Dec 19, 2006
By Gabriel Kolko
It is relatively easy to comprehend the thinking, motives, and ideas of those who embark on wars. At the inception of conflicts, all advocates of war are very similar, regardless of time and place, and a simplistic euphoric optimism suffuses their thinking. They expect triumph and glory, not ashes. More than most nations, however, optimism is integral to the American creed.
Defeat is a wholly different matter. Denial, fantasy, illusions and wish fulfillment-how do politicians confront failure? They find it too difficult to face the enormous damage they have done and the immense losses they created. If the rulers of Germany, Russia, Japan, Italy and others had known the momentous social and political costs their wars would entail, they surely would have been far more reluctant to embark on adventures that were to bring their societies to an end and radically change much of the history of the past century.
Disjunction and irrationality become the norm in these kinds of situations, and responses that seem bizarre are fairly predictable. Rationality often disappears in this process and denial-and delay--becomes the norm. That is happening now in Washington, and probably in London and Canberra as well, because Bush's foreign policy has produced an immense disaster and there is less peace and stability in the world and security at home than anytime since 1945. Donald Rumsfeld's December 15th farewell speech as Defense Secretary should be read in this light, but also as a as reflection of the much larger problem of the way American foreign and military policy has been conducted for decades. It is probably the precursor of those we have yet to hear-and will. If his speech were not so important it would simply be pathetic.
Rumsfeld: "Shock and Awe"
Rumsfeld is one of the most articulate advocates of the two major wars the U. S. has embarked upon since 2000, and he had earlier made it plain to George Bush when he took office as Secretary of Defense that he would be "forward-leaning." September 11 was an opportunity to realize dreams of heroism and success. He and Vice-president Dick Cheney are soul mates, their careers have been intertwined, but Cheney seeks to keep out of the limelight and Rumsfeld adored the publicity that his cleverness attracted. He is best known for his desire to make the military both meaner and leaner, relying on high tech rather than manpower, and "shock and awe" became his slogan. But to do so, national defense spending, which had been stable in the 1990s, increased from $294 billion in 2000 to $536 billion in 2006, and as a percentage of the GNP it grew 37 percent from 2000 to 2006. All kinds of weapons, many the futuristic products of junk science concocted by well-placed manufacturers, were funded for eventual production-a dozen years being a short delivery time for many of them.
Rumsfeld's military dream was technology-intensive, even more now than 40 years ago, and it failed abysmally in Iraq. Army manpower, however, was reduced and it was left unprepared in countless domains, under-funded and overstretched even before the Iraq war began. Since then its "readiness" in terms of available troops and equipment has only fallen precipitously. And while Rumsfeld made the Army his enemy, even the Air Force now has to cut manpower to raise funds for new equipment.
He always premised his ambition, which various defense secretaries had attempted before him and failed, on the notion that the secret of military success was better and more weapons-"more bang for the buck" as an illustrious predecessor phrased it. More bucks also made the Pentagon requests that much more palatable to a pork-hungry Congress eager to increase spending in their districts. Politics and complex diplomacy never interested people like Rumsfeld, even after the abysmal failure of the Vietnam War. Delivering bad news, which meant serious assessments, was the best way not to advance in the hierarchy, and careerism was crucial to what people said. The name of the game was the game.
In both Afghanistan and Iraq he learned that realities were far more complex and he managed to shock and awe himself and the neoconservatives who shared his naïve assumptions. Reliance on high tech did not prevent warfare from becoming protracted, and it guaranteed that it would become far more costly. Both wars produced stalemates that have become the preludes to American defeats now staring the Bush administration in the face.
Rumsfeld showed at various times that in certain ways he was a person of superior intelligence notwithstanding the basically erroneous premises of the military system he led and the imperatives of ambition that demanded he share them. But like his peers, he learned far too slowly. He suffered from the typical contradiction between intelligence and ambition, and the latter requires an ideology and assumptions which most men-of-power come to believe. He admitted in a confidential memo in October 2003 that "we lack the metrics to know if we are winning or losing the global war on terror;" even then key members of the Bush Administration were far less confident of what they are doing.
His November 6, 2006 memo on the Iraq war admitted that "what U.S. forces are currently doing in Iraq is not working well enough or fast enough." There are some anodynes he advocated too, but it was rightly interpreted as his concession to the Baker-Hamilton panel view, which is the voice of the traditional foreign policy Establishment, that the Iraq war was going disastrously-in effect, was being lost. Since then, former Secretary of State Colin L. Powell has declared there is a civil war raging in Iraq and there should be a drawdown of American troops, to begin by the middle of next year-a step that even Rumsfeld favored with modest withdrawals that would compel the Iraqis "to pull up their socks."
Rumsfeld and his peers know the American military cannot win the war in Iraq. Just as during the Vietnam war, they have the quixotic hope that a solution for the profound and bloody turmoil that reigns there can be found politically-at first the Shiites, Sunnis, and Kurds were to have parliamentary elections and then make a political deal. They did not. Then they were to write a constitution, which they eventually managed to do but it changed nothing. Now they are hoping that the prime minister, Nouri al-Maliki, can miraculously cobble together some kind of consensus that will produce peace, but Bush's closest advisers think it is very likely he will fail. They have no one else to turn to. Politics, like military power, will not prevent the United States from losing control over events in Iraq-thereby losing the war. A "surge" in American troops in Iraq, as even the Joint Chiefs of Staff now argues, is only a recipe for greater disasters. Attacks against U. S. coalition forces, their Iraqi dependents, and civilians have now reached a peak and are over twice that two years ago. The Bush Administration today confronts disaster in Iraq, and probably the worst foreign policy failure in American history. Futility is the hallmark of all its efforts.
Rumsfeld's Final Thoughts
Rumsfeld's farewell speech on December 15th is therefore all the more remarkable because it attempts to revive older notions, long discredited and seriously at odds with facts that he himself accepted only weeks earlier. It represents a type of recidivism that is all-too-common when disaster approaches and it reveals the kind of intellectual schizophrenia that afflicts those who rise the top. It is a symptom of the complete failure of the crew that has led the U. S. for the past six years, and their total inability to confront reality.
Rumsfeld's final words are Soviet-centric, and he reiterated his 1977 declaration that "weakness is provocative." If "aggressors" in our "new era" perceive weakness or a lack of resolution they are enticed "into acts they otherwise would avoid." But "the enemy" consists of "unstable dictators, weapons proliferators and rogue regimes" ready to use "unconventional" and "irregular" threats. They mix "extremist ideology" with modern weaponry. The "perception of weakness" is provocative, as is the "reluctance to defend our way of life." The unnamed enemy is resolved to destroy "freedom." Concretely, Rumsfeld thinks the U.S. should "invest more" to protect itself.
His mélange includes a theory of credibility, a notion that got America into the Vietnam debacle. Credibility is certainly now a factor in the Iraq-Afghan wars, one shared by many administration leaders. Rumsfeld does not confront why persisting until utter defeat will make the U.S. look not credible but dangerously irrational. His speech is historically and factually wholly inaccurate. It ignores entirely that the existence of modern weapons in Saddam Hussein's hands was used as an excuse for the Iraq war but not found there. Many of the unstable dictators, rogue regimes, Islamic fundamentalists, and what have you were useful allies in the American confrontation with the USSR and Communism, and America gave them both weapons and training. This policy was bipartisan, pursued by Democrats as enthusiastically as by Republicans, and reflects the consensus which the Bush Administration shares with its predecessors, a fact that explains why the Democrats refuse to break with the President's wars.
Had the U.S. not intervened covertly and overtly after 1947 to undermine countless regimes it thought dangerous, even though most were neutralist, reformist, and legitimate, there would be far fewer extremists today for it to worry about. But that they now pose some sort of fatal danger to the United States is a sheer fantasy that the Bush Administration has concocted to justify a foreign policy the American people now reject.
Rumsfeld's final speech bears no relation whatever to the realities the U. S. now confronts, not just in the Middle East but everywhere. Like the president and those around him, it refuses to confront reality.
The American Way of War
The fact is that the immense and costly American military today bears no relationship to politics and reality. It accounts for nearly half of the world's military expenditures but it cannot win its two wars against the most primitive enemies, enemies who exist in multiple factions who often fight each other more than Americans and who could not care less what Washington spends on weaponry and manpower. But America's leaders have always assumed convenient enemies who calculate the way the U. S. wants them to. More important, politics was never complicated; it existed as an afterthought and never interfered with fighting and winning wars the American way. But the Soviet Union and Communism no longer exist, and absolutely nothing has changed in America's behavior and thinking. The Pentagon is superb at spending money but its way of warfare in now in a profound and perhaps terminal crisis. It has lost all its wars against persistent guerillas armed with cheap, light weapons that decentralize and hide.
The military system that Rumsfeld and his precursors created is increasingly dysfunctional and meant only to suit the expensive demands and pretensions of the powerful companies in the military-industrial complex. The emphasis on expensive weaponry is good for the American economy; successful counterinsurgency war costs too little to maintain full employment. It bears scant relationship to the political problems that the U. S. has confronted for decades-and more now than ever.
America's weapons are made to fight state-centric wars and destroy concentrated targets-they were designed originally for the USSR and its Warsaw bloc allies, and for European conditions. China compelled some minor modifications in this strategy. Even ignoring that nuclear deterrence made this emphasis irrelevant, or that the Korean and Vietnam wars proved it was destined to fail, it took (and still takes) 15 to 20 years to develop and produce this equipment. But Communism has disappeared in Europe and in all but name in China. The budgeting cycle, which keeps the economy of the U. S. buoyant and is deftly spread to numerous Congressional districts, bears no relation to American foreign policy, which makes former friends foes, ex-foes allies and members of NATO, and changes every few years like a kaleidoscope. As a very recent study for the U. S. Army Strategic Studies Institute concludes, "the United States [is] prepared to fight the most dangerous but least likely threats and unprepared to fight the least dangerous but most likely threats."1 The American way of war is technology intensive, firepower focused, logistically superior but politically and culturally ignorant to the point of being pathetic.
