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The Daily Reckoning

London, England

Monday, June 05, 2006

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*** The three stages of Bush public spectacle...The difference 40 years
makes... Borrowing money from former and future enemies

*** Can China change the U.S. Constitution?...Forget terrorists, we have
Congress and the White House to bring down the U.S. Empire...


Every great public spectacle begins with a lie, develops into a farce, and
often ends up a tragedy. We read the newspapers and wonder where the war
in Iraq stands in the sequence. Certainly, the lies are behind it. The
Bush administration told the lies it needed to tell to get the war
underway. Now, no more lies are needed. But, does that mean we are in the
farce stage? Or have we already moved to tragedy?

"When you open up the strategy for victory, there is nothing inside," said
Representative John Murtha, Democrat from the great state of Pennsylvania.
Murtha has seen this show before, in Vietnam. That, too, had to work its
way through the three stages. The lies: that Americans should care what
kind of misgovernment the Vietnamese had...and that if they "went
communist," the whole of Southeast Asia would fall "like dominoes."

Then came the farce - in which hundreds of thousands of American boys were
"sent to do the fighting that Asian boys should do," in Lyndon Johnson's
words...sent off with an empty strategy and no real knowledge of whom they
were fighting or what they were fighting for, other than slogans as empty
as a George Bush speech. And finally, came the tragedy, not so much the
American retreat, which was still in the bloody farce stage, but the
victory of the reds, who were every bit as asinine and murderous as their
enemies made them out to be. But finally, when Vietnam did "go communist,"
the whole of Southeast Asia yawned. Nobody cared. The Vietcong had won.
And the whole country suffered its victory, like a war wound, for the rest
of the century.

There were no real winners in Vietnam. The president says he has a Plan
for Victory in Iraq, but there will be no winners there either.

Who will be the biggest loser? We cannot know. It is not given to man to
know his fate. All we can do is to try to peek around the corner.

The world was a much different place in 1966 than it is in 2006. Forty
years ago, the United States was the world's undisputed economic power,
and still a growing power with a positive trade balance, a net creditor to
the rest of the world, and a dollar still convertible into gold, albeit
indirectly. Americans still paid off their mortgages. Credit cards were
still in the future...along with reality TV and "neg am" mortgages. The
generation in command still remembered the lessons of the Great
Depression, and World Ware II. They made mistakes - big ones - but they
still expected to pay their bills and balance their budgets. What's more,
their largest potential competitors - Russia, China, India - still hobbled
themselves with Marxist claptrap that kept them out of world markets for
much of the 20th century. In other words, America could still afford to
make grandiose mistakes.

The United States is, of course, an imperial power. It is also the world's
largest debtor. Its role in the world is to maintain order. But it can
only do so by borrowing money from its former and future enemies! And now,
the empire wastes its military resources in a fight that can do it no
good, and squanders its borrowed money trying to secure a part of the
imperial periphery that can do it no harm; Russia is building up piles of
dollars by exporting energy. China is building up mountains of dollars by
exporting consumer-manufactured goods. India is coming on strong, too, by
offering English-language information processing to the rest of the world.

At some time in the future, these lenders will surely want more for their
money than 5%. Already, we read in last week's paper that China's key
advisors are urging the government to take its dollars and buy oil and
gold. At some point, they might want to suggest changes in the trade
relationship, or changes in the décor of the White House...or changes in
the U.S. Constitution itself. Who knows?

The dollar is, after all, a currency of no fixed value. Both lenders and
borrowers are aware that it floats on the wind like odor from a public
dump. And when the lenders decide the time is right, they will make a
flap. Then, the borrower will find he or she is on the wrong side of the
breeze.

Osama bin Laden wasn't born yesterday. He, too, knows which way the wind
blows. His publicly stated strategy is to bleed the empire dry - forcing
it to spend $100,000 for every 50 cents his terrorists lay out. It is
simple enough to understand the math, but who would have thought that the
empire would be stupid enough to fall into the trap?

A "war on terror" is in many ways the perfect war for a bankrupt empire.
Perfect for its enemies, too. It allows the homeland team to marshal
resources it does not have for a war it cannot lose. Terrorists can only
irritate the great empire; they cannot bring it down. No, the empire will
have to bring itself down. And for that, we don't need terrorists. We have
Congress and the White House.

fwiw

dub