A Culture Of Delusion

A writer’s greatest disappointments are readers who have knee-jerk responses. Not all readers, of course. Some readers are thoughtful and supportive. Others express thanks for opening their eyes. But the majority are happy when a writer tells them what they want to hear and are unhappy when he writes what they don’t want to hear.

For the left wing, Ronald Reagan is the great bogeyman. Those on the left don’t understand supply-side economics as a macroeconomic innovation that cured stagflation by using the impact of fiscal policy on aggregate supply. Instead, they see “trickle-down economics” and tax cuts for the rich. Leftists don’t understand that the Reagan Administration intervened in Grenada and Nicaragua in order to signal to the Soviets that there would be no more Soviet expansion or client states and that it was time to negotiate the end of the Cold War. Instead, leftists see in Reagan the origin of rule by the 1 percent and the neoconservatives’ wars for U.S. hegemony.

In 1981, curtailing inflation meant collapsing nominal gross national product and tax revenues. The result would be budget deficits — anathema to Republicans — during the period of readjustment. Ending the Cold War meant curtailing the military/security complex and raised the specter in conservative circles of “the anti-Christ” Mikhail Gorbachev deceiving Reagan and taking over the world.

In pursuing his two main goals, Reagan was up against his own constituency; he relied on rhetoric to keep his constituency on board with his agenda. The left wing heard the rhetoric but failed to comprehend the agenda.

When I explain these facts, easily and abundantly documented, some of leftish persuasion send in condescending and insulting emails telling me that they look forward to the day that I stop lying about Reagan and tell the truth about Reagan like I do about everything else.

“Knee-jerk liberal” is a favorite term of conservatives. But conservatives can be just as knee-jerk. When I object to Washington’s wars, the mistreatment of detainees and the suspension of civil liberties, some on the right tell me that if I hate America so much I should move to Cuba. Many Republicans cannot get their minds around the fact that if civil liberties are subject to the government’s arbitrary discretion, then civil liberties do not exist. The flag-waving element of the population is prone to confuse loyalty to the country with loyalty to the government, unless, of course, there’s a Democrat in the White House.

Rationally, it makes no sense for readers to think that a writer who would lie to them about one thing would tell them the truth about another. But as long as they hear what they want to hear, it is the truth. If they don’t want to hear it, it is a lie.

Both left and right also confuse explanations with justifications.

When a writer writes about the perils that we as a society face and the implications, it is very discouraging for the writer to know that many readers will not listen unless it is what they want to hear. This discouragement is precisely what every truth-teller faces, which is why there are so few of them.

This is one reason I stopped writing a couple of years ago. I found that solid facts and sound analysis could not penetrate brainwashed and closed minds seeking vindication to keep the mind locked tightly against unsettling truths. Americans want to have their beliefs vindicated more than they want the truth. The success of print and TV pundits is based on allying with a prominent point of view or interest group and serving it. Those served make the writer or talking head successful. I never thought much of that kind of success.

But success as a whore is about the only kind of success that can occur in Washington or in the media these days. Those who refuse to prostitute themselves arouse pity and denunciation, not admiration. A couple of years ago an acquaintance from a university in the Northeast called me to say he had recently had lunch with some of my former associates in Washington. When he inquired about me, he said the response was, “Poor Craig, if he hadn’t turned critic, he would be worth tens of millions of dollars like us.”

I replied that my former associates were undoubtedly correct. My acquaintance said that he hadn’t realized that he was having lunch with a bunch of prostitutes.

The incentive to speak the truth and the reward for doing so are very weak. And not just for a writer, but also for academics and experts who can make far more money by lying than by telling the truth. How else would we have gotten genetically modified organisms, jobs offshoring, the “unitary executive” and a deregulated financial system? It is a very lucrative career to testify as an expert in civil lawsuits. It is part of America’s romance with the lie that experts purchased by the opposing sides in a lawsuit battle it out as gladiators seeking the jury’s thumbs-up.

And look at Congress. The two members of the House who stood up for the Constitution and truth in government will soon be gone. Ron Paul is stepping down, and Dennis Kucinich was redistricted out of his seat. As for the Senate, these thoughtful personages recently voted 90-1 to declare war on Iran, as the sole dissenter, Rand Paul, pointed out. The Senate is very much aware, although only a few will publicly admit it, that the U.S. has been totally frustrated and held to a standoff, if not a defeat, in Afghanistan and is unable to subdue the Taliban. Despite this, the Senate wants a war with Iran, a war which could easily turn out to be even less successful. Obviously, the Senate not only lies to the public but also to itself.

Last week the Pentagon chief, Leon Panetta, told China that the new U.S. naval, air and troop bases surrounding China are not directed at China. What else could be the purpose of the new bases? Washington is so accustomed to lying and to being believed that Panetta actually thinks China will believe his completely transparent lie. Panetta has confused China with the American people: Tell them what they want to hear, and they will believe it.

Americans live in a matrix of lies. They seldom encounter a truthful statement. There is no evidence that Americans can any longer tell the difference between the truth and a lie. Americans fell for all of these lies and more: Saddam Hussein has weapons of mass destruction and al-Qaida connections. Saddam’s troops seized Kuwaiti babies from incubators and threw them on the floor. Moammar Gaddafi fed his troops Viagra to help them rape Libyan women. Iran has a nuclear weapons program. Change — yes, we can! The U.S. is “the indispensable country.” America is broke because of food stamps and Social Security, not because of wars, bankster bailouts and a failing economy. Russia is America’s No. 1 enemy. China is America’s No. 1 enemy. Iran is a terrorist state. Jobs offshoring is free trade and good for the U.S. economy. Israel is America’s most loyal ally. The U.S. missile shield surrounding Russia is not directed at Russia. The South China Sea is an area of U.S. national interest. Financial markets are self-regulating.

The list is endless. Lies dominate every policy discussion, every political decision. The most successful people in America are liars.

The endless lies have created a culture of delusion. And this is why America is lost. The beliefs of many Americans, perhaps a majority, are comprised of lies. These beliefs have become emotional crutches, and Americans will fight to defend the lies that they believe. The inability of Americans to accept facts that are contrary to their beliefs is the reason the country is leaderless and will remain so. Unless scales fall from Americans’ eyes, Americans are doomed.

–Paul Craig Roberts

The Dispossessed Majority

The bumper sticker on the beat-up pickup truck read: “Friends don’t let friends vote Democrat.”

The driver was obviously not affluent. Yet, despite all the news about mega-trillion-dollar bankster bailouts, mega-million-dollar bonuses for financial crooks and unimaginable compensation packages for corporate CEOs who have moved middle class jobs out of America, something made the down-and-out pickup truck driver associate with the political party of the super-rich.

As I wondered at this strange alliance of the dirt poor with the mega-rich, I remembered that in 2004, Thomas Frank wondered about how the Republicans had managed to convince the poor to vote against their best interests. Frank’s answer, or part of his answer, is that the Republicans use “social issues,” such as gay marriage and Janet Jackson’s exposed nipple, to work up indignation over the threat to moral values posed by liberal Democrats.

The working poor have been convinced by Republican propaganda that voting Democrat means giving the working poor’s tax dollars to the non-working poor, to providing medical care and schooling for illegal aliens, and being soft on terrorism.

To the pickup truck driver, standing up for America means standing up for bankster bailouts and the military/security complex’s multitrillion-dollar wars.

The Karl Rove Dirty Tricks Team has honed the Republican propaganda. Republicans send each other via email an endless number of nonsense stories about Barack Obama being a Muslim, about Obama being a Marxist, about Obama being a Manchurian candidate turning America over to the New World Order, the United Nations or some other dastardly plotting organization. But never is Obama accused of turning the United States over to Wall Street, the military/security complex or Israel.

There is never any citation or source for the accusations in the emails. None is needed, because the words are what the Republicans want to hear. Ask them why Obama would be killing Muslims in seven countries if he was a Muslim or why Wall Street and the military/security complex would put a Marxist in the White House, and they turn purple with rage. Just by asking the obvious questions instead of joining in the denunciations, a person confirms the propaganda that America is threatened by Obama dupes who won’t stand up for the country.

The non-affluent who rage about welfare, Medicaid, Obamacare and public schools can’t seem to put two and two together. The $750 billion TARP bankster bailout, a small part of the total and ongoing bailout, would have sufficed to cover any holes in these budgets for a long time. Instead, the money went to reward those who caused the financial crisis and threw millions of Americans out of their homes. As far as I know, the pickup truck driver is one of the dispossessed.

