AuthorTopic: How the World Works: Part I  (Read 1464 times)

Geoffrey Chia

  • Guest
How the World Works: Part I
« on: August 08, 2015, 02:32:21 AM »

Off the keyboard of Geoffrey Chia

Follow us on Twitter @doomstead666 Friend us on Facebook

Published on the Doomstead Diner on August 7, 2015

Visit the New Diner News Page for Daily Updates from around the Collapse Blogosphere

HillarysNewHumanitarianWars-600x610

Discuss this article at the Geopolitics Table inside the Diner

A BEGINNER'S GUIDE TO HOW THE WORLD REALLY WORKS

PART 1: IMPERIALISM, THE GREAT GAME AND PETROPOLITICS

Geoffrey Chia is an Australian physician who has written many provocative articles including "The Brisbane Institute is a Brisbane Prostitute". The reader is encouraged to fact check for yourself everything written here.

The Pax Americana: a dream turned into nightmare

Once upon a time in fairytale land not long ago, there existed an empire which proclaimed itself the beacon of truth, liberty and democracy in the world, the last best hope of the world. Even though this empire, this collection of "United States", occupied just the mid portion of the Northern one of the two continents named America, they simply called themselves "America", as though the other people who lived on the American continents did not count. This empire declared that order, stability and prosperity in the world were best maintained by the Pax Americana, a term which admittedly did flow off the tongue better than the "Pax USAana". The USA had certainly earned the gratitude and respect of untold millions worldwide for their help in turning the tide of World War II and defeating the evil tyranny of the Axis powers. The fall of the Berlin wall in 1989, the end of the Cold War and the subsequent fragmentation of the totalitarian USSR seemed to herald a bright new dawn for the humanity. Just when we thought that systematic genocide had been banished into the dark depths of history, the Balkan conficts of the 1990s uncovered acts of "ethnic cleansing" by Serbs1 and brought to light the brutalisation and starvation of minorities in concentration camps, imprisoned merely because of their ethnicity or religion2. When the US under Clinton led NATO to bomb the Serb militia to protect the victims of such atrocities, we once again witnessed the USA acting as a force for good. Christian nations rising to the defence of Muslim victims, a humanitarian act never before witnessed in history. It seemed as though the USA was championing a future for universal human rights based on secular principles, irrespective of race or religion. It seemed as though the Americans were becoming all that they claimed they were meant to be.

And then the twin towers fell in 2001, to our utter horror and dismay. Our hearts went out to the families and friends of the Americans who were so callously murdered by this unspeakably despicable criminal act. Indeed, we wished to stand side by side in solidarity with all Americans. Such apparent mindless terrorist thuggery forced us all to ask the question: Why? Why? Why?

A deeper look at history

For those of us seeking explanations and willing to ask the hard questions, an honest study of world history is necessary. Examination of the broader sweep of well documented and well validated (but not well publicised) historical facts reveals a picture quite different from the official narrative taught in schools and churned out by the mainstream AngloAmerican media.

This essay looks at history not along linear timelines, but instead analyses important concepts, which are grouped together under relevant headings. Rote learning of history by mindless memorisation of dates is useless. A proper understanding of history can only be achieved by analysing the cultures, mindsets, motivations and strategies of the various participants within the appropriate geographic (and even climatic) contexts. History must also be understood in the context of competition for energy and resources.

The greatest contribution of Western civilisation to the world was undoubtedly the Scientific Method. Science is the best tool we have to work out objective reality, often to an extremely high level of mathematical precision. Objective reality is the same no matter what culture you belong to, E=MC2 no matter where you are or who you are. Science by itself is amoral. Whether the discoveries of Science are used for good or evil are determined by whether or not one is guided by an ethical framework. Even though haphazard attempts at logical and rational enquiry into Nature had been attempted by many other cultures in history, the systematic principles of the Scientific Method were indisputably discovered by and refined by the West. Application of scientific findings to technological inventions, combined with the methods of mass production, led to the Industrial Revolution and subsequently the "Green"3 Revolution, with spectacular results (both spectacularly good and spectacularly bad).

Some historians claim the West invented democracy, rule of law and social justice ideals, however those are not valid claims. The earliest documented records of organised democratic societies may possibly trace back to ancient Mesopotamia (fragmentary inscriptions) but can certainly be traced back to ancient India4 , well before Greece. Many pre-Columbian North American tribes commonly employed democratic principles in their governance (among the Six Nations5 in particular). They invented the use of the "talking stick", enabling each participant to freely express their views in a discusssion circle without interruption, before subsequently casting their votes. Codified rules of law can be traced back to ancient Mesopotamia, with similar strong traditions in ancient India and China, well before ancient Rome. The underlying principle of social justice, the "Golden Rule", that we should treat others according to how we ourselves would like to be treated, was universally advocated in all ancient cultures, most notably written down in the Analects of Confucius, centuries before a similar corollary was purported to have been expressed by some guy from Nazareth.

The memory of world history in the West only seems to extend back to the rise of Western civilisation6. They choose to ignore the fact that the largest land empire in history was actually established by the Mongols. They choose to ignore the fact that a century before Columbus, vast ocean going navies had been established by the Chinese. They choose to ignore the fact that during the dark ages of Europe, it was an Islamic Empire which represented the bastion of knowledge, intellectual enquiry, artistic and architectural achievement and cultural tolerance in the Western world, extending as far as Spain during the Omayyad Caliphate.

The largest land empire in history was that of the Mongols, who almost never lost in battle. They were highly organised, ruthless and cruel. Before 1250 CE they had overrun Hungary, Poland and Croatia, had sacked Kiev and were hammering on the gates of Vienna. They had devastated the Rus (or land Vikings), whose abiding visceral dread of the Mongols lives on in Russian lore to this day. In 1241 they inflicted simultaneous crushing defeats upon the Germans near Breslau and upon mixed European cavalry near Buda. The outlook appeared hopeless for Europe. Then it all stopped. The sudden death (from a drinking binge) of the Grand Khan at the time, Ogedei, required that all the generals withdraw back to Karakorum in Central Asia to work out the succession. Europe was saved by a chance event. The Mongols ultimately decided to cease their Western expansion and to consolidate their occupation of China and India which were the most advanced and productive cultures, the main sources of wealth in the world at the time. A rational decision, to avoid imperial overreach and not to overextend into peripheral territories which were relatively worthless then (Europe). The Mongols who settled in India and China learned to appreciate the fineries of those cultures and adapted themselves to life there.

