Putin Holds All The Cards

After America was caught spying on its Europeans friends it is little wonder they are less than enthusiastic about trusting the Obama administration. Now Germany is in a new uproar concerning more ongoing spy activity by America. This happens while still fresh in the minds of many Europeans is Obama to his discredit backing down and away from his words about a "red line in the sand" during the Syria fiasco. None of this inspires great confidence in Washington. In a display of self-righteousness, President Obama continues to scold Russia for intervening in the affairs of Ukraine. Secretary of State John Kerry even went so far as to declare it unacceptable to invade another country on a "completely trumped-up pretext," or just because you don't like its current leadership.

It's difficult to say if the double standards exhibited by the White House or what appears to be a total lack of self-awareness by U.S. officials is the most surprising part of the unfolding Ukraine saga. While Obama  continues to charge his Russian counterpart, Vladimir Putin, with violating Ukraine's sovereignty and territorial integrity in breach of international law, it is difficult to forget this comes after the infamous "Fuck the EU" comment by Assistant Secretary of State Victoria Nuland in the run-up to Ukraine's revolution. The comment revealed the extent to which Washington was recklessly maneuvering to undermine Ukraine's elected pro-Russian president, Viktor Yanukovych, by backing the Kiev street protesters' demands.

In reality, America has few military options in Russia's backyard unless it has the backing of a full and enthusiastic NATO and that is very unlikely. Europe has reason to be unexcited about a possibly long and expensive conflict. While still trying to recover from a recession Europe would face fuel shortages and a massive spike in the price of natural gas. Currently, Russia supplies much of the gas used in Europe, this gives Putin a great deal of leverage. If an actual ground attack were to occur few see the Russians as likely to roll over as other armies have when America approaches.

It appears Russia has been thinking several steps ahead and was prepared for being squeezed out of the Group of 8 for some time. With the recent exclusion of Russia what is now known as the Group of 7 and is made up of mostly insolvent nations has seen its global influence wane. A major shift in the geopolitical axis towards the east is taking place. As the days of summer past and we move towards fall the thought of a long cold winter will begin to weigh heavily upon the Euro-zone. Time appears on the side of Putin who has not taken the lead in promoting violence in Ukraine but instead left it to those in Kiev who insist on holding the fractured and bankrupt country together by force.

Putin has sat back and allowed violence to fester and to his credit, he holds the trophy of a bloodless Russian annexation of Crimea. Obama would give his eye teeth for such a victory. All the self-righteous huffing and puffing in Washington over Ukraine jars on European and especially Russian ears after the multiple U.S. led invasions and interventions into several countries in recent years. Not stopping after attacking Osama bin Laden and his al Qaeda training camps after the 9/11 attacks, Bush opted for full-scale regime change. The lamentable consequences of that decision are still being felt 13 years later in a crumbling Iraq and by the ever-growing numbers of Afghan civilians dying as the final NATO withdrawal approaches.

Europe is furiously scrambling to find alternative sources of energy should Gazprom pull the plug on natural gas exports to Germany and Europe. The surge in Ukraine gas prices is probably the best indication of what Europe faces. A cutoff by Russia would severely disrupt supplies. The EU, Turkey, Norway, Switzerland, and the Balkan Countries received 30% of the natural gas they burned last year from Russia according to the U.S. Energy Department "We have to be very careful not to hurt ourselves more than we hurt the other side," the Polish Foreign Minister said recently in Brussels. This comes after Russia announced what many have called the "Holy Grail" energy deal with China that has geopolitical implications for the whole world by binding the two nations in a commodity-backed axis. 

If Europe and the United States isolate Russia, Moscow will look East for new business, energy deals, military contracts, and political alliances. In a sign that Russia has the ability to use its economic power to drive a wedge between its former G20 allies, France’s government said this week it will deliver Mistral helicopter carrier warships to Russia as planned, thus rejecting requests from its European and U.S. allies to cancel the sale. There are also significant dependencies on Russian grain exports, particularly in the EU. It looks the pragmatists and non-ideologues may be gaining the upper hand over the  more hawkish western voices who were risking conflict with Russia.

