Don’t Mention The War!

From The Guardian, February 2003, media mogul Rupert Murdoch, stalwart cheerleader for Mr Bush and Mr Blair and their war of choice in Iraq, provides a reminder of just how misguided our political leaders and opinion formers were regarding the economic implications of war:

“The greatest thing to come out of [the Iraq war] for the world economy, if you could put it that way, would be $20 a barrel for oil. That’s bigger than any tax cut in any country.”

Today a barrel of Brent crude costs $31.68 while US light crude costs $34.53. During the last war on Iraq in 1991, the price of oil doubled to $40 a barrel. A $10 increase in the cost of oil is seen as the equivalent of a 0.2% cut in economic growth in America and Europe.

The economic argument that war is costly, wasteful and inflationary was not even permitted an airing in polite society in 2003. Any assertion that war might lead to debt, dislocation and inflation – as war has throughout history – would invite denigration as anti-American, defeatist, pacifist and Arab-loving. (Read the rest of Mr Murdoch’s comments in the link above for a refresh on the technique.)

It is worthwhile to revisit Mr Murdoch’s misguided views in the cold, hard light of this sixth year of violent occupation of Iraq as the world’s financial system confronts the perils of soaring deficit finance, credit market collapse and inflation – and escalating tensions with Iran.

If oil at $20 a barrel would have been “bigger than any tax cut” then is oil at $140 a barrel the equivalent of the greatest stealth tax increase in history?

If $10 incremental cost of a barrel implies a 0.2% reduction in growth in America and Europe, then does the $110 increase in the cost of a barrel imply a 2.2% reduction in growth – or even more?

If it was deemed essential to American and British national security by Mssrs Bush and Blair to occupy and control Iraqi oil reserves when oil was at $30 a barrel and peak oil theory was fringe, is the case for continued Iraqi occupation and even expansion of the war to seize Iran or Venezuela’s oil reserves stronger with oil at $140 and peak oil theory mainstream?

If financing war for oil justified Mr Greenspan’s expansionary credit policies and below-inflation Fed Funds rates, will the need to finance more war for more oil justify even greater Bernanke credit excess? (At least Mr Greenspan later honestly admitted, the Iraq war is largely about oil.”)

Once again, as ever before, war has led to debt, dislocation and inflation.

More wars would be more worse.

Arguably greater than economic damage, the war in Iraq seems likely to cost America and Britain any ideological credibility from winning the Cold War. It is hard to defend “free markets” and Anglo-American capitalism as western economies are re-nationalised by stealth at a shocking pace and swathes of the democratic electorate are dispossessed of jobs and homes.

The main result of the financial crisis so far is a stealth nationalisation of impaired financial assets via central bank liquidity facilities and dollar-peg sterilisation operations. Trillions of dollars worth of impaired assets, including a substantial proportion of the $9 trillion of foreign-owned US dollar debt, are being transferred from private investors into central banks worldwide as market makers and dollar holders of last resort. Sovereign Wealth Funds are effectively nationalising large corporations and banks – under foreign government owners. Now we are entering a second stage of calls for government intervention in markets on a scale rivaling planned economies behind the Iron Curtain. Governments and lobbyists are working overtime to craft new mechanisms for stealth socialisation of losses through industry bailouts and subsidies. Few CEOs now assert a strident defense of “free markets” when peddling their case for further regulatory, tax, subsidy, trade and monetary concessions that will enhance their fragile solvency.

The net result of all this nationalisation of impaired assets is a confiscation of wealth from the taxpayers of the world to the benefit of a relative handful of corporate and financial oligarchs. The current trends reflect poorly on capitalism as promoting the optimisation of welfare of the many over the few or democracy as protecting the middle class from tyranny by either rich or poor.

Substantiating the loss of our Cold War laurels, Alexy Miller, CEO of Gazprom, the world’s largest energy company and so a major beneficiary of the oil price boom, has this week predicted that oil could go as high as $250 a barrel “in the foreseeable future”. Indeed, so changed is the world economy after this disastrous war that Gazprom is planning to sell its gas for newly floated roubles, strengthening the role of the rouble as tradable currency backed by resource wealth.

What does Mr Murdoch have to say about that?

