I’ve been meaning to write about all economic lunacy perpetrated by the Federal Reserve for sometime, but this quote from this weekend’s OPEC summit just floored me:
On Friday, Prince Saud Al-Faisal, Saudi Arabia’s foreign minister, warned that the dollar could “collapse” if the US currency was mentioned in the declaration.
His remarks – made in what was supposed to be a closed ministerial meeting – were accidentally broadcast to reporters.
Al-Faisal is stating that the dollar is is in such a precarious position that even mentioning that OPEC needs to consider the effects of a low dollar on its members could cause the currency’s collapse. This would lead to outright panic here in America, as well as many of the oil producing states, such as Saudi Arabia, which use dollars as the basic pricing mechanism for oil. Because of the fall in the dollar’s value –44% since the last OPEC meeting 7 years ago– a number of the oil states are calling for greater oil prices to offset the devaluation. This, of course, will result in deepening the nascent recession here at home –which will, no doubt, result in the Fed cutting baseline rates again, thus, causing greater devaluation of the dollar.
In other words, under current Fed policy, we’re screwed. The Fed, however, sees it differently. By cutting baseline rates they are funding speculative investing, and keeping the equities and option markets (artificially) high. The Fed seems to be counting on foreign interests to keep the dollar from collapsing. The belief, seems to be, is that China, which holds around $1 trillion in US bonds, and the oil states of OPEC cannot afford to see the US currency collapse, and will continue to invest in dollars. But this is a strategy of russian roulette. Eventually, these states will decide they can no longer afford the losses on the dollar and begin to reinvest elsewhere –China, earlier this year began selling off US bonds at an alarming rate.
Last week President Bush charged congressional Democrats with spending money like “a teenager with a new credit card.” This from a man whose administration shipped 360 tons of US dollars to Iraq with no accounting or oversite in place. This from a man who has presided over the greatest increase in national debt in US history; an in increase in spending which has had no positive effects for the majority of Americans. When Franklin Roosevelt and Lyndon Johnson borrowed, they did so to try to enrich the American people. This president has done so simply out of hubris, and has enriched only the wealthy. The American people have found their wages stagnated at levels lower then those 30 years ago. They have found themselves with crumbling infrastructure, a crumbling military, and an inept and crony filled regulatory landscape to protect them.
I don’t generally believe in grand conspiracy theories, but, if I did, I could easily see one here. Thanks to Bush’s tax cuts, and outrageous spending on a never ending war and ‘homeland security,’ coupled with the “spend it now” attitude of the Federal Reserve we find ourselves perilously close to an economic meltdown. When one looks around, one can easily see the ‘free market’ wolves waiting in the wings. They will cry out that the problem with the US is that it spends too much on social programs, like Medicare and Medicaid, and others; that government is too inefficient and we need to privatize more and let the markets run without restraints and regulations. The fact is, they will be responding to a crises of their own making.
corruption,
Economy
The Iraqi government said today that it would revoke the license of the private security firm BlackwaterUSA, due to the reckless actions of its employees. Blackwater is is best known for supplying the contractors who were killed in Fallujah — an event which sparked a major siege of the city costing thousands of lives. Lesser known, of course, is their construction of private military bases in California and Illinois for training, and their deployment to New Orleans shortly after Katrina. The problem with the Iraqi government announcement is that Blackwater does not currently have a license to operate in Iraq to revoke. According PSCAI, Blackwater started the certification process, but hasn’t completed it. Blackwater operates in Iraq under contracts provided by the State Department and CIA, and it can be guaranteed that neither one of those organization is going to take its queues from the government of Iraq. So what’s all the hubbub about then? The news may suggest that the Iraqi government is getting tired of the wild west antics of private security contractors, or it may suggest that the Iraqi government is trying to show they are not the obedient puppies of American corporate interests. Nonetheless, very little, if anything will change with the Iraqi government’s announcement. If nothing else it is simply a diversion to suggest a more just reality where none really exists; for — you would imagine — in a just world a government would be able to expel a private foreign army from its soil. But not in Iraq.
blackwater,
corruption,
Iraq
It has become the worn cliché of our times to express one’s disbelief in the ineptitude and corruption of our government or its officials. The very idea that the government should aid its neediest citizens has become a nostalgic dream — a tail handed down from past generations. Two years ago this week, hurricane Katrina devastated New Orleans and surrounding areas. Our government was slow to respond and quick to blame. Two years later, after issuing billions of dollars for reconstruction, not a single one of the 115 critical projects identified by local government has been completed.
Conservative ideology has always been set on proving that government is less efficient and more wasteful then the private sector. The Bush administration went out of its way to accept this ideology and make it true. Instead of supplying funds to New Orleans, or municipalities it funneled money to large contractors like Halliburton early on believing that large private sector firms were more competent and appreciative then local business could be. The result has been a disaster for the people of New Orleans. Money has been moved away from public services like education, subsidized housing, and health-care and into charter schools, planned developments, and private hospitals. Instead of letting the people of New Orleans decide what the priorities of rebuilding were, this administration let the market decide. Some people have pointed to this as evidence of a conspiracy against the poor and middle-class of Louisiana, but there is no conspiracy: it is merely incompetence and greed.
The idea that private enterprise is more efficient that government has been accepted as gospel since the days of Ronald Reagan. It has never been true. Private enterprise is inherently corrupt - it has to be. It’s primary goal is not to deliver goods or a service, but to generate profit whatever way possible. Within that marketplace the only reason private enterprise delivers any quality of goods or services is due to competition and regulation. Conservative ideology was taken in by the notion that the larger and more successful a company the more competent it is. But when the government issues a massive contract there is no competition; the is no reason for the company to deliver goods or respond to the needs of citizens, and larger companies are inherently better at generating profits then delivering services.
The people of New Orleans are ready and capable of rebuilding their city, but this government, and its cadres, have withheld financial support. The people of New Orleans continue to suffer today because this administration is determined to prove its ideology of a low-tax privatized empire. It is beyond time that we recognized that this ideology is a failure, and return to the idea of a government for the people.
corruption,
katrina
