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Egypt Under Empire, Part 3: From Nasser to Mubarak
By: Andrew Gavin Marshall
Originally published at The Hampton Institute
Part 2: The “Threat” Of Arab Nationalism
Between 1952 and 2011, Egypt was ruled by three military dictators: Nasser, Sadat, and Mubarak. Nasser placated labour unrest and imposed many social programs that benefited the population. Sadat subsequently began to break down the ‘social contract’ with Egyptian society, and when Mubarak came to power in 1981, the following three decades witnessed the imposition of a neoliberal order, complete with crony-capitalists, corrupted bureaucracies and a repressive police force. Three decades of increased poverty, polarized wealth and power, and increased labour unrest all laid the groundwork for the 2011 popular uprising.
As Nasser came to power in Egypt in 1952, he successfully crushed labour militancy in the country, and even executed two labour leaders as a symbol of the new regime’s lack of tolerance for radical labour actions. Nasser engaged in a power struggle for a brief period, before assuming complete power in 1954, at which point independent political organizations were banned and he “ushered in a populist-corporatist pact between labour and the state,” in which “the state controls the bulk of the economic, political, and social domains, leaving little space for society to develop itself and for interest groups to surface, compete, and act autonomously.”
Labour groups were organized “into a limited number of singular, compulsory, non-competitive, hierarchically ordered and functionally differentiated categories.” In 1957, the government created the General Federation of Egyptian Trade Unions (GFETU), monopolizing labour unions under the government, purging the radical leaders and co-opting the moderates. Since this period, “trade unions have functioned as an arm of the state rather than as democratic representatives of workers.” Thus, labour activism and actions largely subsided throughout the 1950s and 60s.
Despite violent repression of independent political organizations, communists and militant labour groups, Nasser became incredibly popular both within Egypt and across the wider Arab world. He established a one-party state and a large security apparatus “to crush any and all dissent.” However, his articulation and actions related to Arab nationalism and Arab socialism – the twin pillars of his ‘revolution’ – sought to free Egypt and the Arab world from imperial domination, and to undertake a social revolution domestically as “part of an informal social contract where the population accepted constraints on its political freedom in exchange for the promise of higher living standards and a stronger nation.”
A large network of social services was established, which “provided employment, education and healthcare, as well as subsidized transportation and food.” This program also entailed “spending large sums of money on the military, which was seen as the protector of the nation from external enemies.” These social programs helped to “create a modern middle class” in Egypt. The allegiance of the middle class to the authoritarianism of the regime was secured by the government guaranteeing state employment to all university graduates.
Nasser also implemented major agrarian reforms, which between 1952 and 1961, “redistributed about one seventh of the country’s cultivable land from large landowners… passed on to the landless and near landless fellahin rather than kept for direct use by the state.” This led to an “improvement of rural incomes and agricultural production,” and attempted to undermine the influence of the large landowning class of Egyptians.
With the defeat of Egypt in the 1967 Arab-Israeli War, Nasser’s government suffered a humiliating defeat, and Nasser’s death in 1970 led to the emergence of a new dictator, Anwar Sadat, also emerging from the military, who ruled the country from 1970 until 1981. Undertaking a policy of ‘de-nasserisation,’ Sadat sought to undo many of Nasser’s more progressive policies, earning him the favour of the West. Among such policies were to return the “confiscated” land to the large landowners within Egypt by employing an ‘open door’ market-oriented program called infitah. The intifah helped to create the conditions for a real estate and credit boom, ultimately adding to Egypt’s foreign debt as the country became increasingly dependent upon foreign financing and ‘investment.’
The infitah – or “opening” – wrote Hibbard and Layton, “offered an alternative vision of economic development to that of Arab socialism;” beginning a process of liberalization and an influx of Western capital, “to integrate Egypt into the Western capitalist system.” Sadat’s policies also oversaw the gradual elimination of Nasser’s social programs and “the abandonment of Nasser’s anti-imperialism.” The country quickly became more trade dependent, having to import staple foods, and foreign financing was limited to non-productive sectors of the economy. Egypt increasingly exported its labour to the Persian Gulf, which helped to reduce the problems of unemployment at home, and increased the country’s reliance upon remittances from its foreign workers sending their wages back home. In 1974, labour remittances, oil exports, tourism, foreign aid and the Suez Canal accounted for nearly a third of Egypt’s foreign income, a number that exploded to 75% in 1980. A new commercial elite developed with extensive ties to the state, while economic inequality between the rich and the rest of society accelerated.
Such policies did not occur without resistance, however, with opposition emanating from academics, state bureaucrats and workers, with strikes and “popular unrest” occurring throughout the mid-1970s, with a major transport worker strike in 1976 and large bread riots in 1977. Sadat responded to the labour unrest and food riots by sending in the military to crush the protests. Sadat oversaw the construction of an alliance between the large landowning class, the business class, and the conservative religious elite, and even sought to build ties with the Muslim Brotherhood. Further, Sadat rebuilt ties with the United States, and even established an alliance and peace treaty with Israel, negotiated by the Carter administration in the U.S. as the 1979 Camp David Peace Accords. With that, Sadat lost a great deal of popular support, and Egypt’s Islamists rejected him. Sadat was ultimately assassinated by an Islamist group in 1981.
In 1981, Hosni Mubarak then took control of Egypt, also emerging from within the military and continuing the trend of maintaining the military dictatorship established since 1952, and deepening the economic ‘reforms’ begun under Sadat. Under Mubarak, the military and economic elites became more closely integrated, and with the imposition on the Emergency Law following Sadat’s assassination, Mubarak wielded more authoritarian power, suspending the constitution and dismantling the rights of citizens, also allowing for “detention without charge, press censorship and other restrictions on civil liberties.” A new – parallel – legal system was constructed, relying upon military courts, purportedly for use against ‘terrorists’ but used to persecute any and all forms of political opponents.
Mubarak oversaw – during the 1980s and 1990s – a massively expanded entrenchment of neoliberal economic and social reforms in Egypt. Mubarak also pursued a major campaign against Islamists, who were making political gains with segments of the population by capitalizing on the poverty and popular anger toward the government, largely brought on as a result of the economic reforms. Mubarak’s Egypt thus became a major human rights violator, all the while receiving immense financial and military aid from Western governments, namely, the United States. The role of the security services – in particular the police forces under the control of the Interior Ministry – became more predominant throughout Mubarak’s rule, with torture and other abuses widespread.
The military plays a very large role in the economy as well, and under Mubarak, military officials were appointed as regional governors, village chiefs and put in charge of state-run companies. The military itself has undertaken large land expropriations, runs companies and factories, giving it a major role to play in manufacturing, agriculture, construction, gas and consumer industries. The military, however, keeps most of its economic activities secret, and does not pay taxes while often using “conscripted labourers” for its workforce.
Mubarak began to implement further ‘reforms’ to the agrarian sector along neoliberal lines during the 1980s. The Agriculture Minister Yusuf Wali began implementing agriculture sector liberalization policies in 1986, working “hand in hand with USAID and the World Bank.” The U.S. stressed “market-oriented” reforms and promoted export-led growth, as USAID invested $1.26 billion in the agricultural reforms. These reforms continued over the 1990s, and resulted in widespread dispossession of small farmers and a further alliance between economic and military-political elites.
The major neoliberal reforms in Egypt arrived under Mubarak with the signing of a 1991 Economic Restructuring and Adjustment Program with the IMF, demanding liberalization of trade and prices, privatization, and labour ‘flexibility,’ as well as the removal of several social safety net measures.
The ‘new economic elite’ that emerged in Egypt as a result of the IMF’s programs of the 1990s were closely tied to the ruling party, the National Democratic Party (NDP), and Mubarak’s son, Gamal, who headed the NDP. Prominent businessmen became more influential in policy-making circles and “the number of businessmen elected to Egypt’s parliament increased from 8 in 1995 to 150 by 2005.” Public spending on social services was dramatically cut, state-owned industries were privatized and employees fired, resulting in “staggering hardships for the majority.”
As labour was under sustained attack, they fought back, with twice as many labour protests in the 1990s than took place during the 1980s. With the 1991 IMF program, Egypt was firmly entrenched in a neoliberal ‘order,’ which would accelerate over the following two decades. Fifteen years following the IMF program’s beginning – by 2006 – Egyptian workers had been subjected to continuous hardships and exponentially increased their resistance to it.
The privatization program led to the unprecedented plundering of the Egyptian economy into the hands of relatively few economic elites. Out of 314 state-run companies, 209 were privatized by 2005, “leading to a massive displacement of public sector workers, and with it a further weakening of the struggling labour movement.” The number of workers employed by public sector companies was cut in half between 1994 and 2001. The IMF praised the privatization program in 2006 for having “surpassed expectations.” Wealth and power was concentrated “in the hands of a tiny layer of the country’s elite,” and a few large conglomerates dominated the major sectors of the economy. As Henry Veltmeyer wrote, “Mubarak – and the Egyptian state as a whole – represented an entire capitalist class.”
Neoliberal reforms were further implemented under Prime Minister Ahmed Nazif (2005-2011), which saw businessmen take a more direct role in managing the state, with six major government ministries being run by six major businessmen in the areas of trade and industry, housing, transportation, health, agriculture and social welfare. Taxes were dramatically cut for corporations and elites and dramatically increased for the rest of the population. Corruption and embezzlement of public funds was rampant as the privatization programs effectively subsidized “the private sector at the expense of the nation as a whole.”
The costs of food, fuel and transportation skyrocketed, while Prime Minister Nazif instructed protesting Egyptians to “grow up.” Thus, in 2006, Egypt witnessed a new wave of labour unrest. Independent forms of worker organization re-emerged and in 2006 alone, “there were 220 major strikes involving tens of thousands of workers in the largest strike wave that Egypt had seen in decades,” and which were increasingly linking up with peasant movements protesting against the large landowners.
In 2006, a three-day strike of workers at a weaving and spinning factory in El-Mahalla was “a major turning point in the history of the Egyptian workers’ movement,” marking a total work-stoppage and for a much longer duration than strike action prior and helped in the formation of new workers associations with more democratic accountability, directly challenging the state monopoly over unions.
The strike was “the largest and most politically significant industrial strike since a dispute in the same workplace in 1947,” having roughly 24,000 workers participating, with over 10,000 occupying the factory for three days and nights, and on the fourth day the government granted a concession by offering a 45-day bonus. This set off a wave of worker protests and strikes across the country over the following years. Between 2006 and 2009, an estimated 1.7 million workers participated in protest actions, including private and public industrial workers, postal workers, educational administrators, workers in transportation, tax collection, healthcare, and other sectors. The recent years of labour unrest has been referred to as “the largest social movement in over half a century” taking place within Egypt.
Between 2006 and 2008, Egypt recorded annual growth rates of 7%, and in 2009 – while much of the world was experiencing negative growth – Egypt recorded a 4.6% growth rate. However, between 2008 and 2009, poverty in Egypt increased from 20% to 23.4%, while roughly 40% of Egyptians live on less than $2 per day, one-third of the population is illiterate, and youth make up roughly 90% of the unemployed. Thus, while the neoliberal reforms of the previous three decades produced high growth rates, “it has [also] led to worsening living standards for the majority of the population and the increased concentration of wealth in the hands of a tiny minority.” Between 1998 and 2010, there were between 2 and 4 million workers who took part in between 3,400 and 4,000 strikes and other labour actions. There were 266 strikes and labour actions in 2006, 614 in 2007, and they reached roughly 1,900 in 2009.
As strikes escalated, the demands for higher wages and more democratic union representation evolved into demands for the end of the Mubarak regime (and the neoliberal reign of Prime Minister Nazif). One strike organizer in 2007 told a radio program, “We are challenging the regime.” At strikes, workers were chanting, “We will not be ruled by the World Bank! We will not be ruled by colonialism!” Images of signs at protests circulated, reading, “Down with the Government. We want a Free Government.” One strike leader who was arrested in 2007, said upon his release: “We want a change in the structure and hierarchy of the union system in this country… The way unions in this country are organized is completely wrong, from top to bottom. It is organized to make it look like our representatives have been elected, when really they are appointed by the government.”
The second Palestinian Intifada in 2000 helped spawn new social movements within Egypt. The Cairo Conference was held in 2002 in an attempt to organize disparate social groups around two main shared positions: anti-neoliberalism and anti-war. In 2004, this led to the formation of the Kefaya (“Enough”), the Egyptian Movement for Change. This was aided along by a major demographic change within the country, where by 2011, roughly 52% of Egypt’s population was under the age of 25, and it was this group which disproportionately lacked employment, with roughly 95% of post-secondary educated youth being unemployed or working in fields unrelated to their education with very low pay. It was this demographic which became increasingly mobilized around non-ideological movements such as Kefaya, organizing a series of anti-Mubarak protests between 2004 and 2005, demanding democracy and accountability. The younger members of this group then established the April 6 Movement, “an organization that emerged in support of the 2008 strike by textile workers in Mohalla al-Kubra.”
A number of other social groups and protests organizations emerged from 2004 onwards, including Students for Change, Youth for Change, University Professors for Change, Workers for Change, Artists for Change, and the People’s Campaign for Change, among many others. In 2005, as Kefaya organized a massive anti-Mubarak protest, an organization of Egyptian intellectuals was formed as the National Assembly for Democratic Transition. Lawyers, journalists and other professions increasingly took part in protests.
The April 6 Youth Movement began to support the Mahalla workers’ strike in 2008, with founder Ahmed Maher having started a Facebook page that quickly reached over 70,000 members. As support grew, the government crack down ensued, with roughly 500 activists arrested over the following two months, including Maher (who was also tortured).
Since the Mubarak government made it illegal to hold meetings of more than five people, with a heavy-handed approach to information control and news censorship, Facebook and other Internet-based social media platforms quickly became very popular among young Egyptians. Roughly one in nine people in Egypt have Internet access, and 9% of those who have access used Facebook, making it the most visited website in the country, following Google and Yahoo. The Facebook page for the April 6 movement, reported the New York Times in 2009, was the page “with the most dynamic debates” among young Egyptians, “most of whom had never been involved with politics before joining the group.” The Facebook page provided a venue for young Egyptians “to assemble virtually and communicate freely about their grievances.”
The United States has been a major sponsor of the Egyptian dictatorship, giving it extensive leverage with the regime. Between 1948 and 2011, the U.S. provided Egypt with a total of $71.6 billion in bilateral foreign aid (most of which consisted of an annual aid package of $1.3 billion in military aid from 1987 to present), and since the peace treaty with Israel was signed in 1979, Egypt has been the second-largest recipient of U.S. ‘aid’ in the world (after Israel).
Another large international sponsor of the Egyptian dictatorship was the International Monetary Fund (IMF), which also heaped praise upon the Tunisian dictatorship of Ben Ali prior to its overthrow. In a 2010 report on Egypt, the IMF noted that the country had been following the Fund’s advice on economic reforms, though continued to recommend “phasing out energy subsidies” and increasing privatizations. The IMF further noted that, “the relationship between Egypt and the World Bank Group has been transformed and markedly improved over the last few years as a result of the progress Egypt has made in implementing reforms.”
In 2010, labour unrest continued throughout the country, with one strike organizer telling the press in May of 2010, “The government represents the marriage between authority and money – and this marriage needs to be broken up… We call for the resignation of Ahmad Nazif’s government because it works only for businessmen and ignores social justice.”
Egypt was clearly on the edge of an uprising, all that was required was a ‘spark’ – which came in the form of the Tunisian uprising in December of 2010 and January of 2011. With the overthrow of the long-time dictator, Ben Ali, in Tunisia, Egyptians were motivated to mobilize against Mubarak.
Andrew Gavin Marshall is an independent researcher and writer based in Montreal, Canada. He is Project Manager of The People’s Book Project, head of the Geopolitics Division of the Hampton Institute, Research Director for Occupy.com’s Global Power Project and hosts a weekly podcast show at BoilingFrogsPost.
 Rabab El-Mahdi, “Labour protests in Egypt: causes and meanings,” Review of African Political Economy (Vol. 38, No. 129, September 2011), page 390.
 Scott Hibbard and Azza Salama Layton, “The origins and future of Egypt’s revolt,” Journal of Islamic Law and Culture (Vol. 12, No. 3, October 2010), pages 198-199.
 Ibid, page 199.
 Rabab El-Mahdi, op. cit., page 390.
 Ray Bush, “Coalitions for Dispossession and Networks of Resistance? Land, Politics and Agrarian Reform in Egypt,” British Journal of Middle Eastern Studies (Vol. 38, No. 3, December 2011), page 395.
 Scott Hibbard and Azza Salama Layton, “The origins and future of Egypt’s revolt,” Journal of Islamic Law and Culture (Vol. 12, No. 3, October 2010), page 200.
 Ibid, pages 200-201.
 Ibid, pages 201-202.
 Ibid, pages 202-203.
 Angela Joya, “The Egyptian revolution: crisis of neoliberalism and the potential for democratic politics,” Review of African Political Economy (Vol. 38, No. 129, September 2011), page 372.
