America's Financial Crisis

[Armenian]

Re: America's Financial Crisis

The Asian connection...

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An anti-American military confederacy may loom in Asia

September 21st, 2005

The members of the Shanghai Cooperation Organization (SCO), an intergovernmental association comprising China, Russia, Kazakhstan, Kyrgystan, Tajikistan and Uzbekistan, will recognize the organization’s fifth anniversary in June 2006 with a much anticipated celebration, “Everyone agrees this first jubilee date must be celebrated accordingly,” said Vitally Vorobyev, Russia’s coordinator in the SCO. Washington, however, will not be joining in the festivities. The reason for Washington’s sour mood? Growing anxiety surrounding the ultimate mission of the SCO and its impact on Central Asia and the Middle East. Pictures taken by journalists of Russian President Vladimir Putin during the recent joint Russsian-Chinese Peace Mission 2005 military exercises, showing the president in full military attire and holding a large model warplane were not reassuring. His subsequent flight in a supersonic bomber specifically designed to deliver a nuclear payload did not help either. This raises an important question: with SCO leaders such as Russia’s Vladimir Putin, China’s Hu Jintao and Iran’s Mahmoud Ahmadinejad openly embracing military modernization and improved synergies, is the organization destined to become a military confederacy with the U.S. as its main target? “For the SCO to be turned into a military and political bloc or alliance, the present-day SCO would need to be dissolved. The legislation of some of the SCO member-countries makes this [military confederacy] impossible,” said Vitally Vorobyov. He immediately followed these comments with a contradictory statement, “Cooperation between defense agencies within the SCO framework can and should develop. The SCO makes provision for this, it’s nothing new.” Statements of this type from high-level Russian and SCO officials continue to perplex western intelligence officials, leading some to speculate that it may be only a matter of time before the SCO begins to exert its collective military influence in Central Asia and the Middle East.

Peace Mission 2005

In August, “Peace Mission 2005,” a joint eight-day military exercise involving 10,000 Russian and Chinese troops, was held in Russia’s Far East and China’s Shandong Peninsula. The exercises were led by Russian General Makhmut Gareyev, a veteran of World War II who fought against both Germany and Japan. Requests by Washington to reduce the scope of the exercises were rejected by both Russia and China. The joint exercises involved beach landings, airborne assaults, naval blockades, anti-ship missiles and precision bombing from strategic bombers. To the surprise of western intelligence officials, Russian Tu-95MS Bear and Tu-22M3 Backfire strategic bombers designed to carry nuclear-tipped cruise missiles were deployed during the exercises. The exercises reportedly involved a mock intervention to stabilize an imaginary country driven by ethnic strife. In response, the U.S. launched a week long “Joint Air Sea Exercise 2005” in Okinawa and Guam which included 10,000 troops and 100 warplanes from the USS Kitty Hawk strike group. In addition, the U.S. and South Korea participated in a twelve day “Ulchi Focus Lens 2005” military exercise. Taiwan has already announced that it has scheduled its own invasion defense exercise code named “Yama Sakura” for 2006. Taken collectively, the military exercises send a clear message to Moscow and Beijing that the U.S. is prepared to respond to any collaborative military threat.

Recent Military Exchanges

In September, Russian Defense Minister Sergey Ivanov announced his country had agreed to supply China with a total of 40 IL-76 transport and IL-78 refueling planes at a cost of about $1 billion. Later this month, Ivanov is expected to sign contracts to deliver Russian military vehicles to China. The recent plane and vehicle sales continue a trend of Russian military hardware transfers to China which have included: 200 fourth-generation fighter aircraft, several S-300 air defense batteries, guided missile destroyers and sophisticated submarines worth a combined $15 billion over the past ten years. In 2004 alone, Russian arms exports to China totaled $2.3 billion. According to Konstantin Makiyenko, the deputy director of the Center for Strategic and Technological Analysis, a Moscow-based think tank, China is also interested in purchasing Russian made A-50 Mainstay AWACS planes and a manufacturing license for the Su-30MK2 multi-role fighter. Moreover, Beijing has made it clear that wants to accelerate the purchase of advanced Russian fighters, unmanned aircraft and long and short-range missiles as part of its ongoing modernization program. Not surprisingly, Russian Defense Minister Ivanov announced this month that Russian servicemen would travel to China for training stating, “Russia needs more experts who can speak Chinese.” More than 500 Chinese students already study at Russian military universities. But why the sudden urgency for improved communication between the two militaries? Washington has begun to take notice of the evolving relationship. U.S. State Department spokesman Sean McCormack commented in August, “We would hope that anything that they [China and Russia] do is not something that would be disruptive to the current atmosphere in the [Central Asia] region.” Unfortunately, Mr. McCormack may be disappointed.

