We the People Pay

terrorist-300x214gc2reddit-logoOff the keyboard of John Ward

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Publishes on The Slog on November 21, 2015


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ANALYSIS: Terror – who brought it upon us, and who is disseminating it today?

The Slog outlines an authentic step by step guide to how and why insane Jihadism has become widespread terror

rainsBrussels has been on ‘maxumum alert’ to my certain knowledge for three days….all shops are closed and every sporting event cancelled. An attack, we’re told, is ‘imminent’. Imminent is becoming one of those internet words like ‘free’: it’s a tricky one to interpret, given the reality.

Meanwhile, of the ten people besieged in the St Denis raid, er, seven have been released without charge. Spookily, the only persons killed were this week’s Mastermind winner, Abdelhamid Abaaoud, and his girlfriend or perhaps cousin but whom we now ‘know’ haha wasn’t a woman at all. As their coming back to life, regardless of sexual orientation, is not imminent, another trail of information and evidence has been lost: another Osama Bin Laden has been buried at sea.

We know Abaaoud was a mastermind, by the way, because he masterminded the Stade de France attack – you know, the one where they made themselves conspicuous by entering the ground half an hour late, were immediately spotted by security cops, and then blew themselves up…scoring a casualty total of precisely three. Yup, it takes a master of the Universe mind to devise that one.

We’re beginning to see emerging elements in the National State of Emergency declared by Hollande last week. The French National Assembly has awarded the Executive sweeping powers: the bill includes the right to tell ISPs to block websites – without any judicial review or court order. Police will no longer need a warrant to seize electronic devices without a warrant. So gung-ho is the Assembly, several even more draconian moves have been suggested – for example, criminalising the Act of even attempting to load one of the summarily banned websites.

French MPs have already voted in favour of an amendment allowing the Minister of the Interior to block any website “promoting terrorism or inciting terrorist acts” (no legal process for adjudication of promoting or inciting) and confine to house arrest individuals that present “serious reasons to think that their behaviour represents a threat for security and public order”….such to also be decided by security forces, not the Courts. So if I blog “what a pity the Schäuble assassin missed” I could be banged up before you could say lettres de cachet. If Nigel Farage stands up in the Brussels Parliament and suggests “one day that crook Verhofstadt is going to wind up hanging from a lamppost” we might even wind up sharing the house. This could be even worse than I thought.

Across the Channel in Target Britannia,  Foreign Secretary Phillip Hammond is saying that yes, Britain really is a target and yes, we’re alert. David Cameron his chosen this moment in particular to tell us that seven “major planned Jihadist atrocities” have been foiled in the UK this year, a statement as unqualified as it is unsubstantiated: will CallMeDave now be arrested by Theresa May as a suspected NVE? We don’t know, but we do know that without drawing breath, the Prime Minister confirmed that his government’s new Strategic Defence and Security Review will involve ‘thousands of armed troops flooding the streets if terrorists launch a Paris-style attack on Britain,  and a huge increase in the number of combat troops placed on high alert for a rapid response to a terrorist attack’.

But I’m afraid this leaves me asking one simple question: who exactly are the ones creating terror here? I mean, that is what terrorists do, right? They create a widespread sense of terror.

Before anyone leaps to a convenient misunderstanding of my motives, I should reiterate my very clear view that has not wavered in nearly fifteen years: pc in Britain, the US and Europe has from Day One turned a blind eye to the fundamentally intolerant, misogynist and aggressive nature of Islam. But if they hadn’t done this, we wouldn’t be in the self-perpetuating state of terror that besets us today….with an immigration policy that allowed in hundreds of extremist preachers and an estimated 15,000 Jihadist activists.

Unbelievably, we’re still at it: a pre-Christmas commercial planned for showing in  UK cinemas has been banned by the chains because it features the Lord’s Prayer. Apparently, ‘the cinemas rejected the commercial, saying that it could offend people of differing or no faith’. Hands up all those readers who think the Jews might have objected.

There is then, of course, the vexed (but entirely glossed over) question of where some of this ISIL worldwide well-drilled and ten-million strong at least headcases bought their weapons in the first place. Just over a month ago, it was revealed that the British government has identified Saudi Arabia as a “priority market” and is encouraging UK businesses to bid for contracts in, among others, security and defence. The Saudis have roughly the same in common with our values as ISIL: they are also known suppliers of weapons to the Jihadists.

