Looking at all the nonsense filling the news recently (Presidential debates in the USA, the dying EU with a Nobel prize, etc.) I get a feeling that we are living through a proverbial “calm before the storm” and that is a good opportunity to make a quick survey of the situation of the main actors of the coming crisis.
The EU: contrary to what we see in media reports, the EU is currently undergoing a massive systemic crisis which it is unlikely to survive. Basically, the EU is broke. And I am not only talking about Greece here, but also about Italy, Spain, Portugal and even France. Unemployment is rapidly rising, corporations are closing everywhere, most banks have severe liquidity problems and, worst of all, not a single European politician is offering any suggestion, however tepid, as to how to overcome the crisis. In the meantime, the USA is using fiat money to purchase real estate and other assets all over the continent. The austerity imposed upon Europeans by a political class totally sold out to the USA and international bankers is literally pushing the countries of southern Europe into a social explosion which could very rapidly turn violent. With a few rare exceptions, the media (mostly owned by banks) is buying time for the bankers by simply ignoring this reality and feeding its clueless audience a steady stream of nonsensical and irrelevant news. Bottom line: both the Euro and the EU as a political project are dying, the continent is broke and a social explosion inevitable.
Russia: is stark contrast to the EU, Russia is doing great. The Russian economy is booming, the Western-sponsored opposition totally discredited, the armed forces are in very good shape and getting even stronger and the economic and social prospects look excellent. Interestingly, Russian government officials have been very candid about the situation in the EU and they are openly saying that they have taken all the necessary measures to protect the Russian population from the consequences of the inevitable collapse of the EU. No matter how good things look in Russia now, a collapse of the EU will have negative consequences for the Russian economy and the Kremlin has taken a wide array of measures to prepare for this situation. Likewise, the Russian military appears to be ready to act should a US/Israeli attack on Iran create a crisis on Russia’s southern borders. Bottom line: Russia is just about as ready as can be for any foreseeable crisis and getting stronger each day.
Iran: there is no denying that Iran is in a very difficult situation and that the economic war imposed on Iran by Israel via the USA and the EU is having a strong impact upon the Iranian economy. In purely military terms, Iran is probably as ready as it can be for a US/Israeli attack which the Iranians have been expecting and preparing for since decades. To quote my friend Soraya Sepahpour-Ulrich “If I were to make a call, I would say that given the world economy, the unrest around the globe, if there is an ideal time for war (to benefit Iran), this would be the ideal time“. While it is true that a US attack on Iran could potentially result in an immense number of casualties, it is nevertheless true that Iran is probably better prepared to respond to a military attack than to the current economic warfare imposed upon it. I believe that Russia and China could help Iran break the economic and financial blockade imposed upon it, but this will take time and small, incremental, steps.
Hezbollah: though there is very little information available about the effect the NATO war on Syria is having on Hezbollah, my guess is that Hezbollah is in a very difficult situation threatened on all sides by a nauseating mix of US agents and Wahabi crackpots. It is bad enough to have to face Israel, the US, NATO, Qatar, Saudi Arabia and the al-Qaeda types and their respective puppets inside Lebanon, but to have to face this at the very moment when Iran is struggling to deal with a full-spectrum destabilization effort by the USA and Israel must be particularly difficult. Others might disagree with this, but my personal feeling is that all the high-fiving Hezbollah has been doing recently about its drone its threats conduct offensive operations in Galilee is mostly a case putting a brave face on a very difficult situation.
Latin America: first and foremost, in Venezuela Chavez did pull off something of a miracle by winning the recent elections with a wide margin and during an election which was universally hailed as extremely honest, transparent and fair. For all his faults and mistakes, Chavez has had the courage to let the Venezuelan people make a fundamental and far reaching choice: US-style global capitalism or “Bolivarian socialism” and the majority of the people clearly have made the choice for the latter. This is bound to have an effect on the entire continent, if only because it shows that it is possible to resist against the US pressure and survive. Likewise, Ecuador’s decision to grant asylum to Assange is probably the result of a calculated risk of daring to openly defy the USA and get away with it. Finally, in Bolivia, President Morales has managed, so far, to survive the multiple crisis created by pro-US interests against his administration. So even if it is true that Brazil, Argentina or Chile are showing signs of caving in to US pressures to submit, the resistance to the US domination still appears to be strong enough to present a complex challenge to the White House.