The same brainwashed Americans who rage against Obamacare and are lined up to vote for Mitt Romney are oblivious to the fact that Romney, while Governor of the eastern liberal Democratic state of Massachusetts, had his version of Obamacare enacted at the State level.

The greatest irony about Obamacare is that it was written by the private insurance companies and diverts Medicaid and Medicare funds to their profits. It is socialized medicine alright, but it is socialism for the private insurance companies.

All it took to convince Red Staters to go along with the military/security complex squandering $6 trillion on the Iraq and Afghanistan wars were yellow ribbon decals and a slogan, “Support the troops.”

Obama, Republicans claim, won’t stand up to Syria, or against Iran or for Israel. But Republicans are proud when Romney goes to Israel to slither on his belly, pandering to the crazed, bloodthirsty Israeli Prime Minister Benjamin Netanyahu, who called Israeli top generals “pussies” for warning against attacking Iran. Romney told Netanyahu: “Just tell me what to do, and I’ll do it; I am loyal to Israel.” Apparently, flag-waving Republican patriots are not bothered when their Presidential candidate announces that as soon as he is in office he will turn over U.S. foreign policy to Netanyahu and send more americans to death and bankruptcy for Netanyahu.

Karl Rove didn’t have any trouble at all in brainwashing Red Staters to support their own demise. The pickup truck driver could just as well have sported a bumper sticker that read: “Don’t support a Democrat. He might do something for you.”

Yes, I know. It is almost as easy to beat up on Democrats. George W. Bush, Dick Cheney and their neocon hoodlums destroyed the Constitution and, thereby, America. But the Democrats let them. It was Nancy Pelosi, who as Speaker of the House stridently declared Bush’s impeachment to be “off the table.”

Bush and Cheney unquestionably violated both U.S. and international laws and the Constitution. Pelosi’s refusal to hold them accountable established the precedent that the executive branch is no longer accountable to law or to the Constitution. In effect, the executive branch now comprises a dictatorship. It acts outside of law and Constitutional restraints. On some issues it still has to consult with Congress or the courts; but as the executive branch’s power and audacity grows, consultation will become a formality and then drop away. Congress will have no more influence than the Roman Senate under the Empire, and courts will become stages for show trials.

Americans elected Obama President, expecting that he would restore the rule of law. Instead, he codified the Bush regime’s transgressions and added some of his own. No one of my generation could have imagined the President of the United States sitting in the Oval Office signing off on lists of American citizens to be murdered without evidence or due process of law.

So which do you want? The Republican panderer to the rich and Israel whose foreign policy is war or the Democrat panderer to the rich and Israel whose foreign policy is war? As Gerald Celente wrote in the July issue of the Trends Journal, americans “argue among themselves why their freak is better than the other freak. They will get angry with you if you call their freak a freak. They will actually fight and die to defend their freaks.”

It is extraordinary that millions of americans actually believe fervently that it matters whether Romney freak or Obama freak gets elected. If americans had any sense, they would stay home and not vote. The 1 percent control the country, and the 99 percent had just as well own up to it and stay at home. Nothing is going to change because of the ballot box.

What do you suppose the Ron Paul supporters will do? Will they see Romney as the less socialist of the two and vote for the Republicans who stole the nomination from Paul? (Jaret Glenn, “How the GOP Establishment Stole the Nomination from Ron Paul,” published on Aug. 6 on the OpEdNews website.)

The United States is ruled by a private oligarchy. The government is merely its front. The country’s resources are diverted to the pockets of Wall Street, the military/security complex and to the service of greater Israel. The oil, mining, timber and agribusiness companies control the Environmental Protection Agency and the Forestry Service, which is why regulation pertains only to the small individual, while fracking, mountaintop removal mining and pollution of air, water and soil run wild.

The oligarchs have succeeded in making americans a dispossessed majority in their own country. In November, americans will again give their approval to one of the oligarchy’s two candidates.

–Paul Craig Roberts

The Collapsing U.S. Economy And The End Of The World

Washington has been at war since October 2001, when President George W. Bush concocted an excuse to order the U.S. invasion of Afghanistan. This war took a backseat when Bush concocted another excuse to order the invasion of Iraq in 2003, a war that went on without significant success for eight years and has left Iraq in chaos with dozens more killed and wounded every day, a new strongman in place of the illegally executed former strongman, and the likelihood of the ongoing violence becoming civil war.

Upon his election, President Barack Obama foolishly sent more troops to Afghanistan and renewed the intensity of that war, now in its 11th year, to no successful effect.

These two wars have been expensive. According to estimates by Joseph Stiglitz and Linda Bilmes, when all costs are counted, the Iraq invasion cost U.S. taxpayers $3 trillion. Ditto for the Afghanistan war. In other words, the two gratuitous wars doubled the U.S. public debt. This is the reason there is no money for Social Security, Medicare, Medicaid, food stamps, the environment and the social safety net.

Americans got nothing out of the wars; but, as the war debt will never be paid off, U.S. citizens and their descendants will have to pay interest on $6,000 billion of war debt in perpetuity.

Not content with these wars, the Bush/Obama regime is conducting military operations in violation of international law in Pakistan, Yemen and Africa; organized the overthrow by armed conflict of the government in Libya; is currently working to overthrow the Syrian government; and continues to marshal military forces against Iran.

Finding the Muslim adversaries that Washington created to be insufficient for its energies and budget, Washington has encircled Russia with military bases and has begun the encirclement of China. Washington has announced that the bulk of its naval forces will be shifted to the Pacific over the next few years, and Washington is working to re-establish its naval base in the Philippines, construct a new one on a South Korean island, acquire a naval base in Vietnam, and build air and troop bases elsewhere in Asia.

In Thailand, Washington is attempting to purchase with the usual bribes an air base used in the Vietnam War. There is opposition, as the country does not wish to be drawn into Washington’s orchestrated conflict with China. Downplaying the real reason for the air base, Washington, according to Thai newspapers, told the Thai government that the base was needed for “humanitarian missions.” This didn’t fly, so Washington had NASA ask for the air base in order to conduct “weather experiments.” Whether this ruse is sufficient cover remains to be seen.

U.S. Marines have been sent to Australia and elsewhere in Asia.

To corral China and Russia (and Iran) is a massive undertaking for a country that is financially busted. With wars and bankster bailouts, Bush and Obama have doubled the U.S. national debt while failing to address the disintegration of the U.S. economy and rising hardships of U.S. citizens.

The charts below are courtesy of www.shadowstats.com.

GNon-Farm Payroll Employment

The annual U.S. budget deficit is adding to the accumulated debt at about $1.5 trillion per year with no prospect of declining. The financial system is broken and requires ongoing bailouts. The economy is busted and has been unable to create high-paying jobs — indeed any jobs. Despite years of population growth, payroll employment as of mid-2012 is the same as in 2005 and substantially below 2008. Yet, the government and financial presstitute media tell us that we have a recovery.

According to the U.S. Bureau of Labor Statistics, employment in 2011 was only 1 million more than in 2002. As it takes about 150,000 new jobs each month to stay even with population growth, that leaves a decade-long job deficit of 15 million jobs.

The U.S. unemployment and inflation rates are far higher than reported. In previous columns I have explained, based on statistician John Williams’ work, the reasons that the government’s headline numbers are serious understatements. The headline (U3) unemployment rate of 8.2 percent doesn’t count discouraged workers who have given up on finding a job. The government has a second unemployment rate (U6), seldom reported, which includes short-term discouraged workers. That rate is 15 percent. When the long-term discouraged workers are added in, the current U.S. unemployment rate is 22 percent, a number closer to the unemployment rate of the Great Depression than to the unemployment rates of postwar recessions.

GDP Annual Growth

Changes in the way inflation is measured have destroyed the consumer price index as a measure of the cost of living. The new methodology is substitution-based. If the price of an item in the index rises, a lower-priced alternative takes its place. In addition, some price rises are labeled quality improvements whether they are or not and, thus, do not show up in the index. People still have to pay the higher price, but it is not counted as inflation.

Currently, the substitution-based rate of inflation is about 2 percent. However, when inflation is measured as the actual cost of living, the rate of inflation is 5 percent.

The Misery Index is the sum of the inflation and unemployment rates. The level of the current Misery Index depends on whether the new rigged measures are used, which understate the misery, or the former methodology that accurately measures it.

