A blog by Mel Riser about LifeBoat Permaculture and Solar Villages

Friday, January 27, 2006

Support the Troops? Nah not interested

Warriors and wusses
I DON'T SUPPORT our troops. This is a particularly difficult opinion
to have, especially if you are the kind of person who likes to put
bumper stickers on his car. Supporting the troops is a position that
even Calvin is unwilling to urinate on.

I'm sure I'd like the troops. They seem gutsy, young and up for
anything. If you're wandering into a recruiter's office and signing up
for eight years of unknown danger, I want to hang with you in Vegas.
And I've got no problem with other people — the ones who were for the
Iraq war — supporting the troops. If you think invading Iraq was a
good idea, then by all means, support away. Load up on those patriotic
magnets and bracelets and other trinkets the Chinese are making money
off of.

But I'm not for the war. And being against the war and saying you
support the troops is one of the wussiest positions the pacifists have
ever taken — and they're wussy by definition. It's as if the one
lesson they took away from Vietnam wasn't to avoid foreign conflicts
with no pressing national interest but to remember to throw a parade
afterward.

Blindly lending support to our soldiers, I fear, will keep them
overseas longer by giving soft acquiescence to the hawks who sent them
there — and who might one day want to send them somewhere else. Trust
me, a guy who thought 50.7% was a mandate isn't going to pick up on
the subtleties of a parade for just service in an unjust war. He's
going to be looking for funnel cake.

Besides, those little yellow ribbons aren't really for the troops.
They need body armor, shorter stays and a USO show by the cast of
"Laguna Beach."

The real purpose of those ribbons is to ease some of the guilt we feel
for voting to send them to war and then making absolutely no
sacrifices other than enduring two Wolf Blitzer shows a day. Though
there should be a ribbon for that.

I understand the guilt. We know we're sending recruits to do our dirty
work, and we want to seem grateful.

After we've decided that we made a mistake, we don't want to blame the
soldiers who were ordered to fight. Or even our representatives, who
were deceived by false intelligence. And certainly not ourselves, who
failed to object to a war we barely understood.

But blaming the president is a little too easy. The truth is that
people who pull triggers are ultimately responsible, whether they're
following orders or not. An army of people making individual moral
choices may be inefficient, but an army of people ignoring their
morality is horrifying. An army of people ignoring their morality, by
the way, is also Jack Abramoff's pet name for the House of
Representatives.

I do sympathize with people who joined up to protect our country,
especially after 9/11, and were tricked into fighting in Iraq. I get
mad when I'm tricked into clicking on a pop-up ad, so I can only
imagine how they feel.

But when you volunteer for the U.S. military, you pretty much know
you're not going to be fending off invasions from Mexico and Canada.
So you're willingly signing up to be a fighting tool of American
imperialism, for better or worse. Sometimes you get lucky and get to
fight ethnic genocide in Kosovo, but other times it's Vietnam.

And sometimes, for reasons I don't understand, you get to just hang
out in Germany.

I know this is all easy to say for a guy who grew up with money, did
well in school and hasn't so much as served on jury duty for his
country. But it's really not that easy to say because anyone remotely
affiliated with the military could easily beat me up, and I'm listed
in the phone book.

I'm not advocating that we spit on returning veterans like they did
after the Vietnam War, but we shouldn't be celebrating people for
doing something we don't think was a good idea. All I'm asking is that
we give our returning soldiers what they need: hospitals, pensions,
mental health and a safe, immediate return. But, please, no parades.

Seriously, the traffic is insufferable.

This was written by someone at the LA Times named Joel

mel

Tuesday, January 24, 2006

The Long Emergency... or the Perfect Storm

"This reality had begun to penetrate the American collective consciousness and will be represented in 2006 by millions of individual choices to not buy a new suburban house, either because the individuals fear the expense of long commutes or they fear the cost of heating a 4000 square foot house occupied by only a few people (or both). As the inventory of unsold new houses mounts up, the prices of all houses, new and old, will start to go down. There will be enormous psychological resistance to this reality, expressed in a lag of correct pricing, as the owners of these value-shedding "investments" wait for the bubble behavior (anticipated 10 t o20 percent asset appreciation) to return. Eventually they will get the picture.

The velocity of change in the housing bubble (and the psychology involved) will be greatly affected by oil and gas prices. It seemed to many of us watching the energy markets that the world may indeed have passed through its all-time oil production peak in 2005. Production in 2005 was nearly flat over 2004. The world was producing and also using roughly 82 million barrels of oil a day. Oil coming into new production was not making up for signs of depletion showing among virtually all the world's major producers. Iran, Russia, Mexico, Venezuela, the North Sea, and, of course, the USA, were all past peak. The big mystery was Saudi Arabia, but their inability to boost production from the 50-year-old fields that comprised their main reserves suggested that they were topping out, too. Which left an energy-hungry world with the need to either A.) make other arrangements for powering industrial economies, or B.) contesting for control of the remaining oil reserves, which were substantially concentrated in the Middle East and Central Asia.

