Elements of fascism have existed in this country through out the 20th century.  Calvin Coolidge famously said “the business of America is business.”  He was not formenting a fascist coup.  Why would he even try?  The US was already promoting policies that benefited connected families and businesses.  But for those who are able to look past the cave the fascist undertones are clear.

People credit Goebells with the mastery of propaganda but this is simply not true.  Edward Bernays is the father of propaganda techniques.  He is a naturalized American citizen of Austrian descent and nephew of Sigmund Freud.  As a side note you may now realize why a discredited psychoanalyst is still in the popular conscious.  Goebells used Bernay’s Crystallizing Public Opinion as the basis for his campaign against the Jews and every other group in Germany.  NAZI Germany realized the utility of American techniques.

Goebells is not the only NAZI leader to use American ideas.  Hitler drew many of his regressive policies against the Jews straight from the South’s and thus America’s degradation of African Americans.  American segregation laws were replicated in spirit and probably in words.  Again US political life was used as an example for a regressive totalitarian state.  In an ironic twist, the Soviet Union sought to emulate progressive American philosophy from Dewey and Ford.

Americans never learn about the proposed coup versus FDR in 1933.  Naomi Klein has written about Prescott Bush’s involvement in the pot.  He is the grandfather and father of two United States Presidents.  Is it any wonder that we’ve moved closer to a police state under this dynasty?

India to buy battle tanks from Russia, extends deal

Bappa Majumdar
Reuters North American News Service

Sep 29, 2008 07:06 EST

NEW DELHI, Sept 29 (Reuters) – India will buy 347 T-90 battle tanks from Russia and build 1,000 more locally with Russian help, the defence minister said on Monday, as the two nations decided to iron out differences that had delayed several arms deals.

India, one of the world’s biggest arms buyers and Russia, a long time supplier, also agreed to speed up delivery of an aircraft carrier that has been slated for delivery in 2012, a defence official said.

The announcement came after a meeting between Russian Defence Minister Anatoly Serdyukov and India’s Defence Minister A.K. Antony, who said the two countries had also decided to extend a defence cooperation deal by another 10 years.

India is moving closer to the West in a challenge to traditional ally and supplier Russia. European and U.S. firms are bidding for India’s $10 billion deal to buy 126 fighter jets, one of the biggest arms contracts in the world.

In 2004, India and Russia had signed a $1.6 billion deal to bring the Admiral Gorshkov to India by 2008. India may now have to pay an extra $1.2 billion for the carrier’s refitting costs.

“The Indian side has considered the Russian demand for an escalation in price….the same has been considered and would be placed before the cabinet for consideration,” Antony said in a statement on Monday.

India plans to spend $30 billion over the next four years to modernise its largely Soviet-era arms.

The two countries agreed to speed up pending projects, including delivery of Sukhoi-30MKI fighters, battle tanks, stealth frigates and missile destroyers, officials said.

While analysts say Russia was delaying some arms deliveries because it was uneasy about India’s growing ties with the United States and France to buy more weapons, India says Russia was still their tried and tested friend.

“A major part of our defence inventory is of Russian origin, and continues to remain so even now,” Antony said.

The defence deal between the two countries is over $35 billion since they started a partnership in the 1960s, officials said. (Editing by Alistair Scrutton and Sanjeev Miglani)

I am not an expert on Indo-US relations but I have believed that the US has been attempting to bring Indian into an Indo-US alliance against both Pakistan and China.  The US has been trying to find a counter weight to Chinese influence and who better than another country with a population of a billion plus.  An alliance with India will also allow the US to continue its covert-ish war against Pakistan.

I’m looking for analysis on this deal but I’ve found nothing.  I am interested to know why India would purchase Russian tanks.

Are these tanks better than American tanks?

Is the purchase of these tanks an indication that India is unhappy with America’s policies in their region?

Is the possible that the probably Indo-US alliance is on hold?

I’m asking the latter because I have long suspected that the US will align itself with India and Israel in a war against Pakistan and Iraq.  There of course would be other smaller powers involved with the United States but I’ve suspected that the US would need these two powers in order to become a true global hegemon while the other two would become regional hegemons.

I’m not sure if it’ll happen but its what I wrote about while I was in college.  So far my predictions are not totally off.  I’ll try to find the paper and post the highlights.

Calvin Coolige remakred that that “the business of America is business.”  The Great Depression and the ’60s rebellions nearly redefined the business of America but American remains a Corporate State.  The shopping mall is the foundation of America’s corporate state.  Prior to the Post WWII period Americans were a thrifty bunch.  The idea of a “credit/debt” card would be against their very nature.  They paid as they went.  The consumer culture of the post war period is diametrically opposed to our founder’s culture.

The Post War consumer culture needed a way to pay for its very consumerism.  In the 1950s and 60s wages rose in order for Americans to maintain a consumer culture.  In the 1970s America experienced a significant recession that turned into stagflation for much of the 1970s.  America’s real wages have declined since the mid-1970s yet America’s consumer spending has increased every year.  How can Americans buy more while their real incomes are declining?  The answer is the debt card.

America has maintained its lifestyle through debt not credit.  The debt card enable Americans to maintain a veneer of success while the top 1% of Americans waged war on their wages and very lifestyle.  The use of the credit card skyrocketed in the 90s and 00s.  Credit Card companies realized they could hook teenagers and college students into lifetime debt peonage.  Instead of accepting their lives they were told they could finance a lifestyle. As a result of financing a lifestyle Americans are now underwater.  The American consumer paid for the world’s economic expansion with Chinese recycled dollars and now the credit bubble is collapsing.  The mortgage bubble is already in collapse but consumer debt is soon following this trend.  When people are faced with the choice of food or payments they’ll choose food.

If anyone ever wonders why America failed the simple answer is “It was the credit bubble, stupid!”

If you disagree with that frame then please read about neo-liberalism, Washington Consensus, Structural Adjustment Programs, Jeffrey Sachs and Milton Friedman.  Every policy from the University of Chicago and Sachs (Harvard) has only increased the power of the elites while dismantling any safety net for everyone else.