As time went by, the Chinese eventually expelled the Mongols, shored up the Great Wall to keep them out and established the Ming dynasty. During this eastern rennaissance, the Chinese built vast fleets of ships which undertook multiple expeditions to southeast Asia, India and Africa (probably no further, despite the claims of Gavin Menzies). The first Ming fleet, consisting of 27,000 troops in hundreds of ships, voyaged in 1405, almost a century before Christopher Columbus and his three small vessels. The Chinese had invented paper, printing, the compass and large ocean going ships7 innovations the philosopher Francis Bacon later cited as being essential for the subsequent Western domination of the world (however he did not acknowledge their origin). The Chinese had also invented gunpowder, which they did not bother to significantly weaponise. After the seventh Ming voyage in 1433, they suddenly stopped. They too chose to avoid imperial overreach. They decided that they had sufficient resources within their own country. They were not interested in seizing lightly defended real estate overseas, nor in enslaving foreigners. They had enough at home, and enough is as good as a feast.

The Mongols, after expulsion from China, eventually lost their historical ferocity. In the longer term, it seemed to be the adoption of Tibetan Buddhism which finally transformed the Mongols into the peaceloving, gentle and hospitable people we know today. Arguably it was this religion, originally from India, which ultimately conquered and pacified the Mongols.

The above are two examples of massive empires which voluntarily ceased expansion and decided to live within their means. They understood that being too greedy could be counterproductive.

Whether we consider the Spanish conquistadors who indiscriminately slaughtered Central and South American natives, or the Belgian colonists who amputated the hands of the children of African slaves who failed to meet plantation quotas, it is clear the subsequent European colonists were driven by their sense of God given entitlement and by limitless greed, with disdain for other cultures. The British declaration of Australia as "Terra Nullis" and their classification of Aboriginals as "fauna" who were to be indiscriminately shot on sight, was a particularly sickening example of such disdain. John Howard's refusal to acknowledge such history during his time as Prime Minister, (what he called the "black armband view") was a reflection of his persistent colonial racist attitudes. Kevin Rudd's much appreciated apology to the Aboriginal stolen generation as soon as he took office showed that despite his faults, Rudd was at heart a decent man who strived for true reconciliation.

The Japanese in World War II were considered by some to be even more brutal and cruel than the European Imperialists. Indeed the same John Howard who refused to apologise to the Aboriginals for European colonial atrocities, demanded an apology from the Japanese for their war atrocities against European Australians. This exemplified Howard's two faced hypocritical racist mentality. However the Meiji restoration, which paved the way for subsequent Japanese industrialisation, Imperial expansion and aggression, was in fact originally triggered by the bullying behaviour of US Commodore Perry's "gunboat diplomacy"8. Japan was bullied and in turn became a bully.

Some may argue that the bad old days of murderous Imperialism are all in the past, that we now live in a wonderful new world of enlightened mutual regard for everyone's dignity. Steven Pinker promotes the idea that we will all eventually end up holding hands, skipping through fields of daffodils singing Kumbaya, like some kind of CocaCola advertisment. Pinker is a useful pseudointellectual talking head for the mainstream establishment, who lulls the public into complacent somnolescence: everything will be just fine and dandy, just go with the flow.

At the level of interactions between Nation States, echoes of old Imperial aggression, sabre-rattling and brinkmanship resound louder today than ever before, even though today's Power Blocs may be somewhat differently aligned. Unfortunately the mainstream populations of the Industrial West of today and the AngloAmerican Empire in particular, continue to view the world through their own ethnocentric lens of entitlement (for themselves) and the plunder and exploitation (of others) which are "necessary" to maintain the Western Industrial lifestyle. A neocolonial mindset, or perhaps the same old colonial mindset which never went away.

The toxic legacy of colonialism continues to this day. It is impossible to understand the state of our modern world without understanding the history of European colonisation and Petropolitics.

The Great Game: an introduction

The Great Game was started by the European Imperial nations but eventually came to be dominated by the US Empire (Japan was an intermittent player). The Great Game was all about acquiring and exercising power. Certain personality types crave power over others and over the world. To them, power is the most intoxicating and addictive drug imaginable and they can never get enough of it.

Specifically the Great Game was about expanding and securing your own sphere of influence while keeping in check or undermining your rival's sphere of influence. It was also about preventing the rise of future potential rivals such as a Pan Arabic or Pan Islamic Bloc.

The apparent triumph of the US over the USSR in the nineties prompted the American neocon Francis Fukuyama to write a book titled "The End of History". To him it was Game over, the US had decisively won and all other nations would then model themselves after America in perpetuity, end of story. As we have since seen, he not only has egg on his face now, he is buried under a huge mountain of omelette.

The Great Game was the way by which the major powers maneuvered, postured and fought to carve up the world to suit themselves, whether militarily, politically or economically, often using bogus justifications such as opening the world to "free" trade by despicable acts such as trafficking opium into China, or by "bringing civilisation" or "bringing Christianity" or "bringing democracy" to nsert name of country being invaded here eg Iraq>. Only since its industrialisation has China become a significant player, whether for ill or good. A game implies an enjoyable recreational activity. However in the context of Imperial Machiavellian skullduggery, the flippant use of the word "game" takes on an Orwellian hue which belittles and dismisses the horrific suffering experienced by the victims of warfare and exploitation. It may be a fun game to those psychopaths who order drone strikes from their armchairs in Washington, but it represents death or dismemberment to those "collateral damage" victims on the receiving end. It may be a fun game to those EU bankers who impose austerity on the Greeks, but it represents deprivation and hardship to those victims on the receiving end.

The major difference between the Great Game being played today compared with that played the last century, is that it is now operating in a background of fast declining high EROEI energy sources (or High Net Energy Sources which I have abbreviated to Hi-NES see appendix), not to mention the exponential decay of natural capital, such a deteriorating chaotic climate and a dying, polluted ecosystem plagued by mass extinctions. We are now playing the game of "last man standing" as described by energy expert Richard Heinberg. Of course it is a fool's game because the last man standing will inevitably also drop dead immediately after the penultimate fatality, leaving behind a resource depleted, environmentally devastated, hothouse planet.