Here, I hasten to remind the reader that peak is peak, meaning right now we are all operating on the basis of a lot of oil flowing around the world. The comfort level is still high. The factories are still humming in China, and the six-lane commuting corridors are still full of big cars around Atlanta, Dallas, Denver, and Minneapolis. The problem is that the oil supply will soon steadily diminish at a rate of at least three percent a year, and that necking down of supply is likely to be expressed in greater geopolitical friction and turmoil between the great nations who crave oil. The US entered into the military phase of this turbulence before any other nation. We used our superpower status to set up a centrally-located Middle East garrison in Iraq, under the idealistic cover story that we were removing a dangerous head-of-state and helping to set up a model democracy that would invite us to stick around the vicinity indefinitely, and thus retain some control over the deportment of other oil-rich states in the region.

The foregoing is the background of my predictions for 2006, which will be the year that the hardships and difficulties I lump together as The Long Emergency get some serious traction.

The world oil allocation system is now so fragile that any disturbance in one producing region can send damaging shock waves around the planet. There is no more "swing producer." The US squeaked through the huge loss of oil production capacity this fall by taking oil from our own strategic petroleum reserves and from Europe's. These actions kept oil prices in the high fifty-dollar-range through the holidays, giving Americans a false sense of festive security. Those withdrawals are now over. Global demand for oil is still increasing. The strategic reserves will now have to be refilled (they're called strategic reserves for a reason). This will start oil prices moving upward again -- they already have moved above $61 as of this morning.

I can't predict whether some maniac will drive a Zodiac boat into a tanker in the straits of Hormuz, or fire a shoulder-launched missile at an Arabian refinery. If nothing like that happens, the first year of post-peak will express itself in turbulent oil markets. Fear of not getting enough will rule. Futures will be overbought and then dumped or shorted and then overbought again. This will at least increase the violence of the ratcheting effect in the markets. Overall I expect to see $100-a-barrel oil at some point this year. Last year I made a bet with a friend that oil would end 2005 at $75. I lost the bet. But it is a fact that the price of oil altogether ended the year 40 percent higher than 2004, so it is not as if the markets did not show extraordinary stress.

New laws regulating gasoline mixtures will also contribute substantially to higher gasoline prices (perhaps as much as 40 cents a gallon). So I will predict gasoline breaking through the $4-a-gallon mark sometime this year.

Our natural gas situation is pretty dire. Prices shot up for a while above $17 (per one million btu's), but that was the energy equivalent of $100-a-barrel oil) and based at the time on the enormous damage in the Gulf of Mexico prior to the start of the heating season. The heating season so far as been abnormally mild in the northern US and prices have slumped back to the $11 range -- which is still a lot higher than the $7 range in 2004. Unlike oil, we will get no quick relief from international gas sources if the rest of winter turns sharply colder. We're short of terminals to receive significant quantities of imported liquefied natural gas and they cannot be built quickly (or cheaply). The natural gas markets in the US respond very sharply to current conditions. A warm week and the prices sink. A cold one and the price shoots up. Our gas storage for the year is slightly below 2004 levels. Even if we have a mild winter overall, there will be spikes of cold. Our production is still crippled in the Gulf. Therefore, I'll predict that methane gas prices will spike above $20 sometime before May.

High gasoline, heating oil, and methane gas prices will absolutely kill the housing bubble for reasons I've already outlined. The production home builders will be idle, stuck with huge inventories in places that never should have been suburbanized in the first place. A lot of Americans holding "creative" mortgages -- no money down, interest only, adjustable rate, what-have-you -- will be crushed by the expense of their obligations. Many of them will go bankrupt under new bankruptcy laws that leave no wiggle room for escaping partial repayment. Their houses will flood the real estate markets in an orgy of distress selling. "Greater fools" will snap up these "bargains," failing to realize that many of the logistical liabilities will remain -- namely remote locations and huge heating costs of enormous McHouses -- even if the ownership terms are less hazardous than the previous owner's. At some point in the future, after several flippings perhaps, all those 4000 square foot houses 44 miles outside Denver (or Cleveland, or Seattle) will be seen as the mistakes that they are, and their cash value will reflect that.

With the cratering of the housing bubble, the US economy has to fall on its ass. The global economy is likely to fall on its ass, too, since so much of it depends on the decisions of Americans to take out exotic loans for buying houses they can't afford. Large numbers of jobs will vanish in construction, remodeling, real estate sales, and the various mortgage rackets -- those things precisely related to the recent gains in GDP.

The sheer falloff in new mortgages will send a tsunami through financial markets addicted to continuous supplies of new "money" to preserve the illusion of expansion. I'd called for a Dow-4000 late in 2005. I think that was just an error in timing, and still call for the Dow to sink into that range, or worse, in 2006. This will represent a moment of painful clarity for market professionals, as they realize that an industrial economy and the finance that serves it must be based on the expectation of generating real future wealth, not on zero-sum rackets, games of monetery musical chairs, or casino legerdemain. Hedge funds, which depend on predictable stability, will be especially vulnerable. They will certainly take some large banks down with them when they go. I'll call for the so-called government sponsored entities of Fannie Mae and Freddie Mac to groan under and then drown in a sea of non-performing loans, probably with overtones of criminal irresponsibility.