Today the Corporate News Network is trying to tell Americans to save save save.  These professional propagandists err ‘news’ anchors have consistently told families to teach their kids how to properly handle credit cards otherwise known as debt cards.  That is not a typo.  I did not mean to write debit card.  In order to use a credit card you must go into debt.  Corporate propaganda has taught a generation of Americans that debt cards are useful and necessary to survive in modern society.  The true cost of a debt card is never discussed.

Our current account deficits are linked to our use of debt cards.  In order to continue our consumer culture our government and by extension corporations rely on foreign capital.  Foreign Central Banks buy T-bills and other US debt products to finance America’s current account deficit.  In essence we are paying back China and other net lenders through our taxes and credit cards bills.  Foreign Central Banks take part in this system to maintain a currency system known as Bretton Woods II.  We are witnessing the failure of this global currency system.

The Corporate Media System (CMS) otherwise known as the Mainstream Media has consistently told Americans to leverage themselves into more debt/credit cards, home refinancing, 401ks, IRAs, and other debt or investment vehicles.  The CMS was nowhere when Warren Buffet called CDOs “financial weapons of mass destruction” or when writers such as Michael Hudson, Pam Martenson, Paul Craigs Roberts, Lew Rockwell, Nouriel Roubini, and Mike Whitney were dismantling the housing bubble.   The CMS has performed its job brilliantly.  Corporate control over a democracy is only possible when the frame of through is narrowed into an acceptable spectrum.  CNN, Fox, and MSNBC all provide a frame for society.  One for the right, center, and left but all accept the corporate frame.

The CMS has continued to maintain the subprime frame despite its inadequacy.  The subprime crisis has already occurred but it has morphed into a new crisis.  The “shadow banking industry” is in crisis.  Structured investment vehicles utilized the mortgage industry as a vehicle for profit. In order for investment banks, commercial banks, and other broker dealers to make a profit they enlisted the help of rating agencies that gave AAA ratings to junk mortgages. The fraud committed by these financial institutions and their sycophants in the media are the cause this crisis.  The failure of the debtor to pay off the debt is part of the problem but it is not the cause of the problem. However, the people that overstated their income to gain a mortgage are guilty of fraud.  These people should face criminal charges.  Furthermore the mortgage originators should also face serious sanctions for encouraging unsustainable mortgages. This breakdown was caused by predatory lenders and predatory capitalism. The model should fail.

]]> http://phenixrisen.wordpress.com/2008/09/23/over-indulgence-wont-cut-it-2/feed/ 0 Phenix http://phenixrisen.wordpress.com/2008/09/23/the-new-president-and-the-global-landscape/ http://phenixrisen.wordpress.com/2008/09/23/the-new-president-and-the-global-landscape/#comments Tue, 23 Sep 2008 21:20:40 +0000 phenixrisen http://phenixrisen.wordpress.com/?p=29 ]]> Editor’s Note: This is part one of a four-part report by Stratfor founder and Chief Intelligence Officer George Friedman on the U.S. presidential debate on foreign policy, to be held Sept. 26. Stratfor is a private, nonpartisan intelligence service with no preference for one candidate over the other. We are interested in analyzing and forecasting the geopolitical impact of the election and, with this series, seek to answer two questions: What is the geopolitical landscape that will confront the next president, and what foreign policy proposals would a President McCain or a President Obama bring to bear? For media interviews, e-mail pr@stratfor.com or call 512-744-4309.

By George Friedman

It has often been said that presidential elections are all about the economy. That just isn’t true. Harry Truman’s election was all about Korea. John Kennedy’s election focused on missiles, Cuba and Berlin. Lyndon Johnson’s and Richard Nixon’s elections were heavily about Vietnam. Ronald Reagan’s first election pivoted on Iran. George W. Bush’s second election was about Iraq. We won’t argue that presidential elections are all about foreign policy, but they are not all about the economy. The 2008 election will certainly contain a massive component of foreign policy.

We have no wish to advise you how to vote. That’s your decision. What we want to do is try to describe what the world will look like to the new president and consider how each candidate is likely to respond to the world. In trying to consider whether to vote for John McCain or Barack Obama, it is obviously necessary to consider their stands on foreign policy issues. But we have to be cautious about campaign assertions. Kennedy claimed that the Soviets had achieved superiority in missiles over the United States, knowing full well that there was no missile gap. Johnson attacked Barry Goldwater for wanting to escalate the war in Vietnam at the same time he was planning an escalation. Nixon won the 1968 presidential election by claiming that he had a secret plan to end the war in Vietnam. What a candidate says is not always an indicator of what the candidate is thinking.

It gets even trickier when you consider that many of the most important foreign policy issues are not even imagined during the election campaign. Truman did not expect that his second term would be dominated by a war in Korea. Kennedy did not expect to be remembered for the Cuban missile crisis. Jimmy Carter never imagined in 1976 that his presidency would be wrecked by the fall of the Shah of Iran and the hostage crisis. George H. W. Bush didn’t expect to be presiding over the collapse of communism or a war over Kuwait. George W. Bush (regardless of conspiracy theories) never expected his entire presidency to be defined by 9/11. If you read all of these presidents’ position papers in detail, you would never get a hint as to what the really important foreign policy issues would be in their presidencies.

Between the unreliability of campaign promises and the unexpected in foreign affairs, predicting what presidents will do is a complex business. The decisions a president must make once in office are neither scripted nor conveniently timed. They frequently present themselves to the president and require decisions in hours that can permanently define his (or her) administration. Ultimately, voters must judge, by whatever means they might choose, whether the candidate has the virtue needed to make those decisions well.

Virtue, as we are using it here, is a term that comes from Machiavelli. It means the opposite of its conventional usage. A virtuous leader is one who is clever, cunning, decisive, ruthless and, above all, effective. Virtue is the ability to face the unexpected and make the right decision, without position papers, time to reflect or even enough information. The virtuous leader can do that. Others cannot. It is a gut call for a voter, and a tough one.