Perhaps capitalists need to rethink pacifism as being a proximate condition of capitalism. If war leads to debt, dislocation, inflation, nationalisation of assets and reduction of personal and economic liberties, then perhaps peace promotes prudence, growth, strong currency, free markets and the preservation of personal and economic liberties. The Swiss economy may not be exciting, but it is notably democratic, stable and prosperous.

For a rational exposition on why war can never increase prosperity, even of a conqueror nation, capitalists could do worse than read Sir Norman Angell’s The Great Illusion: A Study of the Relation of Military Power in Nations to Their Economic and Social Advantage (London, 1910), which contributed to his being awarded the Nobel Peace Prize in 1933. Sir Norman explains that the “delicate interdependence of international finance” which depends on fiat currencies, credit-based banking systems and contract-based commercial dealings among developed economies inherently inflicts losses on all parties to a military conflict. A loser loses more but a winner loses as well. His great insight was observing that war debases credit and undermines commercial contract via confiscation. As he put it in the synopsis, for commercially developed nations it is an “economic impossibility for one nation to seize or destroy the wealth, or for one nation to enrich itself by subjugating another.”

Wall Street economists and Main Street businessmen who style themselves capitalists should start thinking through the connection between capitalism and pacifism now rather than waiting for the next war to learn the lessons history keeps trying to teach them.

For those who might not catch the humorous intent in the title, enjoy this YouTube of a classic Fawlty Towers.

Don’t Mention The War!

http://www.youtube.com/watch?v=acCFpFgpEvk

44 Responses to "Don’t Mention The War!"

  1. Guest   June 13, 2008 at 2:56 am

    Einz

  2. London Banker   June 13, 2008 at 3:07 am

    And very welcome you are, Guest on 2008-06-13 02:56:23! It will be interesting to see if the Irish are able to defeat the stealth European constitution in yesterday’s referendum. Our EU leaders don’t seem to like democracy so much when we vote against their expanded powers.

  3. tutterfrut   June 13, 2008 at 8:53 am

    Those ungrateful Irish. We’ve been subsidizing them, so they could become the Celtic Tiger and take lots of corporations from the mainland Europe in a rather rigged competition. And now that their property-boom-illusion-economy explodes in their face, they say the hell with Europe……Let’s get to war with them.(LOL)

  4. Guest   June 13, 2008 at 9:38 am

    LBOne of the interesting thing about the recent high oil prices is that the USA has now effectively lost control of oil prices. Previously in history the US could always rely upon its political and military clout to get special favor in the oil market. But no longer. Now even when the President of the US goes to OPEC, he receives no special deal on oil price reduction. If you look at what’s bothering Americans these days, you will realize that partly its a control issue. America can no longer control oil prices. We’re just a customer, like everyone else.PeteCA

  5. tutterfrut   June 13, 2008 at 9:59 am

    @Pete CAI think this spike in oil prices is orchestrated. It gives Saoudi states the extra revenue to keep investing in the faltering banking system and it is paid for by the global population. In the mean time it keeps up the necessary spending and tax revenue and it triggers a worldwide alt-energy and soft commodity boom. In the logic of TPTB I can see more benefits than disadvantages. What if we had the barrel still at 70$?

  6. Mandarin   June 13, 2008 at 11:45 am

    I think you must consider the other side of the coin, i.e. how the competition for profits, markets, and resources has always provided an incentive for rapacious wars of conquest against lesser nations and mutual distrust among greater ones. And though in the long run the confiscation of other peoples’ wealth may lead to ruination, in the long run we are all dead. In the short run war has promised enrichment and provided an outlet for the animal spirits conjured up by mankind’s acquisitive instincts. Sorry, this customer isn’t buying.

  7. Anonymous ibid.   June 13, 2008 at 12:36 pm

    Great post, London Banker.The really scary thing is the tendency of these guys to double down when they get in trouble. Don’t like our first war? Have another! By my count, US troops are engaged in something like five separate wars. Things are not going well– in the metrics that matter– in any of them. With the investment of a few hundred thousand, bin Laden got the US to waste trillions. So– let’s start a war with Iran!

