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Vol. 8 Issue 21…Dedicated to the Dialogue on Race…May
27, 2005
Managing Debt
By John Burl Smith
Benjamin
Franklin's maxim, "A penny saved is a penny earned," has no relevance
today. Earning money is old fashion. Why waste time earning and saving money
when you can borrow it at historically low interest rates? Financial systems
today, public and private, run on debt. Consequently, "debt
management" drives modern economies, not thrift or saving. The UK and US
are prime examples.
The UK's outstanding mortgage
debt totals £420 billion, commercial debt £380 billion and national debt £400
billion. The US mortgage debt is $4.2 trillion. Its national debt exceeds $7
trillion and is rising with federal budget deficits projected well into the
future. According to Bank of England records, 97% of the entire UK money supply
consists of bank money (paper) created by lending to borrowers. Globally, over
90% of all money is created by bank paper transactions. Debt management is how
the UK and US create wealth.
Franklin, like most people,
considered money "the stuff one had in their pocket." Today, money
consists of numbers relayed between bank accounts via computer systems. Every
time a loan is approved money is created out of thin air. Mortgages,
overdrafts, commercial loans, overnight transactions, credit card debts, etc.
are what is meant by money today. This is how the UK and US maintain their high
standards of living. But, who pays the bills?
People in places like Malaysia,
South Korea, Indonesia, and across Africa pay the bills. The IMF regulates their entire economic
future. After gaining what they believed was independence, they learned they
had to repay all debts owed by their colonial masters. Forced to accept massive
IMF and commercial loans, privatize natural resources and devaluate their
currencies, these countries are being robbed blind by speculators.
Russia is a classic example of
this system of international speculation, which operates under the guise of
free market capitalism and democracy. A victim of Cold War thinking, Moscow
sank billions into military competition with the US and space exploration.
Drawn in by US rhetoric and tittering on the brink of bankruptcy, Russia was
conned by the IMF and seduced like a streetwalker. Saved by new leadership that
kicked out western speculators, today, Russia's gold and foreign currency
reserves top $144 billion with a projection of $180 billion by year's end. Now,
Russia can influence international currency markets.
Western powers-- UK and US --use
debt to manage the world. The latest episode is playing out in Asia. There the
US is trying to force China, as it did Japan, to bail out the dollar with a
Plaza-style Accord. The Bush administration is demanding China raise the value
of its yuan 25%. The real problem is private consumption is 70% of GDP in the
US but only 43% in China. Personal savings is 1% of disposable income in the
US, while it exceeds 40% in China.
If China gives in, it will spread
another "Asian contagion" and force other nations to make
adjustments. Ergo, the US will avoid devaluating the dollar, while outsourcing
its debt so the rest of the world pays for the war in Iraq. Debt managers call
such schemes "creative financing," but Franklin would call it fraud.
The Dark Knight-Batman/White Ninja/Zorro is enjoying a break from the rigors of
academia, including getting up early to catch the school bus. As an incentive
to read and improve math skills over the summer, he signed a contract with
explicit rewards for successfully completing each month of assignments.
Developed by the DeKalb County School System, the program is extensive and
intensive. The Dark One/Ninja/Zorro verbally noted, "This is like school,
except I get something for doing all this work!"
The Debt Unpayable
By Francis William Bourdillon
(1852-1921)
What have I given,
Bold sailor on the sea?
In earth or heaven,
That you should die for me?
What can I give,
O soldier, leal and brave,
Long as I live,
To pay the life you gave?
What tithe or part
Can I return to thee,
O stricken heart,
That thou shouldst break for me?
The wind of Death
For you has slain life's flowers,
It withereth
(God
grant) all weeds in ours.
Bit of
History
James Monroe (1758-1831)
The
fifth United States president (1817-1825), James Monroe was born on April 18,
1758 in Westmoreland County, Virginia. He served with the Revolutionary forces
and was wounded. Commended for gallantry, he became a lieutenant colonel before
leaving military service (1780).
Monroe studied law under Virginia Governor Thomas Jefferson. Monroe entered
politics and served one year in the Virginia legislature (1782), before being
elected to the Confederation Congress and served from 1783-1786. In1788, Monroe
began his law practice and served as a delegate to the Virginia convention to
ratify the US Constitution. Though it became the law, he opposed ratification.
Elected to the US Senate (1790), Monroe joined Jefferson and James Madison in
forming the Democratic-Republican Party. Minister to France under President
George Washington (1795-1796), Monroe was recalled after several diplomatic
indiscretions, including criticism of the US policy.
After serving as governor of Virginia (1799-1802), Jefferson appointed Monroe
to a diplomatic mission to France; he worked with Robert R. Livingston, the
regular US envoy, on negotiations that led to the Louisiana Purchase. Monroe
went to Madrid, Spain and then to London, England (1806), where his
negotiations were repudiated by the Jefferson administration for its
concessions to Britain on pending trade issues. Monroe returned to the US and
unsuccessfully ran for US president (1808).
Monroe won Virginia's governorship (1811), the year President James Madison
appointed him Secretary of State, a position he held for six years. During the
War of 1812, he also served as secretary of War. The 1816 congressional caucus
nominated Monroe for president; he handily defeated his Federalist opponent in
the fall election and ran unopposed for reelection in 1820.