ISIL’s other major supplier is Erodgan’s Turkey, whose leader Cameron licked all over in his ill-judged Ankara speech of 2010. Turkey is a member of NATO – a military organisation dedicated to the annihilation of Jihadist terrorism.

And of course, we mustn’t leave out France. Je suis Paris, when all’s said and done. Unfortunately, Syrian Jihadists frequently use the FAMAS assault rifle….supplied to them by France.

As the Independent pointed out two years ago, ‘France was instrumental, alongside the UK, in lifting the European Union arms embargo on Syria which would allow supplies to be sent to the rebels’. This was way back when the ‘bastards’ of ISIL were brave freedom-fighters against Bashar Assad.

Earlier this year, in fact, France24 gushed that ‘France’s booming arms trade has proved one of the few bright spots for the country’s struggling economy’;  Hollande conveniently ignored the advice of experts that ‘the influx of arms to Saudi Arabia and other Middle Eastern countries is worsening tensions in a region already ravaged by conflicts in Syria, Iraq, Libya and Yemen’.

And just to round off the survey, the US remains the biggest arms exporter to the Middle East, with €7.5 billion worth of weapon sales in 2014, while the UK and Germany are also major players.

This is how it works. Our governments follow amoral foreign and export policies, we the People pay. Western governments remain in awe of an energy form we should have moved past decades ago, we the People pay. Politically correct idiots ignore the dark sides of immigration, we the People pay. Establishments become completely beholden to the greed of bankers, we the People pay. Those of neoliberal dogma hire the government pipers to play their ideological hymn, we the People pay. Media moguls smear every real opposition to their cosy privilege, we the People pay. Childish fundamentalists with small dicks get cheap arms and gain ground among the disgruntled, we the People pay.

The path along which we are allowing ourselves to be herded is so well trodden – and so easily recognised by even the most inattentive student of history – it is beyond parody. I feel like a man face up under the guillotine, waiting for it to hurtle down.


The Anti-Empire Report #139

From the Keyboard of William Blum
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female jihadi

Published originally in The Anti-Empire Report May 23, 2015


Their precious young minds and our precious young minds

She was a redheaded rebel, the singer in the family, a trash-talking, tattooed 21-year-old wrapped up in a hip-hop dream of becoming Holland’s Eminem. Then Betsy found Allah. After her sudden conversion to Islam last summer, Betsy began dressing in full Muslim robes. By January, the once-agnostic Dutch woman, raised in a home where the only sign of religion was a dusty Bible on a shelf, began defending homegrown terrorists. … Denis Cuspert, a German hip-hop artist known as Deso Dogg who converted in 2010 and later joined The Islamic State [ISIS], delivers a rap-like chant portraying the path to jihad as a chance for empowerment, spiritual fulfillment, vengeance and adventure. … ‘The door to jihad is standing there waiting for you,’ says a Swedish convert to Islam in a video. ‘It is the fastest way to paradise.’ 

Tales told many times in recent years, all over Europe, at times in the United States. Parents and authorities are deeply distressed and perplexed. How can young people raised in the West – the freedom-obsessed, democratic, peace-loving, humanitarian, fun-filled West – join the Islamic State and support the public cutting off of the heads of breathing, living human beings? Each of us in our own way are lost souls searching for answers to the awful mysteries of life. But THIS? What life-quest does The Islamic State satisfy that our beloved West can’t satisfy? ISIS is unique in the world in making US foreign policy look good. The Defense Department and the State Department have special task forces studying the new enemy; the latter regularly puts out videos to counteract the many Islamic State videos.

I hope those researching the question look inwardly as well as at ISIS. How do young people raised in the West – the same West we know and love – coldly machine-gun to death more than a dozen Iraqis, men, women, children, reporters, absolutely in cold blood, in the video made famous by Chelsea Manning; but this of course is nothing compared to Fallujah with its two-headed babies, even three-headed, an eye in the middle of the forehead. The Islamic State has done nothing compared to what the United States did to the people of Fallujah. Can anyone name a horror in all of history more gruesome? Yes, there are some, but not many; and much of Fallujah was personally executed by nice, clean-cut, freedom-obsessed, democratic, peace-loving, humanitarian, fun-filled made-in America young men.