Rumsfeld did not initiate this myopia, which has been inherent in the U.S.' foreign and military policies after 1947 regardless of whether Democrats or Republicans were in power. He only attempted to apply it to Afghan and Iraqi conditions, to sand and heat, to profoundly divided places, and he only continued the legacy of failures that began long ago.
Hence defeat.
Showing posts with label Gabriel Kolko. Show all posts
Showing posts with label Gabriel Kolko. Show all posts
Wednesday, December 20, 2006
Tuesday, November 28, 2006
Making sense of a mad world
This is a world in which capitalism has gone crazy, and its welfare is increasingly dependent on financial instruments few even understand. Meanwhile, our leaders cling to their fantasies and wishes even as they become more irrational.
Nov 29, 2006
SPEAKING FREELY
By Gabriel Kolko
Speaking Freely is an Asia Times Online feature that allows guest writers to have their say. Please click here if you are interested in contributing.
These are dismal days for those who attempt to run the affairs of the world. But how should we understand it?
It would be a basic error to look at our present situation as if it were rationally comprehensible. The limits of rational explanations are that they assume rational men and women make decisions and that they will respect the limits of their power and behave realistically. This has rarely been true anywhere historically over the past century, and politics and illusions based on ideology or wishful thinking have often been decisive. This is especially the case with the present bunch in Washington.
We are right to fear anything, particularly a war with Iran, that would immediately reel out of control and have catastrophic consequences not only to the region but globally. We are also correct to see limits to the power of irrational people, for the United States is strategically weak. It loses the big wars, as in Korea, Vietnam, and now Afghanistan and Iraq, even though its tactical victories often prove to be very successful but also ultimately destabilizing and ephemeral. Had the US not overthrown the Mohammed Mossadegh regime in Iran in 1954, it is very likely the mullahs would never have come to power and we would not now be considering a dangerous war there.
Although the whole is far more important than the parts, the details of each part deserve attention. Many of these aspects are known, even predictable, but there are - to paraphrase Donald Rumsfeld - the "known unknowns and the unknown unknowns", the "x-factor" that intercedes to surprise everyone. All of these problems are interrelated, are interacting, and potentially aggravate or inhibit each other, perhaps decisively, making our world very difficult both to understand and to run.
Putting them together is a formidable challenge to thinking people outside systems of power. It has always been this way; fascism was in large part the result of economic crisis, and World War II was the outcome. How factors combine is a great mystery and cannot be predicted - not by us or by those ambitious souls who have the great task of making sure there is no chaos. We wish to comprehend it but it is not decisive if we don't; for those who have responsibility to manage it, this myopia will produce the end of their world - and their privileges.
We can rule out the left, that artifact of history. Socialism ceased being a real option long ago, perhaps as early as 1914. Since I have just published an entire book, After Socialism, and detailed its innumerable myopias and faults, I need not say more than that it is no longer a threat to anybody.
The fakirs who lead the parties who still use "socialism" as a justification for their existence have only abolished defeats in the hands of the people from the price capitalism pays for its growing follies. That confidence - the freedom of being challenged by the unruly masses - is very important but it is less and less sufficient to solve its countless remaining dilemmas. The system has become increasingly vulnerable, social stability notwithstanding, since about 1990 and the formal demise of communism.
Assume anarchy
The failure of socialist theory is much more than matched by the failure of capitalism because the latter has the entire responsibility for keeping the status quo functioning, and it has no intellectual basis for doing so. The crisis that exists is that capitalism has reached a status of most destructiveness, and no opposition to it exists.
This malaise involves foreign affairs and domestic affairs - vast greed at home and adventure overseas. If the foreign-policy aspects are largely American in origin, the rest of the world tolerates or sometimes collaborates with it. Its downfall is inevitable, perhaps imminent. The chaos that exists, much less comes, will exist in a void. No powerful force exists to challenge it, much less replace it, and therefore it will continue to exist but at immense and growing human cost. Visions to create alternatives are, for the moment at least, mostly cranky.
Ingenious and precarious schemes in the world economy today have great legitimacy, and they profit in the sense that classical economics is fast becoming irrelevant. It is the era of the fast talker and buccaneer-snake-oil salesmen in suits. Nothing old-fashioned has credibility. Joseph Schumpeter and other economists worried about pirates, but they are more important today than ever before, including than during the late 19th century when they were immortalized in Charles Francis Adams Jr's Chapters of Erie.
The leitmotif is "innovation", and many respectables are extremely worried. I argued in Counterpunch earlier (June 15 and July 26) that gloom prevailed among experts responsible for overseeing national and global financial affairs, especially the Bank for International Settlements, but I grossly underestimated the extent of anxieties among those who know the most about these matters.
More important, over the past months officials at much higher levels have also become much more articulate and concerned about the dominant trends in global finance and the fact that risks are quickly growing and are now enormous. Generally, people who think of themselves as leftists know precious little of those questions, questions that are vital to the very health of the status quo. But those most au courant with global financial trends have been sounding the alarm louder and louder.
The problem is that capitalism has become more aberrant, improvised, and self-destructive than ever. It is the age of the predator and gamblers, people who want to get very rich very quickly and are wholly oblivious to the larger consequences. Power exists but the theory to describe the economy that was inherited from the 19th century bears no relationship whatsoever to the way it operates in practice, a fact more and more recognized by those who favor a system of privilege and inequality.
Even some senior officials at the International Monetary Fund (IMF) now acknowledge that the theory that powerful organizations cherish is based on outmoded 19th-century illusions. "Reconstructing economic theory virtually from scratch" and purging economics of "neoclassical idiocies", or that its "demonstrably false conceptual core is sustained by inertia alone", is now the subject of very acute articles in none other than the Financial Times, the most influential and widely read daily in the capitalist world.
Capitalism as an economic system is going crazy. In late November there were a record US$75 billion in global mergers and acquisitions in a 24-hour period. Global capitalism is awash with liquidity - virtually free money - and anyone who borrows can become very rich, assuming he or she wins. The beauty of the hedge fund is that individual risks become far smaller and one can join with others to wager big and much more precariously.
So spectacular chances are now being taken: on the value of the US dollar, the price of oil, real estate and countless others gambles. Amaranth Advisors lost about $6.5 billion at the end of September on an erroneous weather prediction and went under. At least 2,600 hedge funds were founded from the beginning of 2005 to October 2006, but 1,100 went out of business. The new financial instruments - derivatives, hedge funds, incomprehensible financial inventions of every sort - are growing at a phenomenal rate, but their common characteristic, as one Financial Times writer summed it up, is that "everyone [has] become less risk-averse".
Therein lies the danger.
Hedge funds will bet on anything, pension-fund members being only the latest examples of their addiction to taking chances. London is fast replacing New York as the center of this activity, and the capital market in general, because the regulatory regime the British Labour Party established is much more favorable to this sort of activity than what US President George W Bush's Republican minions allow, though this may change because Wall Street does not like losing business.
On September 12, the IMF released its report on "Global Financial Stability", and it was unprecedented in its concern that "new and complex financial instruments, such as structured credit products", might wreak untold havoc. "Liberalization", which the "Washington consensus" and IMF had preached and helped realize, now threatens the US dollar and much else. "The rapid growth of hedge funds and credit derivative mechanisms in recent years adds to uncertainty," and might aggravate the "market turbulence and systemic impact" of once-benign events. Hedge funds, it warned, have already "suffered noticeable losses".
At the end of October, Jean-Claude Trichet, head of the European Central Bank, deplored these new financial products, which have been increasing and growing into the trillions. He could not comprehend them, and there was scant oversight over them. Many were pure hype, and nothing prevented them from creating immense domino effects on the entire financial system were they to collapse, thereby also dragging the well-regulated parts of it down. Then, at the beginning of November, the quasi-official UK Financial Services Authority (FSA) issued a report that detailed the existing risks to the entire world financial structure. Despite its tone, it is dynamite.
The FSA report documents the many risks to the private-equity sector: excessive leverage, unclear ownership of risk, market abuses and insider trading. There were conflicts of interest of every sort, the system was opaque, hedge funds made inherent dangers even riskier. "Given current leverage levels and recent developments in the economic/credit cycle, the default of a large private-equity-backed company or a cluster of smaller private-equity-backed companies seems inevitable."
Given this growing consensus of risks, on November 13 John Gieve, the deputy governor of the Bank of England, concluded that each national state regulating full-blown financial crises was no longer feasible: the financial system was so international in scope today that no national mechanism could handle it. There have been at least 13 borderline or full-blown financial crises since the late 1970s, and some of the methods for dealing with them were "less easy to deploy" under present conditions, which was a polite way of saying they were irrelevant.
His conclusion: regulators "should practice coping with global crisis", "work together" on practical examples to develop machinery, especially to avoid the "moral hazards" of bailing out firms in trouble, including "closing down a large firm in an orderly way".
The chances of developing a common transnational approach or rules are close to zero, if only because nations of the world are rivals to attract financial companies and regulation, or lack of it, is a major factor on where to headquarter. When the next financial crisis occurs, and the likelihood of that happening has grown by leaps and bounds, it is more likely than ever to drag the entire global economy with it. At least the "experts" think so. They did not before now.
So economics may foul up politics. Perhaps not, but it could become a very important factor in the overall situation.
