranian Brigadier General Amir-Ali Hajizadeh, commander of the Islamic Revolution Guards Corps (IRGC) Aerospace Division.

The drills, led by the US military, are taking place in the Gulf of Oman and the Gulf of Aden, avoiding the busy shipping route in the Strait of Hormuz.

Meanwhile, on Sunday a senior Iranian military commander warned that an Israeli strike on Iran could trigger World War III.

Iran's Press TV reports:

“We see the United States and the Zionist regime [of Israel] alongside one another and can by no means imagine that the Zionist regime would initiate a war [against Iran] without the US support….In case of the eruption of such a [war] condition, the situation would spin out of control and management; this war is likely to degenerate into World War III. It means that some countries might enter the war in favor of or against Iran,” Brigadier General Amir-Ali Hajizadeh, commander of the Aerospace Division of the Islamic Revolution Guards Corps (IRGC), said on Al-Alam television on Sunday.

[...] “The Islamic Republic of Iran considers the US bases in the region as part of the American soil and will definitely target them if a war breaks out,” he added.

FARS News Agency in Iran reports:

Iranian armed forces are closely monitoring the military forces of the US and its allies in the region and will maintain their preparedness to confront them.

"We are at the highest level of preparedness to accomplish our mission …" Moussavi stated.

...Iranian Navy Commander Rear Admiral Habibollah Sayyari stressed Iran's intelligence supremacy over US moves in the region, and noted that Iran is well informed of the details of the US naval moves in the region.

"We are well aware of the exact number and the position of the US surface vessels, aircrafts, submarines and minesweeping warships in the region," Sayyari underscored.

CNN reported:

The United States has been promoting the fact that more than 30 nations are participating in the exercises.

But CNN has learned that so far, two thirds of those nations do not want to have their participation made public. And only half a dozen or so will send actual ships to the exercise.

The situation suggests that in any real minesweeping scenario, or conflict with Iran, the U.S. military would bear the brunt of the fight.

Earlier in the week, Tehran deployed a submarine in the Persian Gulf.

+++++++++

Monday, September 24, 2012 by Inter Press Service
Iranian Diplomat Says Iran Offered Deal to Halt 20-Percent Enrichment
by Gareth Porter

WASHINGTON - Iran has again offered to halt its enrichment of uranium to 20 percent, which the United States has identified as its highest priority in the nuclear talks, in return for easing sanctions against Iran, according to Iran’s permanent representative to the International Atomic Energy Agency (IAEA).

Iranian envoy to the IAEA Ali Asghar Soltanieh. (Press TV) Ali Asghar Soltanieh, who has conducted Iran’s negotiations with the IAEA in Tehran and Vienna, revealed in an interview with IPS that Iran had made the offer at the meeting between EU Foreign Policy Chief Catherine Ashton and Iran’s leading nuclear negotiator Saeed Jalili in Istanbul Sep. 19.

Soltanieh also revealed in the interview that IAEA officials had agreed last month to an Iranian demand that it be provided documents on the alleged Iranian activities related to nuclear weapons which Iran is being asked to explain, but that the concession had then been withdrawn.

“We are prepared to suspend enrichment to 20 percent, provided we find a reciprocal step compatible with it,” Soltanieh said, adding, “We said this in Istanbul.”

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Soltanieh is the first Iranian official to go on record as saying Iran has proposed a deal that would end its 20-percent enrichment entirely, although it had been reported previously.

“If we do that,” Soltanieh said, “there shouldn’t be sanctions.”

Iran’s position in the two rounds of negotiations with the P5+1 – China, France, Germany, Russia, Britain, the United States and Germany – earlier this year was reported to have been that a significant easing of sanctions must be part of the bargain.

The United States and its allies in the P5+1 ruled out such a deal in the two rounds of negotiations in Istanbul and in Baghdad in May and June, demanding that Iran not only halt its enrichment to 20 percent but ship its entire stockpile of uranium enriched to that level out of the country and close down the Fordow enrichment facility entirely.

Even if Iran agreed to those far-reaching concessions the P5+1 nations offered no relief from sanctions.

Soltanieh repeated the past Iranian rejection of any deal involving the closure of Fordow.

“It’s impossible if they expect us to close Fordow,” Soltanieh said.

The U.S. justification for the demand for the closure of Fordow has been that it has been used for enriching uranium to the 20-percent level, which makes it much easier for Iran to continue enrichment to weapons grade levels.

But Soltanieh pointed to the conversion of half the stockpile to fuel plates for the Tehran Research Reactor, which was documented in the Aug. 30 IAEA report.

“The most important thing in the (IAEA) report,” Soltanieh said, was “a great percentage of 20-percent enriched uranium already converted to powder for the Tehran Research Reactor.”

That conversion to powder for fuel plates makes the uranium unavailable for reconversion to a form that could be enriched to weapons grade level.

