Wednesday, November 29, 2006

Iraqinam: 'The parallels to Vietnam are way too optimistic'

Plumb Out of Mission

By Harold Meyerson
Wednesday, November 29, 2006; A23

The meaning of the election was clear for all to see: The people plainly believed that the unified, pluralistic Iraq that the Bush administration insisted was growing stronger with each passing day actually had no future at all.

There's no other way to interpret the vote for the first Iraqi National Assembly, held one year ago, in December 2005. Overwhelmingly, Iraqis voted their sect rather than their nation. The Shiites, who constitute roughly 60 percent of Iraq's population, voted for Shiite parties, which now control roughly 60 percent of the National Assembly. The Sunnis and the Kurds voted for their own parties, too.

There was, to be sure, a national unity slate, a coalition of nonsectarian parties headed by former prime minister Ayad Allawi. It pulled down 8 percent of the vote.

For a moment, the U.S. government seemed to understand what the election meant. "It looks as if people have preferred to vote for their ethnic or sectarian identities," said Zalmay Khalilzad, our harried proconsul (okay, ambassador) in Baghdad. "But for Iraq to succeed there has to be cross-ethnic and cross-sectarian cooperation."

But if Iraqis had wanted Iraq to succeed, they would have voted for Allawi. Iraq, it turns out, was not the name of their desire, or their fear. And the civil war that has been growing relentlessly more horrifying since the election is ultimately just the continuation of their politics by other means.

Which is why the parallels to Vietnam are way too optimistic. In Vietnam, at least the United States could identify a government and some genuinely anti-communist constituencies with which it was plainly allied. But with whom do we stand, and who stands with us, in Iraq? Prime Minister Nouri al-Maliki heads a Shiite-dominated government that grows closer to Iran and that is propped up by Moqtada al-Sadr, whose militia is the most powerful force in the country other than the U.S. Army, which Sadr has called on to leave Iraq forthwith.

As for the Sunni minority, it's among that group that the insurgency against both the U.S. occupation and the string of post-Hussein governments took root. At first the number of insurgents was relatively small, but as the Shiite-controlled police force joined the Shiite militias in anti-Sunni pogroms, the number of Sunnis taking up arms ballooned.

So -- which side are we on?

In the face of escalating civil war, of an increasingly Hobbesian conflict of each against all, the calls still coming from the U.S. military, the administration and Capitol Hill to step up our training of Iraqi forces seem light-years off the mark. The problem with Iraqi security isn't that Iraqi forces are poorly trained. It's that, like the rest of their countrymen, like the very government whose uniform they wear, they're not really invested in fighting for a unified, nonsectarian Iraq. Why do we expect them to defend an ideal that their countrymen either never believed in or were compelled to abandon under pressure of civil war?

But on matters Iraqi, much of the Beltway -- and not just the administration -- remains impervious to fact. "We've got to get the Iraqi army and police better equipped, better trained and into the fight," retired Gen. Barry McCaffrey declared recently. "And I think we've got 24 months." The police, of course, are already into the fight, many of them working with Shiite militias to execute Sunnis. They are, from any dispassionate perspective, proficient enough. Train them for 24 months and they will be the terror of the Earth.

We have plumb run out of mission in Iraq. We have enemies galore, but, other than the Kurds, precious few friends. We defend the idea of Iraq in the absence of Iraqis willing to do the same. We are at best a buffer -- unable to deter the daily atrocities but ensuring by our presence that they won't grow cataclysmically worse. Since we cannot deter the sectarian polarization, however, the cataclysm will follow our leave-taking whether it comes sooner or later.

Those who argue that we should send more troops (as if we had them) to Iraq, or train more Iraqis, or stay until the situation stabilizes should at least explain how the situation will stabilize, how nation-building will work in a nation that doesn't want to be built. We should, as George Packer has argued, rescue as many individual Iraqis as we possibly can on our way out. But rescuing Iraq from the forces we unleashed is plainly beyond us.

