Into the Void

A friend recently consulted me about a rumor he heard. He wanted to know whether the Muslims are investing money in the US in order to take over. This is my reply:

The simple answer is “No, and if they did it was an amazingly stupid investment.”

But I don’t do simple. :-)

I’ll start by saying, screw the Taliban, they’re stone-age guys with guns and a beautiful book of inspired verses that none of them is educated enough to actually read. And WE put them in power to drive out the Russians.
Third World Traveler: Afghanistan, the CIA, bin Laden,
and the Taliban

Unfortunately, in the late ’90’s the Taliban was opposing an oil pipeline through Uzbekistan that would have had to come down through their country. This incensed oilman George W. Bush.

The Taliban doesn’t own anything but poppies, guns and rocks. Their country was destroyed by years of war against Russia. There is an entire generation of people who can’t read, who have no government records like land deeds, marriage licenses or birth certificates. They aren’t investing in anything but the feudal system that protects them from themselves.

We often boost up third-world, authoritarian regimes when there is something in it for us.

Ok, so one way is to go to an underdeveloped nation with a mineral you need that you can’t get in the U.S. Pay the guys in power so that they have absolute control over the populace and can use them to mine the mineral. **Saudi Arabia** is a prime example of that – and Osama Bin Laden was a Saudi until we enlisted him to organize the Taliban in Afghanistan. The Shah of Iran and Saddam Hussein are also good examples of it. Where’s that photo of Rumsfeld shaking hands with Saddam Hussein after they negotiated an oil deal?

Think of Teddy Roosevelt riding roughshod over Libya, etc. NeoCons are “Teddy Roosevelt Republicans.” Iraq didn’t go so well, but they don’t see it. With “trickle-down economics” the poor and the middle class bear the burden. It doesn’t affect the NeoCons so they don’t even know it exists.

I wrote a couple of blog entries on the public debt recently. You really need to read some of Jefferson’s and Madison’s thoughts on scrip before you read my short, simple answer. Here’s the URL and a quote from it.

In modern terms, the Federal Reserve Bank decides on a dollar amount that it needs to borrow to stimulate the growth of new businesses or to fund a war, then it prints dollars to symbolize the debt. When you and I then borrow the dollars, we take on a portion of the Fed’s debt. Once we own the dollar bills, we pay interest on the dollars that the Fed borrowed. The Fed borrows not just interest-free, but at a profit.

Pull a dollar out of your wallet if you don’t believe me. There is statement in the upper-right corner “This note is legal tender for all debts, public and private.” The dollar bill is an I.O.U.!

Having read that, and knowing that the dollar is (or was) the standard world-wide, you can deduce who owns our public debt. Pretty much the whole world, eh?

Foreign investors own large portions of corporate America. Fortunately, most of them don’t own isn’t enough to actually control the companies, but what if they did? They’d still want to make a profit!

At the same time, convince these investors that real estate is booming and to invest not in the real estate itself, but in the real estate and financial instutions that hold the mortgages. Stocks are more liquid than mortgages, who would want that hassle?

The way to make real estate boom is to make it easier to borrow money, that is, to print money so there can be more debt. It also is necessary to make it easier to buy an overpriced house, like with variable-interest loans.

So here’s how to eliminate large portions of the public debt quickly: We have induced foreign countries take an interest in our biggest industries instead of in cash. That would be financial institutions, mostly.

Make the institutions crash and have the government take over, leaving all the investors with nothing.

The conflict in Iraq has been taking away our pay raises for several years, so many folks were unable to meet the balloon payments. Countrywide Mortgage went first, and the foreign investors said oh shit and started trying to get their money out of our financial institutions. The Wall Street version of a run on the bank, 1929 style. Suddenly dollars aren’t so popular. (That’s why it looks as if oil costs more. It’s the exchange rate, people!!!)

If the dollar is worth less, the debt is less! But simultaneously it gets harder to attract those foreign investments we need so badly to support the opulent lifestyle that we euphemistically call “the American Dream.”

The Fed is trying to control it, so the fall is slow, but we are definitely falling and who the hell knows where the bottom is. Maybe it will stop when Americans have the same lifestyle one of our biggest creditors, the Chinese.

Oooo.

Let’s talk about the Department of the Treasury for a minute. When you buy a Treasury Bond or other instrument, you are borrowing money from the future of the United States financial health. What I meant to say actually is that you are betting the the government will be strong enough to pay the bill with the stated interest at the end of the term of the bill. The shakier the U.S. looks, the harder it gets to sell them.

Thee Treasury department web page maintains a list of what countries hold the Public Debt in Treasury notes. If you want to demonize oil producers by generalizing them as Muslims, then they are #4 on the list. Venezuela is actually Catholic. The Carib and Luxemborg entries actually are world banks that launder money for everywhere. Ditto Switzerland.

As for this bailout, your grandkids will still be paying for the last eight years of laissez-faire economics 30 years from now. Personally, I think that only folks who voted for oilman Bush should have to pay for the bailout.

Basically, your question has no meaning. We have been relying on foreign governments to support our opulent lifestyle for years.

I have been considering picking up some cheap real estate to sell a few years from now when the market picks up. I don’t see why our friends the Saudi Arabians wouldn’t do the same thing. Along with lots of Japanese, Chinese and Russian citizens. I don’t see this as a sinister plot, I see it as good Capitalism.

Which doesn’t means it’s good for you and me.

Did that sort of answer the question?