Soltanieh suggested that the Iranian demonstration of the technical capability for such conversion, which apparently took the United States and other P5+1 governments by surprise, has rendered irrelevant the P5+1 demand to ship the entire stockpile of 20-percent enriched uranium out of the country.

“This capacity shows that we don’t need fuel from other countries,” said Soltanieh.

Iran began enriching uranium to 20 percent in 2010 after the United States made a virtually non-negotiable offer in 2009 to provide fuel plates for the Tehran Research Reactor in return for Iran’s shipping three-fourths of its low-enriched uranium stockpile out of the country and waiting for two years for the fuel plates.

The P5+1 demand for closure of the Fordow enrichment plant was also apparently based on the premise the facility was built exclusively for 20-percent enrichment. But Iran has officially informed the IAEA that it is for both enrichment to 20 percent and enrichment to 3.5 percent.

The 1,444 centrifuges installed at Fordow between March and August – but not connected to pipes, according to the Washington-based Institute for Science and International Security – could be used for either 20-percent enrichment or 3.5-percent enrichment, giving Iran additional leverage in future negotiations.

Soltanieh revealed that two senior IAEA officials had accepted a key Iranian demand in the most recent negotiating session last month on a “structured agreement” on Iranian cooperation on allegations of “possible military dimensions” of its nuclear programme – only to withdraw the concession at the end of the meeting.

The issue was Iran’s insistence on being given all the documents on which the IAEA bases the allegations of Iranian research related to nuclear weapons which Iran is expected to explain to the IAEA’s satisfaction.

The Feb. 20 negotiating text shows that the IAEA sought to evade any requirement for sharing any such documents by qualifying the commitment with the phrase “where appropriate”.

At the most recent meeting on Aug. 24, however, the IAEA negotiators, Deputy Director General for Safeguards Herman Nackaerts and Assistant Director General for Policy Rafael Grossi, agreed for the first time to a commitment to “deliver the documents related to activities claimed to have been conducted by Iran”, according to Soltanieh.

At the end of the meeting, however, Nackaerts and Grossi “put this language in brackets”, thus leaving it unresolved, Soltanieh said.

Former IAEA Director General Mohamed ElBaradei recalls in his 2011 memoirs that he had “constantly pressed the source of the information” on alleged Iranian nuclear weapons research – meaning the United States – “to allow us to share copies with Iran”. He writes that he asked how he could “accuse a person without revealing the accusations against him?”

ElBaradei also says Israel gave the IAEA a whole new set of documents in late summer 2009 “purportedly showing that Iran had continued with nuclear weapons studies until at least 2007″.

Soltanieh confirmed that the other unresolved issue is whether the IAEA investigation will be open-ended or not.

The Feb. 20 negotiating text showed that Iran demanded a discrete list of topics to which the IAEA inquiry would be limited and a requirement that each topic would be considered “concluded” once Iran had answered the questions and delivered the information requested.

But the IAEA insisted on being able to “return” to topics that had been “discussed earlier”, according to the February negotiating text.

That position remains unchanged, according to Soltanieh. The Iranian ambassador quoted an IAEA negotiator as asking, “What if next month we receive something else — some additional information?’”.

“If the IAEA had its way,” Soltanieh said, “It would be another 10 or 20 years.”

Soltanieh told IPS a meeting between Iran and the IAEA set for mid-October had been agreed before the IAEA Board of Governors earlier this month with Nackaerts and Grossi.

The Iranian ambassador said the IAEA officials had promised him that Director General Yukia Amano would announce the meeting during the Board meeting, but Amano made no such announcement.

Instead, after a meeting with Fereydoun Abbasi, Iran’s Vice President and head of the Atomic Energy Organization of Iran, Amano only referred to the “readiness of Agency negotiators to meet with Iran in the near future.”

“He didn’t keep the promise,” said Soltanieh, adding that Iran would have to “study in the capital” how to respond.

Soltanieh elaborated on Abassi’s suggestion last week that the sabotage of power to the Fordow facility the night before an IAEA request for a snap inspection of the facility showed the agency could be infiltrated by “terrorists and saboteurs”.

“The objection we have is that the DG isn’t protecting confidential information,” said Soltanieh. “When they have information on how many centrifuges are working and how many are not working (in IAEA reports), this is a very serious concern.”

Iran has complained for years about information gathered by IAEA inspectors, including data on personnel in the Iranian nuclear programme, being made available to U.S., Israeli and European intelligence agencies.

Stumbling Towards Nuclear War?

Is Washington Deaf As Well as Criminal?

by PAUL CRAIG ROBERTS

 

The morons who rule the American sheeple are not only dumb and blind, they are deaf as well. The ears of the american “superpower” only work when the Israeli prime minister, the crazed Netanyahu, speaks. Then Washington hears everything and rushes to comply.

Israel is a tiny insignificant state, created by the careless British and the stupid Americans. It has no power except what its American protector provides. Yet, despite Israel’s insignificance, it rules Washington.