Power in Washington
Bush made this month's congressional election a referendum on the war in Iraq and was badly repudiated; his party suffered a disaster. Disorientation, depression and defeat have left the US president and the neo-conservatives adrift. They have two more years of power, so we are at the mercy of people who are irresponsible and dangerous.
Their rhetoric proved a recipe for disaster in Afghanistan, and Iraq has become a surrealistic nightmare. The US public is largely anti-war (55% of those who voted on November 7 disapproved of the Iraq war, most of them strongly); they voted against the war and only tangentially for Democrats, most of whom vaguely implied they would do something about the war but immediately after the election shamelessly reaffirmed their support for its essence.
But people, and voters in particular, are such a nuisance everywhere; they more quickly than in the past respond to reality, which means that traditional politicians must betray them very speedily. They create certain decisive parameters that ambitious politicians flout at greater risk than ever because the people have shown themselves ready to vote the rascals - whether Democrats in 1952 and 1968 or Republicans this month - out of office.
The US public is more anti-war than ever, and no one can predict what the future holds, including some Republicans outflanking the Democrats from a sort of anti-war left so that they can remain in, or gain, office. That the people are subsequently cynically ignored - as they have been immediately after the last US election - is a fact also, but their role can neither be overestimated nor gainsaid.
Experience shows that politicians, whatever they call themselves or however nationalist, can never be trusted. Ever. But the facts on the ground are today very bad for those who advocate wars.
Israel: The dream comes apart
Hawks in Israel, ascendant since the founding of the Jewish state, are still debating their 33-day war in Lebanon and the decisive limits of their once-awesome, ultra-sophisticated modern military power that their Lebanon adventure exposed. The Israeli press is full of accounts of ministers' sexual offenses and corruption; Prime Minister Ehud Olmert's government is badly divided, backbiting, and may fall soon.
The army is openly split, and Olmert would like to dump its chief of staff, Dan Halutz, and the minister of defense. The Zionist project is increasingly surrealistic and in an unprecedented state of disrepair and depression, with profound demoralization taking hold. Olmert himself is a complete mediocrity, a minor Likud politician who parlayed himself into the No 2 spot and was lucky. His comment when he visited the US in the middle of November that America's Iraq war had brought stability to the region either infuriated or embarrassed everyone. He is basically a shrewd politician but a very stupid man.
The most devastating analyses of Israel's war in Lebanon have appeared in Israel itself, and "the fact the Israeli army is at a low point", according to a writer in Haaretz, has goaded rather than deterred Iran. "Almost every weapon lost its significance and effectiveness as soon as it was used," Ofer Shelah wrote in the Jaffee Center's Strategic Assessment.
The Israeli military relied on massive, overwhelming firepower delivered by the most modern means possible, and it failed to stop incoming rockets and enemy mobility, much less win the war. Hezbollah not only showed Syria how to defeat the Israeli army but made Iran much more confident it can carry on what it is doing. The entire Israeli government and army leadership was incompetent.
From its very inception there was a warrior ethic in the Zionist ideology, one it shared with diverse reactionaries in Europe. Both its left wing as well as the right have nourished it, and Joseph Trumpeldor, the hero of this militant mentality, was one of the founders of Zionist socialism - a leader of Hashomer Hatzair, the far left of this tendency. But the cult of heroism in Israel has made way for military technocrats who read digital printouts.
Morale in Israel, and especially in the once-elitist military, has plummeted. The arms industry there is very large, and like its US equivalents, needs subsidies - computer-based war is very expensive and greatly helps employment. But Lebanon only showed Israel what the Americans learned elsewhere. It loses.
There are many dangers, from fascistic politicians like Avigdor Lieberman becoming even more powerful to yet greater emigration abroad of those Jews with high skills. The latter is happening. Israel's ability to flout European opinion with impunity or to have Washington embark on military adventures from which Israel gains is increasingly limited.
France has warned Israel that should it initiate a war with Iran it would create "a total disaster for the entire world". Oil prices would rise, the entire Arab world would unite behind the Iranians, and Israel would be targeted, but so would other nations. Even more important, Israeli strategists admit that Iranian nuclear weapons would only create a stable deterrent relationship between the two nations, and are not an "existential threat".
Repentance or rapture?
Above all, in Iraq the US government is confronting the failure of its entire Middle East project, an illusion in which the Israelis have a profound interest. Bush and gang are in a state of denial, but the US is going the way of its defeat in Korea and Vietnam, and its military is increasingly overstretched and demoralized. It has based its foreign policies on fantasies and non-existent dangers, neo-con dreams and desires, only partially to meet equally illusory Israeli objectives to transform the entire Middle East so that it accepts Israel in whatever form the fickle Israeli electorate presents it.
US foreign policy has been fraught with dangers since 1945, and I have documented them extensively, but this is the worst set of incompetents ever to hold power in Washington. It "shocked and awed", to use the departed secretary of defense Donald Rumsfeld's phrase, itself. Things are going disastrously for conservative warriors.
But it is very difficult to anticipate what this administration will come up with, though disasters over the past six years have made a number of alternatives far less probable. In a way, that is a good thing, although the cost in lives lost and wealth squandered has been immense. The Baker/Hamilton bipartisan commission is deeply split and if - with emphasis on "if" - it happens to come up with a clear alternative, the president is free to ignore it.
The Pentagon has formulated alternatives, summed up as "go big", "go long" - both of which would require five to 10 years to "Iraqize" the war - or "go home", but it is divided also. One thing certain, however, is that it has neither manpower, materiel, nor political freedom to make the same mistakes as in Vietnam, as the first two alternatives would have it do.
There are no options in Iraq because the US has traumatized the entire nation and created immense problems for which it has no solutions. No one can predict what it will do in Iraq because the administration wishes to preserve the illusion of success and is genuinely confused about how to proceed. It has produced only chaos. Iraq is very likely to remain a tragedy, one racked by violence, for years to come. The Bush administration has created a massive disaster involving the lives of many millions of people.
A great deal depends on the president, whose policy has utterly failed in Iraq and is failing in Lebanon, and one of his options is escalation, meaning war with Iran. Israel might attack Iran to drag the US in, but by itself it can only be a catalyst. It knows that, at least at certain levels, and Olmert and Bush approach these issues in a remarkably similar fashion. Either way, Bush has not ruled out war with Iran despite warnings from many military men that such a conflict would have vast repercussions, it would probably last years, and the US would likely lose the war, even if it used nuclear weapons.
A number of the neo-con theoreticians have repented the Iraq adventure, and even criticized some the basic premises that motivated it, but it would be an error to assume that this administration has some contact with reality and can be educated - by the electorate or by alienated neo-con intellectuals.
There are still plenty of people in Washington who advocate going for broke, who still retain fantastic illusions. There remains the imponderable factor of rapture - fantasy and illusions mixed with desires. Is victory around the corner if we escalate with more troops? Will the Iraqi troops the Americans train attain victory over enemies that eluded US forces? Many much wiser presidents have pursued such chimera. Why not Bush too? Facts on the ground, which are much greater in constricting US power than they were six years ago, are a critical factor. They may not be sufficient to prevent irrational behavior. We simply cannot know.
All of these factors, and perhaps others not mentioned here, will affect one another. The whole is very often no stronger than all the parts. All surprises that thwart the Bush administration's freedom to act are now to be welcomed, and while the world's financial system is the leading candidate for upsetting the United States' calculations, it is scarcely the only one. The facts on the ground, realities rather than decisions, are usually crucial, and here the US is losing in its megalomaniac ambition to shape the world. It has been this way for many nations led by men far superior in intellect to George Bush.
Wishes are not reality and the US has an endemic ability to hold on to its wishes and fantasies as long as possible. Desire often leads to its acting despite itself. But its resources are far more constrained now than they were six years ago, much less during the Vietnam War, which it lost. The US public is already deeply alienated, the world financial system is teetering, the United States' military resources are virtually exhausted.
We shall see.
Gabriel Kolko is a leading historian of modern warfare. His latest book is The Age of War.
http://www.atimes.com/atimes/Front_Page/HK29Aa02.html
Nov 29, 2006
SPEAKING FREELY
By Gabriel Kolko
Speaking Freely is an Asia Times Online feature that allows guest writers to have their say. Please click here if you are interested in contributing.
These are dismal days for those who attempt to run the affairs of the world. But how should we understand it?
It would be a basic error to look at our present situation as if it were rationally comprehensible. The limits of rational explanations are that they assume rational men and women make decisions and that they will respect the limits of their power and behave realistically. This has rarely been true anywhere historically over the past century, and politics and illusions based on ideology or wishful thinking have often been decisive. This is especially the case with the present bunch in Washington.
We are right to fear anything, particularly a war with Iran, that would immediately reel out of control and have catastrophic consequences not only to the region but globally. We are also correct to see limits to the power of irrational people, for the United States is strategically weak. It loses the big wars, as in Korea, Vietnam, and now Afghanistan and Iraq, even though its tactical victories often prove to be very successful but also ultimately destabilizing and ephemeral. Had the US not overthrown the Mohammed Mossadegh regime in Iran in 1954, it is very likely the mullahs would never have come to power and we would not now be considering a dangerous war there.
Although the whole is far more important than the parts, the details of each part deserve attention. Many of these aspects are known, even predictable, but there are - to paraphrase Donald Rumsfeld - the "known unknowns and the unknown unknowns", the "x-factor" that intercedes to surprise everyone. All of these problems are interrelated, are interacting, and potentially aggravate or inhibit each other, perhaps decisively, making our world very difficult both to understand and to run.
