"Liquidate labor, liquidate stocks, liquidate the farmers."
So Treasury Secretary Andrew Mellon advised Herbert Hoover in the Great Crash of '29.
Hoover did. And the nation liquidated him — and the Republicans.
In the Crash of 2008, 40 percent of stock value has vanished, almost $9 trillion. Some $5 trillion in real estate value has disappeared. A recession looms with sweeping layoffs, unemployment compensation surging, and social welfare benefits soaring.
America's first trillion-dollar deficit is at hand.
In Fiscal Year 2008 the deficit was $438 billion.
With tax revenue sinking, we will add to this year's deficit the $200 to $300 billion needed to wipe the rotten paper off the books of Fannie and Freddie, the $700 billion (plus the $100 billion in add-ons and pork) for the Wall Street bailout, the $85 billion to bail out AIG, and $37 billion more now needed, the $25 billion for GM, Chrysler and Ford, and the hundreds of billions Hank Paulson will need to buy corporate paper and bail out banks to stop the panic.
As Americans save nothing, where are the feds going to get the money? Is the Fed going to print it and destroy the dollar and credit rating of the United States? Because the nations whose vaults are full of dollars and U.S. debt — China, Japan, Saudi Arabia, the Gulf Arabs — are reluctant to lend us more. Sovereign wealth funds that plunged billions into U.S. banks have already been burned.
Uncle Sam's VISA card is about to be stamped "Canceled."
The budget is going to have to go under the knife. But what gets cut?
Social Security and Medicare are surely exempt. Seniors have already taken a huge hit in their 401(k)s. And as the Democrats are crafting another $150 billion stimulus package for the working poor and middle class, Medicaid and food stamps are untouchable. Interest on the debt cannot be cut. It is going up. Will a Democratic Congress slash unemployment benefits, welfare, education, student loans, veterans benefits — in a recession?
No way. Yet, that is almost the entire U.S. budget — except for defense, the wars in Afghanistan and Iraq, and foreign aid. And this is where the axe will eventually fall.
It is the American Empire that is going to be liquidated.
Retrenchment has begun with Bush's backing away from confrontations with Axis-of-Evil charter members Iran and North Korea over their nuclear programs, and will likely continue with a negotiated peace in Afghanistan.
Gen. Petraeus and Secretary Gates are already talking "reconciliation" with the Taliban.
We no longer live in Eisenhower or Reagan's America. Even the post-Cold War world of George H. W. Bush, where America was a global hegemon, is history. In both relative and real terms, the U.S.A. is a diminished power.
Where Ike spent 9 percent of GDP on defense, Reagan 6 percent, we spend 4 percent. Yet we have two wars bleeding us and many more nations to defend, with commitments in the Baltic, Eastern Europe, and the Balkans we did not have in the Cold War. As U.S. weapons systems are many times more expensive today, we have fewer strategic aircraft and Navy ships than Ike or Reagan commanded. Our active-duty Army and Marine Corps consist of 700,000 troops, 15 percent women, and a far higher percentage of them support rather than combat troops.
With so few legions, we cannot police the world, and we cannot afford more. Yet, we have a host of newly hostile nations we did not have in 1989.
U.S. interests in Latin America are being challenged not only by Cuba, but Venezuela, Bolivia, Ecuador, Nicaragua and Honduras. Brazil, Argentina and Chile go their own way. Russia is reasserting hegemony in the Caucasus, testing new ICBMs, running bomber probes up to U.S. air space. China, growing at 10 percent as we head into recession, is bristling over U.S. military sales to Taiwan. Iran remains defiant. Pakistan is rife with anti-Americanism and al-Qaida sentiment.
The American Empire has become a vast extravagance.
With U.S. markets crashing and wealth vanishing, what are we doing with 750 bases and troops in over 100 countries?
With a recession of unknown depth and duration looming, why keep borrowing billions from rich Arabs to defend rich Europeans, or billions from China and Japan to hand out in Millennium Challenge Grants to Tanzania and Burkina Faso?
America needs a bottom-up review of all strategic commitments dating to a Cold War now over for 20 years.