 Ray Bush, op. cit., pages 396-397.
 Angela Joya, op. cit., page 370.
 Scott Hibbard and Azza Salama Layton, op. cit., page 202.
 Rabab El-Mahdi, op. cit., page 395.
 Henry Veltmeyer, “Unrest and Change: Dispatches from the Frontline of a Class War in Egypt,” Globalizations (Vol. 8, No. 5, October 2011), page 612.
 Angela Joya, op. cit., pages 370-371.
 Rabab El-Mahdi, op. cit., page 395.
 Henry Veltmeyer, op. cit., page 612.
 Rabab El-Mahdi, op. cit., pages 397-399.
 Ibid, pages 387-388.
 Henry Veltmeyer, op. cit., page 611.
 Joel Beinin, “Egyptian Workers and January 25th: A Social Movement in Historical Context,” Social Research (Vol. 79, No. 2, Summer 2012), page 326.
 Ibrahim Awad, “Breaking Out of Authoritarianism: 18 Months of Political Transition in Egypt,” Constellations (Vol. 20, No. 2, 2013), page 278.
 Joel Beinin, op. cit., page 331.
 Angela Joya, op. cit., pages 368-369.
 Scott Hibbard and Azza Salama Layton, “The origins and future of Egypt’s revolt,” Journal of Islamic Law and Culture (Vol. 12, No. 3, October 2010), pages 206-207.
 Angela Joya, op. cit., page 369.
 Ellen Knickmeyer, “Fledgling Rebellion on Facebook Is Struck Down by Force in Egypt,” The New York Times, 18 May 2008:
 Samantha M. Shapiro, “Revolution, Facebook-Style,” The New York Times, 22 January 2009:
 Jeremy M. Sharp, “Egypt: Background and U.S. Relations,” Congressional Research Service, 27 June 2013: page 9.
 Patrick Bond, “Neoliberal threats to North Africa,” Review of African Political Economy (Vol. 38, No. 129, September 2011), pages 483-484.
 Joel Beinin, “Egyptian Workers and January 25th: A Social Movement in Historical Context,” Social Research (Vol. 79, No. 2, Summer 2012), page 339.
Quebec Steps Closer to Martial Law to Repress Students: Bill 78 is a “Declaration of War on the Student Movement”
Quebec Steps Closer to Martial Law to Repress Students
Bill 78 is a “Declaration of War on the Student Movement”
By: Andrew Gavin Marshall
Originally Published at: The Media Co-Op
On Friday, May 18, the Québec legislature signed a special “emergency law” to “restore order” in the province following three months of student protests in a strike against the government’s proposed 80% increase in the cost of tuition. A legislative debate lasted all night and resulted in a vote of 68-48 in favour of the legislation. The legislation has three main focal points: (1) it “suspends” the school semester for schools majorly affected by the strike, (2) it establishes extremely high fines for anyone who attempts to picket or block access to schools, and (3) it imposes massive restrictions on where and how people may demonstrate and protest in the streets. The law is set to expire by July 1, 2013.
On Monday, May 14, Quebec’s Education Minister Line Beauchamp resigned, and was replaced with Quebec’s Treasury Board president Michelle Courchesne, a former Education Minister from 2007 to 2010, who had also participated in the failed negotiations the weekend of May 4. Premier Jean Charest commented on the change of ministers and the continuity of the government’s position on the tuition hikes, saying that, “We believe in this policy… This policy is going to go ahead.” On Tuesday, May 15, protests continued in Quebec, with about 100 riot police called in to break a student strike blockage of a community college in Montreal. Students were told that “all necessary force” would be used to ensure that classes would resume, in line with a legal injunction obtained by 53 of the school’s students to return to class. Legal injunctions have regularly been used to undermine the student strike, as the state refuses to recognize the right of students to strike. As a result, a few dozen – or even one or two – students can obtain legal injunctions to force the schools to re-open and go to class. The injunctions are backed by the power of the state, and so the riot police are called in to pepper spray, tear gas, and beat with batons those students who form picket lines blocking access to the schools. On May 15, parents and teachers of striking students were involved in helping organize the picket line which ended with the riot squad using tear gas and arresting several people.
That night, student leaders met with the new Education Minister Michèle Courchesne, in a meeting that lasted just over an hour, at which students urged the government “to abandon any hard line strategy and impose a moratorium.” The students pushed for a “truce” with the government, and said, following the meeting, that the new Minister was “receptive” but had “refused to commit herself to a position.” Students, however, were assured by the new Minister that no special laws would be adopted to force a settlement. The spokesman for the largest student association – CLASSE – Gabriel Nadeau-Dubois, stated that, “We cannot say that the impasse has been overcome. The Minister told us the decision will be taken by the cabinet (on Wednesday).” Martine Desjardins, another student leader expressed optimism in thinking a solution may be at hand, “This is a crisis and we need to solve it quickly and everybody is working hard to do that.” Leo Bureau-Blouin, head of the college student federation, stated, “We certainly hope [the] cabinet will be open to compromises.” The student leaders warned against using legislation to end the conflict, with Nadeau-Dubois stating, “It would be a major step backward… You can’t end a strike like this with police force.” Gabriel-Nadeau indicated that CLASSE was discussing the possibility of sacrificing the semester, and Martine Desjardins of the Fédération étudiante universitaire du Québec (FEUQ) indicated that they were willing to make concessions in negotiations, but was concerned about the government’s hard line with court injunctions and police interventions, which only stoke anger and incur harsher reactions. Léo Bureau-Blouin of the college association stated that, “I’m sure that if they gave us new proposals it would help move things along,” but condemned the idea of a special law: “This would do nothing to help the crisis, to help settle the conflict. With battery of court injunctions, the tension has grown. A special law would only make matter worse.”
Students emerged from the meeting with the new Education Minister stating that they were “relatively satisfied” and that, “we hope that the council of ministers is going to be open to our compromises,” referring to the cabinet meeting to be held the following day. Gabriel Nadeau-Dubois described the meeting as “cordial” and stated, “We also unblocked certain channels of communication that had perhaps been blocked by some misunderstandings with Madame Beauchamp.” Jeanne Reynolds, another spokesperson for CLASSE, stated that Minister Courchesne had “assured the students she has no intention of seeing the semester cancelled,” and that this was, “very reassuring.” She added: “Like us, the minister seems to agree injunctions are not the solution to solve the current crisis… Obviously we were very happy to hear that.” The student leaders were surprised to hear the next day that Minister Courchesne commented on their meeting, stating, “On their side I sensed a hardening of their position… That was very clear.” She added, “I will report to the cabinet soon. The government will judge what decision to make then.”
Resentful of the fact that a minority of students have used legal injunctions to violate the declared strike, roughly one hundred students on Wednesday, May 16, went through the hallways disrupting classes at the Universite du Quebec a Montreal (UQAM). Emotions were heated in confrontations with some of the other students and teachers. This happened as Jean Charest and his cabinet met in Quebec City to discuss a “solution” to the crisis by passing “emergency legislation.”
On May 17, Quebec’s opposition Parti Quebecois leader Pauline Marois called on Premier Charest to sit down with students instead of legislate against them, “Why is the premier attacking the youth of Quebec?” As the Quebec government tabled legislation to crack down on the student protests, students from all sides of the debate – wearing a red (pro-strike), green (pro-hike), or white squares (proposing a moratorium on tuition fee hikes) – all banded together to urge the government to negotiate instead of passing “repressive” legislation. Student leader Léo Bureau-Blouin commented, “You can clearly see it here today. Regardless of the colour of squares we carry, regardless of the political parties, today is not a time to play partisan politics… Parliamentarians were elected to ensure social peace…we are open to compromises, we are open to discussions.” Student leader Martine Desjardins commented, “All the coloured squares are here to say that it would be better to negotiate a deal rather than unilaterally impose a resolution to this crisis.” Even the main student representative demanding students return to class and end the strike, Laurent Proulx, asked the government not to resort to the legislation, “We want to make sure that both sides reach a settlement that won’t require either to surrender.” Student leaders announced that they would challenge the legislation in court as it violates their right to legitimately protest.
As the Quebec government began an all-night debate on Thursday night on the proposed legislation, protests took place in all five of Quebec’s largest cities. Before Thursday night’s debate, student leaders were calling for new negotiations, with Martine Desjardins opposing Jean Charest’s legislation, “Let him come sit with us, and negotiate a solution to this crisis… Let him come show us that he is a head of state, not just a party leader.” Bureau-Blouin stated, “We are more ready than ever to compromise.” Protests in Montreal the night before – when the legislation was first announced – drew thousands into the streets and resulted in riot police arresting 122 people.
In “abandoning any hope of negotiating a settlement with striking students,” Jean Charest announced that, “We need to bring down the pressure where strikes are still on. We need to bring back social peace.” With student leaders saying they were willing to compromise, Charest announced that he will not back down from the tuition hikes, and “promised a tougher approach to ensure classes can resume in August, with stronger police intervention to guarantee access.” He added, “No student will be forced to attend class. But for others, they have the right to attend classes in a secure environment.” Charest stated that, “We cannot accept that access be blocked … we will not bow to violence and intimidation – our laws need to be obeyed.” Apparently, this means passing new laws to violate the Canadian Charter of Rights and Freedoms. After all, “our laws need to be obeyed.” Student leaders warned of the dangers of passing such a law, as the reaction is sure to be intense. Léo Bureau-Blouin commented, “If there is violence, if there is tension, Mr. Charest will be the only one to blame.” Martine Desjardins commented, “We now know that Mr. Charest never had any real intentions of solving this conflict.” Gabriel Nadeau-Dubois of CLASSE responded to the proposed legislation, “The bill that the government is proposing to table is an anti-union law, it is authoritarian, repressive and breaks the students’ right to strike… This is a government that prefers to hit… its youth, ridicule its youth rather than listen to them.” The student leaders continued to call on students to hold peaceful demonstrations and support the plans for a massive demonstration on Tuesday, May 22, to mark the 100th day of the strike.
The legislation – Bill 78 – includes heavy fines for those participating in student strike demonstrations: “fines of between $1,000 and $5,000 for any individual who prevents someone from entering an educational institution,” and these numbers climb to “between $7,000 and $35,000 for a student leader and to between $25,000 and $125,000 for unions or student federations.” The bill would essentially aim to bankrupt and destroy the student associations. Further, it includes strict new regulations in regards to holding demonstrations – manifestations – which include mandating that demonstration organizers must give police (in writing) at least eight hours before a scheduled demonstration, the details of the itinerary, duration, time, and route for a march. Police are then granted the “right” to demand changes, “in order to keep the peace and maintain order and public security.” Gabriel Nadeau-Dubois commented, “This is an abuse of power… It’s totally unacceptable in a democracy to table such legislation.” Leo Bureau-Blouin, the student leader who has been most willing to compromise, commented, “This legislation strikes a blow to the freedom of expression.” Martine Desjardins stated that the bill is a “declaration of war against the student movement.” The bill, explained student leaders, will only increase tension and make the crisis much worse. Jean Charest commented, “We hold the conviction that this decision is important — not only for our young people, but for the future of the Quebec people.”
The legislation has promoted calls for increased civil disobedience. Gabriel Nadeau-Dubois stated, “When laws become unjust, sometimes you have to disobey and we are now thinking seriously about that possibility… Police repression never scared us. The demonstrations will continue tonight, I believe, every night if necessary.” A member of the National Assembly Amir Khadir, leader of the Quebec political party Quebec Solidaire, stated that, “Civil disobedience is a noble thing… In my democratic perspective and that of my party, civil disobedience, when justified and morally right and commendable, it is politically appropriate.” On Friday, May 18, the Quebec Bar Association stated it had “serious concerns” over the legislation, which it described as “excessive.” Student and union groups united on Friday to oppose the bill, describing it as turning Quebec into a “totalitarian state” and stating, “This law is guided by the aggressiveness, anger and revenge of the Liberal Party.” But not everyone was upset about it. As the law requires organizers to inform police about gatherings of 10 or more people, the chamber of commerce of Gatineau, Quebec, released a “tongue-in-cheek” statement of plans to hold an “assembly of more than 10 people” and asked how many police officers would be present “so that they could prepare the appropriate number of hors d’oeuvres.”
Nadeau-Dubois stated, “I believe my anger is quite representative of the way students are feeling, and I am convinced that will be expressed in the streets… over the next few days and the next few weeks.” He then added: “It’s a declaration of war, not only against students but also against anyone who clings in any way to democracy, against anyone who clings to what Quebec was before this legislation was tabled.” He predicted that Quebecers would “rise up against such an unacceptable document.” The heads of three major Quebec unions came out in opposition to the law, with one leader stating, “The Quebec government chose to use a club instead of dialogue and negotiations… Quebec must not become a police state and that’s what this law means.” Louis Masson, president of the Quebec Bar Association, stated that, “This bill, if adopted, is a breach to the fundamental, constitutional rights of the citizens.” A university and college teacher’s union stated, “If we are no longer able to protest in our society, it becomes a totalitarian society… We are telling our members to defend their fundamental right, the right to demonstrate.”
The legislation also bars students from demonstrating inside or even within 50 metres of college and university buildings. This essentially amounts to making freedom of assembly and speech illegal on college and university campuses. Bureau-Blouin stated, “This bill transforms all civil protests into a crime and transforms a state that has a tradition of openness into a police state… It is an unreasonable limit on our right to demonstrate and aims at killing our associations.” The legislation directly targets the student associations. If a student association attempts to disrupt or prevent students from getting to classes, “it will lose its funding.” Further, “for each day classes are disrupted by actions taken by a student group, the penalty will amount to cessation of funding for a term.” This bill could “virtually bankrupt student associations” for supporting the strike. It also severely restricts the ability of other unions and professors and teachers to support striking students.
Legal experts began speaking out against the legislation, saying that it “goes too far and contravenes fundamental rights.” To add insult to injury, on the same day the legislation was voted for, the City of Montreal quietly passed a by-law which bans masks being worn at protests. The Quebec Bar Association explained that its “serious concerns” about Bill 78 included the fact that, “The scale of its restraints on fundamental freedoms isn’t justified by the objectives aimed by the government.” The president of the Quebec Bar added, “The government is making it harder for people to organize spontaneous demonstrations. It is a limit on freedom of speech.” A Laval University law professor, Louis-Philippe Lampron, an expert in human rights, commented, “Read it. Stunned. Can’t believe that a democratic government can adopt such a law.”
Another Laval University law professor, Fannie Lafontaine, raised concerns about the provisions in the law “which aim to prevent protesters from barring other students from attending school,” as Section 13 and 14 state that no one can “directly or indirectly contribute” to delaying classes or preventing others from having access to them. Section 15 said that student associations must undertake “appropriate means” to ensure their members do not “directly or indirectly” contribute to delaying or denying access to classes. Section 25 threatens fines that go as high as $125,000 for student associations that violate these provisions. Law professor Lafontaine warned that “those sections are too broadly defined while at the same time they are twinned with stiff penalties,” adding: “The students are told to take `appropriate means’ and we don’t know what this implies, to `induce’ members to comply, so there’s an obligation to get results… this doesn’t work in law. You can’t have offences that are written so vaguely they’re impossible to respect.” She also stated, “In times of crisis, all governments tend to restrain fundamental rights and history shows that excessive restrictions don’t help restore order.” Louis Roy, who represents most of the province’s teachers said that his members are “disgusted,” and that, “[t]hey will not be collaborating in any kind of police action. They are not going to become some kind of police squad for the provincial government. We are very close to having a government ready to trample on fundamental rights.” Another union leader stated, “This law is worthy of a banana republic.”
The Canadian Association of University Teachers spoke out on May 18 in condemnation of Bill 78, “for violating fundamental freedoms of association, assembly, and expression.” James L. Turk, executive director of the Canadian Association of University Teachers, stated, “This special law is a terrible act of mass repression… The Quebec government has opted to exert the heavy hand of the law as a weapon to suppress dissent.” The bill not only imposes heavy fines and limits freedom of assembly, but it also stipulates that students associations (and other supportive associations, including unions) will be held responsible for any third party violence which takes place at demonstrations. Turk stated, “Now, more than ever, the rest of Canada needs to be pinning on a red felt square showing their support for the students of Quebec and for civil liberties… Bill 78 needs to be defeated in the name of democracy or the rest of Canada should be joining the students on the streets.”
Lucie Lemonde, a law professor at Universite du Quebec a Montreal, stated, “It’s the worst law that I’ve ever seen, except for the War Measures Act,” which was the invocation of martial law in Quebec in 1970 during the FLQ crisis. She added, “We knew something was coming, but I didn’t think they would use it to change the rules of the game in terms of the rights to demonstrate.” Meanwhile the President of the Board of Trade of Metropolitan Montreal, Michel Leblanc, “welcomed the bill as a way to protect downtown businesses which say they are suffering because of the frequent demonstrations.” All in all, over the course of Friday May 18:
Student groups, unions, opposition politicians, a host of legal scholars, the Quebec Human Rights Commission, right-wing and left-wing commentators, and the normally restrained Quebec Bar Association blasted the provincial law as an assault on the right to speak and assemble freely.