Putting them together is a formidable challenge to thinking people outside systems of power. It has always been this way; fascism was in large part the result of economic crisis, and World War II was the outcome. How factors combine is a great mystery and cannot be predicted - not by us or by those ambitious souls who have the great task of making sure there is no chaos. We wish to comprehend it but it is not decisive if we don't; for those who have responsibility to manage it, this myopia will produce the end of their world - and their privileges.
We can rule out the left, that artifact of history. Socialism ceased being a real option long ago, perhaps as early as 1914. Since I have just published an entire book, After Socialism, and detailed its innumerable myopias and faults, I need not say more than that it is no longer a threat to anybody.
The fakirs who lead the parties who still use "socialism" as a justification for their existence have only abolished defeats in the hands of the people from the price capitalism pays for its growing follies. That confidence - the freedom of being challenged by the unruly masses - is very important but it is less and less sufficient to solve its countless remaining dilemmas. The system has become increasingly vulnerable, social stability notwithstanding, since about 1990 and the formal demise of communism.
Assume anarchy
The failure of socialist theory is much more than matched by the failure of capitalism because the latter has the entire responsibility for keeping the status quo functioning, and it has no intellectual basis for doing so. The crisis that exists is that capitalism has reached a status of most destructiveness, and no opposition to it exists.
This malaise involves foreign affairs and domestic affairs - vast greed at home and adventure overseas. If the foreign-policy aspects are largely American in origin, the rest of the world tolerates or sometimes collaborates with it. Its downfall is inevitable, perhaps imminent. The chaos that exists, much less comes, will exist in a void. No powerful force exists to challenge it, much less replace it, and therefore it will continue to exist but at immense and growing human cost. Visions to create alternatives are, for the moment at least, mostly cranky.
Ingenious and precarious schemes in the world economy today have great legitimacy, and they profit in the sense that classical economics is fast becoming irrelevant. It is the era of the fast talker and buccaneer-snake-oil salesmen in suits. Nothing old-fashioned has credibility. Joseph Schumpeter and other economists worried about pirates, but they are more important today than ever before, including than during the late 19th century when they were immortalized in Charles Francis Adams Jr's Chapters of Erie.
The leitmotif is "innovation", and many respectables are extremely worried. I argued in Counterpunch earlier (June 15 and July 26) that gloom prevailed among experts responsible for overseeing national and global financial affairs, especially the Bank for International Settlements, but I grossly underestimated the extent of anxieties among those who know the most about these matters.
More important, over the past months officials at much higher levels have also become much more articulate and concerned about the dominant trends in global finance and the fact that risks are quickly growing and are now enormous. Generally, people who think of themselves as leftists know precious little of those questions, questions that are vital to the very health of the status quo. But those most au courant with global financial trends have been sounding the alarm louder and louder.
The problem is that capitalism has become more aberrant, improvised, and self-destructive than ever. It is the age of the predator and gamblers, people who want to get very rich very quickly and are wholly oblivious to the larger consequences. Power exists but the theory to describe the economy that was inherited from the 19th century bears no relationship whatsoever to the way it operates in practice, a fact more and more recognized by those who favor a system of privilege and inequality.
Even some senior officials at the International Monetary Fund (IMF) now acknowledge that the theory that powerful organizations cherish is based on outmoded 19th-century illusions. "Reconstructing economic theory virtually from scratch" and purging economics of "neoclassical idiocies", or that its "demonstrably false conceptual core is sustained by inertia alone", is now the subject of very acute articles in none other than the Financial Times, the most influential and widely read daily in the capitalist world.
Capitalism as an economic system is going crazy. In late November there were a record US$75 billion in global mergers and acquisitions in a 24-hour period. Global capitalism is awash with liquidity - virtually free money - and anyone who borrows can become very rich, assuming he or she wins. The beauty of the hedge fund is that individual risks become far smaller and one can join with others to wager big and much more precariously.
So spectacular chances are now being taken: on the value of the US dollar, the price of oil, real estate and countless others gambles. Amaranth Advisors lost about $6.5 billion at the end of September on an erroneous weather prediction and went under. At least 2,600 hedge funds were founded from the beginning of 2005 to October 2006, but 1,100 went out of business. The new financial instruments - derivatives, hedge funds, incomprehensible financial inventions of every sort - are growing at a phenomenal rate, but their common characteristic, as one Financial Times writer summed it up, is that "everyone [has] become less risk-averse".
Therein lies the danger.
Hedge funds will bet on anything, pension-fund members being only the latest examples of their addiction to taking chances. London is fast replacing New York as the center of this activity, and the capital market in general, because the regulatory regime the British Labour Party established is much more favorable to this sort of activity than what US President George W Bush's Republican minions allow, though this may change because Wall Street does not like losing business.
On September 12, the IMF released its report on "Global Financial Stability", and it was unprecedented in its concern that "new and complex financial instruments, such as structured credit products", might wreak untold havoc. "Liberalization", which the "Washington consensus" and IMF had preached and helped realize, now threatens the US dollar and much else. "The rapid growth of hedge funds and credit derivative mechanisms in recent years adds to uncertainty," and might aggravate the "market turbulence and systemic impact" of once-benign events. Hedge funds, it warned, have already "suffered noticeable losses".
At the end of October, Jean-Claude Trichet, head of the European Central Bank, deplored these new financial products, which have been increasing and growing into the trillions. He could not comprehend them, and there was scant oversight over them. Many were pure hype, and nothing prevented them from creating immense domino effects on the entire financial system were they to collapse, thereby also dragging the well-regulated parts of it down. Then, at the beginning of November, the quasi-official UK Financial Services Authority (FSA) issued a report that detailed the existing risks to the entire world financial structure. Despite its tone, it is dynamite.
The FSA report documents the many risks to the private-equity sector: excessive leverage, unclear ownership of risk, market abuses and insider trading. There were conflicts of interest of every sort, the system was opaque, hedge funds made inherent dangers even riskier. "Given current leverage levels and recent developments in the economic/credit cycle, the default of a large private-equity-backed company or a cluster of smaller private-equity-backed companies seems inevitable."
Given this growing consensus of risks, on November 13 John Gieve, the deputy governor of the Bank of England, concluded that each national state regulating full-blown financial crises was no longer feasible: the financial system was so international in scope today that no national mechanism could handle it. There have been at least 13 borderline or full-blown financial crises since the late 1970s, and some of the methods for dealing with them were "less easy to deploy" under present conditions, which was a polite way of saying they were irrelevant.
His conclusion: regulators "should practice coping with global crisis", "work together" on practical examples to develop machinery, especially to avoid the "moral hazards" of bailing out firms in trouble, including "closing down a large firm in an orderly way".
The chances of developing a common transnational approach or rules are close to zero, if only because nations of the world are rivals to attract financial companies and regulation, or lack of it, is a major factor on where to headquarter. When the next financial crisis occurs, and the likelihood of that happening has grown by leaps and bounds, it is more likely than ever to drag the entire global economy with it. At least the "experts" think so. They did not before now.
So economics may foul up politics. Perhaps not, but it could become a very important factor in the overall situation.
Power in Washington
Bush made this month's congressional election a referendum on the war in Iraq and was badly repudiated; his party suffered a disaster. Disorientation, depression and defeat have left the US president and the neo-conservatives adrift. They have two more years of power, so we are at the mercy of people who are irresponsible and dangerous.
Their rhetoric proved a recipe for disaster in Afghanistan, and Iraq has become a surrealistic nightmare. The US public is largely anti-war (55% of those who voted on November 7 disapproved of the Iraq war, most of them strongly); they voted against the war and only tangentially for Democrats, most of whom vaguely implied they would do something about the war but immediately after the election shamelessly reaffirmed their support for its essence.
But people, and voters in particular, are such a nuisance everywhere; they more quickly than in the past respond to reality, which means that traditional politicians must betray them very speedily. They create certain decisive parameters that ambitious politicians flout at greater risk than ever because the people have shown themselves ready to vote the rascals - whether Democrats in 1952 and 1968 or Republicans this month - out of office.
The US public is more anti-war than ever, and no one can predict what the future holds, including some Republicans outflanking the Democrats from a sort of anti-war left so that they can remain in, or gain, office. That the people are subsequently cynically ignored - as they have been immediately after the last US election - is a fact also, but their role can neither be overestimated nor gainsaid.
Experience shows that politicians, whatever they call themselves or however nationalist, can never be trusted. Ever. But the facts on the ground are today very bad for those who advocate wars.
Israel: The dream comes apart
Hawks in Israel, ascendant since the founding of the Jewish state, are still debating their 33-day war in Lebanon and the decisive limits of their once-awesome, ultra-sophisticated modern military power that their Lebanon adventure exposed. The Israeli press is full of accounts of ministers' sexual offenses and corruption; Prime Minister Ehud Olmert's government is badly divided, backbiting, and may fall soon.
The army is openly split, and Olmert would like to dump its chief of staff, Dan Halutz, and the minister of defense. The Zionist project is increasingly surrealistic and in an unprecedented state of disrepair and depression, with profound demoralization taking hold. Olmert himself is a complete mediocrity, a minor Likud politician who parlayed himself into the No 2 spot and was lucky. His comment when he visited the US in the middle of November that America's Iraq war had brought stability to the region either infuriated or embarrassed everyone. He is basically a shrewd politician but a very stupid man.
The most devastating analyses of Israel's war in Lebanon have appeared in Israel itself, and "the fact the Israeli army is at a low point", according to a writer in Haaretz, has goaded rather than deterred Iran. "Almost every weapon lost its significance and effectiveness as soon as it was used," Ofer Shelah wrote in the Jaffee Center's Strategic Assessment.