Here’s US Lieutenant General Ricardo Sanchez, in his memoir, April 6, 2004, the time of Fallujah, in video teleconference with President Bush, Secretary of State Colin Powell, and Secretary of Defense Donald Rumsfeld. “We’ve got to smash somebody’s ass quickly,” said Powell. “There has to be a total victory somewhere. We must have a brute demonstration of power.” Then Bush spoke: “At the end of this campaign al-Sadr must be gone. At a minimum, he will be arrested. It is essential he be wiped out. Kick ass! If somebody tries to stop the march to democracy, we will seek them out and kill them! We must be tougher than hell! This Vietnam stuff, this is not even close. It is a mind-set. We can’t send that message. It’s an excuse to prepare us for withdrawal. … There is a series of moments and this is one of them. Our will is being tested, but we are resolute. We have a better way. Stay strong! Stay the course! Kill them! Be confident! Prevail! We are going to wipe them out! We are not blinking!” 

“Years from now when America looks out on a democratic Middle East, growing in freedom and prosperity, Americans will speak of the battles like Fallujah with the same awe and reverence that we now give to Guadalcanal and Iwo Jima” in World War II. – George W. Bush, 2006 

Well, George, it’s either that or Fallujah was one of the key reasons for the rise of ISIS.

My point here is not that United States foreign policy is as barbaric and depraved as The Islamic State. It’s not. Most of the time. I simply hope to make it a bit easier to understand the enemy by seeing ourselves without the stars in our eyes. And I haven’t even mentioned what the United States has led the world in for over a century – torture.

The ever-fascinating and ever-revealing subject of ideology

Jeb Bush has gotten himself into trouble because, like all politicians running for office, he is unable to give simple honest answers to simple straightforward questions, for fear of offending one or another segment of the population. How refreshing it would be to have a politician say only what s/he actually believes, even if it’s as stupid as usual.

The brother of the previous president has been asked repeatedly: “Knowing what we know now, would you have authorized the invasion of Iraq?” At first his answer was “yes”, then at times “I don’t know”, even “no” at least once, or he’s refused to answer at all. Clearly he’s been guessing about which reply would win him points with the most people, or which would lose him the least.

This caused a minor uproar, even among conservatives. Right-wing radio host Laura Ingraham was moved to make a rare rational remark: “You can’t still think that going into Iraq, now, as a sane human being, was the right thing to. If you do, there has to be something wrong with you.”

Such discussions always leave out a critical point. Why did millions of Americans, and even more millions abroad, march against the war in the fall of 2002 and early 2003, before it began? What did they know that the Bush brothers and countless other politicians didn’t know? It was clear to the protesters that George W. Bush and Dick Cheney were habitual liars, that they couldn’t care less about the people of Iraq, that the defenseless people of that ancient civilization were going to be bombed to hell; most of the protesters knew something about the bombings of Vietnam, Cambodia, Laos, Panama, Yugoslavia, or Afghanistan; and they knew about napalm, cluster bombs, depleted uranium, etc. Those who marched knew that the impending war was something a moral person could not support; and that it was totally illegal, a textbook case of a “war of aggression”; one didn’t have to be an expert in international law to know this.

Didn’t the Brothers Bush, Hillary Clinton (who voted for the war in the Senate), et al know about any of these things? Of course they did. They just didn’t care enough; supporting the empire’s domination and expansion was a given, and remains so; no US politician gets very far – certainly not to the White House – questioning the right of American Exceptionalism to impose itself upon humanity (for humanity’s sake of course).

Consider the darlings du jour of the American Left, Senators Elizabeth Warren and Bernie Sanders. They very seldom speak out critically about US foreign policy or even the military budget. The anti-war/anti-imperialist segment of the American left need to put proper pressure on the two senators.

Mr. Sanders should also be asked why he routinely refers to himself as a “democratic socialist”. Why not just “socialist”? It’s likely a legacy of the Cold War. I think that he and other political figures who use the term are, consciously or unconsciously, trying to disassociate themselves from communism, the Soviet Union, Marxism, etc., all those things that are not good for you. (The word “socialist” once connoted furtive men with European accents, sinister facial hair, and bombs.)

