What Comes After The U.S. Empire?

Introductory Speech at the TRANSCEND International Meeting - 6-12 June 2007, Vienna, Austria

By Johan Galtung

07/20/07 "ICH" -- - I first want to say a few words about the current G8 meeting, and then talk about major conflicts in the world. This will cover much of the world situation, a reflection on global capitalism, and the US Empire and its imminent demise and what will happen after that.

The G8 meeting is actually an act of sabotage, and in my view a deliberate one. It sabotages and undermines the UN. In 1975, the meeting was established as a small forum for intimate meetings between 3 leaders from each participating country. However, from a purely economic agenda it has become much more, incorporating a lot of UN agenda items (security issues and global warming etc.) and thereby actually hijacking the subjects of global importance to about 8 countries only. Russia, which was invited under Yeltsin, is the black sheep in the community. Also, not inviting Chindia is a guarantee for sabotage, as is talking about Africa without having even one African representative present. The good news is that there were 100'000 demonstrators, and the bad news is that there were some violent idiots.

If the nonviolent majority could practice the technique of 20 nonviolent encircling every violent one in a nonviolent way, incapacitating their capacity for violence, it would be an enormous feat. There is, however another piece of what I would call bad news; the 100'000 without constructive, positive ideas. I've gone through the whole rigmarole of the slogans. Personally, I don't like the slogans against globalization; there is no way in the world to stop globalization because it is driven by things we all love: communication and transportation. We are not going to turn that backwards. A good slogan would be "another globalization is possible" and spelling out that better globalization as opposed to the economically exploitative process we know.

So, having said that, we have dark days in front of us. We have impending climate and economic disaster and on top of that a political military issue, the so-called Shield. There isn't hardly a person in the world who believes it is against Iran. It is a part of a policy started in 1996, counter-posing against each other, on the one hand NATO and AMPO (the US-JAPAN arrangement), and on the other hand the SCO countries, the biggest alliance in human history: the Shanghai Cooperation Organization, with 6 full members and 3 observers. The 6 members are China, Russia and four of the former Central Asian republics, excluding Turkmenistan. The three observers are India, Pakistan and Iran. Together, it's about 50% of humanity, confronting a relatively small country called the United States of America, with only 300'000'000, not a very impressive size these days.

I have said this, knowing that of the 10 points of the Project for the New American Century--written by people who are still in power, although there is an erosion among them--point number 7 is to change regime in China. I am of the opinion that whatever be the method, that the Chinese will rather do the change of regime themselves, and are not enthusiastic about being encircled. It is the major conflict confrontation of the world today, between NATO/AMPO and SCO, and since it is the major one, it is also the one least talked about. The Shield has to neutralize missiles from Russia and China. I think Putin understood it correctly in Munich, and sees it in the light of the cancellation of the ABM treaty, which was a cornerstone of the peaceful development during the Cold War. It was canceled unilaterally by the United States, The anti-missile capacities in the Czech Republic and Poland come on top of the US and NATO breaking the promises made to Gorbachev at the end of the Cold War: that the Soviet Union would withdraw from Eastern Europe, including Eastern Germany, and the United States would not follow suit, whereupon the United States had filled almost every base opportunity, and enrolled practically speaking all the countries in NATO. That has heightened the tension immensely. Whether it will dominate the Heiligendamm [G8 meeting] meeting, I don't know, but I would imagine that it could be quite important. The guess is that the US would do anything they can in order to bribe the citizens of the villages selected in Poland and the Czech Republic with high amounts of money in order not to demonstrate against. So, G8 spells only bad news, as introduction to the six conflicts:

1. Economic Contradiction: Global Capitalism

Let me just say a word about global capitalism. The two antidotes to the market mechanism that have been effective have been, on the one hand, a welfare state, and on the other hand, protectionism. Microcredit, you can forget about it, these are small drops in the bucket, giving relief to some small groups. The countries that practice it most, Bangladesh and Bolivia, are still at the bottom, economically speaking. The combination of selective protectionism and welfare state, that is the real stuff. The way Japan did it, the way Taiwan did it, the way South Korea did it, the way Hong Kong did it, the way Singapore did it, the way Malaysia did it, with considerable success. You find in the whole of the East Asia/South East Asia conglomerate countries that have been doing exactly this. That is important, and the neo-liberal free market syndrome is of course against that. They are doing everything they can to eliminate the two factors. That means that the global market place becomes a vertical assembly line for the transportation of capital from the bottom to the top. And this works with three mechanisms: monetization, privatization and globalization, border-free market, of which globalization is the least important. The most important is monetization, setting a monetary price on everything. It is the most important because it means that those who have no money have no chance, and they are about 1'000'000'000. Their option, that is very clear, is to join the ranks of the dying; 125'000 dying every day with 25'000 starving and 100'000 dying from preventable and curable diseases, for which cures exist, but they are monetized. User's fees in Africa are a disaster. All of this is known today! Adam Smith warned against unmitigated markets; David Ricardo warned against unmitigated labor markets in periods with high labor supply, saying that it would have lasting unemployment as a result, and extreme poverty among the labor.

From global capitalism as it is operating today, we can expect no solution to these problems. So let me then add the kind of approach that I, as one person, would advocate; taming capitalism, by introducing at the same time about 14 other types of economies. In other words, it is a little bit like the thinking about energy: we don't say an unconditional no to hydrocarbons, but we introduce 6, 7, 8 other methods. The energy profile becomes complex. Time does not permit me to get into all 14, I'll not do it, some of you have the manuscript and the book A Life-Sustaining Economy is close to completion. The point I am arguing is a pluralistic economy. There is no single formula that covers all the alternatives, and the pluralistic profile must be adjusted to the preconditions in space and time.

2. Military Contradiction: Terrorism and State Terrorism

Number two on this list is the military contradiction between terrorism and state terrorism. The USA state contradiction on terrorism has now entered military intervention number 73 since the Second World War; Number 73 being what they are doing in Lebanon right now: killing Palestinians. There are 470'000 Palestinian refugees in Lebanon, almost half a million, scattered in camps from the north to the south. We now know the number of the people who were driven out of the territory that became the Jewish state during the Naqba, the Catastrophe: the number of Palestinians driven out was 711'000, very far from 'a couple of thousand'. It is a very major number for a small nation. Some of them, not necessarily in that period, found their way to Lebanon. This is number 73 and the number of people killed in overt Pentagon-driven military action after the Second World War is now between 13 and 17 million. The number of people killed in covert action is at least 6 million. The number of people killed by structural violence could be 125'000 people per day, but for that the USA is not alone responsible. What the USA is responsible for is giving the military cover for that economic system. You can go through the total amount of interventions, 243, since Thomas Jefferson started, and you will find that almost without exception the interventions are triggered by some political action that sounds like or might lead to redistribution of wealth and power somewhere in the world. So, you get this endless pairing: intervening when the Sandinistas are in power but not when Somoza is in power, intervening when Chavez is in power but not when, for instance, Jimenez is in power. Both of them were darlings of the International Monetary Fund, a solid pillar of exploitation.

Iraq

Right now the major arena is Iraq, the coming arena may be Iran. One particularly gifted journalist, Andreas Zumach, has written an article saying that for the Iran war everything is prepared. It is totally wrong to assume that because the US has problems in Iraq it will not attack Iran. I will also say that it is totally wrong to assume that the US is losing in Iraq. You will only assume that if you assume that the major goal of the United States is a cohesive Iraq entity that has some semblance to parliamentary democracy. If you look at the real goals, oil and military bases, they may ever be winning. There could be an oil law, the chances that it could be passed are not that small. And it is the Paul Bremer concept they are working on that essentially presupposes that the oil resources are put on the global market, bought up by the 5 big companies, with 100% repatriation of profit.

It is sometimes pointed out that the US Empire is not colonial. That is correct. They had colonies in the past, after they in 1898 stepped into the Spanish empire and acquired some major indigenous problems. One interesting thing about colonialism, however, is that it gave colonizers some paternalistic sense of responsibility that you can forget about when it comes to what's going on under imperialism.

Let me just add one point to that. I find the idea of pulling out of Iraq one of the most cowardly, dishonorable ideas I can imagine, so let me immediately formulate an alternative. Shed the uniform, and start helping the Iraqi people you have brutalized. Compensate, apologize, you have a lot of infrastructure at your disposal, you US army could still do a decent job. And one of the worst proposals in addition to that is to say "Just go to your bases and stay there". Those bases are for the coming war with SCO, that's why they are there. Have a look at the analysis of the length of the runways and you will see the purpose behind them.

Let me come back for a second to the idea of pulling out, which in my mind is such a bad idea that we could expect it from the US. What it means is that you pull out so that you don't suffer any humiliating defeat. You make yourself unavailable for defeat. I can understand the reason, it is not difficult. The 30th April 1975, the humiliating defeat in Vietnam became a major trauma. To avoid that situation is the priority of course, pulling out better than to continue killing, but, I just think one should call a spade a spade, and no way I see cut and run as peaceful action. We shouldn't, I would say, contaminate the concept of peace with cowardice, trying to "save face" after having killed 750'000 so far. Multiply that by 10 for the bereaved--the persons who feel the loss of a friend, a spouse, a brother, a sister, a child, a parent, a colleague, a neighbor--multiply 750'000 by 10 and you have an estimate of the hatred that has been created. Add to that the 4 million who are displaced, some of them among the 7,5 million I just mentioned; and add to that the psychosis induced in the high number of US military who have been to Iraq; and add to that the about 25'000 wounded who have come back to the US and you may probably add 10% of them dying. The definition of a person of the US army personnel killed in the war is that he dies in Iraq, that means "Put them on the plane get them to Walter Ried as quickly as possible, don't let them die in Iraq". I am not saying that to get somewhere closer to realism when discussing this enormity.

Why don't the USA with some allies win? Because they are against an enemy that is unconquerable, and why is that? Because of "asymmetric warfare" is too sterile. Of course they are using "improvised explosive" devices against these sophisticated things that the US army used. But they have two more arms at their disposal: time and space.

An unlimited time perspective. There is no point called "capitulation" in their rules, that can just be forgotten, it belonged to the old days. We are dealing with a type of warfare where what used to be called the weaker party has any amount of time at its disposal. These people are trained in fighting a government empire for 400, 500 years, like the Serbs were fighting the Turks for 500 years. The Orthodox, among the three Christianities, have a time perspective very similar to the Islamic one. I don't think you will find 500 years patience in Washington, maybe not even 5 months for that matter.

And, they have space, there are 57 members of the OIC, the Organization of the Islamic Conference. 56 of them are states, number 57 are the 160 million or so Muslims in India. Most of the borders of the 56 countries are drawn by the West; they are borders that make no sense to Islam at all. That doesn't mean there are no fault lines inside Islam. More important than Shia-Sunni is probably Arab-non-Arab. The non-Arab countries are in the majority, of the 56 only 22 are Arab. Of the 1.350.000.000 Muslims, 300.000.000 are Arab. If the Arabs feel that the religion is essentially theirs, then they are in a minority position. That is becoming something interesting, and of course the US plays on those fault lines. It seemed to work as long as they were dealing with Khomeini, he is a Shia, the "bad" Islam. But, bin Laden, a Wahab, was a Sunni, and didn't look much more attractive than Khomeini. So something went wrong somehow with that Harvard University distinction.

