America Totally Discredited

 Paul Craig Roberts
August 31, 2013

A foolish President Obama and moronic Secretary of State Kerry have handed the United States government its worst diplomatic defeat in history and destroyed the credibility of the Office of the President, the Department of State, and the entire executive branch. All are exposed as a collection of third-rate liars.

Intoxicated with hubris from past successful lies and deceptions used to destroy Iraq and Libya, Obama thought the US “superpower,” the “exceptional” and “indispensable” country, could pull it off again, this time in Syria.

But the rest of the world has learned to avoid Washington’s rush to war when there is no evidence. A foolish Obama was pushed far out on the limb by an incompetent and untrustworthy National Security Advisor, Susan Rice, and the pack of neoconservatives that support her, and the British Parliament cut the limb off.

What kind of fool would put himself in that vulnerable position?

Now Obama stands alone, isolated, trying to back away from his threat to attack without authorization from anyone–not from the UN, not from NATO, not from Congress who he ignored–a sovereign country. Under the Nuremberg Standard military aggression is a war crime. Washington has until now got away with its war crimes by cloaking them in UN or NATO approval. Despite these “approvals,” they remain war crimes.

But his National Security Advisor and the neocon warmongers are telling him that he must prove that he is a Real Man who can stand alone and commit war crimes all by himself without orchestrated cover from the UN or NATO or a cowardly US Congress. It is up to Obama, they insist, to establish for all time that the President of the United States is above all law. He, and he alone is the “decider,” the Caesar, who determines what is permissible. The Caesar of the “sole superpower” must now assert his authority over all law or Washington’s hegemony over the world is lost.

As I noted in an earlier column today, if Obama goes it alone, he will be harassed for the rest of his life as a war criminal who dares not leave the US. Indeed, a looming economic collapse could so alter the power and attitude of the United States that Obama could find himself brought to justice for his war crimes.

Regardless, the United States government has lost its credibility throughout the world and will never regain it, unless the Bush and Obama regimes are arrested and put on trial for their war crimes.

Obama’s destruction of US credibility goes far beyond diplomacy. It is likely that this autumn or winter, and almost certainly in 2014, the US will face severe economic crisis.

The long-term abuse of the US dollar’s reserve currency role by the Federal Reserve and US Treasury, the never-ending issuance of new debt and printing of dollars to finance it, the focus of US economic policy on bailing out the “banks too big to fail” regardless of the adverse impact on domestic and world economies and holders of US Treasury debt, the awaiting political crisis of the unresolved deficit and debt ceiling limit that will greet Congress’ return to Washington in September, collapsing job opportunities and a sinking economy all together present the government in Washington with a crisis that is too large for the available intelligence, knowledge, and courage to master.

When the proverbial hits the fan, the incompetent and corrupt Federal Reserve and the incompetent and corrupt US Treasury will have no more credibility than Obama and John Kerry.

The rest of the world–especially Washington’s bullied NATO puppet states–will take great delight in the discomfort of “the world’s sole superpower” that has been running on hubris ever since the Soviet collapse.

The world is not going to bail out Washington, now universally hated, with currency swaps, more loans, and foreign aid. Americans are going to pay heavily for their negligence, their inattention, their unconcern, and their ignorant belief that nothing can go wrong for them and that anything that does is temporary.

Two decades of jobs offshoring has left the US with a third world labor force employed in lowly paid domestic nontradable services, a workforce comparable to India’s of 40 years ago. Already the “world’s sole superpower” is afflicted with a large percentage of its population dependent on government welfare for survival. As the economy closes down, the government’s ability to meet the rising demands of survival diminishes. The rich will demand that the poor be sacrificed in the interest of the rich. And the political parties will comply.

Is this the reason that Homeland Security, a Nazi Gestapo institution, now has a large and growing para-military force equipped with tanks, drones, and billions of rounds of ammunition?

How long will it be before American citizens are shot down in their streets by “their” government as occurs frequently in Washington’s close allies in Egypt, Turkey, Bahrain?

Americans have neglected the requirements of liberty. Americans are so patriotic and so gullible that all the government has to do is to wrap itself in the flag, and the people, or too many of them, believe whatever lie the government tells. And the gullible people will defend the government’s lie to their death, indeed, to the death of the entire world.

If Americans keep believing the government’s lies, they have no future. If truth be known, Americans have already lost a livable future. The neocons’ “American Century” is over before it begun.

I have heard from educated and aware friends that the presstitute media on the evening news are beating the drums for war. This shows what paid whores the US media is and their total disconnect from reality. Anyone who wastes their time on the US media is a brainwashed idiot, a danger to humanity.

Is the White House idiot going to be a victim of his own careless presidential appointments?

