Over The Garden Wall

Meanwhile in the USA we have entered a period of twelve months hiatus. This is something that happens quite often, notably when an incumbent President has been having difficulties and it going to have to campaign hard and come up with a lot of popular measures to ensure his (or her) return to Office.

It is a very muddled situation there. The Republican Party has had already a number of persons put forward as potential candidates but none of them seems to convince either their own party or most of the voters. The voters want somebody to cut the cackle and do the business but are getting too much cackle and too little sense.

President Obama is in trouble because the USA was in deep trouble when he took over. It has not got any better and the signs are that it is not going to. The debt is still rocketing, large areas of the economy are badly stressed and he has not had either the ability or the chance of picking the kind of team he needed. But there are no Democrats in sight able to challenge him.

And things keep happening, as they do. In most countries this may matter less but in a country where religion is a major deciding force then the wrath of whatever god is in a bad temper is to be feared. Geophysicists, who are wise enough to keep their heads down may worry but prefer to explain after the event then to warn before.

As the USA is very big and straddles a continent between the Atlantic and the Pacific the chances of something changing that will be inconvenient to humans in the area is higher than in most places. It could be anything, but the hot money (sic) is that in the mid West there could be a long drought impending.

The USA also has a failed state to the south, Mexico, which is exporting its troubles to a number of States in the south west of the USA. In the Caribbean a number of small places could suddenly demand a lot of expensive attention.

With all this and the increased dependence on Chinese money and other Asian inputs the USA has now turned West (again) to its Pacific neighbours and is looking to keep some sort of lead and initiative.

This will not be easy. In my experience creditors do not take kindly to debtors who lecture them. They will not the pushover that so many European states have been in the past.

This had led the USA not so much to withdraw from Europe but to regard it as a kind of maiden Aunt who is suddenly in need of care. All its eccentricities have now become intolerable and something to stay away from and they can’t be trusted with the money any more.

Which is unlucky as Wall Street is embroiled with the City of London and parts of Europe to the same extent as it ever was and to the same effect. President Obama may want to politically steer clear of European troubles but Wall Street will not let him. This could become very complicated if the Eurozone crisis worsens.

Also Wall Street is involved in the same network of tax havens and the same shifting of money and capital as are the The City, the Swiss and others notably amongst the big international magnates who call the shots. Enter the Russians, the wild cards in this great game of the 21 Century.

We should remember that the backyards of Russia and the USA overlook each other and there are signs that like housewives of old they have begun to chat over the garden wall away from prying eyes and ears.

So when we look at our own media and see the stories that are being covered the one thing we should really know is that we are being neither informed or advised about the USA and its problems and therefore very little of the reality of our own.

Anything can happen and will.

Goodbye To All That

Because of events, principally the dreadful tragedy in Norway as well as our own issues and the Euro other matters have had less attention in the UK.

One that has been sidelined has been the seemingly interminable cat fights in Congress in Washington DC over the debt ceiling and expenditure commitments.

It would take a very long post to describe how the government of the USA has arrived at this stage and what is involved. It has been developing now for some time as the US House of Representatives and Senate has lurched from one muddled set of compromises to another.

They have given away control of the US Government to the money men. Once we had three powers, the Judiciary, the Legislature and the Administration. Now we have a fourth, the Financial and this has taken control.

The taxes, the revenues, the shape of the economy and the laws and regulation that govern it all will be determined by the Financial. War and Peace will be subject to whatever the Financial will determine.

http://www.nakedcapitalism.com/2011/07/more-shades-of-tarp-latest-deficit-ceiling-plan-to-establish-extra-constitutional-legislative-process.html

Goodbye The Constitution, goodbye Democracy, goodbye America.

4th Of July - Dependence Day

There was a sighting of an increasing rare species in Central London yesterday. It was American’s of working age who were on vacation. Apparently all those out of work in the USA cannot afford to travel whereas those who do work cannot afford to take a vacation.

Today, in London in Grosvenor Square, once one of the demonstration grounds, now a sealed off security zone and before both a green place where the most expensive of London’s old street walkers were to be found, a large statue of President Ronald Reagan was unveiled. Now he really does stand ten foot tall.

Over on Stateside on Independence Day my family there are catching up on their rapidly rising bills, mending an ageing car and doing overtime at home on their paid employment.