The recent huge fine levied upon a French Bank by the American government is viewed by some as financial blackmail and has reinforced the idea America has lost its moral compass. It appears Obama has been following in Bush's footsteps as America has repeatedly and cynically without U.N. security council authorization.launched or backed myriad armed attacks on foreign soil, in Libya, Somalia, Yemen, and Pakistan to name a few. We should remember the expanded use of drones has made few friends for America in the international community. Critics say the Obama administration has continued to flout international law by refusing to join or recognize the International Criminal Court developed in 1945.

Nightmarish World War II memories linger in Moscow, Ukrainian neo-fascists were among those who seized control in the new government in Kiev yet the U.S. rushed to give its blessing to what the Kremlin later described as a "coup d'etat". While Sergei Lavrov, the Russian Foreign Minister, reflected these worries when he voiced "most serious concern" over Ukraine in phone calls to the French, German and Polish foreign ministers the EU, knowing this was what Washington wanted, just looked on. Little wonder the Russians were furious at what they saw as a western double-cross. Don't hold your breath for Putin to back-off or back-down, he has put down his marker and is now playing both Obama and Kerry for fools in a contest that cost Russia little. It is likely that if If Putin doesn't get his way next week he will next month or next year at the latest.

Many people see Ukraine as the worst east-west crisis since the end of the Cold War and as the biggest foreign test of the Obama Presidency but with so many problems in the world eyes have shifted to the collapse of Iraq and turmoil in the Mideast. Putin is an unredeemed Cold War throwback and one tough cookie and he is prepared for the crisis to get very ugly. Similar battles elsewhere on Russia's periphery, in Georgia, Moldova, Armenia, Nagorno-Karabakh, and maybe Belarus and the Baltic states have hardened Putin. Whatever they think in Washington, and whatever the financial markets say, it's working for him  with polls showing his popularity soaring at home. One of these days western leaders will learn to stop underestimating him and recognize Russia's leader as the canny, dangerous, and unyielding opponent he is.



For the latest update see the article below;
             http://brucewilds.blogspot.com/2014/08/eu-moving-towards-deal-on-ukraine.html

Children at our border $72,000 each!

A much discussed issue over the last several weeks has been the large influx of children crossing the southern  border and entering America unaccompanied by an adult. Most of these kids are coming up from countries south of Mexico. In 2011, fewer than 4,000 children from Guatemala, Honduras and El Salvador were caught crossing the border. That number has surged to more than 40,000 of the 52,000 children caught or turning themselves in since October. A law passed in 2008 makes a distinction and requires that these children from countries other than Mexico and Canada be handled and processed differently. Reality on the ground has changed since that law was passed and altering or repealing it would change the way these kids are processed.

This problem has been building for years, a paper trail of funding request show that for months Washington knew this problem was forming but nothing was done. Now calling it a crisis President Obama has requested $3.7 billion in emergency funds from Congress to address the surge of unaccompanied children crossing into the United States from the south. The request for funds which is nearly twice as much as originally expected would be used to improve border security, care facilities for the children, additional immigration judges and agents, and efforts to help Central American nations curtail the exodus of children northward.

Lets cut to the chase and the reason I'm writing this article, it is to call attention to the money and the math behind it. Rounding it off for fun 50,000 goes into 3.7 billion 74,000 times. this means the government is asking for roughly $71,153 to cover "handling" each of these children. This does not include the cost of  paying for medical cost and schooling for a 15 year old boy allowed to join his undocumented father in Houston. This is only additional funding going to agencies that are "overwhelmed." Everyone seems to agree this influx of children is a problem. Yes, they are children. Yes, it must and should be handled but to an American who has worked all their life and now lives on a monthly social security check of under $1,000 a month the cost will most likely seem excessive.

Of the 3.7 billion dollars 1.8 are slated to go to Health and Human Services. Secretary Sylvia Mathews Burwell says it would assist their efforts to humanely treat the needs of the children at the border. "We don't have enough beds," Burwell urged "a robust and compassionate approach" noting many of the children crossing the border are often fleeing personal danger in their respective countries. HHS also provides basic medical and mental health exams to the children, as well as some education resources. The goal of this special outlay is to speed up the processing of these immigrants, with an eye toward sending as many as possible back to their countries of origin and improving the detention conditions while they are here. The White House said that without supplemental funding agencies do not have sufficient resources to adequately address this situation.

