Dear Readers: This is our quarterly appeal for your support. Remember, this is your site. The site will continue as long as you support it. There is no advertising on this site, and there is no political, social, economic, or ideological agenda associated with this site. This site offers information and explanations that are independent of self-serving agendas. I am not infallible, but I respect the truth. This site is free of spin.
Defeated By The Taliban, Washington Decides To Take On Russia And China
Paul Craig Roberts
The several days of organized protests in Ukraine are notable for the relative lack of police violence. Unlike in the US, Canada, Thailand, Greece, and Spain, peaceful protesters have not been beaten, tear gassed, water cannoned, and tasered by Ukrainian police. Unlike in Egypt, Palestine, and Bahrain, Ukrainian protesters have not been fired upon with live ammunition. The restraint of the Ukrainian government and police in the face of provocations has been remarkable. Apparently, Ukrainian police have not been militarized by US Homeland Security.
What are the Ukrainian protests about? On the surface, the protests don’t make sense. The Ukrainian government made the correct decision to stay out of the EU. Ukraine’s economic interests lie with Russia, not with the EU. This is completely obvious.
The EU wants Ukraine to join so that Ukraine can be looted, like Latvia, Greece, Spain, Italy, Ireland, and Portugal. The situation is so bad in Greece, for example, that the World Health Organization reports that some Greeks are infecting themselves with HIV in order to receive the 700 euro monthly benefit for the HIV-infected.
The US wants Ukraine to join so it can become a location for more of Washington’s missile bases against Russia.
Why would Ukrainians want to be looted?
Why would Ukrainians want to become targets for Russia’s Iskander Missiles as a host country for Washington’s aggression against Russia?
Why would Ukrainians having gained their sovereignty from Russia want to lose it to the EU?
Obviously, an intelligent, aware, Ukrainian population would not accept these costs of joining the EU.
So, why the protests?
Part of the answer is Ukrainian nationalists’ hatred of Russia. With the Soviet collapse, Ukraine became a country independent of Russia. When empires break up, other interests can seize power. Various secessions occurred producing a collection of small states such as Georgia, Azerbaijan, the former central Asian Soviet Republics, Ukraine, the Baltics, and the pieces into which Czechoslovakia and Yugoslavia were broken by “nationalism.” The governments of these weak states were easy for Washington to purchase. The governments of these powerless states are more responsive to Washington than to their own people. Much of the former Soviet Empire is now part of Washington’s Empire. Georgia, the birthplace of Joseph Stalin, now sends its sons to die for Washington in Afghanistan, just as Georgia did for the Soviet Union,
These former constituent elements of the Russian/Soviet Empire are being incorporated into Washington’s Empire. The gullible nationalists, naifs really, in these American colonies might think that they are free, but they simply have exchanged one master for another.
They are blind to their subservience, because they remember their subservience to Russia/Soviet Union and have not yet realized their subservience to Washington, which they see as a liberator with a checkbook. When these weak and powerless new countries, which have no protector, realize that their fate is not in their own hands, but in Washington’s hands, it will be too late for them.
With the collapse of the Soviet Union, Washington quickly stepped into the place of Russia. The new countries were all broke, as was Russia at the time and, thus, helpless. Washington used NGOs funded by Washington and its EU puppets to create anti-Russian, pro-American, pro-EU movements in the former constituent parts of Soviet Russia. The gullible peoples were so happy to have escaped the Soviet thumb that they did not realize that they now had new masters.
It is a good bet that the Ukrainian protests are a CIA organized event, using the Washington and EU funded NGOs and manipulating the hatred of Ukrainian nationalists for Russia. The protests are directed against Russia. If Ukraine can be realigned and brought into the fold of Washington’s Empire, Russia is further diminished as a world power.
To this effect NATO conducted war games against Russia last month in operation Steadfast Jazz 2013. http://www.strategic-culture.org/news/2013/10/17/nato-steadfast-jazz-exercise-chill-of-cold-war.html
Finland, Ukraine, Georgia, and neutral Sweden have offered their military participation in the next iteration of NATO war games close to Russia’s borders despite the fact that they are not NATO members.
