Paul Craig Roberts: "Hegemony's Cost"

[FourScore]

AN EXCERPT:

The U.S. dollar is under double assault. One assault is from the offshoring of American jobs, which turns U.S. gross domestic product into foreign GDP and worsens the U.S. trade deficit. It is not possible to achieve a trade balance when the production of goods and services for the U.S. market is being moved offshore by U.S. corporations.

The other assault is from the U.S. budget deficit. Americans have become so hard-pressed that their savings rate is negligible. The U.S. government has to rely on foreigners to lend it money for its annual expenditures. Washington's two biggest bankers are China and Japan, the countries with the largest trade surpluses with the United States.

The transformation of the Iraq "cakewalk" into an interminable war has run up a $1 trillion price tag, and an even larger war with Iran is looming. U.S. generals and neoconservative ideologues predict a decade or multi-decade-long war in the Middle East. Washington's bankers are waking up to the reality that they will not be repaid.

The only reason the dollar has not already lost its reserve currency role is that the only alternative is the euro. Yet even the euro, a virtual currency, may have taken the dollar's role by the end of 2008.

Full of hegemonic hubris, the U.S. government does not understand that U.S. power and hegemony have always depended not on missiles and military force, but on the financial power conveyed by the dollar's role as reserve currency.

The reserve currency is world money, good in any country to pay any bill. The reserve currency country is not a debtor in the usual sense. As the reserve currency can be used to settle international accounts, the reserve currency country can borrow at will until lenders lose confidence in the currency.

There is abundant evidence that the loss of confidence in the dollar is underway. When it is complete, the United States will no longer be a superpower.

The decline in American power and influence could be dramatic. Part of America's power results from European countries going along with Washington. The sharp rise in the euro's value has hurt European exports, however, squeezing profit margins and wages, and encouraging offshore production. Fights over monetary policy between European capitals could doom both the European Union and the euro, leaving the world with no reserve currency and America with embittered former allies.

By going to war for hegemony, the Bush regime has brought about American decline. While the neocons have spent two administrations trying to deracinate Islam, real threats to America's power have been neglected. Offshoring, which turns U.S. GDP into imports and larger trade deficits, together with war debts, has eroded the dollar's status as reserve currency, undermining the foundation of American power.

http://www.creators.com/opinion/paul-craig-roberts/hegemony-s-cost.html

[Karenina]

1. Heads Up!!!

K&R!

[seafan]

2. Once again, Paul Craig Roberts sounds the alarm on BushCheney.

I wonder how close that horrible moment is, when Americans fully realize the enormity of the destruction George W. Bush and Richard B. Cheney have accomplished since they seized power on December 12, 2000, enabled by their accomplices sitting on the Supreme Court.



The Wages of Hegemony

Paul Craig Roberts
November 1, 2007

When he departs the White House on 20 January, 2009, the current resident will bequeath to the American people and the next administration an interminable war in the Middle East and a depreciated currency.
And that's the good news. It assumes there is a successor administration and that no Cheney-contrived "national emergency" will make it possible for Bush to test drive National Security Presidential Directive/NSPD-51 and Homeland Security Presidential Directive/HSPD-20 to cancel the 2008 election.
Neoconservatives led by vice president Dick Cheney remain determined to effect "regime change" in Iran. The allegation of weapons of mass destruction falsely brought against Iraq is now being deployed against Iran.

The International Atomic Energy Agency says that there is no evidence that Iran has a nuclear weapons program. The IAEA is the institution that polices the Nuclear Non-proliferation Treaty by inspecting the nuclear facilities of the signatories to the treaty of which Iran is one. However, the neocon/Cheney/Bush regime is prepared to bomb Iran on the basis of fibs alone.
Faithfully repeated by the propaganda ministry that masquerades as the "mainstream media," those fibs have been trotted out so many times in recent months that significant numbers of Americans now believe themselves to be in peril from nonexistent Iranian nukes.