Prior to the November 1980 election, the Misery Index hit nearly 22 percent, which was one reason for Ronald Reagan’s victory over President Jimmy Carter. Today, if we use previous methodology, the Misery Index stands at 27 percent. But if we use the new rigged methodology, the Misery Index is 10 percent.

The understatement of inflation serves to boost gross domestic product. GDP is calculated in current dollars. To be able to determine whether GDP rose because of price rises or because of increases in real output, GDP is deflated by the index. The higher the inflation rate, the less the growth in real output and vice versa. When the substitution-based methodology is used to measure inflation, the U.S. economy experienced real growth in the 21st century except for the sharp dip during 2008-2010. However, if the cost-of-living based methodology is used, except for a short period during 2004, the U.S. economy has experienced no real growth since 2000.

In the chart above, the lower measure (blue) of real GDP is deflated with the inflation methodology that measured cost of living. The higher GDP measure (red) deflates GDP with the new substitution-based methodology.

The lack of employment and real GDP growth go together with the decline in real household median income. The growth in consumer debt substituted for the lack of income growth and kept the economy going until consumers exhausted their ability to take on more debt. With the consumer dead in the water, the outlook for economic recovery is poor.

Real Median Household Income Index

Politicians and the Federal Reserve are making the outlook even worse. At a time of high unemployment and debt-stressed households, politicians at local, State and Federal levels are cutting back on government provision of healthcare, pensions, food stamps, housing subsidies and every other element of the social safety net. These cutbacks, of course, further reduce aggregate demand and the ability of income-stressed Americans to survive.

The Federal Reserve has interest rates so low that retirees and others living on their savings can earn nothing on their money. The interest rates paid on bank CDs and government and corporate bonds are lower than the rate of inflation. To live on interest income, a person has to purchase Greek, Spanish or Italian bonds and run the risk of capital loss. The Federal Reserve’s policy of negative interest rates forces retirees to spend down their capital in order to live. In other words, the Fed’s policy is destroying personal savings as people are forced to spend their capital in order to cover living expenses.

In June, the Federal Reserve announced that it was going to continue its policy of driving nominal interest rates even lower — this time focusing on long-term Treasury bonds. The Fed said it would be purchasing $400 billion of the Treasury’s 30-year bonds.

Driving interest rates down means driving bond prices up. With five-year Treasury bonds paying only .7 percent and 10-year Treasuries paying only 1.6 percent, below even the official rate of inflation, Americans desperate for yield move into 30-year bonds currently paying 2.7 percent. However, the high bond prices mean that the risk of capital loss is very high.

The Fed’s debt monetization, or a drop in the exchange value of the dollar as other countries move away from its use to settle their balance of payments, could set off inflation that would take interest rates out of the Fed’s control. As interest rates rise, bond prices fall.

In other words, bonds are now the bubble that real estate, stocks and derivatives were. When this bubble pops, Americans will take another big hit to their remaining wealth.

It makes no sense to invest in long-term bonds at negative interest rates when the Federal government is piling up debt that the Federal Reserve is monetizing and when other countries are moving away from the flood of dollars. The potential for a rising rate of inflation is high from debt monetization and from a drop in the dollar’s exchange value. Yet, bond fund portfolio managers have to follow the herd into longer-term maturities or see their performance relative to their peers drop to the bottom of the rankings.

Some individual investors and foreign central banks, anticipating the dollar’s loss of value, are accumulating gold and silver bullion. Realizing the danger to the dollar and its policy from the rapid rise in the price of bullion during 2011, the Federal Reserve has arranged offsetting action. When the demand for physical bullion drives up the price, short sales of bullion in the paper market are used to drive the price back down.

Similarly, when investors begin to flee Treasuries, thus causing interest rates to rise, JPMorgan Chase & Co. and other dependencies of the Federal Reserve sell interest-rate swaps, thus offsetting the effect on interest rates of the bond sales. (Keep in mind that interest rates rise when bond prices fall and vice versa.)

The point of all this information is to establish that except for the 1 percent, the incomes and wealth of Americans are being cut back across the board. From 2002 through 2011, the economy lost 3.5 million manufacturing jobs. These jobs were replaced with lower-paying server and bartender jobs (1,189,000), ambulatory healthcare service jobs (1,512,000) and social assistance jobs (578,000).

These replacement jobs in domestic services mean that, on a net basis, U.S. consumer income was moved out of the country. Potential aggregate demand in the United States dropped by the differences in pay in the job categories. Clearly and unambiguously, jobs offshoring lowered U.S. disposable income and U.S. GDP and, thereby, employment.

Despite the lack of an economic base, Washington’s hegemonic aspirations continue unabated. Other countries are amused at Washington’s unawareness. Russia, China, India, Brazil and South Africa are forming an agreement to abandon the U.S. dollar as the currency for international settlement between themselves.

On July 4, China Daily reported: “Japanese politicians and prominent academics from China and Japan urged Tokyo on Tuesday to abandon its outdated foreign policy of leaning on the West and accept China as a key partner as important as the United States. The Tokyo Consensus, a joint statement issued at the end of the Beijing-Tokyo Forum, also called on both countries to expand trade and promote a free-trade agreement for China, Japan and South Korea.”

This means that Japan is in play.

The Chinese government, more intelligent than Washington, is responding to Washington’s military threats by enticing away Washington’s two key Asian allies. As the Chinese economy is now as large as the United States’ and on far firmer footing, and as Japan now has more trade with China than with the United States, the enticement is appealing. Moreover, China is next door, and Washington is distant and drowning in its hubris.

Washington, which flicked its middle finger to international law and to its own law and Constitution with its arrogance and gratuitous and illegal wars and with its assertion of the right to murder its own citizens and those of its allies (such as Pakistan), has made the United States a pariah state.

Washington still controls its bought-and-paid-for NATO puppets, but these puppet states are overwhelmed with derivative debt problems brought to them by Wall Street and by sovereign debt problems, some of which were covered up by Wall Street’s Goldman Sachs Group Inc.

Europe is on the ropes and has no money with which to subsidize Washington’s wars of hegemony.

Washington is becoming an isolated and despised element of the world community. Washington has purchased Europe, Canada, Australia, the former Soviet state of Georgia (and almost Ukraine), and Columbia; and it continues its effort to purchase the entire world. But sentiment is turning against the rising Gestapo state that has shown itself to be lawless, ruthless and indifferent, even hostile, to human life and human rights.

A government whose military was unable with the help of the U.K. to occupy Iraq after eight years and was forced to end the conflict by putting the “insurgents” on the U.S. military payroll and paying them to stop killing American troops, and a government whose military has been unable to subdue a few thousand lightly armed Taliban after 11 years, is over the top when it organizes war against Iran, Russia and China.

The only prospect Washington has of prevailing in such an undertaking is first use of nuclear weapons, of catching its demonized opponents off guard by nuking them out of the blue. In other words, by the elimination of life on Earth.

Is this Washington’s program revealed by neoconservative warmonger Bill Kristol who had no shame to ask publicly: “What’s the good of nuclear weapons if you can’t use them?”

–Paul Craig Roberts

Hubris As The Evil Force In History

I have always been intrigued by the Battle of Bull Run, the opening battle of the U.S. Civil War, known to Southerners as the War of Northern Aggression. Extreme hubris characterized both sides: the North before the battle and the South afterward.

Republican politicians and ladies in their finery rode in carriages to Manassas, the Virginia town through which the stream Bull Run flowed, to watch the Union Army end the “Southern Rebellion” in one fell swoop. What they witnessed instead was the Union Army fleeing back to Washington with its tail between its legs. The flight of the Northern troops prompted some Southern wags to name the skirmish the “Battle of Yankee Run.”

The outcome of the battle left the South infected with the hubris that had so abruptly departed the North. The Southerners concluded that they had nothing to fear from cowards who ran away from a fight. “We have nothing to worry about from them,” decided the South. It was precisely at this point that hubris defeated the South.

Historians report that the flight back to Washington left the Union Army and the U.S. capital in a State of disorganization for three weeks, during which time even a small army could have taken the capital. Historians who are inclined not to see the battle as a victory for the South claim that the Southerners were exhausted by the effort it took to put the Yankees to flight and that they simply didn’t have the energy to pursue them, take Washington, hang the traitor Abraham Lincoln and all the Republicans, and end the war.

Exhausted troops or not, had Napoleon Bonaparte been the Southern general, the still organized Southern army would have been in Washington as fast as the disorganized Union. Possibly, the Southerners would have engaged in ethnic cleansing by enslaving the Yankees and selling them to Africans, thus ejecting from the country the greed-driven Northern imperialists who, in the Southern view, did not know how to behave either in private or in public.

