Sunday, March 12, 2023

The Real Deal


  Michael Hudson and Radhika Desai: No Room For Gunboats, a history of the Imperial Sterling System, and how it was changed when the $US moved-in.
  There is quite a lot of explanation of the economic events from WW-1 through the end of 1949, which is as well-presented as I have ever seen, then this:
  Everybody was complaining by 1950. The United States solved the problem in a way that nobody had expected. The Korean War — from the time America entered the Korean War in 1950/51, every single year its balance of payments moved into chronic deficit that got deeper and deeper until 1971 when it was forced off gold.
  The entire balance of payments deficit was equal to, year after year, to America’s military spending abroad.
  When I left Chase Manhattan Bank, I was employed by Arthur Anderson to do an analysis of the US balance of payments. I produced the charts and the statistics — they are repeated in Super Imperialism — to show the entire deficit was indeed U.S. foreign military spending.
  At that time, Mr. John McNamara, the Secretary of Defense, telephoned Arthur Anderson and said, if they supply [Michael’s] report, [Arthur Anderson] would never get another contract with the US government.
  So my boss Mr. Barsanti came in and apologized to me and said that they couldn’t publish it.
  Their art department had made very nice charts and he gave them to me. And I went to New York University’s business school and I published it,  all these statistics, and a monograph summarized in Super Imperialism.
  The Federal Reserve, then, thought, “How are we going to cope with this?”

  They didn’t want to attack me obviously, so they attacked all the publications of NYU’s business school. They said that the fact that I found the Vietnam War responsible for the deficit and military spending doesn’t give confidence in NYU’s editorial decision.
  But then one of my students, at The New School where I was teaching international finance and trade, worked for the Federal Reserve and showed me their internal memos saying, “Yes this is true, we can’t let it get out.”
  All of this discussion about international balance and fairness, as if all the balance of payments deficits were international trade, ignored two things.
  They ignored, number one, military spending that was the key to the deficit, and that actually has been since the thirteenth century. War forces countries into deficit. War forces countries to borrow. That was why the Catholic Church, the papacy in the thirteenth century, legitimized interest-bearing debt to finance the wars — the crusades and the wars it was fighting.
  So this is a constant throughout history. It doesn’t appear in any of the “free trade” economic models. It’s as if governments don’t exist.
  And the other thing that doesn’t exist in this, saying that balance of payments equilibrium is all trade — they then say that all trade is a result of labor asking for [higher] wages. And the way to run a deficit is to institute a class war against labor. You want to fight the labor unions, you want to lower wage levels to enable countries to have achieved balance.
  Well what they mean by “balance” is obviously to finance this US-centered, military order, because the dollars that countries who are accumulating — when they weren’t asking for gold — were loans to the US Treasury by buying Treasury Bills that financed not only the domestic budget deficit — that was largely military — but also the balance of payments deficit.
  So the entire stability between 1951 and 1971, for 20 years, was provided by military spending as the United States put military bases all over the rest of the world.
  So what achieved balance was military — the military deficit. Not trade adjustment. Not investment adjustment. All of this is left out.
  Trade theory does not have room for the gunboats. And if you look at the balance of payments for the last 800 years, it’s all about the gunboats. That’s the amazing thing.
  And what we’re focusing on is the politics. International exchange rates and relations are not a function of “free market” arrangements. They are a function of intergovernmental debt — not so much private [debt] — and military spending. And governments paying their foreign currency by selling off their infrastructure.
  I want to make one final comment. When Radhika says that “stability is achieved by investing,” I said that was the US nightmare.
  That nightmare was imposed — the iron hand was the World Bank. There is a reason it’s usually led by defense department and military heads. The prime directive of the World Bank is, “No country should compete with major products that the United States exports — above all, grain.
  The one thing that the World Bank has opposed is other countries growing their own food grain.                            

"Never Seen In Over 40 Years" - SVB Collapse Sparks Bank Runs As People Wait In Lines

Yellen Says Government Will Help SVB Depositors But "No Bailout" As Fed, FDIC "Hope" Talk Of Special Vehicle Prevents More Bank Runs
(There is good analysis in this article of how SVB had forced risk onto customers by making those businesses that took loans from SVB, tech start-ups, etc. do all of their banking at SVB, ​assuming a lot of risk​ from SVB​, for only a small premium. The bank got-over on them, they are​ now​ the hostages.)