If these things occur, ugly things would happen to the dollar. I would predict an episode something short of hyperinflation -- say a rapid 30 percent drop in dollar value -- with a later deflation in the price of things like houses, paintings by Childe Hassam, and many consumer goods. Which means that standards of living will fall across the board as incomes vanish with jobs and food and energy prices rise -- while Americans try to shed their houses, at the same time that consumer products sit unsold on the shelves of WalMart, Target, and Best Buy. This will spell the beginning of the end for the chain store universe.

The commercial airline industry is already whirling around the drain. 2006 will send it decisively down that drain. Since we cannot do without aviation in a nation as large as the US (with train service on the level with Bolivia) then the government may have to take over the crippled air routes. If that happens, then service will certainly be greatly diminished. Fewer people will be flying under the circumstances, anyway, but there is no reason to believe that this will all occur smoothly. Among other things, huge pension obligations would remain to be worked out.

By similar reasoning, I see an excellent chance for General Motors and Ford to go out of business in 2006. Sales of their stupid SUVs were already tailing off in the second half of last year, and they are not positioned to offer much of anything else. Anyway, a middle class groaning under insupportable debt and bankruptcy is not likely to be assuming new time payments for exactly the kinds of vehicles they would be insane to depend on.

As America roils in economic pain, factory workers in China will be thrown out of work. They will be extremely pissed off, and as their appeals go unappeased, they might start making political trouble in their country. That could easily stimulate Chinese leaders to divert their nation's attention with a compelling military project -- say some moves into the oil-rich former Soviet lands to China's west. Sooner or later, China eventually will go cuckoo from a shortage of fossil fuels. It only remains to be seen how this will express itself. So far it has only done so in terms of an aggressive outreach in oil contracts with producers like Venezuela and Canada. But those arrangements were based on a peaceful world and a peaceful China.

I have no idea what will happen with Iran. Their leader Mr. Mahmoud Ahmadinejad, is clearly a maniac -- calling for Israel to be removed to Alaska, for instance. But here I invoke my allergy to conspiracy theories by saying I do not necessarily expect any US or Israeli strikes against that country. One could argue that Iran could comfortably kick back and watch America get tortured by the insurgency next door in Iraq, and I think they will do just that through 2006. The nuclear card is wild, however, and anything could happen if they keep slapping it on the table.

Which brings us to the extremely sore subject of Iraq. I maintain that our reasons for being there have not changed one bit, namely to make sure that we don't lose access to Middle East oil in any shape or form. Now my stating that does not mean I think we will necessarily succeed. The creation of a constitution in Iraq and holding elections based on it amounted to an admirable stunt, but I tend to think this experiment will dissolve into sectarian violence and civil war, probably within 2006, no matter what else we do. I predict that circumstances will impel us to withdraw from the Iraqi cities but that we will not give up large bases near the oil production areas of the north and south, and that we will continue to control the air space over Baghdad. Our position in that country would then devolve to a sort of Fort Apache situation. I imagine the vast emptiness of the desert combined with air cover will afford us some protection. But our presence there will only inspire more turmoil, hatred, and jihad elsewhere.

King Abdullah seems to be in pretty good health, but he is going on 82. I predict that there will be fissures in the kingdom, and continued confusion about their oil production capacity. But by the end of the year it ought to be clear that they have not increased their output. Peak for Saudi Arabia may be the beginning of the end of the Saud kingdom -- since peak itself is highly destabilizing.

In Europe, we are beginning to see some of the first tectonic heavings over energy as Russia jerks poor Ukraine around on their natural gas shipments. England has managed to piss away all the former advantage of their North Sea oil bonanza and they now face a future of dependence on Russian gas plus the bankruptcy of their remaining industrial base. France enters 2006 somewhat more energy self-sufficient, at least as far electricity is concerned, since 70 percent of it comes from nuclear reactors. The other nations of Europe are apt to get restive this year, and may more actively join the worldwide contest for access to fossil fuels. At the same time, they will be struggling to contain large Muslim immigrant populations and I would be surprised if there were fewer problems in 2006 than last year -- with the riots in France and the London subway bombings. We tend to write off Europe as a region of sclerotic cafe layabouts, but for the time being many of these nations can still mobilize potent military forces if they have to defend vital interests. Generally, I predict 2006 will see a shift in power to the big energy bear, Russia. It's industrial infrastructure is otherwise decrepit. It's armed forces are bankrupt. But it has at least enough nuclear arms to blow up the world a few times over, so that, combined with its oil-and-gas assets, require us to take it very seriously.

