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Chris Hedges: Gonna be some changes made--by others: "American Empire Is Bankrupt"

That meeting that Ahmadinejad put off attending for one day? Just "the most important meeting of the 21st Century," per Michael Hudson.

[This meeting]...Monday and Tuesday in Yekaterinburg, Russia, (formerly Sverdlovsk) among Chinese President Hu Jintao, Russian President Dmitry Medvedev and other top officials of the six-nation Shanghai Cooperation Organization. The United States, which asked to attend, was denied admittance. Watch what happens there carefully. The gathering is, in the words of economist Michael Hudson, “the most important meeting of the 21st century so far.”

Hedges opens his essay with this paragraph:

This week marks the end of the dollar’s reign as the world’s reserve currency. It marks the start of a terrible period of economic and political decline in the United States. And it signals the last gasp of the American imperium. That’s over. It is not coming back. And what is to come will be very, very painful.

You want pessimism? Hedges provides it in spades:

It is the first formal step by our major trading partners to replace the dollar as the world’s reserve currency. If they succeed, the dollar will dramatically plummet in value, the cost of imports, including oil, will skyrocket, interest rates will climb and jobs will hemorrhage at a rate that will make the last few months look like boom times. State and federal services will be reduced or shut down for lack of funds. The United States will begin to resemble the Weimar Republic or Zimbabwe. Obama, endowed by many with the qualities of a savior, will suddenly look pitiful, inept and weak. And the rage that has kindled a handful of shootings and hate crimes in the past few weeks will engulf vast segments of a disenfranchised and bewildered working and middle class. The people of this class will demand vengeance, radical change, order and moral renewal, which an array of proto-fascists, from the Christian right to the goons who disseminate hate talk on Fox News, will assure the country they will impose.

China is not going to wait for their dollars to become worthless and has begun buying land and resource access in countries in South American and Africa which will sell for dollars. Other countries get dollars because that's how we pay for their bases and other means of establishing our military outposts for the empire.

Hudson told Hedges that:

...China, Russia, India, Pakistan, Iran are forming an official financial and military area to get America out of Eurasia. The balance-of-payments deficit is mainly military in nature. Half of America’s discretionary spending is military. The deficit ends up in the hands of foreign banks, central banks. They don’t have any choice but to recycle the money to buy U.S. government debt. The Asian countries have been financing their own military encirclement. They have been forced to accept dollars that have no chance of being repaid. They are paying for America’s military aggression against them. They want to get rid of this.”

Hedges expands on this:

The architects of this new global exchange realize that if they break the dollar they also break America’s military domination. Our military spending cannot be sustained without this cycle of heavy borrowing. The official U.S. defense budget for fiscal year 2008 is $623 billion, before we add on things like nuclear research. The next closest national military budget is China’s, at $65 billion, according to the Central Intelligence Agency.

There are three categories of the balance-of-payment deficits. America imports more than it exports. This is trade. Wall Street and American corporations buy up foreign companies. This is capital movement. The third and most important balance-of-payment deficit for the past 50 years has been Pentagon spending abroad. It is primarily military spending that has been responsible for the balance-of-payments deficit for the last five decades. ....

Hudson ties this into our current Wall Street bailout binge and transfer of wealth from the public to Big Banksters:

“We will have to finance our own military spending,” Hudson warned, “and the only way to do this will be to sharply cut back wage rates. The class war is back in business. Wall Street understands that. This is why it had Bush and Obama give it $10 trillion in a huge rip-off so it can have enough money to survive.”

Good links, some good comments. More pessimism in the final paragraph.

Via Zuma at The Agonist and Bernard at Moon of Alabama.

No votes yet


Submitted by hipparchia on

can hand over his dr doom name tag now.

The class war is back in business. Wall Street understands that. This is why it had Bush and Obama give it $10 trillion in a huge rip-off so it can have enough money to survive.”

i read somewhere [can't remember where] early in the bailout, a slightly different take: that this is the reason why we bailed everybody out, foreign banks and sovereign wealth funds and who knows all else through our domestic banks, just to prevent this or something like it from happening.

Submitted by ralphb on

It would appear that didn't work out so well. From the pessimist's pov of course.

Submitted by hipparchia on

so far, not too good.

DCblogger's picture
Submitted by DCblogger on

Yekaterinburg is where Tsar Nicholas II and his family were murdered.

Davidson's picture
Submitted by Davidson on

And by "survive," I'm assuming they mean preserving their status quo (in terms of status, money) in spite of the cliff we're about to fall over.

$10 trillion! What a staggering number.

BDBlue's picture
Submitted by BDBlue on

I'll believe any of these countries can work together when I see it. They may not like us, but they aren't all that fond of each other either. Sure, it's in their interest to find another reserve currency and I have no doubt they will try. But it's one thing to agree they need another reserve currency, it's another to agree on what that currency should be. China manipulates its currency horribly. I don't know about the rest. But I can't imagine Russia trusting China on these issues (or vice versa). India and Pakistan hate one another. And Iran is having its own problems right now.

I agree this could be a step towards a change, but it's not going to be easy or quick and, in fact, could fall apart before it begins. Which doesn't mean that the US is golden or things are going to be peachy. Just that I'm not sure these countries are quite ready to force the issue yet (although they may very well be some day).

kelley b's picture
Submitted by kelley b on

Try effective, if you were psycho enough to want a train wreck of the global economy so you could get a chance with your own schemes of hegemony.

You heard it here first: chaos is the plan.