Road to Ruin

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Bloated Empire and the Financial Crash

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Ivan Eland
May 12, 2009 - Consortium News

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A few - and only a few - prescient commentators have questioned whether the U.S. can sustain its informal global empire in the wake of the most severe economic crisis since World War II. And the simultaneous quagmires in Iraq and Afghanistan are leading more and more opinion leaders and taxpayers to this question.

But the U.S. Empire helped cause the meltdown in the first place.

War has a history of causing financial and economic calamities. It does so directly by almost always causing inflation - that is, too much money chasing too few goods.

During wartime, governments usually commandeer resources from the private sector into the government realm to fund the fighting. This action leaves shortages of resources to make consumer goods and their components, therefore pushing prices up.

Making things worse, governments often times print money to fund the war, thus adding to the amount of money chasing the smaller number of consumer goods. Such "make-believe" wealth has funded many U.S. wars.

For example, the War of 1812 had two negative effects on the U.S. financial system. First, in 1814, the federal government allowed state-chartered banks to suspend payment in gold and silver to their depositors.

In other words, according Tom J. DiLorenzo in Hamilton's Curse, the banks did not have to hold sufficient gold and silver reserves to cover their loans. This policy allowed the banks to loan the federal government more money to fight the war. The result was an annual inflation rate of 55 percent in some U.S. cities.

The government took this route of expanding credit during wartime because no U.S. central bank existed at the time. Congress, correctly questioning The Bank of the United States' constitutionality, had not renewed its charter upon expiration in 1811.

But the financial turmoil caused by the war led to a second pernicious effect on the financial system - the resurrection of the bank in 1817 in the form of the Second Bank of the United States. Like the first bank and all other government central banks in the future, the second bank flooded the market with new credit.

In 1818, this led to excessive real estate speculation and a consequent bubble. The bubble burst during the Panic of 1819, which was the first recession in the nation's history. Sound familiar?

Although President Andrew Jackson got rid of the second bank in the 1830s and the U.S. economy generally flourished with a freer banking system until 1913, at that time yet another central bank - this time the Federal Reserve System - rose from the ashes.

We have seen that war ultimately causes the creation of both economic problems and nefarious government financial institutions that cause those difficulties. And of course, the modern-day U.S. Empire also creates such economic maladies and wars that allow those institutions to wreak havoc on the economy.

The Fed caused the current collapse in the real estate credit market, which has led to a more general global financial and economic meltdown, by earlier flooding the market with excess credit. That money went into real estate, thus creating an artificial bubble that eventually came crashing down in 2008. But what caused the Fed to vastly expand credit?

To prevent a potential economic calamity after 9/11 and soothe jitters surrounding the risky and unneeded U.S. invasion of Iraq, Fed Chairman Alan Greenspan began a series of interest rate cuts that vastly increased the money supply.

According to Thomas E. Woods, Jr. in Meltdown, the interest rate cuts culminated in the extraordinary policy of lowering the federal funds rate (the rate at which banks lend to one another overnight, which usually determines other interest rates) to only one percent for an entire year (from June 2003 to June 2004).

Woods notes that more money was created between 2000 and 2007 than in the rest of U.S. history.

Much of this excess money ended up creating the real estate bubble that eventually caused the meltdown. Ben Bernanke, then a Fed governor, was an ardent advocate of this easy money policy, which as Fed Chairman he has continued as his solution to an economic crisis he helped create using the same measures.

Of course, according to Osama bin Laden, the primary reasons for the 9/11 attacks were U.S. occupation of Muslim lands and U.S. propping up of corrupt dictators there.

And the invasion of Iraq was totally unnecessary because there was never any connection between al Qaeda or the 9/11 attacks and Saddam Hussein, and even if Saddam had had biological, chemical, or even nuclear weapons, the massive U.S. nuclear arsenal would have likely deterred him from using them on the United States.

So the causal arrow goes from these imperial behaviors - and blowback there from - to increases in the money supply to prevent related economic slowdown, which in turn caused even worse eventual financial and economic calamities.

These may be indirect effects of empire, but they cannot be ignored. Get rid of the overseas empire because we can no longer afford it, especially when it is partly responsible for the economic distress that is making us poorer.

EPA Bans Deadly Pesticide Responsible for Millions of Bird Deaths

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Steve Holmer
May 11, 2009 - American Bird Conservancy

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The U.S. Environmental Protection Agency (EPA) today announced its final decision to revoke all food tolerances for the highly toxic pesticide carbofuran, which is sold under the name "Furadan" by FMC Corporation. The agency's announcement confirms a proposed action first announced in July 2008. FMC Corp. will have the opportunity to challenge the decision within 90 days with a petition to stay the rule. When the rule becomes final, EPA will proceed with the cancellation of registration for all uses of the pesticide.

"Carbofuran causes neurological damage in humans, and one of the most deadly pesticides to birds left on the market. It is responsible for the deaths of millions of wild birds since its introduction in 1967, including Bald and Golden Eagles, Red-tailed Hawks, and migratory songbirds," said Dr. George Fenwick, President of American Bird Conservancy. "This EPA decision marks a huge victory for wildlife and the environment."

This rule becomes effective December 31, 2009 to allow for commodities in storage to be used. Most uses of carbofuran on food crops were voluntarily cancelled in March 2009, effective immediately, so that most uses of the pesticide have been cancelled for the 2009 growing season.

In its 2005 ecological risk assessment on carbofuran, EPA stated that all legal uses of the pesticide were likely to kill wild birds. If a flock of mallards were to feed in a carbofuran treated alfalfa field, EPA predicted that 92% of the birds in the flock would quickly die. EPA analysis has also confirmed that carbofuran is a threat to human health through contaminated food, drinking water, and occupational exposure.