Or we could, I suppose, wait it out. About 100,000 Iraqis now flee the country every month for Syria or Jordan. At that rate, if we just hang on for 20 years, Iraq will be completely depopulated. The insurgency will be vanquished; sectarian strife will subside. Victory will be ours, and we can go home.

meyersonh@washpost.com

http://www.washingtonpost.com/wp-dyn/content/article/2006/11/28/AR2006112801279.html

The Balkanization of Iraq

November 29, 2006

by Loretta Napoleoni

While ethnic cleansing plagues "liberated Iraq," Moqtada al-Sadr, the leader of the powerful Shi'ite Mahdi militia, has issued an ultimatum to Prime Minister Nouri al-Maliki. Sadr warned that if Maliki met President Bush in Jordan this week, the cleric and his 30 followers in Iraq's parliament would pull out of the shaky ruling coalition, effectively ending (or so Sadr hopes) the first democratically elected Iraqi government. The meeting's agenda includes a discussion of the role that Iran and Syria can play in pacifying Iraq. Sadr objects to Bush's involvement because, he claims, U.S. forces are backing the Sunni insurgency. The young Shi'ite leader accuses Americans of being complicit in the killing of thousands of innocent Shi'ites in Iraq. Yet, until recently, America considered Sadr a man they could work with. One can only imagine Abu Musab al-Zarqawi, in his comfortable position in the Jihadist Martyrs' Paradise, laughing at the latest twist in the Iraqi saga.

Of course, Sadr has never been a loyal U.S. ally. How many now remember that the Iraqi insurgency began in April 2003 in Sadr City, the miserable Shi'ite suburb of Baghdad? Under the leadership of Sadr, residents took up arms against coalition forces to protest the lack of basic infrastructure: water, electricity, and security. In June 2003, after similar uprisings erupted across the country, Sadr formed the Mahdi Army, whose task was to foment violence against Coalition forces and against Iraqi Sunnis, especially former members of the Ba'ath Party. Yet, the Shi'ite insurgency went unpunished. Protected by religious leaders such as Ayatollah Ali al-Sistani and politicians close to Washington such as Ahmed Chalabi, Sadr was able to unleash his militia across Iraq.

In August 2003, when Zarqawi entered the Iraqi arena, the country was already in the grip of the Shi'ite insurgency. Like Sadr, the Jordanian fought on two fronts: he targeted both Coalition forces and his Iraqi religious enemies, as evidenced by his spectacular first attacks. In August 2003, Zarqawi masterminded the bombing of the UN headquarters in Baghdad, killing several members of the UN delegation, and the suicide attack against the Imam Ali Mosque, which killed, among many others, Ayatollah Muhammad Baqir al-Hakim, the spiritual leader of the Supreme Council of the Islamic Revolution in Iraq. Both Sadr and Zarqawi used powerful rhetoric to justify the targeting of Iraqi civilians. While Sadr attacked the Sunnis, accusing them of being Saddam's henchmen, Zarqawi drew analogies to the 13th-century Mongol invasion of Iraq, which was backed by the Iraqi Shi'ites. Zarqawi wrote to bin Laden that Sadr and his political backers had allied with Coalition forces, i.e., the new Mongols, to force Iraq into chaos in order to take control of its resources. Sadr's recent attempts to carve a Shi'ite state out of Iraq, cutting the Sunni population out of oil and gas revenues, seem to validate this analysis.

From summer 2003 to summer 2004, Coalition forces battled against both Shi'ite and Sunni militias. Yet, because of the strategic alliance between Washington and the Iraqi Shi'ite leadership, the Mahdi militia went systematically unpunished while the Sunni resistance was criminalized. Zarqawi was wrongly portrayed as the leader of the Sunni insurgency, while in reality he headed a very small group of mostly foreign jihadists. Fed information by the U.S. Army, the media depicted Zarqawi as the new Saddam, the butcher of Nicholas Berg, the leader of the Islamist Republic of Fallujah, the ultimate international terrorist. So blind was U.S. policy that, in August 2004, after Sadr's militia ignited violent clashes against coalition and Iraqi police forces in Najaf, Karbala, and Sadr City, killing hundreds of people, Ayatollah Sistani was given the go-ahead to broker a deal on behalf of the Americans with Sadr. The Mahdi militia, under siege in Najaf by coalition and Iraqi forces, walked free with their weapons, tramping on the bodies of the people they had killed. A few days later, Iyad Allawi, the Shi'ite interim prime minister of Iraq, issued an ad hoc amnesty to clear Sadr and his militia of all wrongdoing. This allowed the Shi'ite cleric to participate in the forthcoming election and win a seat in the Iraqi parliament. Thanks to that seat, he can today throw down the gauntlet to Maliki.