This does not mean that all we can do is guess about a candidate’s nature. There are three things we can draw on. First, there is the political tradition the candidate comes from. There are more things connecting Republican and Democratic foreign policy than some would like to think, but there are also clear differences. Since each candidate comes from a different political tradition — as do his advisers — these traditions can point to how each candidate might react to events in the world. Second, there are indications in the positions the candidates take on ongoing events that everyone knows about, such as Iraq. Having pointed out times in which candidates have been deceptive, we still believe there is value in looking at their positions and seeing whether they are coherent and relevant. Finally, we can look at the future and try to predict what the world will look like over the next four years. In other words, we can try to limit the surprises as much as possible.

In order to try to draw this presidential campaign into some degree of focus on foreign policy, we will proceed in three steps. First, we will try to outline the foreign policy issues that we think will confront the new president, with the understanding that history might well throw in a surprise. Second, we will sketch the traditions and positions of both Obama and McCain to try to predict how they would respond to these events. Finally, after the foreign policy debate is over, we will try to analyze what they actually said within the framework we created.

Let me emphasize that this is not a partisan exercise. The best guarantee of objectivity is that there are members of our staff who are passionately (we might even say irrationally) committed to each of the candidates. They will be standing by to crush any perceived unfairness. It is Stratfor’s core belief that it is possible to write about foreign policy, and even an election, without becoming partisan or polemical. It is a difficult task and we doubt we can satisfy everyone, but it is our goal and commitment.

The Post 9/11 World

Ever since 9/11 U.S. foreign policy has focused on the Islamic world. Starting in late 2002, the focus narrowed to Iraq. When the 2008 campaign for president began a year ago, it appeared Iraq would define the election almost to the exclusion of all other matters. Clearly, this is no longer the case, pointing to the dynamism of foreign affairs and opening the door to a range of other issues.

Iraq remains an issue, but it interacts with a range of other issues. Among these are the future of U.S.-Iranian relations; U.S. military strategy in Afghanistan and the availability of troops in Iraq for that mission; the future of U.S.-Pakistani relations and their impact on Afghanistan; the future of U.S.-Russian relations and the extent to which they will interfere in the region; resources available to contain Russian expansion; the future of the U.S. relationship with the Europeans and with NATO in the context of growing Russian power and the war in Afghanistan; Israel’s role, caught as it is between Russia and Iran; and a host of only marginally related issues. Iraq may be subsiding, but that simply complicates the world facing the new president.

The list of problems facing the new president will be substantially larger than the problems facing George W. Bush, in breadth if not in intensity. The resources he will have to work with, military, political and economic, will not be larger for the first year at least. In terms of military capacity, much will hang on the degree to which Iraq continues to bog down more than a dozen U.S. brigade combat teams. Even thereafter, the core problem facing the next president will be the allocation of limited resources to an expanding number of challenges. The days when it was all about Iraq is over. It is now all about how to make the rubber band stretch without breaking.

Iraq remains the place to begin, however, since the shifts there help define the world the new president will face. To understand the international landscape the new president will face, it is essential to begin by understanding what happened in Iraq, and why Iraq is no longer the defining issue of this campaign.

A Stabilized Iraq and the U.S. Troop Dilemma

In 2006, it appeared that the situation in Iraq was both out of control and hopeless. Sunni insurgents were waging war against the United States, Shiite militias were taking shots at the Americans as well, and Sunnis and Shia were waging a war against each other. There seemed to be no way to bring the war to anything resembling a satisfactory solution.

When the Democrats took control of Congress in the 2006 elections, it appeared inevitable that the United States would begin withdrawing forces from Iraq. U.S expectations aside, this was the expectation by all parties in Iraq. Given that the United States was not expected to remain a decisive force in Iraq, all Iraqi parties discounted the Americans and maneuvered for position in anticipation of a post-American Iraq. The Iranians in particular saw an opportunity to limit a Sunni return to Iraq’s security forces, thus reshaping the geopolitics of the region. U.S. fighting with Iraqi Sunnis intensified in preparation for the anticipated American withdrawal.

Bush’s decision to increase forces rather than withdraw them dramatically changed the psychology of Iraq. It was assumed he had lost control of the situation. Bush’s decision to surge forces in Iraq, regardless by how many troops, established two things. First, Bush remained in control of U.S. policy. Second, the assumption that the Americans were leaving was untrue. And suddenly, no one was certain that there would be a vacuum to be filled.

The deployment of forces proved helpful, as did the change in how the troops were used; recent leaks indicate that new weapon systems also played a key role. The most important factor, however, was the realization that the Americans were not leaving on Bush’s watch. Since no one was sure who the next U.S. president would be, or what his policies might be, it was thus uncertain that the Americans would leave at all.

Everyone in Iraq suddenly recalculated. If the Americans weren’t leaving, one option would be to make a deal with Bush, seen as weak and looking for historical validation. Alternatively, they could wait for Bush’s successor. Iran remembers — without fondness — its decision not to seal a deal with Carter, instead preferring to wait for Reagan. Similarly, seeing foreign jihadists encroaching in Sunni regions and the Shia shaping the government in Baghdad, the Sunni insurgents began a fundamental reconsideration of their strategy.

Apart from reversing Iraq’s expectations about the United States, part of Washington’s general strategy was supplementing military operations with previously unthinkable political negotiations. First, the United States began talking to Iraq’s Sunni nationalist insurgents, and found common ground with them. Neither the Sunni nationalists nor the United States liked the jihadists, and both wanted the Shia to form a coalition government. Second, back-channel U.S.-Iranian talks clearly took place. The Iranians realized that the possibility of a pro-Iranian government in Baghdad was evaporating. Iran’s greatest fear was a Sunni Iraqi government armed and backed by the United States, recreating a version of the Hussein regime that had waged war with Iran for almost a decade. The Iranians decided that a neutral, coalition government was the best they could achieve, so they reined in the Shiite militia.