  8. London Banker   June 13, 2008 at 12:39 pm

    @ tutterfrutThe results are in and the people of Ireland have once again saved us from a tyranny of Brussels bureaucrats by voting down another usurpation of power. Between that and the Supreme Court upholding habeus corpus, I’m feeling more optimistic about good triumphing over evil this week. On the downside, I can now be arrested and held without knowing the charges against me for 42 days here in the land that first recorded habeus corpus in the Magna Carta. @ PeteCAI agree that the loss of American control must irk Americans, along with the loss of the moral high ground and popularity. No one likes to be disliked and powerless too. And the way Saudi has been cozying up to China has got to worry some of the folks in DC as well as [email protected] MandarinThe point of quoting Murdoch is to demonstrate how deluded those who bought the promise of enrichment from war were given the harsh reality of endless occupation and blowback. This war can bankrupt America just as Afghanistan bankrupted the Soviets. Wars of occupation are unwinnable, and although a few oligarchs in the oil and arms industries have profitted handsomely, overall the economy is headed for disaster from the unsustainable costs of this war and the economic dislocation resulting from it.

  9. Mark   June 13, 2008 at 1:03 pm

    Fundamentals, fundamentals…As war destroys, it wastes energy, embodied energy. It cannot, therefore, be a net gainer in wealth (wealth is derived from work performed; anticipated wealth is speculation on future work to be performed). What war does do is to establish control over wealth.Great observation LB about reverting back toward nationalism. This Bloomberg piece seems to concur (and it’s something that I foresaw as long time ago):http://www.bloomberg.com/apps/news?pid=20601109&sid=a2TmFExZud8A&refer=homeBut what is going on that people don’t really want to talk about is that it IS all about energy. Man is not immune to physics, to the parameters of nature. The laws of conservation of energy are catching up with us; the payment for violating them is not negotiable (so there! Dick Cheney!).Mark

  10. hazleton   June 13, 2008 at 1:17 pm

    I have resisted believing that OIL men are causing wars until I saw a simple little t.v. show here in California called "Who Killed the Electric Car". I am now a believer.

  11. Mark   June 13, 2008 at 1:46 pm

    @Written by hazleton on 2008-06-13 13:17:32I have resisted believing that OIL men are causing wars until I saw a simple little t.v. show here in California called "Who Killed the Electric Car". I am now a believer.Not in defense of the "OIL men," but WE’RE to blame for these outcomes. Consumer demand. If we weren’t demanding (and using so much) oil then we wouldn’t be having this discussion. Our government is, believe it or not, doing exactly what it proclaims to do: support business and the American Way of Life… The oil men are just a product of ourselves, the ugly side.As far as the electric car goes, since 50% of US electricity is produced by coal-fired power plants I can’t say that they’re necessarily all that better than conventional autos. They clearly are NOT a one to one replacement: what about trucking?The bottom line is we’re going to be transporting ourselves less and less, electric cars (for the wealthy) or otherwise. It’s a conservation of energy issue.Mark

  12. OuterBeltway   June 13, 2008 at 2:01 pm

    LB:Thanks for re-stating what I hope is becoming obvious to everyone: fighting over oil only makes sense if you’re the guy that gets to control the oil once the blood is shed. Are you one of those people that stands to win the spoils of war? I’m not. If ExxonMobil controls Iraq, will you pay less for gas? I think ME wars are dumb. There’s nothing over there that I want. I have no economic or emotional stock in Israel/Christianity, defense companies, or oil companies. What I’d rather do is to channel our massive intellectual and economic resources into building the tools and technology we’re going to need to live within the Earth’s carrying capacity.I see that taking a few generations to get right, and every moment we spend supporting yesteryear’s ideas is another family left behind, and another species lost forever.Thanks for banging the drum, LB. Keep at it.

  13. OuterBeltway   June 13, 2008 at 2:04 pm

    @Mark:You are correct. We are the problem – and – we are egregiously manipulated and deflected and misinformed by the wealthy people that control the oil, auto, defense, and media companies. But WE are the main problem, and that’s what LB, and many others like him, are doing: refute, refute, refute. Every chance you get. Change, if it ever comes, is going to be bottom-up. Certainly not top-down.