It is essential to understand the basic principles underlying thermodynamics, Peak Oil, Climate Change and Ecological Destruction, in order to understand why and how our formerly stable world is unravelling now. Similarly it is essential to learn the past histories and motivations of the Great Game players (and in particular Petropolitics) in order to understand how it is being played out now and to anticipate possible consequences for the future.

Some people (primarily Fox News watchers) find it impossible to understand why they, the "good guys", the "leaders of the free world", the "defenders of liberty and freedom", are so hated by all those feckless and ungrateful foreigners. They cannot explain the rise of Islamic terrorism other than in the simple minded terms such as the "clash of civilisations" or they simply regard the terrorists as evil or insane. If simple explanations are all they can understand, then let us advise them with simple aphorisms: eg when you point a finger at others, remember you have three of your own fingers pointing back at you. Or perhaps something from the Bible: look to the mote in your own eye before accusing another.

Experienced, informed and thoughtful ex-CIA analysts such as Chalmers Johnson, Robert Baer and Valerie Plame have summarised the origins of contemporary Islamic terrorism in one word: blowback. Others might call it bad karma.

A terrible humanitarian crisis is now unfolding in sub-Saharan Africa, much of it a legacy of the Great Game, now overlaid with climate change stresses and epidemics of infectious diseases. However we in the Industrial West don't care about that and we don't care about them. They are not important to us unless they threaten to "invade" our country in derelict boats or on floaty pool toys, to grab a share of "our" pie.

Middle Eastern Petropolitics

ME map

We are mainly interested in the Middle East, where the largest reserves of conventional oil (= Hi-NES) are still to be found. Saudi Arabia has the largest reserves, then Iraq, then Iran. Similar considerations apply to conventional natural gas reserves in countries such as Qatar, the country with the highest per capita income in the world, however we will omit natural gas issues from this discourse to avoid further complicating an already complex story. We will not examine in detail the issues involving unconventional oil (or low EROEI or low net energy sources) here, apart from saying that the pursuit of Lo-NES is a madman's delusion, the last desperate act of a drowning man grasping at straws.

Basic background information:

The portrayal by the Western media of the "person of Middle Eastern appearance" as a hairy, turbaned, dark skinned Arab Muslim terrorist would be laughable if it did not have such serious implications for (lack of) peace in our world. To the unwashed American public, those Middle Easterners are all the same. Ignorant Americans did not know or care that 15 of the 19 Al-Qaeda hijackers from 9/11 were Saudi Arabians (and the mastermind, Osama bin Laden was Saudi Arabian). Ignorant Americans sought mindless "revenge" against any Ay-rabs they could conveniently vent their rage on. They stupidly believed the Cheney/Bush lies about the "war on terror" and WMDs in Iraq, leading to the invasion of Iraq in 2003. Saddam Hussien's secular leaning Baathist administration was in fact bitterly opposed to Al-Qaeda. Saddam, originally America's puppet, was indeed a murderer and brutal dictator, but this never bothered the US until he became a loose cannon. Before he invaded Kuwait in 1990, Saddam actually sought clearance from the US ambassador to Iraq at the time, April Glaspie, who amazingly expressed "no opinion", which Saddam interpreted as a green light. He was therefore surprised by the subsequent violent US reaction and realised that the US could not be trusted. After being repulsed from Kuwait he decided to do his own thing. The last straw for the Neocons was when Saddam decided to sell his oil in Euros, which would undermine the US Petrodollar. On the eve of Gulf War 2 in 2003, Saddam agreed that international weapons inspectors could have free reign to look for WMDs anywhere and anytime in Iraq, however the US ignored that offer and invaded anyway, putting the lie to the claim that the US invasion was about Iraqi WMDs. Of course, no WMDs were ever found.

It is important to try understand how the various peoples of the Middle East view themselves, to try to grasp some sense of their self-identity, if one is to attempt meaningful engagement with them.

Iranians speak Farsi. They regard themselves as Aryan. Their sense of history dates back thousands of years, to the glory days of the Persian empire. Their original religion was Zoroastrianism, although they were long ago converted en masse by force to Shi'ite (or Shi'a) Islam and most Iranians identify themselves accordingly today. Such was the persecution faced by the remaining recalcitrant Zoroastrians in antiquity that most had to flee to India. Mumbai has long since benefited from a thriving Farsi community.

The term "Arab" refers to a cultural-linguistic group, not a religious group. Arabs are considered a "semitic" ethnic group (hence ethnically similar to Jews). They speak Arabic and read and write Arabic script. They live mainly along the North African and Eastern Mediterranean coasts and on the Arabian peninsula (where Mohammed, himself an Arab, was born in 570 CE).

Although most Arabs are Muslim, a significant proportion are in fact Christian (with some Druze and other minority religions). Many Arab Christians eg Syrian Christians can trace their Church histories back to long jQuery(document).ready(function($){jQuery(function(){jQuery("#msg_82468").css("overflow-y", "hidden");});});

« Last Edit: August 08, 2015, 05:00:30 AM by Surly1 »

Offline Surly1

  • Administrator
  • Master Chef
  • *****
  • Posts: 16143
    • View Profile
    • Doomstead Diner
Re: How the World Works: Part I
« Reply #1 on: August 08, 2015, 05:11:09 AM »
Interesting article and a good read. Wish it didn't end in the middle of a sentence. I tried- briefly- to find the original to fix it but I could not find a linkback.

"A terrible humanitarian crisis is now unfolding in sub-Saharan Africa, much of it a legacy of the Great Game, now overlaid with climate change stresses and epidemics of infectious diseases. However we in the Industrial West don't care about that and we don't care about them. They are not important to us unless they threaten to "invade" our country in derelict boats or on floaty pool toys, to grab a share of "our" pie.

With every story that moves about third world refugees hitting the shores of Italy or Greece, and with every nativist bleating by Trump and others about "immigration" (enough already, the country needed by grandparents but now the current, unpleasantly brown crop are all rapists and gangbangers-in-becoming), the proof of Chia's assertion of "blowback" is revealed in stark relief.
"It is difficult to write a paradiso when all the superficial indications are that you ought to write an apocalypse." -Ezra Pound

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 38585
    • View Profile
Re: How the World Works: Part I
« Reply #2 on: August 08, 2015, 05:31:50 AM »
Interesting article and a good read. Wish it didn't end in the middle of a sentence. I tried- briefly- to find the original to fix it but I could not find a linkback.