Future Military Exercises

Immediately after the completion of their historic joint military exercises, Russia and China announced plans to hold additional joint exercises in 2006. Both countries anticipate expanding the exercises to include SCO member states Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan, as well as observer states India, Iran, Mongolia and Pakistan. “It is possible by the time we decide to hold such exercises with China; other SCO countries would be willing to join, like India,” one Russian official said. Russian Defense Minister Ivanov concurred, “I think that future Russia-China military exercises will be held and other members of the SCO will probably take part in them.” Russia and India are scheduled to hold their first joint army drill next month, with mock raids on terrorist facilities taking place in the Indian province of Rajastahn, on the boarder with Pakistan. Andrei Kokoshin, a former secretary of the Russian Security Council and a member of parliament said the impending follow-up to the Peace Mission 2005 exercises could be part of a Russia-China-India triangle which supports the increased activity of the SCO. “The exercise might focus on maintaining stability in Central Asia and ensuring the security of oil supplies via sea routes,” Kokoshin said. Chinese, Indian and Russian naval assets working in unison to protect oil supplies in the Persian Gulf? This comment shows another disturbing aspect of the emerging confederacy, an increased willingness to use its combined military strength to secure strategic energy reserves located in the Middle East. The mere thought of the Persian Gulf clogged with warships enforcing multilateral allegiances and interests is enough to make any intelligence analyst stay up all night. General Yury Baluyevskiy, Chief of Staff of the Russian Armed Forces, further elaborated on the topic of SCO military cooperation, “I do not rule out that, if a decision is made by the SCO, of which Russian and China are members, the armed forces of our countries may be involved in performing certain tasks.” General Baluyevskiy failed to elaborate on what those “certain tasks” would include. Observer country Pakistan is also becoming more active in the military aspects of the SCO. In September, Chinese General Liang Guanglie, a member of the Central Military Commission and Chief of Staff of the People’s Liberation Army (PLA), met with Pakistani General Ehsan Ul Haq, Chairman of the Joint Chiefs of Staff, to strengthen military-to-military ties. During the meeting in Beijing, the two generals exchanged views on issues of common global and regional interest, as well as army building. The most troubling development of the past month related to the SCO is the growing prospect of a nuclear-obsessed Iran joining the organization as a permanent member. Mahmoud Ahmadinejad, the newly elected conservative President of Iran, is a proven U.S. antagonist and a firm believer in spreading revolutionary Islamist ideology throughout the Muslim world. His recent comments at the U.N. concerning the U.S. show a preparation for confrontation with the U.S. Making matters worse; Iran is planning to build up its military forces. Iran had planned to double its military budget by 2010, but thanks to record oil revenues, that timetable has been adjusted to 2008.

New Thinking Needed

The SCO is a menacing confederacy of powerful nations arising out of the shadows of the Cold War that could cause tremendous global instability and even lead to world war. Geopolitics aside, the SCO has the potential to become the most powerful alliance on earth, combining Russia’s energy, military and technology expertise; China and India’s economic and human capital; and Iran’s enormous energy resources and growing military capabilities. This unique combination makes the SCO a formidable adversary for the U.S. In February, Chinese People’s Liberation Army (PLA) chief of staff General Liang Guanglie said the Peace Mission 2005 exercises would, “protect the peace and stability in our region and the world.” The world? The world has been led to believe that the SCO is a regional alliance designed to address issues of mutual concern such as terrorism, separatism and extremism -- whatever they may mean at the moment for the members of the SCO. With military operations scheduled for 2006 and an expanded list of participating nations, the military threat posed by the SCO is starting to take shape. At this time, what steps need to be taken by the U.S. to prepare for a possible SCO military threat? First, the U.S. Congress, Department of Defense and U.S. intelligence community must recognize that the continued military modernization and integration involving Russia, China, India, Pakistan and Iran will directly threaten the U.S. and its allies within the next several years. This is an uncomfortable reality, but one which is taking shape right before our eyes. Second, calls by the SCO and others in the international community for an immediate withdraw of U.S. troops from the Middle East and Central Asia should be disregarded, due to the horrific consequences that the inevitable power vacuum would cause. Instead, strategic alliances should be strengthened with countries such as Georgia and the Ukraine to counter any regional threat. Third, recent calls by Iran for a Muslim seat on the UN Security Council should be viewed for what they are; an effort by Tehran to weaken U.S. legitimacy in the international community and diminish its influence in Central Asia and the Middle East. Iranian President Mahmoud Ahmadinejad’s announcement that his country will sell “peaceful” nuclear technology to other Islamic countries is too chilling to contemplate. In short, the SCO is an immature, but potentially dangerous confederacy of countries with a mutual interest to dethrone the U.S. and if necessary, confront it militarily. Under the guise of economic partnership, regional alliances and friendship, China, Russia and the other members of the SCO are rapidly increasing their collective power. Recent Pentagon reports identifying China as a growing threat are indeed accurate, but don’t go far enough. The reports are deficient in that they base their analysis and predictions on countries such as China acting unilaterally. As a result, compulsory discussions concerning the rise of regional and global alliances that threaten the U.S. are not taking place. This could be a fatal mistake, since the SCO has become the perfect vehicle for coordinated military action in the future. Frederick W. Stakelbeck Jr. is an expert on bilateral and trilateral alliances as they relate to China foreign policy.

Source: http://www.americanthinker.com/artic...rticle_id=4837

[Armenian]

Re: America's Financial Crisis

Brazil, Russia, India and China Overtake USA

June 26, 2007

The largest threats to the American economic power have overtaken the domination of the USA in the global energy industry. Brazil, Russia, India and China – have taken over the domination of the USA in the global energy industry, shows the newest study by the investment bank, Goldman Sachs. The strengthening of the economic power of those four countries – new economic giants united under the name BRIC – is already obvious in the metal and mining sector, and it is slowly starting to be felt in the insurance and consumer industries, says Anthony Ling, the director of that investment bank.