Harvard University, by the way, is the university that by far has contributed most economists to the neo-liberal attack on humanity. Like Jeffrey Sachs, a major person in the destruction of Bolivia and of Russia, and now proceeding to the whole world. He has changed his rhetoric, even humanized the rhetoric. But if we look at the measures, they look very much like what he did to Bolivia and Russia.

Having said that, if you have time and space on your side, then you are dealing with enormous resources. In principle, the whole Islamic world is on the other side. This constitutes the "Clash of Civilizations" that Samuel Huntington's publisher stole from Bernard Lewis, a far more important intellectual, professor at Princeton University, and a major advisor to Cheney. One of those who, more than anybody else, has whispered in Cheney's ears "Attack Iraq!". Everybody is blaming Samuel Huntington, best read the book, you'll find almost nothing about civilization. Read Bernard Lewis, and you will find quite a lot, particularly about Islam.

It is a complete mistake to talk about this as a civilizational-religious clash only. It's economic, military, political, it's the full house. The more one says the "clash of civilizations", the more is one inclined to forget the economic, political, military interests hidden underneath. It must be wonderful for Washington to have all this clash-of-civilization-talk and establish 14 military bases, and then try to put your paw on all the oil. "Keep them discussing civilization". And this of courseis why we need the concept of imperialism, because it is holistic, one reason why the concept does not have a very high standing in the USA. The war of state terrorism against terrorism is an elitist warfare against peoples warfare. The people's war is close to unbeatable, but it may take time. That holds for Iraq and it holds for Afghanistan. Anybody who knows a little bit of the history of Afghanistan and the British attacks in 1838 and 1878 and the Soviet attack in 1978, also know how it ended; with humiliating defeats. The one in 1878 ended even with the massacre in the British embassy in Kabul in 1883. I think they would have wished for good life insurances for those people.

How is it possible to enter a thing when so much knowledge would indicate otherwise, with all these negative indicators? Is it permissible to be that ignorant of history? To deny entirely a whole lot of facts that nevertheless somehow play a role? I myself think we give much too much credit to facts, but some facts are quite useful. It tells a lot to have a President who has both ignorance and denial fitted into his mental framework, but I would warn strongly against associating the calamity with Bush alone.

The US empire is resting on a deep structure and a deep culture. Let me take the deep culture first. There is both Chosenness, the vision of past and present glory, and a strong sense of trauma. There is Dualism, Manichaeism, and the sense that Armageddon will solve it. But, this is no Republican monopoly. It is found in both corporate parties, with some fringes that feel some uneasiness. And, of course, of those, the Republicans have suffered the humiliation of losing the elections. But the two parties re-cohered, voted for the "surge", voted for 100 billion more money, adding some clauses. In other words, we are faced with a Republican Democrat entity, a Repucrat, Repurat, whatever we want to call it; a single-party coalition with two wings. That was the bad news, the good news are the 50% who don't vote. Somewhere in those 50% there is a solution, not as one person. In other words, there is good news and bad news.

How does a person like Andreas Zumach, very well informed, think that the war against Iran will be? It could be based on a provocation, constructed, fake and false. Like Racak in Kosovo. A Finnish forensic specialist has now released her report which was silenced by Joschka Fischer at a critical moment, and the report on Racak is very clear: there was a gun-powder slam, but, the slam was on their hands and not on the neck. In other words, it was on those who had been shooting, not on the executed victims. Killing had been done in an ordinary manner and they then assembled the corpses and lay them out. They need a US ambassador to make that, it bears the stamp of William Walker. The total number of killed in Kosovo was not 150'000, but 8'000 over the years, 5'000 Albanians and 3'000 Serbs. I am just saying that because we have been treated to lies, and if there is the war against Iran it will be initiated by lies. To propagate those lies we have the corporate press, meaning press owned by the corporation. Information is easily arranged.

From the plans that have emerged it looks as if the 100'000 targets have been identified in Iran. These targets include not only some nuclear arrangements, but the total military infrastructure of the country, that means any kind of center of command, naval points, air bases, anything that has to do with missiles. But that would only amount to one half of the 100'000 targets, the other targets would be anything that has to do with civilian infrastructure in the sense of railroads, airports, roads of course, sewerage, bridges, canals or watering, electric power plants, anything that keeps the civilian population going. Starting at 5 am some morning, 100'000 targets, in association with Israel. As far as I understand the Iranian counterattack will be considerable. I don't know, but I could guess there could be dirty bombs inside the US, ignited by remote control. Only an idiot will use missiles. They will of course use totally different methods. So I mention it as an example of what we may be facing.

Afghanistan

In March I was invited to give a talk for three ministries in the UK, the Ministry of Foreign Affairs, the Ministry or Department of Defense, and the Department for International Development (DFID). It was organized by the latter. I was a little surprised when I was asked to give the keynote address, and in the chair was the former Foreign Minister. The keynote was about Afghanistan, Nepal and Sri Lanka. And since I have just been mentioning Afghanistan, let me say some words about what I saw as possible solutions. The basic point I have just made: you can forget any possibility of winning. You may have a lull, and God bless you when it comes to what happens after the lull: Osama bin Laden. You can also forget calling your enemy Taliban, Talib means "student", it's a highly anti-student type of word, you can forget about that too. We are essentially dealing with the Afghan people. I remember a discussion I had myself in that meeting, with an Afghan general. He gave a talk about how many small weapons he had confiscated, 90'000, and how his forces were fighting. And I said to him "General, tell me a little bit more about that fighting", and he looked at me and said, "Of course it doesn't work. I cannot ask my Afghan troops to kill Afghans, it makes no sense for them. The Russians, no problem." He didn't say, but he was thinking "Americans, no problem", but that was not politically correct at such a conference in London. I will never forget how the twinkle in his eyes met with the twinkle in mine, twinkle meets twinkle, and we understood each other perfectly.

The 5 points that would give a solution to Afghanistan would be the following from the TRANSCEND mediation in Peshawar in February 2001.

1. Make a Coalition Government with the Taliban. 100% Taliban is intolerable. But the Taliban has a moral fiber, which most others don't have. If you eliminate them you will get heroin and corruption and not much more. They are needed.

2. Afghanistan is the material from which a Federation is made, not a unitary state, even if the Northern Alliance based on Tadjiks and Pashtuns with Kabul in the middle, count for half. There are at least ten others. To call potential Prime Ministers "warlords" is an insult. You have to be very much removed from reality to believe that by insulting them you can eliminate them or make them your friends.

3. A Central Asian Community surrounding Afghanistan with the countries that contribute to the national mosaic that is Afghanistan, the Pashtuns from Pakistan, the Tadjiks from Tadjikistan and the Dari-speaking from Iran, and so on and so forth, would make a lot of sense. That will include Kashmir, and Pakistan, and Iran. The Shanghai Cooperation Organization has almost realized it. The Shanghai Cooperation Organization does not publish much, but moves in very, very clever, slow, movements. It moves so slowly that the journalists do not discover it, because it would have to move from day to day in order for a jour-nal to record it.

4. Make Basic Needs the leading line of the Government policy. That means food, education, health, clothing, whatever is needed for the somatic human being, shared by all, and available to men and women alike. That last problem can only be solved on a Quranic basis, and is being solved in a number of Islamic countries. One of the most interesting solutions was by Saddam Hussein, number 3 of the 14 good things he did. He told the Iraqi women, "From tomorrow on you decide whether to wear the hijaab or not. Only you. And if anybody tries to change your view come to me." Now, to come to Saddam Hussein was not a very appetizing invitation, so this was definitely under threat, but it worked. It created a very, very vibrant group of women in Iraqi society. That of courseis now all disappearing.

5. Security, provided by cooperation between the UN Security Council and the Organization of the Islamic Conference. The UN Security Council has a veto nucleus of 4 Christian powers, and one Confucian. It has no legitimacy whatsoever in the Muslim world, that has to be understood. To believe that one can organize a UNSC-sponsored security operation in a country that hates the UN, not only because of the composition of the Security Council, but for having killed 1 million through the Iraq sanctions, is naive. And they gave a very clear expression for their hatred by killing the Secretary-General's representative in the Iraq UN building. It doesn't help much to call the people who did it "extremists". In the war we had against the German occupation in Norway, the people who did violent acts were extremists, and most people were sitting on the fence, applauding. But, don't be confused, don't call the fence-sitters moderates. They were waiting for the wind to blow a little bit more clearly and then jumped down taking a clear stand.

With those 5 points, I think one could arrive at something. It is not for us to impose any solution on anybody, and TRANSCEND in this case was essentially the Canadians. I was an adjunct. One of them was an Afghan Canadian, Seddiq Veera, of considerable diplomatic acumen. When that report was read in front of the working groups, a former Cabinet Member said "This is the best I've ever seen, the only problem is it has no chance... Why, because," he added, "the Americans will attack us in October 2001, because they want to control pipelines, and they want bases." So I asked him, "How do you know that?". And he said, "Would you mind coming to my room this evening?" The room was very dark, and had a considerable amount of electronics, and quite good assistants who were very discrete, and he presented quite a lot of very interesting pictures. "When the Americans attack in October, they will put their military bases exactly here", he took a map and put his finger exactly where a major base is today. You will of course remember that this was to be exact seven months before 9/11.

But having said that, the question comes up: "How does one move a plan like those 5 points?" Well, the reports from the conference, with the keynote address, is there, circulated to all kinds of governmental circles, not only in England. I don't know, but we need a better dissemination technique. The corporate press will do their best to deny us that access, because we are uncontrollable, unpredictable. And I think they want it to remain like that, and so do we.

3. Nations and States Contradiction: 200 States, 2000 Nations

Let me go on to number three, very briefly, 200 states, 2000 nations. In Kosova they are now practicing the principle of self-determination. They are not practicing it in Republica Srpska, they are not practicing it in Transdniestria, they are not practicing it for the Tamils in Sri Lanka. They are practicing it where they want to practice it. What TRANSCEND tries to do is to open the space between independence and unitary states. And we have a lot of research done and a lot of experience when it comes to the range of in between points. And the three best known points are of course federation, confederation and devolution. Those are in-between parts. We did not have any success so far in Sri Lanka. The parties are not convinced that they can win, but they are convinced that they can deprive the other side from winning. Not quite the same, but almost equally good. If both of them want to deprive the other side of winning it can go on for a considerable amount of time, because you won't even have the mechanism of victory or capitulation which sets some full stop, for some period. They needed of course the cease-fire agreement brokered by the Norwegian government in order to arm and re-deploy, and both parties make use of it. During that period, there was not a single serious effort to solve the conflict; certainly not by the Norwegian government, nor by the others. A very sad picture. And I'm afraid that whatever beautiful peace-building efforts one can make, it has limited impact. There has to be a solution. The good news from my own experience: the moment you do have a solution, it is incredible how much bad sentiment and behavior can evaporate quickly because the solution is there.

4. Cultural Contradiction: Islam vs Christianity

Number four, the cultural one. Imagine that you take the TRANSCEND 5 point diagram and you simply say Islam hates Christianity, wants to kick it out, and Christianity hates Islam, wants to kick it out. That formula is called intolerance. We are against that. There is the neither/nor possibility they may both conclude that there is something crazy in both religions. Let us turn to Buddhism, or let's become secular. Secularism, I think, can partly be traced back to the 30 years war in Europe (1618 – 48). I don't have the historical evidence, but I have at least the hypothesis that a high number of people came to the conclusion that if these are two Christianities that both define themselves as the only correct one, and that's the way they treat each other, there must be something basically wrong in the whole Christian message. At the time, they did not have alternative religion, so they turned to secularism.