When a resolution introduced by the Israel Lobby is delivered to Congress, it passes unanimously. If Israel wants war, Israel gets its wish. When Israel commits war crimes against Palestinians and Lebanon and is damned by the hundred plus UN resolutions passed against Israel’s criminal actions, the US bails Israel out of trouble with its veto.

The power that tiny Israel exercises over the “worlds’s only superpower” is unique in history. Tens of millions of “christians” bow down to this power, reinforcing it, moved by the exhortations of their “christian” ministers.

Netanyahu lusts for war against Iran. He strikes out against all who oppose his war lust. Recently, he called Israel’s top generals “pussies” for warning against a war with Iran. He regards former Israeli prime ministers and former heads of the Israeli intelligence service as traitors for opposing his determination to attack Iran. He has denounced America’s servile president Obama and america’s top military leader for being “soft on Iran.” The latest poll in Israel shows that a solid majority of the Israelis are opposed to an Israeli attack on Iran. But Netanyahu is uninterested in the opinion of Israeli citizens. He has Washington watching his back, so he is war mad. It is a mystery why Israelis put Netanyahu in public office instead of in an insane asylum.

Netanyahu is not alone. He has the american neoconservatives in his corner. The american neoconservatives are as crazed as Netanyahu. They believe in nuclear war and are itching to nuke some Muslim country and then get on to nuking Russia and China. It is amazing that no more than two or three dozen people have the fate of the entire world in their hands.

The Democratic Party is helpless before them.

The Republican Party is their vehicle.

The Russians, watching Netanyahu push Washington toward dangerous confrontations keep raising their voices about the danger of nuclear war.

On May 17 Russian Prime Minister Dmitry Medvedev warned the West against launching “hasty wars,” which could result “although I do not want to scare anyone” in “the use of a nuclear weapon.”

On November 30 of last year the Chief of the General Staff of the Armed Forces of Russia warned of nuclear war with NATO. General Nikolai Makarov said that NATO’s eastward expansion meant that the risk of Russia coming into conflict with NATO had “risen sharply.” General Makarov said, “I do not rule out local and regional armed conflicts developing into a large-scale war, including using nuclear weapons.”

Here is Russian president Medvedev (currently the prime minister) describing the steps toward nuclear war that Russia has taken pushed by the crazed warmongers in Washington wallowing in their insane hubris:

With regard to the American missile bases on Russia’s borders, “I have made the following decisions. First, I am instructing the Defense Ministry to immediately put the missile attack early warning radar station in Kaliningrad on combat alert. Second, protective cover of Russia’s strategic nuclear weapons will be reinforced as a priority measure under the program to develop our air and space defenses. Third, the new strategic ballistic missiles commissioned by the Strategic Missile Forces and the Navy will be equipped with advanced missile defense penetration systems and new highly-effective warheads. Fourth, I have instructed the Armed Forces to draw up measures for disabling missile defense system data and guidance systems.

These measures will be adequate, effective, and low-cost. Fifth, if the above measures prove insufficient, the Russian Federation will deploy modern offensive weapon systems in the west and south of the country, ensuring our ability to take out any part of the US missile defense system in Europe. One step in this process will be to deploy Iskander missiles in Kaliningrad Region. Other measures to counter the European missile defense system will be drawn up and implemented as necessary. Furthermore, if the situation continues to develop not to Russia’s favor, we reserve the right to discontinue further disarmament and arms control measures.”

Russian president Vladimir Putin has said, as politely as possible, that the US seeks to enslave the world, that the US seeks vassals, not allies, that the US seeks to rule the world and that the US is a parasite on the world economy. It would be difficult for an informed person to take exception with Putin’s statements.

Putin told the politicians in Washington and Western and Eastern European capitals that surrounding Russia with anti-ballistic missiles “raises the specter of nuclear war in Europe.” Putin said that the Russian response is to point nuclear armed cruise missiles, which cannot be intercepted by anti-ballistic missiles, at the US missile bases and at European capitals. The American move, Putin said, “could trigger nuclear war.”

Putin has been trying to wake up the American puppet states in Europe at least since February 13, 2007. At the 43rd Munich Conference on Security Policy, Putin said that the unipolar world that Washington was striving to achieve under its banner, “is a world in which there is one master, one sovereign. And at the end of the day this is pernicious not only for all those within this system, but also for the sovereign itself because it destroys itself from within.”

That has certainly happened to the US which now has a police state as thorough-going as Nazi Germany. And even better armed: http://rt.com/usa/news/dhs-ammo-rounds-security-560/print/

Putin went on to tell his European audience that in Russia, “we are constantly being taught about democracy. But for some reason those who teach us do not want to learn themselves.” Instead, Putin said, “we are seeing a greater and greater disdain for the basis principles of international law. And independent legal norms are, as a matter of fact, coming increasingly closer to one state’s legal system. One state and, of course, first and foremost the United States, has overstepped its national borders in every way. This is visible in the economic, political, cultural and educational policies it imposes on other nations. Well, Who likes this? Who is happy about this?”