Japan has nearly been forgotten. It now imports 95 percent of the fossil fuel it needs to run itself. God knows what they will do if geopolitical turmoil shuts down the shipping lanes that bring a steady stream of oil tankers to the islands. They are capable of mobilizing to defend their vital interests. We just haven't seen them do it since the 1940s. What role Japan will play in the Pacific remains a mystery, especially in relation to the growing power of China. Perhaps some of this oriental mystery will be revealed in 2006. Perhaps Japan will enter into some kind of Asian co-prosperity sphere alliance. Japan's economy will otherwise be subject to the severe economic strains emanating out of America.

South America is going loco on us. They will probably never amount to a united front, but one-by-one they will become more hostile to us, in the manner of Venezuela's Hugo Chavez and the newly elected Evo Morales of Bolivia, a former coca farmer who aims not to allow America any more say in what crops his people can grow. Chavez can jerk America around on oil imports if he wants to, but probably not without risking his health and position. Mexico's economy is dependent on ours, only Mexico will suffer by another order of magnitude if the US economy turns down in a big way. In 2006 I think we'll see the first signs of overt hostility between our two nations as the US desperately tries to come to grips with the flow of illegal immigrants, and Mexico attempts to divert its suffering peoples' attention by making threats of incursion and reviving claims to lands along the border. We could see the first shots of what could turn into a huge ongoing border nuisance, perhaps even a quasi-war. Meanwhile, Mexico's premier oil field, Canterall, has entered depletion. They depend on imports of natural gas from us, and under the rather insane terms of NAFTA, we in the US depend on imports of gas from Canada to make up for the stuff we have to sell to Mexico. Those relationships may be subject to review.

Here in USA, I predict that we will be diverted by a fantastic circus of congressional hearings and court proceedings. It will be scandal-o-rama for the Bush administration and the Republican party. The domestic spying issue will be a huge stink (I recognize I defended it on this blog), but it raises issues that our political system cannot digest right now. The Abramoff scandal is going to be huge and may take down twenty congressmen. Karl Rove will probably join Lewis "Scooter" Libby in the indictment pen for the Valarie Plame incident. Tom Delay is going to have a very ugly trial in Texas, and senate majority leader Bill Frist may end up being prosecuted for stock sale irregularities. These shows may so successfully entertain the public -- and the cable news impresarios -- that we will fail to notice the rising predicament of oil and gas prices and the cratering of the suburban sprawl economy (just as Watergate -- a very satisfying melodrama for those of us who were young reporters in 1973-4 -- diverted the US from the first throes of the oil crisis). All this activity will tend to degrade the standing of the Republican party to "junk" status. But there is no sign that the Democrats offer an alternative world-view to the "non-negotiable American way of life."

Political circuses will not completely divert the middle class from its own suffering, as their mortgages devour what is left of their financial lives. But as they sink in fortune and hope, I predict we will see a turning of all the recent celebrity envy -- and the infotainment value spun off it -- into a vicious hatred of the rich and famous and a new desire not to emulate them, but to punish them. Look out, Nicole Ritchie and the Donald Trump. The grandchildren of Ozzie and Harriet will be looking to eat you for dinner starting in 2006,"

Friday, January 20, 2006

AS WE SOW, THUS WE SHALL REAP...

ANONYMOUS

No one arrives at a destination on a road he did not travel, not individuals, not cities, not counties, not states, not nations, not the world and even the universe. Everything we think, say and do effects energy-dimensions spiritual, mental and physical. Cause/action, and, effect/change, is reality, regardless of how we perceive it. For every action there is a reaction. For every cause there is an effect. What we send out returns. The law of cause and effect is an eternal truth. Effect can be mitigated but cannot be annulled.

The world, this world, our world, the kind of world we NOW live in, is NOW (currently and at this moment) in the throws of disruption, turmoil, upheaval and ultimate re-creative devastation and destruction. For the moment, the demolition of the earth, continents, countries, cities, pleasures, services and people is spotty and spasmodic, yet slowly, destruction is stalking us and creeping closer, and will increasingly touch, impact, impinge, encroach and intrude mercilessly upon every concern of our lives. WHY? BECAUSE WE HAVE TRAVELED AND ARE TRAVELING THE ROAD THAT LEADS TO IT.

Mark these words: Unless there is something that changes the motivation and intent of the masses of humanity from selfishness and greed to unconditional love, with the actual manifestations of that love, our utter destruction is SURE, with the exception of some–a remnant, who actually change and thus LIVE AND PRACTICE unconditional love. Some of those who love unconditionally will survive to BE the seed for the next time-period on this world. Everyone else will be killed, put to death and exterminated by nature’s upheavals or man’s destructive nature. EITHER THE NATURE OF -A- MAN WILL CHANGE OR NATURE WILL ELIMINATE THAT MAN. Why? Because men are traveling the road that leads to it.