In this way the regime gains the complicity of the American people and their representatives in Congress for what will be unprovoked aggression against a third Middle Eastern country, a third war crime under the Nuremberg standard.
The "war on terror" is a hoax. It serves as a cover for the drive for US and Israeli hegemony in the Middle East. Iraq, Iran, and Syria became neoconservative targets, because they were the only Middle Eastern countries that are not American puppet states or dependencies.

Afghanistan was attacked, because the Taliban were uniting the country under the banner of Islam, a development that, if successful, could lead to the overthrow of the governments in America's puppet states and dependencies.
The war rhetoric against Iran ratcheted up when the White House belatedly realized that the result of "bringing democracy to Iraq" was to empower the majority Shi'ites, thereby creating a Shi'ite crescent from Iran to southern Lebanon and alarming America's Sunni Saudi Arabian dependent.

Israel's goal is to have the Americans eliminate the Muslim states that support Hamas and Hezbollah's opposition to Israel's theft of the remainder of Palestine and southern Lebanon, whose water resources Israel covets. Israel's goal thus precisely coincides with that of the Cheney regime.
The "Cakewalk War" in Iraq was supposed to be over in a few weeks and to pay for itself out of Iraqi oil revenues. The war is now five years old and has cost American taxpayers, and those left dependent on government programs by decades of a welfare state, $1 trillion in out-of-pocket and already incurred future costs.

As large and troublesome as this cost is, it pales in comparison to the damage the war has done to the value of the dollar and its role as reserve currency. Since 2001, the Euro has risen 60 percent against the dollar.

.....

The US dollar is under double assault. One assault is from the offshoring of American jobs, which turns US GDP into foreign GDP and worsens the US trade deficit. It is not possible to achieve a trade balance when the production of goods and services for the US market is being moved offshore by US corporations.
The other assault is from the US budget deficit. Americans have become so hard pressed that their savings rate is negligible. The US government has to rely on foreigners to lend it money for its annual expenditures. Washington's two biggest bankers are China and Japan, the countries with the largest trade surpluses with the US.

The transformation of the Iraq "cakewalk" into an interminable war has run up a one trillion dollar price tag, and an even larger war with Iran is looming. US generals and neoconservative ideologues predict a decade or multi-decade long war in the Middle East. Washington's bankers are waking up to the reality that they will not be repaid.

.....

[raccoon]

3. K&R nt

[Strelnikov_]

4. Putin is ready, once the Republicans attack Iran, to supplant the petrodollar

with the petrorouble.

Full of hegemonic hubris, the U.S. government does not understand that U.S. power and hegemony have always depended not on missiles and military force, but on the financial power conveyed by the dollar's role as reserve currency. The reserve currency is world money, good in any country to pay any bill. The reserve currency country is not a debtor in the usual sense. As the reserve currency can be used to settle international accounts, the reserve currency country can borrow at will until lenders lose confidence in the currency. - P.C. Roberts

Putin understands. Can't find that oil you must have with 50% of the worlds export market offline (Persian Gulf). Give us your bid, offered and paid in roubles.


Putin is playing the Republicans/Neocons like a chess master. The attack on Iran will be checkmate, with Russia (and to a lesser degree China) winning the game. It would be somewhat entertaining, if we were not the pawns in this final 'Great Game'.


++++

Putin has long been nursing ambitions of using Russia's vast oil and gas supplies as an instrument of power. In the mid '90s, after 15 years in the KGB, Putin went back to school, attending the St. Petersburg Mining Institute. He wrote a dissertation titled "Toward a Russian Transnational Energy Company." The topic: how to use energy resources for grand strategic planning.

“In the early stages of pro-market reforms in Russia the state temporarily lost strategic control over the mineral resources industry. This led to the stagnation and disintegration of the geological sector built over many decades…. However, today the market euphoria of the early years of economic reform is gradually giving room to a more balanced approach that... recognises the need for a regulatory role of the state.”

