How the Economy Was Lost: The War of the Worlds (Counterpunch) Read Free

the Bank of France acknowledged that the real values of repackaged debt instruments are unknown to both buyers and sellers. Many of the derivatives have never been priced by the market.
    Think of derivatives as a mutual fund of debt, a combination of good mortgages, subprime mortgages, credit card debt, auto loans, and who knows what. Not even institutional buyers know what they are buying or how to evaluate it. Arcane pricing models are used to produce values, and pay incentives bias the assigned values upward.
    Richistan wealth may prove artificial and crash, bringing an end to the new Gilded Age. But the plight of the rich in distress will never compare to the decimation of America’s middle class. The offshoring of American jobs has destroyed opportunities for generations of Americans.
    Never before in our history has the elite had such control over the government. To run for national office requires many millions of dollars, the raising of which puts “our” elected representatives and “our” president himself at the beck and call of the few moneyed interests that financed the campaigns.
    America as the land of opportunity has passed away into history.
    August 2, 2007

Chapter 2: Greenspan and the Economy of Greed
    F ormer Fed Chairman Alan Greenspan’s memoir has put him in the news these last few days. He has upset Republicans with his comments on various presidents, with George W. Bush getting the brickbats and Clinton the praise, and by saying that Bush’s invasion of Iraq was about oil, not weapons of mass destruction.
    Opponents of Bush’s wars welcomed Greenspan’s statement, as it strips the moral pretext away from Bush’s aggression, leaving naked greed unmasked.
    It is certainly the case that Iraq was not invaded because of WMD, which the Bush administration knew did not exist. But the oil pretext is also phony. The U.S. could have purchased a lot of oil for the trillion dollars that the Iraq invasion has already cost in out-of-pocket expenses and already incurred future expenses.
    Moreover, Bush’s invasion of Iraq, by worsening the U.S. deficit and causing additional U.S. reliance on foreign loans, has undermined the U.S. dollar’s role as reserve currency, thus threatening America’s ability to pay for its imports. Greenspan himself said that the U.S. dollar “doesn’t have all that much of an advantage” and could be replaced by the Euro as the reserve currency. By the end of last year, Greenspan said, foreign central banks already held 25 percent of their reserves in Euros and 9 percent in other foreign currencies. The dollar’s role has shrunk to 66 percent.
    If the dollar loses its reserve currency status, the U.S. would magically have to move from an $800 billion trade deficit to a trade surplus so that the U.S. could earn enough Euros to pay for its imports of oil and manufactured goods and settle its current account deficit.
    Bush’s wars are about American hegemony, not oil. The oil companies did not write the neoconservatives’ “Project for a New American Century,” which calls for U.S./Israeli hegemony over the entire Middle East, a hegemony that would conveniently remove obstacles to Israeli territorial expansion.
    The oil industry asserted its influence after the invasion. In his book, Armed Madhouse , BBC investigative reporter Greg Palast documents that the U.S. oil industry’s interest in Middle Eastern oil is very different from grabbing the oil. Palast shows that the American oil companies’ interests coincide with OPEC’s. The oil companies want a controlled flow of oil that results in steady and high prices. Consequently, the U.S. oil industry blocked the neoconservative plan, hatched at the Heritage Foundation and aimed at Saudi Arabia, to use Iraqi oil to bust up OPEC.
    Saddam Hussein got in trouble because one moment he would cut production to support the Palestinians and the next moment he would pump the maximum allowed. Up and down movements in prices are