It would be delightful to hear Sanders openly declare that he is simply a “socialist”. Socialism can be democratic; indeed, a lot more so than capitalism, particularly concerning the distribution of wealth and all the ramifications of that. Presented here are some relevant thoughts on these issues, from myself and others:

It’s only the socialists who maintain as a bedrock principle: People before Profit, which can serve as a very concise definition of socialism, an ideology anathema to the Right and libertarians, who fervently believe, against all evidence, in the rationality of a free market. I personally favor the idea of a centralized, planned economy. (Oh my God, a damn Commie!) Modern society is much too complex and technical to leave its operation in the hands of libertarians, communitarians, or anarchists seeking to return to a “community” or “village” level.

“Washington has always regarded democratic socialism as a greater challenge than totalitarian Communism, which was easy to vilify and made for a handy enemy. In the 1960s and ’70s, the favored tactic for dealing with the inconvenient popularity of economic nationalism and democratic socialism was to try to equate them with Stalinism, deliberately blurring the clear differences between the world views.” – Naomi Klein

“If it is true, as often said, that most socialist regimes turn out to be dictatorships, that is largely because a dictatorship is much harder to overthrow or subvert than a democracy.” – Jean Bricmont, Belgian author of “Humanitarian Imperialism” (2006)

Without a proclaimed socialist vision, radical change becomes too many different things for too many different individuals and groups.

“Call it democracy, or call it democratic socialism, but there must be a better distribution of wealth within this country for all of God’s children.” – Martin Luther King

The United States is so fearful of the word “socialism” that it changed the “social sciences” to the “behavioral sciences”.

If for no other reason than to save the environment, the world needs to abandon the capitalist system. Every day, in every spot on earth, in a multitude of ways, corporations are faced with a choice: to optimize profits or to do what’s best for the planet.

The great majority of people in any society work for a salary. They don’t need to be motivated by the profit motive. It’s not in anyone’s genes. Virtually everybody, if given the choice, would prefer to work at jobs where the main motivations are to help others, improve the quality of life of society, and provide themselves with meaningful and satisfying work. It’s not natural to be primarily motivated by trying to win or steal “customers” from other people, no holds barred, survival of the fittest or the least honest.

And what about this thing called “democracy”, or “majority rule”? Many millions marched against the invasion of Iraq before it began. I don’t know of a single soul who marched in favor of it, although I’m sure there must have been someone somewhere. That lucky soul was the one they listened to.

Finally, the question being asked of Jeb Bush and others is not the best one. They’re asked: “Knowing what we know now, would you have authorized the invasion of Iraq?” A more important question would be: “Knowing what we knew then, would you have authorized the invasion of Iraq?” And the answer should be “no”, because we knew that Saddam Hussein had destroyed his weapons of mass destruction. This is very well documented, from diverse sources, international and Iraqi, including Saddam himself and his chief lieutenants. 

The American Mainstream Media – A Classic Tale Of Propaganda

“When an American warplane accidentally struck the Chinese Embassy in Belgrade in 1999 during the Kosovo campaign …”

These words appeared in the Washington Post on April 24, 2015 as part of a story about US drone warfare and how an American drone attack in Pakistan in January had accidentally killed two Western aid workers. The Post felt no need to document the Belgrade incident, or explain it any further. Almost anyone who follows international news halfway seriously knows about this famous “accident” of May 7, 1999. The only problem is that the story is pure propaganda.

Three people inside the Chinese embassy were killed and Washington apologized profusely to Beijing, blaming outdated maps among other problems. However, two well-documented and very convincing reports in The Observer of London in October and November of that year, based on NATO and US military and intelligence sources, revealed that the embassy had been purposely targeted after NATO discovered that it was being used to transmit Yugoslav army communications. The Chinese were doing this after NATO planes had successfully silenced the Yugoslav government’s own transmitters.  The story of how the US mainstream media covered up the real story behind the embassy bombing is absolutely embarrassing. 

Over and above the military need, there may have been a political purpose served. China, then as now, was clearly the principal barrier to US hegemony in Asia, if not elsewhere. The bombing of the embassy was perhaps Washington’s charming way of telling Beijing that this is only a small sample of what can happen to you if you have any ideas of resisting or competing with the American juggernaut. Since an American bombing campaign over Belgrade was already being carried out, Washington was able to have a much better than usual “plausible denial” for the embassy bombing. The opportunity may have been irresistible to American leaders. The chance might never come again.