Is it essential to keep 30,000 troops in a South Korea with twice the population and 40 times the wealth of the North? Why are McCain and Obama offering NATO memberships, i.e., war guarantees against Russia, to a Georgia run by a hothead like Mikheil Saakashvili, and a Ukraine, millions of whose people prefer their kinship to Russia to an alliance with us?
We must put "country first," says John McCain.
Right you are, Senator. Time to look out for America first.
To find out more about Patrick Buchanan, and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate web page at www.creators.com.
COPYRIGHT 2008 CREATORS SYNDICATE INC.
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6 Comments | Post Comment
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Sir; ....Are you on drugs? I am not asking you to be mean because perhaps I should be. I have this sads. It is seasonally adjusted depression. I went to the docotor, and he tried to give me this new anti depresent medicine called dilafin, and its supposed to end fears of the economy, and restore faith in republican administration. I told him as long as my money was still good I'd just grab an old grand dad on the way home to keep me cheered up. ....Still, it is amazing how you can some times make sense and some times seem like you are from some other planet where reality makes no rules. Today you seem to be able to grasp the problem. Stated simply, the economy does not work. And what happens in these depressions? If the wealthy have a lean on all these properties, and the whole economy is living on credit to pay both principal and interest, then; if the situation remains unchanged they own the whole country. We could start over. We could become a pay as you go society, and then people would have to demand fair wages and fair prices. Look at our situation... It is aimed at profit. Eighty percent of the profit does not result from manufacture, but from finance. Twenty percent of the econoomy is manufacture, and eighty percent is service. Since nothing of value is produced in service, it is really twenty percent carrying the rest of the society. What about that profit? Do we tax profit? Do we tax property? Not as we should or it would never have been held for speculation. It is labor that carries both profit and government. But if the costs of infrastructure or wages or benefits cut into profits, the business can pack up and leave troubles behind. They can shop for their work force, here or abroad. They can avoid the support of the workers, or of the society with a change of address form. And still they want American workers to buy, even if on credit? Why? It is because that gives them that much more wealth and a piece of every product. My mortgage is colatoralized. Even if it were not it would have me honorably on the hook to do what ever it takes to pay back the loan. Isn't government in the same boat? ....People think the government is secure. That is a false presumption. When the economy wants to go south, people invest in government. The government does not fund basic services with that money, but loans to the very sharks that are bleeding us dry. The government has always been run by the rich for the rich, but now the government and business have merged. Where is the protection for the people. If the people go to their government for justice, for relief, for redress of grievances where is the fair judge? Those who pay for the government are denied fair representation, but those who loan to government so it can loan to them have complete control. Certainly it is not fair. It is against the goals of the constitution. Worse, it is an invitation to revolution, or to oligarchic government. Look at the history of England. Cromwell and his roundheads took Charles the king to task, and after his head was off, Cromwell beat back the Levelers who were asking for no more than our Declaration of Independence asked for us. Once they were beat, membership in Parlement was restricted to those having an income of no less than 300 Pounds. Old feudal dues were abolished. What does that mean... Only that those with the property owed nothing to the support of the government. Instead government perpetuated the excise, (sales) tax which bore on the common people, and poverty began to be regarded virtually as a crime. At the same time, The commons were rapidly being enclosed and people who were once invested with heritable rights to the commons were left without support. Where once they were poor, they became empoverished, and those without an obligation to government were left in charge of the governmennts. They soon after came to rule the world, and they still have a lot of money invested in America. But the place is a wreck. It is third world. There is still a lot of wealth in England.. Much of it is invested here, paying profit there...For their wealth and power they have reduced their population to so many bums who can barely speak our common tongue. I don't see any reason why we should imitate England, but if we do not revolt, that is the situation we will have, and no working p erson will have rights. Our future as it stands is for our government to serve only the rich....Thanks...Sweeney
Comment: #1
Posted by: James A, Sweeney
Tue Oct 14, 2008 10:47 AM
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I looked up dilafin in my personal Republican drug handbook, found it on page 5. Dilafin: a drug which should be used with caution and taken prn. Can cause hallucination's of abundance and wealth and episodes of extreme euphoria and crashing depresssion. May cause nerve damage.