People are not happy, Putin said, because they don’t feel safe. Not to feel safe “is extremely dangerous. It results in the fact that no one feels safe. I want to emphasize this–no one feels safe!” The result, Putin said, is “an arms race.”

Putin politely unbraided the Italian defense minister, a person owned by Washington, for suggesting that NATO or the EU could take the place of the UN in justifying the use of force against sovereign countries. Putin took exception to the idea that Washington could use its puppet organization or its puppet states to legitimize an act of US aggression. Putin stated flatly: “The use of force can only be considered legitimate if the decision is sanctioned by the UN.”

Putin went on to discuss the forked tongue of Washington. Reagan and Gorbachev had firm agreements, but Reagan’s successors put “frontline forces on our borders. . . . The stones and concrete blocks of the Berlin Wall have long been distributed as souvenirs. But we should not forget that the fall of the Berlin Wall was possible thanks to a historic choice – one that was also made by our people, the people of Russia – a choice in favor of democracy, freedom, openness and a sincere partnership with all the members of the big European family. And now they are trying to impose new dividing lines and walls on us – these walls may be virtual but they are nevertheless dividing ones that cut through our continent. And is it possible that we will once again require many years and decades, as well as several generations of politicians, to dissemble and dismantle these new walls.”

Putin’s speech of more than 6 years ago shows that he has Washington’s number. Washington is The Great Pretender, pretending to respect human rights while Washington slaughters Muslims in seven countries on the basis of lies and fabricated intelligence. The american people, “the indispensable people,” support this murderous policy. Washington uses the status of the dollar as reserve currency to exclude countries that do not do Washington’s bidding from the international clearing system.

Washington, awash in hubris like Napoleon and Hitler before they marched off into Russia, has turned a deaf, dumb, and blind ear to Putin during the entirety of the 21st century. Speaking on May 10, 2006, Putin said: “We are aware of what is gong on in the world. Comrade wolf [the US] knows whom to eat, he eats without listening, and he’s clearly not going to listen to anyone.”

“Where,” Putin asked, is Washington’s “pathos about protecting human rights and democracy when it comes to the need to pursue its own interests?” For Washington, “everything is allowed, there are no restrictions whatsoever.”

China also has caught on. Now the hubris that drives Washington toward world hegemony confronts two massive nuclear powers. Will the criminal gang in Washington drive the world to nuclear extinction?

Washington, thinking that it owns the world, has imposed more unilateral sanctions on Iran without any basis in any recognized law. The imposed sanctions are nothing but Washington’s assertion that its might is right.

The Russian Foreign Ministry said that Washington could stick its sanctions up its ass. “We consider efforts to impose internal American legislation on the entire world completely unacceptable.”

Washington will do what it can to assassinate Putin and effect regime change through the Russian “opposition” that Washington funds. Failing that, Washington’s pursuit of world hegemony has run up against a brick wall. If the fools in Washington with their hubris-inflated egos don’t back off, that mushroom cloud they have been warning about will indeed blossom over Washington.

War on All Fronts

Russia and China Back in Washington's Crosshairs

by PAUL CRAIG ROBERTS

 

The Russian government has finally caught on that its political opposition is being financed by the US taxpayer-funded National Endowment for Democracy and other CIA/State Department fronts in an attempt to subvert the Russian government and install an American puppet state in the geographically largest country on earth, the one country with a nuclear arsenal sufficient to deter Washington’s aggression.

Just as earlier this year Egypt expelled hundreds of people associated with foreign-funded “non-governmental organizations” (NGOs) for “instilling dissent and meddling in domestic policies,”  the Russian Duma (parliament) has just passed a law that Putin is expected to sign that requires political organizations that receive foreign funding to register as foreign agents.  The law is based on the US law requiring the registration of foreign agents.

Much of the Russian political opposition consists of foreign-paid agents, and once the law passes leading elements of the Russian political opposition will have to sign in with the Russian Ministry of Justice as foreign agents of Washington.  The Itar-Tass News Agency reported on July 3 that there are about 1,000 organizations in Russia that are funded from abroad and engaged in political activity.  Try to imagine the outcry if the Russians were funding 1,000 organizations in the US engaged in an effort to turn America into a Russian puppet state. (In the US the Russians would find a lot of competition from Israel.)

The Washington-funded Russian political opposition masquerades behind “human rights” and says it works to “open Russia.”  What the disloyal and treasonous Washington-funded Russian “political opposition” means by “open Russia” is to open Russia for brainwashing by Western propaganda, to open Russia to economic plunder by the West, and to open Russia to having its domestic and foreign policies determined by Washington.

“Non-governmental organizations” are very governmental. They have played pivotal roles in both financing and running the various “color revolutions” that have established American puppet states in former constituent parts of the Soviet Empire. NGOs have been called “coup d’etat machines,” and they have served Washington well in this role. They are currently working in Venezuela against Chavez.