Never a brilliant man, Monroe nonetheless enjoyed a successful administration,
which was called the "era of good feeling." His administration's
accomplishments include the Rush-Bagot agreement (1817) with Great Britain,
which established the 49th parallel as the US-Canadian boundary, and the
purchase of Florida from Spain (1819). Monroe supported the Missouri
Compromise, which excluded slavery from certain territory, on the condition
that Missouri is admitted to the Union as a slave state (1821). In his annual
message of December 2, 1823, Monroe laid down the principle for which his
administration is best known, the Monroe Doctrine. It proclaimed the Americas
should be free from future European colonization and warned Europe against any
interference. Modified over the years, the Monroe Doctrine has become one of
the most fundamental documents in US foreign policy.
At the end of his second term, Monroe returned to Virginia, where he served as
regent of the University of Virginia and presided over the 1828 constitutional
convention. Monroe opposed the widening of US suffrage, and showed very little
interest in the question of slavery. Monroe died in New York, New York on July
4, 1831. (Encyclopedia Americana and http://en.wikipedia.org/wiki/Monroe_Doctrine)
Disgruntled feels:
Indebted! The US
owes countries like China and Japan a debt of gratitude for buying US dollars
at historically low values. This allows the US to finance foreign wars on
multiple fronts on credit, a modern miracle! Insulated from reality by this
charity, US consumers and businesses enjoy low interest rates and inflation, a
phenomenon many believe is mere statistical manipulation, cause prices are
steadily rising. Although indebted to China for keeping its boat afloat, the US
economy is a mess; it is demanding that China revalue the yuan in order to
reduce its trade deficit. The US needs a scapegoat, some entity outside the
country to blame for its fiscal recklessness.
Disgruntled says:
The newly reinvigorated stem cell debate, like the "runaway bride,"
is being widely covered by US media. Skeptics wonder, what news the government
wants to hide? That pondered, the debate is noteworthy. It pits right-to-lifers
against those that support the use of embryonic stem cells in the scientific
pursuit of cures and/or treatments for an array of ailments. Right-to-lifers
believe embryos in a petri dish must be accorded the same rights as those
already born. Simultaneously, they support capital punishment, ostensibly, as
George W. Bush claims, "to save lives," and wars in which the US
deploys some of the deadliest weapons manufactured, again ostensibly to prevent
evildoers from acquiring weapons of mass destruction and to spread democracy in
foreign countries at gunpoint. Another irony in the "culture of life"
debate, and there are many, is the case of the death row inmate refused a stay
of execution in order to donate part of his liver to his sick sister. Without a
doubt, when we righteously demand protection for frozen embryos, while
disdainfully dismissing and dealing death to those already born, we are
hypocrites extraordinaire.
Disgruntled wants to know: A small aircraft flew into Washington, DC restricted
airspace. It visibly rattled the nation's capital as buildings were emptied and
significant government figures, including the First Lady and Vice President,
were whisked off to secure locations. Jets were scrambled to intercept the
wayward craft, and US Secretary of Defense Donald Rumsfeldt gave the shoot down
order moments before the plane proved to be non-threatening. Ironically,
subsequent reports show neither DC first responders, which include fire and
police, nor George W. Bush, who was biking in suburban DC, were notified until
it was over. The relevant question highlighted by this incident is not whether
or not the system in place works, but more importantly, what is the proper role
of the nation's commander-in-chief in a national emergency?
By
John Burl Smith
Called Manifest Destiny, the fever of expansionism struck the US in the 1800s.
The Monroe Doctrine and Roosevelt's Corollary closed the Western Hemisphere to
European colonialism. Gunboats became the tip of the sword of democracy, as the
US demanded an "open door" policy in the rest of the world. The Opium
War reduced China to a European brothel. The same perilous pitfalls in the US'
narrow economic perspective and perceived world domination led to its current
disastrous adventures in Afghanistan and Iraq.
A recently formed strategic defense, trade and energy alliance composed of
Brazil, Russia, India, China and South Africa (BRICS) is challenging the US.
Nations in the Middle East and Asia perceive a threat from US military actions
in Afghanistan and Iraq. Moreover, they see provocation in US moves across the
"Stans" and in former Soviet possessions, like Belarus. Desiring to
check the US geopolitical "offensive," BRICS has emerged as a global
countermeasure reminiscent of the Cold War.
Casting itself in the role of protector and benefactor in South America during
the early 1800s, the US is seen as an overlord today. Hence, Russia and China
are making real gains in nation like Venezuela, Mexico and Brazil. Planning for
new contracts and expanding spheres of cooperation, Venezuela recently
purchased helicopters and assault rifles from Russia. Following revelations,
which implicate the US in an attempt to shoot down President Hugo Chavez's
flight in route to New York City for a United Nations meeting, Venezuela agreed
to purchase MIG fighters and Mach 2.9 ramjet anti-ship cruise missiles from
Russia.