Following objections to the proposed ban by FMC Corporation, a government Scientific Advisory Panel reviewed the decision and agreed with EPA in 2008 that the pesticide poses an unreasonable risk to the environment, particularly birds, and that there was no evidence to recommend reversing EPA's decision to cancel carbofuran.

"Despite overwhelming scientific evidence of carbofuran's extreme toxicity and the availability of safer alternatives, FMC Corporation continued to do everything it could to keep this chemical on the market," said Dr. Michael Fry, ABC's Director of Conservation Advocacy. "We congratulate EPA for standing up for science and the public interest in the face of an industry pressure campaign."

Carbofuran first came under fire in the 1980s after an EPA Special Review estimated that over a million birds were killed each year by the granular formulation. Many of these die-off incidents followed applications of carbofuran that were made with extraordinary care. The granular formation was cancelled in 1994, but the liquid form has remained on the market.

"The revocation of all food tolerances has international implications, as imports of rice, coffee, bananas and sugarcane were previously allowed to contain residues of carbofuran," said Dr. Fry. "After this revocation, countries wishing to export these foods to the US must stop using carbofuran on these four major crops."

Rice and coffee are particularly important, as many US birds over wintering in Latin America use coffee and rice fields as winter habitats. American Bird Conservancy and the Natural Resources Defense Council petitioned EPA to cancel all import tolerances for pesticide residues on food, and this decision complies with the ABC/NRDC petition.

Incidents of bird poisonings by carbofuran are documented in the Avian Incident Monitoring System (www.abcbirds.org/aims) operated by American Bird Conservancy in cooperation with the EPA and state and federal wildlife agencies. In addition to killing birds when used legally, carbofuran is often illegally used in poison baits intended to kill wildlife in agricultural areas and grazing lands. This abuse has resulted in the deaths of raptors including Bald and Golden Eagles in violation of the Bald and Golden Eagle Protection Act.

Cheney To Travel Around Country In Sound Truck

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Andy Borowitz
May 11, 2009 - Huffington Post

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In a sign that he has no intention of going away quietly, former Vice President Dick Cheney embarked today on a nationwide road trip in a sound truck equipped with a state-of-the-art bullhorn.

The formerly reclusive Mr. Cheney has been a ubiquitous fixture on Sunday talk shows and right-wing radio programs in recent weeks, but his decision to tour the nation in a 2000-watt sound truck shows a heightened determination to spread his pro-torture message from coast to coast.

According to aides to the former vice president, Mr. Cheney had briefly considered starring in an IMAX film called "The Dick Cheney 3-D Experience" before settling on the less costly sound truck idea.

But Mr. Cheney's "Pro-torture Tour '09" has not managed to skirt controversy thus far, as the former Vice President has already had to contend with grievances about the noise levels produced by his high-wattage truck.

Residents of the town of Keene, New Hampshire were awakened at 5 AM this morning by a familiar voice blaring, "We're less safe than we were under the last administration. Run for your lives!"

As townsfolk rubbed their eyes, Mr. Cheney's voice could be heard extolling waterboarding and other enhanced interrogation techniques.

For his part, a buoyant Mr. Cheney brushed off complaints from the New Hampshire citizens that he had disturbed the peace with his early-morning rant: "All this proves is that sleep deprivation works."

iPhones in Iraq – The US Army's New Weapon

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Applications prove invaluable for soldiers on the battlefield

Kim Sengupta in Basra
May 11, 2009 - The Independent/UK

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In Basra's Hayaniyah district, a notorious stronghold of Shia militias, a US army sergeant leading a patrol faced two suspects in the street. Amid rising tension he produced a gadget from his pocket and after a few minutes of its use the matter was amicably resolved. The Iraqis and the Americans went their separate ways.

The equipment being used - described by the US Army as ideal for 21st-century warfare - was an Apple iPod Touch. In a matter of minutes the soldier had established through words and images that the two men were not considered to be serious threats and detaining them was unnecessary.

Apple's iPods and iPhones, symbols of a modern urban lifestyle, are now in use in a very different setting - the front lines of Iraq and Afghanistan. They are, say the US forces, ideal for the age of "network centric warfare", relatively easy to use, safe with secure software, and far cheaper than manufacturing a military version.

The sheer versatility of the kit - with the capability of over 30,000 programmes - allows a huge variety of functions needed for operations ranging from providing language translations to the transmitting of sensitive information and working out trajectories for snipers. Projects are on the way to use them as guidance systems for bomb disposal robots and receivers of aerial footage from unmanned drone aircraft.

The US Marine Corps is funding an application that would allow soldiers to upload photographs of detained suspects, along with written reports, into a biometric database. The software would match faces, in theory making it easier to track suspects after they're released.

Members of the British military who have seen the Apple instruments in action drool about the opportunities on offer. The Ministry of Defence, however, remains wary of security implications and has "no plans" at present to go down the American path.

But Lieutenant Colonel Jim Ross, the director of the US Army's intelligence, electronic warfare and sensors operation, believes the iPod "may be all that the personnel need".

"What gives it added advantage is that a lot of them have their own personal ones so they are familiar with them," he said.

Another plus is the cost. The iPod touch (which soldiers can use over a secure WiFi network) retails for around $230 (£150) and the iPhone for $600. Bulk orders placed by the Pentagon bring further savings. The manufacture of a specific military model would be much more expensive.

Robert Emerson, a security analyst who has advised foreign governments on computerised warfare, said: "The US military has had a reputation for being somewhat heavy handed, with justice. But what they are doing with iPods and iPhones show they can also be nimble on their feet. Other militaries should learn to be equally open minded."