  14. Capone   June 13, 2008 at 2:21 pm

    but President Bush told Americans they are addicted to oil ! he did not say Americans, time to conserve and make a statement to the world that we can be a prudent, conservative nation utilizing as little oil as is absolutely necessary encouraging car pooling, public transportation, riding bicycles (yes that is right exercise !) nor did he mention investments in public transportation unfrastructure that would for example eliminate the need for millions of Americans to drive a car so FAR to WORK every day ! Why is this not part of the plan ? Why is there not at least four trains from the North, South, East and West of every moderate sized US city with a circle connecting the outermost points to each other ? Hello ? Apologies for the logic and sensibility of this solution… "Keeping America competitive requires affordable energy. And here we have a serious problem: America is addicted to oil, which is often imported from unstable parts of the world. The best way to break this addiction is through technology. Since 2001, we have spent nearly $10 billion to develop cleaner, cheaper, and more reliable alternative energy sources — and we are on the threshold of incredible advances." State of the Union January 2006

  15. Alessandro   June 13, 2008 at 2:38 pm

    @OuterBeltwayI concur sentence by sentence.

  16. Guest   June 13, 2008 at 2:46 pm

    Are you the reincarnation of Paul Warburg? (this is a compliment by the way)But what kind of democracy is it when citizens cannot do a thing about their government taking on (in their name) worthless assets as collateral in a massive bailout of an imprudent, unpatriotic financial elite?I’m much less worried about Soverign Wealth Fund purchases, as at least they have a chance of managing things better.As an Amreican I am galled, yet feel helpless by this absortion of junk into our national treasury. One can protest, but not have a real say in what happens.K.S.

  17. Guest   June 13, 2008 at 3:05 pm

    PS:The Warburg comment was directed at LB.This war can bankrupt America just as Afghanistan bankrupted the Soviets. Wars of occupation are unwinnable, and although a few oligarchs in the oil and arms industries have profitted handsomely [WHO MIGHT THAT BE, NOT THE RULERS OF USA BY CHANCE, ELECTED OR NOT], overall the economy is headed for disaster from the unsustainable costs of this war and the economic dislocation resulting from it.I’ve been looking at it this way for some time. The US did not win the cold war. It saw the USSR bankrupted in Afghanistan and through arms race and CIA actions. They lost that battle. Now time for US to lose in the same sort of battle (failed occupations and delayed consequences of arms race)[email protected] agree with you completely too.Note: I power my 100% electric car from electricty from solar panels on the roof of the house. Not the perfect solution but better than most. The car is only for local driving at low speeds (where I mostly go anyway).KS

  18. London Banker   June 13, 2008 at 3:49 pm

    @ HazletonAfter winning WWII it seems that Americans liked the idea of democracy better than the practice of it, and allowed corporate interests to represent them to their government. What was good for GM wasn’t so good for America once Toyota started to compete, but by then it was too late to engineer efficient cars. What was good for Exxon wasn’t so good for America once the Shah was ousted, but by then it was too late to build public transport. @ Mark and Outer BeltwayYes, we are the problem, but we are also the solution. I have a touching faith that the "arc of the universe is towards justice". That embraces justice to mankind and justice to the Earth. I no longer look to the USA or UK for innovations that will change the world. I have learned that the most amazing disruptive technologies often come from the margins of development. Some of the most efficient and flexible solar power solutions were developed first in South Africa. Many of the mobile commerce solutions are emerging from Asia. The drive to continue development in Asia and Africa with limited resources will fuel future innovations that will change our lives in the OECD. Bet on [email protected] Capone and AlessandroAlways good to see you [email protected] KSIf I were channelling Paul Warburg, I trust I would be a great deal wealthier and busier than I am. Just as well as I would be too busy rearranging the international financial order to blog.

  19. BJ   June 13, 2008 at 4:48 pm

    Still, it’s worth remembering that possible military applications are one of the main driving forces behind many important technical innovations that we now take for granted in our every day lives. And the reconstruction years after WWII were not the worst economic period in history on both sides of the Atlantic. That is horribly cynical, but: don’t mention the war!

  20. Alessandro   June 13, 2008 at 4:55 pm

    German guest: "Could you stop talking about the war!"Basil: "Me? You started it!"German guest: "We did not start it!"Basil: "Yes you did, you invaded Poland!"LOL! I love British humor (… and I didn’t watch today’s football match, there must be something seriously wrong with my Italian genes!)