Secularism supported itself as science, and they fell into a very deep dark hole. Science, as you know, is based on data as the ultimate arbiter between hypotheses. But, data come from the past. In opting for science you give the past practically speaking 100 percent of the power. I have been struggling almost all my life to develop epistemology that does not take that dramatic position, but maneuvering even-handedly between past and future. It means that you give the potential, the negatively non-existing, as much praise as the positively existing. The moment secularism allies itself with science, it allies itself with the past. It is very easy to understand why they do it: because they are Christians, maybe Jews, maybe Muslims, and God created the world, and if God is perfection then His work must also be perfection. To talk about an alternative future is to challenge the creation. Any alternative future from a science point of view is speculation. From that point of view Darwinism and intelligent design are very very similar. The driving forces are in the past. What could be a true global future of this relation? We should draw on the potential of future wishes, of the dreams and the wishes and the values as an equally important part of the intellectual enterprise, and here I am not with Noam Chomsky. Brilliant, he is a digger for facts, and I dig him too. But he is chemically free from any concrete, constructive and creative future. There isn't one single idea except "writing a letter to your Congressman". And he has proven again and again and again how futile that exercise is. He is called the major intellectual in the world.

So, having said that, I am very much attracted by a statement by an Iranian, and that statement by an Iranian is as follows. I will read it to you in English. It is the 14th Century Persian Sufi poet Hafiz and his ultimate words about the distinction and struggle between Christianity and Islam:

"I have learned so much from God that I can no longer call myself a Christian, a Hindu, a Muslim, a Buddhist, a Jew. The truth has shed so much of itself in me that I can no longer call myself a man, a woman...".

The latter is going a little bit too far, I'm not sure I can follow him into that!

"...An angel or even a pure soul, love has befriended Hafiz so completely, has turned to passion, freed me of every concept and image my mind has ever loved... man/woman, thing."

And that is what I for reasons of time will say about number 5 on the list:

5. Sufism

It comes straight out of the Axis of Evil. Ahmadinejad wrote a letter of 18 pages to Bush, a little bit repetitive at times, but a fascinating letter. What an indictment of the Western civilization that they are not even able to answer that letter. Nobody is of course expecting any answer from George Bush, but he has a couple of people: couldn't Condi try her hand at it for instance? I mean, she is a bright woman. Why not?

A quote from Daoism:

"Sharing the suffering of others, the life and joy of others. Use the good fortune of others as your own good fortune. View the losses of others as yours."

This is "we-ness", this is swinging in harmony, two persons, or, humanity swinging in harmony, sensing each other's delight and suffering. Compare that with the profoundly egoistic lex talionis: "Do unto others as you want others to do unto you." Why is it so profoundly egoistic? Because it ends up with my ego, somebody should do something good to me, but I'm so smart that I know that the best way to get that is to be nice to that person, you get much more from him with that method. If you treat him badly you might get nothing or worse. A light-year away from the Daoism of creating we's. This is the kind of thing that I find fascinating in connection with religion: it is not neither/nor, it is not the compromise, it is not one dominating over the other. Better, try to take the both/and, pick up the gems from all of them, make them coalesce, cohere somehow! A fascinating challenge, a little bit ahead of its time, or then maybe not. Maybe a lot of people think that way, it only has to be released, perhaps, in public space.

6. The US Empire

Let me introduce number 6, with a quotation from the South African Nobel Prize winner in literature J.M. Coetzee. Absolutely brilliant. The essay he wrote and published in 1974, when he was 34 years old, was about South Africa and the Vietnam War. He wrote a statement about the USA, putting it in the working of a specialist in a U.S. think tank in California, southern part. The project he is working on is how to break the wild of the Vietcong, and substitute for Vietcong goals goals that are compatible with the sincere US love for the Vietnamese people. He writes:

"If the Vietnamese had come singing towards us through the hails of bullets, we would have knelt down and embraced them."

If they can come singing through the hails of bullets. A good way of putting it. Yes, if only it's exactly what happens. The idea that we can bomb the people into submission, and make them love us, is insane. When the Germans were "bombed into submission", it actually strengthened the Nazi party. What then happened to the Germans was something else. At a certain point they realized that their whole project was doomed, the whole Nazi project was wrong wrong wrong. They were not taught a lesson by being bombed. "If only they would come singing through the hail of bullets, we would go down on our knees and embrace them." The perception of their own project came from the inside. What Coetzee leads up to is psychosis, diagnosis maybe a combination of narcissism, megalomania and paranoia, maybe with elements of a fantastic detachment from reality. But we are not dealing with psychopaths, we are dealing with socio-paths. Maybe lovely individuals, but with an image of the world totally devoid of any humanitarian reality when those attacked refuse to do what Reagan said when he was entering a helicopter, in connection with Nicaragua. "Mr. President, what do you want them to do?" "All I want them to do is to say 'Uncle'", meaning "I submit."

It doesn't work like that with a deep culture and a deep structure at work. US political science and US economics have no concept of history, and, it seems, only two concepts of structure, hierarchy and anarchy. If you come from a Nordic country, or from the European Union, you have no problem what equity is about, even if I had to make up the word "equiarchy", to add to hierarchy, polyarchy and anarchy. Their only approach to equity was and is the signed agreement, contract, regardless of the 2nd, 3rd, 4th level consequences. Similarly, solution to them means settlement, a signed document, and I would argue it isn't good enough, solution is deeper.

So how is the US Empire performing these days? There are 15 contradictions at the end in the hypothesis made in the year 2000. Let me say what the basic theory is about. An Empire is a transborder arrangement that combines economic, military, political and cultural power. It's an enormous power display that obviously brings with it contradictions. Contradictions are problems you cannot solve unless you change the system, but you can coexist with a couple of contradictions. When the contradictions start multiplying, synchronizing and synergizing, they become serious.

For the Empire people hit by an Empire start understanding that they have a common cause: get rid of the Empire – like colonialism, like slavery.

I can now pick up some of them, such as the amount of Euros passing the Dollars in circulation last December, Toyota passing GM in January, and you have the number of patents in the world with the US proportion sinking in comparison with other countries passing the US in one domain after the other. There is all of this happening, and much much more.

Let me point to a key factor. It hasn't happened yet. But, many Europeans have felt bothered, and the moment they meet people in the Iraqi resistance movement and they compare notes, a sense of a common cause may start arising. If I now take all of these 15 points, some of them also inside the US, and Americans also sense that they are better off without the US Empire, the moment that common cause factor comes about, the US Empire is doomed. That is what happened to the Soviet Union. My prediction made in 1980 was that the wall would fall before 1990 and that the Soviet Empire would follow and they performed on time. The prediction of the US Empire is by 24 October 2020, the UN day and also my 90th anniversary, and you are all invited to celebrate. And let us combine it with a TRANSCEND meeting, but we need to make a jump, because they are now in odd years.

What comes after the U.S. Empire?

A. The European Union as Successor

And then what? Three possibilities. 1) A Successor Country or Countries, 2) A Regionalizing World, 3) Another Globalization. Let me say a couple of words on all three. And you will take note, of course, that the end of an Empire is the most natural thing in the world. Empires come and go, it's been like that all the time. No empire lasts forever. However, this one happens to be so brutal, so killing, so intervening, doing so much damage that you would expect it to be more short-lived than many of the others. It didn't have the decorum and the sense of responsibility sometimes exercised by the English and the French, to a large extent by the Spanish, to a minor extent also by the Dutch, much less by the Portuguese and the Belgians. You will of coursealso remember that the Portuguese in Brazil, with the US, were hanging onto slavery more than any other. So there is a tradition here.

But leaving that point aside, I think China is one of the least likely successor candidates. On my list, candidate number one is the European Union. You need a sense of universalism, China has nothing of that. They are still convinced that it is surrounded by barbarians. They are willing to buy quite a lot. The annual global income is 54 trillion dollars, and China's reserves are more than one trillion. The US currency reserves right now amount to 47 billion, which is nothing. That means when you want 100 billion for more fighting in Iraq and Afghanistan, you have to take more loans. That they get those loans is something still a little bit strange, but they do pay something in return, namely access to the US markets. So, having said that, a likely successor is the European Union, very universalist, with the 11 major colonial powers all members, and all concerned about their part of the world. And they are willing to say "I'll not protest if you do something in your part if you'll not protest when I do something in my part". It is European political common market. There is much more to the European Union, but this is one important aspect.

We had a conference on peace studies in Hull in England one week ago, about democracy and peace. And I launched the idea of the European Union as a successor, after 19 reasons why the hypothesis of "democratic peace" is false, even a fraud, but I leave out all of that. The point I'm making is simply that the European Union has the deep culture and the deep structure it takes to become an empire. There were protests to the effect that there was no such plan also from Members of the European Parliament. Back then, a German from the European Commission raised his hand and said: "I'll tell you one thing, I work in the European Commission, but occasionally I go over to the Council of Ministers and whenever I am in the building, so many of the people walking around are in uniform, they suddenly disappear into some room, and it is very clear that the doors are closed." There is of course also the Tindemans plan, and the Tindemans plan is exactly what they need for that successor purpose. So let me proceed to what I think is most likely, regionalization.

B. Regionalization

We have 4 regions or maybe 5, EU, AU, SAARC and ASEAN. Number 5 is the G8, it's not contiguous, but it doesn't have to be contiguous to be a region. And we have 4 regions that are coming, and they have one thing in common: they are not going to ask Washington for permission.

The first one is the Estados Unidos de America Latina y el Caribe, the United States of Latin America and the Caribbean. The common currency will be a Bolivar. Nine of the countries met in La Paz in December and drew up the basic plans for the Charter. A basic pattern of thinking is what they call a "social economy" and about that one I will just say one or two lines. When sanctions came to Cuba in 1960, or 1961 rather, the only trading possibility was with the Soviet Union, meaning sugar in return for shoddily manufactured goods. The Soviet Union collapsed, so did the trade, and Washington was already looking forward to the collapse of Cuba. What did they do then? First of all they switched to organic agriculture to be self-sufficient. In industrial products, they have enormous shortages, but they have some trade possibilities. And then you would immediately say that it was obvious, but not everybody thought about it. "We have human material, let us process that human material to as high a level as possible." That started university education to an extent unknown in most other countries, with a science and training center outside Havana for the training of doctors, dentists, engineers, social workers, educators, teachers of all trades. Thousands and thousands of them, ready to go to Latin America. But they didn't have the money till Chavez. He had the money, and a messianic complex. He is the Messiah with a budget. Imagine Jesus Christ with an oil budget? You see the triangular theme? Chavez pays Cuba for providing the manpower for lifting the bottom level of those 9 countries, starting with the slums, and they pay Chavez a certain allegiance to the Estados Unidos, which is evolving everyday today. Venezuela then, a couple of weeks ago left the World Bank and the IMF. You cannot leave it unless you have paid all your debts and Venezuela paid them some time ago. The other countries cannot leave because they haven't paid their debts, so Venezuela is going to pay their debts for them. The Messiah with a budget. The difficulty of it is, that Messianism might go to his head and make his populist democracy, as opposed to the usual Latin American elitist democracy, similar to people's democracy in Eastern Europe, as opposed to any democracy. As it is obvious I like his policies, I would hate to see that happen.