As it did during the bloody war in the Balkans, in Iraq the West is constantly entering into alliances, including with terrorist organizations, as if a clear divide existed between the good and the evil, and the West knew which was which. In Iraq, as in the Balkans, this "divide" shifts daily. In 1998, in Kosovo, following the attacks by the Kosovo Liberation Army (KLA) against Serbian police and civilians, the U.S. accused the KLA of being a terrorist organization. The British followed suit. Then, in March 1999, foreign policy in the U.S. and the UK underwent a radical shift and both governments condemned the Serbs. Suddenly, members of the KLA were no longer terrorists but freedom fighters, and the KLA was summarily removed from the U.S. State Department's terror list. American politicians even praised the organization. The new status was then reversed when, a few months later, the KLA supported an Islamist insurgency against the government of Macedonia – a U.S. ally – and it was once again listed as a terrorist organization by the State Department. One wonders how many times since George Bush declared 'Mission Accomplished" in Iraq should the Mahdi Army have been entered and erased from this list.

The Balkanization of Iraq goes well beyond homegrown ethnic cleansing and civil war. It springs from the willingness of countries such as America and the United Kingdom to police the Middle East. It is proof that Western intervention can destabilize entire regions now that the world is no longer trapped in the Cold War Manichean straitjacket. Iraq's future may well replicate the end of the Vietnam War, when America declared victory and airlifted its people out, leaving the country in the hands of a "neighboring power," i.e., the Chinese-backed North Vietnamese Army. Only this time, Iraq will be ravaged by voracious ethnic militias – backed by foreign countries militarily and politically too weak to impose their own rule – not because America withdrew, but because the U.S. invaded the country in the first place, unleashing these forces. Today, almost four decades after the end of the war, Vietnam is a leading exporter and an emerging economy because North Vietnam was able to impose peace, which eventually led to prosperity, safely locked within China's sphere of influence. Today, Iran and Syria's involvement in the Iraqi civil war will continue to drag the country further into sectarian warfare and may even give al-Qaeda the longed-for opportunity to carve out their own state. This is the terrifying legacy of this unjust and illegal war, a legacy that should not be hidden by political propaganda. Nevertheless, the sooner the West pulls out of Iraq, the better the chances Iraqis will find their own way out of the present morass. The danger, of course, is that peace in Iraq will come only when nothing is left standing but the ruins of ancient Mesopotamia.


Born and raised in Rome, Loretta Napoleoni was a Fulbright scholar at Johns Hopkins University's Paul H. Nitze School of Advanced International Studies (SAIS) in Washington, D.C., and a Rotary Scholar at the London School of Economics (LSE). She has an M.Phil. in Terrorism from LSE, a Master's in International Relations from SAIS, and a Ph.D. in economics from the University of Rome.

Napoleoni is an expert on the financing of terrorism and is well known internationally for having calculated the size of the terror economy. She is the author of the best-selling book Terror, Incorporated (Seven Stories Press), which was translated into 12 languages. Her latest book is Insurgent Iraq : Al-Zarqawi and the New Generation.

Visit her Web site.

http://www.antiwar.com/orig/napoleoni.php?articleid=10079

UN rights chief warns of 'climate of impunity' in Middle East

Photo

AFP
Wed Nov 29, 1:54 PM ET

United Nations (UN) human rights chief Louise Arbour faces the assembly during a Session of the Human Rights Council, at the UN Office in Geneva. Arbour warned of a "climate of impunity" operating in the Palestinian territories and urged Israel to carry out credible and transparent probes into civilian deaths resulting from military action.(AFP/Fabrice Coffrini)


Wed Nov 29, 1:54 PM ET

UN human rights chief Louise Arbour warned of a "climate of impunity" operating in the Palestinian territories and urged Israel to carry out credible and transparent probes into civilian deaths resulting from military action.