Does he have no one to tell him how to escape the dilemma his moronic Secretary of State and National Security Advisor have put him in? Someone needs to tell the WH Fool that he must say that he accepts the conclusion of the world community that there is not sufficient evidence for launching a military attack on Syria and killing even more people than were killed in the alleged, but unproven, chemical attack, and that he awaits further and better evidence.

God help the moron and the unfortunate country that the fool represents.

The Myth of "Credibility Markets"

The Obama Team's Perverse Economics
By MARSHALL AUERBACK

It is time to distinguish between the truths and the myths propagated by Wall Street, among them the hoary old stand-by, that “if you don’t do anything with spending cuts, it doesn’t get you credibility.”

This, in a word, encapsulates the Administration’s perverse Wall Street-centric thinking. Credibility with the American people takes a back seat to this amorphous concept called “the markets”, and the corresponding need to maintain “credibility”.

But how are we to divine the true aspirations of the markets? Is this really a legitimate basis for government policy? Private portfolio preference shifts (which are manifested daily in the capital markets) are probably the area least amenable to economic analysis. There are no cookie cutter models here (and economists LOVE models).

Consider the case of a currency: How does one respond to a weaker currency? The conventional response seems to be, “Raise interest rates and eventually you’ll re-attract the capital because you will re-establish ‘credibility’ with the markets”. That was essentially the IMF advice to East Asia in 1997. But, as that experience demonstrated, sometimes raising rates can actually trigger additional capital flight if it is perceived to be a panicked reaction to something. And Japan today clearly demonstrates that low rates per se do not necessarily prefigure a weaker currency. What does a 10 year Japanese government bond yielding less than 1% tell us about “the markets”? Does it reflect approval with a country that has a public debt to GDP ratio about 2.5 times higher than the US?

To paraphrase Milton (the poet, not Friedman), sometimes they also serve who only stand and wait!

Markets are an amorphous concept, which reflect heterogeneity of viewpoints. Some people today are buying gold because they foresee a Weimar style hyperinflation emerging in the face of all of this government spending. Some buy it because they envisage the death of fiat currencies and view the yellow metal as the ultimate insurance policy. Some invest because they consider gold the only real form of money. Some people view it as a barbarous relic and ignore it altogether. How does a government respond to these varying points of view? What’s the right policy response?

The myth that markets, not governments, ultimately determine rates has, of course, been legitimized to some degree by virtue of the fact that our institutional monetary arrangements still reflect archaic gold standard type thinking (whereby a certain amount of gold on hand was required to fund government operations). But we went off the gold standard decades ago. Still we have laws which mandate that all net government spending is matched $-for-$ by borrowing from the private market. So net spending appears to be “fully funded” (in the erroneous neo-liberal terminology) by the market. But in fact, all that is actually happening is that the Government is coincidentally draining the same amount from reserves as it adds to the banks each day and swapping cash in reserves for government paper.

The resultant bond market drain is there to ensure that the central bank maintains control of its reserve rate. It has nothing to do with “funding” government operations itself.

If you think that sounds radical then consider the following question posed by Professor Bill Mitchell: If a government bond auction “fails” (i.e. the government doesn’t find enough buyers for the paper it issues during that particular sale), does this mean that your Social Security cheque is going to bounce? Will national infrastructure projects be suddenly halted because the net spending is not “funded”? Do we have to stop fighting a war in Afghanistan? The answer to all of these questions is the same: Of course not! The net spending will go wherever the Government intends it to go - after all the Government needs no funds to spend because it first creates the currency which is ultimately required to be spent in the real economy. The private sector does not produce dollars (if it did, it would represent a jailable offence called counterfeiting).

More fundamentally, how does one presume that the private sector can net save (in this case, dollars) something it cannot net produce?

Isn’t it true that the government is in a unique position because only it has the capacity to create new net financial assets? Now, granted, this simple observation does not readily apply to the euro zone because the individual countries concerned have effectively ceded that authority, thereby circumscribing an adequate fiscal response to their crisis . But when the operations of government are examined in this light, it establishes that the Obama Administration’s ongoing fixation with “long term deficit reduction” and “establishing credibility with the markets” is as foolhardy as conducting human sacrifices to placate a deity.

Yet government policy responses today on issues like Social Security or Medicare reflect a misguided belief system and a genuine failure to understand the basis of modern money. Scaling back Social Security will certainly drive unemployment up higher than it is already going becomes it robs people of the very income required to sustain growth. Not a very sensible strategy if you truly care about implementing “change that people can believe in”.

Unfortunately, until these Wall Street-centric beliefs are fully exposed for the myths that they are, we can expect to see more dispiriting headlines of the sort reflected in Mike Allen’s latest politico playbook.