“This bill infringes many of the fundamental rights of our citizens. The basis of a democracy is the rule of law. We must respect the law. We must also respect fundamental freedoms, like the freedom to protest peacefully, the freedom of speech and the freedom of association,” bar association president bâtonnier Louis Masson, said in an interview.
Quebec Solidaire party leader Amir Khadir stated, “This is a bludgeon law imposed by an illegitimate, corrupt government… I call upon all citizens to respect the laws. But we have to ask ourselves the question: Must we obey a law that takes away fundamental rights guaranteed by the Constitution? Can we be justified to disobey?”
So this is where we’ve come to now: the government of Quebec has decided that instead of compromising on its tuition hikes – something it has stated from the beginning that it was unwilling to even consider – and instead of negotiating in good faith with the students, as all the negotiations have been farces thus far, it will instead “crack down” on the students of Quebec, implementing the “worst law” since the War Measures Act of 1970, which was a declaration of martial law. Bill 78 amounts to a pseudo-declaration of martial law against the students of Quebec. The Canadian Charter of Rights and Freedoms guarantees the rights to freedom of speech, assembly, and expression. Bill 78 is the most dangerous law in all of Canada, and one of the most dangerous laws in our history as a country. It must be opposed, and in the face of such measures which are expected of a ‘Third World’ police state but not of a so-called ‘democracy,’ civil disobedience is just, righteous, and necessary.
This is no longer about tuition.
Our very freedom is at stake.
Andrew Gavin Marshall is an independent researcher and writer based in Montreal, Canada, writing on a number of social, political, economic, and historical issues. He is also Project Manager of The People’s Book Project. He also hosts a weekly podcast show, “Empire, Power, and People,” on BoilingFrogsPost.com.
Debt Dynamite Dominoes: The Coming Financial Catastrophe
Assessing the Illusion of Recovery
Global Research, February 22, 2010
Understanding the Nature of the Global Economic Crisis
The people have been lulled into a false sense of safety under the ruse of a perceived “economic recovery.” Unfortunately, what the majority of people think does not make it so, especially when the people making the key decisions think and act to the contrary. The sovereign debt crises that have been unfolding in the past couple years and more recently in Greece, are canaries in the coal mine for the rest of Western “civilization.” The crisis threatens to spread to Spain, Portugal and Ireland; like dominoes, one country after another will collapse into a debt and currency crisis, all the way to America.
In October 2008, the mainstream media and politicians of the Western world were warning of an impending depression if actions were not taken to quickly prevent this. The problem was that this crisis had been a long-time coming, and what’s worse, is that the actions governments took did not address any of the core, systemic issues and problems with the global economy; they merely set out to save the banking industry from collapse. To do this, governments around the world implemented massive “stimulus” and “bailout” packages, plunging their countries deeper into debt to save the banks from themselves, while charging it to people of the world.
Then an uproar of stock market speculation followed, as money was pumped into the stocks, but not the real economy. This recovery has been nothing but a complete and utter illusion, and within the next two years, the illusion will likely come to a complete collapse.
The governments gave the banks a blank check, charged it to the public, and now it’s time to pay; through drastic tax increases, social spending cuts, privatization of state industries and services, dismantling of any protective tariffs and trade regulations, and raising interest rates. The effect that this will have is to rapidly accelerate, both in the speed and volume, the unemployment rate, globally. The stock market would crash to record lows, where governments would be forced to freeze them altogether.
When the crisis is over, the middle classes of the western world will have been liquidated of their economic, political and social status. The global economy will have gone through the greatest consolidation of industry and banking in world history leading to a system in which only a few corporations and banks control the global economy and its resources; governments will have lost that right. The people of the western world will be treated by the financial oligarchs as they have treated the ‘global South’ and in particular, Africa; they will remove our social structures and foundations so that we become entirely subservient to their dominance over the economic and political structures of our society.
This is where we stand today, and is the road on which we travel.
The western world has been plundered into poverty, a process long underway, but with the unfolding of the crisis, will be rapidly accelerated. As our societies collapse in on themselves, the governments will protect the banks and multinationals. When the people go out into the streets, as they invariably do and will, the government will not come to their aid, but will come with police and military forces to crush the protests and oppress the people. The social foundations will collapse with the economy, and the state will clamp down to prevent the people from constructing a new one.
The road to recovery is far from here. When the crisis has come to an end, the world we know will have changed dramatically. No one ever grows up in the world they were born into; everything is always changing. Now is no exception. The only difference is, that we are about to go through the most rapid changes the world has seen thus far.
Assessing the Illusion of Recovery
In August of 2009, I wrote an article, Entering the Greatest Depression in History, in which I analyzed how there is a deep systemic crisis in the Capitalist system in which we have gone through merely one burst bubble thus far, the housing bubble, but there remains a great many others.
There remains as a significantly larger threat than the housing collapse, a commercial real estate bubble. As the Deutsche Bank CEO said in May of 2009, “It’s either the beginning of the end or the end of the beginning.”
Of even greater significance is what has been termed the “bailout bubble” in which governments have superficially inflated the economies through massive debt-inducing bailout packages. As of July of 2009, the government watchdog and investigator of the US bailout program stated that the U.S. may have put itself at risk of up to $23.7 trillion dollars.
In October of 2009, approximately one year following the “great panic” of 2008, I wrote an article titled, The Economic Recovery is an Illusion, in which I analyzed what the most prestigious and powerful financial institution in the world, the Bank for International Settlements (BIS), had to say about the crisis and “recovery.”
The BIS, as well as its former chief economist, who had both correctly predicted the crisis that unfolded in 2008, were warning of a future crisis in the global economy, citing the fact that none of the key issues and structural problems with the economy had been changed, and that government bailouts may do more harm than good in the long run.
William White, former Chief Economist of the BIS, warned:
Crying Wolf or Castigating Cassandra?
While people were being lulled into a false sense of security, prominent voices warning of the harsh bite of reality to come were, instead of being listened to, berated and pushed aside by the mainstream media. Gerald Celente, who accurately predicted the economic crisis of 2008 and who had been warning of a much larger crisis to come, had been accused by the mainstream media of pushing “pessimism porn.” Celente’s response has been that he isn’t pushing “pessimism porn,” but that he refuses to push “optimism opium” of which the mainstream media does so outstandingly.
So, are these voices of criticism merely “crying wolf” or is it that the media is out to “castigate Cassandra”? Cassandra, in Greek mythology, was the daughter of King Priam and Queen Hecuba of Troy, who was granted by the God Apollo the gift of prophecy. She prophesied and warned the Trojans of the Trojan Horse, the death of Agamemnon and the destruction of Troy. When she warned the Trojans, they simply cast her aside as “mad” and did not heed her warnings.
While those who warn of a future economic crisis may not have been granted the gift of prophecy from Apollo, they certainly have the ability of comprehension.
So what do the Cassandras of the world have to say today? Should we listen?
Empire and Economics
To understand the global economic crisis, we must understand the global causes of the economic crisis. We must first determine how we got to the initial crisis, from there, we can critically assess how governments responded to the outbreak of the crisis, and thus, we can determine where we currently stand, and where we are likely headed.
Africa and much of the developing world was released from the socio-political-economic restraints of the European empires throughout the 1950s and into the 60s. Africans began to try to take their nations into their own hands. At the end of World War II, the United States was the greatest power in the world. It had command of the United Nations, the World Bank and the IMF, as well as setting up the NATO military alliance. The US dollar reigned supreme, and its value was tied to gold.
In 1954, Western European elites worked together to form an international think tank called the Bilderberg Group, which would seek to link the political economies of Western Europe and North America. Every year, roughly 130 of the most powerful people in academia, media, military, industry, banking, and politics would meet to debate and discuss key issues related to the expansion of Western hegemony over the world and the re-shaping of world order. They undertook, as one of their key agendas, the formation of the European Union and the Euro currency unit.
In 1971, Nixon abandoned the dollar’s link to gold, which meant that the dollar no longer had a fixed exchange rate, but would change according to the whims and choices of the Federal Reserve (the central bank of the United States). One key individual that was responsible for this choice was the third highest official in the U.S. Treasury Department at the time, Paul Volcker.
Volcker got his start as a staff economist at the New York Federal Reserve Bank in the early 50s. After five years there, “David Rockefeller’s Chase Bank lured him away.” So in 1957, Volcker went to work at Chase, where Rockefeller “recruited him as his special assistant on a congressional commission on money and credit in America and for help, later, on an advisory commission to the Treasury Department.” In the early 60s, Volcker went to work in the Treasury Department, and returned to Chase in 1965 “as an aide to Rockefeller, this time as vice president dealing with international business.” With Nixon entering the White House, Volcker got the third highest job in the Treasury Department. This put him at the center of the decision making process behind the dissolution of the Bretton Woods agreement by abandoning the dollar’s link to gold in 1971.
In 1973, David Rockefeller, the then-Chairman of Chase Manhattan Bank and President of the Council on Foreign Relations, created the Trilateral Commission, which sought to expand upon the Bilderberg Group. It was an international think tank, which would include elites from Western Europe, North America, and Japan, and was to align a “trilateral” political economic partnership between these regions. It was to further the interests and hegemony of the Western controlled world order.
That same year, the Petri-dish experiment of neoliberalism was undertaken in Chile. While a leftist government was coming to power in Chile, threatening the economic interests of not only David Rockefeller’s bank, but a number of American corporations, David Rockefeller set up meetings between Henry Kissinger, Nixon’s National Security Adviser, and a number of leading corporate industrialists. Kissinger in turn, set up meetings between these individuals and the CIA chief and Nixon himself. Within a short while, the CIA had begun an operation to topple the government of Chile.
On September 11, 1973, a Chilean General, with the help of the CIA, overthrew the government of Chile and installed a military dictatorship that killed thousands. The day following the coup, a plan for an economic restructuring of Chile was on the president’s desk. The economic advisers from the University of Chicago, where the ideas of Milton Freidman poured out, designed the restructuring of Chile along neoliberal lines.
Neoliberalism was thus born in violence.
In 1973, a global oil crisis hit the world. This was the result of the Yom Kippur War, which took place in the Middle East in 1973. However, much more covertly, it was an American strategem. Right when the US dropped the dollar’s peg to gold, the State Department had quietly begun pressuring Saudi Arabia and other OPEC nations to increase the price of oil. At the 1973 Bilderberg meeting, held six months before the oil price rises, a 400% increase in the price of oil was discussed. The discussion was over what to do with the large influx of what would come to be called “petrodollars,” the oil revenues of the OPEC nations.
Henry Kissinger worked behind the scenes in 1973 to ensure a war would take place in the Middle East, which happened in October. Then, the OPEC nations drastically increased the price of oil. Many newly industrializing nations of the developing world, free from the shackles of overt political and economic imperialism, suddenly faced a problem: oil is the lifeblood of an industrial society and it is imperative in the process of development and industrialization. If they were to continue to develop and industrialize, they would need the money to afford to do so.
Concurrently, the oil producing nations of the world were awash with petrodollars, bringing in record surpluses. However, to make a profit, the money would need to be invested. This is where the Western banking system came to the scene. With the loss of the dollar’s link to cold, the US currency could flow around the world at a much faster rate. The price of oil was tied to the price of the US dollar, and so oil was traded in US dollars. OPEC nations thus invested their oil money into Western banks, which in turn, would “recycle” that money by loaning it to the developing nations of the world in need of financing industrialization. It seemed like a win-win situation: the oil nations make money, invest it in the West, which loans it to the South, to be able to develop and build “western” societies.
However, all things do not end as fairy tales, especially when those in power are threatened. An industrialized and developed ‘Global South’ (Latin America, Africa, and parts of Asia) would not be a good thing for the established Western elites. If they wanted to maintain their hegemony over the world, they must prevent the rise of potential rivals, especially in regions so rich in natural resources and the global supplies of energy.
It was at this time that the United States initiated talks with China. The “opening” of China was to be a Western project of expanding Western capital into China. China will be allowed to rise only so much as the West allows it. The Chinese elite were happy to oblige with the prospect of their own growth in political and economic power. India and Brazil also followed suit, but to a smaller degree than that of China. China and India were to brought within the framework of the Trilateral partnership, and in time, both China and India would have officials attending meetings of the Trilateral Commission.
So money flowed around the world, primarily in the form of the US dollar. Foreign central banks would buy US Treasuries (debts) as an investment, which would also show faith in the strength of the US dollar and economy. The hegemony of the US dollar reached around the world.
The Hegemony of Neoliberalism
In 1977, however, a new US administration came to power under the Presidency of Jimmy Carter, who was himself a member of the Trilateral Commission. With his administration, came another roughly two-dozen members of the Trilateral Commission to fill key positions within his government. In 1973, Paul Volcker, the rising star through Chase Manhattan and the Treasury Department became a member of the Trilateral Commission. In 1975, he was made President of the Federal Reserve Bank of New York, the most powerful of the 12 regional Fed banks. In 1979, Jimmy Carter gave the job of Treasury Secretary to the former Governor of the Federal Reserve System, and in turn, David Rockefeller recommended Jimmy Carter appoint Paul Volcker as Governor of the Federal Reserve Board, which Carter quickly did.
In 1979, the price of oil skyrocketed again. This time, Paul Volcker at the Fed was to take a different approach. His response was to drastically increase interest rates. Interest rates went from 2% in the late 70s to 18% in the early 1980s. The effect this had was that the US economy went into recession, and greatly reduced its imports from developing nations. A the same time, developing nations, who had taken on heavy debt burdens to finance industrialization, suddenly found themselves having to pay 18% interest payments on their loans. The idea that they could borrow heavily to build an industrial society, which would in turn pay off their loans, had suddenly come to a halt. As the US dollar had spread around the world in the forms of petrodollars and loans, the decisions that the Fed made would affect the entire world. In 1982, Mexico announced that it could no longer service its debt, and defaulted on its loans. This marked the spread of the 1980s debt crisis, which spread throughout Latin America and across the continent of Africa.
Suddenly, much of the developing world was plunged into crisis. Thus, the IMF and World Bank entered the scene with their newly developed “Structural Adjustment Programs” (SAPs), which would encompass a country in need signing an agreement, the SAP, which would provide the country with a loan from the IMF, as well as “development” projects by the World Bank. In turn, the country would have to undergo a neoliberal restructuring of its country.
Neoliberalism spread out of America and Britain in the 1980s; through their financial empires and instruments – including the World Bank and IMF – they spread the neoliberal ideology around the globe. Countries that resisted neoliberalism were subjected to “regime change”. This would occur through financial manipulation, via currency speculation or the hegemonic monetary policies of the Western nations, primarily the United States; economic sanctions, via the United Nations or simply done on a bilateral basis; covert regime change, through “colour revolutions” or coups, assassinations; and sometimes overt military campaigns and war.
The neoliberal ideology consisted in what has often been termed “free market fundamentalism.” This would entail a massive wave of privatization, in which state assets and industries are privatized in order to become economically “more productive and efficient.” This would have the social effect of leading to the firing of entire areas of the public sector, especially health and education as well as any specially protected national industries, which for many poor nations meant vital natural resources.
Then, the market would be “liberalized” which meant that restrictions and impediments to foreign investments in the nation would diminish by reducing or eliminating trade barriers and tariffs (taxes), and thus foreign capital (Western corporations and banks) would be able to invest in the country easily, while national industries that grow and “compete” would be able to more easily invest in other nations and industries around the world. The Central Bank of the nation would then keep interest rates artificially low, to allow for the easier movement of money in and out of the country. The effect of this would be that foreign multinational corporations and international banks would be able to easily buy up the privatized industries, and thus, buy up the national economy. Simultaneously major national industries may be allowed to grow and work with the global banks and corporations. This would essentially oligopolize the national economy, and bring it within the sphere of influence of the “global economy” controlled by and for the Western elites.
The European empires had imposed upon Africa and many other colonized peoples around the world a system of ‘indirect rule’, in which local governance structures were restructured and reorganized into a system where the local population is governed by locals, but for the western colonial powers. Thus, a local elite is created, and they enrich themselves through the colonial system, so they have no interest in challenging the colonial powers, but instead seek to protect their own interests, which happen to be the interests of the empire.
In the era of globalization, the leaders of the ‘Third World’ have been co-opted and their societies reorganized by and for the interests of the globalized elites. This is a system of indirect rule, and the local elites becoming ‘indirect globalists’; they have been brought within the global system and structures of empire.
Following a Structural Adjustment Program, masses of people would be left unemployed; the prices of essential commodities such as food and fuel would increase, sometimes by hundreds of percentiles, while the currency lost its value. Poverty would spread and entire sectors of the economy would be shut down. In the “developing” world of Asia, Latin America and Africa, these policies were especially damaging. With no social safety nets to fall into, the people would go hungry; the public state was dismantled.