Of course, Washington is infuriated that its plans for achieving hegemony over a country too dangerous to attack militarily have been derailed by Russia’s awakening, after two decades, to the threat of being politically subverted by Washington-financed NGOs.  Washington requires foreign-funded organizations to register as foreign agents (unless they are Israeli funded). 

However, this fact doesn’t stop Washington from denouncing the new Russian law as “anti-democratic,” “police state,” blah-blah.  Caught with its hand in subversion, Washington calls Putin names. The pity is that most of the brainwashed West will fall for Washington’s lies, and we will hear more about “gangster state Russia.”

China is also in Washington’s crosshairs.  China’s rapid rise as an economic power is perceived in Washington as a dire threat. China must be contained. Obama’s US Trade Representative has been secretly negotiating for the last 2 or 3 years a Trans Pacific Partnership, whose purpose is to derail China’s natural economic leadership in its own sphere of influence and replace it with Washington’s leadership.

Washington is also pushing to form new military alliances in Asia and to establish new military bases in the Philippines, S. Korea, Thailand, Vietnam, Australia, New Zealand, and elsewhere.
Washington quickly inserted itself into disputes between China and Vietnam and China and the Philippines. Washington aligned with its former Vietnamese enemy in Vietnam’s dispute with China over the resource rich Paracel and Spratly islands and with the Philippines in its dispute with China over the resource rich Scarborough Shoal.

Thus, like England’s interference in the dispute between Poland and National Socialist Germany over the return to Germany of German territories that were given to Poland as World War I booty, Washington sets the stage for war.

China has been cooperative with Washington, because the offshoring of the US economy to China was an important component in China’s unprecedented high rate of economic development. American capitalists got their short-run profits, and China got the capital and technology to build an economy that in another 2 or 3 years will have surpassed the sinking US economy.  Jobs offshoring, mistaken for free trade by free market economists, has built China and destroyed America.

Washington’s growing interference in Chinese affairs has convinced China’s government that military countermeasures are required to neutralize Washington’s announced intentions to build its military presence in China’s sphere of influence.  Washington’s view is that only Washington, no one else, has a sphere of influence, and Washington’s sphere of influence is the entire world.
On July 14 China’s official news agency, Xinhua, said that Washington was interfering in Chinese affairs and making China’s disputes with Vietnam and the Philippines impossible to resolve.

It looks as if an over-confident US government is determined to have a three-front war: Syria, Lebanon, and Iran in the Middle East, China in the Far East, and Russia in Europe. This would appear to be an ambitious agenda for a government whose military was unable to occupy Iraq after nine years or to defeat the lightly-armed Taliban after eleven years, and whose economy and those of its NATO puppets are in trouble and decline with corresponding rising internal unrest and loss of confidence in political leadership.

GM producing 70% of autos outside US

GM producing 70% of autos outside US

06 June 2012 by Michael Stumo.

Dan Akerson, CEO of GM, says that seven out of 10 GM automobiles are built outside the U.S.  They have 11 joint ventures with Chinese government controlled auto manufacturers.

They are moving R&D to China.

When the federal government bails out an industry or provides tax incentives or subsidies, or when state economic development agencies do the same, there need to be terms that benefit the U.S. in terms of production and job growth.  We can’t subsidize offshoring.  Producing here and selling to our wealth consumer market need to go together.

Vince Wade has the video documenting GM’s actions.

Why Is The Obama Administration Allowing China To Buy Up U.S. Oil And Gas Deposits?

Sunday, May 13, 2012
Michael Snyder, Contributor
Activist Post

If we are trying to become independent of foreign oil, then why is the Obama administration allowing the Chinese government to buy up U.S. oil and gas deposits worth billions of dollars? This makes absolutely no sense whatsoever. The United States desperately needs to maintain control over its own domestic energy resources so that we can end our addiction to foreign oil.

As I have written about previously, the United States actually has plenty of oil. If we would simply use the resources that we already have, we would never have to import a single drop of foreign oil. But instead, we continue to be the largest importer of oil on the planet and we are allowing China to rapidly buy up oil and gas deposits inside the United States. This is fundamentally wrong and it is a serious threat to our national security. But apparently everything is for sale in the United States today, and that includes our precious energy resources.

The Chinese government is using two giant corporations to buy up these energy resources.

The first is the China National Offshore Oil Corporation (CNOOC). According to Wikipedia, this corporation is 100 percent owned by the Chinese government....

CNOOC Group is a state-owned oil company, fully owned by the Government of the People's Republic of China, and the State-Owned Assets Supervision and Administration Commission of the State Council (SASAC) performs the rights and obligations of shareholder on behalf of the government.

The second is Sinopec Corporation. Sinopec Group is the largest shareholder (about 75% of the shares) in Sinopec Corporation. And as the Sinopec website tells us, Sinopec Group is owned by the Chinese government....