Arbour told the UN Human Rights Council that Israel had both the right and the duty to defend its population against rocket attacks but it must do so within the bounds of human rights and humanitarian law.

"The human rights situation in the occupied Palestinian territory is grave and worsening, within a general climate of impunity," Arbour said in a verbal report on her recent mission to the region.

"Overall I was struck throughout my visit by the sense of vulnerability and abandonment that was expressed to me by virtually all the civilians that I met, both in Israel and in the occupied Palestinian territories," she added.

The UN High Commissioner for Human Rights said she had urged Israel to ensure "transparent, credible and independent investigations" in cases where lethal force had resulted in the sort of civilian casualties suffered in the northern Gaza town of Beit Hanun.

"This would be central to break the culture of impunity and contribute to solidify the rule of law," she told the UN Human Rights Council.

Nineteen Palestinians were killed on November 18 in Israeli shelling of private homes in Beit Hanun, which Israel blamed on a technical malfunction.

The UN's human rights office announced Wednesday that South African Nobel laureate Desmond Tutu, who headed that country's Truth and Reconciliation after the end of the apartheid regime, will lead a fact-finding mission into the Beit Hanun incident set up by the Council.

The mission is meant to recommend ways "to protect Palestinian civilians against further Israeli attacks."

The mission was supported by 32 countries mainly from Asia, Africa and the Middle East, but opposed by eight including Canada, Britain and Germany while six more, including France, Switzerland and Japan, abstained.

Arbour said that during her meeting with Palestinian leader Mahmud Abbas, she had stressed the need for the Palestinian Authority to stop rocket attacks by militants on Israeli communities and prosecute those responsible.

"Every effort must be made to enable the Palestinian Authority to discharge that responsibility," she told the 47 member states in the Council.

"At the same time I stressed that as long as the rockets continue to hit its territory, Israel has the right and indeed the duty to defend its population and to ensure the protection of its citizens," Arbour said.

"However, this must be done in accordance with international human rights and humanitarian law," she added.

Israel's ambassador to the UN in Geneva, Itzhak Levanon, praised Arbour's approach as "balanced" and urged the Council to adopt the same outlook.

"The High Commissioner's initiative to visit both sides, Palestinians and Israelis, permitted her to see firsthand that human suffering is the monopoly of neither side, that human distress is equal on both sides of the divide, and also that placing blame on one-side only is a distortion of reality," he said.

An Israeli television network reported last week that authorities had been secretly in contact with the families of Palestinian victims about possible compensation should the relatives agree not to bring the shelling before the International Court of Justice in The Hague.

http://news.yahoo.com/s/afp/20061129/wl_mideast_afp/unrightsmideastunrest_061129185404

What truce? Israeli raids continue


Raids in West Bank continue — Peretz


TEL AVIV — Israeli Defence Minister Amir Peretz said yesterday that Israel would continue its arrest raids in the West Bank, saying the tenuous, two-day-old truce with Palestinian militant factions applied to the Gaza Strip only. Peretz spoke after Israeli soldiers shot dead a Palestinian militant and a 56-year-old bystander during an arrest operation near the West Bank city of Jenin on Monday, sparking Palestinian allegations of an Israeli violation of the cease-fire.

“The basic understandings are that we are talking about a cease-fire in Gaza alone,” he said.

He also urged the Palestinian leadership to enforce the truce and threatened “severe respon-ses” to each violation of it by the Palestinians.

Israeli Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas of the moderate Fatah party agreed on a surprise truce that took effect on Sunday morning, after militant factions decided to stop rocket fire at Israel from Gaza in an attempt to stop Israeli military operations in the strip.

Renegade militants nevertheless fired 13 Gaza-made rockets at southern Israel on Sunday and Monday.