It was not Southern exhaustion that saved the day for the North. It was Southern hubris. The Battle of Bull Run convinced the South that the citified Northerners simply could not fight and were not a military threat.

Perhaps the South was right about the North. However, the Irish immigrants, who were met at the docks and sent straight to the front, could fight. The South was dramatically outnumbered and had no supply of immigrants to fill the ranks vacated by casualties. Moreover, the South had no industry and no navy. And, of course, the South was demonized because of slavery, although the slaves never revolted — even when all Southern men were at the front. When the South failed to take advantage of its victory at Bull Run and occupy Washington, the South lost the war.

An examination of hubris casts a great deal of light on wars, their causes and outcomes. Napoleon undid himself, as Adolf Hitler was to do later, by marching off into Russia. British hubris caused both world wars. World War II began when the British incomprehensibly gave a “guarantee” to the Polish colonels who were on the verge of returning that part of Germany that Poland had acquired from the Versailles Treaty. The colonels, not understanding that the British had no way of making the guarantee good, gave Hitler the finger, an act of defiance that was too much for Hitler, who had declared Germans to be the exceptional people.

Hitler smacked Poland, and the British and French declared war.

Hitler made short work of the French and British armies. But the British in their hubris, hiding behind the English Channel, wouldn’t surrender or even agree to a favorable peace settlement. Hitler concluded that the British were counting on Russia to enter the war on their side. Hitler decided that if he knocked off Russia, the British hope would evaporate and they would come to peace terms. So Hitler turned on his Russian partner with whom he had just dismembered Poland. Joseph Stalin, in his own hubris, had recently purged almost every officer in the Red Army, thus making Hitler’s decision easy.

The outcome of all this hubris was the rise of the U.S. military/security complex, more than four decades of Cold War and the threat of nuclear destruction, a period that lasted from the end of World War II until Ronald Reagan and Mikhail Gorbachev, two leaders not consumed by hubris, agreed to end the Cold War.

Alas, hubris returned to America with the neoconservative ascendency. Americans have become “the indispensable people.” Like the Jacobins of the French Revolution who intended to impose “liberty, equality, fraternity” upon all of Europe, Washington asserts the superiority of the American way and the right to impose it on the rest of the world. Hubris is in full flower despite its defeats. The “three week” Iraq war lasted eight years; and after 11 years, the Taliban control more of Afghanistan than the “world’s only superpower.”

Sooner or later, American hubris is going to run up against Russia and China, neither of which will give way. Either the United States, like Napoleon and Hitler, will have its Russian (or Chinese) moment, or the world will go up in thermonuclear smoke.

The only solution for humanity is to immediately impeach and imprison warmongers when first sighted before their hubris leads us yet again into the death and destruction of war.

Brewing A Conflict With China

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 likes of Indonesia and the Philippines are a matter of U.S. national interests.

Washington has not made it clear what its 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.

This is all about 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 Washington 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 that belongs 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 U.S. Marines to protect Australia from China, despite the lack of Chinese threats against Australia. George W. Bush and Barack 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 Dwight Eisenhower’s 1961 warning to the American people in his last public address about the military-industrial complex.

Eisenhower pointed out to Americans that, unlike previous wars after which the United States 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. Eisenhower said that the flow of power and profit into the military-industrial complex was a threat to the economic well-being 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 President Ronald Reagan and Russian President Mikhail Gorbachev reached agreement and ended the Cold War. When the Soviet Union subsequently collapsed, the future outlook for the power and profit of the U.S. military-security complex was bleak. The 1 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 Mideast became the target of opportunity.

Muslims are sufficiently different from Westerners in that Muslims are easy to demonize.
The demonization began in the neoconservative publications. Once Dick Cheney had the 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 Adviser of “mushroom clouds” over U.S. cities.

No one in the U.S. government or the “free” U.S. media or the media of the U.S. 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 eight 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 to not 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 U.S. military and creates the worldwide 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 U.S. soldiers have died from demoralization and suicides than from combat. In Iraq, the United States was humiliated by having to end the war by putting the Sunni insurgents on the U.S. military payroll and paying them to stop killing U.S. troops. In Korea the United States was stopped by an army of a backward Third World country that lived on rice. What would happen today if the U.S. “superpower” military confronted China, a country with an economy on which the United States is dependent (about equal in size to the U.S. 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, The 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 U.S. military-security complex, which governs an 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 U.S. standard of living 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 the 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.

–Paul Craig Roberts

Empires Then And Now

Great empires, such as the Roman and British, were extractive. The empires succeeded because the value of the resources and wealth extracted from conquered lands exceeded the value of conquest and governance. The reason Rome did not extend its empire east into Germany was not the military prowess of Germanic tribes but Rome’s calculation that the cost of conquest exceeded the value of extractable resources.

The Roman Empire failed because Romans exhausted manpower and resources in civil wars fighting among themselves for power. The British empire failed because the British exhausted themselves fighting Germany in two world wars.

In his book The Rule of Empires (2010), Timothy H. Parsons replaces the myth of the civilizing empire with the truth of the extractive empire. He describes the successes of the Romans, the Umayyad Caliphate, the Spanish in Peru, Napoleon in Italy, and the British in India and Kenya in extracting resources. To lower the cost of governing Kenya, the British instigated tribal consciousness and invented tribal customs that worked to British advantage.

Parsons does not examine the American empire, but in his introduction to the book he wonders whether America’s empire is really an empire as the Americans don’t seem to get any extractive benefits from it. After eight years of war and attempted occupation of Iraq, all Washington has for its efforts is several trillion dollars of additional debt and no Iraqi oil. After 10 years of trillion-dollar struggle against the Taliban in Afghanistan, Washington has nothing to show for it except possibly some part of the drug trade that can be used to fund covert CIA operations.

America’s wars are very expensive. George W. Bush and Barack Obama have doubled the national debt, and the American people have no benefits from it. No riches, no bread and circuses flow to Americans from Washington’s wars. So what is it all about?

The answer is that Washington’s empire extracts resources from the American people for the benefit of the few powerful interest groups that rule America. The military-security complex, Wall Street, agribusiness and the Israel lobby use the government to extract resources from Americans to serve their profits and power. The U.S. Constitution has been extracted in the interests of the security state, and Americans’ incomes have been redirected to the pockets of the 1 percent. That is how the American empire functions.

The new empire is different. It happens without achieving conquest. The American military did not conquer Iraq and has been forced out politically by the puppet government that Washington established. There is no victory in Afghanistan, and the American military does not control the country after a decade of war.

In the new empire, success at war no longer matters. The extraction takes place by being at war. Huge sums of American taxpayers’ money have flowed into the American armaments industries and huge amounts of power into the Department of Homeland Security. The American empire works by stripping Americans of wealth and liberty.

This is why the wars cannot end and why if one does end, another starts. Remember when Obama came into office and was asked what the U.S. mission was in Afghanistan? He replied that he did not know what the mission was and that the mission needed to be defined.

Obama never defined the mission. He renewed the Afghan war without telling us its purpose. Obama cannot tell Americans that the purpose of the war is to build the power and profit of the military/security complex at the expense of American citizens.

This truth doesn’t mean that the objects of American military aggression have escaped without cost. Large numbers of Muslims have been bombed and murdered and their economies and infrastructure ruined, but not in order to extract resources from them.

It is ironic that under the new empire the citizens of the empire are extracted of their wealth and liberty in order to extract lives from the targeted foreign populations. Just like the bombed and murdered Muslims, the American people are victims of the American empire.

–Paul Craig Roberts

No Jobs For Americans

On March 9, the Bureau of Labor Statistics (BLS) announced that 227,000 new nonfarm payroll jobs were created by the economy during February. Is the government’s claim true?

No. Statistician John Williams reports that 44,000 of these jobs, or 19 percent, consist of an add-on factor derived from the BLS’s estimate that 44,000 more unreported jobs from new business start-ups were created than were lost by unreported business failures. The BLS’s estimate comes from the bureau’s “birth-death model,” which works better during normal times but delivers erroneous results during troubled times such as the economy has been experiencing during the past four years.

Taking out the 44,000 added-on jobs reduces the February jobs number to 183,000 but does not provide a full correction. In an economy as troubled as the U.S. economy is, most likely the deaths exceeded the births, but we don’t know what the number is. Was it 20,000? 50,000? What number do we deduct from the 183,000? We simply do not know.