“For all companies that operate globally, the world is changing at an ever faster rate, bringing larger challenges than ever before – that is true globalization”, he said. One of the most important changes is the growth of the BRIC economies, he added. According to a Goldman Sachs study, at the end of the first Gulf War in 1991, of the 20 largest companies in the energy sector by market capitalization, 55 percent were American, and 45 percent European. However, in 2007, 35 percent of the largest energy companies come from BRIC countries, 35 percent European, and around 30 percent American, it says in the study. “The USA is now trailing behind, with the smallest percentage of energy companies in the world”, says Ling.

“If we assume the global resources industry is a traditional leader as far as global trends are concerned, we will start to notice the same trend in the mining industry, where 20 percent of the top 20 companies are from BRIC countries”, he said. “We are convinced that the same form will happen in all other industries”.

This form is already present in the insurance sector, in which the BRIC countries hold 10 percent of the top 20 companies. In the world industry of refreshing drinks, in which the new economic powers are just starting to be represented with a 5 percent share. Ling is predicting that BRIC will soon start to penetrate the food and pharmaceutical sectors. If investors and corporations do not take into account the growing strength of BRIC in the global economy, they will start to fall behind in the growth of investments, and lose their competitive advantage of their companies, warned Ling, talking at a press conference before the summit in Geneva on July 5-6, about the United Nations Global Compact initiative.

An initiative that was stated in 2000 is in question. The aim of the initiative is connecting the business sectors with UN agencies, governments, and the civilian population, in supporting basic social values, which reflect the ten principles on which the initiative is based, which includes respecting human rights and fair work, responsible behaviour towards the environment, and anti-corruption measures. The Goldman Sachs study, which analyses the effect of those factors in a number of industry sectors, will be released on the 3rd of July.

Source: http://www.javno.com/en/economy/clanak.php?id=57122

[Armenian]

Re: America's Financial Crisis

On Track for U.S. Collapse

Bush and Cheney are steering the U.S. into a collapse. Only strong public voices by influential people can prevent the coming disaster. We desperately need for men and women who are known to the public and have credibility to speak up in the critical period ahead to avoid catastrophe.

* A few weeks ago, Israel bombed a alleged nuclear facility in Syria. This is a warm-up for an attack on Iran.
* In the last few days, the U.S. unilaterally tightened sanctions on Iran. Russia and China do not support this move.
* A week ago Bush warned Iran that its attainment of nuclear arms would lead to World War III.
* Russia, which has been assisting Iran in its nuclear construction program for decades, regards Western military action against Iran as unacceptable.
* China has been arming Iran with missiles. Its relations with Iran have been improving for years.

We know that Bush and Cheney are capable of pre-emptive attack. We know that Bush will act if he believes he is right no matter what the costs are. In his distorted worldview, Iran with nuclear weapons is a scenario worth any cost to avoid. We know that Bush, Cheney, and Rice have repeatedly warned Iran of meaningful consequences if Iran arms itself with nuclear weapons. We know that their terms in office end in 15 months. These are the critical months. But it is by no means clear that the front-running candidates for office who may replace them hold substantially different views. Hillary Clinton has publicly called for sanctions against Iran and has called Iran a threat to Israel. Why may an unprovoked attack on Iran lead to WWIII and why may it lead to the collapse of the U.S.?

Imagine this scenario. The U.S. encourages Israel to bomb the Natanz nuclear facility in Iran. Russia attempts to restrain an Iranian response but fails. Iran responds in any of many ways, such as launching missiles on Israel, firing on shipping in the Straits of Hormuz, mining the Straits of Hormuz, sending troops into Iraq, or allying its military with Hezbollah and attacking Israel from Lebanon. The U.S., citing Iran’s aggressions (that will be the story), launches a full-scale attack on Iran designed to devastate the country. This attack has actually been planned by the U.S. for years. Syria is unable to maintain neutrality and quickly becomes a battleground between Iran and Israel.

The price of oil by this point has already soared to $200 a barrel. The U.S. begins to use its strategic reserve and to divert Iraqi production. Russia responds by taking steps to prevent its oil production from reaching the U.S. China responds by cutting off its support of the U.S. Treasury market. Venezuela halts oil shipments to the U.S. The first stages of WWIII are economic warfare designed to cripple the U.S. and halt its war-making capacity.

The U.S., unable to finance its deficits and fund its sovereign debt, is forced into raising interest rates drastically in order to borrow. The Fed is forced to print money. An inflationary spiral occurs. Meanwhile the high interest rates and high oil prices, not to mention the shock of a spreading conflict, drive the U.S. economy into severe decline. The U.S. attempts to raise taxes in order to fund itself, further crippling the economy. Gold soars to $1,500–$2,000 an ounce. The U.S. attempts to bolster its military forces. The draft is reinstated. The severity of the emergency allows Bush and Cheney to assume emergency powers and begin a dictatorship. Elections are postponed.

The U.S. collapses.

Unfortunately, even if this scenario does not occur, the position of the U.S. is so precarious that any number of other scenarios equally disastrous lie in wait. This house needs urgently to be put in order or it will fall, and especially if it does not terminate its imperial adventures. The very fact that Bush and Cheney (or any major U.S. political officials) gain by starting WWIII is a terrible indictment of our entire political system. Who can stop this? Who can prevent this? It will only take a few well-placed people to prevent this catastrophe. My guess is 5–20 people could sway public opinion against war or provide enough cover for Congressional dissenters to screw up their courage. Maybe even as few as 3 or 4 influential people could derail the Bush-Cheney train to disaster. They need to speak out at the right times and they must be heard. Previously mute or muted voices simply must speak out. They know who they are. They know that their silence will mean silent approval of a U.S. collapse.