The net result of this was that the jihadists were marginalized and broken, and an uneasy coalition government was created in Baghdad, balanced between Iran and the United States. The Americans failed to create a pro-American government in Baghdad, but had blocked the emergence of a pro-Iranian government. Iraqi society remained fragmented and fragile, but a degree of peace unthinkable in 2006 had been created.

The first problem facing the next U.S. president will be deciding when and how many U.S. troops will be withdrawn from Iraq. Unlike 2006, this issue will not be framed by Iraq alone. First, there will be the urgency of increasing the number of U.S. troops in Afghanistan. Second, there will be the need to create a substantial strategic reserve to deal with potential requirements in Pakistan, and just as important, responding to events in the former Soviet Union like the recent conflict in Georgia.

At the same time, too precipitous a U.S. withdrawal not only could destabilize the situation internally in Iraq, it could convince Iran that its dream of a pro-Iranian Iraq is not out of the question. In short, too rapid a withdrawal could lead to resumption of war in Iraq. But too slow a withdrawal could make the situation in Afghanistan untenable and open the door for other crises.

The foreign policy test for the next U.S. president will be calibrating three urgent requirements with a military force that is exhausted by five years of warfare in Iraq and seven in Afghanistan. This force was not significantly expanded since Sept. 11, making this the first global war the United States has ever fought without a substantial military expansion. Nothing the new president does will change this reality for several years, so he will be forced immediately into juggling insufficient forces without the option of precipitous withdrawal from Iraq unless he is prepared to accept the consequences, particularly of a more powerful Iran.

The Nuclear Chip and a Stable U.S.-Iranian Understanding

The nuclear issue has divided the United States and Iran for several years. The issue seems to come and go depending on events elsewhere. Thus, what was enormously urgent just prior to the Russo-Georgian war became much less pressing during and after it. This is not unreasonable in our point of view, because we regard Iran as much farther from nuclear weapons than others might, and we suspect that the Bush administration agrees given its recent indifference to the question.

Certainly, Iran is enriching uranium, and with that uranium, it could possibly explode a nuclear device. But the gap between a nuclear device and weapon is substantial, and all the enriched uranium in the world will not give the Iranians a weapon. To have a weapon, it must be ruggedized and miniaturized to fit on a rocket or to be carried on an attack aircraft. The technologies needed for that range from material science to advanced electronics to quality assurance. Creating a weapon is a huge project. In our view, Iran does not have the depth of integrated technical skills needed to achieve that goal.

As for North Korea, for Iran a very public nuclear program is a bargaining chip designed to extract concessions, particularly from the Americans. The Iranians have continued the program very publicly in spite of threats of Israeli and American attacks because it made the United States less likely to dismiss Iranian wishes in Tehran’s true area of strategic interest, Iraq.

The United States must draw down its forces in Iraq to fight in Afghanistan. The Iranians have no liking for the Taliban, having nearly gone to war with them in 1998, and having aided the United States in Afghanistan in 2001. The United States needs Iran’s commitment to a neutral Iraq to withdraw U.S. forces since Iran could destabilize Iraq overnight, though Tehran’s ability to spin up Shiite proxies in Iraq has declined over the past year.

Therefore, the next president very quickly will face the question of how to deal with Iran. The Bush administration solution — relying on quiet understandings alongside public hostility — is one model. It is not necessarily a bad one, so long as forces remain in Iraq to control the situation. If the first decision the new U.S. president will have to make is how to transfer forces in Iraq elsewhere, the second decision will be how to achieve a more stable understanding with Iran.

This is particularly pressing in the context of a more assertive Russia that might reach out to Iran. The United States will need Iran more than Iran needs the United States under these circumstances. Washington will need Iran to abstain from action in Iraq but to act in Afghanistan. More significantly, the United States will need Iran not to enter into an understanding with Russia. The next president will have to figure out how to achieve all these things without giving away more than he needs to, and without losing his domestic political base in the process.

Afghanistan, Pakistan and the Taliban

The U.S. president also will have to come up with an Afghan policy, which really doesn’t exist at this moment. The United States and its NATO allies have deployed about 50,000 troops in Afghanistan. To benchmark this, the Russians deployed around 120,000 by the mid-1980s, and were unable to pacify the country. Therefore the possibility of 60,000 troops — or even a few additional brigades on top of that — pacifying Afghanistan is minimal. The primary task of troops in Afghanistan now is to defend the Kabul regime and other major cities, and to try to keep the major roads open. More troops will make this easier, but by itself, it will not end the war.

The problem in Afghanistan is twofold. First, the Taliban defeated their rivals in Afghanistan during the civil war of the 1990s because they were the most cohesive force in the country, were politically adept and enjoyed Pakistani support. The Taliban’s victory was not accidental; and all other things being equal, without the U.S. presence, they could win again. The United States never defeated the Taliban. Instead, the Taliban refused to engage in massed warfare against American airpower, retreated, dispersed and regrouped. In most senses, it is the same force that won the Afghan civil war.

The United States can probably block the Taliban from taking the cities, but to do more it must do three things. First, it must deny the Taliban sanctuary and lines of supply running from Pakistan. These two elements allowed the mujahideen to outlast the Soviets. They helped bring the Taliban to power. And they are fueling the Taliban today. Second, the United States must form effective coalitions with tribal groups hostile to the Taliban. To do this it needs the help of Iran, and more important, Washington must convince the tribes that it will remain in Afghanistan indefinitely — not an easy task. And third — the hardest task for the new president — the United States will have to engage the Taliban themselves, or at least important factions in the Taliban movement, in a political process. When we recall that the United States negotiated with the Sunni insurgents in Iraq, this is not as far-fetched as it appears.

The most challenging aspect to deal with in all this is Pakistan. The United States has two issues in the South Asian country. The first is the presence of al Qaeda in northern Pakistan. Al Qaeda has not carried out a successful operation in the United States since 2001, nor in Europe since 2005. Groups who use the al Qaeda label continue to operate in Iraq, Afghanistan and Pakistan, but they use the name to legitimize or celebrate their activities — they are not the same people who carried out 9/11. Most of al Qaeda prime’s operatives are dead or scattered, and its main leaders, Osama bin Laden and Ayman al-Zawahiri, are not functional. The United States would love to capture bin Laden so as to close the books on al Qaeda, but the level of effort needed — assuming he is even alive — might outstrip U.S. capabilities.