The Israeli military relied on massive, overwhelming firepower delivered by the most modern means possible, and it failed to stop incoming rockets and enemy mobility, much less win the war. Hezbollah not only showed Syria how to defeat the Israeli army but made Iran much more confident it can carry on what it is doing. The entire Israeli government and army leadership was incompetent.
From its very inception there was a warrior ethic in the Zionist ideology, one it shared with diverse reactionaries in Europe. Both its left wing as well as the right have nourished it, and Joseph Trumpeldor, the hero of this militant mentality, was one of the founders of Zionist socialism - a leader of Hashomer Hatzair, the far left of this tendency. But the cult of heroism in Israel has made way for military technocrats who read digital printouts.
Morale in Israel, and especially in the once-elitist military, has plummeted. The arms industry there is very large, and like its US equivalents, needs subsidies - computer-based war is very expensive and greatly helps employment. But Lebanon only showed Israel what the Americans learned elsewhere. It loses.
There are many dangers, from fascistic politicians like Avigdor Lieberman becoming even more powerful to yet greater emigration abroad of those Jews with high skills. The latter is happening. Israel's ability to flout European opinion with impunity or to have Washington embark on military adventures from which Israel gains is increasingly limited.
France has warned Israel that should it initiate a war with Iran it would create "a total disaster for the entire world". Oil prices would rise, the entire Arab world would unite behind the Iranians, and Israel would be targeted, but so would other nations. Even more important, Israeli strategists admit that Iranian nuclear weapons would only create a stable deterrent relationship between the two nations, and are not an "existential threat".
Repentance or rapture?
Above all, in Iraq the US government is confronting the failure of its entire Middle East project, an illusion in which the Israelis have a profound interest. Bush and gang are in a state of denial, but the US is going the way of its defeat in Korea and Vietnam, and its military is increasingly overstretched and demoralized. It has based its foreign policies on fantasies and non-existent dangers, neo-con dreams and desires, only partially to meet equally illusory Israeli objectives to transform the entire Middle East so that it accepts Israel in whatever form the fickle Israeli electorate presents it.
US foreign policy has been fraught with dangers since 1945, and I have documented them extensively, but this is the worst set of incompetents ever to hold power in Washington. It "shocked and awed", to use the departed secretary of defense Donald Rumsfeld's phrase, itself. Things are going disastrously for conservative warriors.
But it is very difficult to anticipate what this administration will come up with, though disasters over the past six years have made a number of alternatives far less probable. In a way, that is a good thing, although the cost in lives lost and wealth squandered has been immense. The Baker/Hamilton bipartisan commission is deeply split and if - with emphasis on "if" - it happens to come up with a clear alternative, the president is free to ignore it.
The Pentagon has formulated alternatives, summed up as "go big", "go long" - both of which would require five to 10 years to "Iraqize" the war - or "go home", but it is divided also. One thing certain, however, is that it has neither manpower, materiel, nor political freedom to make the same mistakes as in Vietnam, as the first two alternatives would have it do.
There are no options in Iraq because the US has traumatized the entire nation and created immense problems for which it has no solutions. No one can predict what it will do in Iraq because the administration wishes to preserve the illusion of success and is genuinely confused about how to proceed. It has produced only chaos. Iraq is very likely to remain a tragedy, one racked by violence, for years to come. The Bush administration has created a massive disaster involving the lives of many millions of people.
A great deal depends on the president, whose policy has utterly failed in Iraq and is failing in Lebanon, and one of his options is escalation, meaning war with Iran. Israel might attack Iran to drag the US in, but by itself it can only be a catalyst. It knows that, at least at certain levels, and Olmert and Bush approach these issues in a remarkably similar fashion. Either way, Bush has not ruled out war with Iran despite warnings from many military men that such a conflict would have vast repercussions, it would probably last years, and the US would likely lose the war, even if it used nuclear weapons.
A number of the neo-con theoreticians have repented the Iraq adventure, and even criticized some the basic premises that motivated it, but it would be an error to assume that this administration has some contact with reality and can be educated - by the electorate or by alienated neo-con intellectuals.
There are still plenty of people in Washington who advocate going for broke, who still retain fantastic illusions. There remains the imponderable factor of rapture - fantasy and illusions mixed with desires. Is victory around the corner if we escalate with more troops? Will the Iraqi troops the Americans train attain victory over enemies that eluded US forces? Many much wiser presidents have pursued such chimera. Why not Bush too? Facts on the ground, which are much greater in constricting US power than they were six years ago, are a critical factor. They may not be sufficient to prevent irrational behavior. We simply cannot know.
All of these factors, and perhaps others not mentioned here, will affect one another. The whole is very often no stronger than all the parts. All surprises that thwart the Bush administration's freedom to act are now to be welcomed, and while the world's financial system is the leading candidate for upsetting the United States' calculations, it is scarcely the only one. The facts on the ground, realities rather than decisions, are usually crucial, and here the US is losing in its megalomaniac ambition to shape the world. It has been this way for many nations led by men far superior in intellect to George Bush.
Wishes are not reality and the US has an endemic ability to hold on to its wishes and fantasies as long as possible. Desire often leads to its acting despite itself. But its resources are far more constrained now than they were six years ago, much less during the Vietnam War, which it lost. The US public is already deeply alienated, the world financial system is teetering, the United States' military resources are virtually exhausted.
We shall see.
Gabriel Kolko is a leading historian of modern warfare. His latest book is The Age of War.
http://www.atimes.com/atimes/Front_Page/HK29Aa02.html
Saturday, November 25, 2006
Factors in Our Colossal Mess
November 25,2006
By Gabriel Kolko
Gabriel Kolko is the leading historian of modern warfare.
These are dismal days for those who attempt to run the affairs of the world. But how should we understand it?
It would be a basic error to look at our present situation as if it were rationally comprehensible. The limits of rational explanations are that they assume rational men and women make decisions and that they will respect the limits of their power and behave realistically. This has rarely been true anywhere historically over the past century, and politics and illusions based on ideology or wishful thinking have often been decisive. This is especially the case with the present bunch in Washington.
We are right to fear anything, particularly a war with Iran that would immediately reel out of control and have catastrophic consequences not only to the region but globally. We are also correct to see limits to the power of irrational people, for the United States is strategically weak. It loses the big wars, as in Korea, Vietnam, and now Afghanistan and Iraq-even though its tactical victories often prove to be very successful-but also ultimately destabilizing and ephemeral. Had the U.S. not overthrown the Mossadegh regime in Iran in 1954 it is very likely the mullahs would never have come to power and we would not now be considering a dangerous war there.
Although the whole is far more important than the parts, the details of each part deserve attention. Many of these aspects are known, even predictable, there are -- to paraphrase Donald Rumsfeld -- the "known unknowns and the unknown unknowns" -- the "x-factor" that intercedes to surprise everyone. All of these problems are interrelated, interacting and potentially aggravate or inhibit each other, perhaps decisively, making our world both very difficult to understand -- or to run. Putting them together is a formidable challenge to thinking people outside systems of power. It has always been this way; fascism was in large part the result of economic crisis, and World War Two was the outcome. How factors combine is a great mystery and cannot be predicted -- not by U S or by those ambitious souls who have the great task of making sure there is no chaos. We wish to comprehend it but it is not decisive if we don't; for those who have responsibility to manage it, this myopia will produce the end of their world-and their privileges.
What is important to watch?
We can rule out the Left, that artifact of past history. Socialism ceased being a real option long ago, perhaps as early as 1914. Since I have just published an entire book, After Socialism, and detailed its innumerable myopias and faults, I need not say more than that it is no longer is a threat to anybody. The fakirs who lead the parties who still use "socialism" as a justification for their existence have only abolished defeats at the hands of the people from the price capitalism pays for its growing follies. That confidence- freedom from challenge by the unruly masses-- is very important but it is less and less sufficient to solve the countless remaining dilemmas. The system has become increasingly vulnerable, social stability notwithstanding, since about 1990 and the formal demise of "communism".
Assume Anarchy
The failure of socialist theory is much more than matched by the failure of capitalism because the latter has the entire responsibility for keeping the status quo functioning-and it has no intellectual basis for doing so. The crisis that exists is that capitalism has reached a most dangerous stage in destructiveness -- and no opposition to it exists. This malaise involves foreign affairs and domestic affairs -- vast greed at home and adventure overseas. If the foreign policy aspects are largely American-originated, the rest of the world tolerates or sometimes collaborates with it. Its downfall is inevitable, perhaps imminent. The chaos that exists will exist in a void. No powerful force exists to challenge, much less replace it, and therefore it will continue to exist -- but at immense and growing human cost. Alternative visions are, for the moment at least, mostly cranky.
Ingenious and precarious schemes in the world economy today have great legitimacy and flourish in the sense that the postulates of classical economics postulated are fast becoming irrelevant. It is the era of the fast talker and buccaneer-snake-oil salesmen in suits. Nothing old-fashioned has credibility. Joseph Schumpeter and other economists worried about pirates, but they are more important today than ever before-including than during the late 19th century when they were immortalized in Charles Francis Adams Jr's Chapters of Erie. The leitmotif is "innovation," and many respectables are extremely worried. I argued here in Counterpunch recently (June 15 and July 26) that gloom prevails among experts responsible for overseeing national and global financial affairs, especially the Bank for International Settlements, but I grossly underestimated the extent of anxieties among those who know the most about these matters. More importantly, over the past months officials at much higher levels have also become much more articulate and concerned about the dominant trends in global finance and the fact that risks are quickly growing and are now enormous. Generally, people who think of themselves as leftists know precious little of those questions, questions that are vital to the very health of the status quo. But those most au courant with global financial trends have been sounding the alarm louder and louder.
