Ruin Is Our Future
By Paul Craig Roberts
January 16, 2015 "ICH"
- Neoconservatives arrayed in their
Washington offices are congratulating
themselves on their success in using the
Charlie Hebdo affair to reunite Europe with
Washington’s foreign policy. No more French
votes with the Palestinians against the
Washington-Israeli position. No more growing
European sympathy with the Palestinians. No
more growing European opposition to
launching new wars in the Middle East. No
more calls from the French president to end
the sanctions against Russia.
Do the neoconservatives
also understand that they have united
Europeans with the right-wing
anti-immigration political parties? The wave
of support for the Charlie Hebdo cartoonists
is the wave of Marine Le Pen’s National
Front, Nigel Farage’s UK Independence Party,
and Germany’s PEGIDA sweeping over Europe.
These parties are empowered by the
anti-immigration fervor that was
orchestrated in order to reunite Europeans
with Washington and Israel.
Once again the arrogant
and insolent neoconservatives have
blundered. Charlie Hebdo’s empowerment of
the anti-immigration parties has the
potential to revolutionize European politics
and destroy Washington’s empire. See my
weekend interview with King World News for
my thoughts on this potential game-changer.
http://kingworldnews.com/paul-craig-roberts-new-crisis-worse-russia-unleashing-black-swans-west/
The reports from the UK
Daily Mail and from Zero Hedge that Russia
has cut off natural gas deliveries to six
European countries must be incorrect. These
sources are credible and well-informed, but
such a cut-off would have instantly produced
political and financial turmoil of which
there is no sign. Therefore, unless there is
a news blackout, Russia’s action has been
misunderstood.
We know something real has
happened. Otherwise, EU energy official
Maros Sefcovic would not be expressing such
consternation. Although I am without any
definite information, I believe I know what
the real story is. Russia, tired of
Ukraine’s theft of the natural gas that
passes through the country on its way to
delivery to Europe, has made a decision to
route the gas to Turkey, thus bypassing
Ukraine.
The Russian energy
minister has confirmed this decision and
added that if European countries wish to
avail themselves of this gas supply, they
must put in place the infrastructure or
pipeline to bring the gas into their
countries.
In other words, there is a
potential for a cutoff in the future, but no
cutoff at the present.
These two events–Charlie
Hebdo and the Russian decision to cease
delivering gas to Europe via Ukraine–should
remind us that the potential for black
swans, and unintended consequences of
official decisions that can produce black
swans, always exist. Not even the American
“superpower” is immune from black swans.
There is as much
circumstantial evidence that the CIA and
French Intelligence are responsible for the
Charlie Hebdo shootings as there is that the
shootings were carried out by the two
brothers whose ID was conveniently found in
the alleged get-away car. As the French made
certain that the brothers were killed before
they could talk, we will never know what
they had to say about the plot.
The only evidence we have
that the brothers are guilty is the claim by
the security forces. Every time I hear
government claims without real evidence, I
remember Saddam Hussein’s “weapons of mass
destruction,” Assad’s “use of chemical
weapons,” and Iran’s “nuclear weapons
program.” If a US National Security Advisor
can conjure up out of thin air “mushroom
clouds over an American city,” Cherif and
Said Kouachi can be turned into killers.
After all, they are dead and cannot protest.
If this was, and we will
never know for certain, a false flag attack,
it achieved Washington’s goal of reuniting
Europe under Washington and Israeli
auspices. But this success has an unintended
consequence. The unintended consequence is
to unify Europe under the anti-immigration
policy of the right-wing parties, thus
empowering the leaders of those parties.
If this surmise is
correct, Marie Le Pen and Nigel Farage will
find their lives and/or reputations in
danger as Washington will resist the rise of
European governments that do not adhere to
Washington’s line.
The consternation caused
by Russia’s decision to relocate its gas
delivery to Europe is proof that Russia
holds many cards that Russia could play that
would bring down the political and financial
structures of the Western World.
China holds similar cards.
The two countries are not
playing their cards, because they do not
think that they need them. Instead, the two
powers are withdrawing from the Western
financial system that serves Western
hegemony over the world. They are creating
all of the economic institutions that they
need in order to be completely independent
of the West.
Therefore, the Russian and
Chinese governments reason, “Why be
provocative and slap down the Western fools.
They might resort to their nuclear weapons,
and the entire world would be lost. Let’s
just walk away while they encourage us to
depart with their provocations.”
We can be thankful that
Vladimir Putin and the leaders of the
Chinese government are both intelligent and
humane, unlike Western leaders.
Imagine, for example, the
dire consequences for the West if Putin were
to become personally involved as a result of
the numerous affronts to both Russia and
Putin himself. Putin can destroy NATO and
the entire Western financial system whenever
he wants. All he has to do is to announce
that as NATO has declared economic war
against Russia, Russia no longer sells
energy to NATO members.
The NATO alliance would
dissolve as Europe cannot survive without
Russian energy supplies. Washington’s empire
would end.