In a new operation yesterday, Israeli forces arrested 13 suspected West Bank militants, the army said. Peretz said Israel required an end to militant operations in the West Bank before it would consider a cease-fire there. DPA, Reuters

http://www.businessday.co.za/articles/world.aspx?ID=BD4A329649

Israeli fires rubber bullets at school girls, several injured



Several school girls injured and army takes over one house in a village near Hebron

Ghassan Bannoura – IMEMC & Agencies - Wednesday, 29 November 2006, 11:20

Several school girls were injured when army fired tear gas bombs at their school in Al Samu'a village south of the West Bank city of Hebron on Wednesday morning.

Eyewitnesses said, that Israeli troops stopped and assualted several residents at the checkpoint located on the village entrance. Also, soldiers attacked the school boys and fired rubber-coated metal bullets and tear gas at the students, who responded by throwing stones at the soldiers.

Later soldiers attacked the girls school in the village and fired tear gas bombs at the classrooms and the school playground causing several chocking cases as a result of gas inhalation, medical sources reported.

Troops also attacked the house of Hatem Abu Al Kabash, located on the northern entrance of Al village and forced him and his family in one room and took over the house and turned it to a military post, eyewitnesses reported.

http://www.imemc.org/content/view/22951/1/

Lawless Army defies supreme court, demolishes Palestinian home



One house leveled by the army in Hebron
IMEMC & Agencies - Wednesday, 29 November 2006, 10:41

The Israeli army has demolished one house in the West Bank city of Hebron on Wednesday morning. Army bulldozers and vehicles stormed Wadi Al Suman neighborhood in the city, closed all the streets leading to it and demolished the house of Ishak Al Madani, the army claimed that the house was built without permit.

Al Madani told the Palestinian News Agency WAFA that Israeli army handed him a military order to demolish his house three months ago. However, he appealed to the Israeli supreme court and he won a preventive court ruling to cease the demolition. However, regardless of the court ruling, the army unlawfully demolished the house.

This is the second time that the army levels a house in Wadi Al Suman neighborhood despite a court ruling demanding a freeze of the demolition.

Israel has been unlawfully demolishing Palestinian houses in the West Bank since 1967. Sometimes houses are demolished as a collective punishment when a family member is involved in attacks against the Israeli army.

According to statistics bty the Israeli Committee Against Home Demolition, (ICAHD), Israel has demolished mroe than 3000 houses since September 2000.

http://www.imemc.org/content/view/22949/1/

Global Debt Saturation – The Human Reckoning

Tulips of Stone - Part II

By: Nigel H Maund


-- Posted Wednesday, 29 November 2006

by Nigel H Maund
BSc(Hons)Lond., MSc, DIC, M.Aus.IMM, MIMMM, SEG
“There is no calamity greater than lavish desires
There is no greater guilt than discontentment
And, there is no greater disaster than greed”
Lao Tzu (604 – 531 BC, “The Way of Lao Tzu”)
We stand for Freedom.
That is our conviction for ourselves;
that is our only commitment to others”
John F Kennedy (35th president of USA, 1961-1963)
The world’s greatest residential property bubble, is, at last, starting to come apart in the US, UK and Australia first, as predicted by this writer in his article “Tulips of Stone”, written in 2004. The sustained 25 basis point rises in interest rates undertaken by the Reserve Banks of the US, UK, Europe and Australia is, albeit slowly, beginning to bite. This will slowly intensify as rebalancing of the global economy takes place.

Funded by the massive re–allocation (or misallocation) of capital under the easiest credit environment ever witnessed by man, the real estate bubble has grown since 2001 to become an unrestricted and unconstrained financial supergiant with seemingly endless digi-money as its underpin, unsupported by any hard asset in one of the world’s greatest and insidious confidence tricks ever undertaken. The most astonishing thing is, very few people have had the gumption to ask why was this ever allowed to happen? So long as the entire incredible edifice appears to survive, however implausible, to sustain never ending asset inflation everyone is happy, or so it seems, for now.