Source: http://www.lewrockwell.com/rozeff/rozeff183.html

[Armenian]

Re: America's Financial Crisis

Rural U.S. Takes Worst Hit as Gas Tops $4 Average

Gasoline prices reached a national average of $4 a gallon for the first time over the weekend, adding more strain to motorists across the country. But the pain is not being felt uniformly. Across broad swaths of the South, Southwest and the upper Great Plains, the combination of low incomes, high gas prices and heavy dependence on pickup trucks and vans is putting an even tighter squeeze on family budgets. Here in the Mississippi Delta, some farm workers are borrowing money from their bosses so they can fill their tanks and get to work. Some are switching jobs for shorter commutes. People are giving up meat so they can buy fuel. Gasoline theft is rising. And drivers are running out of gas more often, leaving their cars by the side of the road until they can scrape together gas money. The disparity between rural America and the rest of the country is a matter of simple home economics. Nationwide, Americans are now spending about 4 percent of their take-home income on gasoline. By contrast, in some counties in the Mississippi Delta, that figure has surpassed 13 percent. As a result, gasoline expenses are rivaling what families spend on food and housing. “This crisis really impacts those who are at the economic margins of society, mostly in the rural areas and particularly parts of the Southeast,” said Fred Rozell, retail pricing director at the Oil Price Information Service, a fuel analysis firm. “These are people who have to decide between food and transportation.” A survey by Mr. Rozell’s firm late last month found that the gasoline crisis is taking the highest toll, as a percentage of income, on people in rural areas of the South, New Mexico, Montana, Wyoming and North and South Dakota.

With the exception of rural Maine, the Northeast appears least affected by gasoline prices because people there make more money and drive shorter distances, or they take a bus or train to work. But across Mississippi and the rural South, little public transit is available and people have no choice but to drive to work. Since jobs are scarce, commutes are frequently 20 miles or more. Many of the vehicles on the roads here are old rundown trucks, some getting 10 or fewer miles to the gallon. The survey showed that of the 13 counties where people spent 13 percent or more of their family income on gasoline, 5 were located in Mississippi, 4 were in Alabama, 3 were in Kentucky and 1 was in West Virginia. While people here in Holmes County spent an average of 15.6 percent of their income on gasoline, people in Nassau County, N.Y., spent barely more than 2 percent, according to the survey. Economists say that despite widespread concern about gasoline prices, the nationwide impact of the oil crisis has so far been gentler than during the oil crises of the 1970s and 1980s, when shortages caused long lines at the pump, set off inflation and drove the economy into recession. Americans on average now spend about 4 percent of their after-tax income on transportation fuels, according to Brian A. Bethune, an economist at Global Insight, a forecasting firm. That compares with 4.5 percent in early 1981, the highest point since World War II. At its lowest point, in 1998, that share dropped to 1.9 percent. “Gas prices have doubled over the last year but the economy has not fallen off the cliff,” said Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University. “But for the rural lower income people, as a proportion of their income the rise of gas prices is very high.”

While people everywhere are talking about gasoline prices these days, some folks in Tchula (the T is silent) have gone beyond talking. Anthony Clark, a farm worker from Tchula, says he prays every night for lower gasoline prices. He recently decided not to fix his broken 1992 Chevrolet Astro van because he could not afford the fuel. Now he hires friends and family members to drive him around to buy food and medicine for his diabetic aunt, and his boss sends a van to pick him up for the 10-mile commute to work. A trip from Tchula to the nearest sizable town about 15 minutes away can cost him $25 roundtrip — for the driving and the waiting. That is about 10 percent of what he makes in a week. Taking a break under some cottonwood trees beside a drainage ditch filled with buzzing mosquitoes, Mr. Clark and members of his work crew spoke of the big and little changes that higher gas prices have brought. The extra dollars spent at the pump mean electric bills are going unpaid and macaroni is replacing meat at supper. Donations to church are being put off, and video rentals are now unaffordable. Cleveland Whiteside, who works with Mr. Clark and used to commute 30 miles a day, said his Jeep Cherokee was repossessed last month, because “I paid so much for gas to get to work I couldn’t pay my payments anymore.” His employer, Larry Clanton, has lent him a pickup truck so he can get to work. Signs of pain and adaptation because of the cost of gas are everywhere. Local fried chicken restaurants are closing because people are eating out less. At the hardware store here, sales have plummeted to $30 a day from $250 a day a month ago. “Money goes to gasoline — I know mine does,” said the hardware store’s manager, Pam Williams, who tries to attract customers by putting out choice crickets for fishing bait beside the front door.

Local governments are leaving grass high along the roads and doing fewer road repairs to save on fuel costs. The Holmes County government has cut the work week to four days to give workers gasoline relief (keeping the same total of hours), and politicians are even considering replacing sanitation workers with prison inmates on some shifts to conserve money for fuel. The local price for a gallon of regular unleaded gasoline was roughly $3.85 last week, slightly below the national average, but the median family income in Holmes County is about $18,500. Nationwide, regular unleaded gasoline reached an average of $4.005 on Sunday, according to the American Automobile Association. That is the highest price ever and about a dollar higher than at the start of the year. While looking to cut workers at his fish processing plant in nearby Isola, Miss., xxxx Stevens, president of Consolidated Catfish Producers, said that 10 workers walked into his office last week and volunteered to take a buyout rather than continue commuting from Charleston, Miss., 65 miles away. “The gas ate them alive,” he said. Workers at the plant are trying to find ways to cope. Josephine Cage, who fillets fish, said her 30-mile commute from Tchula to Isola in her 1998 Ford Escort four days a week is costing her $200 a month, or nearly 20 percent of her pay. “I make it by the grace of God,” she said, and also by replacing meat at supper with soups and green beans and broccoli. She fills her car a little bit every day, because “I can’t afford to fill it up. Whatever money I have, I put it in.”