When it came to Africa, the continent so rapidly de-industrialized throughout the 1980s and into the 1990s that poverty increased by incredible degrees. With that, conflict would spread. In the 1990s, as the harsh effects of neoliberal policies were easily and quickly seen on the African continent, the main notion pushed through academia, the media, and policy circles was that the state of Africa was due to the “mismanagement” by Africans. The blame was put solely on the national governments. While national political and economic elites did become complicit in the problems, the problems were imposed from beyond the continent, not from within.
Thus, in the 1990s, the notion of “good governance” became prominent. This was the idea that in return for loans and “help” from the IMF and World Bank, nations would need to undertake reforms not only of the economic sector, but also to create the conditions of what the west perceived as “good governance.” However, in neoliberal parlance, “good governance” implies “minimal governance”, and governments still had to dismantle their public sectors. They simply had to begin applying the illusion of democracy, through the holding of elections and allowing for the formation of a civil society. “Freedom” however, was still to maintain simply an economic concept, in that the nation would be “free” for Western capital to enter into.
While massive poverty and violence spread across the continent, people were given the “gift” of elections. They would elect one leader, who would then be locked into an already pre-determined economic and political structure. The political leaders would enrich themselves at the expense of others, and then be thrown out at the next election, or simply fix the elections. This would continue, back and forth, all the while no real change would be allowed to take place. Western imposed “democracy” had thus failed.
An article in a 2002 edition of International Affairs, the journal of the Royal Institute of International Affairs (the British counter-part to the Council on Foreign Relations), wrote that:
The authors then explained that NGOs have a peculiar evolution in Africa:
The authors examined how with the spread of neoliberalism, the notion of a “minimalist state” spread across the world and across Africa. Thus, they explain, the IMF and World Bank “became the new commanders of post-colonial economies.” However, these efforts were not imposed without resistance, as, “Between 1976 and 1992 there were 146 protests against IMF-supported austerity measures [SAPs] in 39 countries around the world.” Usually, however, governments responded with brute force, violently oppressing demonstrations. However, the widespread opposition to these “reforms” needed to be addressed by major organizations and “aid” agencies in re-evaluating their approach to ‘development’:
The outcome of these deliberations was the ‘good governance’ agenda in the 1990s and the decision to co-opt NGOs and other civil society organizations to a repackaged programme of welfare provision, a social initiative that could be more accurately described as a programme of social control.
The result was to implement the notion of ‘pluralism’ in the form of ‘multipartyism’, which only ended up in bringing “into the public domain the seething divisions between sections of the ruling class competing for control of the state.” As for the ‘welfare initiatives’, the bilateral and multilateral aid agencies set aside significant funds for addressing the “social dimensions of adjustment,” which would “minimize the more glaring inequalities that their policies perpetuated.” This is where the growth of NGOs in Africa rapidly accelerated.
Africa had again, become firmly enraptured in the cold grip of imperialism. Conflicts in Africa would be stirred up by imperial foreign powers, often using ethnic divides to turn the people against each other, using the political leaders of African nations as vassals submissive to Western hegemony. War and conflict would spread, and with it, so too would Western capital and the multinational corporation.
Building a ‘New’ Economy
While the developing world fell under the heavy sword of Western neoliberal hegemony, the Western industrialized societies experienced a rapid growth of their own economic strength. It was the Western banks and multinational corporations that spread into and took control of the economies of Africa, Latin America, Asia, and with the fall of the Soviet Union in 1991, Eastern Europe and Central Asia.
Russia opened itself up to Western finance, and the IMF and World Bank swept in and imposed neoliberal restructuring, which led to a collapse of the Russian economy, and enrichment of a few billionaire oligarchs who own the Russian economy, and who are intricately connected with Western economic interests; again, ‘indirect globalists’.
As the Western financial and commercial sectors took control of the vast majority of the world’s resources and productive industries, amassing incredible profits, they needed new avenues in which to invest. Out of this need for a new road to capital accumulation (making money), the US Federal Reserve stepped in to help out.
The Federal Reserve in the 1990s began to ease interest rates lower and lower to again allow for the easier spread of money. This was the era of ‘globalization,’ where proclamations of a “New World Order” emerged. Regional trading blocs and “free trade” agreements spread rapidly, as world systems of political and economic structure increasingly grew out of the national structure and into a supra-national form. The North American Free Trade Agreement (NAFTA) was implemented in an “economic constitution for North America” as Reagan referred to it.
Regionalism had emerged as the next major phase in the construction of the New World Order, with the European Union being at the forefront. The world economy was ‘globalized’ and so too, would the political structure follow, on both regional and global levels. The World Trade Organization (WTO) was formed to maintain and enshrine global neoliberal constitution for trade. All through this time, a truly global ruling class emerged, the Transnational Capitalist Class (TCC), or global elite, which constituted a singular international class.
However, as the wealth and power of elites grew, everyone else suffered. The middle class had been subjected to a quiet dismantling. In the Western developed nations, industries and factories closed down, relocating to cheap Third World countries to exploit their labour, then sell the products in the Western world cheaply. Our living standards in the West began to fall, but because we could buy products for cheaper, no one seemed to complain. We continued to consume, and we used credit and debt to do so. The middle class existed only in theory, but was in fact, beholden to the shackles of debt.
The Clinton administration used ‘globalization’ as its grand strategy throughout the 1990s, facilitating the decline of productive capital (as in, money that flows into production of goods and services), and implemented the rise finance capital (money made on money). Thus, financial speculation became one of the key tools of economic expansion. This is what was termed the “financialization” of the economy. To allow this to occur, the Clinton administration actively worked to deregulate the banking sector. The Glass-Steagle Act, put in place by FDR in 1933 to prevent commercial banks from merging with investment banks and engaging in speculation, (which in large part caused the Great Depression), was slowly dismantled through the coordinated efforts of America’s largest banks, the Federal Reserve, and the US Treasury Department.
Thus, a massive wave of consolidation took place, as large banks ate smaller banks, corporations merged, where banks and corporations stopped being American or European and became truly global. Some of the key individuals that took part in the dismantling of Glass-Steagle and the expansion of ‘financialization’ were Alan Greenspan at the Federal Reserve and Robert Rubin and Lawrence Summers at the Treasury Department, now key officials in Obama’s economic team.
This era saw the rise of ‘derivatives’ which are ‘complex financial instruments’ that essentially act as short-term insurance policies, betting and speculating that an asset price or commodity would go up or go down in value, allowing money to be made on whether stocks or prices go up or down. However, it wasn’t called ‘insurance’ because ‘insurance’ has to be regulated. Thus, it was referred to as derivatives trade, and organizations called Hedge Funds entered the picture in managing the global trade in derivatives.
The stock market would go up as speculation on future profits drove stocks higher and higher, inflating a massive bubble in what was termed a ‘virtual economy.’ The Federal Reserve facilitated this, as it had previously done in the lead-up to the Great Depression, by keeping interest rates artificially low, and allowing for easy-flowing money into the financial sector. The Federal Reserve thus inflated the ‘dot-com’ bubble of the technology sector. When this bubble burst, the Federal Reserve, with Allen Greenspan at the helm, created the “housing bubble.”
The Federal Reserve maintained low interest rates and actively encouraged and facilitated the flow of money into the housing sector. Banks were given free reign and actually encouraged to make loans to high-risk individuals who would never be able to pay back their debt. Again, the middle class existed only in the myth of the ‘free market’.
Concurrently, throughout the 1990s and into the early 2000s, the role of speculation as a financial instrument of war became apparent. Within the neoliberal global economy, money could flow easily into and out of countries. Thus, when confidence weakens in the prospect of one nation’s economy, there can be a case of ‘capital flight’ where foreign investors sell their assets in that nation’s currency and remove their capital from that country. This results in an inevitable collapse of the nations economy.
This happened to Mexico in 1994, in the midst of joining NAFTA, where international investors speculated against the Mexican peso, betting that it would collapse; they cashed in their pesos for dollars, which devalued the peso and collapsed the Mexican economy. This was followed by the East Asian financial crisis in 1997, where throughout the 1990s, Western capital had penetrated East Asian economies speculating in real estate and the stock markets. However, this resulted in over-investment, as the real economy, (production, manufacturing, etc.) could not keep up with speculative capital. Thus, Western capital feared a crisis, and began speculating against the national currencies of East Asian economies, which triggered devaluation and a financial panic as capital fled from East Asia into Western banking sectors. The economies collapsed and then the IMF came in to ‘restructure’ them accordingly. The same strategy was undertaken with Russia in 1998, and Argentina in 2001.
Throughout the 2000s, the housing bubble was inflated beyond measure, and around the middle of the decade, when the indicators emerged of a crisis in the housing market a commercial real estate bubble was formed. This bubble has yet to burst.
The 2007-2008 Financial Crisis
In 2007, the Bank for International Settlements (BIS), the most prestigious financial institution in the world and the central bank to the world’s central banks, issued a warning that the world is on the verge of another Great Depression, “citing mass issuance of new-fangled credit instruments, soaring levels of household debt, extreme appetite for risk shown by investors, and entrenched imbalances in the world currency system.”
As the housing bubble began to collapse, the commodity bubble was inflated, where money went increasingly into speculation, the stock market, and the price of commodities soared, such as with the massive increases in the price of oil between 2007 and 2008. In September of 2007, a medium-sized British Bank called Northern Rock, a major partaker in the loans of bad mortgages which turned out to be worthless, sought help from the Bank of England, which led to a run on the bank and investor panic. In February of 2008, the British government bought and nationalized Northern Rock.
In March of 2008, Bear Stearns, an American bank that had been a heavy lender in the mortgage real estate market, went into crisis. On March 14, 2008, the Federal Reserve Bank of New York worked with J.P. Morgan Chase (whose CEO is a board member of the NY Fed) to provide Bear Stearns with an emergency loan. However, they quickly changed their mind, and the CEO of JP Morgan Chase, working with the President of the New York Fed, Timothy Geithner, and the Treasury Secretary Henry Paulson (former CEO of Goldman Sachs), forced Bear Stearns to sell itself to JP Morgan Chase for $2 a share, which had previously traded at $172 a share in January of 2007. The merger was paid for by the Federal Reserve of New York, and charged to the US taxpayer.
In June of 2008, the BIS again warned of an impending Great Depression.
In September of 2008, the US government took over Fannie Mae and Freddie Mac, the two major home mortgage corporations. The same month, the global bank Lehman Brothers declared bankruptcy, giving the signal that no one is safe and that the entire economy was on the verge of collapse. Lehman was a major dealer in the US Treasury Securities market and was heavily invested in home mortgages. Lehman filed for bankruptcy on September 15, 2008, marking the largest bankruptcy in US history. A wave of bank consolidation spread across the United States and internationally. The big banks became much bigger as Bank of America swallowed Merrill Lynch, JP Morgan ate Washington Mutual, and Wells Fargo took over Wachovia.
In November of 2008, the US government bailed out the largest insurance company in the world, AIG. The Federal Reserve Bank of New York, with Timothy Geithner at the helm:
As Bloomberg reported, since the New York Fed is quasi-governmental, as in, it is given government authority, but not subject to government oversight, and is owned by the banks that make up its board (such as JP Morgan Chase), “It’s as though the New York Fed was a black-ops outfit for the nation’s central bank.”
In the fall of 2008, the Bush administration sought to implement a bailout package for the economy, designed to save the US banking system. The leaders of the nation went into rabid fear mongering. The President warned:
The head of the Federal Reserve Board, Ben Bernanke, as well as Treasury Secretary Paulson, in late September warned of “recession, layoffs and lost homes if Congress doesn’t quickly approve the Bush administration’s emergency $700 billion financial bailout plan.” Seven months prior, in February of 2008, prior to the collapse of Bear Stearns, both Bernanke and Paulson said “the nation will avoid falling into recession.” In September of 2008, Paulson was saying that people “should be scared.”
The bailout package was made into a massive financial scam, which would plunge the United States into unprecedented levels of debt, while pumping incredible amounts of money into major global banks.
The public was told, as was the Congress, that the bailout was worth $700 billion dollars. However, this was extremely misleading, and a closer reading of the fine print would reveal much more, in that $700 billion is the amount that could be spent “at any one time.” As Chris Martenson wrote:
Further, the proposed bill would “raise the nation’s debt ceiling to $11.315 trillion from $10.615 trillion,” and that the actions taken as a result of the passage of the bill would not be subject to investigation by the nation’s court system, as it would “bar courts from reviewing actions taken under its authority”:
Larisa Alexandrovna, writing with the Huffington Post, warned that the passage of the bailout bill will be the final nails in the coffin of the fascist coup over America, in the form of financial fascists:
At the same time, the US Federal Reserve was bailing out foreign banks of hundreds of billions of dollars, “that are desperate for dollars and can’t access America’s frozen credit markets – a move co-ordinated with central banks in Japan, the Eurozone, Switzerland, Canada and here in the UK.” The moves would have been coordinated through the Bank for International Settlements (BIS) in Basle, Switzerland. As Politico reported, “foreign-based banks with big U.S. operations could qualify for the Treasury Department’s mortgage bailout.” A Treasury Fact Sheet released by the US Department of Treasury stated that:
So, the bailout package would not only allow for the rescue of American banks, but any banks internationally, whether public or private, if the Treasury Secretary deemed it “necessary”, and that none of the Secretary’s decisions could be reviewed or subjected to oversight of any kind. Further, it would mean that the Treasury Secretary would have a blank check, but simply wouldn’t be able to hand out more than $700 billion “at any one time.” In short, the bailout is in fact, a coup d’état by the banks over the government.
Many Congressmen were told that if they failed to pass the bailout package, they were threatened with martial law. Sure enough, Congress passed the bill, and the financial coup had been a profound success.
No wonder then, in early 2009, one Congressman reported that the banks “are still the most powerful lobby on Capitol Hill. And they frankly own the place.” Another Congressman said that “The banks run the place,” and explained, “I will tell you what the problem is – they give three times more money than the next biggest group. It’s huge the amount of money they put into politics.”
The Collapse of Iceland
On October 9th, 2008, the government of Iceland took control of the nation’s largest bank, nationalizing it, and halted trading on the Icelandic stock market. Within a single week, “the vast majority of Iceland’s once-proud banking sector has been nationalized.” In early October, it was reported that:
An article in BusinessWeek explained:
This was the grueling situation that faced the government at the time of the global economic crisis. The causes, however, were not Icelandic; they were international. Iceland owed “more than $60 billion overseas, about six times the value of its annual economic output. As a professor at London School of Economics said, ‘No Western country in peacetime has crashed so quickly and so badly’.”
What went wrong?
Iceland followed the path of neoliberalism, deregulated banking and financial sectors and aided in the spread and ease of flow for international capital. When times got tough, Iceland went into crisis, as the Observer reported in early October 2008:
In 2007, the UN had awarded Iceland the “best country to live in”:
As the third of Iceland’s large banks was in trouble, following the government takeover of the previous two, the UK responded by freezing Icelandic assets in the UK. Kaupthing, the last of the three banks standing in early October, had many assets in the UK.
On October 7th, Iceland’s Central Bank governor told the media, “We will not pay for irresponsible debtors and…not for banks who have behaved irresponsibly.” The following day, UK Chancellor of the Exchequer, Alistair Darling, claimed that, “The Icelandic government, believe it or not, have told me yesterday they have no intention of honoring their obligations here,” although, Arni Mathiesen, the Icelandic minister of finance, said, “nothing in this telephone conversation can support the conclusion that Iceland would not honor its obligation.”
On October 10, 2008, UK Prime Minister Gordon Brown said, “We are freezing the assets of Icelandic companies in the United Kingdom where we can. We will take further action against the Icelandic authorities wherever that is necessary to recover money.” Thus:
The UK had more than £840m invested in Icelandic banks, and they were moving in to save their investments, which just so happened to help spur on the collapse of the Icelandic economy.
On October 24, 2008, an agreement between Iceland and the IMF was signed. In late November, the IMF approved a loan to Iceland of $2.1 billion, with an additional $3 billion in loans from Denmark, Finland, Norway, Sweden, Russia, and Poland. Why the agreement to the loan took so long, was because the UK pressured the IMF to delay the loan “until a dispute over the compensation Iceland owes savers in Icesave, one of its collapsed banks, is resolved.”
In January of 2009, the entire Icelandic government was “formally dissolved” as the government collapsed when the Prime Minister and his entire cabinet resigned. This put the opposition part in charge of an interim government. In July of 2009, the new government formally applied for European Union membership, however, “Icelanders have traditionally been skeptical of the benefits of full EU membership, fearing that they would lose some of their independence as a small state within a larger political entity.”
In August of 2009, Iceland’s parliament passed a bill “to repay Britain and the Netherlands more than $5 billion lost in Icelandic deposit accounts”:
Iceland is now in the service of the IMF and its international creditors. The small independent nation that for so long had prided itself on a strong economy and strong sense of independence had been brought to its knees.
In mid-January of 2010, the IMF and Sweden together delayed their loans to Iceland, due to Iceland’s “failure to reach a £2.3bn compensation deal with Britain and the Netherlands over its collapsed Icesave accounts.” Sweden, the UK and the IMF were blackmailing Iceland to save UK assets in return for loans.