The second one is an Islamic community from Morocco to Mindanao. 1'300'000'000 Muslims crossing almost 1'300'000'000 Hindus, from Nepal to Sri Lanka, like two highways, but at the same level. A major potential for a major conflict, making small riots in India look microscopic. I use that as an exercise for diplomats and say, "Please come up with 5 solutions for this one".

Third, an East Asia Community, without Japan and with India, possibly combined with SCO.

And fourth, possibly, Putin could pull it off, but he may not be the man for it, is a Russian Union with a Chechnya having as much autonomy as the Netherlands in the European Union. Today widely off the mark. Tomorrow? Maybe. It would be widely in Russia's interest. The problem is that Putin came to power by being anti-Chechen. So, let us see. Maybe somebody can come to power by being pro-Chechen.

In a regional world we do not have any guarantee for peace. As a matter of fact, the country that will benefit most from the decline and fall of the US Empire will be the US Republic. They may start sleeping well at night, and they might use their enormous natural and human resources for innovative projects and their capacity for cooperation, all of that, for better purposes, and make a decent country out of the USA.

C. Another Globalization

That means of course a stronger UN with globalization through the United Nations. I was advisor to the Commission for Global Governance. They had a lot of good ideas whose time had not come, so let me just say the three that for me are most important.

Abolish the veto power. They may meet, in the G8, but put their agenda on the UN agenda, and if they don't like what they come up with, outvote them by expanding the Security Council to 54 members like the Economic and Social Council, and see to it that all parts of the world are there. That's point one.

Point two, democratize the United Nations. They can mobilize an enormous amount of initiatives through a democratic United Nations. Maybe with one representative for each 1 million inhabitants, some say for each 10 million.

And, point three, take the United Nations out of the United States and put it somewhere else. Put it in a more friendly environment. This can all be done within a span from 5 to 20 years. If democracy is such a good idea, then why not practice it?

My own book on The Decline and Fall of the US Empire--And Then What? is scheduled for next Spring. The book on alternative economics is also for next year, and so is the book on deep culture. Books, books, books, what matters more is peace, peace.

So let me end by simply saying that I was asked to say something on the state of the world. I've done that. And, if anybody can come up with ideas on how to speed up constructive, creative, concrete development, please don't hesitate!

Thank you.
Johan Galtung, Dr hc mult, Professor of Peace Studies; Founder, TRANSCEND, a peace and development network ( www.transcend.org )

15 contradictions of the US

ECONOMIC

1. Between growth and distribution: overproduction, 1.4 billion below 1 dollar a day, 100'000 die a day from preventable and curable diseases and 25'000 from hunger;

2. Between productive and finance economy: currency, stocks, bonds, overvalued, crashes, unemployment, contract jobs, not positions;

3. Between production/distribution/consumption and nature: ecocrisis, depletion/pollution, global warming;

MILITARY

4. Between US state terrorism and terrorism: blowback;

5. Between US and allies: except UK-Germany-Japan, allies will say "enough";

6. Between US Eurasia hegemony and Rus-Chindia triangle with 40% of humanity;

7. Between US-led NATO and the EU army: a Tindemans follow-up;

POLITICAL

8. Between USA and the UN: the UN ultimately hitting back;

9. Between USA and the EU: vying for Orthodox/Muslims support;

CULTURAL

10. Between US Judeo-Christianity and Islam: the UNSC nucleus has four Christian, and none of 56 Muslim countries;

11. Between US and the oldest civilizations: Chinese, Indian, Egyptian, Mesopotamian, Aztec, Inca, Maya;

12. Between US and EU elite cultures: France, Germany etc.

SOCIAL

13. Between state-corporate elites and working classes of unemployed and contract workers; the middle classes?

14. Between older generation and youth: Seattle, Washington, Praha, Genova and ever younger youth. The middle generation?

15. Between myth and realities: the US dream and US reality.

The Ants of Gaia
It’s only the end of the world, so quit bitching

by Joe Bageant / July 7th, 2007

The power of population is so superior to the power of the earth to produce subsistence for man, that premature death must in some shape or other visit the human race. The vices of mankind are active and able ministers of depopulation. They are the precursors in the great army of destruction, and often finish the dreadful work themselves. But should they fail in this war of extermination, sickly seasons, epidemics, pestilence, and plague advance in terrific array, and sweep off their thousands and tens of thousands. Should success be still incomplete, gigantic inevitable famine stalks in the rear, and with one mighty blow levels the population with the food of the world.

– Thomas Malthus, 1798

As a small boy, I once transferred most of an anthill population from its natural digs in our front yard to a gallon jar of fresh dirt, sprinkled it with a little sugar (in the cartoons ants are always freaks for sugar, right?) and then left the ants on their own. Of course the day came when all I had was a jar full of dry earth, ant shit and the desolation of their parched little carcasses. I’d guess that it was the lack of water that finally got ‘em.

But the most interesting thing in retrospect — if a jar of dead bugs can be called interesting — is this: Up until the very end they seemed to be happily and obliviously busy. They constructed an ant society with all of its ant facilities, made more baby ants and did all those things ants do that the proverbial grasshopper is famous for not doing. Obviously Christian predestinationists to the last ant, they met the grasshopper’s grim fate by another route, and did not look at all surprised in death.

Now you’d think that the lesson of the ants would be obvious as hell to any non-intoxicated individual with a grade school education. Never mind that many people since Malthus, as my sainted daddy would have put it, “Done drove the point in the ground and broke it clean off.” Never mind that Paul Ehrlich’s The Population Bomb was a best seller and remains a classic. Never mind that James Lovelock, the nerdish forward thinking Englishman who 99% of Americans never heard of, delivered unto us yet one more time the worst truth in human history, the Gaia Hypothesis. Which is a fancy way of saying we cannot continue to devour our planet forever because it amounts to self-cannibalism.

Lovelock also convincingly argued that, due the side effects of this species expiration, now acknowledged as global warming, the equator will look like Mars at some point relatively soon, with the surviving 20% of humans now alive, or perhaps in the next generation, living near the North and South Poles.

As to be expected, the few very comfortable elite folks on this earth said of Lovelock: “This guy is full of shit, a nutcase being adored by a bunch of naked tattooed pagans and gloomy intellectual types,” both of which number among my favorite kinds of people.

Those pagans who allowed themselves to feel and not just intellectualize about the earth’s condition, and those scientists who did not require computer modeling to do simple subtraction, recognized that these are the most challenging of times in human history, “challenging” being a polite term for the fact that that humanity is gonna die off big time, if not sooner, then later. Call it the secular version of The End Times.

But not much later, in light of the brief span Homo sapiens hath shat, frolicked, killed and exceeded their MasterCard limits upon the earth, which is less than a second in geological time. Already we are on the way out because we did not have the common sense of lizards, which lasted tens of millions of years longer without so much as a calculator, much less computerized eco models.

A bunch of DNA molecules gave us this aberrant evolution of brain and consciousness that enabled us to dominate everything else and get into the totally fucked situation in which we now find ourselves. The monkey got so smart he took over everything, ate most of it, drove over the rest, then stuck the roadkill on its own dick as a nuclear warhead, and after having threatened what was left around him, set out to destroy even that small remaining scrap of his ruined earthly turf. Is this God’s cruelest joke?

Global Warming as Mange Medicine

If mankind were discovered on a dog’s hide the owner would give the dog a mange dip. Or if the earth were a Petri dish, we would be called pathology. Problem is though, mama earth tends to shed pathogens off her skin, which for us pathogens, is the ultimate catastrophe.

When forced to look at catastrophe on this order of magnitude, we either go numb in shock or look in delusion to something bigger, or at least something with more grandeur than Mother Nature flushing humanity down the toilet. Otherwise, one must accept the both ugly and the weirdly beautiful prospect of oblivion. Meanwhile, we begin too late to “make better choices.” Grim choices that do nothing but postpone the inevitable, which are called better ones and sold to us to make ourselves feel better about our toxicity. Burn corn in your gas tank. Go green, with the help of Monsanto. But not many can be concerned even with the matter of better choices. Few can truly grasp the fullness of the danger because there is no way they can get their minds around it, no way to see the world in its entirety. The tadpole cannot conceive of the banks of the pond, much less the wooded watershed that feeds it. But old frogs glimpse of it.

Still, there is choice available, even a superior choice — the moral one. Accept the truth and act upon it. Take direct action to eliminate human suffering, and likewise to eliminate our own comfort. We can say no to scorched babies in Iraq. We can refuse to drive at all and refuse to participate in a dead society gone shopping. We can quit being so addicted to rationality and embrace the spirit. Rationality simply turns back on itself like a mobius strip. Too much thinking, too much cleverness on the monkey’s part leads it to believe it can come up with rational solutions for what ration itself hath wrought.

All the green energy sources and eating right and voting right cannot fix what has been irretrievably ruined, but only make life amid the ruination slightly more bearable. Species gluttony is nearly over and we’ve eaten the earth and pissed upon its bones. Not because we are cruel by nature (though a case might be made for stupidity) but because the existence of consciousness necessarily implies each of us as its individual center, the individual point of all experience and thus all knowing. The accumulated personal and collective wounds fester and become fatal because there is no way to inform the world that we must surrender our assumptions, even if we wanted to. Which we do not because assumptions are the unseen cultural glue, the DNA of civilization. If we did so, the crash would be immediate.

So we postpone transformation through truth, and stick with what has always worked — empire and consumption. And we twiddle our lives away thorough insignificant fretting about mortgages and health care and political parties and pretend the whole of American life is not a disconnect. Hell, all of Western culture has become a disconnect. Somebody needs to tell the Europeans too; progressive Americans give them entirely too much credit for the small positive variation in their cultures and ours. We both get away with it only so long as the oil and the entertainment last.

The front page of today’s newspaper tells me that 41 million motorists will gas up and hit the road today, July 3rd. Another five million will sip drinks and read magazines while zipping through the stratosphere in 747s that burn the day’s oxygen production of a 44,000 acre rainforest in the first five minutes of flight just getting off the ground and gaining altitude, adding to the more than 110 million annual tons of atmosphere-altering chemtrail gasses, some of which will remain to hold heat in the upper atmosphere for almost 100 years.

Below it all are the spreading pox like blotches of economic and ecological ruins of dead North American towns and city cores, such as downtown Gary Indiana, Camden, Newark, Detroit . . . all those places we secretly accept as being hellish because, well, that’s just what happens when “blacks take over,” isn’t it? Has anyone seen downtown Detroit lately? Of course not. No one goes there any more. Miles of cracked pavement, weeds and abandoned buildings that look like de Chirico’s Melancholy and Mystery of a Street. Hell, for all practical purposes it is uninhabited, though a scattering of drug addicts, alcoholics and homeless insane people wander in the shadows of vacant rotting skyscrapers where water drips and vines crawl through the lobbies, including the Ford Motor Company’s stainless steel former headquarters. (See the works of Chilean-born photographer Camilo José Vergara.) It is the first glimpse of a very near future, right here and now for all to see.