Unfortunately, the SMF here has a character limit which Geoff's article exceeded.  the Full Article appears on the Blog.

RE
Save As Many As You Can

Offline Petty Tyrant

  • Cannot be Saved
  • Sous Chef
  • *
  • Posts: 4573
    • View Profile
Re: How the World Works: Part I
« Reply #3 on: August 08, 2015, 01:23:35 PM »


With every story that moves about third world refugees hitting the shores of Italy or Greece, and with every nativist bleating by Trump and others about "immigration" (enough already, the country needed by grandparents but now the current, unpleasantly brown crop are all rapists and gangbangers-in-becoming), the proof of Chia's assertion of "blowback" is revealed in stark relief.

Pardon my ignorance but im not clear what you mean here Surly,
Do u mean the blowback is from those against illegal immigration only,  against all resettlement of refugees as processed through UNHCR, from refugee supporters,  or from the illegal immigrants themselves? and what form does it or will it take... how expressed , violently or peacefully?

voting for Donny would be peaceful expression as would  the immigrants voting against him. "Dey took yer jerb!" is not so far from turning violent especially when TPP starts, and what of the statistics getting quoted for numbers of murders in border states as a percentage?
« Last Edit: August 08, 2015, 01:31:26 PM by Uncle Bob »
ELEVATE YOUR GAME

Offline Surly1

  • Administrator
  • Master Chef
  • *****
  • Posts: 16143
    • View Profile
    • Doomstead Diner
Re: How the World Works: Part I
« Reply #4 on: August 08, 2015, 02:03:09 PM »


With every story that moves about third world refugees hitting the shores of Italy or Greece, and with every nativist bleating by Trump and others about "immigration" (enough already, the country needed by grandparents but now the current, unpleasantly brown crop are all rapists and gangbangers-in-becoming), the proof of Chia's assertion of "blowback" is revealed in stark relief.

Pardon my ignorance but im not clear what you mean here Surly,
Do u mean the blowback is from those against illegal immigration only,  against all resettlement of refugees as processed through UNHCR, from refugee supporters,  or from the illegal immigrants themselves? and what form does it or will it take... how expressed , violently or peacefully?

voting for Donny would be peaceful expression as would  the immigrants voting against him. "Dey took yer jerb!" is not so far from turning violent especially when TPP starts, and what of the statistics getting quoted for numbers of murders in border states as a percentage?

I probably wasn't terribly clear, UB.
Probably poorly expressed shorthand for a larger thought.

The anti-immigrant sentiment in the US has a direct parallel to that almost exactly 100 years ago in the US. There has always been a nativist strain in American life, and it finds voice from time to time in anti-Irish and anti-German riots (the Know Nothings of the 1850s), as well as sporadic acts of violence directed at every group of come-heres ever since. To say nothing of lynching, that favorite sport of the entitled whites in the south.

We're really good at forms of nativism that target primarily at 'first-generation' immigrants, prior generations being covered in virtue (since they are our parents and grandparents.

I was thinking of the US as a smaller subset of the larger debate, where blowback from US foreign policy (which is to pit warring factions against one another everywhere across the globe, the better for them to kill one another off) is resulting in refugees from Syrac and Africa. The costs of which will be borne by the lucky recipients in southern Europe.

People who start out welcoming can find, after several years, their resources fully tapped and their patience stretched to breaking. This is what is happening right now in Europe. And this is before wholesale climate refugees fleeing in search of water, which is baked in the cake and Coming To A Theatre Near You.

I conflated all this, and it probably wasn't clear. Thanks for asking.
"It is difficult to write a paradiso when all the superficial indications are that you ought to write an apocalypse." -Ezra Pound

Offline Palloy

  • Sous Chef
  • ****
  • Posts: 3754
    • View Profile
    • https://palloy.wordpress.com
Re: How the World Works: Part I
« Reply #5 on: August 08, 2015, 09:38:28 PM »
It is impossible for the TV-watching public to know what the "extremist Arabs" think, because we were never allowed to hear the words of their leader, Usama bin Laden.  Of course it has been on the internet for a decade, if you know where to look for it:

http://www.aljazeera.com/archive/2004/11/200849163336457223.html
Full transcript of bin Ladin's speech
1 Nov 2004



<snip>
I say to you, Allah knows that it had never occurred to us to strike the towers. But after it became unbearable and we witnessed the oppression and tyranny of the American/Israeli coalition against our people in Palestine and Lebanon, it came to my mind.

The events that affected my soul in a direct way started in 1982 when America permitted the Israelis to invade Lebanon and the American Sixth Fleet helped them in that. This bombardment began and many were killed and injured and others were terrorised and displaced.

I couldn't forget those moving scenes, blood and severed limbs, women and children sprawled everywhere. Houses destroyed along with their occupants and high rises demolished over their residents, rockets raining down on our home without mercy.

The situation was like a crocodile meeting a helpless child, powerless except for his screams. Does the crocodile understand a conversation that doesn't include a weapon? And the whole world saw and heard but it didn't respond.

In those difficult moments many hard-to-describe ideas bubbled in my soul, but in the end they produced an intense feeling of rejection of tyranny, and gave birth to a strong resolve to punish the oppressors.

And as I looked at those demolished towers in Lebanon, it entered my mind that we should punish the oppressor in kind and that we should destroy towers in America in order that they taste some of what we tasted and so that they be deterred from killing our women and children.

And that day, it was confirmed to me that oppression and the intentional killing of innocent women and children is a deliberate American policy. Destruction is freedom and democracy, while resistance is terrorism and intolerance.
The State is a body of armed men

Guest

  • Guest
How the World Works: Part II
« Reply #6 on: August 14, 2015, 02:04:00 AM »
[html]


   Off the keyboard of Geoffrey Chia



   Follow us on Twitter @doomstead666

   Friend us on Facebook



   Published on the Doomstead Diner on August 10, 2015



   Visit the New Diner News Page for Daily Updates from around the Collapse Blogosphere



   EROI-The-Destroyer-of-Net-Energy



   Discuss this article at the Geopolitics Table inside the Diner



   A BEGINNER'S GUIDE TO HOW THE WORLD REALLY  WORKS



   PART 2: CAPITALISM, THE PETRODOLLAR AND FINANCIAL BUBBLES



   Geoffrey Chia is an Australian physician who has written many provocative articles including "The Brisbane Institute is a Brisbane Prostitute". The reader is encouraged to fact check for yourself everything written here.