  21. Alessandro   June 13, 2008 at 5:10 pm

    BJ: "Still, it’s worth remembering that possible military applications are one of the main driving forces behind many important technical innovations that we now take for granted in our every day lives."Bzzzz. Anything that is of use in peace time can be researched and developed without the need for wars. Each dollar moved from military spending to R&D will be used way more efficiently."And the reconstruction years after WWII were not the worst economic period in history on both sides of the Atlantic."I’m sorry, but re-construction means doing the same work again. Immagine how prosperouse that time could have been without wasting resources re-constructing bombed cities.During a war opponents consume their resources to destroy the enemy wealth. How exactly do you get value out of it? Unless you are a close friend of the winning general.

  22. AfA   June 13, 2008 at 6:04 pm

    LB,Do you think it is thanks to rising oil prices that SWF and FCB keep the equity, and most importantly, bond markets afloat?

  23. GLOOMY   June 13, 2008 at 7:54 pm

    "The main result of the financial crisis so far is a stealth nationalisation of impaired financial assets via central bank liquidity facilities and dollar-peg sterilisation operations. Trillions of dollars worth of impaired assets, including a substantial proportion of the $9 trillion of foreign-owned US dollar debt, are being transferred from private investors into central banks worldwide as market makers and dollar holders of last resort. Sovereign Wealth Funds are effectively nationalising large corporations and banks – under foreign government owners. Now we are entering a second stage of calls for government intervention in markets on a scale rivaling planned economies behind the Iron Curtain. Governments and lobbyists are working overtime to craft new mechanisms for stealth socialisation of losses through industry bailouts and subsidies."I loved the whole column, bu the above quote is probably the finest, most succinct summary of the current global banking system I have ever seen-magnificently compacting it all in just a few sentences. Keep up the great work!!

  24. London Banker   June 14, 2008 at 1:16 am

    The comment below is copied and pasted from the Professor’s blog, but really belongs here. It is excellent in every respect._________________________________________________“Oil and war!” If there are going to be pre-emptive attacks on two countries that have not attacked the U.S., then it is important on this website, which discusses the economic ramifications of war, to look at the reasons for war.London Banker asks on the previous thread: “Does anyone really think the current war or the next war are about anything other than oil?”The answer is yes. Many people know there are two primary reasons for the war in Iraq, and for the threatened war in Iran, other than oil.REASON ONE: The corporate culture in Washington is so inbred, that war and profits can be considered on the same page. Much of the push by both political parties for war in Iraq came from the corporations that will benefit, big time. This doesn’t even include the military-industrial suppliers. It all begins with the planning, ordering and building everything that is needed for war, all at inflated prices: bombs, planes, missiles, tanks, uniforms, trucks, and the processing of mega tons of food and all the rest for soldiering. That’s just for a fast war; suppose it lasts for years? Wasn’t it Secretary Albright who asked Secretary Powell why all this war preparation was needed if it wasn’t going to be used? Anyway, when all is ready and the war planners have the people and the press on board, the bombers are brought on — to level cities and infrastructure, knock out sewer systems, power grids, roads and bridges, hospitals, schools, businesses…putting the population on life support. Then, comes the corporate contractor army — rebuilding everything, again with U.S. tax money, again at inflated prices – for profit.REASON TWO: The U.S. went to war in Iraq to support Israel’s hegemony in the region, evidenced by the major push inside the U.S. government (both in Congress and the White House) from the neo-conservatives, a group clearly supporting the most hawkish political movements in Israel. Neo-conservative Richard Perle, for example, was a former assistant secretary of defense and head of Secretary Rumsfeld’s “Defense Policy Board,” the point man in laying out rationale for a pre-emptive war on Iraq. In 1996, for Israel’s Likud Party, Perle led a group to establish the principles of pre-emptive war. The project, called, “A Clean Break: A New Strategy for Securing the Realm,” was published by the Institute for Advanced Strategic and Political Studies, an Israeli think tank. Not to be forgotten are the plans to direct pipelines of Iraqi oil into Israel.Iraq and Iran geographically are central to Middle East war strategy. If the U.S. can establish a puppet government in Iraq and set-up major air bases there, the skies over all of Iraq’s neighbors can be monitored and controlled (it shares borders with Syria, Turkey, Iran, Jordan and Saudi Arabia). The public sell for this power play was packaged as a “war on terrorism” with “terrorism” centering on the perceived aggressiveness of Islam. “Control” of the Middle East by the U.S. and Israel would keep “terrorism” in check and Israel’s “terrorist enemies” in check.A major emphasis for the Iraq war came from the neo-con organization called “Project for the New American Century" (PNAC), established in 1997. An open letter to President Bush after the 9/11 attack stated: “Even if evidence does not link Iraq directly to the attack (9/11), any strategy aiming at the eradication of terrorism and its sponsors must include a determined effort to remove Saddam Hussein from power in Iraq.” When Bill Clinton was president, PNAC sent an open letter to him urging that the regime of Saddam Hussein be toppled. Many of PNAC’s key people at that time became key people in the Bush administration. The neo-conservatives, now in power, brought all the war-leaning factors together: a vice president advocating American Empire no matter the price in lost civil rights, the corporations who would benefit, including the oil companies and that naïve portion of the news-duped public that believes the worst of the “terrorist” connections to Islam. To make it all go down, the media gladly jumped on board. Even now the chief representative of this “conservative” viewpoint is America’s liberal voice of record and strong supporter for the security of Israel, the "New York Times". It’s William Kristol, co-founder of the Project for A New American Century. Biographies and documents concerning the neo-conservatives mentioned above can be found at the “Christian Science Monitor’s” extensive research project:http://www.csmonitor.com/specials/neocon/spheresInfluence.htmlWritten by Guest on 2008-06-13 15:50:14