The US buys 60% of Venezuela's crude oil, which is not just a drop in the
bucket for an energy glutton. A real loss for the US, Iran recently inked a
$200 billion energy deal with China. Speculation is rift that Iran is moving
closer to joining the BRICS alliance, which is presently composed of 75% of the
world's population and 80% of its natural resources. If consummated, this
emerging alliance will redraw the power lines that allowed US and UK gunboat
diplomacy to dominate the world.
Current arguments over nuclear power, raising the value of the yuan and
democracy in Belarus and Africa are smoke scenes designed to cover the US' pea
and shell debt game. No longer able to terrorize nations with its military
might and nuclear arsenal, nations like China are looking to advance their
interests in varied spheres, including South America and Africa. Dragging the
dollar's value down by running up a huge war debt, George W. Bush and neocons
thought getting Iraq's oil was a "snatch and grab" operation; they
have since found it is more like pulling teeth. Burning the midnight oil
developing counter strategies for the US is not a waste for the Kremlin; Russia
has got oil to burn. However, with the dollar tanking and suppliers like
Venezuela and Iran throwing BRICS at the White House, how will Bush keep lights
on?
Monroe Metamorphosis
When proposed, the Monroe Doctrine may well have been an
expression of moral opposition to colonialism. However, subsequent
reinterpretations jettisoned any claims to a moral justification for US action
in international relations. As it morphed, the Monroe Doctrine ran the gauntlet
from opposition to European empire building in the New World to various
justifications for US imperialism.
Oddly, Monroe Doctrine reinterpretations include cooperation with European
powers in the occupations of Santo Domingo and Haiti, as well as the Falklands
War in which the US supported Great Britain over Argentina. As applied in
Caribbean conflicts, it has been downright schizophrenic, changing to fit US
short-term economic interests.
US President James Polk (1845) asserted the Monroe Doctrine supported manifest
destiny or US claim to Indian lands as it expanded westward. In the Maximilian
Affair (1864-1867), the US opposed Napoleon III's efforts to establish a regime
in Mexico. The US also claimed the authority to mediate South American border
disputes in 1895.
In 1902, the Drago Doctrine (1902) proclaimed European powers could not use
force to collect debts in the Americas. President Theodore Roosevelt (1904)
added a corollary that claimed a US right to intervene in Latin America.
Reversing Roosevelt's Corollary, the Clark Memorandum (1930) proclaimed the
Monroe Doctrine did not give the United States any right to intervene in Latin
American affairs when the region was not threatened by Old World powers. During
the Cold War, the US opposed the establishment of a Communist regime in Cuba
and invoked the Monroe Doctrine to prevent the further spread of Soviet-backed
Communism in Latin America. While the Cold War has ended, the US embargo of
Cuba continues.
Other notable reinterpretations of the Monroe Doctrine include the Iran Contra
Affair (1984) in which the US Central Intelligence Agency (CIA) secretly
trained guerrillas in Nicaragua to overthrow the democratically elected
government of President Daniel Ortega. Recently, the US is suspected of
supporting efforts to overthrow the democratically elected governments of Hugo
Chávez in Venezuela and Jean-Bertrand Aristide in Haiti.
Drowning in Sea of Debt
Key findings from a housing report, published at www.americanprogress.org, show the dream of
a home for middle-class families is drowning in a sea of debt. Despite claims
by the Bush administration of increased home ownership, the rate of increase
from the mid-1990s has markedly slowed. This is especially true for black
Americans. A weak job market and fall in real wages tend to disproportionately
impact this segment of the population.
Other sources of concern for housing market analysts and others include the
fact that households rely more heavily on borrowing against their home equity
to help pay bills. Families own less of their homes than at any time since the
1950s, even though home values are rapidly rising. It appears their debt is
increasing faster. As a result, mortgage debt figures more prominently in
historically high personal bankruptcies. Some homeowners have turned to
interest-only mortgages to stretch their budgets and to buy new homes. Others
with adjustable rate mortgages sit astride ticking time bombs as interest rates
rise. For more about this report, visit www.americanprogress.org.
Mailbox: E-Mails, Faxes and Telephone
Calls
Email www.nytimes.com
On Tuesday, United Airlines became the biggest pension defaulter in the history
of corporate America. Analysts fear that Delta may also default, as well as
other ailing airlines, followed by auto parts companies and perhaps even, in
five years or so, the carmakers themselves. Currently, the government estimates
that, at most, 20 percent of a total of $450 billion in (private pension)
under-funding is due to financial distress at companies. The rest is occurring
at businesses that are financially healthy and are simply dodging their
responsibility to put the proper resources into their pensions.
Email www.Reuters.com Federal Reserve Chairman
Alan Greenspan said the booming U.S. housing sector shows signs of some
"froth" but that the central bank does not see a national housing
bubble. "We don't perceive that there is a national bubble but it's hard
not to see ... that there are a lot of local bubbles," Greenspan told the
Economic Club of New York. He said speculation in both the housing and mortgage
markets had accelerated, and that people were reaching financially to purchase
homes, using adjustable-rate and interest-only loans to make houses more
affordable. According to Greenspan, "Eventually, home prices will decline
because the underlying pattern is unsustainable.
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