   The Good, the Bad and the Ugly



   How can we reconcile the exploitative behaviour of the AngloAmerican colonial empires of the past, with their later acts of defeating Nazism followed by the generous postwar reconstruction of Germany and Japan, and later, the Clinton intervention to save the victims of atrocities in Kosovo and Bosnia? Human beings are complicated animals, sometimes showing great brutality and sometimes showing great compassion, although generally tending to act in their own self interest most of the time. Self interest has certainly been the most consistent theme in US policy, specifically the interests of the US corporations and banks, masquerading as "US National" interest. It is ever so today. Some may view US history as a progressive trajectory from the brutish genocidal behaviour of the colonial past (their actions towards Native Americans were undoubtedly genocidal), eventually moving toward greater social enlightenment, with the abolition of slavery, universal suffrage and the civil rights movement. If we expected more and better social justice outcomes with the passage of time, our hopes have been dashed since the turn of the century, as exemplified by the criminal invasion of Iraq on the basis of lies, the multiple human rights abuses by the Bush/Cheney regime, escalating gun crime and racial conflict in the US with excessive incarceration of the African American population and the increasing impoverishment of ordinary Americans (and Southern Europeans) by parasitic bankers who control compliant governments. The fact is that the background US agenda of exploitation of the vulnerable has continued unabated since the end of WW2, albeit disguised by the Orwellian newspeak and misrepresentations, indeed barefaced lies, perpetrated by their mainstream media. A guaranteed outcome of the current arrangements will be the collapse of industrial civilisation with massive human die-off and a possible outcome may be near term human extinction.



    



   Predatory Capitalism



   If mechanised industry represented the hardware of our brave new world, it was another Western invention, Predatory Capitalism, which represented the software, which governed the workings of the entire edifice. To use another metaphor: capitalism was the nervous system, industry was the musculoskeletal system and petroleum was the lifeblood which fuelled it all. If the electrical impulses in your nerves are interrupted, then even if your muscles are strong and are receiving plenty of blood, you will be paralysed. Financial/economic collapse can paralyse societies and curtail basic services (food, water, energy, sanitation) just as surely as resource depletion can, however the former tends to happen much more suddenly.



   Predatory capitalism is the ideology of "infinite growth on a finite planet", driven by limitless greed, the idea that enough is never enough. It confers upon its privileged practitioners tremendous short term material benefits, but in the long term promotes the behaviour of a malignant cancer or a relentless planetary parasite hellbent on killing its host. Capitalism was primarily an AngloAmerican invention13 (also enthusiastically embraced by the Dutch), although Hayek and the Austrian school of economics also became highly influential. Margaret Thatcher herself famously waved Hayek's book "The Constitution of Liberty" about, like some kind of bible, proudly professing her fundamentalist faith. Events have proved beyond any shadow of doubt that the doctrine of neoclassical economics, despite brandishing all sorts of impressive mathematical equations, is a delusional ideology based on flawed assumptions, which, although initially apparently beneficial to a country, ultimately concentrates wealth among a select few while exploiting the many. It disregards the environmental damage it causes. These "externalisations" are willfully ignored by the blinkered adherents of this ideology.



   The economic enslavement of Greece (with other PIIGS countries on the chopping block) by the European troika (European Commission, ECB and IMF – the latter being headquartered in the US) represents the beginning of the endgame for Predatory Capitalism, a system fated to voraciously consume itself in the long run. We are witnessing one power bloc beginning to cannibalise itself, starting with its most vulnerable members at the periphery. In the Great Game, nowadays even a "left wing greenie" female politician can play, no Chaplinesque moustache or goose-stepping required (admittedly though, she is German).



    



   Money, the Petrodollar and the exponential growth of the real economy on the upside of Hubbert's curve



   Before we proceed it is important to remind ourselves of some basic definitions.



   Economics is commonly defined as the study of how goods and services are produced and distributed. In a sane world, economics should also require the study of how waste is generated and disposed of, and the necessary costs for proper disposal must be factored in. Unfortunately this last issue has largely been ignored, particularly by the so-called neoclassical economic "experts". They therefore gave Industry a free pass to treat the environment as a toilet. If we lack solutions to safely dispose of or neutralize certain hazardous waste, then the true economic cost of generating that waste approaches infinity and any sane person must conclude that such waste should not be generated in the first place. This is why nuclear power generation, properly considered, must be regarded as insane14. Refusal to acknowledge the harm caused by industrial activities such as carbon emissions lies at the heart of the failure of our economic system. Denialism leads to death, and in our case, possible near term extinction. Naomi Klein put it starkly: Capitalism is at war with life on Earth.



   Finance refers to how economic processes are funded. Money, the stockmarket, banks and governments (which print fiat currency and allow banks to create cyber currency out of nothing in the fractional reserve banking system) are the major components of the financial system. Herd behaviour of the public, driven by greed and fear, is the main driver of the stockmarket. Fraud and deceit lie at the heart of the failure of our financial system.



   Money represents the promise of delivery of future useful goods and services (FUGS). The operative word here is useful. If I have a voucher which I can only exchange for homeopathic lotions or Tarot readings, ie future useLess goods and services (FULGS), then that voucher is in reality worthless, it is not real money. Some silly people may argue that homeopathic lotions and Tarot readings represent value for money to them. During the height of tulip mania in Holland, some silly people paid the equivalent value of a house to buy a tulip bulb. Such people are the suckers who feed the bogus economy, the figures for which are then added to the real economy in an undifferentiated manner, which then distorts any true information as to what is actually happening in the real, worthwhile economy.



   Money is a promise of FUGS, nothing more. In itself, money is intrinsically worthless, whether in the form of banknotes, cyberdigits in your bank account or shares in the stockmarket. Only the ability to transform those types of money into FUGS gives value to your money. If that promise cannot be fulfilled, if confidence in the money is lost, then the value of your money evaporates and it becomes worthless.



