Friday, May 12, 2006

Inflammatory Opinion:
Before the Storm, the Rant

The stock market has just had two of the hardest slaughterhouse days for bulls in recent months, platinum is at its all-time high, gold is in the stratosphere, and so are a whole host of other metals. The dollar has slid against the euro to the point where what I thought wouldn't happen becomes rather likely: full and swift movement of the global financial community toward denomination of international commodities contracts in euros instead of dollars. That means more than just the end of the heady days when every commodity trader, regardless of native language, said "dollars": it means the United States no longer serves as the world banker, so it doesn't get banker's privilege in capital markets and neither do its citizens; it also means commodities prices are no longer tethered to dollars, so as the dollar sinks into Third World status, imports become more and more expensive. It shouldn't take a math-geek economist to figure out what that's going to mean for the price of gasoline in the years ahead (the chorus of apocalyptic types and their refrain about "Peak Oil" notwithstanding).

Now, put skyrocketing prices on imports together with all the U.S. companies that have headed overseas because the reverse was true for so long, and you've got a pretty dire mix. Throw into that brew the fact that many, many Americans are trying to hold onto their lifestyles by drawing down their net wealth through debt, which will become more expensive in a world where we aren't the bankers who get the preferred rates, and that mix starts to turn pretty toxic. Finally, add in a dash of seething inflation that's going to be the only way the Fed can help to control the situation, and we'll eventually have a cocktail strong enough to knock a neo-con right off the gallows that have been built for him.

Meanwhile, the Shangai Coöperation Organization—an organization of which, I might point out, almost no one has ever even heard—is rapidly tying up oil and natural gas resources, along with pipeline routes, throughout Central Asia and into the Middle East, putting our own allies like Turkey and India into the vice grip between a war organization called NATO and a rabidly mercantilist organization comprising China, Russia, and (shock of all shocks) Iran.

This is happening in the context of China plowing into full commercial relationship with Cuba to get to massive offshore oil reserves in that latter country; and this is happening in the context of that same China slithering all around the newly-minted Leftist states of South America, snuggling into bed with those nations' little populist governments to gain leverage on even more strategic hydrocarbon assets and general trade routes.

And here we are, sitting on our fat butts waiting for the world to crawl to us because our guns go "BOOM-BOOM" really loudly, which is good because about the only way the neo-cons in Washington have in their limited intellectual repertoire for us now to stop the Shanghai Coöperation Organization from just about wrapping up a major piece of the planet for its own, exclusive playground for the remainder of this century is if we bomb Iran so massively that, not only does the Persian Pest go away in a vaporous crater, but the Chinese and the Russians are so stunned by our sheer willingness to violence that they back down... at least for a while. Don't bet on that being a great solution, though. The claim that the United States spends enormously more on its military than do the Chinese is elegantly flawed: that calculation is based upon the artificial exchange rate, about eight yuan to the dollar, China maintains. If the real exchange rate were used for comparison—purchasing power parity puts it at maybe two to three yuan to the greenback—instead of the phony exchange rate, the Chinese military budget would get a whole lot more attention inside the Beltway and at the Pentagon.

That means the neo-cons, backed into a corner far enough that they simply have to clobber Iran, will learn an old lesson from the history books: mercantilist cartels can transform with lightning speed and stunning lethality into mutual defense accords.

Ah, but the Bush Administration is trumpeting how great the economy is, and the media can't help itself but keep parroting all the good-news statistics that don't have even the remotest connection anymore to what real people are experiencing.

Those of you who have read articles at The Dark Wraith Forums know there is a tendency toward pessimism in my reporting and editorials. The more the government and the lackeys in the news media pretend that what's happening isn't happening, the more strongly evident that pessimism will be.

Ignoring the problems, as has been and will continue to be the culture of the politicians and the mainstream news media, is going to make the river out of Hell just that much less navigable. So, until that river turns to ice—which will most likely entail Hell freezing over—I shall remain the darkest Dark Wraith; and what I predict will in retrospect probably have been rather on the optimistic side. This is not an exercise in "speaking truth to power"; the powers in Washington—both Republican and Democrat alike—listen not to unvarnished truth, but rather to rhetorical affirmation. No one—not the Republicans, not the Democrats, and certainly not the mainstream news media—wants to be shown the straight-as-an-arrow road from here to the abyss.

That's fine, though: they'll see it when we all get there.

The Dark Wraith will proceed without delusion of grand effect on outcomes.

This article is cross-posted from The Dark Wraith Forums.

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