All of US/NATO’s other bombing “mistakes” in Yugoslavia were typically followed by their spokesman telling the world: “We regret the loss of life.” These same words were used by the IRA in Northern Ireland on a number of occasions over the years following one of their bombings which appeared to have struck the wrong target. But their actions were invariably called “terrorist”.

Undoubtedly, the US media will be writing of the “accidental” American bombing of the Chinese embassy as long as the empire exists and China does not become a member of NATO.

Personal stuff

I’m part of a panel at the annual Left Forum in New York, Saturday, May 30, noon to 1:50, Room 1.89: US Wars of Aggression & Islamic Jihad: What is the Bigger Danger and How Should the Antiwar Movement Respond?

Other panel members are David Swanson and Alan Goodman.

John Jay College of Criminal Justice
524 W. 59th St (Between 10th and 11th)

On May 20 the Office of the Director of National Intelligence released a list of 39 English-language books recovered during the raid that reportedly killed Osama bin Laden. Noam Chomsky and I are the only two authors on the list with two books.

As some of you may remember, in January, 2006 bin Laden, in an audiotape, recommended that Americans read my book Rogue State. This resulted in the US media discovering my existence for a week. You can read the full story in my book America’s Deadliest Export: Democracy (pp. 281-84). 




  1. Washington Post, May 7, 2015
  2. Ricardo Sanchez, Wiser in Battle: A Soldier’s Story (2008), pages 349-350
  3. Associated Press, November 11, 2006
  4. William Blum, America’s Deadliest Export: Democracy, pp. 61-2
  5. The Observer (London), October 17, 1999 (“Nato bombed Chinese deliberately”), and November 28, 1999 (“Truth behind America’s raid on Belgrade”)
  6. Extra! Update (magazine of Fairness and Accuracy in Reporting [FAIR], New York), December 1999; appeared first as solitary article October 22, 1999 (“U.S. Media Overlook Expose on Chinese Embassy Bombing”)

William Blum is an author, historian, and renowned critic of U.S. foreign policy. He is the author of Killing Hope: U.S. Military and CIA Interventions Since World War II and Rogue State: A Guide to the World’s Only Superpower, among others.

Any part of this report may be disseminated without permission, provided attribution to William Blum as author and a link to this website are given.


Ides of December

Off the keyboard of Steve from Virginia

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Published on Economic Undertow on December 31, 2013


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The future is always obscure to us. We see it after it emerges in the past … any troubles the future bears become apparent only long after it is possible to do something about them.

This is the time of year when there is a blizzard of predictions. Most of these turn out to be wrong:

(Posted last year) “One thing to keep in mind, the world’s central banks are fully committed already. If/when there is a deleveraging event, there is little more that the central banks can do other than lend from their discount windows. Administrative interest rates are nearly zero in the US, Japan, the EU and in UK. They cannot be lowered further. Also, Japan, US, EU and UK central banks are now credit providers for both governments and large sectors of their respective economies. The (small) incentives the private sector had to lend have disappeared. It also means that promissory notes/IOUs for loans made in the past — which are the collateral for the central banks’ loans — are in diminishing supply. The central banks can lend additional amounts to governments and the private sector, but the positive shock of such lending is diminished and the danger of central banks making unsecured loans increases.

Unsecured lending by the central bank is a danger because leverage is the reason why the commercial lenders have failed in the first place. When the central banks take on all the private sector unsecured loans or they offer their own loans in excess of collateral they become super-sized, insolvent commercial lenders. The consequence is no effective lenders of last resort. Depositors look to remove funds from banking system which in turn accelerates system insolvency. Nobody wants to be caught where the only effective collateral is deposits (currency) and where claims against currency exceed it.”

This isn’t a prediction but an observation. It is always true …

Will central banks be tested in 2013? Maybe not but that certainly does not mean clear sailing.

Not quite a prediction but central banks were indeed tested in 2013. They had little choice but to retreat as their open-market operations reached the limits of usefulness or offered diminished returns.

– In 2013, look for the ongoing bank/deposit runs underway in Europe to accelerate and for Spain and Greece to default (Greece is already in Selective Default according to the Standard and Poors rating agency). The depositor runs indicate that central bank has been making unsecured loans and that system is insolvent rather than individual banks.

Only partially correct. There was a great ‘silent run’ out of the euro system toward US stock market. Ditto runs out of Japan and China.