   What gives us confidence in our money? Before the Ponzi scheme of fractional reserve banking was invented, fiat currency was physically backed up by adequate gold reserves stored in bank vaults. However gold itself does not confer any FUGS either. Apart from limited applications in dentistry and electronics, gold is intrinsically worthless ("bling" does not count, in this essay we value substance over style). Gold is merely another form of money, merely a promise of FUGS. Physical gold was previously useful to back up paper currency because being rare, it has high "value density" (small quantities can represent large FUGS), it is non-perishable (it can be stored indefinitely without deterioration) and it is not consumed (not generally eaten, combustible or otherwise used up).



   Contrast the gold standard with the detergent standard of currency. Boxes of detergent were used as defacto money in the hyperinflation period of Zimbabwe, when a trillion zim dollar banknote would not even buy a loaf of bread. Detergent does have intrinsic value, but it delivers just one service: cleanliness. Zimbabweans would however happily exchange a box of detergent for a few loaves of bread because both had intrinsic value. However detergent has low "value density". It may be possible to purchase a bicycle with one gold coin, however it may take a large, heavy crate of detergent to make the same purchase. Furthermore detergent can dissolve and perish if exposed to damp (it cannot be stored indefinitely) and detergent is a consumable commodity. Despite these drawbacks, the "detergent standard" of money did work when the "paper standard" of money failed.



    



   Bretton Woods: In July 1944 in the dying days of WW2, the Allies got together in Bretton Woods, New Hampshire, to plan and shape global postwar redevelopment and trade. It led to the eventual formation of the IMF, GATT (later WTO) and IBRD (later World Bank). It also led to the designation of the US dollar as the global reserve currency to which other currencies would be pegged, backed up by gold kept in US vaults (The US held almost 80% of the physical gold in the world then). Unfortunately as the years went by, the temptation by the US to print more money than was backed up by the real gold proved too great. By the late 1960s, the US was living beyond its means, with massive trade deficits. With doubts about the US being able to service their debts, other nations were demanding to exchange their greenbacks for real gold from the US coffers, demands which ultimately could not be honoured. The game was up. Nixon decoupled the American greenback from the gold standard in 1971, overturning Bretton Woods and turning the US dollar into a 100% fiat currency. This provoked a crisis of confidence in the US dollar and drastic drop in demand for the greenback, hence a drastic drop in its value. It raised the question by the international community whether the US dollar should remain the global reserve currency. How could the global financial system then subsequently function on pure fiat US currency, indeed how did the global economy expand exponentially as it did from 1971 till the 2000s, without gold backing?



    



   The Petrodollar: In 1973 the Arabs were defeated yet again by Israel in the Yom Kippur war. In retaliation, the Arabs, by way of OPEC, imposed an oil embargo, triggering the first international oil crisis to punish the West who had supported Israel. Nixon and Kissinger devised a "solution" to this situation, as well as the US dollar crisis, which was a stroke of brilliance. It not only addressed the USA's concerns about future secure access to foreign oil, it restored confidence in the greenback as the global reserve currency and most of all, it enabled the US to effortlessly accumulate mind bogglingly immense wealth in the decades to follow. It was a first class ticket on the richest gravy train of all time. If most non-Americans today actually understood this scheme, there would be international outrage to demand it be overturned immediately. It was the US Petrodollar.



   The US negotiated this agreement with the Saudis: They would defend the Saudis against any future Israeli or other foreign attacks, they would defend the Saudi oilfields and they would provide the Saudis with abundant high tech weaponry. This amounted to the solid entrenchment of power for the Saudi Royal family, an offer they could not refuse. In return the Saudis simply had to sell their oil only in US dollars (refusing any other currency) and after Saudi domestic expenditure, excess oil profits were to be used to purchase US debt securities, to be held in Western banks (later known as Petrodollar recycling).



   It was essentially a protection racket.



   This scheme encouraged the US to maintain Israel, their nominal ally, as the bogeyman in the Middle East, which also involved selling high tech US weaponry to Israel. A sweet deal for the US military industrial complex, who were selling weapons to both sides, weapons which would require frequent upgrading in this arms race.



   By 1975, the USA had persuaded the other OPEC countries to sign up to this deal.



   For the US, what did the Petrodollar mean? It meant they could get oil essentially free from the Middle East, simply by printing US dollars, a privilege enjoyed by no other country. It meant that US debt would be underwritten by foreign investments. It meant that other countries which needed oil (ie everyone else) had to buy US dollars first, either very expensively in the foreign exchange market or more cheaply by exporting their goods to the US and obtaining US dollars in return. The latter meant that the US could obtain foreign manufactured goods (eg high quality Japanese cars) for free, simply by printing US dollars.



   To the rest of the world, the US dollar represented the promise of access to petroleum, the keystone commodity which fueled the industrial economy (and industrial agriculture), which enabled raw materials to be mined and manufactured into products, and enabled services (especially transportation services) to be delivered. The Petrodollar was the new guarantee to the rest of the world that a US dollar represented FUGS and hence no longer needed gold backing. Gone was the crisis of confidence in the US dollar. Indeed this scheme created a huge surge in demand for the greenback, strongly raising its value against other currencies, hence the world was happy for it to remain the global reserve currency.



   We can therefore understand how the US was able to accumulate huge material wealth (wealth being defined as easy access to a wide variety of high quality goods and services) beyond the wildest dreams of avarice, not by being a particularly productive country, but by running a protection racket known as the Petrodollar. It also explains the heavy US military presence in the Persian Gulf and all the oil rich Middle Eastern countries not aligned with Russia. It also explains just about all US foreign policy with respect to the Middle East since the 1970s, especially the invasion of Iraq.



   If the oil rich Middle East was politically stable, they would not need military protection and the Petrodollar would be unnecessary and irrelevant. Hence the US had a vested interest in keeping the Middle East unstable. Divide and profiteer.