China: by far the major country about which I know the least and the little I know about it comes mainly from Russian sources. According to these sources, China is working side by side with Russia in preparation for an economic collapse of the EU followed by an inevitable collapse of the dollar and the rest of the current international financial system. There are persistent rumors that both China and Russia are quietly buying large amounts of gold and off-loading dollars. What is sure is that these two countries are ideal partners to jointly overcome the consequences of the inevitable meltdown of the current international financial system. According to Russian analysts, both Russia and China expect the USA to try to use its military to force the rest of the planet to accept the dollar as the quasi-sole currency of international exchange a this is why both Russia and China are spending a great deal of money and efforts to modernize their armed forces. Unlike Russia, China is very heavily invested in the US market and this is the reason why the Chinese are scrambling to open new markets for their goods in Africa, Latin America and, of course, Russia. I personally expect these two countries to continue to work hand in hand on all levels.
Last, but not least,
The USA: for all the constant saber-rattling of the White House and the hysterics of the Israel Lobby, it is quite amazing that the inevitable US attack on Iran, announced since 2006-2007, has still not happened. It appears that the usually almighty Israel Lobby has failed to prevail against two powerful interest groups: the Pentagon and Wall Street (I personally think of them as the “old Anglo money” as opposed to “new Jewish money”). As long as there is simply too much to loose in a military strike against Iran, these forces are likely to limit their aggressive inclinations to a mix of threats and economic sanctions. However, if the international role of the dollar becomes truly threatened, then all bets are off and all options very much on the table.
As a country, the USA is broke, bled to death by the so-called 1%ers running it. Worse, the USA are becoming gradually de-industrialized and socially dysfunctional. The only thing which currently prevents a complete collapse of the entire US economy is the ability to print more and more dollars and to exchange them against real goods and services. This is nothing new, it all really began in the 1980s when the system began to show clear signs of fundamental systemic failures. What saved the day was the collapse of the Soviet Union which opened a huge segment of the planet to a massive inflow of dollars. In their typical arrogance, the Western elites decreed that they had “won the Cold War” instead of realizing that their capitalist system had only been temporarily given a reprieve from its inevitable collapse by the collapse of the Soviet system. This was a one time thing, however, and now are no more potential markets to flood with US dollars and the entire scheme is about to come tumbling down.
The corporate media does a truly stellar job of hiding it all from the general population which continues to be fed a constant diet of irrelevant non-news with rosy forecasts about the future. While Russia and China are clearly bracing themselves for the inevitable crisis, the Western government are putting all their efforts into hiding the facts from their population and delaying the inevitable.
How things will actually play themselves out is anybody’s guess. My personal sense is that the economic crisis in Europe will trigger a rapid collapse of the EU financial system which, in turn, will precipitate a collapse of the US banking system at which point a military attack on Iran will begin to start making sense even to the folks on Wall Street. A war in the Middle-East will also be an ideal pretext to basically do away with the few civil rights still left and a period of internal Fascism is probably inevitable, at least in the USA (unlike the USA, Europe simply does not have a system in place capable of effectively beating down an angry population). Whatever the actual scenario, a collapse the international financial system is probably inevitable and that, in turn, most likely means that we are going to witness one or more full-scale wars in the near future.
What is your take on this? Do you agree with my “doom and gloom” forecast?
The Saker
I certainly think that the Eurozone is headed for a terminal crisis.
The ultimate secret of the financial crisis, the thing that nobody anywhere wants to talk about is this: if a country gets into a credit crisis, defaulting on its debts is the one option that consistently leads to recovery.
That statement ought to be old hat by now. Russia defaulted on its debts in 1998, and that default marked the end of its post-Soviet economic crisis and the beginning of its current period of relative prosperity. Argentina defaulted on its debts in 2002, and the default put an end to its deep recession and set it on the road to recovery. Even more to the point, Iceland was the one European country that refused the EU demand that the debts of failed banks must be passed on to governments; instead, in 2008, the Icelandic government allowed the country’s three biggest banks to fold, paid off Icelandic depositors by way of the existing deposit insurance scheme, and left foreign investors twisting in the wind. Since that time, Iceland has been the only European country to see a sustained recovery.
When Greece defaults on its debts and leaves the Euro, in turn, there will be a bit of scrambling, and then the Greek recovery will begin. That’s the reason the EU has been trying so frantically to keep Greece from defaulting, no matter how many Euros have to be shoveled down how many ratholes to prevent it. Once the Greek default happens, and it will — the number of ratholes is multiplying much faster than Euros can be shoveled into them — the other southern European nations that are crushed by excessive debt will line up to do the same. There will be a massive stock market crash, a great many banks will go broke, a lot of rich people and an even larger number of middle class people will lose a great deal of money, politicians will make an assortment of stern and defiant speeches, and then the great European financial crisis will be over and people can get on with their lives.