– In a shocker, look for the French government to seek an IMF-EU bailout.

Incorrect … France was able to continue to borrow from the private sector and avoid bankruptcy proceedings.

– France’s automobile- and banking sectors will collapse in 2013.

Incorrect. These French industries are under tremendous strain.

– EU fuel consumption will decline sharply in 2013. Regardless of the price for fuel in Europe, it will be too high.
Screen Shot 2013-12-31 at 9.36.44 AM
This is certainly correct and will be reflected in the next year’s BP Statistical Review (Mazama Science).

– German auto production and sales will also decline … perhaps not as sharply as makers in other western European countries … as Chinese and US car buyers vanish.

Not quite correct. Americans stepped up and bought more cars and trucks, so did the Chinese. This offset tepid sales in the EU.

– Look for auto sales, registrations and production to decline in western Europe while Eastern European manufacturers will continue to hold steady or decline more slowly than their western counterparts. The eastern European manufacturers have a wage advantage over the counterparts and a local market that has not been completely saturated. Furthermore, these manufacturers are not dependent upon sales to China (Germany) or the US (Japan) or to southern European countries such as Spain and Greece … as are the car makers in France and Italy.

Not quite correct. Europeans did not buy as many cars as the ‘recovery’ in Europe has been confined to the well-off and finance markets. However, access to China and US markets was a life saver for automakers during 2013.

– As long as the European Central Bank lends there will be no pressure for any country to leave the euro-zone and (re)introduce their own currency. However, if any one country abandons the euro, all of them will be effectively gone as Germany will be the second country out the door. Europe’s liabilities are currently the shared burden of the ‘EU’ but will be effectively lodged against Germany if the EU cracks … Germany is one of the few countries in Europe with any money. The Germans will not invest it in European ‘solidarity’ that no longer exists.

Correct. The ECB continued to lend although credit multipliers have collapsed across Europe creating both a liquidity trap and dire, delfationary conditions in the countries across the South.

– Look for the politics in Europe to become more conflicted as the governments endeavor to restart chimeric ‘sustainable’ growth and fail miserably. The economic problems on the Continent can only be solved by stringent conservation, not attempts to waste more resources, faster. Europe cannot afford the resources.

Correct. Notable is the increase of neo-Nazi parties across Europe, generally blaming immigrants and non-nationals for economic problems.

– Angela Merkel will easily win her re-election bid as the main opposition party is unable to find a candidate who can pass the sniff test. Merkel will remain in charge even if the Eurozone falters and Germany exits.


– Segments of the populations of Spain, France, Greece, UK and in many eastern European countries will descend further into poverty, with food- and fuel shortages and homelessness.

Correct. The segment of EU society that has not suffered is the ‘investor class’.

– Look for more weather ‘events’ in 2013 including more severe drought and flooding. The pressure on governments to ‘do something’ about climate change will increase … Europe, China and India will respond by burning more coal …

Correct. This has been the year of ‘super-smogs’ in China and India as well as destructive cyclones in India and Philippines. The establishment response has been denial … and burning more coal.

– Look for higher prices for grains due to bad weather. Humans have to buy and drive cars to keep economies alive. Humans have to buy and eat food to keep themselves alive: the marginal human will choose paying for food at any price … versus paying for expensive/useless cars.

It is hard to say whether this prediction is true or false. Bad weather affected consumers more than it did producers world-wide = less pressure on food prices.

– The US government will propose a minuscule carbon tax of $10 per ton along with a ‘cap and trade’ system that rewards energy speculators and big polluters.

Incorrect. The US government lied about energy and climate and did nothing else but subsidize the fossil fuel industry and give credence to climate change deniers.

– Look for at least two wide-area gasoline/fuel shortages occurring in the US as preludes to permanent shortages occurring in 2014. The prices needed to bring fuels to market are becoming unaffordable by rapidly impoverished Americans.

Also incorrect. Creeping poverty eliminating fuel consumers has kept US prices in check. So has the ‘Incredible fuel supply glut caused by fracking’ … What kept upward pressure on fuel prices was US purchases of goods from China and India with Wall Street credit; this in turn subsidized fuel waste in these countries.

– Look for fuel prices on spot and futures markets to generally decline (as customers continue to go broke).

Generally correct.

