The Good, the Bad, & the Takfiri

Off the keyboard of Steve from Virginia

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Published on Economic Undertow on June 29, 2014

Discuss this article at the Economics Table inside the Diner

Oscar Wilde famously observed that, “Life imitates art”. Fast forward a hundred years from Wilde’s Belle Époque; art is dead and life imitates Netflix. Everything the West thinks it knows about the Arab world it learned from “Lawrence of Arabia”. Ironically, everything the Arabs think they know about both the West and the Arab world itself has also been learned from … “Lawrence of Arabia”!

The Near East in all its voluptuous backwardness is distilled into a three-hour, technicolor smorgasbord: the man-love, the billowing drapery, the cynical- yet eagerly credulous American media, the fluttering banners, the stirring and improbable dashes across the desert; the blowing up of motor vehicles, the casual barbarism, masochism, escapism, sadism, voyeurism; overblown romantic posturing and charisma; the megalomania/religious indoctrination and the cult of personality = Iraq.

Lawrence_of_ArabiaThe character Lawrence lives the school-boy’s dream; a ‘Tintin’ leading the vengeful Mu’min horde from the back of a camel. “No prisoners,” warbles Lawrence; when he isn’t cooking up a revolution as a hobby, he’s back in England having conversations with rabbits.

The power of pop lies in its ability to reduce everything to a flat surface; to a tape loop and a beat. There are no independent actors, agents, subjects or objects; only processes which grind toward conclusions like clockwork. Participants receive their fifteen milliseconds of fame: in exchange they surrender whatever identities that they might possess to take on roles that fashion dictates, becoming robots driven by the ‘artificial intelligence’ of process. To escape the boxes that the process demands, robots build more boxes; to become free, they enslave themselves. In the pop-culture miasma we create for ourselves, we have the choice to be Wile E. Coyote or nothing at all. Individuality evaporates; we march our camels in lock step over the edge of the precipice, we have no choice, it’s in the script, it’s what the camel is programmed to do; to hang in the air for a few seconds before vanishing.


Lawrence of Arabia Part Two


WARNING: pornography; “Lawrence of Arabia Two” by ISIS Inc. ( Every member of the US Congress should be required to watch this video, then take a test afterward. Question Number One: what happened to the money? Where in the name of Allah is the $25 billion dollars spent by the US since 2003 to train and equip the Iraqi Army? Where is the accountability?

The Iraqi military is so inept it defies criticism: the soldiers are little more than targets; no wonder they run away. The entire US enterprise in Iraq is a gigantic control fraud, as it has been from the beginning of the US ‘conquest’ in 2003.

Iraqi government is the latest in the long line of klepto-proxies installed by Washington in countries overseas; their purpose is to service the fraud and to keep the oil- and dope flowing. The government is inept to the degree that US policy makers insist on restructuring as a condition of military aid. Washington’s insistence pushes the Iraqi government closer to Iran. Washington finds itself stranded, with no good choices but to deal with militants or incompetents.

This is not a movie, folks!

Debtonomics 101: In order to gain petroleum fuel, a customer somewhere has to pay for it. This takes money which in our world is credit/debt. People point to central banks but they cannot create ‘new money’, that is, they cannot make unsecured loans. Central banks are collateral constrained. Only private-sector finance can make unsecured loans … as they do so they become insolvent.

If the central bank makes unsecured loans or takes the defective assets of the private sector as collateral, it becomes insolvent like a private sector bank. The outcome is no lender of last resort = bank runs. This is occurring in Argentina and Venezuela right now … also Japan.

What determines oil drillers’ costs is geology, what matters is drillers’ costs relative to all the other costs within the economy. Every new barrel costs the drillers more energy and materials — money — to extract every day.

What we do with oil after we have it in hand is non-remunerative: we drive big metal boxes in circles on flat petroleum surfaces between gas stations. Consumers cannot meet the cost of fuel or the cars, roads, military machines, credit or other car-related junk by driving cars. To meet drillers’ increasing real costs the customers must borrow … more every day. Just like drilling, credit has exponential costs because the only way to retire and service the ballooning debt is to borrow more:


 photo 5d8c68a9-786c-4f0e-9c21-e5f76f1fd683_zps06b26769.png


… a lot more … something on the order of 7- or 8 hundred trillion dollars! Cars are expensive we just don’t have a handle on how costly they really have turned out to be.

The economy is a closed system, in bookkeeping terms costs on the expense-side of the ledger must equal returns on the other: (Expenses) – (Returns) = zero. (Expense of fuel + Expense of credit) – (Returns on fuel) = 0 …

(E1 + E2) – (R) = 0

Fuel use is supposed to pay for everything but it cannot even meet its own expenses; ‘use’ is non-remunerative circling. We have to borrow a large portion of our returns in addition to what we borrow to meet total credit- and fuel costs. No wonder we are broke! Our economy cannibalizes itself: in an attempt to keep pace with costs the robotic process ‘sells’ itself more mouths while adding to the debt pyramid at the same time.