The problem is that capitalism has become more aberrant, improvisatory, and self-destructive than ever. We are in the age of the predator and gamblers, people who want to get very rich very quickly and are wholly oblivious to the larger consequences. Power exists but the theory to describe the economy which was inherited from the 19th century bears no relationship whatsoever to the way it operates in practice, a fact more and more recognized by those who favor a system of privilege and inequality. Even some senior IMF executives now acknowledge that the theory that powerful organization cherish is based on outmoded 19th century illusions. "Reconstructing economic theory virtually from scratch" and purging economics of "neoclassical idiocies," or that its "demonstrably false conceptual core is sustained by inertia alone," is now the subject of very acute articles in none other than the Financial Times, the most influential and widely-read daily in the capitalist world.
As an economic system capitalism is going crazy. In late November there were $75 billion in global mergers and acquisitions in a 24-hour period-a record. Global capitalism is awash with liquidity -- virtually free money -- and anyone who borrows can become very rich, assuming they win. The beauty of the hedge fund is that individual risks become far smaller and one can join with others to bet big -- and much more precariously. Henced, spectacular chances are now being taken: on the value of the U.S. dollar, the price of oil, real estate -- and countless others gambles. In the case of Amaranth Advisors, this outfit lost about $6.5 billion at the end of September on an erroneous weather prediction and went under. At least 2,600 hedge funds were founded from the beginning of 2005 to October 2006, but 1,100 went out of business. The new financial instruments -- derivatives, hedge funds, incomprehensible financial inventions of every sort-are growing at a phenomenal rate, but their common characteristic, as one Financial Times writer, John Plender, summed it up on November 20. , is that "everyone [has] become less risk adverse." Therein lies the danger.
Hedge funds will bet on anything, natural disasters and, soon, longevity of pension fund members being only the latest examples of their addiction to taking chances. London is fast replacing New York as the center of this activity, and the capital market in general, because the regulatory regime of the government the British Labour Party established is much more favorable to this sort of activity than that Bush's Republican minions allow -- though this may change because Wall Street does not like losing business.
On September 12, 2006, the International Monetary Fund released its report on "Global Financial Stability," and it was unprecedented in its concern that "new and complex financial instruments, such as structured credit products," might wreak untold havoc. "Liberalization," which the "Washington consensus" and IMF had preached and helped realize, now threatens the US dollar and much else. "The rapid growth of hedge funds and credit derivative mechanisms in recent years adds to uncertainty," and might aggravate the "market turbulence and systemic impact" of once-benign events. Hedge funds, it warned, have already "suffered noticeable losses."
At the end of October, again the Financial Times, Jean-Claude Trichet, head of the European Central Bank, deplored these new financial products, which have been increasing and growing into the trillions. He wrote that he could not comprehend them; that there is scant oversight over them; that many are pure hype; that nothing prevents them from creating immense domino effects on the entire financial system were they to collapse, thereby also dragging the well-regulated parts of the system down. Then, at the beginning of November the quasi-official UK Financial Services Authority issued a report that detailed the existing risks to the entire world financial structure. Despite its tone, it is dynamite.
The FSA report documents the many risks to the private equity sector: excessive leverage, unclear ownership of risk, market abuses and insider trading. There are conflicts of interest of every sort; the system is opaque; hedge funds made inherent dangers even riskier. "Given current leverage levels and recent developments in the economic/credit cycle, the default of a large private equity backed company or a cluster of smaller private equity backed companies seems inevitable."
Given this growing consensus of risks, on November 13 Sir John Gieve, the deputy governor of the Bank of England, concluded, in the Financial Times, that each national state regulating full-blown financial crises was no longer feasible: the financial system is international in scope today and no national mechanism can handle it. There have been at least 13 borderline or full-blown financial crises since the late 1970s and some of the methods for dealing with them would be "less easy to deploy" under present conditions-which is a polite way of saying they were irrelevant. His conclusion: Regulators "should practise coping with global crisis," "work together" on practical examples to develop machinery, especially to avoid the "moral hazards" of bailing out firms in trouble, including "closing down a large firm in an orderly way."
The chances of developing a common trans-national approach or rules are close to zero, if only because nations of the world are rivals in the bid to attract financial companies and regulation, or lack of it, is a major factor on where to headquarter. When the next financial crisis occurs, and the likelihood of that happening has grown by leaps and bounds, it is more likely than ever to drag the entire global economy with it. At least the "experts" think so. They did not before now.
So economics may foul up politics. Perhaps not, but it could become a very important factor in the overall situation.
Power in Washington
President Bush made the election a referendum on the war and was badly repudiated; his party suffered a disaster. Disorientation, depression, and defeat have left the president and his neoconservatives adrift. They have power, two more years of it, and we are at the mercy of people who are irresponsible and dangerous. Their rhetoric proved a recipe for disaster in Afghanistan and Iraq -- a surrealistic nightmare. The American public is largely antiwar (55 percent of those who voted disapproved of the war, most of them strongly); they voted against the war and only tangentially for Democrats, most of who vaguely implied they would do something about the Iraq war but immediately after the election shamelessly reaffirmed their support for its essence. But people, and voters in particular, are such a nuisance everywhere. More quickly than in the past, they respond to reality, which means that traditional politicians must betray them very speedily. They create certain decisive parameters that ambitious politicians flout at greater risk than ever because the people have shown themselves ready to vote the rascals-whether Democrats in 1952 and 1968 or Republicans last November -- out of office. The American public is more antiwar than ever, and no one can predict what the future holds, including some Republicans outflanking the Democrats from a sort of antiwar left so that they can remain, or gain, office. That the people are subsequently cynically ignored-as they have been immediately after the last American election--is a fact also, but their role can neither be overestimated nor gainsaid. Experience shows that politicians, whatever they call themselves or in any nation we can think of, can never be trusted. Ever. But the facts on the ground -- reality -- are today very bad for those who advocate wars.
Israel: the Dream Comes Apart
Hawks in Israel, ascendant since the founding of the Jewish state, are still debating their thirty-three day war in Lebanon and the decisive limits to their once awesome, ultra-sophisticated modern military power exposed by their Lebanon adventure. The Israeli press is full of accounts of ministers' sexual offenses and corruption. Ehud Olmert's government is badly divided, backbiting, and may fall soon. The army is openly split and Olmert would like to dump its chief of staff, Dan Halutz, and the minister of defense. The Zionist project is in an unprecedented state of disrepair, with profound demoralization taking hold. Olmert himself is a complete mediocrity, a minor Likud politician who parlayed himself into the number two spot and was lucky. His comment when he visited the U.S. in the middle of November that America's Iraq war had brought stability to the region either infuriated or embarrassed everyone. He is basically a shrewd politician but very stupid man.
The most devastating analyses of Israel's war in Lebanon have appeared in Israel itself, and "the fact the Israeli army is at a low point," according to a writer in Haaretz, has goaded rather than deterred Iran. "Almost every weapon lost its significance and effectiveness as soon as it was used," Ofer Shelah wrote in the Jaffee Center's Strategic Assessment. The Israeli military relied on massive, overwhelming firepower delivered by the most modern means possible and it failed to stop incoming rockets and enemy mobility, much less win the war. Hizbollah not only showed Syria how to defeat the Israeli army but made Iran much more confident they can carry on what it is doing. The entire government and army leadership was incompetent.
From its very inception there was a warrior ethic in the Zionist ideology, one it shared with diverse reactionaries in Europe. Both its left-wing as well as the Right have nourished it, and Joseph Trumpeldor, the hero of this militant mentality, was one of the founders of Zionist socialism-a leader of the Hashomer Hatzair, the far left of this tendency. But the cult of heroism in Israel has made way for military technocrats who read digital print-outs (as described in Defense Tech, Nov. 20, 2006.) Morale in Israel, and especially the once elitist military, has plummeted. The arms industry there is very large, and like its American equivalents need subsidies -- computer-based war is very expensive and greatly helps employment. But Lebanon only showed Israel what the Americans learned elsewhere -- it loses.
There are many dangers, from fascistic politicians like Avigdor Lieberman becoming even more powerful, to yet greater emigration abroad of those Jews with high skills. The latter is happening. Israel's ability to flout European opinion with impunity or to have Washington embark on military adventures from which Israel gains is increasingly limited. France has warned Israel that should it initiate a war with Iran it would create "a total disaster" for the entire world". Oil prices would rise, the entire Arab world would unite behind the Iranians, and Israel would be targeted but so would other nations. Even more important, Israeli strategists admit that Iranian nuclear weapons would only create a stable deterrent relationship between the two nations, and are not an "existential threat."
Repentance or Rapture?
Above all, in Iraq the American government is facing the failure of its entire Middle East project, an illusion in which the Israelis have a profound interest. Bush and gang are in a state of denial, but the U.S. is going the way of its defeat in Korea and Vietnam, and its military is increasingly overstretched and demoralized. It has based its foreign policies on fantasies and non-existent dangers, neo-con dreams and desires, only partially to meet equally illusory Israeli objectives to transform the entire Middle East so that it accepts Israel in whatever form the fickle Israeli electorate presents it. American foreign policy has been fraught with dangers since 1945, and I have documented them extensively, but this is the worst set of incompetents ever to hold power in Washington. It "shocked and awed," to use the departed Secretary of Defense's phrase, itself. Things are going disastrously for conservative warriors.