The most difficult step politically for the new U.S. president will be to close the book on al Qaeda. This does not mean that a new group of operatives won’t grow from the same soil, and it doesn’t mean that Islamist terrorism is dead by any means. But it does mean that the particular entity the United States has been pursuing has effectively been destroyed, and the parts regenerating under its name are not as dangerous. Asserting victory will be extremely difficult for the new U.S. president. But without that step, a massive friction point between the United States and Pakistan will persist — one that isn’t justified geopolitically and undermines a much more pressing goal.

The United States needs the Pakistani army to attack the Taliban in Pakistan, or failing that, permit the United States to attack them without hindrance from the Pakistani military. Either of these are nightmarishly difficult things for a Pakistani government to agree to, and harder still to carry out. Nevertheless, without cutting the line of supply to Pakistan, like Vietnam and the Ho Chi Minh Trail, Afghanistan cannot be pacified. Therefore, the new president will face the daunting task of persuading or coercing the Pakistanis to carry out an action that will massively destabilize their country without allowing the United States to get bogged down in a Pakistan it cannot hope to stabilize.

At the same time, the United States must begin the political process of creating some sort of coalition in Afghanistan that it can live with. The fact of the matter is that the United States has no long-term interest in Afghanistan except in ensuring that radical jihadists with global operational reach are not given sanctuary there. Getting an agreement to that effect will be hard. Guaranteeing compliance will be virtually impossible. Nevertheless, that is the task the next president must undertake.

There are too many moving parts in Afghanistan to be sanguine about the outcome. It is a much more complex situation than Iraq, if for no other reason than because the Taliban are a far more effective fighting force than anything the United States encountered in Iraq, the terrain far more unfavorable for the U.S. military, and the political actors much more cynical about American capabilities.

The next U.S. president will have to make a painful decision. He must either order a long-term holding action designed to protect the Karzai government, launch a major offensive that includes Pakistan but has insufficient forces, or withdraw. Geopolitically, withdrawal makes a great deal of sense. Psychologically, it could unhinge the region and regenerate al Qaeda-like forces. Politically, it would not be something a new president could do. But as he ponders Iraq, the future president will have to address Afghanistan. And as he ponders Afghanistan, he will have to think about the Russians.

The Russian Resurgence

When the United States invaded Afghanistan in 2001, the Russians were allied with the United States. They facilitated the U.S. relationship with the Northern Alliance, and arranged for air bases in Central Asia. The American view of Russia was formed in the 1990s. It was seen as disintegrating, weak and ultimately insignificant to the global balance. The United States expanded NATO into the former Soviet Union in the Baltic states and said it wanted to expand it into Ukraine and Georgia. The Russians made it clear that they regarded this as a direct threat to their national security, resulting in the 2008 Georgian conflict.

The question now is where U.S.-Russian relations are going. Russian Prime Minister Vladimir Putin called the collapse of the Soviet Union a geopolitical catastrophe. After Ukraine and Georgia, it is clear he does not trust the United States and that he intends to reassert his sphere of influence in the former Soviet Union. Georgia was lesson one. The current political crisis in Ukraine is the second lesson unfolding.

The re-emergence of a Russian empire in some form or another represents a far greater threat to the United States than the Islamic world. The Islamic world is divided and in chaos. It cannot coalesce into the caliphate that al Qaeda wanted to create by triggering a wave of revolutions in the Islamic world. Islamic terrorism remains a threat, but the geopolitical threat of a unifying Islamic power is not going to happen.

Russia is a different matter. The Soviet Union and the Russian empire both posed strategic threats because they could threaten Europe, the Middle East and China simultaneously. While this overstates the threat, it does provide some context. A united Eurasia is always powerful, and threatens to dominate the Eastern Hemisphere. Therefore, preventing Russia from reasserting its power in the former Soviet Union should take precedence over all other considerations.

The problem is that the United States and NATO together presently do not have the force needed to stop the Russians. The Russian army is not particularly powerful or effective, but it is facing forces that are far less powerful and effective. The United States has its forces tied down in Iraq and Afghanistan so that when the war in Georgia broke out, sending ground forces was simply not an option. The Russians are extremely aware of this window of opportunity, and are clearly taking advantage of it.

The Russians have two main advantages in this aside from American resource deficits. First, the Europeans are heavily dependent on Russian natural gas; German energy dependence on Moscow is particularly acute. The Europeans are in no military or economic position to take any steps against the Russians, as the resulting disruption would be disastrous. Second, as the United States maneuvers with Iran, the Russians can provide support to Iran, politically and in terms of military technology, that not only would challenge the United States, it might embolden the Iranians to try for a better deal in Iraq by destabilizing Iraq again. Finally, the Russians can pose lesser challenges in the Caribbean with Venezuela, Nicaragua and Cuba, as well as potentially supporting Middle Eastern terrorist groups and left-wing Latin American groups.

At this moment, the Russians have far more options than the Americans have. Therefore, the new U.S. president will have to design a policy for dealing with the Russians with few options at hand. This is where his decisions on Iraq, Iran, Afghanistan and Pakistan will intersect and compete with his decisions on Russia. Ideally, the United States would put forces in the Baltics — which are part of NATO — as well as in Ukraine and Georgia. But that is not an option and won’t be for more than a year under the best of circumstances.

The United States therefore must attempt a diplomatic solution with Russia with very few sticks. The new president will need to try to devise a package of carrots — e.g., economic incentives — plus the long-term threat of a confrontation with the United States to persuade Moscow not to use its window of opportunity to reassert Russian regional hegemony. Since regional hegemony allows Russia to control its own destiny, the carrots will have to be very tempting, while the threat has to be particularly daunting. The president’s task will be crafting the package and then convincing the Russians it has value.