Loans are finance system losses, finance cannot retain its own losses and remain in business. These must be allocated elsewhere; Iraq has found itself as a sink for finance system losses that it did not agree to take on. At the same time, Iraq is stuck with its fuel industry costs arising from depletion and more difficult extraction regime. The Iraq government cannot effectively pass these costs/losses onto others: the country is insolvent. What is underway in Iraq right now is a ‘run’ against the country’s assets, (Michael Schwartz via Tom Engelhardt):

The oppressive regime of Saddam Hussein was racked with insurgency, and when vicious repression failed, it delivered a portion of the vast oil revenues to the people in the form of government jobs, social services, and subsidized industries and agriculture. The oppressive United States occupation was racked with insurgency precisely because it tried to harness the country’s vast oil revenues to its imperial designs in the Middle East. The oppressive Maliki regime is now racked with insurgency, because the prime minister refused to share those same vast oil revenues with his Sunni constituents.


Someone has to pay for both fuel waste and credit — take on finance system losses — and do so by borrowing. Cutting through the tangle of proxies and their various puppet-masters leaves the petroleum customers in the West and their imitators as ultimate financiers. Imitators have to include Iraqis themselves: unable to bear costs themselves or pass them to others by peaceful means, they resort to warfare.

If you drive a car you are funding ISIS.

Along with Ukraine and Argentina, Iraq is one more fiercely ugly place-of-the-moment where fantasy and reality collide. The West and the United States in particular are caught in a contradiction of its own making. The West requires resources from the Middle East and elsewhere to produce economic expansion. The West’s fuel payments provide funding messianic non-state actors that threaten the West itself. Put another way: if you drive a car you must buy fuel, when you buy fuel you fund ISIS and growing constellation of similar groups.

Because the West’s fuel payments must be borrowed; the cost of borrowing threatens the West from the other direction. More costly credit makes it more difficult to destroy the militants: failing to destroy makes them more proficient. Our waste + borrowing + warfare cycle has created a Frankenstein monster that nobody can control.

It’s important to view what is underway in the world right now in both developed and developing countries through a petroleum prism. Economic distress in the OECD and elsewhere is a consequence of petroleum consumption. Political and social distress is a product of declining economic fortunes. The rise of militancy in developing countries is a consequence of both consumption and meddling proxy politics, particularly as played by major consuming countries.

The only reason events in Iraq matter at all is because of the West’s petroleum dependence. We need gas because our economy ‘grows’ by monetizing automobile waste; once burned the fuel is gone forever, new supplies are always required.
Screen Shot 2014-06-29 at 9.02.36 AM

Minimalist ‘Triangle of Doom’ by Chris Skrebowski, ODAC; from a presentation by Matt Mushalik
– Blue line: Brent price going up at $10 per annum
– Red line: affordable price with efficiency increase of 3% per annum; Crossover period: 2014

Americans tie themselves into knots blaming religion, regional backwardness, vendettas, the color of the president, everything besides our wasteful, non-negotiable lifestyle. Religion is indeed to blame; the religion of ‘modernity’ that pretends there are no limits to our God-like greed.

The proliferation of militants indicates our non-negotiable lifestyle is untenable; that we need to do something else. We don’t need to become militants ourselves but instead, honest regarding our wasteful resource dependency. The next step is stringent resource conservation and husbandry. The US needs to cut its petroleum consumption at once, by half if not more: doing so would defund aggressive petro-states such as Russia, Iran and Saudi Arabia; it would also cut colossus China’s waste down to size as they depend entirely on dollar credit. Doing so would also undermine proxies such as ISIS that depends on willingness of the West to buy fuel from any source regardless of how corrupt or violent.

The alternative to conservation is catastrophe: ‘conservation by other means’™.

What is taking place in Iraq is a reaction against American-style colonialism and pseudo-democracy. Maliki’s outreach to Shi’ite militias speaks for itself: there is no state, Maliki is not a part of any state, he seeks to create his own version of ISIS, to challenge for that group’s administrative- and political space as if he is another crazy Englishman on a camel. He cannot possibly succeed: any government in Baghdad will be seen as the arm of Washington, even ISIS itself.

Washington is roundly hated by citizens in a country that the US has effectively ‘bombed into the stone age’ … then lavished with artillery. What America proposes as the ‘solution’ to the America-created ‘militant problem’ is more bombing and artillery. Americans see Iraq as a giant gas pump, with Iraqis as little more than cockroaches to be stepped on and swept aside. Heaving into view is the American establishment, looking to exercise this prejudice further; it needs the gas, there are automobile interests to protect along with real estate, finance, construction … the economy itself.

Prejudice will not advance any interests besides those of militants in Iraq and elsewhere who see themselves as cogs in a destructive process with nothing to lose.

Since 2008 industrial modernity has presented the human race with an array of choices of increasing difficulty: to drive a car or ‘do something else’: drive or gain a college education, drive a car or obtain medical care. We choose the car and shove its costs onto increasingly unaffordable education and medical care. With time and petroleum depletion, the choices become more difficult: to drive a car or have a job, drive a car or live in a house … live inside, to live in a nice town. We chose to drive and add layers of denial. Choices are becoming fierce and existential: drive a car or have something to eat, drive a car or have some fresh water … drive a car and allow countries like Greece, Syria, Yemen to descend into warfare and collapse … China, Japan … France. In the background, the Four Horsemen are making themselves ready to ride … If you drive a car you should watch ‘movie number two’ one more time. It’s the cost of your car and it is coming to a driveway near you.

Knarf plays the Doomer Blues

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