Sociologists and economists who study rural poverty say the gasoline crisis in the rural South, if it persists, could accelerate population loss and decrease the tax base in some areas as more people move closer to urban manufacturing jobs. They warn that the high cost of driving makes low-wage labor even less attractive to workers, especially those who also have to pay for child care and can live off welfare and food stamps. “As gas prices rise, working less could be the economically rational choice,” said Tim Slack, a sociologist at Louisiana State University who studies rural poverty. “That would mean lower incomes for the poor and greater distance from the mainstream.”

Source: http://www.starnewsonline.com/articl...806090305/1002

[Armenian]

Re: America's Financial Crisis

A Challenge for the U.S.: Sun Rising on the East

What a difference five years — and one war — make!

In a 2003 article in Newsweek, written on the eve of the invasion of Iraq, Fareed Zakaria — a columnist for the magazine and the editor of its international edition — wrote: “It is now clear that the current era can really have only one name, the unipolar world — an age with only one global power. America’s position today is unprecedented.” He went on to declare that “American dominance is not simply military. The U.S. economy is as large as the next three — Japan, Germany and Britain — put together,” adding that “it is more dynamic economically, more youthful demographically and more flexible culturally than any other part of the world.” What worries people around the world above all else, he wrote, “is living in a world shaped and dominated by one country — the United States.” In his new book, “The Post-American World,” Mr. Zakaria writes that America remains a politico-military superpower, but “in every other dimension — industrial, financial, educational, social, cultural — the distribution of power is shifting, moving away from American dominance.” With the rise of China, India and other emerging markets, with economic growth sweeping much of the planet, and the world becoming increasingly decentralized and interconnected, he contends, “we are moving into a post-American world, one defined and directed from many places and by many people.”

For that matter, Mr. Zakaria argues that we are now in the midst of the third great tectonic power shift to occur over the last 500 years: the first was the rise of the West, which produced “modernity as we know it: science and technology, commerce and capitalism, the agricultural and industrial revolutions”; the second was the rise of the United States in the 20th century; and the third is what he calls “the rise of the rest,” with China and India “becoming bigger players in their neighborhoods and beyond,” Russia becoming more aggressive, and Europe acting with “immense strength and purpose” on matters of trade and economics. Many of this volume’s more acute arguments echo those that have been made by other analysts and writers, most notably, the New York Times columnist Thomas L. Friedman on globalization, and Jimmy Carter’s national security adviser, Zbigniew Brzezinski, on America’s growing isolation in an increasingly adversarial world. But Mr. Zakaria uses his wide-ranging fluency in economics, foreign policy and cultural politics to give the lay reader a lucid picture of a globalized world (and America’s role in it) that is changing at light speed, even as he provides a host of historical analogies to examine the possible fallout of these changes.

The irony of the “rise of the rest,” Mr. Zakaria notes, is that it is largely a result of American ideas and actions: “For 60 years, American politicians and diplomats have traveled around the world pushing countries to open their markets, free up their politics, and embrace trade and technology. We have urged peoples in distant lands to take up the challenge of competing in the global economy, freeing up their currencies, and developing new industries. We counseled them to be unafraid of change and learn the secrets of our success. And it worked: the natives have gotten good at capitalism.” But at the same time, he goes on, America is “becoming suspicious of the very things we have long celebrated — free markets, trade, immigration and technological change”: witness Democratic candidates’ dissing of Nafta, Republican calls for tighter immigration control, and studies showing that American students are falling behind students from other developed countries in science and math.

While readers might take recent signs like recession at home, a falling dollar abroad and a huge trade deficit as suggesting that the American economy is in trouble, Mr. Zakaria asserts that the United States (unlike Britain, which was undone as a world power because of “irreversible economic deterioration”) can maintain “a vital, vibrant economy, at the forefront of the next revolutions in science, technology, and industry — as long as it can embrace and adjust to the challenges confronting it.” As Mr. Zakaria sees it, the “economic dysfunctions in America today” are the product not of “deep inefficiencies within the American economy,” but of specific government policies — which could be reformed “quickly and relatively easily” to put the country on a more stable footing. “A set of sensible reforms could be enacted tomorrow,” he says, “to trim wasteful spending and subsidies, increase savings, expand training in science and technology, secure pensions, create a workable immigration process and achieve significant efficiencies in the use of energy” — if only the current political process weren’t crippled by partisanship, special-interest agendas, a sensation-driven media, ideological attack groups and legislative gridlock.