Putin realizes that the
insolent neoconservatives would have to push
the nuclear button in order to save face.
Unlike Putin, their egos are on the line.
Thus, Putin saves the world from nuclear war
by not being provocative.
Now, imagine if the
Chinese government were to lose its patience
with Washington. To confront the
“exceptional, indispensable, unipower” with
the reality of its impotence, all China
needs to do is to dump its massive
dollar-denominated financial assets on the
market, all at once, just as the Federal
Reserve’s bullion bank agents dump massive
uncovered gold contracts on the future’s
market.
In order to avoid US
financial collapse, the Federal Reserve
would have to print massive amounts of new
dollars with which to purchase the dumped
Chinese holdings. As the Federal Reserve
would protect US financial markets by
purchasing the dumped Chinese holdings, the
Chinese would lose nothing from the sale. It
is the next step that is decisive. The
Chinese government then dumps the massive
holdings of dollars it has received from its
selloff of dollar-dominated financial
instruments.
Now what happens? The Fed
can print dollars with which to purchase the
dumped Chinese holdings, but the Fed cannot
print foreign currencies with which to buy
up the dumped dollars.
The massive supply of
dollars dumped in the exchange market by
China would have no takers. The dollar’s
value would collapse. Washington could no
longer pay its bills by printing money.
Americans living in an import-dependent
country, thanks to jobs offshoring, would be
faced with high prices that would seriously
erode their living standard. The United
States would experience economic, social,
and political instability.
Putting aside their
brainwashing, their defensiveness and
patriotic support of the regime in
Washington, Americans need to ask
themselves: How is it possible that the
government of the United States, an alleged
Superpower, is so unaware of its true
vulnerabilities that Washington is capable
of pushing two real powers until they have
had enough and play the cards that they
hold?
Americans need to
understand that the only thing exceptional
about the US is the ignorance of the
population and the stupidity of the
government.
What other country would
let a handful of Wall Street crooks control
its economic and foreign policy, run its
central bank and Treasury, and subordinate
citizens’ interests to the interests of the
one percent’s pocketbook?
A population this
insouciant is at the total mercy of Russia
and China.
Yesterday there was a
black swan event, an event that could yet
unleash other black swan events.
http://www.zerohedge.com/news/2015-01-16/largest-retail-fx-broker-stock-crashes-90-swiss-contagion-spreads
The Swiss central bank announced an end to
its pegging of the Swiss franc to the euro
and US dollar.
http://www.zerohedge.com/news/2015-01-15/its-tsunami-swiss-franc-soars-most-ever-after-snb-abandons-eurchf-floor-macro-hedge-
Three years ago flight from euros and
dollars into Swiss francs pushed the
exchange value of the franc so high that it
threatened the existence of the Swiss export
industries. Switzerland announced that any
further inflows of foreign currencies into
francs would be met by creating new francs
to absorb the inflows so as not to drive up
the exchange rate further. In other words,
the Swiss pegged the franc.
Yesterday the Swiss
central bank announced that the peg was off.
The franc instantly rose in value. Stocks of
Swiss export companies fell, and hedge funds
wrongly positioned incurred major hits to
their solvency.
Why did the Swiss remove
the peg? It was not a costless action. It
cost the central bank and Swiss export
industries substantially.
The answer is that the EU
attorney general ruled that it was
permissible for the EU central bank to
initiate Quantitative Easing–that is, the
printing of new euros–in order to bail out
the mistakes of the private bankers. This
decision means that Switzerland expects to
be confronted with massive flight from the
euro and that the Swiss central bank is
unwilling to print enough new Swiss francs
to maintain the peg. The Swiss central bank
believes that it would have to run the
printing press so hard that the basis of the
Swiss money supply would explode, far
exceeding the GDP of Switzerland.
The money printing policy
of the US, Japan, and apparently now the EU
has forced other countries to inflate their
own currencies in order to prevent the rise
in the exchange value of their currencies
that would curtail their ability to export
and earn foreign currencies with which to
pay for their imports. Thus Washington has
forced the world into printing money.
The Swiss have backed out
of this system. Will others follow, or will
the rest of the world follow the Russians
and Chinese governments into new monetary
arrangements and simply turn their backs on
the corrupt and irredeemable West?
The level of corruption
and manipulation that characterizes US
economic and foreign policy today was
impossible in earlier times when
Washington’s ambition was constrained by the
Soviet Union. The greed for hegemonic power
has made Washington the most corrupt
government on earth.
The consequence of this
corruption is ruin.
“Leadership passes into
empire. Empire begets insolence. Insolence
brings ruin.”
Ruin is America’s future.
Dr. Paul Craig Roberts was
Assistant Secretary of the Treasury for
Economic Policy and associate editor of the
Wall Street Journal. He was columnist for
Business Week, Scripps Howard News Service,
and Creators Syndicate. He has had many
university appointments. His internet
columns have attracted a worldwide
following. Roberts' latest books are
The Failure of Laissez Faire Capitalism and
Economic Dissolution of the West and
How America Was Lost.