Williams reports that seasonal adjustment factors do not work properly during troubled economic times and add their own overstatement to the jobs figure. If anyone could estimate the overestimate of new jobs that results from malfunctioning seasonal adjustments, it is Williams; but he doesn’t provide an estimate.

Most likely, the new jobs did not exceed 150,000, a figure that would merely keep even with population growth and thus not reduce the rate of unemployment, which, consistent with this deduction, remained constant.

Let’s look now at the kind of jobs that were created. Of the new jobs reported by BLS,
92 percent are in services. Of this 92 percent, only 7 percent could possibly relate to exportable services: architectural, engineering and computer systems services.

Of the reported new service jobs, 29 percent are in health care and social services. The categories that account for the health services jobs are ambulatory healthcare services and hospitals. Waitresses and bartenders account for 20 percent of the reported new jobs.

Employment services account for 29 percent of the new reported jobs. Transportation and warehousing accounted for 5 percent of the reported new jobs, despite a loss of 60,000 jobs in general merchandise and department stores.

In other words, the vast majority of the new jobs are low-paying jobs, except for a few truck driving jobs.

Other conclusions that we can draw are:

The United States has nothing to export to reduce its massive trade deficit, which has, sooner or later, disastrous implications for the U.S. dollar.

Middle-class-income jobs are declining, with polarization at the two extremes.

U.S. economic policy continues to focus on the mega-rich at the expense of 99 percent of the population. U.S. interest rates are kept at or near zero in order to maximize mega-bank earnings while depriving tens of millions of retired Americans of interest income on their lifetime savings, forcing them to spend their capital in order to live, thus depriving their heavily indebted children of inheritance.

In short, the United States is well on its way to becoming a Third World country. Twenty years ago at a Brookings Institution conference in Washington, D.C., I predicted that would be the case early in the 21st century. America is no longer the land of the free and independent. It is the land of the 1 percent mega-rich.

–Paul Craig Roberts

Why Can’t Americans Have Democracy?

Syria has a secular government as did Iraq prior to the american invasion. Secular governments are important in Arab lands in which there is division between Sunni and Shiite. Secular governments keep the divided population from murdering one another.

When the american invasion, a war crime under the Nuremberg standard set by the U.S. after World War II, overthrew the Saddam Hussein secular government, the Iraqi Sunnis and Shiites went to war against one another. The civil war between Iraqis saved the american invasion. Nevertheless, enough Sunnis found time to fight the american occupiers of Iraq that the U.S. was never able to occupy Bagdad, much less Iraq, no matter how violent and indiscriminate the U.S. was in the application of force.

The consequence of the U.S. invasion was not democracy and women’s rights in Iraq, much less the destruction of weapons of mass destruction which did not exist as the weapons inspectors had made perfectly clear beforehand. The consequence was to transfer political power from Sunnis to Shiites. The Shiite version of Islam is the Iranian version. Thus, Washington’s invasion transferred power in Iraq from a secular government to Shiites allied with Iran.

Now Washington intends to repeat its folly in Syria. According to the american Secretary of State, Hillary Clinton, Washington is even prepared to ally with al-Qaida in order to overthrow Assad’s government. Now that Washington itself has al-Qaida connections, will the government in Washington be arrested under the anti-terrorism laws?

Washington’s hostility toward Assad is hypocritical. On Feb. 26, the Syrian government held a referendum on a new constitution for Syria that set term limits on future presidents and removed the political monopoly that the Ba’ath Party has enjoyed.

The Syrian voter turnout was 57.4 percent, matching the voter turnout for Obama in 2008. It was a higher voter turnout (despite the armed, Western-supported rebellion in Syria) than in the nine U.S. presidential elections from 1972 through 2004. The new Syrian constitution was approved by a vote of 89.4 percent.

But Washington denounced the democratic referendum and claims that the Syrian government must be overthrown in order to bring democracy to Syria.

Washington’s allies in the region, unelected oil monarchies such as Saudi Arabia and Qatar, have issued statements that they are willing to supply weapons to the Islamist rebels in order to bring democracy — something they do not tolerate at home — to Syria.

For Washington “democracy” is a weapon of mass destruction. When Washington brings “democracy” to a country, it means the country’s destruction, as in Libya and Iraq. It doesn’t mean democracy. Libya is in chaos, a human rights nightmare without an effective government.

Washington installed Nouri al-Maliki as president of Iraq. He lost an election, but remained in power. He has declared his vice president to be a terrorist and ordered his arrest and is using the state police to arrest Sunni politicians. Syria’s Assad is more democratic than Iraq’s Maliki.

For a decade Washington has misrepresented its wars of naked aggression as “bringing democracy and human rights to the Middle East.” While Washington was bringing democracy to the Middle East, Washington was destroying democracy in the U.S. Washington has resurrected medieval torture dungeons and self-incrimination. Washington has destroyed due process and habeas corpus. At Obama’s request, Congress passed overwhelmingly a law that permits american subjects to be imprisoned indefinitely without a trial or presentation of evidence. Warrantless searches and spying, illegal and unConstitutional at the turn of the 21st century, are now routine.

Obama has even asserted the right, for which there is no law on the books, to murder any american anywhere if the executive branch decides, without presenting any evidence, that the person is a threat to the U.S. government. Any american anywhere can be murdered on the basis of subjective opinion in the executive branch, which increasingly is the only branch of the U.S. government. The other two “co-equal” branches have shriveled away under the “war on terror.”

Why is Washington so determined to bring democracy to the Middle East (with the exception of Saudi Arabia, Bahrain, Qatar and the Emirates), Africa, Iran, Afghanistan, Russia, and China, but is hostile to Constitutional rights in america?

The rights that americans gained from successful revolution against King George III in the 18th Century have all been taken away by Bush/Obama in the 21st Century. One might think that this would be a news story, but it isn’t.

Don’t expect the Ministry of Truth to say anything about it.

Paul Craig Roberts

Will Iran Be Attacked?

Washington has made tremendous preparations for a military assault on Iran. There is speculation that Washington has called off its two longest running wars — Iraq and Afghanistan — in order to deploy forces against Iran. Two of Washington’s fleets have been assigned to the Persian Gulf along with NATO warships. Missiles have been spread among Washington’s oil emirate and Middle Eastern puppet states. U.S. troops have been deployed in Israel and Kuwait.

Washington has presented Israel a gift from the hard-pressed American taxpayers of an expensive missile defense system, money spent for Israel when millions of unassisted Americans have lost their homes. As no one expects Iran to attack Israel (except in retaliation for an Israeli attack on Iran), the purpose of the missile defense system is to protect Israel from an Iranian response to Israeli aggression against Iran.

Juan Cole has posted on his blog a map showing 44 U.S. military bases surrounding Iran.

In addition to the massive military preparations, there is the propaganda war against Iran that has been ongoing since 1979 when Washington’s puppet, the Shah of Iran, was overthrown by the Iranian revolution. Iran is surrounded, but Washington and Israeli propaganda portray Iran as a threatening aggressor nation. In fact, the aggressors are the Washington and Tel Aviv governments that constantly threaten Iran with military attack.

Neocon warmongers, such as David Goldman, compare the Iranian president to Adolf Hitler and declare that only war can stop him.

Washington’s top military officials have created the impression that an act of Israeli aggression against Iran is a done deal. On Feb. 2, The Washington Post reported that Pentagon chief Leon Panetta believes that Israel is likely to attack Iran in two to four months.

Also on Feb. 2, Gareth Porter reported that Gen. Martin Dempsey, Chairman of the U.S. Joint Chiefs of Staff, informed the Israeli government that the United States would not join Israel’s aggression against Iran unless Washington had given prior approval for the attack.

Porter interprets Dempsey’s warning as a strong move by President Barack Obama to deter an attack that would involve Washington in a regional conflagration with Iran. A different way to read Dempsey’s warning is that Obama wants to hold off on attacking Iran until polls show him losing the Presidential election. It has generally been the case that the patriotic electorate does not turn out a President who is at war.

On Feb. 5, Obama canceled Dempsey’s warning to Israel when Obama declared that he was in “lockstep” with the Israeli government. Obama is in lockstep with Israel despite the fact that Obama told NBC that “we don’t see any evidence that they [Iran] have those intentions [attacks on the US] or capabilities.” By being in lockstep with Israel and simultaneously calling for a “diplomatic solution,” Obama appeased both the Israel lobby and Democratic peace groups, thus upping his vote.