  25. OuterBeltway   June 14, 2008 at 8:06 am

    @LB:Yes, we are the solution. The solution starts with situational awareness, which you are helping to build. The solution continues with: * Rage * Disillusionment * Acceptance * Decision: I will change me * Decision: I will create tools so others can change * Decision: I will speak outAnd from here on out, it’s: * Action, Action, Action!

  26. Wormyboy   June 14, 2008 at 8:30 am

    How come there has been no talk of returning to the, federally mandated, 55 mile per hour speed limit in this country. If we, the country, politicians, are as concerned as we say we are about the price of gas drop the speed limit back down to 55 mph.

  27. Psyops   June 14, 2008 at 12:10 pm

    "The net result of all this nationalisation of impaired assets is a confiscation of wealth from the taxpayers of the world to the benefit of a relative handful of corporate and financial oligarchs. The current trends reflect poorly on capitalism as promoting the optimisation of welfare of the many over the few or democracy as protecting the middle class from tyranny by either rich or poor."Excellent observation. Which begs the question. Is the setting being set for global fascism? Or worse, is the political creature called liberal, middle class based, democracy about to become , from a marxist point of view, obsolete? Modern surveillance and media technologies seem to permit it. Manufacturing consent has worked nicely but the scarcity of natural resources might make consent look like a luxury. Even if loss of consumer spending is a drag, word has it that capitalism is notoriously self destructive…

  28. London Banker   June 14, 2008 at 1:30 pm

    @ [email protected] GloomyMany thanks for your kind [email protected] OuterBeltway and WormyBoyThere is much we can do and much we will do, both individually and collectively, to improve our situation once we have acknowledged and assessed it more accurately than we have been encouraged to do until now. Recognising the topography of reality is essential to navigating it successfully. The Bush administration and others have sold a set of maps with large inaccuracies and too many blanks labelled "Here Be Dragons". When we have better maps, we will have better [email protected] PsyOpsEver the optimist! What I have observed even in the short span of my lifetime is that action invites reaction, oppression invites resistance, occupation invites insurgency, tyranny invites collective rebellion.Yes, The Powers That Be had a headstart because they had a plan, control of the media, and control of the markets sufficient to consolidate their wealth and power. But I also trust in the truth of Gandhi’s observation: "Tyrants and murderers can seem invincible at the time, but in the end they always fall. Think of it. Always."