Sinopec Group, the largest shareholder of Sinopec Corp., is a super-large petroleum and petrochemical group incorporated by the State in 1998 based on the former China Petrochemical Corporation. Funded by the State, it is a State authorized investment arm and State-owned controlling company.

So wherever you see CNOOC or Sinopec you can replace those names with the Chinese government. The Chinese government essentially runs both of those companies.

And both companies have been very busy buying up U.S. oil and gas deposits.

For example, CNOOC recently completed a 570 million dollar deal that gives it a one-third interest in huge oil and gas deposits in Colorado and Wyoming. The following is from Wyoming Energy News....

Chinese energy company CNOOC Ltd. has agreed to pay $570 million for a one-third interest in Chesapeake Energy Corp.’s 800,000 leased acres in northeast Colorado and southeast Wyoming. The acreage is in the Denver-Julesburg (DJ) and Powder River basins. CNOOC is China’s biggest offshore oil and natural gas producer.

In fact, according to a recent Business Insider article, this deal gives the Chinese government the right to a third of any new oil discovered by Chesapeake Energy in the entire region....

The Niobrara Shale formation stretches over Colorado and Wyoming, as well as Kansas and Nebraska. Chesapeake Energy's position is in Wyoming and Colorado. If Chesapeake find any more oil in this region, CNOOC has the rights to 33.3% of what is found.

But this is not the only area of the country where China now owns energy rights. The following is an excerpt from a recent state-by-state breakdown that appeared in the Wall Street Journal....

Louisiana: Sinopec has a one-third interest in 265,000 acres in the Tuscaloosa Marine Shale after a broader $2.5-billion deal with Devon Energy. 

Michigan: Sinopec gained a one-third interest in 350,000 acres in a larger $2.5 billion deal with Devon Energy. 

Ohio: Sinopec acquired a one-third stake in Devon Energy’s 235,000 Utica Shale acres in a larger $2.5 billion deal. 

Oklahoma: Sinopec has a one-third interest in 215,000 acres in a broader $2.5 billion deal with Devon Energy. 

Texas: CNOOC acquired a one-third interest in Chesapeake Energy’s 600,000 acres in the Eagle Ford Shale in a $2.16-billion deal.

The Texas deal was particularly noteworthy. The following is how a San Antonio news source described that deal....

State-owned Chinese energy giant CNOOC is buying a multi-billion dollar stake in 600,000 acres of South Texas oil and gas fields, potentially testing the political waters for further expansion into U.S. energy reserves.

With the announcement Monday that it would pay up to $2.2 billion for a one-third stake in Chesapeake Energy assets, CNOOC lays claim to a share of properties that eventually could produce up to half a million barrels a day of oil equivalent.

So why is the Obama administration allowing this to happen?

Are they so desperate to have China continue lending money to the United States that they would allow the Chinese government to pillage our precious energy resources?

Somebody needs to be asking our politicians that question.

But oil and gas are not the only U.S. assets that the Chinese have been buying up.

In a previous article, I detailed how the Chinese have been purchasing huge chunks of real estate all over the country as well.

For example, a recent Forbes article detailed some of the real estate deals that China has been doing in New York....

According to a recent report in the New York Times, investors from China are 'snapping up luxury apartments' and are planning to spend hundreds of millions of dollars on commercial and residential projects like Atlantic Yards in Brooklyn. Chinese companies also have signed major leases at the Empire State Building and at 1 World Trade Center, the report said.

In addition, it was recently announced that the Federal Reserve will now allow Chinese banks to buy up American banks.

Where will all of this end?

Should all of us start learning to speak Chinese?

Meanwhile, our trade deficit with China continues to get even larger. Our trade deficit with China last year was $295.5 billion, which was the largest trade deficit that one country has had with another country in the history of the world. This year, we are already on a pace to break that record.

So thousands of businesses, millions of jobs and hundreds of billions of dollars will continue to leave the United States and go to China.

And China will continue to use some of the money they are getting from us to buy up pieces of America.

Does anyone else out there see something very, very wrong with all of this?

 

I do! I do! Now, read this and see how much more sense it makes linked to the above article.--jef

What’s Good for Apple is Not Good for the Country

Apple Economics: Maximizing Profit, Minimizing Employment

by MATT VIDAL

 

Apple Inc. is the largest technology company in the world, in terms of both revenue and profit. Yet, the California-based company has just 47,000 workers on its payroll in the United States.

Apple recently released a report in which it claimed responsibility for “indirectly” creating an additional 257,000 American jobs in industries that are part of its supply chain, a claim that was “disreputable,” in the words of MIT labor economist David Autor – as if Apple’s suppliers did not have any other customers. Or, as Wharton labor economist Peter Cappelli noted, as if the consumers spending their money on an iPad would not have purchased another product in its absence (see a New York Times article on debates over the report here, including comments from Autor and Cappelli).