This spring is a prime time for attacking Iran, because there is a good chance that Russia will be in turmoil because of its March election. The Russian opposition to Putin is financed by Washington and encouraged by Washington’s statements, especially those of Secretary of State Hillary Clinton. Whether Putin wins or there is an indecisive result and a run-off election, Washington’s money will put tens of thousands of Russians into the streets, just as Washington’s money created the “Green Revolution” in Iran to protest the presidential elections there.

On Feb. 4, the former left-wing British newspaper The Guardian reported a pre-election protest by 120,000 anti-Putin demonstrators marching in Moscow and demanding “fair elections.” In other words, Washington already has its minions declaring that a win by Putin in March can signify only a stolen election. The problem for Obama is that this spring is too early to tell whether his re-election is threatened by a Republican candidate. Going to war prematurely, especially if the result is a stiff rise in oil prices, is not an aid to re-election.

The willingness of people around the world to be Washington’s puppets instead of loyal citizens of their own countries is why the West has been able to dominate the world during the modern era. There seems to be an infinite supply of foreign leaders who prefer Washington’s money and favor to loyalty to their own countries’ interests.

As Karl Marx said, money turns everything into a commodity that can be bought and sold. All other values are defeated: honor, integrity, truth, justice, loyalty, even blood kin. Nothing remains but filthy lucre. Money certainly turned U.K. Prime Minister Tony Blair into a political commodity.

The power of money was brought home to me many years ago. My Ph.D. dissertation chairman found himself in the Administration of Richard Nixon as Assistant Secretary of Defense for International Security affairs. He asked if I would go to Vietnam to administer the aid programs. I was flattered that he thought I had the strength of character to stand up to the corruption that usually defeats the purpose of aid programs, but I declined the assignment.

The conversation was one I will never forget. Warren Nutter was an intelligent person of integrity. He thought that regardless of whether the war was necessary, we had been led into it by deception. He thought democracy could not live with deception, and he objected to government officials who were not honest with the American people. Nutter’s position was that a democratic government had to rely on persuasion, not on trickery. Otherwise, the outcomes were not democratic.

As Nutter saw it, we were in a war, and we had involved the South Vietnamese. Therefore, we had obligations to them. If we proved to be feckless, the consequence would be to undermine commitments we had made to other countries in our effort to contain the Soviet Empire. The Soviet Union, unlike the “terrorist threat,” had the potential of being a real threat. People who have come of age after the collapse of the Soviet Union don’t understand the Cold War era.

In the course of the conversation, I asked how Washington got so many other governments to do its bidding. He answered, “Money.”

I asked, “You mean foreign aid?”

He said, “No, bags of money. We buy the leaders.”

He didn’t approve of it, but there was nothing he could do about it.

Purchasing the leadership of their enemies or of potential threats was the Roman way. Timothy H. Parsons in his book The Rule of Empires describes the Romans as “deft practitioners of soft power.” Rome preferred to rule the conquered and the potentially hostile through “semiautonomous client kings which the Senate euphemistically termed ‘friends of the Roman people.’ Romans helped cooperative monarchs remain in power with direct payments of coins and material goods. Acceptance of these subsidies signified that an ally deferred to imperial authority, and the Romans interpreted any defiance of their will as an overt revolt. They also intervened freely in local succession disputes to replace unsuitable clients.”

This is the way Washington rules. Washington’s way of ruling other countries is why there is no “Egyptian Spring,” but a military dictatorship as a replacement for Washington’s discarded puppet Hosni Mubarak, and why European puppet states are fighting Washington’s wars of hegemony in the Middle East, North Africa and Central Asia.

Washington’s National Endowment for Democracy funds non-governmental organizations (NGOs) that interfere in the internal affairs of other countries. It is through the operations of NGOs that Washington added the former Soviet Republic of Georgia to Washington’s empire, along with the Baltic States, and Eastern European countries.

Because of the hostility of many Russians to their Soviet past, Russia is vulnerable to Washington’s machinations.

As long as the dollar rules, Washington’s power will rule.

As Rome debased its silver denarius into lead, Rome’s power to purchase compliance faded away. If “Helicopter Ben” Bernanke inflates away the purchasing power of the dollar, Washington’s power will melt away also.

–Paul Craig Roberts

The January Jobs Are Statistical Artifacts

Last Friday, the U.S. Bureau of Labor Statistics reported that in the first month of this year 243,000 jobs were created and the unemployment rate fell to 8.3 percent. This good news is a mirage. It is due to faulty seasonal adjustments and to the BLS birth/death model. In a prolonged downturn, seasonal adjustments and the birth/death model produce nonexistent employment.

The unadjusted data show a rise in the unemployment rate. The birth/death model, which estimates the net effect of jobs lost from business failures and jobs created by new start-ups, was designed for a normal growing economy, not for a prolonged downturn. Statistician John Williams (shadowstats.com) reports that the BLS adds 48,000 new jobs per month to the payroll employment report based on the birth/death model even though the economy has not come out of the deep recession. In other words, over the course of a year, the birth/death model adds about 580,000 jobs to the reported jobs numbers. End-of-year benchmark revisions quietly take the nonexistent jobs out of the totals, but these revisions do not receive headlines and pass largely unnoticed.

The reported January jobs gains are contradicted by other official reports. For example, the January payroll jobs report shows 50,000 new jobs in manufacturing, but according to the recently released fourth quarter gross domestic product, 81 percent of the reported growth consisted of undesired inventory accumulation. Normally, companies produce for sales, not for inventories. Why would manufacturers be hiring people to produce goods for undesired inventories?

Most of the new reported January jobs are in services. The January jobs report has 24,500 new jobs in wholesale and retail trade and 13,100 new jobs in transportation and warehousing. However the data show that inflation-corrected real retail sales are down. Why does it take more people to sell fewer goods?

The other remaining sizable components of the January jobs number are: professional and technical services (30,000), administrative and waste services (36,700), health care and social assistance (29,700), and leisure and hospitality (44,000) of which the largest component is food services and drinking places (32,800).

The leisure, waitresses and bartender employment numbers seem high for January. Perhaps it was an excellent ski month in the United States. However, accommodation (hotels) does not support this conclusion, as accommodation lost 3,900 jobs.

The BLS reports 21,000 new jobs in construction. However, the housing report says that housing starts dropped more than forecast in December, falling 4.1 percent. Why does it take more construction workers to produce fewer houses? Building permits, a proxy for future construction, were little changed.

As the adjusted data produce phantom jobs and employment, the BLS should headline the raw unadjusted data. With so many discouraged workers unable to find jobs, dropping discouraged workers out of the measure of unemployment seriously understates the true magnitude of the unemployment problem. If Americans were aware of the double-digit unemployment rate, would they be as tolerant of Washington’s multitrillion-dollar wars? Would Obama be facing a tougher re-election campaign? Would Republicans be pushing to reduce the Federal budget deficit at the expense of the social safety net?

The phony data serve many interests, but not those of the American people.

The Paul Campaign’s Strategic Mistake

If Ron Paul’s libertarian handlers and support base could escape their ideology, Paul could be much better positioned to win the Republican nomination.

Here are some suggestions.

Paul should be making the point that Social Security and Medicare are threatened by multitrillion-dollar wars that are funded by debt, bailouts of a deregulated banking system and money creation to keep the banks afloat. Libertarians support deregulation, but their position has always been that deregulated industries must not be bailed out with public subsidies, much less subsidies that are so extensive that they threaten government solvency and the value of the currency.

Instead of hitting hard on the serious threat to Social Security and Medicare posed by Obama and Republican candidates for the nomination — all of whom serve Wall Street, the military/security complex and the Israel lobby — Paul has been positioned both by his supporters and his opponents as the danger to Social Security and Medicare. This is an amazing strategic mistake by the Paul campaign.

The mistake is somewhat understandable. Paul’s supporters are mainly among the young. The importance to them of Social Security and Medicare will not register for many years, but for the vast majority of the population, Social Security and Medicare are essential for survival. A candidate who is positioned as the destroyer of what scant economic protection the American elderly have is not positioned to win an election for President.