Perhaps it is time to amend the name of this day given the situation faced by the Federal Government and almost all the States of the Union, their counties and local councils.

Today, 4th July 2011 should be Dependence Day when thought is given to how the government of America threw away the progress and prosperity created by the fifteen generations before the present one.
Skipping a long and gruesome explanation of all the troubles that now afflict the Union, who does America now depend on?

The Chinese are one group, between their holdings of American debt and being key suppliers of many consumer goods as well as controlling much of the present supply of rare earths, when China sneezes, America catches flu’.

The suppliers of oil whether other states or the large companies who drill for it, refine it and carry it to the American consumer for whom cheap fuel is an absolute necessity for survival and lifestyle.

The holders of American dollars in cash world wide which is the currency of much incidental trade and most of the illegal drugs, drink and counterfeit trading. The sums are vast and amount to huge free loans to the American government.

It is one reason why America has intervened in Columbia and Afghanistan to protect the dealers they can depend on from the others. It is why money laundering has become a key source of financial income in both London and New York.

At one time America used to support certain ruling elites from its own sources of wealth. But the number of these has increased and so have their expectations. America is trying to hang on but now has to borrow large sums to manage it.

Once the Federal Government regulated the banks and finance houses who depended on it for security, status and directions in policy. Then “The Gipper” let them off the leash. He had already come to depend on the industrial and military complex that President Eisenhower had feared.

The Bush family ran with them and the Clinton’s bought the banks and funds idea that the way to equality and diversity was lending large scale in property and consumer goods to the poor who were never going to be able to pay off the debts and therefore provided a major income stream of interest, charges and penalties to the finance houses who lent the money and backed the Clinton’s, the Bush family and later Obama.

This gets more and more complicated but the upshot is now the banks and finance houses provide personal financial security to the Senators and Congressmen who take their advice about policy, decisions and the rest from them.

President Obama is still wondering about what to do but with a Presidential and other elections impending he needs to have good advice and feels fortunate to be able to depend on the banks and finance houses to provide it.

The remaining major American companies were once proud to be American with much of their ownership in the hands of American shareholders and they all depended on the government. These days the “shareholders” are largely funds who are so big and powerful that the American system of government has come to depend on them as well as all the others.

The funds etc. concerned are now “globalised” which means that nobody knows what they do, how they do it, what money they are dealing in and where it is. The world economy now depends on these funds and America is central to the world economy. If the funds have problems then American taxpayer has problems.

Hope you all enjoy the hominy and grits.

The End Of Empire

Just out of interest, perhaps time to revisit this item from January 2008, all those years ago, up to a point.

Quote:

An Ottoman warning for indebted America
By Niall Ferguson Published: January 1 2008
The writer is a professor at Harvard University and Harvard Business School and a senior fellow of the Hoover Institution, Stanford

Future historians will look back on the current decade as a turning point comparable with that of the Seventies. No, not the 1970s. This is not going to be another piece pointing out the coincidence of an unpopular Republican president, soaring oil prices, a sagging dollar and an unwinnable faraway war. I am talking about the 1870s.

At first sight, the resemblances across 130 years may not seem obvious. The 1870s were a time when conservative leaders such as Benjamin Disraeli, British prime minister, were powerful and popular. It was a time of falling commodity prices, after the financial crash of 1873 and the opening up of the American plains to agriculture. And it was an era of currency stability, as one country after another followed the British lead by pegging to gold.

Yet, on closer inspection, we are indeed living through a global shift in the balance of power very similar to that which occurred in the 1870s. This is the story of how an over-extended empire sought to cope with an external debt crisis by selling off revenue streams to foreign investors. The empire that suffered these setbacks in the 1870s was the Ottoman Empire. Today it is the US.
In the aftermath of the Crimean war, both the sultan in Constantinople and his Egyptian vassal, the Khedive, had begun to accumulate huge domestic and foreign debts. Between 1855 and 1875, the Ottoman debt increased by a factor of 28.

As a percentage of expenditure, interest payments and amortisation rose from 15 per cent in 1860 to 50 per cent in 1875. The Egyptian case was similar: between 1862 and 1876, the total public debt rose from E£3.3m to E£76m. The 1876 budget showed debt charges accounting for more than half of all expenditure.
The loans had been made for both military and economic reasons: to support the Ottoman military position during and after the Crimean war and to finance railway and canal construction, including the building of the Suez canal, which had opened in 1869.