The hearts of even our most avowedly thriving cities are just dead, reduced to nothing more than designated spending zones, collections of bars and banks and overpriced eateries lodged at the center of a massive tangle of overpasses and freeways designed for a nation of soft people hurtling themselves through the suburbs in petroleum powered exoskeletons in search of fried chicken, or into the city for the lonely monetized experience called urban nightlife. Which is no life at all, but rather posturing in lifelike poses amid simple drunkenness and engorgement.

We allow ourselves to imagine the worst is somewhere in yet another future so we can continue without owning decision. Love of comfort being the death of courage, we continue the familiar commoditized life, the only one we have known. Is it not true that our entire understanding of courage as we know it is about braving some unknown? About making the socially unaccepted and dangerous choice? Stepping forward in the face of the wars and evil mechanics of our own particular time?

Empire and its inevitable permanent state of warfare flourishes not because evil men are at the helm, but because the men at the helm are even weaker and more in denial than we are. (Look at Dick Cheney. The guy is a nervous wreck wrapped in arrogance and denial.) And so their uninformed and crude confidence is assuring to both them and us. We elect the worst among ourselves in increasing avoidance of ourselves and they are validated by our endorsement. Evil men seeking empire did not make us or the world this way. We made their existence possible through our denial, love of ease and non accountability.

The most dangerous question in the world

Yet, I dare say that comfort is not the most important thing in most American lives. It is just the only thing we are offered in exchange for our toil and the pain of ordinary existence in such an age. Consequently, it is all we know. Meaningless work, then meaningless comfort and distraction in the too-few hours between sleep and labor. But we settled for that and continue to do so. The day will never come when we stand around the office water cooler and ask one another: “Why in the hell are we even here today?” It’s the most dangerous question in America and the Western world.

Some few of us are in a hellish limbo, simply waiting for total collapse because it is easier to rebuild from nothing than to change billions of minds not even remotely concerned with the looming catastrophe. A minority of the world, the six percent called America, suffers the mass self-delusion of endless plentitude. A much larger portion is less concerned with the moral aspects of consumption because they are brutally engaged in trying to find enough to eat and a drink of clean water. So plentitude on any terms looks damned good. Escape to America because those fuckers over there don’t seem to be suffering at all.

Manifesto of the Damned

I thank the stars for younger men, writers such as Derrick Jensen and Charles Eisenstein. They say what we cannot yet say to ourselves and what the media will never say because media survives by the corporate numbers game. Consequently, the iron rules of being allowed to communicate with significant numbers of people within our empire tend to call for glibness, fake optimism, and the wide net of inclusion of even the silliest sorts of people. Fuck only knows I’ve participated in the sham over the years. But the truth is never politically or socially correct.

What’s left of my own aging hippie optimism dies hard. And as an older guy who has seen both interior and external horror in this life, I often assure those who will deal with this world after I am worm chow that “to have seen a specter is not everything.” I’ve often repeated this theme because it is important to know that many more specters lie ahead of the next generation, the survivors of which will be the new “brave happy few,” links in the chain of reason tempered with art. No one yet knows with absolute certainty the outcome of our terrible common plunge toward truth. But even in the worst of times, there is glory in the sheer electricity of life, the expression of its juiciness, those moments when the eternal fecundity of the flesh struts by in a tight skirt, or perhaps sporting the perfect unshaven jaw, offering everything and nothing. Life is never completely joyless.

Younger men and women will live to rule or rule the day. So seize it for god sake! And listen to the cellular wisdom of the flesh. I did and do and am damned glad of it. Despite what a police court Jehovah, Yahweh or Allah may have told us, the only holy thing existent is this the flesh in which we now walk. It leads us toward both good and evil, but it leads, and most probably will bleed if we are on the right path. Yet, what could be better than a meaningful life during meaningless times? Which is everything, whether we be artistic, queer, altruistic, an unheralded ox in the fields of labor . . . or one of the invisible ones out there with a stone cold determination to kill the supposedly deathless machinery in which we are expected to supplicate daily and call that a life.

I am not a wise man, but I dare say that’s about all you can hope for. A splash of small glory, or perhaps even a canteen filled with meaningfulness in the desert. It is no small thing.

So here we are. You and me. Let us hang all our laundry out to dry in this tiny corner of cyberspace. I think it is entirely possible that we can be honest cybernetic bards in an unpromising age, possibly even noble amid the ruins.

Joe Bageant is author of the book, Deer Hunting With Jesus: Dispatches from America's Class War. (Random House Crown), about working class America. A complete archive of his on-line work, along with the thoughts of many working Americans on the subject of class may be found on his website. Feel free to contact him at: joebageant@joebageant.com. Read other articles by Joe, or visit Joe's website.

Eat, Fight, Fuck, Pray
An Interview with Joe Bageant

by Joshua Frank / July 9th, 2007

Joe Bageant is author of Deer Hunting With Jesus: Dispatches from America’s Class War just published by Random House Crown. He recently spoke with Joshua Frank about his new book.


Joshua Frank: So Joe, what the hell is going on with the redneck strain of the working class anyway? Why do they seem more apt to embrace evangelism rather than a labor union? Is it, as psychologists would say, learned helplessness, or worse, idiocy?

Joe Bageant: Well, Josh, that’s a pretty broad brush you’re painting with there. In fact, it’s too broad to be answered, but that will not stop me from responding with my usual shrillness and tin drum noise punctuated by flatulence. Let me start by saying the term redneck does not apply especially to southerners. I have found indigenous redneck culture and communities in Maine, Oregon Kansas, New York, Massachusetts, and California … in virtually every state and in large numbers. Among loggers, cowboys, poles, Germans, and even Latino rednecks.

Really. Don’t you think beer and low riders and macho sports aesthetic of Latinos, the heterosexual, patriotic Jesus focused Catholic is that much different from their Jesus focused Baptist Dixie and Midwestern counterparts? The low riders of LA are the same as beer and muscle cars of the south. In fact the first rednecks were probably the striking miners at the Ludlow Colorado massacre, who wore red bandanas and were seen as tough, surly, angry working class people who had to be kept down. The sun on the neck definition is another more recent one that got applied especially to Southerners, during the civil rights era I suppose.

We have been taught to use these ethnic, regional and racial labels to cover up the real issue in America that the rich want keep hidden another 200 years—that we are a classist country. That one class owns pretty much the whole country these days and that all the rest are left to suck hind tit and pretend they are all members of something called “the middle class.” The only real middle class is that thin layer of commissars, lawyers, teachers, journalists, and other caterers to the empire, those people necessary to manage it and count the beans, dumb down the kids and lock up enough people to keep the privatized gulags in business.

Anyway, I assume you are referring the heartland white working class people who attend fundamentalist churches. Ever since around 1800 about one-third of white America has been fundamentalist Christians, about one-third of Americans have had a born again experience. The thing that is different now is that these churches have access to political power. They were welcomed across the church-state wall of separation by cynical GOP strategists to whom giving the Republicans another chance to sack Washington, loot the national kitty and maybe pull off a good oil raid in the Middle East, was more important than our constitution. Now that they’ve let John Calvin’s wooly beast into to tent, we find it chewing on the constitution and generally stinking up the joint—it’s not going to leave without a fight.

As to the last parts of your question: When it comes to embracing the church instead of a labor union, I can remember a time when the churches stood behind the labor unions. Have we learned to be helpless? Man, we are helpless. Capitalist conditioning has replaced citizenship with consumerism. I mean, what are you or I doing? I write a book so the global publishing chain of Bertelsmann makes more money; you and I both sit here on the Internet spewing electrons across circuit boards that keep Bill Gates and the stock brokers farting through silk while we preach to the choir who bought our books. There are far better alternatives. We could grab some axe handles and heat up the tar bucket and start to burn some shit down. That still works you know.

Joshua Frank: I’ve always thought that’d work.

Joe Bageant: But we won’t. Because we are all programmed to participate through purchase, whether it is my book at Barnes and Noble or the software that enables us to read CounterPunch. Or choose the candidate that has been preselected and purchased in advance by the people who have essentially made Americans into a nation of iPod implanted pizza drivers and well dressed lawn jockeys sitting in front of monitors on the empires electronic plantations.

Joshua Frank: So how can we change this political myopia?

Our involvement with politics, our political lives, are merely as spectators who listen to commercials for three years before the magical moment before we “cast our vote” by simply going shopping in the tiniest shopping space of all—the voting booth—with the most limited choices possible that can still be called a choice: two twin parties whose parents, the corporations, have to display them against different colored backgrounds so people can get a clue as to their difference. (“I am for fighting the war until the last dog is dead,” as opposed to “I am for pulling the troops out, but not until a few hundred thousand more dogs are dead. I don’t wanna be seen as weak on the dead dog thing.” Or my favorite, “We can’t leave now or there will be chaos?” What the fuck is it we have created there now?) Right now the owning class Westchester Country Club Democrats is offering us two flavors, Hillary Clinton (bitter vanilla) and Barrack Obama (Mocha hope.)

Soooo … What’s going on politically with the great beery redneck nation? Nothing. We don’t think about politics until the last half hour before time to vote. Then a sort of a heartburn grips our chests, and all the negative campaign ads, and the sound of Bill O’Reilly’s voice and last night’s beer and bratwurst and Hillary’s stern beady eyes drill in on us … preachers call down lightening bolts and fighter planes do a double roll over the desert … then suddenly an acidic clot curdles in our throat, we close our eyes and we projectile vomit all our fears and suspicions and prejudices and state injected messages in the direction of the party making the most noise right up until the last minute. That’s what we do down here.

What do ya’ll do?

Joshua Frank: Well, I grew up in Montana with rednecks aplenty. Most of my own family is small farmers who were forced to move to the little towns in the area because of the onset of industrial agriculture. They lost the land they worked. Most of them are still proud rednecks. I respect the work ethic, but not all the culture that goes along with it. Up in Big Sky country, folks know politicians lie, so they put their trust in God instead.

Pick up trucks. Gun racks. Elk hunting. Beer drinking. It’s a way of life there. I enjoy most of it. It takes some pretty damn rough times before people stand up and say, enough is enough! You’d think they’d be screaming from the mountaintops by now. But they haven’t because they don’t think they can do a damn thing about their lot. And that’s where you get a lot of that anti-government sentiment. The Freeman and the Unabomber. It resonates quite well. As it should. The state doesn’t stand up for the little guy, but for the big corporations and they know it. The elites, however, always seem to capitalize off of their collective weakness—mainly their inability to stand up in the face of power. But anymore, the mainstream “right” and “left” are almost one in the same when it comes to the fundamental economic issues of our times.

Anyway, this is supposed to be an interview with you. Not me!

Joe Bageant: I lived in northern Idaho for years and had a lot of truck with Montanans like yourself. And to me they are among the best people in this country, tough uncomplaining people, kinda like Southerners, but with far less racism (unless you happen to be an Indian in some cases). Once when I was trending bar on the reservation, a Montana cowboy led his horse right into the place and demanded a beer for his steed. He had been drunk for two days, driving south toward New Mexico with his horse trailer, down from Alberta, Canada, and was obviously looking for a good old time tension-releasing brawl. “Well sir,” I told him. “That horse ain’t old enough to drink.” “That horse is 18,” he replied. I peeled back the horse’s lips and checked his teeth. I had horses of my own and knew how to check their age. “That horse is nine years old,” I said. “Just about the age a good cow pony starts getting some real sense.” He threw back his head and laughed. The situation was defused and we sat there in the Bald Eagle Bar and jawed until closing time. A good, tough, brave man of the kind America doesn’t make anymore. Tipped me ten dollars, then went off to wrap himself in a blanket and sleep in his truck until first light.