As for the United States’ role in a world that is rapidly shifting from unipolarity into a far messier and more dynamic system, Mr. Zakaria suggests that it should become a kind of “global broker,” forging close relationships with other major countries, while exchanging the peremptory, directive-issuing role of a superpower for “consultation, cooperation, and even compromise” — in short, repudiating the sort of cowboy unilateralism favored by the current Bush administration and embracing a behind-the-scenes power derived from “setting the agenda, defining the issues and mobilizing coalitions.” The central strategic challenge for American diplomacy in the years to come, Mr. Zakaria says, concerns China: how to deter its aggression and expansionism, while at the same time accommodating its legitimate growth. He suggests that in a world in which “the United States is seen as an overbearing hegemon,” China might well seek to position itself as “the alternative to a hectoring and arrogant America,” gradually expanding its economic ties and enlarging its sphere of influence.

“How will America,” he asks, “cope with such a scenario — a kind of cold war but this time with a vibrant market society, with the world’s largest population, a nation that is not showcasing a hopeless model of state socialism or squandering its power in pointless military interventions? This is a new challenge for the United States, one it has not tackled before, and for which it is largely unprepared.” There are some curious gaps and questionable assertions in this book. While President Bush’s controversial No Child Left Behind program has put increased emphasis on test-taking, and college applicants worry about their SAT scores in what Forbes magazine calls “a test-crazed era,” Mr. Zakaria writes: “Other educational systems teach you to take tests; the American system teaches you to think,” adding that “American culture celebrates and reinforces problem solving, questioning authority, and thinking heretically.”

He skims lightly over the critical role that the Iraq war played in shaping America’s current problems on the world stage (he himself supported the effort to oust Saddam Hussein and wrote in March of 2003 that the war “will look better when it is over” and weapons of mass destruction are found). And in sharp contrast to Qaeda experts like the former C.I.A. officer Michael Scheuer (who argue that the Iraq war has served as a recruitment tool for Osama bin Laden) and a new State Department report (which notes the growth of Qaeda affiliates in the Middle East, North Africa and Europe, and the growing ability of al Qaeda itself to plot attacks from Pakistan), Mr. Zakaria contends that “over the last six years, support for bin Laden and his goals has fallen steadily throughout the Muslim world.” Such dubious assertions distract attention from the many more convincing arguments in this book and the volume’s overall take on the United States’ place in a rapidly changing global landscape — a provocative and often shrewd take that opens a big picture window on the closing of the first American century and the advent of a new world in which “the rest rise, and the West wanes.”

Source: http://www.nytimes.com/2008/05/06/bo...341&ei=5087%0A

[Armenian]

Re: America's Financial Crisis

One of the ways to defeat an otherwise mighty empire is to undermine its financial system. The following news articles underscore the sound strategy of moving away from the US Dollar at a time when other currencies are on the rise. It is now beginning to seem as if Iran, Venezuela and Russia have gradually begun to implement such measures, albeit in limited form. If China and oil producing Arab states within the Persian Gulf region join them in their move against the US dollar, that is precisely when the US will fall into utter ruin. We may already be witnessing the beginning stages of an America's decline. Alarmingly, the danger that is being posed to the dollar from overseas is coming at a time when the US economy is suffering a serious crisis and a time when America's national debt is running in the tune of trillions of dollars and fast rising. Needless to say, an organized attack on the US dollar can potentially have an utterly devastating impact upon the US. As a result, I believe that US policy makers in Washington will attempt everything and anything in their powers to prevent such a thing from occurring. Consequently, this may either result in drastic reversals in Washington's foreign policy formulations, or it may simply result in additional military confrontations around the world. Nonetheless, Americans today are finally waking up from their American Dream... only to find themselves in an American Nightmare.

Armenian

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The Almighty Ruble

The ruble got no respect. During the cold war, it symbolized the backward Soviet economy. After the U.S.S.R. collapsed, it was an avatar of instability. Even plumbers in Moscow often preferred to be paid in bottles of vodka rather than rubles — the bottles did not lose their value. No more. Lifted by high oil prices and a wave of foreign investment, the once humble ruble is showing its muscle, and fueling a consumer boom. After gaining 20 percent in value against the dollar in the last few years, the ruble is even starting to displace the greenback as Russians’ currency of choice for both saving and spending. As the ruble increases in value — not just against the dollar, but against brawnier currencies, too, like the euro — imported goods are becoming cheaper for Russian consumers. Now ruble notes, once handed over by the fistful for a loaf of bread, are being used to purchase Mercedeses, flat-screen televisions and European beach vacations. Of course, the party could be short-lived. Russia takes in roughly $530 million a day from oil, its most lucrative export. If the price of oil declines, so will the ruble. And even if the price of oil does not fall, an oil-fueled boom brings dangers of its own. In many countries, an over-reliance on petrodollars has led to underinvestment in businesses outside oil and gas, and a subsequent withering of other domestic industries. To deal with such downsides of the ruble’s rise, Russia is salting away oil money in a rainy day fund, called the Stabilization Fund, which holds more than $120 billion. In January, Moscow will split it into two funds: the Reserve Fund and the Fund of National Prosperity, the latter intended for state investments.

Together with the Central Bank of Russia’s foreign reserves, Russian authorities have a currency reserve of $413 billion, the largest per capita foreign currency reserve of any major economy, including China’s. In an oil downturn, authorities could spend that reserve to protect the ruble. In the meantime, the reserve adds an aura of stability to the economy for investors. “Excluding a couple of oil countries where the money belongs to the local ruling family, which is something different, Russia has surpassed all the newly industrializing Asian countries,” in foreign currency reserves, Kenneth S. Rogoff, an economics professor at Harvard, said in a telephone interview. Analysts say Russia’s underlying fundamentals are good, too. First, oil exports are not the sole source of the ruble’s rise. That was the case before 2007, but now foreign investment has become a significant factor. Private capital flows into Russia increased roughly 360 percent in the first six months of this year, compared with the same period last year. Only about 30 percent is attributable to oil and other extractive industries, according to the State Statistics Committee. Analysts also point to what they call Russia’s sound macroeconomics. President Vladimir V. Putin’s government has managed inflation, though certainly not eliminated it. And through its tight control over politics and society, the regime has kept demands for social spending in check — a leadership approach reminiscent of the authoritarian “Asian model” of economic development.