Obama's request includes $1.6 billion for the departments of Homeland Security and Justice to support more aggressive deterrence and enforcement. Immigration and Customs Enforcement would get $1.1 billion. Most of it would pay for detention and removal of undocumented adults traveling with children, expansion of alternatives to detention programs, and “additional prosecution capacity” for adults with children who cross into the US illegally. Customs and Border Protection would receive $433 million and an additional $300 million will go to State governments and international programs for efforts to counteract misinformation campaigns in Central America and to discourage these children from making the trip north.

This is a dangerous trip and many children have climbed upon the top or hang on to the side of a train known as "the beast" for a free ride north. Experts say they are fleeing exploding violence in their homelands, and are often under the misconception that once here, they'll be permitted to stay. Others come because their parents are conned by smugglers who promise families their children will be safe after they cross the border. The horrors that the children are fleeing are real. According to the UN Office on Drugs and Crime, Honduras has the highest murder rate in the world outside of a war zone, with 90.4 homicides per 100,000 people. Much of the killing is concentrated in poor neighborhoods, where families will do anything to get their children to safety.

This violence, combined with an ambiguous White House policy, has created the current situation according to Scott Stewart, vice president of tactical analysis at Texas-based intelligence firm Stratfor. In June 2012, President Obama signed a memo called Deferred Action for Childhood Arrivals. It permits teen illegal immigrants to stay in the US for up to two years. It also provided new discretion to ICE in enforcement of immigration laws. While DACA does not grant illegal immigrants permanent status, the policy is not well understood in Central America. In fact, we are seeing reports of teenagers showing up at the border with cheat sheets designed to help them gain DACA status and make it more difficult to be deported, such as  claiming their parents are dead, or that they are fearful for their security.

The fact is many of the thousands of children will get to stay, despite warnings to the contrary. The Wall Street Journal reports that data, as well as interviews with the children and their advocates, show that very few children are sent home, and many are allowed to stay in the US for years, if not permanently. Justice Department figures show that in fiscal year 2013, immigration judges ordered 3,525 children to be deported, with an additional 888 allowed to return home voluntarily. These numbers pale in comparison with the number of juveniles apprehended, amounting to between 23,000 and 47,000 children apprehended annually in each of the last five years.

The reasons children are staying included backlogged courts, winning the right to stay, and simply ignoring orders to appear in court. In recent months, the US has been overwhelmed with finding shelter for children entering the country illegally. President Obama repeatedly said that they won’t be allowed to stay but the reality is very different and until this changes more are going to come because they're achieving what they want, safety and reunification with their families. The head of the immigration court system told a Senate hearing that 46 percent of juveniles failed to appear at their hearings during the last eight months. The problem is expected to get worse, due to growing backlogs. As of June 30, there were 41,832 pending juvenile cases, up from about 30,000 nine months earlier and it is common for court dates to be set two or three years out.

This is a bad situation not a humanitarian catastrophe and many ways exist to ease the cost and resolve it in a way that diminishes governments role as the ultimate solution. First thing that must be done is retroactively change the 2008 law that gives these children special treatment. Other ideas include funding a  massive advertising campaign to let people know the borders are not open. At little cost the National Guard and Military can rotate troops to the border regions and aid in the round up of these youngsters. Refugee camps or centers to hold them can be ran and overseen by groups like the Red Cross and other NGOs. It is important we do what we can to help these children but this should not be another reason to expand government to clean up a mess government created.

Government Pandering In Disasters A Great Disservice

High profile incidents covered by the media often reassures the public that the government stands ready to rush to our aid in case of a national disaster. Following a tornado or hurricane in the news, we often see FEMA workers spread out and moving from door to door offering help to Americans in need. This reassuring media coverage is misleading. Be prepared that in the case of a major crisis or disaster if you find yourself in a large area of devastation the government will prove largely ineffective. If and when a really large Armageddon event does occur we will quickly become acutely aware that God helps those who help themselves.

During A Real Disaster, Help Will Be Hard To Find

The trend of pandering to victims that we have seen develop over the years may be a result of the battering former President Bush took in opinion polls following Hurricane Katrina. The pictures that the media posted following a slow response in handling Katrina haunt his administration and paint Bush as being insensitive and out of touch with the plight of poor Americans. At what point did government become responsible for dispensing sorrow and grief?  With the bar to show concern set at its current level little gets done in Washington.