– Look for Japan’s Shinzo Abe government to fail over its pro-nuclear power policies. The nuclear industry is completely discredited in Japan, ‘Shinzo Abe 2.0′ will be a failure like the first version.

Incorrect. Abe hasn’t failed yet but the cracks are visible.

– Look for Japan to have a funding crisis next year: such a crisis has been predicted for the past twenty years but 2013 will be the year when the prediction becomes reality. The Bank of Japan will be unable to fund the government plus the country’s massive debts by itself. That the establishment cannot imagine a change from the current state of affairs indicates a change is imminent. The difference between next year and the past is Japan’s declining electronics industry and tepid car sales. The outcome is an decreasing foreign trade surplus, which has been the means by which Japan has financed itself.

Correct to some degree. Japan is being funded by its central bank-as-conduit for the private sector in the place of overseas customers. Japan is going broke, it just isn’t there yet.
Japan mfg 122312
Figure 1: from the OECD, noting the secular decline in both the Japan auto industry and manufacturing in general. A business can borrow against its own account(s) such as credit lines or consumer credit (if an individual). A business can borrow against the accounts of its customers (when they borrow to buy the business’ products), against the accounts of the state (by direct credit subsidy, a tax benefit or by way of currency issue) and against the accounts of overseas customers (by way of foreign exchange). Japan has been able to borrow from foreign customers and undercut competitors: now the customers are broke or going.

Still correct.

– In light of the foregoing, Japan will do everything within its power to depreciate the yen to support its flagging car- and electronics industries’ exports: the Bank of Japan will lend without restraint.


– The other major economic powers will attempt to depreciate their own currencies by offering more central bank loans. The biggest issue for 2013 is how long can the economies function when sole provision of credit is by central banks … and when there are no real lender(s) of last resort?

Correct. Attempts have been made but all have failed as the cost of money is outside the reach of central bankers, being set at the world’s gas pumps by millions of motorists buying fuel with money every single day.

– For this reason, gold prices will hold up relative to other commodities which will will tend to follow the price of crude oil.

Incorrect. Gold has been the sole collectible asset that behaves as an agricultural commodity.

– US Congress will not agree to tax increases by January 1, the sequestration process will take effect the following day. Thousands of Federal government employees are set to be furloughed as the Congress struggles to resolve related debt ceiling/revenue issues in a politically palatable way.

Correct, although sequestration has turned out to have only marginal effect on government spending.

– The US debt ceiling will be reached at the end of January (approximately) and the tedious discussion will take place regarding increasing US debt and by how much. The Congress will ultimately cobble together a can-kicking ‘solution’ that lifts the government’s debt ceiling while leaving the US debt burden largely unaltered. The debt is an unproductive claim against economic output … the debt can only be serviced by more borrowing. The US public sector deficit finances the private sector’s surplus. The US cannot increase output to effect the debt as increases are borrowed, the alternative to borrowing is default … the US economy is trapped.


– Look for the Chinese economy to continue to unravel as its overseas customers find it difficult to borrow.

Correct. China faces a credit crunch in 2014.

– Look for more repressive measures in China as its downturn effects workers in cities rather than farmers losing property rights. There will be more riots and work stoppages followed by crackdowns.

Incorrect. The biggest problem in China in 2013 turned out to be air- and water pollution.

– There will be more business bankruptcies in China and capital flight as Chinese tycoons take whatever dollars they can find and run.

Correct about bankruptcies and correct about capital flight out of China.

– The Syrian government of Bashar al-Assad will fail with US-supported militant jihadis gaining ascendency. This in turn will give a reason for the US to intervene and destabilize the country further.

Incorrect. The war in Syria appears to be winding down as combatants run out of human- and other resources needed to continue.

– Look for Salafist consolidation in Egypt. That Salafi- and Shiite extremism are the only coherent, ongoing anti-modern enterprises reflects a world-wide failure of imagination.

Incorrect. Egypt has returned to military dictatorship and the Salafists have been crushed.

– As US military involvement decreases in Afghanistan, look for compensating increased involvement in Somalia, Yemen, Uganda, Kenya, Mali, Democratic Republic of Congo, Nigeria, southern Africa, Venezuela, Honduras, Bolivia and elsewhere.