While Apple’s claim to have created jobs for UPS and FedEx employees is questionable, however, there is some truth to the argument that Apple is responsible for the employment – and working conditions – at its key suppliers, particularly manufacturers for which Apple is the main customer. This may be the case for some Corning employees in the US (supplying glass for iPhones) and is very likely the case for, tens, perhaps hundreds of thousands of employees at Foxconn in China, which presumably has entire lines or buildings dedicated to Apple.

A recent report by political economist and accountant Karel Williams and his research team at the Centre for Research on Socio-Cultural Change at the University of Manchester looked at the Apple Business Model and its employment effects. They cite a study which found that Chinese workers add $6.50 in value to each iPhone 3, just 3.6% of the phone’s shipping price.

In a counter-factual exercise based on the average wage for electronics workers in the US ($21 per hour) and assuming 8 hours labor per phone, the CRESC team shows that Apple could assemble the phone in the US and still make a gross margin of $293 per phone, which is down from its current gross margin of $452, but still an impressive 46.5% margin.

Assembling the phone in the US would have added benefits for the US economy in terms of direct job creation and multiplier effects – in contrast to the current business model, which decreases US employment and increases the US trade deficit. But healthy profits are not enough, so Apple continues to make superprofits to the detriment of the US economy. What is good for Apple is not good for the US.

But what about Chinese workers? The CRESC team analyzes the financial aspects of the Apple supply chain and argues that, unlike in the Japanese and Korean cases, Chinese suppliers under the Apple model do not have good prospects of moving up the supply chain. Japanese and Korean producers originally had competitive advantage in the international market because their domestic supply chains had a low ratio of labor’s share of value-added. In the context of national supply chains, even suppliers were able to continually upgrade to higher-value added locations in the supply chain.

The story for China is different because it remains at the end of a global supply chain dominated by US firms like Apple, which are able to successfully subordinate their Chinese suppliers through contracts that leave little profit for the latter. As a result, funds for reinvestment are limited and corporate strategy may thus remain defensive.

There is a question, which the CRESC team does not consider, of whether the Chinese suppliers will be able to develop their own R&D capabilities from their own manufacturing operations. For now, most electronics R&D remains firmly embedded in the US, Japan and Korea. But there does remain an open question of whether R&D and manufacturing can remain geographically separate, with the former retaining vibrancy and the latter subordinated to the second- or third-tier via contract. Nonetheless, the CRESC report does crystallize some important questions and provide some provocative answers.

Finally, it must be noted that it is somewhat misleading to call this the Apple business model. The business model of maximizing profit and minimizing domestic employment though global subcontracting was pioneered by many corporations in the 1970s and even earlier, among them Nike, which has always been a brand without its own manufacturing capabilities.

But this model has become a normative business logic among manufacturers since then, and it does, as the CRESC team points out, present fundamental employment problems for home countries of corporations, like Apple, Nike and many others, who take it to its extreme. What was good for GM may have been good for the US, but that was another time, when vertical integration was a normative logic of business.

In contemporary globalized capitalism, maximizing profit is often equated with minimizing (domestic) employment. Is it time yet to get over our collective obsession with sanctifying profit?

Brewing Up a Conflict With China

A New Long-Term Cold War
by PAUL CRAIG ROBERTS

Washington has pressured the Philippines, whose government it owns, into conducting joint military exercises in the South China Sea. Washington’s excuse is that China has territorial disputes with the Philippines, Indonesia, and other countries concerning island and sea rights in the South China Sea. Washington asserts that China’s territorial disputes with the like of Indonesia and the Philippines are a matter of United States’ national interests.

Washington has not made it clear what Washington’s stake is in the disputes. The reason Washington cannot identify why China’s disputes with the Philippines and Indonesia are threats to the United States is that there is no reason. Nevertheless, the undefined “threat” has become the reason Washington needs more naval bases in the Philippines and South Korea.

What this is all about is provoking a long-term cold war conflict with China that will keep profits and power flowing into Washington’s military-security complex. Large profits flow to armaments companies. A portion of the profits reflow into campaign contributions to “the people’s representatives” in DC and to presidential candidates who openly sell out their country to private interests.

Washington is going to construct new naval bases in the Philippines and on the environmentally protected Jeju Island belonging to South Korea. Washington will waste tax revenues, or print more money, in order to build the unnecessary fleets to occupy these bases. Washington is acquiring bases in Australia for US Marines to protect Australia from China, despite the lack of Chinese threats against Australia. Bush and Obama are the leading models of the “people’s president” who sell out the people, at home and abroad, to private interests.

Why is Washington ramping up a new cold war?

The answer begins with President Eisenhower’s warning to the American people in his last public address about the military/industrial complex in 1962. I won’t quote the warning as it is available online. Eisenhower pointed out to Americans that unlike previous wars after which the US demilitarized, after World War II the cold war with the Soviet Union kept the power and profits flowing into the military/industrial complex, now known as the military/security complex. President Eisenhower said that the flow of power and profit into the military/industrial complex was a threat to the economic wellbeing and liberty of the American people.