In February of 2010, it was reported that the EU would begin negotiations with Iceland to secure Icelandic membership in the EU by 2012. However, Iceland’s “aspirations are now tied partially to a dispute with the Netherlands and Britain over $5 billion in debts lost in the country’s banking collapse in late 2008.”
Iceland stood as a sign of what was to come. The sovereign debt crisis that brought Iceland to its knees had new targets on the horizon.
Dubai Hit By Financial Storm
In February of 2009, the Guardian reported that, “A six-year boom that turned sand dunes into a glittering metropolis, creating the world’s tallest building, its biggest shopping mall and, some say, a shrine to unbridled capitalism, is grinding to a halt,” as Dubai, one of six states that form the United Arab Emirates (UAE), went into crisis. Further, “the real estate bubble that propelled the frenetic expansion of Dubai on the back of borrowed cash and speculative investment, has burst.”
Months later, in November of 2009, Dubai was plunged into a debt crisis, prompting fears of sparking a double-dip recession and the next wave of the financial crisis. As the Guardian reported:
The neighboring oil-rich state of Abu Dhabi, however, came to the rescue of Dubai with a $10 billion bailout package, leading the Foreign Minister of the UAE to declare Dubai’s financial crisis as over.
In mid-February of 2010, however, renewed fears of a debt crisis in Dubai resurfaced; Morgan Stanley reported that, “the cost to insure against a Dubai default [in mid-February] shot up to the level it was at during the peak of the city-state’s debt crisis in November.” These fears resurfaced as:
Again, the aims that governments seek in the unfolding debt crisis is not to save their people from a collapsing economy and inflated currency, but to save the ‘interests’ of their major banks and corporations within each collapsing economy.
A Sovereign Debt Crisis Hits Greece
In October of 2009, a new Socialist government came to power in Greece on the promise of injecting 3 billion euros to reinvigorate the Greek economy. Greece had suffered particularly hard during the economic crisis; it experienced riots and protests. In December of 2009, Greece said it would not default on its debt, but the government added, “Salaried workers will not pay for this situation: we will not proceed with wage freezes or cuts. We did not come to power to tear down the social state.” As Ambrose Evans-Pritchard wrote for the Telegraph in December of 2009:
Evans-Pritchard wrote that the crisis in Greece had much to do with the European Monetary Union (EMU), which created the Euro, and made all member states subject to the decisions of the European Central Bank, as “Interest rates were too low for Greece, Portugal, Spain, and Ireland, causing them all to be engulfed in a destructive property and wage boom.” Further:
Greece’s debt had soared, by early December 2009, to a spiraling 300-billion euros, as its “financial woes have also weighed on the euro currency, whose long-term value depends on member countries keeping their finances in order.” Further, Ireland, Spain and Portugal were all facing problems with their debt. As it turned out, the previous Greek government had been cooking the books, and when the new government came to power, it inherited twice the federal deficit it had anticipated.
In February of 2010, the New York Times revealed that:
Even back in 2001, when Greece joined the Euro-bloc, Goldman Sachs helped the country “quietly borrow billions” in a deal “hidden from public view because it was treated as a currency trade rather than a loan, [and] helped Athens to meet Europe’s deficit rules while continuing to spend beyond its means.” Further, “Greece owes the world $300 billion, and major banks are on the hook for much of that debt. A default would reverberate around the globe.” Both Goldman Sachs and JP Morgan Chase had undertaken similar efforts in Italy and other countries in Europe as well.
In early February, EU nations led by France and Germany met to discuss a rescue package for Greece, likely with the help of the European Central Bank and possibly the IMF. The issue had plunged the Eurozone into a crisis, as confidence in the Euro fell across the board, and “Germans have become so disillusioned with the euro, many will not accept notes produced outside their homeland.”
Germany was expected to bail out the Greek economy, much to the dismay of the German people. As one German politician stated, “We cannot expect the citizens, whose taxes are already too high, to go along with supporting the erroneous financial and budget policy of other states of the eurozone.” One economist warned that the collapse of Greece could lead to a collapse of the Euro:
However, the Lisbon Treaty had been passed over 2009, which put into effect a European Constitution, giving Brussels enormous powers over its member states. As the Telegraph reported on February 16, 2010, the EU stripped Greece of its right to vote at a crucial meeting to take place in March:
It would appear that the EU is in a troubling position. If they allow the IMF to rescue Greece, it would be a blow to the faith in the Euro currency, whereas if they bailout Greece, it will encourage internal pressures within European countries to abandon the Euro.
In early February, Ambrose Evans-Pritchard wrote in the Telegraph that, “The Greek debt crisis has spread to Spain and Portugal in a dangerous escalation as global markets test whether Europe is willing to shore up monetary union with muscle rather than mere words”:
Fear began to spread in regards to a growing sovereign debt crisis, stretching across Greece, Spain and Portugal, and likely much wider and larger than that.
A Global Debt Crisis
In 2007, the Bank for International Settlements (BIS), “the world’s most prestigious financial body,” warned of a coming great depression, and stated that while in a crisis, central banks may cut interest rates (which they subsequently did). However, as the BIS pointed out, while cutting interest rates may help, in the long run it has the effect of “sowing the seeds for more serious problems further ahead.”
In the summer of 2008, prior to the apex of the 2008 financial crisis in September and October, the BIS again warned of the inherent dangers of a new Great Depression. As Ambrose Evans-Pritchard wrote, “the ultimate bank of central bankers” warned that central banks, such as the Federal Reserve, would not find it so easy to “clean up” the messes they had made in asset-price bubbles.
The BIS report stated that, “It is not impossible that the unwinding of the credit bubble could, after a temporary period of higher inflation, culminate in a deflation that might be hard to manage, all the more so given the high debt levels.” As Evans-Pritchard explained, “this amounts to a warning that monetary overkill by the Fed, the Bank of England, and above all the European Central Bank could prove dangerous at this juncture.” The BIS report warned that, “Global banks – with loans of $37 trillion in 2007, or 70pc of world GDP – are still in the eye of the storm.” Ultimately, the actions of central banks were designed “to put off the day of reckoning,” not to prevent it.
Seeing how the BIS is not simply a casual observer, but is in fact the most important financial institution in the world, as it is where the world’s central bankers meet and, in secret, decide monetary policy for the world. As central banks have acted as the architects of the financial crisis, the BIS warning of a Great Depression is not simply a case of Cassandra prophesying the Trojan Horse, but is a case where she prophesied the horse, then opened the gates of Troy and pulled the horse in.
It was within this context that the governments of the world took on massive amounts of debt and bailed out the financial sectors from their accumulated risk by buying their bad debts.
In late June of 2009, several months following Western governments implementing bailouts and stimulus packages, the world was in the euphoria of “recovery.” At this time, however, the Bank for International Settlements released another report warning against such complacency in believing in the “recovery.” The BIS warned of only “limited progress” in fixing the financial system. The article is worth quoting at length:
The BIS had thus endorsed the bailout and stimulus packages, which is no surprise, considering that the BIS is owned by the central banks of the world, which in turn are owned by the major global banks that were “bailed out” by the governments. However, the BIS warned that these rescue efforts, “while necessary” for the banks, will likely have deleterious effects for national governments.
The BIS warned that, “there’s a risk central banks will raise interest rates and withdraw emergency liquidity too late, triggering inflation”:
Of enormous significance was the warning from the BIS that, “fiscal stimulus packages may provide no more than a temporary boost to growth, and be followed by an extended period of economic stagnation.” As the Australian reported in late June:
Further, major western countries such as Australia “faced the possibility of a run on the currency, which would force interest rates to rise,” and “Particularly in smaller and more open economies, pressure on the currency could force central banks to follow a tighter policy than would be warranted by domestic economic conditions.” Not surprisingly, the BIS stated that, “government guarantees and asset insurance have exposed taxpayers to potentially large losses,” through the bailouts and stimulus packages, and “stimulus programs will drive up real interest rates and inflation expectations,” as inflation “would intensify as the downturn abated.”
In May of 2009, Simon Johnson, former chief economist of the International Monetary Fund (IMF), warned that Britain faces a major struggle in the next phase of the economic crisis:
However, as dire as things look for Britain, “The UK is likely to be joined by other countries as the full scale of the downturn becomes apparent and more financial skeletons are pulled from the sub-prime closet.”
In September of 2009, the former Chief Economist of the Bank for International Settlements (BIS), William White, who had accurately predicted the previous crisis, warned that, “The world has not tackled the problems at the heart of the economic downturn and is likely to slip back into recession.” He “also warned that government actions to help the economy in the short run may be sowing the seeds for future crises.” An article in the Financial Times elaborated:
In late September of 2009, the General Manager of the BIS warned governments against complacency, saying that, “the market rebound should not be misinterpreted,” and that, “The profile of the recovery is not clear.”
In September, the Financial Times further reported that William White, former Chief Economist at the BIS, also “argued that after two years of government support for the financial system, we now have a set of banks that are even bigger – and more dangerous – than ever before,” which also, “has been argued by Simon Johnson, former chief economist at the International Monetary Fund,” who “says that the finance industry has in effect captured the US government,” and pointedly stated: “recovery will fail unless we break the financial oligarchy that is blocking essential reform.”
In mid-September, the BIS released a warning about the global financial system, as “The global market for derivatives rebounded to $426 trillion in the second quarter [of 2009] as risk appetite returned, but the system remains unstable and prone to crises.” The derivatives rose by 16% “mostly due to a surge in futures and options contracts on three-month interest rates.” In other words, speculation is back in full force as bailout money to banks in turn fed speculative practices that have not been subjected to reform or regulation. Thus, the problems that created the previous crisis are still present and growing:
In late November of 2009, Morgan Stanley warned that, “Britain risks becoming the first country in the G10 bloc of major economies to risk capital flight and a full-blown debt crisis over coming months.” The Bank of England may have to raise interest rates “before it is ready — risking a double-dip recession, and an incipient compound-debt spiral.” Further:
As Ambrose Evans-Pritchard wrote for the Telegraph, this “is a reminder that countries merely bought time during the crisis by resorting to fiscal stimulus and shunting private losses onto public books,” and, while he endorsed the stimulus packages claiming it was “necessary,” he admitted that the stimulus packages “have not resolved the underlying debt problem. They have storied up a second set of difficulties by degrading sovereign debt across much of the world.” Morgan Stanley said another surprise in 2010 could be a surge in the dollar. However, this would be due to capital flight out of Europe as its economies crumble under their debt burdens and capital seeks a “safe haven” in the US dollar.
In December of 2009, the Wall Street Journal reported on the warnings of some of the nation’s top economists, who feared that following a financial crisis such as the one experienced in the previous two years, “there’s typically a wave of sovereign default crises.” As economist Kenneth Rogoff explained, “If you want to know what’s next on the menu, that’s a good bet,” as “Spiraling government debts around the world, from Washington to Berlin to Tokyo, could set the scene for years of financial troubles.” Apart from the obvious example of Greece, other countries are at risk, as the author of the article wrote:
Rogoff predicted that, “We’re going to be raising taxes sky high,” and that, “we’re probably going to see a lot of inflation, eventually. We will have to. It’s the easiest way to reduce the value of those liabilities in real terms.” Rogoff stated, “The way rich countries default is through inflation.” Further, “even U.S. municipal bonds won’t be safe from trouble. California could be among those facing a default crisis.” Rogoff elaborated, “It wouldn’t surprise me to see the Federal Reserve buying California debt at some point, or some form of bailout.”
The bailouts, particularly that of the United States, handed a blank check to the world’s largest banks. As another favour, the US government put those same banks in charge of ‘reform’ and ‘regulation’ of the banking industry. Naturally, no reform or regulation took place. Thus, the money given to banks by the government can be used in financial speculation. As the sovereign debt crisis unfolds and spreads around the globe, the major international banks will be able to create enormous wealth in speculation, rapidly pulling their money out of one nation in debt crisis, precipitating a collapse, and moving to another, until all the dominoes have fallen, and the banks stand larger, wealthier, and more powerful than any nation or institution on earth (assuming they already aren’t). This is why the bankers were so eager to undertake a financial coup of the United States, to ensure that no actual reform took place, that they could loot the nation of all it has, and profit off of its eventual collapse and the collapse of the global economy. The banks have been saved! Now everyone else must pay.
Edmund Conway, the Economics Editor of the Telegraph, reported in early January of 2010, that throughout the year:
In other words, the ‘recovery’ is an illusion. In mid-January of 2010, the World Economic Forum released a report in which it warned that, “There is now more than a one-in-five chance of another asset price bubble implosion costing the world more than £1 trillion, and similar odds of a full-scale sovereign fiscal crisis.” The report warned of a simultaneous second financial crisis coupled with a major fiscal crisis as countries default on their debts. The report “also warned of the possibility of China’s economy overheating and, instead of helping support global economic growth, preventing a fully-fledged recovery from developing.” Further:
Nouriel Roubini, one of America’s top economists who predicted the financial crisis, wrote an article in Forbes in January of 2010 explaining that, “the severe recession, combined with a financial crisis during 2008-09, worsened the fiscal positions of developed countries due to stimulus spending, lower tax revenues and support to the financial sector.” He warned that the debt burden of major economies, including the US, Japan and Britain, would likely increase. With this, investors will become wary of the sustainability of fiscal markets and will begin to withdraw from debt markets, long considered “safe havens.” Further:
As interest rates rise, which they will have to in a tightening of monetary policy, (which up until now have been kept artificially low so as to encourage the spread of liquidity around the world), interest payments on the debt will increase dramatically. Roubini warned:
Governments will thus need to drastically increase taxes and cut spending. Essentially, this will amount to a global “Structural Adjustment Program” (SAP) in the developed, industrialized nations of the West.
Where SAPs imposed upon ‘Third World’ debtor nations would provide a loan in return for the dismantling of the public state, higher taxes, growing unemployment, total privatization of state industries and deregulation of trade and investment, the loans provided by the IMF and World Bank would ultimately benefit Western multinational corporations and banks. This is what the Western world now faces: we bailed out the banks, and now we must pay for it, through massive unemployment, increased taxes, and the dismantling of the public sphere.
In February of 2010, Niall Ferguson, a prominent British economic historian, wrote an article for the Financial Times entitled, “A Greek Crisis Coming to America.” He starts by explaining that, “It began in Athens. It is spreading to Lisbon and Madrid. But it would be a grave mistake to assume that the sovereign debt crisis that is unfolding will remain confined to the weaker eurozone economies.” He explained that this is not a crisis confined to one region, “It is a fiscal crisis of the western world,” and “Its ramifications are far more profound than most investors currently appreciate.” Ferguson writes that, “the problem is essentially the same from Iceland to Ireland to Britain to the US. It just comes in widely differing sizes,” and the US is no small risk:
Ferguson points out that, “The long-run projections of the Congressional Budget Office suggest that the US will never again run a balanced budget. That’s right, never.” Ferguson explains that debt will hurt major economies:
In late February of 2010, the warning signs were flashing red that interest rates were going to have to rise, taxes increase, and the burden of debt would need to be addressed.
China Begins to Dump US Treasuries
US Treasuries are US government debt that is issued by the US Treasury Department, which are bought by foreign governments as an investment. It is a show of faith in the US economy to buy their debt (i.e., Treasuries). In buying a US Treasury, you are lending money to the US government for a certain period of time.
However, as the United States has taken on excessive debt loads to save the banks from crisis, the prospect of buying US Treasuries has become less appealing, and the threat that they are an unsafe investment is ever-growing. In February of 2009, Hilary Clinton urged China to continue buying US Treasuries in order to finance Obama’s stimulus package. As an article in Bloomberg pointed out:
The following month, the Chinese central bank announced that they would continue buying US Treasuries.
However, in February of 2009, Warren Buffet, one of the world’s richest individuals, warned against buying US Treasuries:
In September of 2009, an article on CNN reported of the dangers if China were to start dumping US Treasuries, which “could cause longer-term interest rates to shoot up since bond prices and yields move in opposite directions,” as a weakening US currency could lead to inflation, which would in turn, reduce the value and worth of China’s holdings in US Treasuries.
It has become a waiting game; an economic catch-22: China holds US debt (Treasuries) which allows the US to spend to “save the economy” (or more accurately, the banks), but all the spending has plunged the US into such abysmal debt from which it will never be able to emerge. The result is that inflation will likely occur, with a possibility of hyperinflation, thus reducing the value of the US currency. China’s economy is entirely dependent upon the US as a consumer economy, while the US is dependent upon China as a buyer and holder of US debt. Both countries are delaying the inevitable. If China doesn’t want to hold worthless investments (US debt) it must stop buying US Treasuries, and then international faith in the US currency would begin to fall, forcing interest rates to rise, which could even precipitate a speculative assault against the US dollar. At the same time, a collapsing US currency and economy would not help China’s economy, which would tumble with it. So, it has become a waiting game.