WHAT IS HAPPENING AND WHAT WILL HAPPEN:

Nature’s fury, whether manmade or nature made, is more violent over- all than it was in the past , and will continue to increase in violence, duration and severity. Every conceivable and many unheard of nature-events will escalate and intensify, broaden and widen and lengthen in duration. From within and on earth, from oceans and seas, from our atmosphere, space and outer space, MAN, as a whole, has awakened and summoned the destructive forces.

Man’s fury, fired by selfishness and greed, has polluted, contaminated and sickened the earth and its people and will continue to devastate the earth and destroy all that man has built, and finally, kill most of mankind, either THAT, or mankind, in mass, will embrace unconditional love because of a major shift in their consciousness because of an event.

It doesn’t take a genius to know that when you begin polluting a fish pond, eventually all the fish will die, if you don’t stop.

It doesn’t take a rocket scientist to know that when you make a house a fire-trap, it will burn to the ground when the conditions are right.

And it doesn’t take a prophet to know that when selfishness and greed are the primary forces driving most of mankind, that mankind will cause his own demise.

Most people are like the two men who fell out of a one hundred story building. One man said to the other when they were at the fiftieth story, “Nice breeze. How’s it going with you?”

The other one said, “This is great. No problem . . . so far.”

Prepare your heart and follow the spirit in preparing for the days ahead. If you only prepare for the days ahead, and not your heart, all your preparations will be in vain, FOR YOU.

If you desire unconditional love, ask for it. Ask that your love will be increased.

And, whether life or death in days ahead, you will not lose your reward, for whatever you send out, returns to you.

Sow the wind, reap the whirlwind.

Sow love, joy, peace and happiness, and in your heart they are yours, which is where it counts, no matter what the world says or does.

Thursday, January 19, 2006

My Solar Village

I have ALWAYS maintained from DAY ONE, the reason we went into Iraq was to switch Saddamn Insane back to the Dollar for Petro purchases.

The ONLY reason we have maintained the Fiat Dollar, is the WHOLE world has to hold dollars to buy OIL.

Within TWO months of our enteriing Iraq, the oil was only for sale with DOLLARS.

this paper explains it pretty clear.

mel
Krassimir Petrov, Ph.D.
January 15, 2006

Abstract: the proposed Iranian Oil Bourse will accelerate the fall of the American Empire.

I. Economics of Empires

A nation-state taxes its own citizens, while an empire taxes other nation-states. The history of empires, from Greek and Roman, to Ottoman and British, teaches that the economic foundation of every single empire is the taxation of other nations. The imperial ability to tax has always rested on a better and stronger economy, and as a consequence, a better and stronger military. One part of the subject taxes went to improve the living standards of the empire; the other part went to strengthen the military dominance necessary to enforce the collection of those taxes.

Historically, taxing the subject state has been in various forms-usually gold and silver, where those were considered money, but also slaves, soldiers, crops, cattle, or other agricultural and natural resources, whatever economic goods the empire demanded and the subject-state could deliver. Historically, imperial taxation has always been direct: the subject state handed over the economic goods directly to the empire.

For the first time in history, in the twentieth century, America was able to tax the world indirectly, through inflation. It did not enforce the direct payment of taxes like all of its predecessor empires did, but distributed instead its own fiat currency, the U.S. Dollar, to other nations in exchange for goods with the intended consequence of inflating and devaluing those dollars and paying back later each dollar with less economic goods-the difference capturing the U.S. imperial tax. Here is how this happened.

Early in the 20th century, the U.S. economy began to dominate the world economy. The U.S. dollar was tied to gold, so that the value of the dollar neither increased, nor decreased, but remained the same amount of gold. The Great Depression, with its preceding inflation from 1921 to 1929 and its subsequent ballooning government deficits, had substantially increased the amount of currency in circulation, and thus rendered the backing of U.S. dollars by gold impossible. This led Roosevelt to decouple the dollar from gold in 1932. Up to this point, the U.S. may have well dominated the world economy, but from an economic point of view, it was not an empire. The fixed value of the dollar did not allow the Americans to extract economic benefits from other countries by supplying them with dollars convertible to gold.

Economically, the American Empire was born with Bretton Woods in 1945. The U.S. dollar was not fully convertible to gold, but was made convertible to gold only to foreign governments. This established the dollar as the reserve currency of the world. It was possible, because during WWII, the United States had supplied its allies with provisions, demanding gold as payment, thus accumulating significant portion of the world's gold. An Empire would not have been possible if, following the Bretton Woods arrangement, the dollar supply was kept limited and within the availability of gold, so as to fully exchange back dollars for gold. However, the guns-and-butter policy of the 1960's was an imperial one: the dollar supply was relentlessly increased to finance Vietnam and LBJ's Great Society. Most of those dollars were handed over to foreigners in exchange for economic goods, without the prospect of buying them back at the same value. The increase in dollar holdings of foreigners via persistent U.S. trade deficits was tantamount to a tax-the classical inflation tax that a country imposes on its own citizens, this time around an inflation tax that U.S. imposed on rest of the world.