Somehow the President has in a media driven world mistakenly adopted the role of consoler in chief and is expected to pour forth sympathy and cast out concern for every American following incidents of destruction or violence. It does not matter if it is an accident, shooting, or some natural disaster, in recent years all this has reached new heights where even in the case of a few deaths it is not uncommon to see the President leaping upon Air Force One and rushing to the scene to sympathize with families and friends. In this politically correct world, it has even gone so far as to the President being expected to weigh in as to minor tragedies that occur throughout the world.

It should be noted that much time is wasted performing these acts that could be better used and focused on solving many of the real and pressing problems that face America. In reality, this pandering is a major disservice to Americans in that it fosters the impression that government will be there for you if you ever get into a pickle or jam. While reassuring to many the false illusion of a competent and effective government ready to come to your aid comes at the cost of raising unrealistic expectations. I suspect that with the formation of the massive Homeland Security Agency this may be a case of reassuring the masses that their tax money has not been wasted.

A perfect example would be the government,s reaction to the Boston Marathon bombing. It was overwhelming but in the end, it was a homeowner checking the tarp on his boat noticing a spot of blood and not the thousands of law enforcement officers that brought the manhunt to an end. No matter how much planning is spent it is silly to think someone can quickly rush to an area they are totally unfamiliar with and institute actions to efficiently solve massive problems. Do not be fooled, in the case of a real disaster the government is generally not very effective, the real help will come from your neighbors, this has been the case throughout history.

All disasters are not created equal. In all reality, the Federal government would be relatively ineffective and not much help in a major crisis that covered a large area and affecting tens of millions of Americans. Anyone who has ever experienced the frustrations caused by a bad storm with power outages and such will tell you most help comes from nearby and government is not the answer. People who adopt the attitude that they are a victim following a real disaster and then simply wait for the government to arrive to set things straight are making a huge mistake and are risking the kiss of death.

Exit Strategy From QE Remains Elusive

 Exit Strategy From QE Remains Elusive

Regardless of what you name it the "Federal Reserve Nightmare" or the "Yellen conundrum", the box Ben Bernanke made when he painted both himself and the Federal Reserve in a corner remains. Bernanke has by passing the chairmanship to Yellen escaped from the QE trap but left the rest of us fully in its grasp. With a policy of loose and cheap money and an inflation target of just 2%, the Federal Reserve continues to please those gambling that not fighting the Fed guarantees profits. As many Americans are forced to pay higher food, rent, and health insurance premiums, I wish someone would let the Fed know we have already exceeded their target. Any thought that inflation is not higher has come from the false illusion brought from lower payments on things like auto loans and mortgages, this is a one off and will not continue. 

America imports around five hundred billion dollars more from other countries every year than they export. This means we have a giant trade deficit, when we add this to our enormous government deficit it is easy to see that we are living far beyond our means. The Fed has been superbly entrepreneurial when it comes to Ponzi schemes or pseudo-economics hocus-pocus that has allowed the current situation to develop. The Fed must at some point begin to ponder a real exit strategy and end the massive and corrosive stimulus that the economy has come to expect. To make matters worse little has been done to address our structural problems and make America more competitive, this will massively thwart growth going forward.

The Federal Reserve has failed to make any serious efforts in pushing the government to take the necessary reforms needed to move the economy forward. Policy makers aided by the media thrive at presenting simplistic answers that solve both economic and society’s problems with little or no effort required from the masses. What started as a program to support and prop up the economy has morphed into the main driver of economic data. Between the low-interest rates that have propelled investors into high-risk assets in search of a positive return on their money, and money being pumped into the system, the markets have become distorted and disconnected from the economy. The idea that investors will continue to pour money into the sky high equity market is flawed.

Even as many people have grown comfortable with the status quo this does not change the fact the Fed is in a difficult corner. A serious exit strategy from QE  that normalizes interest rates remains elusive. With higher interest rates the cost of mortgages will rise. The low-interest rates that have discouraged savings and encouraged people to take high risks comes at a cost and does not lead to a healthy economy, but rather a story that will end in tears and regrets. When interest rates rise, as they will at some point, the value of these risky investments will decline, and these investors will be hurt. Also, as a double whammy, interest payments on the public debt will rise, increasing the budget deficit, which has averaged well over a trillion dollars a year for the past six years.