European Disunity and Military Weakness

One of the problems the United States will face in these negotiations will be the Europeans. There is no such thing as a European foreign policy; there are only the foreign policies of the separate countries. The Germans, for example, do not want a confrontation with Russia under any circumstances. The United Kingdom, by contrast, is more willing to take a confrontational approach to Moscow. And the European military capability, massed and focused, is meager. The Europeans have badly neglected their military over the past 15 years. What deployable, expeditionary forces they have are committed to the campaign in Afghanistan. That means that in dealing with Russia, the Americans do not have united European support and certainly no meaningful military weight. This will make any diplomacy with the Russians extremely difficult.

One of the issues the new president eventually will have to face is the value of NATO and the Europeans as a whole. This was an academic matter while the Russians were prostrate. With the Russians becoming active, it will become an urgent issue. NATO expansion — and NATO itself — has lived in a world in which it faced no military threats. Therefore, it did not have to look at itself militarily. After Georgia, NATO’s military power becomes very important, and without European commitment, NATO’s military power independent of the United States — and the ability to deploy it — becomes minimal. If Germany opts out of confrontation, then NATO will be paralyzed legally, since it requires consensus, and geographically. For the United States alone cannot protect the Baltics without German participation.

The president really will have one choice affecting Europe: Accept the resurgence of Russia, or resist. If the president resists, he will have to limit his commitment to the Islamic world severely, rebalance the size and shape of the U.S. military and revitalize and galvanize NATO. If he cannot do all of those things, he will face some stark choices in Europe.

Israel, Turkey, China, and Latin America

Russian pressure is already reshaping aspects of the global system. The Israelis have approached Georgia very differently from the United States. They halted weapon sales to Georgia the week before the war, and have made it clear to Moscow that Israel does not intend to challenge Russia. The Russians met with Syrian President Bashar al Assad immediately after the war. This signaled the Israelis that Moscow was prepared to support Syria with weapons and with Russian naval ships in the port of Tartus if Israel supports Georgia, and other countries in the former Soviet Union, we assume. The Israelis appear to have let the Russians know that they would not do so, separating themselves from the U.S. position. The next president will have to re-examine the U.S. relationship with Israel if this breach continues to widen.

In the same way, the United States will have to address its relationship with Turkey. A long-term ally, Turkey has participated logistically in the Iraq occupation, but has not been enthusiastic. Turkey’s economy is booming, its military is substantial and Turkish regional influence is growing. Turkey is extremely wary of being caught in a new Cold War between Russia and the United States, but this will be difficult to avoid. Turkey’s interests are very threatened by a Russian resurgence, and Turkey is the U.S. ally with the most tools for countering Russia. Both sides will pressure Ankara mercilessly. More than Israel, Turkey will be critical both in the Islamic world and with the Russians. The new president will have to address U.S.-Turkish relations both in context and independent of Russia fairly quickly.

In some ways, China is the great beneficiary of all of this. In the early days of the Bush administration, there were some confrontations with China. As the war in Iraq calmed down, Washington seemed to be increasing its criticisms of China, perhaps even tacitly supporting Tibetan independence. With the re-emergence of Russia, the United States is now completely distracted. Contrary to perceptions, China is not a global military power. Its army is primarily locked in by geography and its navy is in no way an effective blue-water force. For its part, the United States is in no position to land troops on mainland China. Therefore, there is no U.S. geopolitical competition with China. The next president will have to deal with economic issues with China, but in the end, China will sell goods to the United States, and the United States will buy them.

Latin America has been a region of minimal interest to the United States in the last decade or longer. So long as no global power was using its territory, the United States did not care what presidents Hugo Chavez in Venezuela, Evo Morales in Bolivia and Daniel Ortega in Nicaragua — or even the Castros in Cuba — were doing. But with the Russians back in the Caribbean, at least symbolically, all of these countries suddenly become more important. At the moment, the United States has no Latin American policy worth noting; the new president will have to develop one.

Quite apart from the Russians, the future U.S. president will need to address Mexico. The security situation in Mexico is deteriorating substantially, and the U.S.-Mexican border remains porous. The cartels stretch from Mexico to the streets of American cities where their customers live. What happens in Mexico, apart from immigration issues, is obviously of interest to the United States. If the current trajectory continues, at some point in his administration, the new U.S. president will have to address Mexico — potentially in terms never before considered.

The U.S. Defense Budget

The single issue touching on all of these is the U.S. defense budget. The focus of defense spending over the past eight years has been the Army and Marine Corps — albeit with great reluctance. Former Defense Secretary Donald Rumsfeld was not an advocate of a heavy Army, favoring light forces and air power, but reality forced his successors to reallocate resources. In spite of this, the size of the Army remained the same — and insufficient for the broader challenges emerging.

The focus of defense spending was Fourth Generation warfare, essentially counterinsurgency. It became dogma in the military that we would not see peer-to-peer warfare for a long time. The re-emergence of Russia, however, obviously raises the specter of peer-to-peer warfare, which in turn means money for the Air Force as well as naval rearmament. All of these programs will take a decade or more to implement, so if Russia is to be a full-blown challenge by 2020, spending must begin now.

If we assume that the United States will not simply pull out of Iraq and Afghanistan, but will also commit troops to allies on Russia’s periphery while retaining a strategic reserve — able to, for example, protect the U.S.-Mexican border — then we are assuming substantially increased spending on ground forces. But that will not be enough. The budgets for the Air Force and Navy will also have to begin rising.