Many libertarians regard Social Security and Medicare as welfare handouts and as Ponzi schemes, when in fact these programs are a form of private property. People pay for these programs all their working lives, just as they pay premiums for private medical policies and make their deposits into private pension plans. Libertarians are great defenders of private property, so why don’t they defend the elderly’s private property rights in Social Security and Medicare benefits? Social Security and Medicare are contracts that the government made with citizens. These contracts are as valid and enforceable as any other contracts. If Social Security and Medicare are in dire trouble, why is the government wasting trillions of dollars on behalf of private armaments industries, a neocon ideology and Israel’s territorial ambitions? Why isn’t this question the most important issue in the campaign?

Instead, in a decade that has seen two massive stock market crashes and an amazing amount of financial fraud, libertarians prattle on about privatizing Social Security and about how much larger the retirement pensions would be. They speak about delaying the Social Security retirement age to 70 without any thought to what a person does who is retired by his employer at 65. People who suggest making Social Security and Medicare off-limits until people reach 70 need to have a look at the cost of private medical plans for older people. A group plan with Blue Cross and Blue Shield of Florida for a 64-year old woman has an $18,000 premium, large deductibles per medical issue and a 20 percent co-pay. Even a person with private insurance faces potentially ruinous healthcare expenses.

Libertarians will not wait to think before they inform me that private savings are funded, but Social Security and Medicare are not. They are incorrect on both accounts.

Social Security and Medicare are funded with a payroll tax. It is true that the government has stolen the funds, spent them and left non-marketable IOUs in their place. But in our deregulated casino financial system with street registration of “securities,” the same thing happens to private holdings. Where is the money that individuals had in MF Global? What happened to people’s savings invested with Bernard Madoff? What happened to Enron’s investors? Can AIG make good on its promises to pay the benefits that people have purchased? Can banks whose balance sheets are loaded with subprime derivatives make good on their depositors’ accounts? U.S. government debt is a component of many private pension plans. How secure are the values of Treasury bonds?

The notion that free, unregulated markets are totally trustworthy is the enormous mistake that former Federal Reserve Chairman Alan Greenspan made, for which American and European peoples continue to pay. Libertarians endorse this fantastic mistake to the hilt.

This is not meant to be an attack on libertarians. Rather, it is an explanation of some of their mistakes. There is much to admire about libertarians. They believe in civil liberty, that is, in the Bill of Rights and the Constitution. They understand that government cannot substitute for the market. I know a lot about libertarians. I was associated with them for years, serving for several years as Distinguished Scholar at the Cato Institute until I was run off for independent thinking.

Libertarians are sectarian, and their tolerance does not extend beyond their ideology.

The biggest mistake that libertarians make is the way they view government and private sectors. Government is the root of all evil, and the private sector is the source of all good. Libertarians have never figured out that people are the same whether in the government or in the private sector. They will abuse their power regardless of where they perch. That is why government needs to be tied down by the Constitution and the private sector by regulation. Yes, regulation can go too far. Certainly, deregulation has gone too far.

The ongoing financial crisis from deregulation and ongoing jobs crisis from offshoring constitute empirical evidence that the belief is false that an unfettered private sector is the source of all good.

Some readers of Paul Craig Roberts Institute for Political Economy misunderstood the point of my column, “America’s Last Chance.” I am endorsing the U.S. Constitution and making the point that Paul is the only candidate for President in either party who is committed to resurrecting the Constitution. Without the Constitution we cease to be American citizens and become subjects of a tyrannical police state. My complaint is that the only candidate who could bring back the Constitution cannot be elected because of the inflexibility and sectarianism of his base. Possibly there are more worthy third-party candidates, but they have no prospect of visibility. Paul is visible, and the opportunity is going to waste.

I hope readers will spare me their comments about how important their various single issues are. There are many important things. The question is: What is the over-riding important thing?

Civil liberty, essentially the accountability of government to law that serves to protect the innocent, is the historic achievement of the English over many centuries from its beginnings with the foundation for common law established by Alfred the Great in the 9th century through the Magna Carta in the 13th century to the Glorious Revolution in the 17th century. If this human achievement is lost, it is unlikely to be resurrected. If the Constitution that George W. Bush and Barack Obama have murdered stays in its grave one more Presidential term, no one will be able to re-establish the Constitution’s authority.

And please, no prattle from libertarians about “natural rights.” The only rights we have are rights achieved by centuries of human struggle that we have the wits and strength to retain.

And no prattle from left-wingers who denounce the Constitution for not protecting slaves and native Indians. The Constitution did not establish universal justice. The Constitution protected the people covered by it. Over time, rights were extended. During the past decade, the Constitution lost its power. Today, rights depend on the subjective opinion of the executive branch. This is tyranny. We should be unified in our opposition to tyranny.

–Paul Craig Roberts

The Dismal Economic Outlook For The New Year

Jobs offshoring, financial deregulation and 10 years of wars have severely damaged the U.S. economy and the economic prospects of 90 percent of the American population. The signs are everywhere in front of our eyes. They are in the income distribution data, the BLS jobs data, the Census data, the poverty figures, and the high number of food stamp recipients.

The signs are in the foreclosed and boarded up homes and the accompanying homelessness. They are in closed strip malls, in office building, warehouse and shopping mall vacancies, and in the huge population losses of America’s manufacturing cities.

The New Economy was a hoax, like Saddam Hussein’s “weapons of mass destruction” and the “War on Terror.” Americans were deceived by “their” corrupt government, by greed-driven corporations, and by corporate shills among economists and the pundit class into believing that they were trading middle class “dirty fingernail” jobs in manufacturing for better middle class “clean fingernail” high-tech service jobs. Instead, reasonably paid manufacturing and professional skill jobs, such as software engineering and information technology, were traded for lowly paid jobs as waitresses and bartenders and for jobs in ambulatory health care.

Consequently, real median U.S. income fell for the vast majority of the population. To keep consumers spending when they had no raises, the Federal Reserve used low interest rates to create a real estate and credit bubble. The low interest rates drove up housing prices, and Americans refinanced their mortgages and spent the equity in their homes. Americans maxed out credit cards. The rise in consumer indebtedness kept consumer demand growing and the economy afloat.

But there is a limit to how far debt can outpace income, and the bubble burst. And when it burst the financial fraud that had been hidden in the euphoria was revealed. That set off the financial crisis.

As the U.S. government is controlled by financial and armaments interests and not by the people, the government responded to the financial crisis by shoveling more debt and more hardships on the American people in order that financial interests did not have to pay for their own mistakes and crimes. Instead of blaming the responsible parties, “our” government handed the bill to the American people.

An important part of the bill is the huge number of new dollars being created in order to keep “banks too big to fail” afloat and in order to finance the Federal government’s enormous budget deficit from its illegal wars. Sooner or later, the proliferation of dollars will cost the American people sharply higher prices.

We will return to the dollar crisis later in this column. First, let’s look at what the loss of manufacturing and manufacturing related jobs have done to the economy and the prospects of U.S. citizens.

In the first decade of the 21st century, Detroit, lost 25 percent of its population. Gary, Ind., lost 22 percent. Flint, Mich., lost 18 percent. Cleveland lost 17 percent. In St. Louis, 19 percent of the housing is vacant. These population losses were not the result of the Black Plague or killer viruses or a nuclear attack. They were the result of corporate CEOs, pushed by their own greed, by the greed of Wall Street and that of large retailers such as Walmart, aided and abetted by “our” government, into moving millions of manufacturing, software engineering, information technology, engineering, research, development and design jobs offshore.

The process of moving American jobs offshore left cities, counties and States with shrunken tax bases. The resulting State and local budget deficits are being used to dismantle public sector unions and to cut social services. Public assets, such as water companies, and future income streams from parking meters, toll roads and bridges, are being sold off to foreign buyers in order to insure another year of local and State government solvency.

In the first decade of the 21st century, Americans lost 5,500,000 manufacturing jobs. U.S. employment in the manufacture of computer and electronic products fell by 40 percent; in the production of machinery by 30 percent, in motor vehicles and parts by 44 percent, and in the manufacture of clothing by 66 percent.

In other words, in 10 years the U.S. economy was decimated by jobs offshoring for the sole purpose of higher rewards to capital in the form of multi-million dollar executive bonuses and large shareholder capital gains. A few hedge fund executives were paid a billion dollars in annual remuneration and a couple of dozen of them were paid $500 million in annual compensation. What sense does that make? Huge fortunes paid for one year’s work, not in productive activity but in destroying the financial system and the value of pensions that tens of millions of Americans had worked all their lives to achieve.