No one paid any attention, and the military/security complex was glad to be rid of the five-star general war hero president when his second term expired. Thanks to the hype about the “Soviet threat,” the military/security complex faced an unlimited horizon of mounting profits and power as Americans sacrificed their future to the interests of those who protected Americans from the Soviet threat.

The good times rolled for the armaments companies and security agencies for almost three decades until Reagan and Gorbachev reached agreement and ended the cold war. When the Soviet Union subsequently collapsed, the future outlook for the power and profit of the US military/security complex was bleak. The one percent was about to lose its fortunes and the secret government was about to lose its power.

The military/security complex went to work to revive the need for a massive “defense” and “security” budget. Among their willing tools were the neoconservatives, with their French Jacobin ideology and Israeli loyalties. The neocons defined America as the “indispensable people.” Such extraordinary people as Americans must establish hegemony over the world as the sole remaining superpower. As most neoconservatives are allied with Israel, the Muslim Middle East became the target of opportunity.

Muslims are sufficiently different from Westerners that Muslims are easy to demonize.

The demonization began in the neoconservative publications. Once Dick Cheney had the George W. Bush regime staffed with neoconservatives, the next step was to create “threats” to Americans out of verbiage about the Taliban’s responsibility for 9/11 and about “Iraqi weapons of mass destruction,” including verbal images from Bush’s National Security Advisor of “mushroom clouds” over US cities.

No one in the US government or the “free” US media or the media of the US puppet states in England, Europe, Japan, Taiwan, Canada, Australia and South Korea was struck by Washington’s proposition that “the world’s sole superpower” was threatened by the likes of Iraq and Iran, neither of which had any offensive military capability or any modern weapons, according to the unequivocal reports of the weapons inspectors.

What kind of “superpower” is threatened by Iraq and Iran? Certainly, not a real one.

No one seemed to notice that the alleged 9/11 hijackers were Saudi Arabians, not Afghans or Iraqis, yet it was Afghanistan and Iraq that were labeled “terrorist threats.”

Saudi Arabia and Bahrain, which do terrorize their subjects, are safe from having America bring them democracy, because they are Washington’s puppets, not independent countries.

As fear of nonentities swept over the population of “the world’s sole superpower,” the demands for war against “America’s enemies”–”you are with us or against us”–swept through the country. “Support the troops” plastic ribbons appeared on American cars. Americans went into a frenzy. The “towel heads” were after us, and we had to fight for our lives or be murdered in our beds, shopping centers, and airliner seats.

It was all a hoax to replace the Soviet threat with the Muslim threat.

The problem that developed with the “Muslim threat” is that in order to keep the profits and power flowing into the military/security complex, the promised six-week war in Iraq had to be extended into 8 years. The war in Afghanistan against a few thousand lightly armed Taliban has persisted for more than a decade, longer than the attempted Red Army occupation of Afghanistan.

In other words, the problem with hot wars is that the need not to win them in order to keep them going (Korea, Vietnam, Iraq, Afghanistan are all long-term wars never won) in order that the profits and power continue to flow to the military/security complex demoralizes the US military and creates the world-wide impression that the “world’s sole superpower” cannot even defeat a few thousand insurgents armed with AK-47s, much less a real army.

In Iraq and Afghanistan more US soldiers have died from demoralization and suicides than from combat. In Iraq, the US was humiliated by having to end the war by putting the Sunni insurgents on the US military payroll and paying them to stop killing US troops. In Korea the US was stopped by an army of a backward third world country that lived on rice. What would happen today if the US “superpower’s” militarily confronted China, a country with an economy on which the US is dependent, about equal in size to the US economy, operating on its home territory? The only chance the evil in Washington would have would be nuclear war, which would mean the destruction of the entire world by Washington’s hubris.

Fortunately, profits are more important to Washington than ending life on earth. Therefore, war with China will be avoided, just as it was avoided with the Soviet Union.

However, China will be presented by Washington and its prostitute media, especially the New York Times, Washington Post, and Murdoch’s collection of whores, as the rising threat to America. The media story will shift the importance of America’s allies from Europe to countries bordering the South China Sea. American taxpayers’ money, or newly printed money, will flow into the “new alliance against China.”

China’s rise is a great boon to the US military/security complex, which governs america in which there is a pretense of “freedom and democracy.” China is the profitable replacement for the “Soviet threat.” As the days go by, the presstitute media will create in the feeble minds of Americans “The CHINA Threat.”

Soon whatever little remains of the US living standard will be sacrificed to Washington’s confrontation with China, along with the seizure of our pensions and personal savings in order to deter “the China threat.”

If only Americans were an intelligent people. Then they might have some prospect of holding on to their incomes, remaining wealth, and liberty. Unfortunately, Americans are so thoroughly plugged into the Matrix that they present as a doomed people, incapable of thought, reason, or ability to comprehend the facts that the rest of the world sees clearly.

Can reality be brought to the American people? Perhaps a miracle will occur. Stay tuned.