In February of 2010, the Financial Times reported that China had begun in December of 2009, the process of dumping US Treasuries, and thus falling behind Japan as the largest holder of US debt, selling approximately $38.8 billion of US Treasuries, as “Foreign demand for US Treasury bonds fell by a record amount”:
So, China has given the US a vote of non-confidence. This is evident of the slippery-slide down the road to a collapse of the US economy, and possibly, the US dollar, itself.
Is a Debt Crisis Coming to America?
All the warning signs are there: America is in dire straights when it comes to its total debt, proper actions have not been taken to reform the monetary or financial systems, the same problems remain prevalent, and the bailout and stimulus packages have further exposed the United States to astronomical debt levels. While the dollar will likely continue to go up as confidence in the Eurozone economies tumbles, this is not because the dollar is a good investment, but because the dollar is simply a better investment (for now) than the Euro, which isn’t saying much.
The Chinese moves to begin dumping US Treasuries is a signal that the issue of American debt has already weighed in on the functions and movements of the global financial system. While the day of reckoning may be months if not years away, it is coming nonetheless.
On February 15, it was reported that the Federal Reserve, having pumped $2.2 trillion into the economy, “must start pulling that money back.” As the Fed reportedly bought roughly $2 trillion in bad assets, it is now debating “how and when to sell those assets.” As the Korea Times reported, “The problem: Do it too quickly and the Fed might cut off or curtail the recovery. Wait too long and risk setting off a punishing round of inflation.”
In mid-February, there were reports of dissent within the Federal Reserve System, as Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, warned that, “The US must fix its growing debt problems or risk a new financial crisis.” He explained, “that rising debt was infringing on the central bank’s ability to fulfill its goals of maintaining price stability and long-term economic growth.” In January, he was the lone voice at a Fed meeting that said interest rates should not remain near zero for an “extended period.” He said the worst case scenario would be for the US government to have to again ask the Fed to print more money, and instead suggested that, “the administration must find ways to cut spending and generate revenue,” admitting that it would be a “painful and politically inconvenient” process.
However, these reports are largely disingenuous, as it has placed focus on a superficial debt level. The United States, even prior to the onset of the economic crisis in 2007 and 2008, had long been a reckless spender. The cost of maintaining an empire is astronomical and beyond the actual means of any nation. Historically, the collapse of empires has as much or more to do with a collapse in their currency and fiscal system than their military defeat or collapse in war. Also important to note is that these processes are not mutually exclusive, but are, in fact, intricately interconnected.
As empires decline, the world order is increasingly marred in economic crises and international conflict. As the crisis in the economy worsens, international conflict and wars spread. As I have amply documented elsewhere, the United States, since the end of World War II, has been the global hegemon: maintaining the largest military force in the world, and not shying away from using it, as well as running the global monetary system. Since the 1970s, the US dollar has acted as a world reserve currency. Following the collapse of the USSR, the grand imperial strategy of America was to dominate Eurasia and control the world militarily and economically.
Throughout the years of the Bush administration, the imperial strategy was given immense new life under the guise of the “war on terror.” Under this banner, the United States declared war on the world and all who oppose its hegemony. All the while, the administration colluded with the big banks and the Federal Reserve to artificially maintain the economic system. In the latter years of the Bush administration, this illusion began to come tumbling down. Never before in history has such a large nation wages multiple major theatre wars around the world without the public at home being fiscally restrained in some manner, either through higher taxes or interest rates. In fact, it was quite the opposite. The trillion dollar wars plunged the United States deeper into debt.
By 2007, the year that Northern Rock collapsed in the UK, signaling the start of the collapse of 2008, the total debt – domestic, commercial and consumer debt – of the United States stood at a shocking $51 trillion.
As if this debt burden was not enough, considering it would be impossible to ever pay back, the past two years has seen the most expansive and rapid debt expansion ever seen in world history – in the form of stimulus and bailout packages around the world. In July of 2009, it was reported that, “U.S. taxpayers may be on the hook for as much as $23.7 trillion to bolster the economy and bail out financial companies, said Neil Barofsky, special inspector general for the Treasury’s Troubled Asset Relief Program.”
That is worth noting once again: the “bailout” bill implemented under Bush, and fully supported and sponsored by President-elect Obama, has possibly bailed out the financial sector of up to $23.7 trillion. How could this be? After all, the public was told that the “bailout” was $700 billion.
In fact, the fine print in the bailout bill revealed that $700 billion was not a ceiling, as in, $700 billion was not the maximum amount of money that could be injected into the banks; it was the maximum that could be injected into the financial system “at any one time.” Thus, it became a “rolling amount.” It essentially created a back-door loophole for the major global banks, both domestic and foreign, to plunder the nation and loot it entirely. There was no limit to the money banks could get from the Fed. And none of the actions would be subject to review or oversight by Congress or the Judiciary, i.e., the people.
This is why, as Obama became President in late January of 2009, his administration fully implemented the financial coup over the United States. The man who had been responsible for orchestrating the bailout of AIG, the buyout of Bear Stearns as a gift for JP Morgan Chase, and had been elected to run the Federal Reserve Bank of New York by the major global banks in New York (chief among them, JP Morgan Chase), had suddenly become Treasury Secretary under Obama. The Fed, and thus, the banks were now put directly in charge of the looting.
Obama then took on a team of economic advisers that made any astute economic observer flinch in terror. The titans of economic crisis and catastrophe had become the fox in charge of the chicken coop. Those who were instrumental in creating and constructing the economic crises of the previous decades and building the instruments and infrastructure that led to the current crisis, were with Obama, brought in to “solve” the crisis they created. Paul Volcker, former Chairman of the Federal Reserve and architect of the 1980s debt crisis, was now a top economic adviser to Obama. As well as this, Lawrence Summers joined Obama’s economic team, who had previously been instrumental in Bill Clinton’s Treasury Department in dismantling all banking regulations and creating the market for speculation and derivatives which directly led to the current crisis.
In short, the financial oligarchy is in absolute control of the United States government. Concurrently, the military structure of the American empire has firmly established its grip over foreign policy, as America’s wars are expanded into Pakistan, Yemen, and potentially Iran.
Make no mistake, a crisis is coming to America, it is only a question of when, and how severe.
Imperial Decline and the Rise of the New World Order
The decline of the American empire, an inevitable result of its half-century of exerting its political and economic hegemony around the world, is not an isolated event in the global political economy. The US declines concurrently with the rise of what is termed the “New World Order.”
America has been used by powerful western banking and corporate interests as an engine of empire, expanding their influence across the globe. Banks have no armies, so they must control nations; banks have no products, so they must control industries; banks have only money, and interest earned on it. Thus, they must ensure that industry and governments alike borrow money en masse to the point where they are so indebted, they can never emerge. As a result, governments and industries become subservient to the banking interests. Banks achieved this masterful feat through the construction of the global central banking system.
Bankers took control first of Great Britain through the Bank of England, building up the massive might of the British Empire, and spread into the rest of Europe, creating central banks in the major European empires. In the 20th Century, the central bankers took control of the United States through the creation of the Federal Reserve in 1913, prior to the outbreak of World War I.
Following World War I, a restructuring of the world order was undertaken. In part, these actions paved the way to the Great Depression, which struck in 1929. The Great Depression was created as a result of the major banks engaging in speculation, which was actively encouraged and financed by the Federal Reserve and other major central banks.
As a result of the Great Depression, a new institution was formed, the Bank for International Settlements (BIS), based in Basle, Switzerland. As historian Carroll Quigley explained, the BIS was formed to “remedy the decline of London as the world’s financial center by providing a mechanism by which a world with three chief financial centers in London, New York, and Paris could still operate as one.” He explained:
The new order that is being constructed is not one in which there is another single global power, as many commentators suggest China may become, but rather that a multi-polar world order is constructed, in which the global political economy is restructured into a global governance structure: in short, the new world order is to be marked by the construction of a world government.
This is the context in which the solutions to the global economic crisis are being implemented. In April of 2009, the G20 set into motion the plans to form a global currency, which would presumably replace the US dollar as the world reserve currency. This new currency would either be operated through the IMF or the BIS, and would be a reserve currency whose value is determined as a basket of currencies (such as the dollar, yen, euro, etc), which would play off of one another, and whose value would be fixed to the global currency.
This process is being implemented, through long-term planning, simultaneously as we see the further emergence of regional currencies, as not only the Euro, but plans and discussions for other regional currencies are underway in North America, South America, the Gulf states, Africa and East Asia.
A 1988 article in the Economist foretold of a coming global currency by 2018, in which the author wrote that countries would have to give up monetary and economic sovereignty, however:
To create a global currency, and thus a global system of economic governance, the world would have to be plunged into economic and currency crises to force governments to take the necessary actions in moving towards a global currency.
From 1998 onwards, there have been several calls for the formation of a global central bank, and in the midst of the global economic crisis of 2008, renewed calls and actual actions and efforts undertaken by the G20 have sped up the development of a “global Fed” and world currency. A global central bank is being offered as a solution to prevent a future global economic crisis from occurring.
In March of 2008, closely following the collapse of Bear Stearns, a major financial firm released a report stating that, “Financial firms face a ‘new world order’,” and that major banks would become much larger through mergers and acquisitions. There would be a new world order of banking consolidation.
In November of 2008, The National, a prominent United Arab Emirate newspaper, reported on Baron David de Rothschild accompanying Prime Minister Gordon Brown on a visit to the Middle East, although not as a “part of the official party” accompanying Brown. Following an interview with the Baron, it was reported that, “Rothschild shares most people’s view that there is a new world order. In his opinion, banks will deleverage and there will be a new form of global governance.”
In February of 2009, the Times Online reported that a “New world order in banking [is] necessary,” and that, “It is increasingly evident that the world needs a new banking system and that it should not bear much resemblance to the one that has failed so spectacularly.” However, what the article fails to point out is that the ‘new world order in banking’ is to be constructed by the bankers.
This process is going hand-in-hand with the formation of a new world order in global political structures, following the economic trends. As regionalism was spurred by economic initiatives, such as regional trading blocs and currency groupings, the political structure of a regional government followed closely behind. Europe was the first to undertake this initiative, with the formation of a European trading bloc, which became an economic union and eventually a currency union, and which, as a result of the recently passed Lisbon Treaty, is being formally established into a political union.
The new world order consists of the formation of regional governance structures, which are themselves submissive to a global governance structure, both economically and politically.
In the construction of a ‘New World Order’, the capitalist system is under intense reform. Capitalism has, since its inception, altered its nature and forms. In the midst of the current global economic crisis, the construction of the ‘New Capitalism’ is based upon the ‘China model’; that is, ‘Totalitarian Capitalism’.
Governments will no longer stand behind the ‘public relations’ – propagandized illusion of ‘protecting the people’. When an economy collapses, the governments throw away their public obligations, and act for the interests of their private owners. Governments will come to the aid of the powerful banks and corporations, not the people, as “The bourgeoisie resorts to fascism less in response to disturbances in the street than in response to disturbances in their own economic system.” During a large economic crisis:
Those who proclaim the actions of western governments ‘socialist’ are misled, as the ‘solutions’ are of a different nature. Daniel Guerin wrote in Fascism and Big Business about the nature of the fascist economies of Italy and Germany in the lead up to World War II. Guerin wrote of the actions of Italian and German governments to bail out big businesses and banks in an economic crisis:
Fascist economic policy:
The bureaucracy of the fascist state becomes much more powerful in directing the economy, and is advised by the ‘capitalist magnates’, who “become the economic high command – no longer concealed, as previously, but official – of the state. Permanent contact is established between them and the bureaucratic apparatus. They dictate, and the bureaucracy executes.” This is exactly the nature of the Treasury Department and Federal Reserve, most especially since the Obama administration took office.
In November of 2008, the National Intelligence Council (NIC) issued a report in collaboration between all sixteen US intelligence agencies and major international foundations and think tanks, in which they assessed and analyzed general trends in the world until 2025. When it reported on trends in ‘democratization’, discussing the spread and nature of democracy in the world, the report warned:
The warning from Daniel Guerin is vital to understanding this trend: “The bourgeoisie resorts to fascism less in response to disturbances in the street than in response to disturbances in their own economic system.” Totalitarianism is on the rise, as David Lyon wrote:
In 2007, the British Defense Ministry released a report in which they analyzed future trends in the world. It stated in regards to social problems, “The middle classes could become a revolutionary class, taking the role envisaged for the proletariat by Marx.” Interestingly:
The general trend has thus become the reformation of the capitalist system into a system based upon the ‘China model’ of totalitarian capitalism. The capitalist class fear potential revolutionary sentiment among the middle and lower classes of the world. Obama was a well-packaged Wall Street product, sold to the American people and the people of the world on the promise of ‘Hope’ and ‘Change.’ Obama was put in place to pacify resistance.
Prior to Obama becoming President, the American people were becoming united in their opposition against not only the Bush administration, but Congress and the government in general. Both the president and Congress were equally hated; the people were uniting. Since Obama became President, the people have been turned against one another: ‘conservatives’ blame the ‘liberals’ and ‘socialists’ for all the problems, pointing fingers at Obama (who is nothing more than a figurehead), while those on the left point at the Republicans and ‘conservatives’ and Bush, placing all the blame on them. The right defends the Republicans; the left defends Obama. The people have been divided, arguably more so than at any time in recent history.
In dividing the people against each other, those in power have been able to quell resistance against them, and have continued to loot and plunder the nation and people, while using its military might to loot and plunder foreign nations and people. Obama is not to provide hope and change for the American people; his purpose was to provide the illusion of ‘change’ and provide ‘hope’ to the elites in preventing a purposeful and powerful opposition or rebellion among the people. Meanwhile, the government has been preparing for the potentiality of great social and civil unrest following a future collapse or crisis. Instead of coming to the aid of the people, the government is preparing to control and oppress the people.
Could Martial Law Come to America?
Processes undertaken in the American political establishment in previous decades, and rapidly accelerated under the Bush administration and carried on by the Obama administration, have set the course for the imposition of a military government in America. Readily armed with an oppressive state apparatus and backed by the heavy surveillance state apparatus, the ‘Homeland Security’ state is about controlling the population, not protecting them.
In January of 2006, KBR, a subsidiary of the then-Vice President Cheney’s former corporation, Halliburton, received a contract from the Department of Homeland Security:
Put simply, the contract is to develop a system of ‘internment camps’ inside the United States to be used in times of ‘emergency’. Further, as Peter Dale Scott revealed in his book, The Road to 9/11:
As Scott previously wrote, “the contract evoked ominous memories of Oliver North’s controversial Rex-84 ‘readiness exercise’ in 1984. This called for the Federal Emergency Management Agency (FEMA) to round up and detain 400,000 imaginary ‘refugees,’ in the context of ‘uncontrolled population movements’ over the Mexican border into the United States.” However, it was to be a cover for the rounding up of ‘subversives’ and ‘dissenters’. Daniel Ellsberg, who leaked the ‘Pentagon papers’ in 1971, stated that, “Almost certainly this [new contract] is preparation for a roundup after the next 9/11 for Mid-Easterners, Muslims and possibly dissenters.”
In February of 2008, an article in the San Francisco Chronicle, co-authored by a former US Congressman, reported that, “Beginning in 1999, the government has entered into a series of single-bid contracts with Halliburton subsidiary Kellogg, Brown and Root (KBR) to build detention camps at undisclosed locations within the United States. The government has also contracted with several companies to build thousands of railcars, some reportedly equipped with shackles, ostensibly to transport detainees.”
Further, in February of 2008, the Vancouver Sun reported that:
Commenting on the Military Commissions Act of 2006, Yale law and political science professor Bruce Ackerman wrote in the Los Angeles Times that the legislation “authorizes the president to seize American citizens as enemy combatants, even if they have never left the United States. And once thrown into military prison, they cannot expect a trial by their peers or any other of the normal protections of the Bill of Rights.” Further, it states that the legislation “grants the president enormous power over citizens and legal residents. They can be designated as enemy combatants if they have contributed money to a Middle Eastern charity, and they can be held indefinitely in a military prison.” Not only that, but, “ordinary Americans would be required to defend themselves before a military tribunal without the constitutional guarantees provided in criminal trials.” Startlingly, “Legal residents who aren’t citizens are treated even more harshly. The bill entirely cuts off their access to federal habeas corpus, leaving them at the mercy of the president’s suspicions.”
Senator Patrick Leahey made a statement on February 2007 in which he discussed the John Warner Defense Authorization Act of 2007, saying:
He added that, “posse comitatus [is] the legal doctrine that bars the use of the military for law enforcement directed at the American people here at home.” The Bill is an amendment to the Insurrection Act, of which Leahey further commented:
On May 9, 2007, the White House issued a press release about the National Security Presidential Directive (NSPD) 51, also known as the “National Security and Homeland Security Presidential Directive.” This directive:
The document defines “catastrophic emergency” as, “any incident, regardless of location, that results in extraordinary levels of mass casualties, damage, or disruption severely affecting the U.S. population, infrastructure, environment, economy, or government functions.” It explains “Continuity of Government” (COG), as “a coordinated effort within the Federal Government’s executive branch to ensure that National Essential Functions continue to be performed during a Catastrophic Emergency.” [emphasis added]
The directive states that, “The President shall lead the activities of the Federal Government for ensuring constitutional government. In order to advise and assist the President in that function, the Assistant to the President for Homeland Security and Counterterrorism (APHS/CT) is hereby designated as the National Continuity Coordinator.”