At the same time though, there is a belief in authority, a reverence even, that is so typically American. America has never been a nation of true dissenters. Even during the Sixties. Don’t let the old newsreels fool you. You gotta remember that when those kids were gunned down at Kent State, one half of America was cheering and an even larger portion did not give a shit. But the footage was so shocking, and we actually had a rather liberal media back then, and so, like Twin Towers footage, it was shown over and over and written about until the message finally soaked in. But Americans for the most part are on the side of their own oppressor and like it that way. Heartland Americans were happy when the working man was shot down at Ludlow, and happy when the Bohunk and Pollack miners were gunned down at the Latimer mines (again, the rewriters of history have made it seem otherwise). The good people of the heartland were happy with the kangaroo courts that framed and murdered Joe Hill and Sacco and Venzetti. And today they are happy when they see police in black Kevlar beating down young radicals in Seattle and Old Jewish women in Miami protesting turning that city into a free trade zone labor gulag.

Joshua Frank: Your book has been put out by a major publishing house. As you note, these cats are in the business of making money, and I’m assuming they wanted to make your book palatable to the run-of-the-mill liberal audience. What was that process like?

Joe Bageant: For lefties it can be infuriating. My publisher is Random House, is owned by owned by Bertelsmann, the former Nazi German publisher that made massive profits from Jewish slave labor and published ant-Jewish propaganda for Hitler. It also owns Doubleday, Bantam, and a slew of other media around the world. So today we see the irony of scores of Jewish editors etc working for Bertelsmann, but this time instead of tattoos, they are sporting blackberries, worrying about theater tickets and treating their Salvadorian nannies like shit.

Anyway, big publishers Random House Crown roll the ball right down the middle of the aisle looking for a strike to sell the most books to the broad middle class. No leftie gutter balls. Let Seven Arrows have’em. On the other hand, Crown publishes Anne Coulter, which tells you something about the real middle road and what sells. Everyone must do that to keep their jobs and climb the ladder of the company, which constitutes the corporate brand allegiance that is their lives, livelihood and personal identity in the Empire. Their lives are the brand. The brand is their lives. As in, “I am an editor at Harper Collins, the one who did the Martini Book of Common Wisdom,” or “Hillary’s book,” or whatever.

At one end, you have the editors, many of whom care about the life of the mind but have internalized capitalist market driven values, and thus feel courageous when they really are not. At the other end you have the company management, who see all books merely as units. Naturally, in a system like that, the pull is always rightward toward profit driven and non-risky thinking. Consequently, the American reading public for idea based books, which is small as hell, thinks it is expanding its knowledge through reading when they buy books, when actually, all most want to do is see their viewpoints reaffirmed. But what really happens is that they are drawn more rightward by the narrowness of available choices in a marketplace that loves the homogeneity and standardization of thought which makes marketing much easier.

In all fairness though, I would be the first to say that a publisher like Random House seems to put energy, resources and talent behind you, once they are committed. Frankly, they put in more than I really care to deal with sometimes. But when I hear the horror stories of some very good writers working with small publishers and their limited resources, I know I have been fortunate that way. Lucky to have the editor, publicist and agent I have. Most writers would kill for what sort of landed in my lap, given that I was not looking to write a book in the first place. I try not to be an ingrate, but at the same time I am not at all impressed with this stuff. I might have been at your age, but not now. Thankfully, it has come too late. It’s rather like a beautiful woman coming to the bed of an 85-year old man. Delightful to behold, but no distraction from the path that took so long to hew through the jungle of false thinking and ill-focused passions.

I had the good standard middle class New York Jewish editor. She had the job of reconciling my cranky agrarian based redneck leftist thinking with the publishing environment and the marketplace as it is. I am a rather uncontrolled writer given to free association and distracting rants. When it comes to something as long as a book, I absolutely need an editor for guidance. Someone to say, “That sucks. It’s unreadable,” and make suggestions. Without her work, it would not be getting the glowing reviews it is getting so far.

Writer/editor relationships can get very personal as you know, and we had class issues, given was the chasm between our backgrounds. But I must say the editor made every effort to bridge that gap, once she got around to my book, when, at times, I simply refused to. Mostly when drunk and depressed by the glacial process by which books are published. To compound matters, time was running out for me. I was very ill with my lung disease at the time and was diagnosed as having about 18 months to live, which turned out to be somewhat wrong; I’ve got a few more years in me yet. So here I was sneezing blood, working 55 hours a week at a straight gig, and trying to write a book too while my editor had put me on the back burner so she could work on Barack Obama’s book. Needless to say, I was a very miserable camper during much of the process.

At the same time, the entire grisly process brought my editor and I closer together as human beings, and I now consider her among my good friends, even if our backgrounds have forever conditioned us in different directions. I shudder for the fate of her children in this world the same as I do for those of my adopted family in Belize.

As to Belize, I’ve pretty much got my scene together there and consider it my home, though what I will do for money in the long term, I do not know. Presently I am back here to cooperate in the promotion of the book, and will be here a few weeks longer. I’m beginning to understand that I will always be spending significant amounts of time here, if for no other reason than earning money. A lot has happened in the past several months. I began to live on $4000 a year, as I had vowed, which causes stress on my marriage and family life, as you would imagine. And now I have a deep regret for the trees wasted in the publication of my book and hate what my air travel to Belize does to the upper atmosphere, regarding global warming. If I ever do another book, I can try to do it on recycled paper, insist it be done by union printers, and then, as I do now, donate all the royalties except the $4000 to small-scale development projects. But frankly, I don’t have anything to say that is important enough to justify the damage done by publishing it. Nothing that cannot be said on the Internet with far less environmental damage. But who knows? Life has a funny way of making us eat every word.

Joshua Frank: What do the folks of your town, of which you write so frankly, think about the book?

Joe Bageant: Not much so far. The working class people in the book, who never buy or read books at all, seem rather mystified when someone exposes them to parts of it. They relish figuring out who is who and generally agree with its message about class in America. The town’s old families are pissed. Some have called me. One asked why I wrote such “mean things about this town’s leading families.” Leading families! Can you imagine that? Another told me there is “no such thing as class in Winchester. We are all happy and equal.” I just about choked on that one. They tell me the local newspaper is oiling up its guns for an attack. And some upper crust family is bound to try and sue me, I’m sure.

Joshua Frank: So when is this class war you write about going to come to a head, or has it already? I’m talking about blood in the streets and mansions on fire. Will there ever be a true class revolt in the United States, or will any sort of militant dissent be stopped dead in its tracks by the Feds?

Joe Bageant: I don’t think that will ever happen, but that doesn’t mean we shouldn’t keep up the fight. I think so-called terrorism and ecocide may tear down the system for us, though. Danger has no favorites. The good old days of “the teeming masses,” that sweat soaked, beer farting mob of working class Americans who didn’t have a pot to piss in, much less a credit card, but instinctively knew fascism when they saw it, are over. Seattle in 1999 may not happen in the states again. We have all become an artificial product of corporately “administrated” modern life.

Joshua Frank is co-editor of Dissident Voice and author of Left Out! How Liberals Helped Reelect George W. Bush (Common Courage Press, 2005), and along with Jeffrey St. Clair, the editor of the forthcoming Red State Rebels, to be published by AK Press in March 2008. Read other articles by Joshua, or visit Joshua's website.

The Fed’s Role in the Bear Stearns Meltdown
by Mike Whitney / July 2nd, 2007

The Bank for International Settlements issued a warning this week that the Federal Reserve’s monetary policies have created an enormous equity bubble which could lead to another “Great Depression”. The UK Telegraph says that, “The BIS — the ultimate bank of central bankers — pointed to a confluence a worrying signs, citing mass issuance of new-fangled credit instruments, soaring levels of household debt, extreme appetite for risk shown by investors, and entrenched imbalances in the world currency system.

The IMF and the UN have issued similar warnings, but they’ve all been shrugged off by the Bush administration. Neither Bush nor the Federal Reserve is interested in “course correction”. They plan to stick with the same harebrained policies until the end.

The “easy credit” which created the subprime crisis in mortgage lending has now spread to the hedge fund industry. The troubles at Bear Stearns prove that Secretary of the Treasury Henry Paulson’s assurance that the problem is “contained” is pure baloney. The contagion is swiftly moving through the entire system taking down home owners, mortgage lenders, banks, rating agencies, and hedge funds. We are just at the beginning of a system-wide breakdown.

The problem originated at the Federal Reserve when Fed-chief Alan Greenspan lowered the Feds Fund Rate to 1% in June 2003 and kept rates perilously low for more than 2 years. Trillions of dollars flowed into the economy through low interest loans creating a massive equity bubble in real estate which drove up housing prices and triggered a speculative frenzy.

The Feds’ “easy money” policy has disrupted the “debt-to-GDP” balance which maintains the integrity of the currency. By expanding circulation debt via low interest rates, Greenspan put the country on the path to hyperinflation and, very likely, the collapse of the monetary system.

The problems at Bear Stearns are the logical upshot of Greenspan’s policies. The over-leveraged hedge funds are a good example of what happens during a “credit boom”. Liquidity flows into the markets and raises the nominal value of all asset classes but, at the same time, GDP continues to shrink. That’s because the wages of working class people have stagnated and not kept pace with productivity. When workers have less discretionary income, consumer spending — which accounts for 70% of GDP — begins to decline. That’s why this quarters earnings reports have fallen short of expectations. The American consumer is “tapped out”.

The current rise in stock prices does not indicate a healthy economy. It simply proves that the market is awash in cheap credit resulting from the Fed’s increases in the money supply. Consumer spending is a better indicator of the real state of the economy than stocks. When consumer spending drops off; it is a sign of overcapacity, which is deflationary. That means that growth will continue to shrivel because maxed-out workers can no longer purchase the things they are making.

The underlying problem is not simply the Fed’s reckless increases to the money supply, but the growing “wealth gap” which is undermining solid economic growth. If wages don’t keep pace with productivity; the middle class loses its ability to buy consumer items and the economy slows.

The reason that hasn’t happened yet in the US is because of the extraordinary opportunities to expand personal debt. The Fed’s low interest rates have created a culture of borrowing which has convinced many people that debt equals wealth. It’s not; and the collapse in the housing market will prove how lethal that theory really is.

To large extent, the housing bubble has concealed the systematic destruction of America’s industrial and manufacturing base. Low interest rates have lulled the public to sleep while millions of high-paying jobs have been outsourced. The rise in housing prices has created the illusion of prosperity but, in truth, we are only selling houses to each other and are not making anything that the rest of the world wants. The $11 trillion dollars that was pumped into the real estate market is probably the greatest waste of capital investment in the nations’ history. It hasn’t produced a single asset that will add to our collective wealth or industrial competitiveness. It’s been a total bust.

The Federal Reserve produces all the facts and figures related to the housing industry. They knew that trillions of dollars were being diverted into a speculative bubble, but they did nothing to stop it. Instead, they kept interest rates low and endorsed the lax lending standards which paved the way for millions of defaults. Now the effects of their “cheap money” policies have spread to the hedge fund industry where hundreds of billions of dollars in pensions and savings are in jeopardy.

