Comment from Clusterfuck Nation, 2006-10-02:
"Possession of the largest reserve of the world's crucial resource, oil, has no doubt driven the people of the Middle East crazy."
Well, consumption of oil has driven the United States of America crazy, making us passive obese simpletons who really do believe that the Earth was created for our (that is, America's) gluttonous consumption.
I don't think that America is going to own Iraq for too much longer. I am certain that America will leave Iraq in the same dishonorable manner as it left Vietnam. The United States of America has lost the Iraq war, but if we stay in the Middle East for too much longer we're going to lose a much greater war and also our Superpower
military and economy as well.
The United States of America is a dying empire. The United States of America is both overpopulated and also an obese overconsumer of the world's resources. For that reason, when the United States falls it will fall hard.
Whereas the Soviet collapse was essentially peaceful, America's collapse will bring anarchy and war to the streets of the United States.
As to the question of the Muslims cutting off America's oil supplies: I support that action. The Muslims own that oil and they can do whatever they wish to it. If they want to leave it in the ground, they should.
Honestly, they really should leave it in the ground forever.
The impoverished nations of the world also should expel all of America's oil corporations and multinational corporations. The poor people of the world need to declare independence from the dying empire, otherwise they will suffer with us but also more than us -- because we'll let them die before Americans sacrifice any of our luxuries and excesses.
At this point, I believe that the United States of America is threatening the entire world with nuclear genocide. The United States military is the greatest threat to world peace, a much more serious danger than Osama ever posed.
The United States of America has a long history of genocide, both with and without WMDs. We also have thousands of nuclear weapons ready to kill millions of civilians in an instant. The United States of America has become the world's greatest terrorists and this is a shameful irony.
The Canadians and Mexicans should break away from the American empire, too. Canadians should know that Americans would let the Canadians freeze to death before we would abandon our SUVs and McMansions. The Mexicans also ought to know that America has committed many crimes against their nation and given enough time, we will commit a lot more.
The United States of America is dying. That much is certain. Our government has chosen the path of national suicide by addictions to consumption and violence. At this point, our fate is sealed and there is no escape.
Enjoy these beautiful and peaceful days while they last. A day will come when the United States of America ceases to exist, and Americans will become impoverished, desperately poor people. Our way of life is going to end in a harsh and painful manner.
But don't blame the Muslims: Americans have destroyed the United States of America. Obese, lazy, self-indulgent, greedy America is dying.
Posted by: David Mathews | October 02, 2006 at 09:20 AM
From Jeff Vail (http://www.jeffvail.net/2006/09/financial-wizardry-collapse.html)
Friday, September 29, 2006
Financial Wizardry & Collapse
Bear with me for a second here. This isn't an easy topic. That's because no one understands Credit-Default Swaps (CDSs), or other complex credit-derivatives, but it is important that we try to understand the implications of their exponential increase. Sure, some people claim to understand: hedge fund managers, investment bankers, etc. They understand the derivatives marketplace just like neuroscientists understand consciousness—they know the component parts, they can use them as tools barely under their control, but when it comes to understanding exactly how the greater dynamic emerges from the component parts they are in the dark.
No one really understands the credit-derivative market, but everyone is impacted by it. Credit-derivatives represent the creation of money out of thin air, like some act of financial wizardry. Take a Credit-Default Swap, for example. Here’s how it works: Corp. A needs to raise funds to expand operations, so they issue a $10 million bond. Pension Fund B buys that bond, but is concerned with the risk of Corp. A going bankrupt and defaulting on the bond. So Hedge Fund C offers what is, in effect an insurance policy—Pension Fund B pays Hedge Fund C $200,000, and in exchange if Corp. A defaults on the bond, Hedge Fund C covers the $10 million for Bank B. Here’s the magic: because this insurance policy creates the market for this otherwise too-risky bond from Corp. A in the first place, and because the par-value of the credit-default swap (the insurance policy) that the Hedge fund issues does nothing more than eat up the difference between the risk-premium on this bond, this
$200,000 that the hedge fund makes is essentially fabricated out of thin air. Don’t forget to sprinkle in a liberal portion of fractional-reserve-banking fairy dust and viola: now you understand the credit-derivatives market as well as anyone else in the world.
Clear as mud? Try this on for size: there were $25 Trillion dollars in credit derivatives issued so far in 2006. That’s about half the size of the world economy. Oh, and it’s unreported, unregulated, and largely non-transparent. But wait, it gets better: What is the effect of this absolutely massive trade in credit-derivatives? It has the effect of creating liquidity in the market for credit, but the larger effect is that it spreads risks very, very effectively. Because these credit-derivatives get pooled, sliced up, re-packaged, and re-sold, they have the effect of
distributing the risk of default very, very broadly. Because virtually every hedge fund borrows from virtually every bank, which is connected to virtually every mutual fund, pension fund, and corporation, the risk of default is spread among virtually everyone. So this makes the world economy very, very resilient in the face of minor financial crises—say, the Asian Financial Crisis of the mid ‘90s, or the fall-out from September 11th. In fact, because of this massive trade in credit-derivatives, the world economy is actually far more secure in the face of your garden-variety financial crisis. This resiliency works as long as there’s enough slack, enough “spare capacity” in the world economy to absorb the distributed force of these defaults or crises. But at some tipping point—and because it’s not regulated and not transparent no one knows where this is—the stress cannot be absorbed. At this point, the crisis is no longer just a “recession” or a “depression”—it is a complete global collapse.
The market in credit-derivatives is a “financial weapon of mass destruction.” That’s not just my opinion, it’s a quote from the Oracle of Omaha himself, Mr. Warren Buffett (Berkshire Hathaway 2002 Quarterly Report, sorry, no link). Complex societies such as ours collapse because diminishing marginal returns eventually weaken a society until it cannot overcome periodic stressor events. The continually advancing sophistication of the derivatives markets represent the desperate efforts of the global economic system to climb high enough to reach even the hardest to reach fruit from the marginal-return orchard. The irony of a derivative collapse is that it will afford us the illusion that not only is everything OK, but that it is actually continually improving and expanding right up until the point where the whole house of cards implodes.