– Look for more diplomatic- and military crises in South China Sea between China, Vietnam, the Philippines and India; between China and Japan over the Sea of Japan; between Iran and the West in the Persian Gulf; between Russia, Norway and Canada over the Arctic Ocean. All of these disputes — plus US military operations in Africa — concern petroleum and mineral resource claims.

Correct. Look for more aggression in 2014 in these areas as well as in Central Asian republics and in Africa.

– Argentina will default in 2013.

Incorrect. Argentina did not default … but it will in 2014!

– Canada will have a banking crisis as the worth of real estate in areas of the country outside of Vancouver, BC, will plummet. The government will be forced to bail out its major banks.

Incorrect. Economic Undertow continually underestimates the ability of the establishment to prop up the status quo.

– Australia will likewise have a banking crisis due to declining real estate prices and an over-leveraged banking system.

Incorrect, see above.

– US real estate prices are now in a short-term quasi-bubble peak and will decline over the course of 2013.

Incorrect. The real estate ‘bubble’ is still inflating across the US. Higher interest rates and the absence of a shadow banking network are making short work of it.

– US natural gas prices will increase due to declining output in shale plays. The cause will be less drilling activity and declining prices for gas liquids and stock prices of gas drillers (New York Times):

“… while the gas rush has benefited most Americans, it’s been a money loser so far for many of the gas exploration companies and their tens of thousands of investors.”


Correct. There is a shake-out underway in the ‘gas patch’ as drillers switch to oil- and other liquids plays. Gas is uneconomical at current prices.

– The recent increase of US oil output will level off. This will be ‘a big shock’ to the public which has been promised increased production and lower prices. There will be declines in conventional oil fields to offset gains from tight-oil deposits. Any gains in high-priced export market will be more than offset by losses in domestic markets as customers cannot meet the higher world price.

This is hard to tell as good data is not available. The establishment will do whatever it can to avoid the truth about our energy situation.

– Russian petroleum production will continue to decline: keep in mind, the arc of Vladimir Putin’s political career has paralleled the output of Russian oil fields.

It is hard to say whether this is correct or not. Any changes in Russian Federation output are very small.

– Kurdistan will make a deal with arch-enemy Turkey to ship its oil and turn away from dealings with the Shiite Iraqi government. The Iraqi government lacks the military horsepower to have its way with the Kurds, the decline of petroleum revenue will weaken the Iraqi government further.


– Israel will not attack Iran in 2013. The country cannot afford a major war because the Israeli’s sponsor America cannot afford one. At the same time, any significant petroleum shortage will be blamed on Middle Eastern suppliers, if a war is necessary to provide cover for politicians in Washington, one will be started.

Correct. The US has begun rapprochement with Iran antagonizing the Saudis and Israelis.

– The steady unraveling of the … economy will continue. Both bonds and stocks in the US will be largely unchanged over the course of the year, largely due to ‘capital’ flight from Europe and the Far East. Given large-scale central bank lending, the credit spreads for European sovereigns and the UK will narrow somewhat. Japan credit costs will climb as the need for credit will be greater than what the Bank of Japan can provide by itself.

Largely correct: citizens around the world became poorer as they exhausted their meager supplies of credit. Meanwhile, the US- and other bourses reached new, all-time highs. This was a consequence of ‘closed-loop’ lending by finance institutions to themselves to support stock Ponzi schemes. Credit spreads did indeed narrow in the EU but did not change in Japan.

– A wildcard would be gunmen shooting up a police station in the US instead of a school. Government would be exposed as vulnerable, the militarization of the police would be demonstrated to be a failure. Putting police into fortresses as a reaction would make them even less effective, would further isolate government police power. There is a reason for militant attacks on police stations overseas: they work.

Incorrect. Gunmen attacked the vulnerable, there was no political action to speak of other than the rise of extremist hard-liners and neo-Nazis in Europe and elsewhere.

– 2013 will be the year of the Marginal Human: among other things, Mr. and Ms. Marginal will have less purchasing power.

Correct. The decline of purchasing power on the part of ordinary citizens has been notable, with the exception of credit-driven purchases of new cars by Baby Boomers.

Only a little more than half-right with some ambiguity due to incomplete data or activities not yet fully ripened. The undercurrent of unraveling is plain to see behind the scrim of media-sphere happy-talk and propagandistic ‘Good News’. Everywhere, the can is being kicked … there is the taint of desperation in the air.

Coming up next: predictions for 2014!

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