- Vladimir Putin, “Toward a Russian Transnational Energy Company.”, PhD dissertation, St. Petersburg Mining Institute


”The Rouble must become a more widespread means of international transactions. To this end, we need to open a stock exchange in Russia to trade in oil, gas, and other goods to be paid for in Roubles. Our goods are traded on global markets. Why are not they traded in Russia?”

— President Vladimir Putin, Speaking before the full Russian parliament, Cabinet and international reporters, May 2006


”Russia has found the Achilles’ heel of the US colossus. In concert with its oil-producing partners and the rising powerhouse economies of the East, Russia is altering the foundations of the current US-led liberal global oil-market order, insidiously working to undermine its US-centric nature and slanting it toward serving first and foremost the energy-security needs and the geopolitical aspirations of the rising East”

- W. Joseph Stroupe, author, Russian Rubicon: Impending Checkmate of the West, as quoted in the Asia Times, November 22, 2006


From the Russian perspective, the Saudi role and OPEC model have benefited the United States, which can pressure Saudi Arabia into opening the spigot to deal with supply emergencies; the US also pressures other oil producers, such as Libya, Iraq, Iran, Venezuela, and Indonesia, by military methods, diplomacy, and economic sanctions. In the Russian alternative, the US will be far less influential, and have fewer levers, commercial or military, to effect pressure on the energy suppliers. Russian arms and defense-industry partnerships are on offer to relatively weak, intervention-prone energy producers in Africa and Latin America to offset US pressure.

In the OPEC model, the benchmark is Brent crude, priced in US dollars. In the Russian model, the discount and disadvantage between the Brent and Urals benchmarks will be reduced, and pricing will evolve toward a currency basket, including the ruble. In the OPEC model, suppliers hold much of their cash and government securities in US controlled institutions. In the Russian model, cash is held in the form of a currency basket; conversion from cash is sought into non-US assets, particularly in the European market.

In the OPEC model, investment in new energy reserves should be open to, and may be controlled by, US corporations. In the Russian model, strategic reserves should be controlled by national companies, state-controlled champions, or joint ventures in which Russian interests are in the majority. The Russian model also extends to energy-convertible coal, uranium, and other mineral resources. Through negotiations for Russian accession to the World Trade Organization (WTO), the US, Australia, Canada and other resource-exporting states have sought to gain unlimited access to search and development of Russian minable resources.

The Russian model rejects this, and instead assigns priority and equity control of domestic resources to national resource companies. The model proposes tradeoffs and partnerships in resource exploitation in third countries, especially the developing states. The US-backed OPEC model assigns international priority to the Arab states. The Russian model assigns priority to the Central Asian alliance, including China, India, and Iran; secondarily to Latin America and ultimately Africa.”

- John Helmer, “Russian energy model challenges OPEC,” Asia Times, July 18, 2006,


In the end, the choice between these two alternatives — Grab the Oil or Energy Reconfiguration — this decision is much bigger than oil alone. It is a choice about the fundamental ethos and, in fact, the very nature of the country. Most immediately, it is about democracy versus empire. In economic terms, it is about prosperity or poverty. In engineering terms, it is a matter of efficiency over waste. In moral terms this is the choice of sufficiency or gluttony. From the standpoint of the environment, it is a preference for stewardship over continued predation. In the ways the US deals with other countries it is the choice of co-operation versus dominance. And in spiritual terms, it is the choice of hope, freedom and purpose over fear, dependency and despair. In this sense, this is truly the decision that will define the future of America and perhaps the world.

- Robert Freeman, “Will the End of Oil Mean the End of America?,” 2004


http://www.worldwiderenaissance.net/Contributions/HirshWorldFacesDevastatingEnergyWars.htm

http://www.petrodollarwarfare.com/PDFs/Hysteria_Over_Iran_and_a_New_Cold_War_with_Russia.pdf (.pdf)

[FourScore]

5. kick