Comment: #2
Posted by: liz
Tue Oct 14, 2008 11:58 AM
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Re: liz;...That's the one, and it makes you faat out of your haid... Who takes that stuff? I mean, I have trouble with the fine print too, and that is why God made magnifying glasses. I don't know what I am going to die of, but I ain't gonna die guessin. I ain't treating nothing I got with no mystery drug if what I has isn't fatal...Thanks and best...Sweeney
Comment: #3
Posted by: James A, Sweeney
Tue Oct 14, 2008 1:23 PM
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Dear Mr. Buchanan,
Your analysis is compeling, but it has holes in it .
You note that the percentage of GDP spent on defense has dropped from 9% in the late 1950s to 4% today, equivalent to roughly $560 billion a year. Obviously there is not enough in the defense budget alone to resolve the national financial problems you describe.
Since you rule out cuts to most other programs, that leaves the"American Empire". Unfortunately you don't put a dollar value on the cost of this empire. As you say, much of it is an extravengence, promoted no doubt by the defense lobby, that we can no longer afford if we ever could. But the question remains: how much could be saved by shrinking our overseas operations?
Comment: #4
Posted by: gerald
Wed Oct 15, 2008 9:23 AM
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Re: gerald; Sir...Who can calculate the price of Empire? Is it found in watching your capital depart to hire so many sweatshop slaves? Do the slaves pay the price? Is the price paid by the native worker who must compete with distant slaves? Is the price paid by the whole society when only a single class benefits??? Is the price paid by everyone who cannot meet the price of money borrowed on inflated property values. -Because the rich do not support this country, and avoid every kind of tax, they have money with which to squeeze the life out of us and foreigners. What social good is accomplished without interest being paid and a profit made??? It is the first consideration and never second. And how much capital comes right out of our hands, turned over to capitalists and piled on the national debt. I'm telling you; The price of empire is not only found in the military budget. It is the care and keeping of every illegal immigrant, and every foreign student. It is the price of hatred and abused pride where we invade, or dominate societies. When we borrow to pay for our military and our military defends our empire, it is those who benifit not at all who must bear the price. Think of the memory of hate the persians have for us for throwing all their farmers on the street with cheap food imports. It is they that rebeled against the Sha. And they hate us still. Do you think Israel is not our satrap, our problem, and our curse. Why do we give them so much of our money? No one can calculate the price of empire since it might result in our destruction completely and utterly. Who wants it??? Who wants it at all since it does not work, but only makes us slaves, and worse, slaves with many enemies. To have freedom we will have to free the world from ourselves, and from our economy...Regard your history. It is native workers who support empire. The English would control the world with their banks. Inevitably it is our army that collects the interest for both our bankers and the British....Thanks....Sweeney
Comment: #5
Posted by: James A, Sweeney
Wed Oct 15, 2008 3:48 PM
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The Worldwide DEBT is the problem.
The best solution for the present economic crisis would be a REBOOT or restart of the entire debt system for the ENTIRE WORLD.
1. A data base listing ALL DEBT, government, business and personal needs to be created. The list would need to list the debt and debt holder with a bank that could make an accounting of the debt. Included would be all national debt of all nations, all mortgages car notes and credit cards for individuals. All outstanding bond and other debt for corporations, The idea is to list ALL DEBT of any kind owed.
2 . Every government on the planet would need to call a special session of it's legislature.
Using the same authority that governments have to use or create FIAT CURRENCY the legislatures and Central Banks need to authorize the creation of ACCOUNT CREDIT in an amount equal to all the listed debts in the world.
3. The Various governments and Central Banking Systems then need to make an accounting change equal to the debt in the form of an ACCOUNT CREDIT or CREDIT zeroing out ALL THE DEBT in the entire world, and crediting all debt-holders in the world.
The following day the economy of the entire world would restart and the Stock Markets of the world would react to the new renewed capital in the banking systems, the Capital now available to restart all business and the disposable income to the individual people would restart and grow the retail sectors and the manufacturing sectors of the entire world.
Allen Charles Report
http://allencharlesreport.blogspot.com/
Comment: #6
Posted by: Allen Charles
Sat Oct 25, 2008 4:31 PM
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