That’s what will happen too, when the United States either defaults on its national debt or hyperinflates the debt out of existence. It’s going to do one or the other, since its debts are already unpayable except by way of the printing press, and its gridlocked political system is unable either to rationalize its tax system or cut its expenditures. The question is simply what crisis will finally break the confidence of foreign investors in the dollar as a safe haven currency, and start the panic selling of dollar-denominated assets that will tip the US into its next really spectacular financial crisis. That’s going to be a messy one, since the financial economy is so deeply woven into the fantasy life of the average American; there will be a lot of poverty and suffering, as there always is during serious financial crises, but as John Kenneth Galbraith pointed out about an earlier crisis of the same kind, “while it is a time of great tragedy, nothing is being lost but money.”
Could it lead to war? Quite possibly. I still think an attack on Iran would be irrational and that the Pentagon will be dead against it but nothing can be ruled out.
I fully expect there to be a military clash between the US and China over the planet’s remaining oil reserves at some point in the future but I expect it will be some time before Beijing is ready.
I also suspect the way the West plundered Russia in the Nineties will go down in history as a strategic mistake of huge proportions putting short term greed against long term interest. China now has a military alliance with the Russians. Had the US treated Russia decently when the Soviet Union collapsed Russia might have become a friend of the United States the way Germany did after the war.
@Robert: “I also suspect the way the West plundered Russia in the Nineties will go down in history as a strategic mistake of huge proportions putting short term greed against long term interest. China now has a military alliance with the Russians. Had the US treated Russia decently when the Soviet Union collapsed Russia might have become a friend of the United States the way Germany did after the war.”
I completely agree. I remember that Russians were very friednly towards Americans throughout most of the 1990’s. They wanted to emulate our (apparent) success. If the U.S. had offered the equivalent of the post-WWI Marshall Plan to Russia, the latter would now be an American ally.
In the end, the Neo-Con and Neo-Liberal hubris got the better of Washington. Bush peré was a time-serving nebbish, who had no effective control over anything but the intelligence community, so he (and his psychopathic successor Clinton) let the plunderers pillage Russia. That, and Clinton’s bombing of Yugoslavia, turned Russia against the West and (I believe) led to the election of Putin.
If the Anglo-American elite had been humble enough and astute enough to make Russia its ally, I think the world would have been much better off, by every measure. As it is, if Putin and China can effectively check the reckless course of the Anglo-Americans, that will be the best humanity can currently hope for.
The Nazis and the Soviets are gone. Washington is now the greatest threat to humanity.
@Robert: the thing that nobody anywhere wants to talk about is this: if a country gets into a credit crisis, defaulting on its debts is the one option that consistently leads to recovery.
Of course! This is particularly true if the debt in question has been fraudulently contracted, as has been the case in Greece. That is the *OBVIOUS* solution, but since the banks control the media we will never hear about it or, if we do, we will never hear about the fact that this is a much better solution than to bleed a country to death to pay private banks.
I fully expect there to be a military clash between the US and China over the planet’s remaining oil reserves at some point in the future but I expect it will be some time before Beijing is ready.
Keep in mind that if you include gas, Russia is by far the biggest energy owing country and that the West has already attempted once (in the 1990s) to seize control of its energy reserves (cf. Khodorkovsky). China needs energy, but does not have it.
Had the US treated Russia decently when the Soviet Union collapsed Russia might have become a friend of the United States
Yes, I agree. A totally wasted opportunity courtesy of the near-sighted Anglosphere…
@Michael: If the Anglo-American elite had been humble enough and astute enough to make Russia its ally, I think the world would have been much better off, by every measure.
Yes, but Russia wanted to become a “normal” country whereas the Anglosphere wanted to become a global empire, alas.
As it is, if Putin and China can effectively check the reckless course of the Anglo-Americans, that will be the best humanity can currently hope for. The Nazis and the Soviets are gone. Washington is now the greatest threat to humanity.
Very true, in particular since neither Russia nor China have any desire to become a global empire, even if they could (which they cannot, of course).
I agree that the multi-polar world these two countries are pushing for is by far the best option we have at this moment in time.
Hello Saker,
As Marx said once: Capitalism carries the seed of its own destruction.
Here is a quote from Chris Hedges article:
the purpose of multinationals not feed, clothe and give shelter to the masses, but divert all (sic) the economic, social and political and wealth in the hands of a tiny elite plutocratic. Is to create a world in which the leaders earn $ 900,000 an hour (super-sic!), While a working family of 4 members struggle to survive. The plutocratic elite achieves its goals of increasing profit by weakening and dismantling government agencies and capturing or destroying public institutions.
This is irrefutable and if it is going to crash then it is just fine..it is time for people to find other ways to live.
By the way I went to see a show Rusian skating circus…man all the girls look like angels…I would marry all of them…of topic sorry.