While this was happening, “our” government squandered several trillion dollars in Iraq and Afghanistan on wars based on lies and deception. The American people were lied to and deceived, and continue to be, in order that arms industries can enjoy record profits and in order that crazed neoconservative war criminals could pursue their ideology of world hegemony and empire. We were even lied to about U.S. war casualties. As Dennis Loo points out in his book, Globalization and the Demolition of Society (2011), the 4,801 Americans killed in action in Iraq leaves out the 50,000 suicides of veterans and active duty U.S. troops. The truth of the matter is that the casualties of the Iraq war are as high as those of the Vietnam War.

With all income gains redirected to the financial and war sectors, the distribution of income in the U.S. has become, according to the Organization for Economic Co-operation and Development (OECD), the worst of all developed countries. The Central Intelligence Agency—yes, the CIA—concluded that America had achieved not only the worst income distribution of all developed countries, but also a worst income distribution than Iran, Cambodia, Uganda, Nicaragua, Russia, and China.

The economic “recovery” that Washington and the financial press hype is all talk and no reality. The “recovery” is produced by understating the inflation rate, which overstates gross domestic product (GDP) growth, and by dropping the long-term unemployed out of the measurement of unemployment. An economy, the driving engine of which has been moved offshore, cannot recover unless the economy is brought back home, and that requires the repeal of Globalism.

Overstatement is common in order to produce good news, but eventually it catches up with the spinmeisters. Last month the National Association of Realtors reported that it had overstated home sales by 3.5 million. Statistician John Williams (shadowstats.com) reports that the “birth/death” model, which the Bureau of Labor Statistics (BLS) uses to estimate the net effect on jobs data of unreported business closures and new start-ups, overstates the annual number of new jobs during troubled economic times by approximately 1 million jobs annually. Each year, the accumulated monthly overstatements are quietly revised away by BLS.

Similarly, data can be understated in order to hide bad news. The understatement of inflation results from basing the Consumer Price Index (CPI) on substitution rather than on a fixed basket of goods, the traditional method. During the “progressive” Clinton regime, a deceptive change was made to the CPI. If the price of a good rises, for example, sirloin steak, the higher price does not appear in the index. Instead, the CPI assumes that consumers switch from sirloin to a cheaper cut, such as round steak. Thus, the rise in prices is negated by substituting goods that represent a lower standard of living.

By understating inflation, the government has been able to produce a “recovery,” when in fact the positive economic growth number is created by counting inflation or nominal GDP growth as real GDP growth. Williams says that when inflation is measured in the old way, prior to Clinton, the U.S. has experienced essentially no real GDP growth in the 21st century. In other words, we have had a decade of essentially no growth in the GDP while the presstitutes in the media proclaim “recovery.”

The government’s forecasts of its budget deficits are based on the assumption that an economic recovery is underway. If there is in fact no recovery and the economy is about to worsen, the trillion dollar plus deficits that the government forecasts for as far as the eye can see will be even larger. As more debt creation likely means more money creation by the Federal Reserve, the future purchasing power of the U.S. dollar appears to be dismal.

The Federal government’s reckless issuance of debt in order to finance its hegemonic wars and the Federal Reserve’s misuse of its authority to create $16.1 trillion in secret loans to U.S. and European banks (as revealed by the GAO audit of the Fed) have created an enormous number of new dollars. In addition, financial deregulation has resulted in banks creating paper claims on real assets that far exceed the value of the underlying real assets. This is an untenable situation. How is it likely to be resolved?

This is a two-part question: there is the banks’ debt and there is the Federal government’s debt. Both are serious problems.

Mortgage-backed derivatives exceed the value of the homes, and Credit Default Swaps and other financial innovations have resulted in the paper claims on assets exceeding the value of the underlying real assets. Consider Credit Default Swaps, a form of unreserved “insurance.” Investors, really speculators, do not have to own a Greek government bond or a mortgage-backed derivative in order to purchase a “swap” that insures its value. Thus, the total value of swaps issued on Greek bonds, for example, can far exceed the total value of Greek bonds. The value of swaps issued on mortgage-backed securities can exceed the total value of mortgaged real estate.

Financial institutions, such as U.S. banks that sold “swaps” on Greek bonds, were gambling that Greece would be bailed out and would not default. The financial institutions regarded as gravy the fees paid to them for “guarantees” on which they cannot make good. I don’t know the extent of swaps on sovereign debt, but I recently saw a report that Bank of America alone has sold $2.1 trillion in swaps on sovereign debt. Imagine the crisis if Bank of America had to pay off these swaps.

Obviously, if European sovereign debt blows up, the U.S. financial crisis will become deeper.

The GAO audit of the Federal Reserve showed that the Fed made secret loans to banks of $16.1 trillion between December 2007 and June 2010. To put that figure in perspective, it is larger than the U.S. GDP and larger than the U.S. public debt. In other words, it took a tremendous amount of new money to keep the financial system from collapsing. Despite this huge sum pumped into the banking system, the banks are still regarded as weak and troubled. The insecurity of bank depositors is reflected in the one basis point interest rate on Treasury bill money funds. Many Americans are willing to receive a negative interest rate in order to have their money in instruments that can be paid off with newly created money.

When the paper claims on assets exceed the value of the underlying assets, one solution could be slow write downs of bad paper over time as the banks’ profits permit. This would require suspending the mark-to-market rule and permitting the banks to remain “solvent” by counting bad assets as good until profits permitted write-downs.

This would be a sensible solution if the banks have profitable prospects. But with consumers too indebted and broke to borrow and the consumer market too impaired for good sales prospects for businesses, what profitable prospects do banks have? Only those created by the Federal Reserve’s support of the “carry trade,” the ability of financial institutions to borrow from the Federal Reserve at essentially zero interest rates and to put the money in Greek and Italian sovereign debt. This is gambling, otherwise known as “casino banking.”

If reality rules out the solution of gradual write-downs, all that remains is bankruptcy or inflation. The Federal Reserve and the U.S. government have ruled out permitting the banks to fail. That leaves inflation.

Except for a relatively few indexed Treasury bonds, financial instruments are in nominal values. Thus bad debts can be inflated away by driving up the nominal values of the underlying real assets and the nominal values of wages and salaries. It seems that the path that policymakers are taking is to reduce the purchasing power of money in order to drive up nominal asset values so that they exceed the claims against them.

For example, consider a person with a $200,000 mortgage whose home, if he could sell it, is only worth $175,000. This person’s asset is under water. However, if inflation drives up the price of his home to $250,000, the person has gone from a balance sheet $25,000 in the red to one $50,000 in the black. It seems clear that in order to save the financial institutions and itself, the government will sacrifice the purchasing power of the dollar.

Thus, the same solution appears to be in effect for the government’s growing debt. For the moment, the U.S. dollar is benefitting from flight from the euro due to the hyped sovereign debt crisis in Europe. As in the past, a scared financial world takes refuge in the dollar and in U.S. Treasury debt instruments. The main difference between Greece’s indebtedness and America’s is that Greece cannot print euros, but the U.S. can print dollars. Thus, holders of U.S. debt can always get back the nominal dollar value of Treasury debt issues. Of course, the real purchasing power of these printed dollars can be very low.

The dollar as a refuge is a short-run phenomenon. Once the transfer out of euros into dollars has occurred, how does the Treasury sell the next round of bonds to finance trillion dollar deficits? Sooner or later the Federal Reserve will be back to monetizing the new Treasury bond issues. That is, the Federal Reserve will create new money with which to purchase the new Treasury bond issues.

Sooner or later the new money will find its way into the economy and drive up prices, or the continual monetization of new U.S. Treasury debt will cause the world to lose confidence in the dollar. Heavy sales of U.S. dollars in currency markets would drive down the exchange value of the dollar and raise the prices of imports such as energy, manufactured goods and food. Either way, inflation is the result. Indeed, both can occur together, which is the likely result.

Normally, inflation is associated with a booming economy, but as too much of the U.S. economy has been moved offshore, there is little left to boom other than prices. Therefore, the combination of high inflation with high unemployment is a likely fate that awaits Americans.

I cannot predict how long policymakers can hold economic Armageddon at bay with spin, money creation, currency swaps, intervention in gold and silver markets and outright lies. The onset could be sudden and take place this year, but we shouldn’t underestimate the power of spin over a gullible public that trusts “their” government and fervently believes that Muslim terrorists are out to get them and that the demise of the Constitution, the product of a 800 year struggle that produced Anglo-American civil liberty, is worth the price of “safety.”

There is no safety in a police state and a debauched currency. The comfortable world that Americans have known is falling apart at the seams.

–© Paul Craig Roberts