As home buyers are pushed beyond all reasonable limits in taking out their mountainous mortgages by schemes ever more fantastic, implausible and irresponsible, including the macabre and hyper cynical “death bed mortgages” hatched in the cynical home of mortgage engineering “par excellence”, the UK; the so called regulators whimper weak warning signals about an impending avalanche of potential defaults. As if to prove the insanity of the human mass psyche, any thought that this improbable lunacy may stop is met by the mentality, reminiscent of the “Tulip Mania” of Holland, and the “South Sea Bubble” in England, that these investments can never go down as though bricks and mortar have some association with an all powerful deity and are immune from the laws of economics and common sense.

For the majority of home owners, they are now “lobster potted” for the rest of their lives in the 21st Century’s version of the Victorian treadmill. Welcome to modern debt controlled serfdom, where if you lose your job, either through retrenchment or illness, you lose your home. It has become a veritable “Sword of Damocles”, or a stick with which to beat recalcitrant labor into a bloody pulp, should they ever prove restless or disobedient. The ruthless and faceless plutocrats who benefit vastly from this incredible and dreadful scheme must be laughing on their return to a status of demagogic power which is the modern equivalent of the Roman or the Medieval European Aristocracy at its exploitative worst. The difference between the rich and poor widens, by the day, into a gaping crevasse in all societies around the world, and, incredibly, no one appears to understand or really care about the overall social and political implications. The “I’m all right jack” mentality is more applicable to today’s world than ever before. Greed has become the credo of 21st Century society and money its surrogate and false God.

The mortgage weapon forms an integral part of the armory of the so called New World Order (NWO) as it seeks to accumulate wealth and power to control people by stealth. Other tools include the explosion of credit card debt where people have been encouraged to spend to the limit of their cards. If they can manage this limit, then the credit envelope is just expanded to encourage them to spend to the absolute limit of their debt servicing capacity incurring “loan sharking” interest rates in doing so. The fact that Governments turn a blind eye to this evil is proof positive of their own complicity, corruption and total lack of moral fortitude.

The Broader Picture Impacting on Real Estate

Another plank in the NWO’s grand scheme is the hoodwinking of the electorate of all countries with bogus economic statistics such as: “the unemployment rate”; “Consumer Prices Index” and “Gross Domestic Product”. When first devised, in the early part of the 20th Century, these figures actually meant something and were reliable indicators of economic performance. However, decades of “cheese slice” style tampering with the ingredients of these statistics has increasingly rendered them meaningless and, now, they are all but worthless. Their only real value now lies in what all this tampering was designed to achieve, namely fooling the general public into the following false beliefs:
  • The economy is in far better shape than it really is and growth greater than it really is. The vital “feel good factor” is the psychological goal of the manipulated GDP;
  • Inflation is far lower than it really is through a lower CPI. This statistic is used to control wage claims, reduce pension increases linked to the CPI and politically manipulate the electorate to believe that management of the economy is far stronger than it really is. This is important to manipulate people’s vital consumer behavior through the “feel good factor”;
  • The unemployment rate is far lower than it really is. This is another important psychological – political tool for reducing political action in respect of the real unemployment rate and in manipulating the economic “feel good factor” and potential wage claims.
The total corruption of these vital economic indicators demonstrates the extreme cynicism and moral bankruptcy of so called Democratic Governments. Furthermore, it shows how these Governments really view their citizens, and what an absolute sham “Democracy” really is. The far reaching consequences of the manipulation of vital economic indicators will become apparent as the massive debt financed bubble economy starts to unravel. Pensioners become impoverished, and savers see their savings whittled away through remorseless currency debasement. Furthermore, the majority of the wage spectrum sees their real earnings eroded by institutionalized inflation. The objective here is to increase profit margins of the multinational corporations through the following international cost management strategy:
  • Erode labor costs through inflation and CPI linked limitation to wage claims;
  • Outsource jobs to low cost labor areas to exert downward pressure on internal wage claims;
  • Play low cost labor areas off against high cost skilled labor areas to reduce the costs of the latter;
  • Destroy welfare benefits to labor by any method possible as these become production costs;
  • Increase the hours worked at no extra cost;
  • Get Governments in industrialized states to fund training initiatives and apprenticeships through taxation thus providing skilled and semi – skilled labor funded by their own workers through taxes;
  • Offer substantial tax and other financial incentives for investment made in green or brown field sites all paid for by the low to middle income workers taxes. The rich can afford top accountants and become “tax efficient” a term not dissimilar to that dreadful military euphemism, “collateral damage”.
The plutocratic corporate – industrial dynasties are waging a constant war on labor in order to increase their profits by any method possible. The techniques used are time honored and well tested, and comprise a mixture of:
  • Lifetime enslavement through the debt – mortgage lobster pot – “the manacles of fear”;
  • Complex multilayered taxation diminishing the ability of labor to save and get ahead and to ensure their lifetime in harness;
  • Wage and savings erosion through continuous but variable inflation above the manipulated CPI;
  • Easy labor laws facilitating hiring and firing of staff without incurring financial liabilities;
  • Creating an atmosphere of fear, insecurity and instability in the minds of labor, keeping them constantly off balance and afraid.
The above all impact on the ability of any mortgagee to meet the repayments on his property should an economic downturn occur or should he lose his job for any reason whatsoever. Furthermore, most mortgagees will be paying between 25% and 35% per month of their after tax salaries to meet mortgage repayments. Many of these repayments are interest only. Their saving will in consequence be nominal and insufficient to sustain them for any length of time in the event of a loss of job.