If all the money dumped into the economy would suddenly change direction and rush into hard assets, the shift would be devastating to our struggling economy. This thought also raises other questions, what can we define as a hard asset, what is really available, and in what quantities? This may be where inflation raises its ugly head. An unknown and surprising fact about inflation is how fast it can take root. With such a shift, interest rates would move higher and investors would flee government bonds. The crash of the bond market and a popping of what many have called a Bond Bubble will become a reality. It is abundantly clear Janet Yellen has shown no interest in coming up with a plausible exit strategy and even after developing such a scheme making it work will be easier said than done.


Footnote; This post dovetails with many of my recent writings. Other related articles may be found in my blog archive, thanks for reading, your comments are encouraged,
              

The Economic Efficiency Of Credit Can Collapse

It might soon become apparent the economic efficiency of credit is beginning to collapse and the additional money poured into the system coupled with lower rates can no longer drive the economy forward. When this happens many of our economic policy options will vanish. This interesting concept may be soon put to the test as new problems emerge in China where we are seeing the extra GDP growth generated by each infusion of money drop from 0.85 to 0.15 over the last four years. This might be taken as a sign of exhaustion. The collapse of credit can pose major problems such as what we saw when many sellers were forced to demand payment up front before shipping goods in 2008.

Wei Yao from Societe Generale says the debt service ratio of Chinese companies has reached 30% of GDP the typical threshold for financial crises. This means many companies will not be able to pay interest or repay principal. She warned that the country could be on the verge of a "Minsky Moment" when the debt pyramid collapses under its own weight. "The debt snowball is getting bigger and bigger, without contributing to real activity," she said. The total credit in China's financial system is estimated to be as high as  221% of GDP and has jumped almost eightfold over the last decade. This means companies will have to pay out $1 trillion in interest payments alone this year. Chinese corporate debt burdens are much higher than those of other economies.

Currently, much of the liquidity that exist in China's economy is being used to repay debt and not to finance output. The fact that new investment in factories has slowed drastically is probably a good thing because China is awash in overcapacity. New factories sit idle because of weak demand. This also raises concerns over an exodus of hot money once the US Federal Reserve starts tightening. China might see a large-scale capital outflow if and when there is an exit from quantitative easing and the dollar strengthens. This maybe already starting with recent withdrawals from Chinese equity funds the highest since early 2008 and withdrawals from Hong Kong funds the highest in a decade.

Fortunately, China's Central government carries little debt on its books. This gives the central government the option to step in if a worse case scenario develops and bail companies out or put them on life support as Japan did so many years ago.  Many people think if things get worse China might have to take action to help real estate companies or even worse recapitalize the banking system, but this will not fix all the problems. I'm forced to reflect on how debt is directly affected by interest rates. In Europe, the ECB has stepped in to halt the economic collapse of Spain, Italy and several other countries that were on the brink of collapse by instituting false super low-interest rates. 

What you pay in interest on debt does matter except in the current manipulated land of  Modern Monetary Theory. Often referred to as MMT its believers see it as a way to remove much of the risk ahead and guarantee the economy will always be able to muddle forward by altering and changing the procedures and consequences of using government-issued tokens and our current units of fiat money.  Newly acquired tools like derivatives and currency swaps allow us to print and manipulate away problems. Unfortunately, the part where you collect a debt that you are owed can be similar to a mirage that keeps moving away each time you approach it. Do not forget the small print that governs most contracts often tells us rules can be changed causing many people and companies to become instantly insolvent.

Why do you want to loan money if most likely you will never be repaid or repaid with something that is totally worthless? We are abusing the large amount of wiggle room in our economic system and our ability to put off the day of reckoning only proving that we will until we can't! Modern society has become very good at kicking the can down the road and delaying the consequences of bad policy.  This means that at some point the return on loaning money is simply not worth the risk! When this happens the only safe place to store wealth will be in "tangible assets" and the only lenders will be those who print the money that nobody wants.



Footnote; This post dovetails with many of my recent writings, for more I might suggest reading the article below. Other related articles may be found in my blog archive, thanks for reading, your comments are encouraged.
                  http://brucewilds.blogspot.com/2014/05/value-and-worth-constantly-change.html

Stock Markets and Girls Gone Wild!

What do stock markets around the world have in common with "girls gone wild" the video of college girls on spring break? The answer is both are crazy out of control. We have grown very complacent as money around the world has continued to flow into intangibles and promises. Currently the market is all a twitter and locked in a "greed and stupidity loop." The loop can be explained as follows, stocks are rising so why get out, not getting out is causing the stocks to rise. When stocks do pullback it is a buying opportunity. Yes, we are indeed experiencing a double down and let it ride mentality. I don't have to explain the greed part.