But it is very difficult to anticipate what this administration will come up with, though disasters over the past six years have made a number of alternatives far less probable. In a way, that is a good thing, although the cost in lives lost and wealth squandered has been immense. The Baker/Hamilton bipartisan commission is deeply split and if -- with emphasis on "if" -- if it happens to come up with a clear alternative the president is free to ignore it. The Pentagon has formulated alternatives, summed up as "go big," "go long"-both of which would require 5 to 10 years to "Iraqize" the war-- or "go home", but it is divided also. One thing certain, however, is that it has neither manpower, materiel, nor political freedom to make the same mistakes as in Vietnam-as the first two alternatives would have it do. There are no options in Iraq because the U S has traumatized the entire nation and created immense problems for which it has no solutions. No one can predict what it will do in Iraq because the administration wishes to preserve the illusion of success and is genuinely confused how to proceed. It has produced chaos. Iraq is very likely to remain a tragedy, one wracked by violence, for years to come. The Bush administration has created a massive disaster involving the lives of many millions of people.
A great deal depends on the President, whose policy has utterly failed in Iraq, is failing in Lebanon, and one of his options is escalation -- war with Iran. Israel might attack Iran in order to drag America in, but by itself it can only be a catalyst. Olmert and Bush approach these issues in a remarkably similar fashion. Either way, Bush has not ruled out war with Iran despite warnings from many military men that such a conflict would have vast repercussions, probably last years, and the U.S. would likely lose the war, even if it used nuclear weapons, after creating an Armageddon.
A number of the neocon theoreticians have repented the Iraq adventure, and even criticized some the basic premises that motivated it, but it would be an error to assume that this administration has some contact with reality and can be educated-by the electorate or by alienated neocon intellectuals. There are still plenty of people in Washington who advocate going for broke, who still retain fantastic illusions. There remains the imponderable factor of rapture -- fantasy and illusions mixed with desires. Is victory around the corner if we escalate with more troops? Will the Iraqi troops the Americans train attain victory over enemies that eluded U.S. forces? Many much wiser presidents have pursued such chimeras. Why not Bush too? Facts on the ground, which are much greater in constricting American power than they were six years ago, are a critical factor. They may not be sufficient to prevent irrational behavior. We simply cannot know.
All of these factors, and perhaps others not mentioned here, will affect each other. The whole is very often no stronger than all the parts. All surprises that thwart the Bush administration's freedom to act are now to be welcomed, and while the world's financial system is the leading candidate for upsetting the U.S.'s calculations, it is scarcely the only one. The facts on the ground, realities rather than decisions, are usually crucial, and here the U S is losing in its megalomaniac ambition to shape the world. It has been this way for many nations led by men far superior in intellect to George Bush.
Wishes are not reality and the U S has an endemic ability to hold onto its wishes and fantasies as long as possible. Desire often leads to its acting despite itself. But its resources are far more constrained now than they were six years ago, much less for the United States during the Vietnam War-which it lost. The American public is already deeply alienated, the world financial system is teetering, the U S' military resources are virtually exhausted.
We shall see.
By Gabriel Kolko
Gabriel Kolko is the leading historian of modern warfare.
These are dismal days for those who attempt to run the affairs of the world. But how should we understand it?
It would be a basic error to look at our present situation as if it were rationally comprehensible. The limits of rational explanations are that they assume rational men and women make decisions and that they will respect the limits of their power and behave realistically. This has rarely been true anywhere historically over the past century, and politics and illusions based on ideology or wishful thinking have often been decisive. This is especially the case with the present bunch in Washington.
We are right to fear anything, particularly a war with Iran that would immediately reel out of control and have catastrophic consequences not only to the region but globally. We are also correct to see limits to the power of irrational people, for the United States is strategically weak. It loses the big wars, as in Korea, Vietnam, and now Afghanistan and Iraq-even though its tactical victories often prove to be very successful-but also ultimately destabilizing and ephemeral. Had the U.S. not overthrown the Mossadegh regime in Iran in 1954 it is very likely the mullahs would never have come to power and we would not now be considering a dangerous war there.
Although the whole is far more important than the parts, the details of each part deserve attention. Many of these aspects are known, even predictable, there are -- to paraphrase Donald Rumsfeld -- the "known unknowns and the unknown unknowns" -- the "x-factor" that intercedes to surprise everyone. All of these problems are interrelated, interacting and potentially aggravate or inhibit each other, perhaps decisively, making our world both very difficult to understand -- or to run. Putting them together is a formidable challenge to thinking people outside systems of power. It has always been this way; fascism was in large part the result of economic crisis, and World War Two was the outcome. How factors combine is a great mystery and cannot be predicted -- not by U S or by those ambitious souls who have the great task of making sure there is no chaos. We wish to comprehend it but it is not decisive if we don't; for those who have responsibility to manage it, this myopia will produce the end of their world-and their privileges.
What is important to watch?
We can rule out the Left, that artifact of past history. Socialism ceased being a real option long ago, perhaps as early as 1914. Since I have just published an entire book, After Socialism, and detailed its innumerable myopias and faults, I need not say more than that it is no longer is a threat to anybody. The fakirs who lead the parties who still use "socialism" as a justification for their existence have only abolished defeats at the hands of the people from the price capitalism pays for its growing follies. That confidence- freedom from challenge by the unruly masses-- is very important but it is less and less sufficient to solve the countless remaining dilemmas. The system has become increasingly vulnerable, social stability notwithstanding, since about 1990 and the formal demise of "communism".
Assume Anarchy
The failure of socialist theory is much more than matched by the failure of capitalism because the latter has the entire responsibility for keeping the status quo functioning-and it has no intellectual basis for doing so. The crisis that exists is that capitalism has reached a most dangerous stage in destructiveness -- and no opposition to it exists. This malaise involves foreign affairs and domestic affairs -- vast greed at home and adventure overseas. If the foreign policy aspects are largely American-originated, the rest of the world tolerates or sometimes collaborates with it. Its downfall is inevitable, perhaps imminent. The chaos that exists will exist in a void. No powerful force exists to challenge, much less replace it, and therefore it will continue to exist -- but at immense and growing human cost. Alternative visions are, for the moment at least, mostly cranky.
Ingenious and precarious schemes in the world economy today have great legitimacy and flourish in the sense that the postulates of classical economics postulated are fast becoming irrelevant. It is the era of the fast talker and buccaneer-snake-oil salesmen in suits. Nothing old-fashioned has credibility. Joseph Schumpeter and other economists worried about pirates, but they are more important today than ever before-including than during the late 19th century when they were immortalized in Charles Francis Adams Jr's Chapters of Erie. The leitmotif is "innovation," and many respectables are extremely worried. I argued here in Counterpunch recently (June 15 and July 26) that gloom prevails among experts responsible for overseeing national and global financial affairs, especially the Bank for International Settlements, but I grossly underestimated the extent of anxieties among those who know the most about these matters. More importantly, over the past months officials at much higher levels have also become much more articulate and concerned about the dominant trends in global finance and the fact that risks are quickly growing and are now enormous. Generally, people who think of themselves as leftists know precious little of those questions, questions that are vital to the very health of the status quo. But those most au courant with global financial trends have been sounding the alarm louder and louder.
The problem is that capitalism has become more aberrant, improvisatory, and self-destructive than ever. We are in the age of the predator and gamblers, people who want to get very rich very quickly and are wholly oblivious to the larger consequences. Power exists but the theory to describe the economy which was inherited from the 19th century bears no relationship whatsoever to the way it operates in practice, a fact more and more recognized by those who favor a system of privilege and inequality. Even some senior IMF executives now acknowledge that the theory that powerful organization cherish is based on outmoded 19th century illusions. "Reconstructing economic theory virtually from scratch" and purging economics of "neoclassical idiocies," or that its "demonstrably false conceptual core is sustained by inertia alone," is now the subject of very acute articles in none other than the Financial Times, the most influential and widely-read daily in the capitalist world.
As an economic system capitalism is going crazy. In late November there were $75 billion in global mergers and acquisitions in a 24-hour period-a record. Global capitalism is awash with liquidity -- virtually free money -- and anyone who borrows can become very rich, assuming they win. The beauty of the hedge fund is that individual risks become far smaller and one can join with others to bet big -- and much more precariously. Henced, spectacular chances are now being taken: on the value of the U.S. dollar, the price of oil, real estate -- and countless others gambles. In the case of Amaranth Advisors, this outfit lost about $6.5 billion at the end of September on an erroneous weather prediction and went under. At least 2,600 hedge funds were founded from the beginning of 2005 to October 2006, but 1,100 went out of business. The new financial instruments -- derivatives, hedge funds, incomprehensible financial inventions of every sort-are growing at a phenomenal rate, but their common characteristic, as one Financial Times writer, John Plender, summed it up on November 20. , is that "everyone [has] become less risk adverse." Therein lies the danger.
Hedge funds will bet on anything, natural disasters and, soon, longevity of pension fund members being only the latest examples of their addiction to taking chances. London is fast replacing New York as the center of this activity, and the capital market in general, because the regulatory regime of the government the British Labour Party established is much more favorable to this sort of activity than that Bush's Republican minions allow -- though this may change because Wall Street does not like losing business.
On September 12, 2006, the International Monetary Fund released its report on "Global Financial Stability," and it was unprecedented in its concern that "new and complex financial instruments, such as structured credit products," might wreak untold havoc. "Liberalization," which the "Washington consensus" and IMF had preached and helped realize, now threatens the US dollar and much else. "The rapid growth of hedge funds and credit derivative mechanisms in recent years adds to uncertainty," and might aggravate the "market turbulence and systemic impact" of once-benign events. Hedge funds, it warned, have already "suffered noticeable losses."