Best
Great post, VS! Any prediction for what is to become of India? I expect them to be a major power too. Am I mistaken?
@AA: Any prediction for what is to become of India?
Yes, I should probably have mentioned India. The only reason why I did not is that India has no aspiration whatsoever at having an influence on the global scale. Instead, it wants to become a regional hegemon, and I predict that it will succeed in this. In the short to mid term, India is simply “busy”. With Pakistan, with Islamic extremism, with its competition with China, with the situation in Nepal and Tibet, with its own insurgencies and social problems. But there is no doubt that India is becoming more and more powerful. It even has leased an “Akula II” class nuclear attack submarine from Russia and it is actively participating in the development of the PAKFA/T-50 multirole aircraft with Russia. And yet India is also wisely staying away from any global conflicts while playing all sides. A very wise policy, I think.
Cheers!
Personally think that there is a class in India that are very ambitious for their place in the ‘global’ order, mostly centred around the BJP/pro-american axis – & like most of the truly ambitious these days, quite incompetent.
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RE: “not a single European politician is offering any suggestion” – there have been a few, but most are right-wing nationalists, & they are very easy to smear in today’s Europe.
The almost complete corruption of the left into secular humanist ‘fanatics’ & free-marketeers has been one of the more amazing stories over the last decade or so. They seem willing to ally with anyone & disregard any form of logical analysis in order to forward their new ‘vision’.
Interestingly, Merkel at the start of the crisis put forward a raft of logical measures that seem to be forgotten about now – focus on controlling the free-flow of capital across boundaries, seperation of speculative capital from the main economy, focuses on tax-havens, CDS’s & exotic financial trading practices, etc.
At the time, this was still early enough that it could of done some real good.
She was shot down hard at the major G7 meeting about the crisis.
Since then, she seems to have decided that if basic financial prudence will not be taken in account, EVERYONE MUST PAY!
Doesn’t seem to have realised the consequences of this though, & the result is the EU/Goldman/Big Bank nexus now looks like it’s sneaked itself into a genuine dictatorship in charge of the EU’s finances, & are now completely free of national regulatory bodies.
Only succession now remains as a viable survivable option for most EU members.
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RE: Russia, there is a good book out now that goes into the story of the Western coverage of Russia, as well as giving a much better picture of the real Russia.
You can download it for FREE at :
http://www.alexandrelatsa.ru/2012/10/putins-new-russia-book_9.html
Presented by non-profit NGO “Kontinent USA” in conjunction with
http://us-russia.org/
@KenM:RE: “not a single European politician is offering any suggestion” – there have been a few, but most are right-wing nationalists, & they are very easy to smear in today’s Europe.
True. Guilty as charged. I should have written “not a single *mainstream* European politician”. In France, the 22 year old Marion Maréchal-Le Pen has been extremely vocal in denouncing the treason of the French political class to the bankers and financiers, and there are others, of course. But you are absolutely correct, the fact that they have been marginalized by the ruling plutocracy and smeared over and over again is not a reason to ignore them. My bad :-)
Thanks for the link to the book, which I will read with great interest.
Cheers!
Authentic left wingers like Marxist Tariq Ali and Chris Hedges have described the political establishment as the “extreme centre” It is standard propaganda of the powers that be to describe their opponents on both left and right as extreme in order to persuade the public that there is no alternative. In reality the policies pursued by the establishment in the US and Europe are pretty extreme, far from being reasonable and moderate they represent a dogmatic ideology of so called free market economics that is corporatist and complete undemocratic in practice.
It’s a great pity that left and right can’t put cultural issues like abortion and gay rights to one aside and unite against the banksters. If the National Front in France could tone down their racism, which does exist and stop scapegoating immigrants I’d have more in common with them than the New Labour types that dominate the official centre left.
Left of Labour and Right of values is a good slogan. The chief menace we all face is economic liberalism.
One of the scary things about what seems to be the complete corruption of the mainstream left parties (or pretty much any western mainstream parties), is that the extreme right is making a lot more sense to most people.
Some of the sharpest commentary & investigations on Soros, Goldman & the neo-liberal global banking order comes from the extreme right these days, & I’ve dug through many of their articles – there is some really good, well researched stuff from some of them, sometimes with some solid questions about economic alternatives & dealing with the damage.
Then you start reading what else they stand for…
From pretty standard racism to real space-cadet lunacy & occasionally advocating some very violent divisive views.
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But on what is important to most people – security, stability, real jobs, not having their life savings stolen by trans-national elites, not being ruled by elites who are essentially foreign & owe no loyalty to the people they are supposedly representing; the idea of having a future; purpose…
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Really starting to get a gut understanding of how Nazi Germany happened lately.