    



   Petroleum and real economic growth: The upslope of the Hubbert curve for world conventional oil production from the 1850s till the peak in 2005 approximated an exponential curve. It was this increasing availability of high net energy sources (or Hi-NES – if you are unfamiliar with this concept, please read appendix first before proceeding), over those 150 years which enabled the exponential increase of the real economy during that time. More Hi-NES enabled more widgets to be produced and more people to be employed making them. More businesses could open and all businesses could grow as the pie expanded. Growing businesses meant growing profits, hence the original startup business loans could be paid off with interest. High EROEI oil fed industrial agriculture, which fed an increasing population, who were the workers and customer base for the growing economy. The originally pristine environment was able to cope with our toxic discharges with apparent impunity in the beginning, however pollution ultimately represents another limit to growth. Even if we had unlimited Hi-NES, the MIT Limits to Growth models showed that pollution was another factor which would inevitably curtail our growth, then force a reversal, as the residents of the polluted cities of China can tell you. However we do not have unlimited Hi-NES and it was the plateuing of conventional oil since 2005 which has caused the stagnation of the global real economy.



   To the Neoclassical economists, economic growth was the only thing they ever knew in their lifetimes and was the only thing that their limited imaginations could conceive of. If high EROEI conventional oil depleted, they said, human ingenuity would just find something else to replace it. Wrong. Newsflash: low EROEI unconventional oil is no substitute, it is a fools' errand.



   The fractional reserve banking, money printing, growth dependent, interest dependent, debt dependent, inflationary, neoclassical economic paradigm was only possible in a world with increasing Hi-NES availability on the upslope of the Hubbert curve (and also required an uncrowded planet, unpolluted environment and stable climate). All that has changed. The growth economy is now just a memory in the rearview mirror, it is deceased, buried, kaput, gone, decomposed, ended, terminated. That parrot is stone cold dead and no amount of Pythonesque denial will change that fact. We now face global economic contraction and innumerable challenges which cannot and will not be met by discredited blinkered economic "experts" with old, deluded ideas and no understanding of energy and the limits to growth.



    



   Greece: The basic understanding of money and its ultimate dependence on Hi-NES outlined above are required for us to understand, at least in part, the Greek crisis. Some people wonder why Greece cannot simply exit from the Euro and print their own Drachma and continue to function happily. If Greece had its own Hi-NES (eg a newly discovered "Leviathan" gas field) to back the Drachma, they would have no problem (at least not till climate change renders Greece about as habitable as the Sahara desert). However Greece has to import virtually all its energy and most of its food from abroad. From the moment the Drachma is printed it will have no value, as it is backed by nothing. Few Greeks and no foreigners will accept the Drachma as a promise for any FUGS, it will become "funny money". Greeks in good times and bad will still seek (and trade with) Euros or US dollars, regarded as "hard currency". What gives the Euro its value, in contrast to the worthless Drachma? The Euro is backed by the agri-industrial capacity of Germany and France, which can confer FUGS. This capacity is fueled primarily by petroleum and to a lesser extent by other fossil fuels such as gas and coal. In France, nuclear powered electricity plays a role, but grid based electricity can never offer all the flexible services and secondary products (eg petrochemicals, pharmaceuticals) that petroleum can. Furthermore the mining, transportation and enrichment of uranium and maintenance of the nuclear power stations requires fossil fuels. Hence ultimately all value of the Euro stems from European access to fossil fuels, petroleum being the most important. If Germany and France are starved of fossil fuels, the Euro too will become worthless.



   What mechanism controls the flow of petroleum to the Eurozone? Primarily the Petrodollar system, now that the North Sea Oil fields are all but depleted, although Russia is becoming an increasingly important energy source for Europe.



   It is astounding that conventional economists fail to acknowledge that an ongoing Hi-NES is absolutely essential for industrial economies to function. It is astounding that they fail to acknowledge that Peak Oil means the end of real (as opposed to bogus) economic growth worldwide. It is astounding that they fail to acknowledge that the inevitable decline of Hi-NES, irrespective of oil price, means the inevitable decline of the worldwide economy. This economic decline, now merely beginning, is a permanent trend. Hardships will become ever worse as time goes by until the global die-off of excess humans15 is completed. All of those conventional economists and those sheep brained politicians bleat on about "eventual return to growth". Those who truly believe such nonsense are fools. Those who understand the situation but make false public declarations about future growth to "maintain confidence in the share market" are liars. Which one is Joe Hockey?



    



   Debt, the Bogus Economy and Financial bubbles



   What is debt? If I give you an IOU note, that note is my promise of delivery of future useful goods or services or FUGS to you by me, to the value indicated on the note. Confidence in that IOU may be gained from my track record of previously repaying my debts on time, and my projected future earning power, but ultimately the debt can only be guaranteed by my assets, which must be at least equivalent in value to the debt, ie. collateral. Solvent debt assumes you are able to seize that collateral if I default payment.



   In the absence of collateral goods, the creditor, if sufficiently powerful and mean spirited, may demand that the insolvent debtor repay the debt in the form of future services (better described as servitude) according to the terms defined by the creditor, until that debt is discharged to the creditor's satisfaction (ie never). In other words, the debtor becomes a debt slave. This is what has happened in Greece, along with the forced fire sale of many Greek assets at bargain basement prices.



   What will be the fate of debt slaves? They may either curl up and die, which will be the fate of Greece (unless they default and align with the BRICS), or they may instigate a World War (as was the case with Germany, burdened with punitive debt after the treaty of Versailles and then faced with the Great Depression).



   If debt represents FUGS, and if, as we previously mentioned, money represents FUGS, then surely debt = money ?



   Indeed, it is this idea that debt is a form of money, that debt can be included on a balance sheet as an asset, which has driven the "credit" card (better described as "debt" card), consumption based economic expansion of the last few decades. The bogus debt based economy now exceeds the numerical value of the real physical economy many times over. Nicole Foss' summary data show that global debt is 100 times larger than global production of real goods and services. This debt is clearly irredeemable, we would be lucky to get one cent on the dollar if it was all called in tomorrow. A more realistic outcome, given the workings of our system, is that a tiny minority ("the elite") will get 90 cents to the dollar and the vast majority of creditors will get nothing. We are playing musical chairs with just one chair per hundred people.



   Bankers had major incentives to persuade everyone to rack up debt, because the bankers' salaries and bonuses were tied to their creation of new loans and mortgages, regarded in the finance world as creating new money. This is why you received so many letters from the banks encouraging you to increase the limit on your "credit" (=debt) card. This is why you there are so many advertisements in the media encouraging you to access "easy" money from all sorts of loan companies.