CRAZY OUT OF CONTROL!

This market while appearing nowhere over the top when compared to bubbles such as the infamous "tulip bulb mania of 1637" it sports one major difference and that is the element of manipulation. Generally bubbles form organically but this one appears to be the result of an unholy alliance of the Federal Reserve, governments, and the too big to fail. For the big boys insider information and computer trading that exploits where stops are placed improves their ability to wash weak bears out of their positions. The Federal Reserve has made the manipulated and distorted stock market ground zero in the war to convince us all is well. The idea is that a soaring market will bolster pension funds, support housing prices, and generate a wealth effect is flawed, instead it only creates a bubble.

Fact is if QE or the massive government deficit spending that props up our economy is removed it will collapse. The low interest rates of today come at a price, in the long run the benefits they bring will be outweighed by the distortions they cause. The higher market prices mask many of the weaknesses we have created in the system, while keeping intact pension funds and large banks higher prices have addressed none of the real problems, but merely set us up for a bigger fall. The entitlements and promises that have piled up have become overwhelming and the numbers going forward simply do not work. Most people are delusional or too focused on the nearby and fail to look out to 2017 and beyond. That is when the numbers really go to hell.

 I'm reminded of a quote on macroeconomic stabilization and crisis from Nassim Taleb (author of The Black Swan);

"Complex systems that have artificially suppressed volatility tend to become extremely fragile, while at the same time exhibiting no visible risks. In fact, they tend to be too calm and exhibit minimal variability as silent risks accumulate beneath the surface. Although the stated intention of political leaders and economic policymakers is to stabilize the system by inhibiting fluctuations, the result tends to be the opposite."

This quote suggest an analogy with ideas about what happens when in forest management natural fires are suppressed. If random fires do not periodically clear away forest underbrush, we see a build-up of flammable material sufficient to power a massive conflagration. I certainly think an equivalent truth applies to financial markets. The longer it has been since a painful collapse, the greater the willingness to pile on leverage and complexity, such that the next crisis becomes unmanageably awful. The "Too Big To Fail" and other policies implemented since 2008 have laid the groundwork for "The Big One", or what we will someday look back on as the mother of all sell-offs.

By not taking steps to correct many of our ills in many ways we are making things much worse. We have not made the structural changes necessary for our economy to become sustainable. We have put band-aid upon band-aid, upon band-aid while what was necessary was the amputation of a diseased limb. After all the threats that this market has avoided, and sidestepped, it is possible that many now think of it as invincible. This market has overcome the death of the euro, the financial cliff, and the end of Greece as we knew it. My studies in micro-economics, and observations in the current real-estate market, both as a owner and hands on landlord in middle America allows me to predict, we ain't seen nothing yet!

If you think markets today are distorted, you are right. Distorted by artificially low interest, easy money, currency games, and more. A word to the wise, we have seen in the market a total disconnect from Main Street. At some point the same people who are driving stock prices higher will find that risk outweighs reward on the high-side and that they can make far more crashing the markets. All the highly leveraged financial instruments lurking in the back of the closet and available only to the big boys like derivatives, options, futures, and such have the potential to explode into massive profits and a gigantic transfer of wealth.

This gigantic transfer of wealth has the potential to wreck the system and be our downfall. What I like about numbers is that when they are not jockeyed, jerked around and falsified they tend to tell the truth. Again I repeat, looking down the road the numbers do not work. The bottom-line is that the higher the market goes the more vulnerable it becomes to a major collapse and sudden downward move. Lately we are seeing some large quantities of money flowing across borders and  into crazy investments. With each new rally I feel a bit of deja vu, we have seen this all before. Way back in 2007 we saw all stocks moving in unison, always upward, often ignoring both the news and reality, note, it is happening again. This is a reason for caution! When this market heads south the fall may be a doozy.

America's Struggle To Stay On Top!

Too many people it appears a struggle is occurring to unseat America as the worlds most dominate nation. For many proud Americans who see the world from the unenlightened and possibly undefendable position of the United States having a right to be in control it is both threatening and frustrating to see control slip away. It is threatening to think the country might quickly fall to the position of a second rate power mired in debt with many of the options we have come to see as our right suddenly ripped away. It is frustrating that in many ways America appears to have become its own worse enemy. The country is guilty of both political inaction and squandering its power through a series of bad choices and missteps.