U.S. national strategy is expressed in the defense budget. Every strategic decision the president makes has to be expressed in budget dollars with congressional approval. Without that, all of this is theoretical. The next president will have to start drafting his first defense budget shortly after taking office. If he chooses to engage all of the challenges, he must be prepared to increase defense spending. If he is not prepared to do that, he must concede that some areas of the world are beyond management. And he will have to decide which areas these are. In light of the foregoing, as we head toward the debate, 10 questions should be asked of the candidates:

1. If the United States removes its forces from Iraq slowly as both of you advocate, where will the troops come from to deal with Afghanistan and protect allies in the former Soviet Union?
2. The Russians sent 120,000 troops to Afghanistan and failed to pacify the country. How many troops do you think are necessary?
3. Do you believe al Qaeda prime is still active and worth pursuing?
4. Do you believe the Iranians are capable of producing a deliverable nuclear weapon during your term in office?
5. How do you plan to persuade the Pakistani government to go after the Taliban, and what support can you provide them if they do?
6. Do you believe the United States should station troops in the Baltic states, in Ukraine and Georgia as well as in other friendly countries to protect them from Russia?
7. Do you feel that NATO remains a viable alliance, and are the Europeans carrying enough of the burden?
8. Do you believe that Mexico represents a national security issue for the United States?
9. Do you believe that China represents a strategic challenge to the United States?
10. Do you feel that there has been tension between the United States and Israel over the Georgia issue?

Stratfor is an amazing resource for information.  I personally visit Stratfor whenever I can get a free look.  If I had the money I would certainly pay for the service.  I will post the other 3 parts of the series.

Stratfor has given permission for anyone to post this series as long as Stratfor is given credit.  I do not always agree with their positions but at least I know i’m getting honest information and I am therefore able to make an informed decision.  I can not say the same for  the Corporate Media.

What is hyperinflation?

First I’d have to understand inflation.  You’d think that it would be simple to understand inflation.  After all I do shop for my own food.  My 40-50 dollars is not buying what it used to buy.  I actually started a garden this year to reduce my food costs but I still spend 40-50 dollars.  Price inflation has clearly occurred in agriculture and its related food industries.

In the past an increase in the money supply was considered inflationary but economists have demonstrated that inflation is really the increase in prices over time.  Inflation is thus the reduction of the real value of money.  The methods of determining the change of prices over time are varied.  The Consumer Price Index (CPI) is the preferred inflation indicator through out most of the world.  The US uses Core Inflation which is further refined to the Personal consumption expenditures price index (PCE).  The PCE rises less than the CPI over time.  Essentially the US inflation rate is artificially lower than global norm because the US uses an equation that lowers inflation relative to the global norm.

Hyperinflation is different than traditional inflation.  Inflationary pressure from the CPI and PCE are based on consumer goods.  Hyperinflation on the other hand is created when paper currency (currency not backed by tangible assets) rapidly increases in supply with no connection to economic output.  The depreciation of the paper currency is accelerated because of an imbalance in the supply and demand of that currency.  The Central Bank will have to either increase interest rates to attract foreigners into buying the depreciated currency or print more currency to meet its obligations.  If a Central Bank chooses to print more paper money than inflation is inevitable.  Hyperinflation will occur if the paper money looses its intrinsic value which is followed by a run on the currency similar to a bank run.  Domestic and foreign holders of the currency will seek shelter in hard assets like gold or other paper currencies.  Hyperinflation will continue and deepen when the Central Bank increases money supply to jump start economic growth.  A negative feedback loop will ensue which will continue to devalue the currency until a currency backed by hard assets are created or a bartering system is formed.  In either case it is an economic catastrophe.

Is Hyperinflation possible in America?

US inflation rates are understated because the US Dollar is the global reserve currency.  Countries must buy and sell in dollars In order to do business in the global dollarized economy.  The greenback’s status as a reserve currency allows the US to export its inflationary pressure.  Foreign Central Banks buy US dollars to work with in the dollarized global economy but Foreign Central Banks in East Asia and other countries focused on export led growth buy dollars to maintain something known as the Bretton Woods II System.

I won’t go into Bretton Woods II since that will require even more reading for me but it is essential to understand why the US will face hyperinflation in the future.  Foreign countries have been absorbing excess US dollars and thus America’s excess inflation.  These countries have done this to grow through exports to the United States.  Foreign financing of America’s current account deficits has created an unstable equilibrium.  The dollar is artificially stronger vs East Asian (Chinese) currencies which has empty out America’s industrial base.  The dissolution of America’s ability to manufacture finished and capital goods has seriously retarded is ability to pay back any of its massive debt.  The only way left is for America to pay its debts through the printing press ie printing more money.  If the excess dollars are not bought by foreign central banks then the US faces inflation not hyperinflation.

The Bretton Woods II system has also hindered the development of internal markets in East Asian economies.  Ironically this reminds me of the Dawes Plan except America takes the place of Germany and East Asian countries are America.  It really reminds of the Dawes Plan because I know the Dawes Plan.  I believe that the US will face hyperinflation because foreign central banks will eventually have to dump the dollar. Foreign Central Banks will not stop buying dollars overnight.  First the US will be forced to increase interest rates effectively creating a negative feedback loop for US consumers that are hooked on credit.  Increased interest rates will feed into increased credit card rates, car loans, bank loans, and mortgage rates and resets.  Defaults will increase which will dry up capital and deflate the economy.

In response to a deflation the US will produce more dollars.  Foreign Central Banks will stop purchasing dollars since they are in effect a loan to a government that is moving towards insolvency.  At this point of the crisis it will become clear that the US economy is collapsing and that the US has no intention of repaying its debt.  The foreign creditors will decide to stop loaning money to the US.  The US dollar will severely depreciate causing all imports to increase accordingly in price.  Consumer spending will severely contract causing the economy to hemorrhage service sector jobs.  Unemployment will skyrocket.  The government will have no choice but to increase the output of the printing press thus devaluing the US dollar even further.  This is the recipe for hyperinflation.  Inflationary and deflationary pressure will turn into a Hyperinflation Depression.

]]> http://phenixrisen.wordpress.com/2008/09/23/what-is-hyperinflation/feed/ 2 Phenix http://phenixrisen.wordpress.com/2008/09/22/over-indulgence-wont-cut-it/ http://phenixrisen.wordpress.com/2008/09/22/over-indulgence-wont-cut-it/#comments Mon, 22 Sep 2008 06:02:56 +0000 phenixrisen http://phenixrisen.wordpress.com/?p=20 ]]> CNN, the Corpoarte News Network, has continuously cheerleaded this terrible economic system.  Titans of Wall Street and their lackeys have always inundated their shows.  The occassional sane voice of reason might have been Ralph Nader.  Unforuntately men and women like Nader only get 1 to 2 minutes to dicuss their views while aplogists for a criminal economic system get the rest of the discussion.  Even their broadcasters maintain the Corporate frame through what I assume are vetted questions.