But a dangerously high proportion of the proceeds had been squandered on conspicuous consumption, symbolised by Sultan Abdul Mejid’s luxurious Dolmabahçe palace and the spectacular world premiere of Aïda at the Cairo Opera House in 1871.

In the wake of the financial crisis that struck the European and American stock markets in 1873, a Middle Eastern debt crisis was inevit­able. In October 1875 the Ottoman government declared bankruptcy.

The crisis had two distinct financial consequences: the sale of the Khedive’s shares in the Suez canal to the British government (for £4m, famously ad­vanced to Disraeli by the Rothschilds) and the hypothecation of certain Ottoman tax revenues for debt service under the auspices of an international Administration of the Ottoman Public Debt, on which European bondholders were represented.

The critical point is that the debt crisis necessitated the sale or transfer of Middle Eastern revenue streams to Europeans.

The US debt crisis has taken a different form, to be sure. External liabilities have been run up by a combination of government and household dis-saving. It is not the public sector that is defaulting but subprime mortgage borrowers.

As in the 1870s, though, the upshot of this debt crisis is the sale of assets and revenue streams to foreign creditors. This time, however, creditors are buying bank shares not canal shares. And the resulting shift of power is from west to east.

Since September, Middle Eastern and east Asian sovereign wealth funds have made a succession of investments in four US banks: Bear Stearns, Citigroup, Morgan Stanley and Merrill Lynch. Most commentators have been inclined to welcome this global bail-out : better to bring in foreign capital than to shrink balance sheets by reducing lending.

Yet we need to recognise that these “capital injections” represent a transfer of the revenues from the US financial services industry into the hands of foreign governments. This is happening at a time when the gap between eastern and western incomes is narrowing at an unprecedented pace.

In other words, as in the 1870s the balance of financial power is shifting. Then, the move was from the ancient oriental empires (not only the Ottoman but also the Persian and Chinese) to western Europe. Today the shift is from the US, and other western financial centres, to the autocracies of the Middle East and east Asia.

In Disraeli’s day, the debt crisis turned out to have political as well as financial implications, presaging a reduction not just in income but also in sovereignty.

In the case of Egypt, what began with asset sales continued with the creation of a foreign commission to manage the public debt, the installation of an “international” government and finally, in 1882, to British military intervention and the country’s transformation into a de facto colony. In the case of Turkey, the debt crisis was followed by the sultan’s abdication and Russian military intervention, which dealt a lethal blow to the Ottoman position in the Balkans.

It remains to be seen how quickly today’s financial shift will be followed by a comparable geopolitical shift in favour of the new export and energy empires of the east. Suffice to say that the historical analogy does not bode well for America’s quasi-imperial network of bases and allies across the Middle East and Asia.

Debtor empires sooner or later have to do more than just sell shares to satisfy their creditors.

Unquote

How right or how wrong?

Change In The USA, Taxation And Representation

Above is a snip from Financial Armageddon that was taken from a fuller article below in The Atlantic dot com. If you look at it, a short one, and click on the picture you will get the full picture.

http://www.theatlantic.com/magazine/archive/2011/01/how-the-recession-changed-us/8347

The USA has changed in the last four years. How far is the change either permanent or just a stage in a long term decline?

In the UK we have paid relatively little attention to the USA recently because our media has interesting celebrities to discuss. A tragic event has now caught our attention, but with little interest in the overall background.

For a long time the USA has been one of the key motors of the world economy. A radical change there will affect us all, for better or worse.

Elsewhere we see that there the “growth” has been almost exclusively amongst the very rich while the poorer half of the population is in deep trouble as are most of the States of the Union.

How will that affect the UK and Ireland, will it be worse here or better?

The Special Relationship Has Changed

Rooting around the net I came across this in The Burning Platform dot com, flagged as a daily dose of reality by Jim Quinn. It is very much a Stateside blog, but this one says as much about us as about them. As for the G20, is anyone outside the media taking it seriously? Watch the rates of interest.

Can a Constitutional Convention Fix This?

To the People of the United States:

The republican system of government as defined in our Constitution has failed to secure for ourselves and our posterity the blessings of Liberty.