At the end of October, again the Financial Times, Jean-Claude Trichet, head of the European Central Bank, deplored these new financial products, which have been increasing and growing into the trillions. He wrote that he could not comprehend them; that there is scant oversight over them; that many are pure hype; that nothing prevents them from creating immense domino effects on the entire financial system were they to collapse, thereby also dragging the well-regulated parts of the system down. Then, at the beginning of November the quasi-official UK Financial Services Authority issued a report that detailed the existing risks to the entire world financial structure. Despite its tone, it is dynamite.
The FSA report documents the many risks to the private equity sector: excessive leverage, unclear ownership of risk, market abuses and insider trading. There are conflicts of interest of every sort; the system is opaque; hedge funds made inherent dangers even riskier. "Given current leverage levels and recent developments in the economic/credit cycle, the default of a large private equity backed company or a cluster of smaller private equity backed companies seems inevitable."
Given this growing consensus of risks, on November 13 Sir John Gieve, the deputy governor of the Bank of England, concluded, in the Financial Times, that each national state regulating full-blown financial crises was no longer feasible: the financial system is international in scope today and no national mechanism can handle it. There have been at least 13 borderline or full-blown financial crises since the late 1970s and some of the methods for dealing with them would be "less easy to deploy" under present conditions-which is a polite way of saying they were irrelevant. His conclusion: Regulators "should practise coping with global crisis," "work together" on practical examples to develop machinery, especially to avoid the "moral hazards" of bailing out firms in trouble, including "closing down a large firm in an orderly way."
The chances of developing a common trans-national approach or rules are close to zero, if only because nations of the world are rivals in the bid to attract financial companies and regulation, or lack of it, is a major factor on where to headquarter. When the next financial crisis occurs, and the likelihood of that happening has grown by leaps and bounds, it is more likely than ever to drag the entire global economy with it. At least the "experts" think so. They did not before now.
So economics may foul up politics. Perhaps not, but it could become a very important factor in the overall situation.
Power in Washington
President Bush made the election a referendum on the war and was badly repudiated; his party suffered a disaster. Disorientation, depression, and defeat have left the president and his neoconservatives adrift. They have power, two more years of it, and we are at the mercy of people who are irresponsible and dangerous. Their rhetoric proved a recipe for disaster in Afghanistan and Iraq -- a surrealistic nightmare. The American public is largely antiwar (55 percent of those who voted disapproved of the war, most of them strongly); they voted against the war and only tangentially for Democrats, most of who vaguely implied they would do something about the Iraq war but immediately after the election shamelessly reaffirmed their support for its essence. But people, and voters in particular, are such a nuisance everywhere. More quickly than in the past, they respond to reality, which means that traditional politicians must betray them very speedily. They create certain decisive parameters that ambitious politicians flout at greater risk than ever because the people have shown themselves ready to vote the rascals-whether Democrats in 1952 and 1968 or Republicans last November -- out of office. The American public is more antiwar than ever, and no one can predict what the future holds, including some Republicans outflanking the Democrats from a sort of antiwar left so that they can remain, or gain, office. That the people are subsequently cynically ignored-as they have been immediately after the last American election--is a fact also, but their role can neither be overestimated nor gainsaid. Experience shows that politicians, whatever they call themselves or in any nation we can think of, can never be trusted. Ever. But the facts on the ground -- reality -- are today very bad for those who advocate wars.
Israel: the Dream Comes Apart
Hawks in Israel, ascendant since the founding of the Jewish state, are still debating their thirty-three day war in Lebanon and the decisive limits to their once awesome, ultra-sophisticated modern military power exposed by their Lebanon adventure. The Israeli press is full of accounts of ministers' sexual offenses and corruption. Ehud Olmert's government is badly divided, backbiting, and may fall soon. The army is openly split and Olmert would like to dump its chief of staff, Dan Halutz, and the minister of defense. The Zionist project is in an unprecedented state of disrepair, with profound demoralization taking hold. Olmert himself is a complete mediocrity, a minor Likud politician who parlayed himself into the number two spot and was lucky. His comment when he visited the U.S. in the middle of November that America's Iraq war had brought stability to the region either infuriated or embarrassed everyone. He is basically a shrewd politician but very stupid man.
The most devastating analyses of Israel's war in Lebanon have appeared in Israel itself, and "the fact the Israeli army is at a low point," according to a writer in Haaretz, has goaded rather than deterred Iran. "Almost every weapon lost its significance and effectiveness as soon as it was used," Ofer Shelah wrote in the Jaffee Center's Strategic Assessment. The Israeli military relied on massive, overwhelming firepower delivered by the most modern means possible and it failed to stop incoming rockets and enemy mobility, much less win the war. Hizbollah not only showed Syria how to defeat the Israeli army but made Iran much more confident they can carry on what it is doing. The entire government and army leadership was incompetent.
From its very inception there was a warrior ethic in the Zionist ideology, one it shared with diverse reactionaries in Europe. Both its left-wing as well as the Right have nourished it, and Joseph Trumpeldor, the hero of this militant mentality, was one of the founders of Zionist socialism-a leader of the Hashomer Hatzair, the far left of this tendency. But the cult of heroism in Israel has made way for military technocrats who read digital print-outs (as described in Defense Tech, Nov. 20, 2006.) Morale in Israel, and especially the once elitist military, has plummeted. The arms industry there is very large, and like its American equivalents need subsidies -- computer-based war is very expensive and greatly helps employment. But Lebanon only showed Israel what the Americans learned elsewhere -- it loses.
There are many dangers, from fascistic politicians like Avigdor Lieberman becoming even more powerful, to yet greater emigration abroad of those Jews with high skills. The latter is happening. Israel's ability to flout European opinion with impunity or to have Washington embark on military adventures from which Israel gains is increasingly limited. France has warned Israel that should it initiate a war with Iran it would create "a total disaster" for the entire world". Oil prices would rise, the entire Arab world would unite behind the Iranians, and Israel would be targeted but so would other nations. Even more important, Israeli strategists admit that Iranian nuclear weapons would only create a stable deterrent relationship between the two nations, and are not an "existential threat."
Repentance or Rapture?
Above all, in Iraq the American government is facing the failure of its entire Middle East project, an illusion in which the Israelis have a profound interest. Bush and gang are in a state of denial, but the U.S. is going the way of its defeat in Korea and Vietnam, and its military is increasingly overstretched and demoralized. It has based its foreign policies on fantasies and non-existent dangers, neo-con dreams and desires, only partially to meet equally illusory Israeli objectives to transform the entire Middle East so that it accepts Israel in whatever form the fickle Israeli electorate presents it. American foreign policy has been fraught with dangers since 1945, and I have documented them extensively, but this is the worst set of incompetents ever to hold power in Washington. It "shocked and awed," to use the departed Secretary of Defense's phrase, itself. Things are going disastrously for conservative warriors.
But it is very difficult to anticipate what this administration will come up with, though disasters over the past six years have made a number of alternatives far less probable. In a way, that is a good thing, although the cost in lives lost and wealth squandered has been immense. The Baker/Hamilton bipartisan commission is deeply split and if -- with emphasis on "if" -- if it happens to come up with a clear alternative the president is free to ignore it. The Pentagon has formulated alternatives, summed up as "go big," "go long"-both of which would require 5 to 10 years to "Iraqize" the war-- or "go home", but it is divided also. One thing certain, however, is that it has neither manpower, materiel, nor political freedom to make the same mistakes as in Vietnam-as the first two alternatives would have it do. There are no options in Iraq because the U S has traumatized the entire nation and created immense problems for which it has no solutions. No one can predict what it will do in Iraq because the administration wishes to preserve the illusion of success and is genuinely confused how to proceed. It has produced chaos. Iraq is very likely to remain a tragedy, one wracked by violence, for years to come. The Bush administration has created a massive disaster involving the lives of many millions of people.
A great deal depends on the President, whose policy has utterly failed in Iraq, is failing in Lebanon, and one of his options is escalation -- war with Iran. Israel might attack Iran in order to drag America in, but by itself it can only be a catalyst. Olmert and Bush approach these issues in a remarkably similar fashion. Either way, Bush has not ruled out war with Iran despite warnings from many military men that such a conflict would have vast repercussions, probably last years, and the U.S. would likely lose the war, even if it used nuclear weapons, after creating an Armageddon.
A number of the neocon theoreticians have repented the Iraq adventure, and even criticized some the basic premises that motivated it, but it would be an error to assume that this administration has some contact with reality and can be educated-by the electorate or by alienated neocon intellectuals. There are still plenty of people in Washington who advocate going for broke, who still retain fantastic illusions. There remains the imponderable factor of rapture -- fantasy and illusions mixed with desires. Is victory around the corner if we escalate with more troops? Will the Iraqi troops the Americans train attain victory over enemies that eluded U.S. forces? Many much wiser presidents have pursued such chimeras. Why not Bush too? Facts on the ground, which are much greater in constricting American power than they were six years ago, are a critical factor. They may not be sufficient to prevent irrational behavior. We simply cannot know.
All of these factors, and perhaps others not mentioned here, will affect each other. The whole is very often no stronger than all the parts. All surprises that thwart the Bush administration's freedom to act are now to be welcomed, and while the world's financial system is the leading candidate for upsetting the U.S.'s calculations, it is scarcely the only one. The facts on the ground, realities rather than decisions, are usually crucial, and here the U S is losing in its megalomaniac ambition to shape the world. It has been this way for many nations led by men far superior in intellect to George Bush.
Wishes are not reality and the U S has an endemic ability to hold onto its wishes and fantasies as long as possible. Desire often leads to its acting despite itself. But its resources are far more constrained now than they were six years ago, much less for the United States during the Vietnam War-which it lost. The American public is already deeply alienated, the world financial system is teetering, the U S' military resources are virtually exhausted.
We shall see.
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