[...]

Source: http://www.nytimes.com/2007/08/08/bu...=worldbusiness

Iran: Almost Dollar-Free

Iran is trumpeting its success at shifting away from the use of dollars in its oil trade. Such a shift is not easy, and generates little but costs. Mohammad-Ali Khatibi, an executive in Iran's National Iranian Oil Co., said Oct. 2 that after two years of effort, Iran uses the U.S. dollar in only 15 percent of its oil transactions, with 20 percent being carried out in Japanese yen and 65 percent in euros. Insisting upon non-dollar payment really only creates rhetorical ammunition. So long as the global system -- and the energy industry in particular -- is dollar-denominated, any non-dollar payments for oil subtract the exchange rate costs from the payments. Put simply, Iran's insistence on anything but dollars translates into a small transaction fee loss on every oil sale. So while Iran can stand proud and bite its thumb at Washington, proud that it has played a small role in reducing demand for the dollar and thus making the currency slightly weaker, the process racks up a hardly inconsequential cost. In the first quarter of 2007, a 1 percent transaction cost would have cost Iran $500 million, a significant sum for a country wracked by inflation and dropping living standards. Once the payments are done, keeping the proceeds in non-dollar currencies could make more sense. For the past few years the U.S. dollar has been weakening, so the relative value of non-dollar holdings has gradually increased. Such logic is more obvious for euros, where gains have been impressive, than for the yen, whose real appreciation has been only marginal.

[...]

Source: http://www.stratfor.com/products/pre...ected=Analyses

Are Iran, Russia, China behind dollar's free-fall?



Some see 'Currency Cold War' meant to bring U.S. to its knees

The hottest selling book in China right now is called "Currency Wars," which makes the case that the U.S. Federal Reserve is a puppet of the Rothschilds banking dynasty and it has persuaded some top officials Beijing should resist America's demands to appreciate its own undervalued currency, the yuan. This might not be news of concern to most Americans if the U.S. dollar were not in precipitous free-fall, having reached record lows against the euro yesterday. What would it mean if China ever threw its economic weight around by dumping dollars in a major way? Suffice it to say it is referred to in some quarters as China's financial "nuclear option," because it would be the economic equivalent of detonating a thermonuclear weapon in the world's financial markets. But the American dollar's fate is hardly in the hands of the Chinese alone. Other foreign parties suspected of participating in a new "Currency Cold War" are Iran, Russia and Venezuela. Diane Francis, a financial reporter for the National Post in Canada, says it plainly and boldly: "There is a Currency Cold War being waged by Russia, Iran and various allies such as Venezuela." The grand strategy being engineered by Vladimir Putin, she writes, is to force the use of euros as the international monetary standard as a transition to the Russian ruble. "This is simply a monetary version of the old Cold War, minus the missiles," she writes.

Experts don't see any short-term reprieve for the falling value of the dollar. Kathy Lien, chief currency strategist with DailyFX.com in the US, told Bloomberg she expects the American dollar to slide even further, forcing more lending rates cuts in the U.S. to stave off recession. "It seems like every single passing day we have a new record low in the dollar, and a new record high in the euro, and it's driven by the fact that U.S. data is continuing to deteriorate," she said. If other nations do not follow the U.S. in cutting rates, the slide in the value of the dollar would most likely continue. If the dollar trend continues spiraling downward, the risk is that nations like China – or Japan or Saudi Arabia – which have been buying U.S. Treasury bonds and thereby funding America's deficit, would stop that practice. That would be the nuclear option. China, with $1.3 trillion in foreign exchange reserves as a result of the massive and growing $260 billion U.S. trade deficit, has taken huge losses with the falling dollar, given that some 80 percent of China's $1.3 trillion in foreign reserves is held in U.S. dollar assets, largely in U.S. treasury securities.

[...]

Source: http://www.wnd.com/news/article.asp?ARTICLE_ID=57936

Russia Quietly Starts to Shift Its Oil Trade Into Rubles

Americans surely found little to celebrate when the price of oil settled above $100 a barrel last week. They could, though, be thankful that oil is still priced in dollars, making the milestone of triple-digit oil prices noteworthy at all. Russia, the world’s second-largest oil-exporting nation after Saudi Arabia, has been quietly preparing to switch trading in Russian Ural Blend oil, the country’s primary export, to the ruble from the dollar. Industry analysts and officials, however, say that this change, if it comes, is still some time off. The Russian effort began modestly this month, with trading in refined products for the domestic market. Still, the effort to squeeze the dollar out of Russian oil sales is yet another project notable for swagger and ambition by the Kremlin, which has already wielded its energy wealth to assert influence in Eastern Europe and former Soviet states. “They are serious,” said Yaroslav Lissovolik, the chief economist at Deutsche Bank in Moscow. “This is something they are giving priority to.”