The diminishment of Russia as a powerful state is critical to Washington’s agenda for world hegemony. If Russia can be rendered impotent, Washington’s only concern is China.
The Obama regime’s “Pivot to Asia” announced Washington’s plan to surround China with naval and air bases and to interject Washington into every dispute that China has with Asian neighbors. China has responded to Washington’s provocation by expanding its air space, an action that Washington calls destabilizing when in fact it is Washington that is destabilizing the region.
China is unlikely to be intimidated, but could undermine itself if its economic reform opens China’s economy to western manipulation. Once China frees its currency and embraces “free markets,” Washington can manipulate China’s currency and drive China’s currency into volatility that discourages its use as a rival to the dollar. China is disadvantaged by having so many university graduates from US universities, where they have been indoctrinated with Washington’s view of the world. When these American-programmed graduates return to China, some tend to become a fifth column whose influence will ally with Washington’s war on China.
So where does this leave us? Washington will prevail until the US dollar collapses.
Many support mechanisms are in place for the dollar. The Federal Reserve and its dependent bullion banks have driven down the price of gold and silver by short-selling in the paper futures market, allowing bullion to flow into Asia at bargain prices, but removing the pressure of a rising gold price on the exchange value of the US dollar.
Washington has prevailed on Japan and, apparently, the European Central Bank, to print money in order to prevent the rise of the yen and euro to the dollar.
The Trans-Pacific and Trans-Atlantic Partnerships are designed to keep countries in the US dollar payments system, thus supporting the dollar’s value in currency markets.
Eastern European members of the EU that still have their own currencies have been told that they must print their own currencies in order to prevent a rise in their currency’s value relative to the US dollar that would curtail their exports.
The financial world is under Washington’s thumb. And Washington is printing money for the sake of 4 or 5 mega-banks.
That should tell the protestors in Ukraine all they need to know.
» The Money Changers Serenade: A New Plot Hatches — Paul Craig Roberts
Paul Craig Roberts
Former Treasury Secretary Timothy Geithner, a protege of Treasury Secretaries Rubin and Summers, has received his reward for continuing the Rubin-Summers-Paulson policy of supporting the “banks too big to fail” at the expense of the economy and American people. For his service to the handful of gigantic banks, whose existence attests to the fact that the Anti-Trust Act is a dead-letter law, Geithner has been appointed president and managing director of the private equity firm, Warburg Pincus and is on his way to his fortune.
A Warburg in-law financed Woodrow Wilson’s presidential campaign. Part of the reward was Wilson’s appointment of Paul Warburg to the first Federal Reserve Board. The symbiotic relationship between presidents and bankers has continued ever since. The same small clique continues to wield financial power.
Geithner’s career is illustrative. In the 1980s, Geithner worked for Kissinger Associates. In the mid to late 1990s, Geithner served as a deputy assistant Treasury secretary. Under Rubin and Summers he moved up to undersecretary of the Treasury.
From the Treasury he went to the Council on Foreign Relations and from there to the International Monetary Fund (IMF). From there he was appointed president of the Federal Reserve Bank of New York, where he worked to make banks more profitable by allowing higher ratios of debt to capital, thus contributing to the financial crisis.
Geithner arranged the sale of the failed Wall Street firm of Bear Stearns, helped with the taxpayer bailout of AIG, and rejected saving Lehman Brothers from bankruptcy in order to create the crisis atmosphere needed to more fully subordinate US economic policy to the needs of the few large banks.
Rubin, a 26-year veteran of Goldman Sachs, was rewarded by Citibank for his service to the banks while Treasury Secretary with a $50 million compensation package in 2008 and $126,000,000 between 1999 and 2009.
When a person becomes a Treasury official it is made clear that the choice is between serving the banks and becoming rich or trying to serve the public and becoming poor. Few make the latter choice.
As MIchael Hudson has informed us, the goal of the financial sector has always been to convert all income, from corporate profits to government tax revenues, to the service of debt. From the bankers standpoint, the more debt the richer the bankers. Rubin, Summers, Paulson, Geithner, and now banker Treasury Secretary Jack Lew faithfully serve this goal.