When in 1970-1971 foreigners demanded payment for their dollars in gold, The U.S. Government defaulted on its payment on August 15, 1971. While the popular spin told the story of "severing the link between the dollar and gold", in reality the denial to pay back in gold was an act of bankruptcy by the U.S. Government. Essentially, the U.S. declared itself an Empire. It had extracted an enormous amount of economic goods from the rest of the world, with no intention or ability to return those goods, and the world was powerless to respond- the world was taxed and it could not do anything about it.

From that point on, to sustain the American Empire and to continue to tax the rest of the world, the United States had to force the world to continue to accept ever-depreciating dollars in exchange for economic goods and to have the world hold more and more of those depreciating dollars. It had to give the world an economic reason to hold them, and that reason was oil.

In 1971, as it became clearer and clearer that the U.S Government would not be able to buy back its dollars in gold, it made in 1972-73 an iron-clad arrangement with Saudi Arabia to support the power of the House of Saud in exchange for accepting only U.S. dollars for its oil. The rest of OPEC was to follow suit and also accept only dollars. Because the world had to buy oil from the Arab oil countries, it had the reason to hold dollars as payment for oil. Because the world needed ever increasing quantities of oil at ever increasing oil prices, the world's demand for dollars could only increase. Even though dollars could no longer be exchanged for gold, they were now exchangeable for oil.

The economic essence of this arrangement was that the dollar was now backed by oil. As long as that was the case, the world had to accumulate increasing amounts of dollars, because they needed those dollars to buy oil. As long as the dollar was the only acceptable payment for oil, its dominance in the world was assured, and the American Empire could continue to tax the rest of the world. If, for any reason, the dollar lost its oil backing, the American Empire would cease to exist. Thus, Imperial survival dictated that oil be sold only for dollars. It also dictated that oil reserves were spread around various sovereign states that weren't strong enough, politically or militarily, to demand payment for oil in something else. If someone demanded a different payment, he had to be convinced, either by political pressure or military means, to change his mind.

The man that actually did demand Euro for his oil was Saddam Hussein in 2000. At first, his demand was met with ridicule, later with neglect, but as it became clearer that he meant business, political pressure was exerted to change his mind. When other countries, like Iran, wanted payment in other currencies, most notably Euro and Yen, the danger to the dollar was clear and present, and a punitive action was in order. Bush's Shock-and-Awe in Iraq was not about Saddam's nuclear capabilities, about defending human rights, about spreading democracy, or even about seizing oil fields; it was about defending the dollar, ergo the American Empire. It was about setting an example that anyone who demanded payment in currencies other than U.S. Dollars would be likewise punished.

Many have criticized Bush for staging the war in Iraq in order to seize Iraqi oil fields. However, those critics can't explain why Bush would want to seize those fields-he could simply print dollars for nothing and use them to get all the oil in the world that he needs. He must have had some other reason to invade Iraq.

History teaches that an empire should go to war for one of two reasons: (1) to defend itself or (2) benefit from war; if not, as Paul Kennedy illustrates in his magisterial The Rise and Fall of the Great Powers, a military overstretch will drain its economic resources and precipitate its collapse. Economically speaking, in order for an empire to initiate and conduct a war, its benefits must outweigh its military and social costs. Benefits from Iraqi oil fields are hardly worth the long-term, multi-year military cost. Instead, Bush must have gone into Iraq to defend his Empire. Indeed, this is the case: two months after the United States invaded Iraq, the Oil for Food Program was terminated, the Iraqi Euro accounts were switched back to dollars, and oil was sold once again only for U.S. dollars. No longer could the world buy oil from Iraq with Euro. Global dollar supremacy was once again restored. Bush descended victoriously from a fighter jet and declared the mission accomplished-he had successfully defended the U.S. dollar, and thus the American Empire.

II. Iranian Oil Bourse

The Iranian government has finally developed the ultimate "nuclear" weapon that can swiftly destroy the financial system underpinning the American Empire. That weapon is the Iranian Oil Bourse slated to open in March 2006. It will be based on a euro-oil-trading mechanism that naturally implies payment for oil in Euro. In economic terms, this represents a much greater threat to the hegemony of the dollar than Saddam's, because it will allow anyone willing either to buy or to sell oil for Euro to transact on the exchange, thus circumventing the U.S. dollar altogether. If so, then it is likely that almost everyone will eagerly adopt this euro oil system:

The Europeans will not have to buy and hold dollars in order to secure their payment for oil, but would instead pay with their own currencies. The adoption of the euro for oil transactions will provide the European currency with a reserve status that will benefit the European at the expense of the Americans.
The Chinese and the Japanese will be especially eager to adopt the new exchange, because it will allow them to drastically lower their enormous dollar reserves and diversify with Euros, thus protecting themselves against the depreciation of the dollar. One portion of their dollars they will still want to hold onto; a second portion of their dollar holdings they may decide to dump outright; a third portion of their dollars they will decide to use up for future payments without replenishing those dollar holdings, but building up instead their euro reserves.
The Russians have inherent economic interest in adopting the Euro - the bulk of their trade is with European countries, with oil-exporting countries, with China, and with Japan. Adoption of the Euro will immediately take care of the first two blocs, and will over time facilitate trade with China and Japan. Also, the Russians seemingly detest holding depreciating dollars, for they have recently found a new religion with gold. Russians have also revived their nationalism, and if embracing the Euro will stab the Americans, they will gladly do it and smugly watch the Americans bleed.
The Arab oil-exporting countries will eagerly adopt the Euro as a means of diversifying against rising mountains of depreciating dollars. Just like the Russians, their trade is mostly with European countries, and therefore will prefer the European currency both for its stability and for avoiding currency risk, not to mention their jihad against the Infidel Enemy.
Only the British will find themselves between a rock and a hard place. They have had a strategic partnership with the U.S. forever, but have also had their natural pull from Europe. So far, they have had many reasons to stick with the winner. However, when they see their century-old partner falling, will they firmly stand behind him or will they deliver the coup de grace? Still, we should not forget that currently the two leading oil exchanges are the New York's NYMEX and the London's International Petroleum Exchange (IPE), even though both of them are effectively owned by the Americans. It seems more likely that the British will have to go down with the sinking ship, for otherwise they will be shooting themselves in the foot by hurting their own London IPE interests. It is here noteworthy that for all the rhetoric about the reasons for the surviving British Pound, the British most likely did not adopt the Euro namely because the Americans must have pressured them not to: otherwise the London IPE would have had to switch to Euros, thus mortally wounding the dollar and their strategic partner.

At any rate, no matter what the British decide, should the Iranian Oil Bourse accelerate, the interests that matter-those of Europeans, Chinese, Japanese, Russians, and Arabs-will eagerly adopt the Euro, thus sealing the fate of the dollar. Americans cannot allow this to happen, and if necessary, will use a vast array of strategies to halt or hobble the operation's exchange:

Sabotaging the Exchange-this could be a computer virus, network, communications, or server attack, various server security breaches, or a 9-11-type attack on main and backup facilities.
Coup d'état-this is by far the best long-term strategy available to the Americans.
Negotiating Acceptable Terms & Limitations-this is another excellent solution to the Americans. Of course, a government coup is clearly the preferred strategy, for it will ensure that the exchange does not operate at all and does not threaten American interests. However, if an attempted sabotage or coup d'etat fails, then negotiation is clearly the second-best available option.
Joint U.N. War Resolution-this will be, no doubt, hard to secure given the interests of all other member-states of the Security Council. Feverish rhetoric about Iranians developing nuclear weapons undoubtedly serves to prepare this course of action.
Unilateral Nuclear Strike-this is a terrible strategic choice for all the reasons associated with the next strategy, the Unilateral Total War. The Americans will likely use Israel to do their dirty nuclear job.
Unilateral Total War-this is obviously the worst strategic choice. First, the U.S. military resources have been already depleted with two wars. Secondly, the Americans will further alienate other powerful nations. Third, major dollar-holding countries may decide to quietly retaliate by dumping their own mountains of dollars, thus preventing the U.S. from further financing its militant ambitions. Finally, Iran has strategic alliances with other powerful nations that may trigger their involvement in war; Iran reputedly has such alliance with China, India, and Russia, known as the Shanghai Cooperative Group, a.k.a. Shanghai Coop and a separate pact with Syria.
Whatever the strategic choice, from a purely economic point of view, should the Iranian Oil Bourse gain momentum, it will be eagerly embraced by major economic powers and will precipitate the demise of the dollar. The collapsing dollar will dramatically accelerate U.S. inflation and will pressure upward U.S. long-term interest rates. At this point, the Fed will find itself between Scylla and Charybdis-between deflation and hyperinflation-it will be forced fast either to take its "classical medicine" by deflating, whereby it raises interest rates, thus inducing a major economic depression, a collapse in real estate, and an implosion in bond, stock, and derivative markets, with a total financial collapse, or alternatively, to take the Weimar way out by inflating, whereby it pegs the long-bond yield, raises the Helicopters and drowns the financial system in liquidity, bailing out numerous LTCMs and hyperinflating the economy.

The Austrian theory of money, credit, and business cycles teaches us that there is no in-between Scylla and Charybdis. Sooner or later, the monetary system must swing one way or the other, forcing the Fed to make its choice. No doubt, Commander-in-Chief Ben Bernanke, a renowned scholar of the Great Depression and an adept Black Hawk pilot, will choose inflation. Helicopter Ben, oblivious to Rothbard's America's Great Depression, has nonetheless mastered the lessons of the Great Depression and the annihilating power of deflations. The Maestro has taught him the panacea of every single financial problem-to inflate, come hell or high water. He has even taught the Japanese his own ingenious unconventional ways to battle the deflationary liquidity trap. Like his mentor, he has dreamed of battling a Kondratieff Winter. To avoid deflation, he will resort to the printing presses; he will recall all helicopters from the 800 overseas U.S. military bases; and, if necessary, he will monetize everything in sight. His ultimate accomplishment will be the hyperinflationary destruction of the American currency and from its ashes will rise the next reserve currency of the world-that barbarous relic called gold.