Alan Greenspan played a major role in the housing boondoggle. On February 26, 2004, he said, “American consumers might benefit if lenders provide greater mortgage product alternatives to the traditional fixed rate mortgage. To the degree that households are driven by fears of payment shocks but willing to manage their own interest-rate risks, the traditional fixed-rate mortgage may be an expensive method of financing a home.”

Greenspan tacitly approved the whacky financing which produced all manner of untested loans — including ARMs, piggyback loans, “no doc” loans, “interest only” loans etc. These loans are a break from traditional financing and have contributed to the increase in bankruptcies.

Millions of people who were hoodwinked into buying homes with “interest-only”, “no down” loans will now either lose their homes or be shackled to an asset of decreasing value for the next 30 years. They’ve been tricked into a life of indentured servitude.

A recent article in the Wall Street Journal revealed the extent of Greenspan’s involvement in the housing fiasco. Here’s an excerpt from the article:

“Edward Gramlich, who was Fed governor from 1997 to 2005, said he proposed to Mr. Greenspan in or around 2000, when predatory lending was a growing concern, that the Fed use its discretionary authority to send examiners into the offices of consumer-finance lenders that were units of Fed-regulated bank holding companies.

“I would have liked the Fed to be a leader” in cracking down on predatory lending, Mr. Gramlich, now a scholar at the Urban Institute, said in an interview this past week. Knowing it would be controversial with Mr. Greenspan, whose deregulatory philosophy is well known, Mr. Gramlich broached it to him personally rather than take it to the full board.

“He was opposed to it, so I didn’t really pursue it,” says Mr. Gramlich.

Still, Mr. Greenspan’s views did color the regulatory environment, facilitating growing concentration in banking and a hands-off approach to derivatives and hedge funds. That approach, broadly shared by both the Clinton and Bush administrations, is coming under increased scrutiny”. (Wall Street Journal)

So, Greenspan had the chance to “crack down on predatory lending” and he refused. Now millions of low income people are saddled with payments they have no reasonable prospect of paying off. How much of the present carnage could have been avoided if he had Greenspan done the right thing?

The “Not So Great” Depression
An article appeared this week in the UK Telegraph by Ambrose Evans-Pritchard which supports the theory that Greenspan’s “loose monetary policy” fueled a huge credit bubble, which is pushing the global economy towards a “1930s-style slump.”

The article quotes from a statement made by The Bank for International Settlements:

“Virtually nobody foresaw the Great Depression of the 1930s, or the crises which affected Japan and Southeast Asia in the early and late 1990s. In fact, each downturn was preceded by a period of non-inflationary growth exuberant enough to lead many commentators to suggest that a ‘new era’ had arrived”.

But today we face “worrying signs” of another economic meltdown.

The BIS said that they were “starting to doubt the wisdom of letting asset bubbles build up on the assumption that they could safely be ‘cleaned up’ afterwards”, (Greenspan’s method) and that, “while cutting interest rates in such a crisis may help, it has the effect of transferring wealth from creditors to debtors and sowing the seeds for more serious problems further ahead.’”

“The bank said it was far from clear whether the US would be able to ignore the consequences of its latest imbalances, ($800 billion per year) citing a current account deficit running at 6.5% of GDP, a rise in US external liabilities by over $4 trillion from 2001 to 2005, and an unprecedented drop in the savings rate. ‘The dollar clearly remains vulnerable to a sudden loss of private sector confidence.”’

The BIS referred to the toxic effect of the “$470 billion in collateralized debt obligations (CDO), and a further $524 billion in “synthetic” CDOs which have spread through hedge funds industry. These CDOs are the loans (many sub primes) which were bundled off to Wall Street and turned into securities which are highly leveraged in hedge funds for maximum profitability. As Bear Stearns is discovering, these CDOs are like roadside bombs; exploding without notice whenever the stock market suddenly dips.

The BIS also cautioned about the excess of “leveraged buy-outs (mergers) which touched $753bn, with an average debt/cash flow ratio hitting a record 5.4… ‘Sooner or later the credit cycle will turn and default rates will begin to rise.’”

The central banks around the world are increasingly worried that the Bush administration’s profligate spending and irrational monetary policies will trigger a global depression. The recent volatility in the stock market suggests that the credit boom is just about over. Once the liquidity dries up — stocks will fall sharply.

The Housing Slump
Yesterday’s housing data, shows that sales are still weak while inventory continues to grow. Existing home sales dropped 3% while prices dropped another 2.1%. Falling prices mean that cash-strapped home owners will not be able to tap into their home’s equity for other expenses. Last year, mortgage equity withdrawals (MEWs) accounted for $600 billion of consumer spending. This year, the amount will be negligible at best.

The media and the Fed continue to mislead the public about the magnitude of the housing bubble. Fed chief Bernanke assures us that the sub prime calamity hasn’t “spread to other parts of the economy” (tell that to Bear Stearns) and the media keeps cheerily reiterating that a “turnaround” or “soft landing” is just ahead.

These claims are ridiculous. Apart from the 80 or more sub-prime lenders that have gone “belly-up” in the last few months, the rickety collateralized debt obligations (CDOs) and mortgage backed securities (MBSs) are steamrolling their way through the stock market bowling down everything their path. Bear Stearns is just the first on the casualties list. There’ll be many more before the storm is over.

Fed-chairman Bernanke knows what’s going on. He was given a full rundown by “John Burns Real Estate Consulting that the national sales information for both new and existing homes, is “misleading and covering up a deep plunge of the housing sector.” The housing market is freefalling. Existing-home sales are down 22% in May and mortgage applications have fallen a whopping 18%…. In Florida home sales are down 34%, not 28% as NAR reported; Arizona sales are down 38%, not 28%; and California’s down 37%, not 24% as NAR reports.”

Down 37% in California!?!

Gadzooks! It’s a landslide.

As the defaults continue to pile up; the hedge funds will take a bigger and bigger pounding. It can’t be avoided. That’s what happens when bankers abandon traditional lending standards and lend trillions of thousands of dollars to people who have bad credit and lie on their loan applications.

Thousands of these same shaky sub primes loans have been wrapped up like the Crown Jewels and sold off to Wall Street as CDOs. Now they are ripping through the hedge fund industry like a tornado in a trailer park. The media has tried to downplay the damage, but its not hard to see what is really going on. According to Reuters:

“Banks doubled the amount of CDOs outstanding in the past two years to $2.6 trillion, including a record $769 billion sold last year, according to J.P. Morgan. These figures include funded and unfunded issuance. Pimco’s Bill Gross said there are hundreds of billions of dollars of subprime residential mortgage-backed securities (RMBS), derivatives on subprime RMBS and collateralized debt obligations (CDOs) that buy subprime RMBS and/or the derivatives on the RMBS — all of which he considers “toxic waste.”’

“$2.6 trillion”! That’s enough to bring down the whole economy. And, as Bear Stearns proves, the whole mess is beginning to unwind pretty quickly.

“Foreign investors have been the dominant buyers of these exotic debt instruments in recent years, owing to their insatiable demand for yield. ‘If investors start dumping them, oh boy, watch out for some massive credit widening,” said Dan Fuss, Vice Chairman at Loomis Sayles. (Reuters)

If the hedge fund industry follows the downward slide of the housing bubble, foreign investors will run for the exits. In fact, this may already being happening.

China sold $5.8 billion in US Treasuries in May; the first time they have dumped USTs on the market. This may be the first sign of “capital flight”—foreign investment fleeing the US for more promising markets in Asia and Europe. The greenback’s survival now depends on the generosity of foreign bankers. If they refuse to recycle our $800 billion current account deficit by purchasing US bonds and securities, then the dollar will sink like a stone and lose its place as the world’s reserve currency.

More Housing Blowdown
Last Friday, the stock market took a 185-point nosedive on the news that Bear Stearns was trying to raise $3.2 billion to rescue its battered hedge fund. According to the New York Times, however, Bear was only able to came up with “$1.6 billion in secured loans to bail out one of the 2 hedge funds”.

The funds are the latest victim of the sub-prime meltdown which Bernanke and Paulson assured us was “largely contained”. In fact, Paulson even said, “We have had a major housing correction in this country,” and “I do believe we are at or near the bottom.”

Anyone who believes Paulson should take a look the below chart. It illustrates that how loan “resets” will continue to pound the housing market for at least another year and a half getting steadily worse as inventory grows.

The disaster is so bad that even the realtors are beginning to tell the truth. As one agent noted, “It’s a bloodbath.”

But the debacle in housing is only the first part of a much larger problem — a global liquidity crisis. Banks and mortgage lenders have already begun to tighten up their lending practices and many have abandoned sub prime loans altogether. (20% of the housing market in 2006 was sub prime) Now the focus has shifted to the stock market, where banks are beginning to see that “risk” has not been properly calculated. That means that if more hedge funds collapse, the banks may not be able to cover the losses.

The Bear Stearns fiasco has had a chilling affect on lending. In fact, the New York Times reported on 6-26-07 that “After years of supersize private equity deals… the buyout boom may be about to hit a bump… Rising interest rates and tougher terms from investors may signal that private equity players will soon be struggling to continue reaping the outsize returns that have made the buyout business so lucrative.” (Private Equity Investors Hint at Cool Down” NY Times)

Liquidity is drying up in the private equity business. The troubles at Bear Stearns has changed the credit-landscape overnight. Bankers are nervous, money is getting tighter, and liquidity is vanishing.

“We know that these holdings are not unique to Bear Stearns,” said Professor Joseph R. Mason, co-author of a recent study warning of dangers in securities backed by home loans to high-risk borrowers. “It would be hard to find a Wall Street firm that hasn’t created similar funds.”

That’s right; the industry is waist-deep in these sub-prime time-bombs. Shaky loans and rising foreclosures threaten to knock the foundation blocks out from under the stock market and set off a wave of panic selling.

Could it have been avoided?

Perhaps, if there were better regulations on rating bonds and restricting leverage.

Consider this: one of Bear Stearns hedge funds took a $600 million investment and leveraged it 10 times its value to $7 billion. Their portfolio was chock-full of dicey CDOs and “illiquid assets” such as timber holdings in foreign countries and toll roads. These assets are difficult to price and nearly impossible to quickly auction off if the market suddenly takes a downturn.

It looked like Merrill Lynch & Co. was going to auction off $850 million of Bear Stearns CDOs this week, but backed off at the last minute. (They were reportedly only offered 30 cents on the dollar!) Once the hedge funds start selling these CDOs, then everyone will know how little they’re worth. That could trigger a wave of selling that could bring down the stock market. Even if that scenario doesn’t play out, the Bear Stearns incident ensures that CDOs in other hedge funds will be face a substantial downgrading that could take a big chunk out of their bottom line.

And, there’s a bigger fear on Wall Street than the fact that 2 hedge funds are headed into bankruptcy, that is, that a sudden tightening of credit will send the over-leveraged stock market into a downward spiral.

The market is particularly sensitive to any rise in interest rates or tougher lending standards. It’s become addicted to cheap credit and any break in the chain will cause equities to plummet.