Oil trading is nearly always denominated in dollars. When Middle Eastern oil is sold to Asia, for example, the price is set in dollars. Similarly, Russia’s large trade with Western Europe and the former Soviet states in crude oil and natural gas is conducted in dollar-denominated contracts. Gazprom, the natural gas monopoly, set the price of gas in Ukraine at $179 per 1,000 cubic meters in 2008, for example. There are no proposals yet to switch gas pricing away from dollars. As a result, companies and countries that buy petroleum products are encouraged to hold dollar reserves to pay for their supplies, coincidentally helping the American economy support its trade deficit. Russia would like to change this practice, at least among its customers, as a means of elevating the importance of the ruble, a new source of national pride after gaining 30 percent against the dollar during the current oil boom. In a speech on economic policy this month, Dmitri A. Medvedev, a deputy prime minister and the likely successor to President Vladimir V. Putin in elections on March 2, said Russia should seize opportunities created by the weak dollar. “Today, the global economy is going through uneasy times,” Mr. Medvedev said. “The role of the key reserve currencies is under review. And we must take advantage of it.” He asserted that “the ruble will de facto become one of the regional reserve currencies.”

Other oil-exporting countries are also chafing at dealing in the weakening dollar. Since 2005, Iran, the world’s fourth-largest oil exporter, has tried to open a commodity exchange to trade oil in currencies other than the dollar. The Iranian ambassador to Russia said Iran might choose rubles to free his country from “dollar slavery.” To be sure, some economists have dismissed the project as improbable, given the exotic nature of a security — oil futures contracts denominated in rubles — that would blend currency risk with the dollar-based global oil market. Ruble-denominated futures contracts for Ural Blend, the main Russian grade, would be attractive only if the dollar continues to depreciate, said Vitaly Y. Yermakov, research director for Russian and Caspian energy at Cambridge Energy Research Associates. “There is a big distance between the desire to trade commodities for rubles and the ability to do so,” he said. All this has not stopped the Kremlin from trying. “We are in Russia, and the currency is rubles, not euros, not dollars,” he said. “We don’t want to depend on the rise or fall of the dollar.” “We will trade in rubles, to strengthen the ruble,” he said.

Source: http://www.nytimes.com/2008/02/27/bu...=worldbusiness

United Russia backs ban on "dollar", "euro" terms among MPs

The pro-presidential United Russia faction backs a proposal by the head of Russia's Public Chamber to ban MPs and officials from using the terms "dollar" and "euro" in domestic economic debates, a faction top official said Friday. "This is a very timely initiative," Vyacheslav Volodin said commenting on the initiative voiced by academician Yevgeny Velikhov Thursday. "We believe we should use only the word 'ruble'." "If today government members [and] deputies calculate expenses and revenue in foreign currency, speak and think about foreign currency, we will never establish our national currency," he said. "We need to start with ourselves, to convince society that our ruble is the most stable currency, and that it's strengthening," Volodin said. Volodin said the lives of Russians could improve if officials dealing with finance and economics were to begin counting everything in rubles.

Source: http://en.rian.ru/russia/20060414/46423009.html

[Sip]

Re: America's Financial Crisis

The situation in the US may be bad but that doesn't mean other places are enjoying great prosperity. The entire world is in very shaky situations and I wouldn't be surprised if for example China under goes a MASSIVE restructuring in the coming decades.

Personally I am not too pessimistic on the US ... at least no where near what these rather biased views in this thread try to paint. The main hurt in the US is the housing market which will inevitably bounce back. There are sectors that are in huge troubles (for example automobile and air travel) and one would have to live under a rock not to realize that manufacturing jobs have been moving to china.

But much like the "tech outsourcing" and the "oh everything is going to India" ended up being mostly an empty scare, I think the manufacturing will also correct itself over time. There was a time where "made in USA" really said something about the quality ... and the way China has been going, I don't think it'll be long till we see similar days again. After all, people will only tolerate so many dead babies and pets before taking a second look at China and reevaluating things a bit

[skhara]

Re: America's Financial Crisis

You know the worrying proposition that comes with a potential US collapse, is the starting of conflicts much more dangerous than Iraq and Afganistan.

America may become desperate, and when such giants fall they fall hard and they crush others as well. America has more conventional firepower then probably the rest of the world. America has enough nuclear capacity to blow up the world 3 times over.

Dangerous times.

[Armanen]

Re: America's Financial Crisis

You know the worrying proposition that comes with a potential US collapse, is the starting of conflicts much more dangerous than Iraq and Afganistan.

America may become desperate, and when such giants fall they fall hard and they crush others as well. America has more conventional firepower then probably the rest of the world. America has enough nuclear capacity to blow up the world 3 times over.

Dangerous times.

But I would expect that to occur whether the decline is rapid or even immediate such as with the soviet union, or if it's more drawn out.

No one can say what route america will take, it could go the way of rome and be destroyed or look more like the u.k. which until 1918 was the world's hegemonic power. Plus with the changing demographics in the u.s. it would be a suprise to see a split among the union shortly before or after the crash.

All of this is interesting to discuss, but we shouldn't overlook the power the u.s. has and will continue to have, even if this is not going to be her century.

[Azad]

Re: America's Financial Crisis

Dangerous times.

You can say that again and again. With all the billions that the west is pumping into "liquid" confidence is getting even worse. All these billions are nothing but future economic promises that they can not fulfill. The turning point of all of this mess goes to one point in history.... when Tsar Putin locked Khodorkovsky. It was one of the smartest moves by the Russians.