The Human Cost of Real Estate and Other Debts

All these measures have not come about by accident but are planned and emplaced by a faceless plutocratic elite working behind an elected group of corrupted marionette politicians, marketed and sold to the electorate by a syndicated and owned media system. The impact of these policies on social behavior has been highlighted by the writer before. However, because of their significance, they need some re – iteration here.

Uncertainty concerning future employment, combined with large debt obligations and family concerns, conspire to create intense worry in even the most stable personality. Sustained worry and stress induces biochemical changes in the body which have adverse affects on the immune system and cause many people to resort to the use of tobacco, alcohol and drugs. The latter have seriously adverse side effects of their own but also serve to compound the medical consequences of worry and stress. Besides the biochemical changes, another major side effect of worry induced stress are the complex psychological side effects such as frustration, fear and inadequacy. These cause such human behavioral responses as heavy smoking, drinking, drug abuse, crime and violence in all its various expressions.

As debt saturation approaches situation overload, the less skilled and educated members of society feel they are not able to participate in the good life they see advertised by the ubiquitous media, so they resort to crime to obtain money to meet these artificially created or, often, real wants. Hence, another adverse affect of debt and easy credit is to accelerate the crime rate by orders of magnitude. What the world needs is not more policemen, but far less credit and debt! To address the effects is to ignore the cause. Credit and debt induced worry and stress cause smoking and drinking related illnesses, cancer, heart attacks and numerous other medical and psychological disorders including suicides. The merchants of credit and debt are also the “merchants of death and human misery” on an unimaginable and largely unaddressed scale.

Interest Rates – How Much Can the Real Estate Market Bear?

The current real estate bubble has been made much worse than any previous bubble not only by its awesome magnitude, but by mortgage refinancing on a hitherto unimaginable scale engineered to sustain economic consumption based on ever increasing asset values. This is the so called mortgage based ATM, where people have been able to repay credit card debts by dipping into their appreciating property values and then run up their credit cards all over again. Cars, electronics, house additions and renovations, education, and holidays have been financed in this manner to partially compensate for falling real wages and salaries, while real inflation romps along in double digits, as demonstrated by the year upon year rise in the salaries and benefits provided to Directors and CEO’s of the world’s medium sized to major corporations. These pay rises, as everyone knows, bear no relation to those afforded the labor force which are constrained by the CPI. As George Orwell correctly pointed out in his novel “Animal Farm”, some animals are more equal than others.