Economist Henry C.K. Liu sums it up like this:

“The liquidity boom has been delivering strong growth through asset inflation without adding commensurate substantive expansion of the real economy. …. Unlike real physical assets, virtual financial mirages that arise out of thin air can evaporate again into thin air without warning. As inflation picks up, the liquidity boom and asset inflation will draw to a close, leaving a hollowed economy devoid of substance. … A global financial crisis is inevitable”. (“Liquidity boom and looming crisis” Asia Times)

In other words, the “virtual” wealth of Wall Street is a chimera which was created by the Fed’s inexorable expansion of debt. It can vanish in a flash if the sources of liquidity are cut off.

Puru Saxena draws the same conclusion in his article “A Gradual Transition”:

“Thanks to the Federal Reserve’s expansionary monetary policies over the past 5 years, US asset-prices have risen considerably; also known as the “wealth effect”. At the end of last year, the market capitalization of the US stock market rose to a record-high of US$20.6 trillion, matching the value of household real-estate, which also rose to a record-high at the same time. On the surface, this may seem like brilliant news, however you must realize that this “wealth illusion” achieved by an ocean of money and record-high indebtedness is only a consequence of inflation.”

Code Red: Subprime Chernobyl
We expect that the mounting losses in CDOs and the continuing defaults in the housing industry will precipitate a “severe credit crunch” which will end in a stock market crash. A report which appeared in the UK Telegraph appears to agree with this analysis. Lombard Street Research predicted that:

“Excess liquidity in the global system will be slashed. Banks Capital is about to be decimated, which will require calling in a swathe of loans. This is going to aggravate the US ‘hard landing”’ (“Banks set to call in swathe of loans” UK Telegraph 6-26-07)

Three of the main hoses which provide liquidity for the market have either been cut off or severely damaged. These are “securatized” subprime CDOs, corporate mega-mergers and hedge fund leveraging. Without these instruments for expanding debt, liquidity will dry up and stocks will fall. The period of “easy credit” will end in disaster.

We should now be able to see the straight line that connects the Fed’s low interest rates to the impending stock market meltdown. The problems began at the central bank.

Presidential candidate Rep. Ron Paul (R-Texas) summed it up best when he said:

“From the Great Depression, to the stagflation of the seventies, to the burst of the dot-com bubble; every economic downturn suffered by the country over the last 80 years can be traced to Federal Reserve policy. The Fed has followed a consistent policy of flooding the economy with easy money, leading to a misallocation of resources and artificial “boom” followed by recession or depression when the Fed-created bubble bursts”.

Mike Whitney lives in Washington state. Read other articles by Mike.

McMansions, SUVs, Mega-Churches and the Baghdad Embassy
Life Among Dim and Brutal Giants

by Phil Rockstroh / June 28th, 2007

In microcosmic mimicry of the plight of the besieged middle and laboring classes, my parent’s Atlanta neighborhood, as is the case with many others in the vicinity, is being destroyed, in reality — disappeared — by a blight of upper-class arrogance. The modest, post-war homes of the area are being “scraped” from the landscape as an infestation of bloated McMansions rises from the tortured soil. These particleboard and Tyvek-choked monstrosities loom over the remaining smaller houses of the area, as oversized and ugly as mindless bullies, as banal as the dreams of petty tyrants.

In the surrounding suburbs, in a similar manner as McMansions eclipse sunlight, throwing the adjacent houses into half-light, mega-churches eclipse the light of reason, leaving their congregations in an ignorant half-light of dogma and superstition. Of course, these true believer lunatics are wrong about everything, except, perhaps, for their elliptical apprehension regarding the arrival of proliferate cataclysms in the years to come. Oddly, although they promulgate dire warnings on the subject, they seem gleeful at the prospect of wide-spread suffering.

How could they not be? They’ve seized upon a fantasy that allows them to escape from the tyranny of their own life-suffocating belief system. Attempting to subdue the suffocating dread of their corporately circumscribed lives, they wish for the destruction of the entire planet. Hence, their escapist fantasy, by the necessity of narrative, is huge, outrageous — apocalyptic. The progenitor of their End Time tale is this: The believer’s emotional inflexibility begets a form of ontological giantism — a phenomenon that arises when one’s worldview is too small to explain the larger world. Therefore, a story must be created that contains violence and terror on such a massive scale that its unfolding would kill off the entire, problematic world. “That’s right world, there’s not enough room on this planet for both you and my beliefs. One of us has to go.”

Upon the nation’s roadways and interstate highways, the overgrown clown cars of the apocalypse, SUVs, Humvees, and oversized pickup trucks also evince hugeness to compensate for the feelings of those folks inside the grotesque vehicles of being crushed down by alienation and isolation — not only while on the road — but by the realities of an existence within a hapless, oil-dependent empire which is itself powerless against the changing realities of the larger world.

In the ranks of the exploiter class, the fat salaries of CEOs separate them further from the general population of the consumer state (that they take every opportunity to bamboozle) as the American public itself grows fatter and fatter in body mass, vainly attempting to sate an inner emptiness borne of their perceived helplessness before the predation of corporate culture.

Concurrently, in Baghdad, the U.S. embassy, which, when completed, will be the largest “diplomatic” compound on the planet is, in fact, an inadvertent monument to the mindless colossus the U.S.A. has become. The structure is as accurate as the art of architecture can be in its depiction of the spirit of a nation’s people. As big and bloated as our national sense of exceptionalism, it stands in the so-called Green Zone of Baghdad, shielding those who will be bunkered down within it — not only from the murderous madness unfolding outside its highly fortified walls — but from reality itself. A massive emblem of the arrogance of power, the embassy is a testament to how the noxious vapors of cultural self-deception can be made manifest in re-inforced concrete, armed watchtowers and razor wire.

Through it all, like some eternally slumbering Hindu deity, we Americans dream these things into existence. Far from blameless, we continue to allow the elites to exploit us; therefore, we enable and sustain their titanic sense of entitlement. In turn, we accept their paltry bribes and, as a result, our banal, selfish dreams have conjured forth George Bush from the zeitgeist. Ergo, Bush is a man whose impenetrable narcissism is so grotesque and ringed with fortifications, that all on his own he constitutes a walking analog of the American embassy in Baghdad.

In addition, we Americans continue to believe our fables of righteous power: Big is good, goes our John Wayne jack-off fantasy. Our leaders must be large: Only McMansion-like men, such as Mitt Romney, are acceptable. We believe Dennis Kucinich is too diminutive in physical stature to be president — with the length of his body being roughly the size of Romney’s head.

In turn, our national landscape is stretched to the breaking point: Cluttered upon it, gigantic islands of garish light torment the night, scouring away the stars, estranging us from imagination, empathy, and eros, and leaving us only with the insatiable appetites of consumerism. Thus, around the clock, inside enormous, under-inspected, industrial slaughterhouses and meat processing plants, underpaid, benefit-bereft workers ply their gruesome, monstrously cruel trade, then the butchered wares are transported by way of brutal, double and triple-axle trailer, diesel trucks over Stygian interstate highways to sepulchral supermarkets and charnel house restaurant chains. Insuring we flesh-eating zombies are provided with all the water-bloated, steroid-ridden meat and industrially farmed, pesticide-laquered vegetables and starches — The Cuisines Of The Living Dead — we could ever crave … uum, uum, it’s the Thanatotic yumminess of empire’s end. Try our convenient drive through window. Would you like us to super-size your order of commodified death?

Hyperbolic ravings, you say. America is not a culture in love with death.

Let’s see. Drawing upon just one example: The corpses of well over half a million dead Iraqis testify otherwise. Moreover, the continuing Iraqi resistance to our occupation speaks volumes as well. Yet still, most of us cannot hear their elegy of outrage over the din created by the parade of killer clowns that we have mistaken for the pageantry of nationhood.

How does one slow this juggernaut of psychosis and curb these acts of murder/suicide being perpetrated on a global scale? Truth is, we might not be able to stop it because this is what lies beneath our unlimited sense of entitlement and self-defeating arrogance: a death-wish that manifests itself as exceptionalism and may well destroy the nation by means of imperial overreach — which is, of course, the time-established method by which empires dispose of themselves.

Further, this state of affairs is exacerbated by the narcissistic insularity of our media elite. At the end of the day, it’s their tumescent egos that are distorting our societal discourse; their vanities and attendant self-serving pronouncements are little more than steaming cargoes of horseshit, carried and delivered by one-trick-jackasses — jackasses endowed with the singular skill of being able to read a teleprompter … Fred Thompson, your agent is calling: You have an important call from Washington, DC.

Notice this: The more permeating the rot becomes within the system’s structure the more huge and pervasive the edifice of media imagery will grow — and the more trivial its content will become. The closer we come to systemic collapse the more we will hear about celebrity contretemps. Cretinous heiresses and shit-wit starlets, with shoddy mechanisms of self-restraint, people the public imagination, because they carry our infantilism, embody our collective carelessness, and, in turn, suffer public humiliation, as we desperately attempt to displace, upon them, the humiliation of our own daily existence within the oppressive authoritarianism of the corporate state.

Correspondingly, there is a well-known (by those who care to look) link between fascism and corporatism. To Mussolini, the two terms were interchangeable. According to rumor, we defeated fascism, during the first half of the 20th century. Yet, at present, we spend our days sustaining a liberty-loathing, soul-enervating corpocracy. To live under corporatism is, in ways large and small, to be a fascist-in-training. Everyday, hour by hour, the exploitive, neo-liberal concept of work devours more and more of our lives. As a consequence, the true self within is crushed to dust and what remains rises as cultural squalls of low-level fear, with its concomitant need for constant distraction. As all the while, the psyches of the well-off (financially, that is) become inflated, gaudy and ugly; in short, internally, they become human versions of McMansions.

Freedom is a microcosm of the forces of evolution engendered by living in the midst of life — a mode of being that apprehends and is transformed by the beauty, sorrow, and wit of the world. Conversely, authoritarian societies are collectives of accomplished liars and lickspittle ciphers, where one must conceal one’s essential self at all costs and the soul falls into atrophy.

To what extent does authoritarian rule diminish both the individual and a nation? Simply, take a look around you and witness the keening wasteland our nation has become. Furthermore, our emptiness cannot be filled by any amount of wealth or power. This is the reason the obscene amounts of mammon acquired by the privileged classes is never — can never be — enough to satisfy them, for their inner abyss is boundless. In a similar vein, no amount of killing can sate a psychopath’s emptiness. Dick Cheney will scowl all the way to the boneyard, hoping he can ascend to heaven by scaling the mountainous pile of corpses he’s responsible for placing there.

In folk stories, when giants are about, drought and famine withers the land and starvation stalks its people. Accordingly, the ruthless giantism inherent to the Corporate-Military-Mass Media state has withered our inner lives, blighted our landscape, and left us powerless before a huge, demeaning system that devours our time, health and humanity.

The bone-grinding giants of the American corporate and political classes have shot the Golden Goose full of growth hormones, enclosed her in an industrial coop, and hoarded her voluminous output of eggs. Yet, nothing satisfies them.

Meanwhile, online, we struggle in a Jack in the Beanstalk Insurgency, hoping that from things as tiny and seemingly trivial as mere beans — our postings, exchanges and periodic meet-ups — the fall of tyrannical giants might begin.

Phil Rockstroh, a self-described, auto-didactic, gasbag monologist, is a poet, lyricist and philosopher bard living in New York City. He may be contacted at philangie2000@yahoo.com.