--------------------------------------------------------------------------------

Recommended Reading
William Clark "The Real Reasons for the Upcoming War in Iraq"
William Clark "The Real Reasons Why Iran is the Next Target"

About the Author
Krassimir Petrov (Krassimir_Petrov@hotmail.com) has received his Ph. D. in economics from the Ohio State University and currently teaches Macroeconomics, International Finance, and Econometrics at the American University in Bulgaria. He is looking for a career in Dubai or the U. A. E.

Also by this author
"China's Great Depression"
"Masters of Austrian Investment Analysis"
"Austrian Analysis of U.S. Inflation"
"Oil Performance in a Worldwide Depression"

Monday, January 16, 2006

MLK day

In honor of Martin Luther King, I was watching Al Gore's spoeech today on the danger's of the current presidency.

I looked up the quote he used to close his speech and here is the whole paragraph in context.

Enjoy!

""A time comes when silence is betrayal...'"

"The truth of these words is beyond doubt, but the mission to which they call us is a most difficult one. Even when pressed by the demands of inner truth, men do not easily assume the task of opposing their government's policy, especially in time of war. Nor does the human spirit move without great difficulty against all the apathy of conformist thought within one's own bosom and in the surrounding world. Moreover, when the issues at hand seem as perplexing as they often do in the case of this dreadful conflict, we are always on the verge of being mesmerized by uncertainty. But we must move on.

"Some of us who have already begun to break the silence of the night have found that the calling to speak is often a vocation of agony, but we must speak. We must speak with all the humility that is appropriate to our limited vision, but we must speak. And we must rejoice as well, for surely this is the first time in our nation's history that a significant number of its religious leaders have chosen to move beyond the prophesying of smooth patriotism to the high grounds of a firm dissent based upon the mandates of conscience and the reading of history. Perhaps a new spirit is rising among us. If it is, let us trace its movement, and pray that our own inner being may be sensitive to its guidance. For we are deeply in need of a new way beyond the darkness that seems so close around us."


My Solar Village

Wednesday, January 04, 2006

The Mayonnaise Jar and 2 cups of coffee

The Mayonnaise Jar and 2 cups of coffee

When things in your life seem almost too much to handle, when 24 hours in a day are not enough, remember the mayonnaise jar and the 2 cups of coffee...

A professor stood before his philosophy class and had some items in front of him.

When the class began, wordlessly, he picked up a very large and empty mayonnaise jar and proceeded to fill it with golf balls. He then asked the students if the jar was full. They agreed that it was.

The professor then picked up a box of pebbles and poured them into the jar. He shook the jar lightly. The pebbles rolled into the open areas between the golf balls. He then asked the students again if the jar was full.
They agreed it was.

The professor next picked up a box of sand and poured it into the jar. Of course, the sand filled up everything else. He asked once more if the jar was full. The students responded with a unanimous "yes".

The professor then produced two cups of coffee from under the table and poured the entire contents into the jar, effectively filling the empty space between the sand. The students laughed.

"Now," said the professor, as the laughter subsided, " I want you to recognize that this jar represents your life. The golf balls are the important things-your God, your family, your children, your health, your friends, and your favorite passions -- things that if everything else was lost and only they remained, your life would still be full.

The pebbles are the other things that matter like your job, your house, and your car.

The sand is everything else -- the small stuff. "If you put the sand into the jar first," he continued, "there is no room for the pebbles or the golf balls.

The same goes for life. If you spend all your time and energy on the small stuff, you will never have room for the things that are important to you.

Pay attention to the things that are critical to your happiness. Play with your children. Take time to get medical checkups. Take your partner out to dinner. Play another 18. There will always be time to clean house and fix the disposal. Take care of the golf balls first -- the things that really matter. Set your priorities. The rest is just sand."

One of the students raised her hand and inquired what the coffee represented. The professor smiled. "I'm glad you asked. It just goes to show you that no matter how full your life may seem, there's alwaysroom for a couple of cups of coffee with a friend."

Tuesday, January 03, 2006

Dry and Hot

In January.

Fires going all over the place, towns burnt.

I have been getting some of my preparations mobile, and cleaning up bruch on the property. Moved the Airstream and plan to get all my BO preps sorted and loaded.

Building a sprinkler system for the house and studio in case we are evacuated and have to leave some water running. Plans are to put a 12 volt shurFlo with some roof sprinklers waterering the house and yard.

IF our neighborhood was to have a fire, the electricity would go pretty quickly, as it ALREADY has trees all around the wire.

So battery powered is the way to go, as I DON'T want to leave my generators or camping equipment.

So getting EVERYTHING ready for a migration is a good exercies in paring down and being ready to MOVE?

what about you? are you ready to evac? would you be comfortable? Have you thought about it?

Have a plan?

mel

My Solar Village