The key issues facing the global real estate markets, which have enjoyed the greatest boom in world history, concerns the underlying weakness of the global unit of currency, the US dollar and interest rates. The US dollar has enjoyed a worldwide “Seigneur” status, hitherto only enjoyed by the Roman sesterces and the British pound, since 1945. Not only is the US dollar the currency of international settlements but currency of all international commodity transactions. Furthermore, the US has the world’s largest Bond and Equity markets and is viewed as the safe haven of last resort for capital. Global surpluses piled up by China, Japan, India, Korea and Taiwan has all traditionally ended up in US denominated securities. However, during the last decade the hitherto unquestioned pre-eminence of the US dollar has been undermined by the explosion in US Federal, State and Public debt. The figures are now well publicized and beyond human comprehension. Debt at all levels of the US economy has reached saturation point and there is no evidence that any of these debts are ever going to be addressed in an orderly unwinding resulting in a soft landing. Like a black hole at the centre of a spiral galaxy, the shear scale of numerical debt is sucking everything into it. The odd thing is that in real terms the US dollar is nothing other than a piece of colored paper with writing and numbers on it. It is not a title deed to some defined amount of a tradable substance like gold or silver, as it used to be. It carries no warrants or guarantees and affords the owner absolutely nothing. Its value is only a perceived value and, therefore, based on trust. Nominal dollars, as expressed by colossal debts, are not sustained by cash in circulation. The money is therefore largely digital and abstract and hence a gigantic confidence trick. The world banks are run by magicians as they have managed to create abstract money and convince people it is real. What does this all tell us about the nature of the human mind?

To add to burgeoning US debt problems, one has to factor in the historically high cost of the US Military Complex running nearly 1,000 global bases and some 14 US Navy Carrier Battle Groups, not to mention the daily financial and human cost of the unfolding debacle in Iraq and Afghanistan. The latter is quietly becoming the US version of Augustus’ Tuetoberg Forest disaster in AD 9, when the loss of three Roman legions in Germany prevented the further enlargement of the Roman Empire and thus changed the course of the history of Europe. Few outside the US, would now question that the Pax Americana is now in decline. The 21st Century is shifting inexorably towards China and India. Whilst China and India continue their rise to global superpower status, the world is slowly shifting towards the Euro as a “global bridging currency” until the Chinese Yuan becomes the new global specie by about 2025.

Both market and global political sentiment is turning against the Anglo – Americans who are seen as meddlesome, overbearing, extremely hypocritical and duplicitous. The Achilles heel of the US – UK hitherto overarching global power is the US dollar. It has, until now conferred a huge economic and political advantage. However, its perceived strength hides its underlying weakness. Recent action in global markets suggests the world economy is quietly moving out of the dollar into the Euro and gold (although the latter is, at current prices, an insignificant monetary instrument). The undeniable link between the US – UK and Israeli actions in the Middle East and the latter’s pre – eminence in reserves of vitally important light and intermediate sweet crude oil needs no further discussion. US – UK control of such reserves is not a situation Russia and China would be happy to see eventuate. Furthermore, concern about global rebalancing and US debts combined with the tremendous loss of prestige both the US and UK have suffered in the Iraq shambles is setting the stage for a historic turning point. Both countries are undeniably in decline. This sentiment will serve to further undermine an already fundamentally worthless US currency.

As the dollar breaks through support at 82 and then the crucial 75, on the weighted currencies index, the Fed will be forced to raise interest rates to defend the dollar and reduce accelerating inflation. Unlike previous periods where interest rates were raised in 50 and even 100 basis point hikes, the present debt saturated real estate and credit markets would quite simply implode if such hikes were made today. So, for the real estate markets it will be a “death by a thousand cuts” to be endured over a protracted period of rebalancing.

For those ordinary people who purchased houses over the last three years, at inflated prices, the years of misery and pain are arriving. Debt is a double edged sword and for most of history the root cause of much pain, suffering and evil. The “have it all now” society we now live in is about to meet its day of reckoning. One sincerely hopes that a vital moral lesson will be learned for future generations to ponder. However, sadly, I doubt it. As one writer said “If there is one thing about history, it is that mankind learns nothing from history”. It gives the writer no pleasure to see the world’s principal advocate of individual freedom (see President Kennedy’s fine words in the heading to this essay) the USA, make a host of disastrous decisions which will ultimately bring about its demise. The US has failed to heed the lessons of Rome and Britain. Empires always collapse because they lose their vision to the corruption that always attends great power.

Nigel H Maund
nhmgeol@yahoo.com.au
12.11.2006
Australia

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