Today the Corpoarte News Network is trying to tell Americans to save save save.  These professional propagandists err ‘news’ anchors have consistently told families to teach their kids how to properly handle credit cards otherwise known as debt cards.  No that is not a typo.  I did not mean to write debit card.  In order to use a credit card you must go into debt.  Corporate propaganda has taught a generation of Americans that debt cards are useful and necessary to survive in modern society.  The true cost of a debt card is never discussed.

Our current account deficits are linked to our use of debt cards.  In order to continue our consumer culutre our government and by extension corporations rely on foreign capital.  Foreign Central Banks by T-bills and other US debt products to finance the current account deficit.  In essence we are paying back China and other net lenders through our taxes and credit cards bills.  Foreign Central Banks take part in this system to maintain a currecny system known as Bretton Woods II.  We are witnessing the failure of this global currency system.

The Corporate Media System (CMS) otherwise known as the Mainstream Media has consistently told Americans to leverage themselves into more debt/credit cards, home refinancing, 401ks, IRAs, and other debt or investment vehichles.  The CMS was nowhere when Warren Buffet called CDOs “financial weapons of mass destruction” or when writers such as Michael Hudson, Pam Martenson, Paul Craigs Roberts, Lew Rockwell, Nouriel Roubini, and Mike Whitney were dismantling the housing bubble.   The CMS has performed its job brilliantly.  Corporate  control over a democracy is only possible when the frame of through is narrowed into an acceptable spectrum.  CNN, Fox, and MSNBC all provide a frame for society.  One for the right, center, and left but all accept the corporate frame.

The CMS has continued to maintain the subprime frame despite its inadequacy.  The subprime crisis has already ocurred but it has morphed into a new crisis.  The “shadow banking indsutry” is in crisis.  Structured investment vehichles that utilized the mortgage industry as a vehichle for profit has caused this crisis.  The failure of the debtor to pay off the debt is not the problem.  However, the people that overstated their income to gain a mortgage are guilty of fraud.  These people should be face criminal charges.  Furthermore the mortgage breakdown was caused by predatory lenders that did not require proof of income or down payments.  These lenders should fail.

* Powerful idea of nationalism
* Powerful executive control in government
* Lower human rights outlook
* Military reigns supreme
* Corporations wield great power
* Idea that National Security is at great risk to some threat
* Identifying of enemies/scapegoats that unifies citizens in Patriotism
* Mass media controlled by State and Corporations
* Fixed elections
* Rampant corruption
* Unlimited power held by police force

My opinions regarding this situation are still forming.  I’m a hodgepodge of ideas. I read Austrian and Post Keynesian economists.  I like how Post Keynesian economists run the economy outside of a crisis but I also appreciate von Mises’ way of handling artificial bubbles. An Austrian economist would have let every firm fail. I do not like the social costs of this view but the bubble will have to pop at one point.

The global financial moves and Wall Streets reaction today is/was a mistake. The lack of liquidity is not the problem. The toxic mortgage securities are dragging down the legitimate banking system. Most financial institutions even some banks have over extended their capital and as a result they are now insolvent. I believe 22% of Wahcovia’s portfolio contains these exotic instruments. Other banks have capital but they can not extend credit.

The ‘shadow banking system’ is collapsing and will collapse. I believe this attempt to re-inflate the asset bubble will lead to a deeper and longer recession which will be worse than the Great Depression.  The Fed and Treasury have already doubled the National Debt and increased the money supply at alarming rates. This recent move will increase inflationary pressure.

I’m still not sure how it all works but I’m starting to really think that every move these people make are leading towards stagflation. I’m reminded of how the first Bretton Woods system failed but more importantly the debt recycling that the US is engaged in reminds me of the failed Dawes Plan that led to Weimar Germany’s hyperinflation. America is not an industrial power which hurts the Dawes Plan analogy but I believe it is still applicable.

Strong leaders are needed to convince Americans that the expense and hassles of changing the nation’s energy dependence is worth the effort, he said.

“You have to have the right leadership that’s going to get up and sell this and say, ‘Let me tell you we can do it on our own, we have resources to do it on our own,’” Pickens said. “People have got to understand this has to be done, the country has got to do this.”

Energy independence is a favorite phrase in today’s political dialog.  The two leading presidential candidates differ slightly on these issues.  The ‘major differences’ mentioned by their perspective camps are dwarfed by the similarities.   Obama and McCain both support clean coal technology and next generation nuclear power plants.  Clean coal and ‘clean’ nuclear are both misnomers since each cause environmental nightmares in their own distinctive ways.  In my view these two commonalities dwarf any difference between the two candidates.

Boone T Pickens has offered a unique plan to move the United States away from the gasoline powered internal combustion engine.  I applaud his vision and agree with its intent.  As a major supporter of Personal Rapid Transit I feel his proposal to move Natural Gas to our truck and car fleet is short sighted.  The country should implement the Pickens’ Plan but it should use the increased wind power to reduce the use of coal.

Politically my idea is a non-starter.  Coal producing states are too important in the presidential race and they are home to powerful members of the political and economic elite.  Ironically coal related industries have shed workers as they mechanize and increase the scale of their environmental destruction.  If money was not King I think there would be an opportunity to make green inroads in coal producing states.  The Mountain Party in West Virginia is one example.

A reduction in the use of coal by 22% would have a dramatic effect on reducing the long term impact of Global Warming.  If you know the CO2 reduction #s please tell me or let me know where to find the #s.  The Pickens’ Plan is an amazing gambit.  I truly hope it succeeds.  The economy needs the infusion of homegrown industrial growth.