The Federal Reserve describes its policy of Quantitative Easing — the creation of new money with which the Fed purchases Treasury debt and mortgage backed securities — as a low interest rate policy in order to stimulate employment and economic growth. Economists and the financial media have parroted this cover story.
In contrast, I have exposed QE as a scheme for pumping profits into the banks and boosting their balance sheets. The real purpose of QE is to drive up the prices of the debt-related derivatives on the banks’ books, thus keeping the banks with solvent balance sheets.
Writing in the Wall Street Journal (“Confessions of a Quantitative Easer,” November 11, 2013), Andrew Huszar confirms my explanation to be the correct one. Huszar is the Federal Reserve official who implemented the policy of QE. He resigned when he realized that the real purposes of QE was to drive up the prices of the banks’ holdings of debt instruments, to provide the banks with trillions of dollars at zero cost with which to lend and speculate, and to provide the banks with “fat commissions from brokering most of the Fed’s QE transactions.” (See: www.paulcraigroberts.org )
This vast con game remains unrecognized by Congress and the public. At the IMF Research Conference on November 8, 2013, former Treasury Secretary Larry Summers presented a plan to expand the con game.
Summers says that it is not enough merely to give the banks interest free money. More should be done for the banks. Instead of being paid interest on their bank deposits, people should be penalized for keeping their money in banks instead of spending it.
To sell this new rip-off scheme, Summers has conjured up an explanation based on the crude and discredited Keynesianism of the 1940s that explained the Great Depression as a problem caused by too much savings. Instead of spending their money, people hoarded it, thus causing aggregate demand and employment to fall.
Summers says that today the problem of too much saving has reappeared. The centerpiece of his argument is “the natural interest rate,” defined as the interest rate at which full employment is established by the equality of saving with investment. If people save more than investors invest, the saved money will not find its way back into the economy, and output and employment will fall.
Summers notes that despite a zero real rate of interest, there is still substantial unemployment. In other words, not even a zero rate of interest can reduce saving to the level of investment, thus frustrating a full employment recovery. Summers concludes that the natural rate of interest has become negative and is stuck below zero.
How to fix this? The way to fix it, Summers says, is to charge people for saving money. To avoid the charges, people would spend the money, thus reducing savings to the level of investment and restoring full employment.
Summers acknowledges that the problem with his solution is that people would take their money out of banks and hoard it in cash holdings. In other words, the cash form of money provides consumers with a freedom to save that holds down consumption and prevents full employment.
Summers has a fix for this: eliminate the freedom by imposing a cashless society where the only money is electronic. As electronic money cannot be hoarded except in bank deposits, penalties can be imposed that force unproductive savings into consumption.
Summers’ scheme, of course, is a harebrained one. With governments running huge deficits, who would purchase bonds at negative interest rates? How would pension and retirement funds operate? Would they also be subject to an annual percentage confiscation?
We know that the response of consumers to the long term decline in real median family income, to the loss of jobs from labor arbitrage across national borders (jobs offshoring), to rising homelessness, to cuts in the social safety net, to the transformation of their full time jobs to part time jobs (employers’ response to Obamacare), has been to reduce their savings rate. Indeed, few have any savings at all. The US personal saving rate is currently 2 percentage points, about 30%, below the long term average. Retired people, unable to earn any interest on their savings from the Fed’s zero interest rate policy, are being forced to draw down their savings in order to pay their bills.
Moreover, it is unclear whether the savings rate is an accurate measure or merely a residual of other calculations. With so many people having to draw down their savings, I wouldn’t be surprised if an accurate measure showed the personal savings rate to be negative.
But for Summers the plight of the consumer is not the problem. The problem is the profits of the banks. Summers has the solution, and the establishment, including Paul Krugman, is applauding it. Once the economy officially turns down again, watch out.
This column first appeared as a Trend Alert, Trends Research Institute
The Money Changers Serenade: A New Plot Hatches