Essentially, in time of a “catastrophic emergency”, the President takes over total control of the executive, legislative and judicial branches of government in order to secure “continuity”. In essence, the Presidency would become an “Executive Dictatorship”.
In late September of 2008, in the midst of the financial crisis, the Army Times, an official media outlet of the Pentagon, reported that, “Helping ‘people at home’ may become a permanent part of the active Army,” as the 3rd Infantry Division’s 1st Brigade Combat Team, having spent years patrolling Iraq, are now “training for the same mission — with a twist — at home.” Further:
None of the authorizations, bills, executive orders, or contracts related to the declaration of marital law and suspension of democracy in the event of an ‘emergency’ have been repealed by the Obama administration.
In fact, as the New York Times revealed in July 2009, the Obama administration has decidedly left in place the Bush administration decisions regarding the government response to a national emergency in ‘Continuity of Government’ (COG) plans in establishing a ‘shadow government’:
The Obama administration announced that their continuity plans were ‘settled’ and they “drew no distance between their own policies and those left behind by the Bush administration.” In July of 2009, it was also reported on moves by the Obama administration to implement a system of ‘preventive detention’. With this, any semblance of democratic accountability and freedom have been utterly gutted and disemboweled; the Republic is officially dead:
Society, and with it, any remaining ‘democracy’ is being closed down. In this economic crisis, as Daniel Guerin warned decades ago, the financial oligarchy have chosen to ‘throw democracy overboard’, and have opted for the other option: totalitarian capitalism; fascism.
The current crisis is not merely a failure of the US housing bubble, that is but a symptom of a much wider and far-reaching problem. The nations of the world are mired in exorbitant debt loads, as the sovereign debt crisis spreads across the globe, entire economies will crumble, and currencies will collapse while the banks consolidate and grow. The result will be to properly implement and construct the apparatus of a global government structure. A central facet of this is the formation of a global central bank and a global currency.
The people of the world have been lulled into a false sense of security and complacency, living under the illusion of an economic recovery. The fact remains: it is only an illusion, and eventually, it will come tumbling down. The people have been conned into handing their governments over to the banks, and the banks have been looting and pillaging the treasuries and wealth of nations, and all the while, and making the people pay for it.
There never was a story of more woe, than that of human kind, and their monied foe.
Truly, the people of the world do need a new world order, but not one determined and constructed by and for those who have created the past failed world orders. It must be a world order directed and determined by the people of the world, not the powerful. But to do this, the people must take back the power.
The way to achieving a stable economy is along the path of peace. War and economic crises play off of one another, and are systematically linked. Imperialism is the driver of this system, and behind it, the banking establishment as the financier.
Peace is the only way forward, in both political and economic realms. Peace is the pre-requisite for social sustainability and for a truly great civilization.
The people of the world must pursue and work for peace and justice on a global scale: economically, politically, socially, scientifically, artistically, and personally. It’s asking a lot, but it’s our only option. We need to have ‘hope’, a word often strewn around with little intent to the point where it has come to represent failed expectations. We need hope in ourselves, in our ability to throw off the shackles that bind us and in our diversity and creativity construct a new world that will benefit all.
No one knows what this world would look like, or how exactly to get there, least of all myself. What we do know is what it doesn’t look like, and what road to steer clear of. The time has come to retake our rightful place as the commanders of our own lives. It must be freedom for all, or freedom for none. This is our world, and we have been given the gift of the human mind and critical thought, which no other living being can rightfully boast; what a shame it would be to waste it.
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Global War and Dying Democracy: The Revolution of the Elites
Global Power and Global Government: Part 5
Global Research, August 19, 2009
This article is the 5th and final part in the series, “Global Power and Global Government,” published by Global Research.
Part 1: Global Power and Global Government: Evolution and Revolution of the Central Banking System
The National Intelligence Council report, Global Trends 2025, stated that many governments will be “expanding domestic security forces, surveillance capabilities, and the employment of special operations-type forces.” Counterterrorism measures will increasingly “involve urban operations as a result of greater urbanization,” and governments “may increasingly erect barricades and fences around their territories to inhibit access. Gated communities will continue to spring up within many societies as elites seek to insulate themselves from domestic threats.” Essentially, expect a continued move towards and internationalization of domestic police state measures to control populations.
The nature of totalitarianism is such that it is, “by nature (or rather by definition), a global project that cannot be fully accomplished in just one community or one country. Being fuelled by the need to suppress any alternative orders and ideas, it has no natural limits and is bound to aim at totally dominating everything and everyone.” David Lyon explained in Theorizing Surveillance, that, “The ultimate feature of the totalitarian domination is the absence of exit, which can be achieved temporarily by closing borders, but permanently only by a truly global reach that would render the very notion of exit meaningless. This in itself justifies questions about the totalitarian potential of globalization.” The author raises the important question, “Is abolition of borders intrinsically (morally) good, because they symbolize barriers that needlessly separate and exclude people, or are they potential lines of resistance, refuge and difference that may save us from the totalitarian abyss?” Further, “if globalization undermines the tested, state-based models of democracy, the world may be vulnerable to a global totalitarian etatization.”
Russia Today, a major Russian media source, published an article by the Strategic Cultural Fund, in which it stated that, “the current crisis is being used as a mechanism for provoking some deepening social upheavals that would make mankind – plunged as it is already into chaos and frightened by the ghost of an all-out violence – urge of its own free will that a ‘supranational’ arbitrator with dictatorial powers intervene into the world affairs.” The author pointed out that, “The events are following the same path as the Great Depression in 1929-1933: a financial crisis, an economic recession, social conflicts, establishing totalitarian dictatorships, inciting a war to concentrate power, and capital in the hands of a narrow circle.” However, as the author noted, this time around, it’s different, as this “is the final stage in the ‘global control’ strategy, where a decisive blow should be dealt to the national state sovereignty institution, followed by a transition to a system of private power of transnational elites.”
The author explained that a global police state is forming, as “Intelligence activities, trade of war, penitentiary system, and information control are passing into private hands. This is done through so-called outsourcing, a relatively new business phenomenon that consists of trusting certain functions to private firms that act as contractors and relying on individuals outside an organization to solve its internal tasks.” Further, “he biggest achievements have been made over the last few years in the area of establishing electronic control over people’s identities, carried out under the pretext of counterterrorism. Currently, the FBI is creating the world’s biggest database of biometric indexes (fingerprints, retina scans, face shapes, scar shapes and allocation, speech and gesture patterns, etc.) that now contains 55 million fingerprints.”
Further, the prospects of war are increasing with the deepening of the economic crisis. It must be noted that historically, as empires are in decline, international violence increases. The scope of a global depression and the undertaking of restructuring the entire global political economy may also require and produce a global war to serve as a catalyst for formation of the New World Order.
The National Intelligence Council document, Global Trends 2025, stated that there is a likely increase in the risk of a nuclear war, or in the very least, the use of a nuclear weapon by 2025, as, “Ongoing low-intensity clashes between India and Pakistan continue to raise the specter that such events could escalate to a broader conflict between those nuclear powers.”
The report also predicts a resurgence of mercantilist foreign policies of the great powers in competition for resources, which “could lead to interstate conflicts if government leaders deem assured access to energy resources to be essential to maintaining domestic stability and the survival of their regime.” In particular, “Central Asia has become an area of intense international competition for access to energy.”
Further, “Sub-Saharan Africa will remain the most vulnerable region on Earth in terms of economic challenges, population stresses, civil conflict, and political instability. The weakness of states and troubled relations between states and societies probably will slow major improvements in the region’s prospects over the next 20 years unless there is sustained international engagement and, at times, intervention. Southern Africa will continue to be the most stable and promising sub-region politically and economically.” This seems to suggest that there will be many more cases of “humanitarian intervention,” likely under the auspices of a Western dominated international organization, such as the UN. There will also be a democratic “backslide” in the most populous African countries, and that, “the region will be vulnerable to civil conflict and complex forms of interstate conflict—with militaries fragmented along ethnic or other divides, limited control of border areas, and insurgents and criminal groups preying on unarmed civilians in neighboring countries. Central Africa contains the most troubling of these cases, including Congo-Kinshasa, Congo-Brazzaville, Central African Republic, and Chad.”
In 2007, the British Defense Ministry released a report in which they analyzed future trends in the world. Among many of the things predicted within 30 years are: “Information chips implanted in the brain. Electromagnetic pulse weapons. The middle classes becoming revolutionary, taking on the role of Marx’s proletariat. The population of countries in the Middle East increasing by 132%, while Europe’s drops as fertility falls. ‘Flashmobs’ – groups rapidly mobilised by criminal gangs or terrorists groups.”
It further reported that, “The development of neutron weapons which destroy living organisms but not buildings ‘might make a weapon of choice for extreme ethnic cleansing in an increasingly populated world’. The use of unmanned weapons platforms would enable the ‘application of lethal force without human intervention, raising consequential legal and ethical issues’. The ‘explicit use’ of chemical, biological, radiological, and nuclear weapons and devices delivered by unmanned vehicles or missiles.” Further, “an implantable ‘information chip’ could be wired directly to the brain. A growing pervasiveness of information communications technology will enable states, terrorists or criminals, to mobilise ‘flashmobs’, challenging security forces to match this potential agility coupled with an ability to concentrate forces quickly in a small area.”
In regards to social problems, “The middle classes could become a revolutionary class, taking the role envisaged for the proletariat by Marx.” Interestingly, “The thesis is based on a growing gap between the middle classes and the super-rich on one hand and an urban under-class threatening social order: ‘The world’s middle classes might unite, using access to knowledge, resources and skills to shape transnational processes in their own class interest’. Marxism could also be revived, it says, because of global inequality. An increased trend towards moral relativism and pragmatic values will encourage people to seek the ‘sanctuary provided by more rigid belief systems, including religious orthodoxy and doctrinaire political ideologies, such as popularism and Marxism’.”
The report also forecasts that, “Globalisation may lead to levels of international integration that effectively bring inter-state warfare to an end. But it may lead to “inter-communal conflict” – communities with shared interests transcending national boundaries and resorting to the use of violence.”
RAND corporation, a Pentagon-linked powerhouse think tank, connected to the Blderberg Group, Trilateral Commission and Council on Foreign Relations, came up with a solution to the financial crisis in October of 2008: for the United States to start a major war. Chinese media reported that RAND “presented a shocking proposal to the Pentagon in which it lobbied for a war to be started with a major foreign power in an attempt to stimulate the American economy and prevent a recession.” Further, “the target country would have to be a major influential power,” and Chinese media “speculated that the target of the new war would probably be China or Russia, but that it could also be Iran or another middle eastern country.”
Gerald Celente, the CEO of Trends Research Institute, the most highly respected trend forecaster in the United States, has been sounding the alarm over the trends to come in the next few years. Having previously predicted the 1987 stock market crash, the fall of the Soviet Union, the dot-com bubble burst, and the 2008 housing bubble burst, these forecasts should not be taken lightly.
Celente told Fox News that, “by 2012 America will become an undeveloped nation, that there will be a revolution marked by food riots, squatter rebellions, tax revolts and job marches, and that holidays will be more about obtaining food, not gifts.” He stated that this will be “worse than the great depression.” In another interview, Celente stated that, “There will be a revolution in this country,” and, “It’s not going to come yet, but it’s going to come down the line and we’re going to see a third party and this was the catalyst for it: the takeover of Washington, D. C., in broad daylight by Wall Street in this bloodless coup. And it will happen as conditions continue to worsen.” He further explained, “The first thing to do is organize with tax revolts. That’s going to be the big one because people can’t afford to pay more school tax, property tax, any kind of tax. You’re going to start seeing those kinds of protests start to develop.”
In June of 2009, Gerald Celente reported that, “The measures taken by successive governments to save the politically corrupt, morally bankrupt, physically decrepit [American] giant from collapse have served to only hasten its demise. While the decline has been decades in the making, the acceleration of ruinous policies under the current Administration is leading the United States — and much of the world — to the point of no return.” This coming catastrophe, which Celente refers to as “Obamageddon,” will become the “Greatest Depression.”
In May of 2009, Celente forecasted that a major issue is the “bailout bubble” which is bigger than the dot-com bubble or the real estate bubble that preceded it, and is made up of 12.8 trillion dollars. He states that with the bursting of this bubble, the next trend would be what he calls “fascism light” and that it will be followed by war. He stated that, “this bubble will be the last one. After the final blowout of the bailout bubble, we are concerned that the government will take the nation into war. This is a historical precedent that’s been done over and over again.” He elaborated, “So, it’s not the dollar that will survive. We may not even survive. Look at the German mess after WWI. It gave rise to Fascism and WWII. The next war will be fought with weapons of mass destruction.”
The Imperial Project
War should not be understood as a recent phenomenon in regards to accelerating capitalism through expansion and transition, as this has been a continual theme throughout the history of capitalism. The notion of “surplus imperialism” is what describes the function and role of war and militarism within capitalism. The concept is built around the function of “constant war.”
Ellen Wood explains the notion of ‘surplus imperialism,’ in that, “Boundless domination of a global economy, and of the multiple states that administer it, requires military action without end, in purpose or time.” Further, “Imperial dominance in a global capitalist economy requires a delicate and contradictory balance between suppressing competition and maintaining conditions in competing economies that generate markets and profit. This is one of the most fundamental contradictions of the new world order.”
Shortly after George Bush Sr. declared a “new world order coming into view,” in 1991, the US strategic community began setting forth a new strategy for the United States in the world. This first emerged in 1992, with the Defense Planning Guidance. The New York Times broke the story, reporting that, “In a broad new policy statement that is in its final drafting phase, the Defense Department asserts that America’s political and military mission in the post-cold-war era will be to ensure that no rival superpower is allowed to emerge in Western Europe, Asia or the territories of the former Soviet Union,” and that, “The classified document makes the case for a world dominated by one superpower whose position can be perpetuated by constructive behavior and sufficient military might to deter any nation or group of nations from challenging American primacy.”
The main figure that drafted this policy was the Pentagon’s Under Secretary for Policy Paul Wolfowitz, who would later become Deputy Secretary of Defense in the George W. Bush administration, as well as President of the World Bank. Wolfowitz is also a member of the Bilderberg Group, the Trilateral Commission, the Council on Foreign Relations, and is currently a scholar at the American Enterprise Institute, a neo-conservative think tank.
The document places emphasis “on using military force, if necessary, to prevent the proliferation of nuclear weapons and other weapons of mass destruction in such countries as North Korea, Iraq, some of the successor republics to the Soviet Union and in Europe,” and that, “What is most important, it says, is ‘the sense that the world order is ultimately backed by the U.S.’ and ‘the United States should be postured to act independently when collective action cannot be orchestrated’ or in a crisis that demands quick response.” Further, “the new draft sketches a world in which there is one dominant military power whose leaders ‘must maintain the mechanisms for deterring potential competitors from even aspiring to a larger regional or global role’.” Among the necessary challenges to American supremacy, the document “postulated regional wars against Iraq and North Korea,” and identified China and Russia as its major threats. It further “suggests that the United States could also consider extending to Eastern and Central European nations security commitments similar to those extended to Saudi Arabia, Kuwait and other Arab states along the Persian Gulf.” The Secretary of Defense at the time of this document’s writing was none other than Dick Cheney.
When George Bush Sr. was replaced by Bill Clinton in 1993, the neo-conservative hawks in the Bush administration formed a think tank called the Project for the New American Century, or PNAC. In 2000, they published a report called, Rebuilding America’s Defenses: Strategy, Forces, and Resources for a New Century. Building upon the Defense Policy Guidance document, they state that, “the United States must retain sufficient forces able to rapidly deploy and win multiple simultaneous large-scale wars,” that there is “need to retain sufficient combat forces to fight and win, multiple, nearly simultaneous major theatre wars,” and that “the Pentagon needs to begin to calculate the force necessary to protect, independently, US interests in Europe, East Asia and the Gulf at all times.” Further, “the United States has for decades sought to play a more permanent role in Gulf regional security. While the unresolved conflict with Iraq provides the immediate justification, the need for a substantial American force presence in the Gulf transcends the issue of the regime of Saddam Hussein.” In describing the need for massive increases in military spending, rapidly expanding the armed forces and “dealing” with threats such as Iraq, North Korea and Iran, they state, “Further, the process of transformation, even if it brings revolutionary change, is likely to be a long one, absent some catastrophic and catalyzing event – like a new Pearl Harbor.”