A major concern has been the shift of power and wealth to the East over the last several decades. Many Americans cringe when they think about the billions of dollars of consumer goods we import from China every month, but what makes it even more bizarre is how China became an export behemoth. We have been instrumental in bringing about the current challenge and possibly our own demise. Decades ago America started down a perilous path to build China into a world power,  a  pathological fear of  Russia and the Kremlin’s atheism caused America to seek a counter balance in the region. The result of our efforts has created modern day China.

Back in the 1970s when MAD (mutual assured destruction) and the communists' stated goal of global domination defined much of international politics the US foreign policy initiative aimed at splitting China from the USSR was an obvious choice. Central to the American effort was offering the prospect of economic incentives to China. Ironically, it was the China’s communist longevity the Washington wise men should have feared more. To separate China from Russia, strengthen our ties with China, and help develop the country made sense. To support China’s economic growth and over 1.3 bill people a export machine was developed that was to both change the  face of China and also how its people viewed freedom and the world.

As a byproduct of our actions we have seen a decline and stagnation not just in America but in many industrialized countries where output has fallen. Because of low production cost, and little regulation, jobs began to be shifted and work "outsourced" to China. Disloyal multinationals are now shipping their products great distances from China to the same infrastructure that they have abandoned and left with excess capacity. For straightforward geopolitical reasons America went down this path, but the path became a slippery slope, a slide greased by greed and short term self interest. Those who let this nightmare get of of hand should have been forewarned, "be careful what you wish for."

A few years ago, Russia, China and the United States appeared to be economic and political allies. Today, those alliances are being quickly scrapped in order to make room for conflict. The false paradigm that the people of these countries can't live together is taking center stage. When countries go to war whether economically or militarily governments demand that individuals relinquish freedom, independence and self-reliance. Sacrifice that “must be made” so that victory can be achieved. In the end, neither nation nor society truly wins, the only winners are the super rich and the oligarchs, who sing words of loyalty to their respective camps. These people never intend to target each other their only target is the people. Again the masses are being bombarded  talk of war.  

In any war each side is led to believe that its position is the good and right position and not asked to question the legitimacy of this because it will lead to ideological weakness and disunity. In the past Americans have shown a tendency to overestimate their enemies and rivals. In what might now be viewed as a state of paranoia during the cold war the Soviet Union was given credit for having far more power than it really possessed. In the early 1980s many Americans lived in fear that the rising economic might of Japan would allow the Japanese to buy all the property in America and make us slaves in our own country. Now as Russia and China grow stronger and closer together also pulling in other countries that are not fond of America we find concern growing that the tide is again turning and America may be unseated as a world leader.

Shift in power can be swift. The fact that the dollar has been the worlds reserve currency for years both empowers America but leaves the country vulnerable to such a shift. Over the last several years many US and European elites have been calling for a centralization of economic power under the control of the International Monetary Fund, as a well as a new global  world wide currency under the guise it would be viewed as more fair and balanced. Note these same elite have a great deal of power and control over the IMF. Not surprisingly, Putin also wants a new world currency under the control of the IMF. During both of his Presidential terms Obama has flooded his cabinet with current and former employees of Goldman Sachs, a longtime proving ground for elitist financiers with globalist aspirations.

Those who cast a critical eye over America see many problems tearing at the very fabric of society. Problems such as inequality, more citizens becoming dependent on the government for their day to day existence, and a dumbing down of the population. Like a cancer cutting through the heart of the country these problems drain away America's strength and resolve with each passing day. Fat and content we live in ignorant bliss and denial of the tough times ahead. When one looks beyond all the theatrical rhetoric being thrown around between Barack Obama and Vladimir Putin, the ultimate reality is that we are being played. The relationship of both governments to the global banking elite is the same and the people are the pawns in a game to enhance the power of those in control. If America wants to stay on top the war it should wage is against its own internal problems, this means it is time we go about setting our own house in order.


 Footnote; While many Americans think China is massively strong reality shows many flaws. The post below delves into some of them. As always your comments are welcome.
                 http://brucewilds.blogspot.com/2013/11/china-land-of-overcapacity-and-debt.html