​  They can only regret the widespread bank-run that will be brought on by failing to secure deposits.​
​  ​SVB Latest Developments Live Blog: Regulators Weighing Bailout Of All Unsecured Depositors To Prevent "Banking Panic"
3:00pm ET Update: In a reversal of what Janet Yellen said just hours ago, WaPo reports that federal authorities are "seriously considering safeguarding all uninsured deposits at Silicon Valley Bank" - and by extension any other bank on the verge of failure - and are weighing an extraordinary intervention to prevent what they fear would be a panic in the U.S. financial system. Translation: bailout of all depositors, not just those guaranteed by the the FDIC.
4:30pm ET Update:  It's getting to the point where every new "proposal" or "idea" being thrown about is worse than the previous one​..​​. Shortly after the WaPo reported that the Fed is "seriously considering safeguarding all uninsured deposits at Silicon Valley Bank", BBG is out with a report that the Federal Reserve is also "considering easing the terms of banks’ access to its discount window, giving firms a way to turn assets that have lost value into cash without the kind of losses that toppled SVB Financial Group."​   [This is good strategy,  in my opinion. It supports trust in ​$​US banking.]
​  ​Such a move would increase the ability of banks to keep up with demands from depositors to withdraw, without having to book losses by selling bonds and other assets that have deteriorated in value amid interest-rate increases — the dynamic that caused SVB to collapse on Friday.

"It's As Bad As We Thought": CCP Money Flowed To Biden Family According Bank Records, Documents Obtained By House GOP

​  This article from Greece can be Google translated. It makes the case that a negotiated settlement to the war in Ukraine is (secretly) coming. That will realistically involve ceding to Russia all that is already declared to be Russian territory, merely as a practical matter.​ 
  China has an interest in peace, as does Europe. The US has interests in preventing normal trade relations between Europe, Russia and China. Ukraine stands to be an important economic corridor. 
  I would like to point out what Hudson and Desai point out above, that "Ukraine" is being saddled with unpayable debt, making it malleable to western policy decisions, and subject to loss of both land and political sovereignty. Maybe Russia and China can offer "Ukraine" and Europe a better deal.

​Here is another war news article in Greek, saying that a bomb-assassination of the president of Transnistria has been prevented, and many lives saved. It reports plans to invade Transnistria from the Ukrainian and Moldovan sides simultaneously. I keep wondering how many of the hypersonic missile strikes last week hit joint Ukraine/NATO command centers, preparing for Ukraine's spring offensive (when the deep mud hardens-up). How are those secret negotiations going?

Iran reverse-engineered an American TOW antitank missile of 1970s vintage. Russia has now sent multiple Javelin anti-tank and Stinger anti-aircraft missile systems to Iran for analysis and possible reverse-engineering, or development of electronic countermeasures. Greek again.

  This analysis assumes a little too much. The US has only opened-the-option of blaming Ukraine for the Nordstream bombings; has not thrown Ukraine under the bus (yet). This puts pressure on Ukraine to accept whatever the US/NATO dictates. The Ukrainians are probably getting sick of this. Will Ukraine shift "enemies"?
Tulsi Gabbard Explains Why US Threw Ukraine Under the Bus by Blaming Kiev for Nord Stream Blasts

​  We may assume that Putin and Xi will meet in Moscow, but may not assume details. China just negotiated a rapprochement between Iran and Saudi Arabia, which means that Israel has also had to make new deals with Russia, Cina and Saudi Arabia, or is doing so.​ Whatever influence Israel may have upon US foreign policy, that is now only part of the regional equation, and may soon be even less. The US is having something like Britain's Suez Crisis moment.
  China has been speaking in a more straightforward way against American imperialistic foreign policy and double-standards. This seems to be accelerating in even the past week or two. China would probably not do this if there were any uncertainty about it backfiring. Since this is hybrid war, and finance is an important part, especially global trade finance, I suspect that China and Russia have an announcement to make about the "newcoin" global trade currency, which was detailed by Pepe Escobar, from a source nicknamed "S. Tzu", who was the author of the Taoist classic, "Art of War".  
​  ​BEIJING, March 7. /TASS/. The Chinese Foreign Ministry is unable to confirm information that Chinese President Xi Jinping will visit Russia on March 21, Chinese Foreign Ministry spokeswoman Mao Ning said on Wednesday.
​  ​"China and Russia maintain close contacts at all levels, but we have no information now about the visit you are asking about," she said curtly to a reporter at a news conference.​     ​

​  At a moment where the bank-run has begun in the US, and the US is clearly losing, and secretly negotiating peace in Ukraine, and has been outed for blowing up Germany's gas pipelines, the stronger a joint-statement made by China and Russia​, the more decisive it will be in rapidly unseating the remaining global authority of the $US, which is the "New Sterling System", as above. Leaving behind an imperialist global trade system for something very much more like what John Mayynard Keynes proposed at Bretton Woods is discussed in that Hudson/Desai co-presentation. It is a noble objective.

When Censorship Fails: Two Thirds Of US Adults Think COVID Likely Started In A Lab

​  ​Steve Kirsch:​  A new study covertly released by the Israeli Ministry of Health confirms what we know from the Medicare data: the COVID vaccines increase your risk of death over time.

​  I would entitle this "Ten bold faced government lies refuted"​.
FDA and CDC Assertions in Doubling Down on COVID-19 Vaccination​  Peter McCullough MD​
Letter to Florida Surgeon General Tells America to Expect More Tension Over Injuries, Disabilities, and Deaths

​Spring Breaker (pictured in Austin kitchen-garden)

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