Zbigniew Brzezinski, co-founder of the Trilateral Commission with David Rockefeller, former National Security Adviser and key foreign policy architect in Jimmy Carter’s administration, also wrote a book on American geostrategy. Brzezinski is also a member of the Council on Foreign Relations and the Bilderberg Group, and has also been a board member of Amnesty International, the Atlantic Council and the National Endowment for Democracy. Currently, he is a trustee and counselor at the Center for Strategic and International Studies (CSIS), a major US policy think tank.
In his 1997 book, The Grand Chessboard, Brzezinski outlined a strategy for America in the world. He wrote, “For America, the chief geopolitical prize is Eurasia. For half a millennium, world affairs were dominated by Eurasian powers and peoples who fought with one another for regional domination and reached out for global power.” Further, “how America ‘manages’ Eurasia is critical. Eurasia is the globe’s largest continent and is geopolitically axial. A power that dominates Eurasia would control two of the world’s three most advanced and economically productive regions. A mere glance at the map also suggests that control over Eurasia would almost automatically entail African subordination.” Brzezinski explained that, “the pursuit of power is not a goal that commands popular passion, except in conditions of a sudden threat or challenge to the public’s sense of domestic well-being. The economic self-denial (that is, defense spending) and the human sacrifice (casualties even among professional soldiers) required in the effort are uncongenial to democratic instincts. Democracy is inimical to imperial mobilization.” Brzezinski also outlines Russia and China, in cooperation with Iran and possibly Pakistan, as the most significant coalition that could challenge US hegemony.
With the George W. Bush administration, the neo-conservative war hawks put into action the plans set out in their American imperial strategic documents. This made up the Bush doctrine, which called for “a unilateral and exclusive right to preemptive attack, any time, anywhere, unfettered by any international agreements, to ensure that ‘[o]ur forces will be strong enough to dissuade potential adversaries from pursuing a military build-up in hope of surpassing, or equaling, the power of the United States’.”
In 2000, the Pentagon released a document called Joint Vision 2020, which outlined a project to achieve what they termed, “Full Spectrum Dominance,” as the blueprint for the Department of Defense in the future. “Full-spectrum dominance means the ability of U.S. forces, operating alone or with allies, to defeat any adversary and control any situation across the range of military operations.” The report “addresses full-spectrum dominance across the range of conflicts from nuclear war to major theater wars to smaller-scale contingencies. It also addresses amorphous situations like peacekeeping and noncombat humanitarian relief.” Further, “The development of a global information grid will provide the environment for decision superiority.”
The War on Terrorism, as a war with invisible enemies and borderless boundaries, a truly global war, marks a major stage in the evolution of the constant war “surplus imperialism” of the American empire. The US military, while being used as a vehicle for surplus imperialism; is also creating and maintaining and expanding NATO. NATO is expanding its role in the world. The wars in Yugoslavia following the collapse of the Soviet Union were used to legitimize NATO’s continued existence, which was created to have an alliance against the USSR. When the USSR vanished, so too did NATO’s purpose, until it found a new calling: becoming a global policeman. NATO has undergone its first major war in Afghanistan and its expansion into Eastern Europe is enclosing Russia and China.
Ivo Daalder, the US representative to NATO, also a Senior Fellow at the Brookings Institution and member of the Council on Foreign Relations, wrote an article for Foreign Affairs in which he advocated for a “global NATO” to “address the global challenges of the day.” In April of 2009, NATO began to review its Strategic Concept “in order to stay relevant in a changing security environment,” and that, “The leaders envisage cyber-attacks, energy security and climate change as new threats to NATO, which would mean big changes in NATO’s future operations.” Since 2008, NATO has been re-imagining its strategy and moving to a doctrine of advocating for pre-emptive nuclear warfare.
As George Orwell wrote in 1984, “The war is not meant to be won, it is meant to be continuous. Hierarchical society is only possible on the basis of poverty and ignorance. This new version is the past and no different past can ever have existed. In principle the war effort is always planned to keep society on the brink of starvation. The war is waged by the ruling group against its own subjects and its object is not the victory over either Eurasia or East Asia, but to keep the very structure of society intact.”
The Revolution of the New World Order
The new system being formed is not one based upon any notion of competition or “free markets” or “socialist morality”, but is, instead a system based upon consolidation of power and wealth; thus, the fewer, the better; one government, one central bank, one army, one currency, one authority, one ruler. This is a much more “efficient” and “controllable” system, and thus requires a much smaller population or class to run it, as well as a much smaller population to serve it. Also, with such a system, a smaller global population would be ideal for the rulers, for it limits their risk, in terms of revolt, uprising, and revolution, and created a more malleable and manageable population. In this new capitalist system, the end goal is not profit, but power. In a sense, this is how the whole capitalist system has functioned, as profit has always acted as a means and lever to achieve power. Power itself, was the goal, profit was merely the means of achieving such a goal.
Shortly following the origins of the capitalist system, central banking emerged. It was through the central banking system that the most powerful figures and individuals in the world were able to consolidate power, controlling both industry and governments. Through central banks, these figures would collapse economies, destroying industry and thus, profits; bankrupt countries and collapse their political structures, destroying a base for the exercise of power; but in doing so, they would consolidate their authority over these governments and industry, wiping out competition and eliminating dissent. It is these individuals who have played the greatest roles in shaping and reshaping the capitalist system, and are the main figures in the current reorganization of world order.
However, such is the nature of individuals whose lives revolve around the acquisition and exercise of power. Like the saying goes, “Power corrupts, and absolute power corrupts, absolutely.” Those who are driven by the lust for power often eliminate and remove all of those who helped them reach such a position. Hitler undertook the Night of Long Knives, in which a series of political executions were carried out, targeting prominent figures of the SA, who helped Hitler rise to power. Stalin similarly, also purged the Soviet Union of those who helped him rise to power.
Power alters the psychology of the individual that holds it. It is an extremely lonely condition, in which, once power is achieved, and with no more power to gain, the obsession turns to the preservation of power, and with that, paranoia of losing it. This is why those that assist the powerful in gaining more power are doomed to a fate that is similar or worse than those who fight against such a power. This, ultimately, is why it is futile to join forces with such systems of power, or ally oneself with such powerful figures.
Power is a cancer; it eats away at its host. The greater the power held, the more cancerous it is, the more malignant it becomes. The less power held by individuals, the less chance there is for growth of this cancer, or for it to become malignant. Power must be shared among all people, for the risk carried thus becomes a risk to all, and there is a greater degree of cooperation, support, and there is a more efficient and effective means through which everyone can act as a check against the abuse of power.
Theoretical Foundations of Global Revolution
Currently, we are witnessing, in the wake of the massive economic crisis, a revolution in the global political economy. This revolution, like all revolutions, is not simply a top-down or a bottom-up revolution. Historically, revolutions are driven by a combination of both the grassroots and the elite. Often, this materializes in clashes between social groups, such as with the American Revolution. Although, the American Revolution itself was primarily waged by the American landed elite against the foreign imperial elite of Great Britain. The French Revolution was the combination of the banking and aristocratic elite co-opting, manipulating and controlling the grassroots opposition to the established order. The Russian Revolution, also being able to see rising social tensions among the lower classes, was co-opted by an international banking elite.
Currently, the transnational elite are very aware of the increasing social tensions among the worlds majority. As the crisis deepens, tensions will rise, and the chances of revolt and revolution from below greatly increase. Governments everywhere, particularly in the Western industrialized nations are building massive police states to monitor and control populations, and are actively preparing for martial law and military rule in the event of such a situation unfolding.
However, the transnational elite are undertaking their own revolution from above. This revolution is encompassing the restructuring of the global political economy through their orchestrated economic crisis.
Neo-Gramscian political economic theory can help us understand how this revolution has been and is currently being undertaken. Neo-Gramscian IPE (International Political Economy) emerged in the 1980s within the critical camp of theory. Largely based off of the Italian Marxist writer, Antonio Gramsci, it places a great focus on analysis of global power, order and structure. There has been much analysis within Neo-Gramscian theory on the nature and structure of the transnational capitalist class. Among the analysis of transnational classes, Neo-Gramscian theory also places emphasis on the notions of hegemony and resistance, or counter-hegemony.
The Gramscian notion of hegemony differs from other perspectives in, particularly mainstream, Global Political Economy. With the Gramscian concept of hegemony, it does not focus simply on the use of state power at exerting power, but rather defines hegemony as a system of power that is dual; it requires both coercion and consent. Consent is key, as it implies the active consent of “subaltern” or “subordinate” groups (in other words, the great majority of the world’s people), to being submissive to the system itself. This hegemony is built around the notion of conformity; thus, conformity is an active consent to hegemony. By conforming, one is submitting to the system and their place within it. This is also an internationalizing concept, in that this hegemony is not nation-based, but transnational, and backed by the threat of coercive force.
In discussing resistance to hegemony, or counter-hegemony, Gramsci identified two forms of resistance; the war of position and the war of movement. Robert Cox, the most well known Neo-Gramscian theorist, analyzed how Gramsci defined these notions by comparing the experiences of Russia with the Bolshevik Revolution as compared with experiences in Western Europe. As Cox explained, “The basic difference between Russia and Western Europe was in the relative strengths of state and civil society. In Russia, the administrative and coercive apparatus of the state was formidable but proved to be vulnerable, while civil society was undeveloped. A relatively small working class led by a disciplined avant-garde was able to overwhelm the state in a war of movement and met no effective resistance from the rest of civil society.”
So a war of movement was characterized by a small vanguard seizing power and overthrowing the state. “In Western Europe, by contrast, civil society, under bourgeois hegemony, was much more fully developed and took manifold forms. A war of movement might conceivably, in conditions of exceptional upheaval, enable a revolutionary vanguard to seize control of the state apparatus; but because of the resiliency of civil society such an exploit would in the long run be doomed to failure.” As Gramsci himself noted, “In Russia, the State was everything, civil society was primordial and gelatinous; in the West, there was a proper relation between State and civil society, and when the State trembled a sturdy structure of civil society was at once revealed.”
In this instance, a war of movement was impossible to achieve in Western Europe, and thus, “The alternative strategy is the war of position which slowly builds up the strength of the social foundations of a new state. In Western Europe, the struggle had to be won in civil society before an assault on the state could achieve success.” This undertaking is massive to say the least, as it implies as a necessity, “creating alternative institutions and alternative intellectual resources within existing society and building bridges between workers and other subordinate classes. It means actively building counter-hegemony within an established hegemony while resisting the pressures and temptations to relapse into pursuit of incremental gains for subaltern groups within the framework of bourgeois hegemony.” In other words, it is a “long-range revolutionary strategy,” as compared to social democracy, which is “a policy of making gains within the established order.”
However, I wish to take the concept and notion of the “war of position” and re-imagine it, not as a means of counter-hegemony, but as a means of supra-hegemony. This is not a war of position on the part of a counter-hegemonic group (grassroots opposition, etc), but is rather a war of position on the part of an embedded international elite, or supra-hegemonic group. Supra is Latin for “above,” which implies that this group is above hegemony, just as supra-national institutions (such as the European Union) are above nations. This is the elite of the elite, beyond national elites, and composing the top tier of the hierarchy within the transnational superclass. In terms of composition, this group is the highly concentrated international bankers, the dynastic banking families such as the Rothschilds and Rockefellers, who control the major banking institutions of the world, which in turn, control the international central banking system. Their centralized power is exemplified in the Bank for International Settlements.
I will refer to this group as the Global Cartel. This Cartel has usurped global authority and power through an incremental, multi-century spanning war of position. The Peace of Westphalia, signed in 1648, constituting two separate treaties, created the notion of the nation state and state sovereignty within Western Europe. Feudalism dominated Europe from the medieval period through the 16th century, and was slowly replaced by the emergence of Capitalism. Major European empires had, since the 15th century, been pursuing empire building, such as with the trans-Atlantic slave trade and expansion into the Americas. This formed the first truly global economy. The empires worked under and in service to the monarchies that oversaw them.
It was with the founding of the Bank of England in 1694 that a European group of bankers overtook one of the major European empires. Great Britain then became the dominant empire, experiencing the Industrial Revolution prior to any other nation, and became a global hegemon. With the French Revolution, these European bankers took over another major empire through the establishment of the Bank of France, and then financed and profited off of all sides of every major war, and expanded imperial reach.
Through the expansion of the central banking system, a highly concentrated group of European bankers were able to overtake the major nations of the world. The entire history of the United States is the story of a Republic’s struggle and battle against a central bank. Finally, the bankers usurped monetary authority with the establishment of the Federal Reserve, and built up and created the American empire.
It was in the 20th century that the war of position of the cartel is most apparent. As the world globalized, so too did the war of position. The major banking dynasties founded powerful philanthropies, such as the Carnegie Endowment and the Rockefeller and Ford Foundations. These organizations shaped civil society in the United States and set their sights internationally in scope. Through the establishment of think tanks like the Royal Institute of International Affairs (RIIA) in Britain and the Council on Foreign Relations (CFR) in the United States, this cartel was able to bring in and centralize the intellectual, academic, strategic, military, economic and political establishments under the cartel’s influence. This was expanded by the cartel through organizations such as the Bilderberg Group and the Trilateral Commission.
Centralizing and controlling debate and discussion within these vital socio-political-economic realms was a vital component of institutionalizing hegemony, as Gramsci understands it, in that the cartel used their monetary and financial hegemony (controlling the printing and value of currencies) to stimulate an active consent among the socio-political-economic elite. National elites consented to the hegemony of the cartel, whose coercive hegemony was in their ability to destroy a national economy through monetary policy.
This hegemony, both coercive and consenting, based within the elite class themselves, facilitated the war of position of the cartel to advance their interests and proceed with their incremental revolution. The aim of this cartel, like many tyrants and power-hungry people before it, was world domination. Bankers command no army, lead no nation, and motivate no people. Their influence lies in co-opting the commanders, controlling the leaders, and manipulating motivation.
Thus, it was of absolute necessity for the cartel to undertake their ultimate aim of world domination and world government through a war of position, as no person would fight for, surrender a nation to, or be motivated to help any banker achieve their own selfish goals. Rather, they had to slowly usurp power incrementally; control money, buy politicians, own economies, build empires, engineer wars, mold civil society, control their opposition, overtake educational institutions and ultimately, control thought.
As George Orwell wrote, “Power is not a means, it is an end. One does not establish a dictatorship in order to safeguard a revolution; one makes the revolution in order to establish the dictatorship. The object of persecution is persecution. The object of torture is torture. The object of power is power.”
The more people that think for themselves; the worse it is for the cartel. People, free thinking individuals, are the greatest threat to this cartel and their war of position. That is why the answer and solution to exposing the supra-hegemonic war of position, challenging and triumphing over the New World Order, lies in the free-thinking individual. The challenge is global and globalized; the solution is local and localized. The problem is conformity and controlled thought; the answer is individuality and free thought.
While humanity is faced with such monumental crises the likes of which in scope and size, we have never before faced, so too, are we faced with the greatest opportunities for an ultimate change in the right direction. While people are controlled and manipulated through crisis and disorder, so too can people be awoken to seeing the necessity of knowledge and critical thought. When one’s life is thrown into disorder and chaos, suddenly observation, information and knowledge become important in understanding how one got into that situation, and how one can escape it.
With this in mind, while facing the potential for the greatest struggle humanity has ever faced, so too are we facing the greatest potential for a new Enlightenment or a new Renaissance; an age of new thought, new life, new potential, and peace. No matter how much elites think they control all things, life has a way of making one realize that there are things outside the control of people. With every action, comes an equal and opposite reaction.
We may not reach a new age of thinking and peace before we enter into a new age of oppression and war. In fact, the former may not be possible without the latter. People must awake from their slumber; their immersion in consumerist society and pop culture distractions, and awake to both the malevolence of world systems and the wonder of life and its potential. Through crisis, comes control; through control, comes power; through power, comes resistance; through resistance, comes thinking; through thinking, comes potential; through potential, comes peace.
We may very well be entering into the most oppressive and destructive order the world has yet seen, but from its ruins and ashes, which are as inevitable as the tides and as sure as the sun rises, we may see the rise of a truly peaceful world order; in which we see the triumphs of individualism merge with the interests of the majority; a people’s world order of peace for all. We must maintain, as Antonio Gramsci once wrote, “Pessimism of the intellect, optimism of the will.”
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 Ibid. Page 8
 Ibid. Page 9
 Ibid. Page 14
 Ibid. Page 51
 Brzezinski, Zbigniew. The Grand Chessboard: American Primacy and its Geostrategic Imperatives. Basic Books, 1997: Pages 30-31
 Ibid. Page 36
 Ellen Wood, Empire of Capital. Verso, 2003: page 160
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 Robert W. Cox, Gramsci, Hegemony and International Relations: An Essay in Method. Millennium: Journal of International Studies, Vol. 12, No. 2: pages 164-165
 Robert W. Cox, Gramsci, Hegemony and International Relations: An Essay in Method. Millennium: Journal of International Studies, Vol. 12, No. 2: page 165
 Robert W. Cox, Gramsci, Hegemony and International Relations: An Essay in Method. Millennium: Journal of International Studies, Vol. 12, No. 2: page 165