   In the good old days when most bankers had ethics, loans and mortgages could not be granted unless the debtor demonstrated a solid ability to repay and had adequate collateral (or a guarantor with collateral). The bankers have since however manipulated the system to overturn such regulatory mechanisms. From the early 2000s, predatory lending by greedy US bankers to naive people with few or no assets (NINJA loans – No Income, No Jobs or Assets) to buy overpriced properties, created irredeemable debts. Those debts were bundled and repackaged as CDOs (collateralised debt obligations) to hide their origins. CDOs were certainly debt obligations, but they were far from collateralised. Corrupt ratings agencies classified CDOs as triple A rated assets, when they were in fact massive liabilities. Corrupt insurance agencies with insufficient funds pretended to insure the CDOs against default with CDSs (credit default swaps), another illusory derivative. Fraud, deceit and corruption lay at the root of the subprime mortgage scam, which led to the financial crash of 2008.



   The trigger for that crash was the spike in oil price to $147/- per barrel as a result of Peak Oil. High oil prices caused living expenses to skyrocket and net incomes to crash, rendering many people unable to service their mortgages, leading to an epidemic of defaults.



   The perpetrators of the Global Financial Crisis (AKA GFC), the predatory bankers, flew in their private jets to meet Obama to find "solutions". The result was the diversion of almost a trillion dollars of US taxpayers money (which would normally be used to fund social services) to bail out those "too-big-to-fail" banks. Other new government financial commitments to stabilise the system amounted to trillions more. The mortgage holders at the bottom of the heap lost of their equity deposits (often amounting to their life savings), faced foreclosure and lost their houses. Those actions can be summarised by the phrases, "privatise the profits and socialise the losses", or if you like, "screw the common people".



   Why have none of those corrupt "banksters" ever gone to jail? Why have they been allowed to carry on unpunished? Why has systemic banking reform not been implemented by the US government?



   When the private banks have bankrolled the election of the US President, (the banksters fund both red and blue parties, hence they win either way), when they have bought off all the congress members and judges, when they employ swarms of lobbyists in Washington, when they are allowed to create cybercurrency from nothing in the fractional reserve system, when they control the purse-strings which fund the entire military-industrial complex, those bankers hold ultimate power. When they claim to be "too big to fail" and threaten to bring down the entire global economy unless bailed out by the US government, the banksters become untouchable.



   Let us not even get into the "Libor" scam.



   Those who are not utterly outraged by this state of affairs are either cluelessly comatose or are sociopathic beneficiaries of this monumental swindle, this daylight robbery of the poor to benefit the rich.



   The Eurozone is of course an integral part of the Western Predatory Capitalist system. Predatory lending by French and German banks (who ignored due diligence) to deceitful Greek governments (who lied about their ability to pay), also created irredeemable debt, which lies at the root of the Greek crisis. Banksters at both ends benefited personally, but it was the Greek banks which held the loans and the Greek public who are burdened with the debt. The current bailouts from the ECB are not going to the Greek people but are going to the Greek banks to prevent them collapsing. If the Greek banks collapse, the existing trickle flow of Euros to the Greeks which is enabling them to barely limp along at this time, will cease completely. Greek society will then grind to a halt and descend into chaos, with mayhem and murder on the streets. The first people to be killed will be the refugees from Africa, being vulnerable scapegoats and easy targets. Golden Dawn will have its golden dawn, bathed in blood.



   Such corrupt lending and borrowing practices lie at the root of the irredeemable debts affecting all the PIIGS countries. They are Ponzi scams (or more precisely, conduit scams) which are guaranteed to collapse, notwithstanding multiple efforts by the troika to "kick the can down the road". The longer they delay the collapse (by offering yet more irredeemable loans to the debtor countries' banks as temporary bailouts), the harder the fall will be. The troika refuse to consider writing off any of the debt, which ultimately is an act of suicide. They are well aware that the inevitable debt default will cause the collapse of the German and French banks and the Euro financial system, with a domino effect involving the entire global financial system.



   You can bet those banksters have contingency plans in place for the inevitable collapse. You can bet their plans were devised behind closed doors and will never be disclosed to you. You can bet their plans involve protecting themselves and screwing the public.



   Predatory lending by greedy investment bankers and energy ignorant investors (AKA suckers) to finance US shale oil developers (and other unconventional oil sources) has also created massive irredeemable debt and a bogus junk bond and derivatives market. This bubble is also guaranteed to burst, the process being accelerated by current low oil prices. However even at higher oil prices, collapse would be inevitable anyway, because the low EROEI of shale oil could never generate sufficient profits to repay the original investment loans, much less the interest on those loans. Shale oil was a Ponzi scheme from the get go. Conventional oil wells typically take several decades to reach peak output after initial drilling, and post peak may decline by 4 to 6% per year, if extraction techniques are not abused. Shale oil "plays", if at all productive, usually reach peak output less than a decade (maybe 5 years) after initial fracking and by the first year after peak production typically decline by 70% and by the third year post peak typically decline by 85%, a shocking rate of depletion.16



   Collapse of the investment banks would not matter much to ordinary people, if it is only the speculators and bankers who lose their money and if the savings accounts of ordinary people are quarantined from such a collapse. However that is no longer the case. Certainly in the US, mechanisms such as Glass-Steagall which previously protected ordinary savings accounts, have long since been dismantled due to the influence of the corrupt banksters on their "bought and paid for" politicians and legislators.



   In Australia, Kevin Rudd pledged immediately after the GFC that 100% of savings accounts in the major Australian banks would be 100% protected from any losses. Nowadays since the end of the mining boom, with Australian balance sheets permanently in the red, we are only "guaranteed" protection of the first 250K of savings and even that may be revised to a lower ceiling or no ceiling in future. The seizure (=theft) of part of the savings deposits of ordinary Cypriots by their government, to bail out the Cypriot banks in 2013 (which were then sold cheaply to Greek banks), was a tiny taste of what lies ahead for all of us17


 

Related Topics

  Subject / Started by Replies Last post
0 Replies
2729 Views
Last post July 24, 2013, 08:28:23 PM
by Guest
1 Replies
2816 Views
Last post August 09, 2013, 03:47:23 AM
by DarylMyers
0 Replies
789 Views
Last post February 28, 2015, 11:46:51 PM
by RE