Our wealth and property are wasted, our lives regulated in minute detail, and a swarm of taxes are levied on every Thing in a myriad of unjust, unequal and opaque ways that prey upon the honest and industrious part of the community, eat up their substance, and license the unproductive to riot on the spoils of the country. Even the very substance of the exhalation of our breath has been Decreed a pollutant to be taxed and traded to enrich the politically well-connected.

The limits imposed by election to defined terms of office have been rendered illusory by an entrenched two-party system certain of its re-election in the face of record disapproval by the public of its governance. The structural faults in the Constitution regarding Federalism, retention of Powers by the States and the People, the Separation of Powers, and the Co-equal status of the three branches are laid open.

Congress routinely passes Law filled with Doublespeak and unread by its Members, Law to which it exempts itself, and Law designed to apply unequally, perniciously rewarding certain groups and penalizing others. Officers of Government trumpet ever more loudly that “We live by the Rule of Law” while declining to enforce laws enacted to secure our borders, prevent manipulation of markets, and provide honest accounting of public finances.

Increasingly, by executive, judicial and bureaucratic Fiat, Officers have contemptuously brushed aside any law deemed inconvenient to the exigencies of the moment: settled law regulating corporate governance, bankruptcy, the rights of creditors, laws regulating Elections, and State laws previously held to be outside the purview of the central government since adoption of this Constitution.

We are now a nation ruled by men, not by the plain words of Law or Constitution as understood by the common citizen. These men are unconnected to the people. We are ruled to an intolerable degree by a Twinned Tyranny of Judges and Bureaucrats. Government by Decree of unelected and unresponsive Men In Black and Men In Gray has largely replaced Government by open debate with duly Read and passed Law.

Local and State governments, which were to have retained most of the Powers of Government, dance to the tune of Federal Government Largesse and depend increasingly for their sustenance upon compliance with Federal mandates in order to receive Federal funds.

Established Law is flouted and improperly changed with the connivance and sometimes outright blessing of the Judiciary, who themselves often originate the changes. The Judiciary arrogated to itself the power of judicial review although the Constitutional Convention expressly rejected giving it such power, and usurps Executive and Legislative powers by making Policy and Law by Decree.

The administration of Law has become the province of Bureaucracies with de facto power to issue Rules and Findings that carry the force of Law. For more than a century the Executive issues Executive Orders and Findings that likewise usurp the Legislative Power, and Courts uphold the notion that these carry the force of Law.

The Legislature passes Laws from which it exempts itself and other Members of Government but require adherence by the States and the People. They pass Laws that clearly abridge the right of the people to speak freely especially upon matters political, to freely, publicly exercise religion, the right of the people to keep and bear arms, and Laws that extend into every facet of life in this nation notwithstanding the restrictions upon Federal government clearly expressed in the 10th Amendment. All of these Acts occur with the connivance of the Executive and the Judiciary.

The Constitution as written is being followed. The Court, as the Constitution intended, is the Supreme and Final arbiter of Law. When the trust of the People that their government will abide by the plain words and restrictions imposed on government becomes merely hope, and hinges upon the character of one or a few Judges, we are by definition in the grip of the Tyranny of the Few.

The meaning of words is held to no longer be plain, but to change with the whim of the Judiciary who have provided a major source of the assault on language. The use of Doublespeak by government increases at exponential rates, and is heavily promoted by a largely compliant and conniving Press, while the few dissenting portions of the Press are threatened with fines, dilution and diminution in the name of “diversity,” and other means of suppression.

All branches of government - the Executive, Legislature and Judiciary, extra-constitutional Bureaucracies and presidential Czars - flout the plain words and meaning of the Constitution. Congress unconstitutionally delegates authorities to unelected and unanswerable bureaucracies. General ignorance prevails in the population of the history and philosophical underpinnings of its own heritage and how much of its liberties are already abridged or altogether lost.

Can the structure be improved so that repair is effective and lasting? The question lies before us, but perhaps not for long. Strict new Amendments at least, possibly a new Constitution, are required or this American Experiment in Liberty, self-government and Limited general government will peacefully, utterly perish from this land.

In the next Letter, A Desirable Bill of Rights, wording for requisite changes will be submitted. Locke.