  29. Guest   June 14, 2008 at 6:01 pm

    " Which begs the question. Is the setting being set for global fascism? Or worse, is the political creature called liberal, middle class based, democracy about to become , from a marxist point of view, obsolete? Modern surveillance and media technologies seem to permit it. Manufacturing consent has worked nicely but the scarcity of natural resources might make consent look like a luxury. Even if loss of consumer spending is a drag, word has it that capitalism is notoriously self destructive…"@ Psyops on 2008-06-14 12:10:21It is my considered opinion that we are already, worldwide, in a state of advanced fascism; this being a natural and repeated transition as outlined by von Hayek in The Road to Serfdom. Governments are beyond their competence and this includes bureaucracy, science, economics, medicine, etc., etc., and fall back on their adoration of those in corporate commerce and their blind faith in Bankers and those in the financial sectors; everyone loves a suit.The fault of this lies with the masses as they ignorantly elect (in most cases) the wrong people who are just after the fast bucks and have no intelligence or incompetence. And, power does the rest as it totally corrupts beyond competence. This can be proven by laboratory demonstration and is consistent with scientific laws and principles. Ignorance is the root of our dilemma and as long as we keep choosing leadership from the long line of morons that shill themselves, then our future is guaranteed to be more of the same. ad infinitum et ad nauseum.As to the future: Look at history: Fascism then War(s) then revolution; who wins? Only the hanging tree.Want this to stop: Replace leadership with those of competence and that do not want the job.Take all the presented volunteers and give them jobs cleaning toilets. We need to get back to "physics"! Shut the FedRes – Oust Congress except Ron Paul – and give Ben, George and Hank the shaft; we need to get our gold mine back.PeterJB

  30. Guest   June 14, 2008 at 6:02 pm

    Apologies:I forgot to add the required "Ho hum" to the bottom of the above (my) post.PeterJB

  31. Guest   June 14, 2008 at 9:13 pm

    @London Banker: “Wall Street economists and Main Street businessmen who style themselves capitalists should start thinking through the connection between capitalism and pacifism now rather than waiting for the next war to learn the lessons history keeps trying to teach them.”The financial sector of Wall Street is a trust, i.e. monopoly. The Wall Street financial sector is made up of no more than a dozen major players, but their interconnections and centralization of control, through the private central bank amounts not to “capitalism,” but to monopoly. And in their case, Teddy Roosevelt’s trust description might still apply: “The great corporations which we have grown to speak of rather loosely as trusts are the creatures of the state (allowed by the government), and the state (the people’s government) not only has the right to control them, but it is in duty bound to control them whenever the need of such control is shown.”IMO, by capitalist here, more times that not, monopolist would better serve. The investment bankers, pulling together like Standard Oil, have created a worldwide money monopoly that knows no fatherland. No common businessman can go up against its monopoly without it says so. Its unfettered power to create money has taken us to war and threatens to control mankind by the whip hand of monopoly throughout the globe. It finds its seat in the Federal Reserve System where rests it powers to create and control, without audit, the world’s reserve currency. Americans and American business must be given a choice to discard this monopoly-centralized government for their former citizen-centered government. It’s not enough for the people to say, we oppose war. The rulers who would use the people’s government for their own power empire must be removed. Rome, while a republic, provided justice and representative government, but when the senators and Caesars began to steal and loot other countries, only the ruling families had influence in government. The word on the street for the average Roman wasn’t “vote.” It was “obey.” Wall Street no more represents “capitalism” than Congress or Parliament represent the people. Investment bankers can make or break giant corporations on the big board any day they want because of their domination over credit and politics. They control every major movement of government finance through their holdings and ties with the central bank. Through this private cartel they retain veto power over the currency and even over who becomes president of the United States. This power, of course, means connections and power in most other government enterprise, from health care to war.John Davison Rockefeller eventually locked up 95 percent of the oil refining business with his oil trust. His deadly game of wealth acquisition was to bankrupt other businessmen. This is not “capitalism,” IMO. This is the bankrupting of players as in the game “Monopoly”…when a market becomes dominated by a single entity. As the dice are thrown and you land on your opponent’s hotel-loaded Park Place, who cannot imagine the anguish of a small town gas station owner on the day Standard Oil, with its backroom bankrolling and its own robber baron law, arrives to build on the opposite corner?…A great article, LB. Hope it circulates the web.

  32. Hazleton   June 14, 2008 at 10:54 pm

    @Wormyboy Good point about the 55 mile speed limit. When I drive 55, I might as well be standing still. Cars whip by me at at least 75 miles per hour or hug my bumper until I have a nervous breakdown. I speed up so I don’t get shoved off the road. The worst offenders are the pick up trucks that honk and flash their lights. Northern California freeways are opportunities to unleash pent up testosterone – or maybe the wanna be macho men are displaying side effects of one-two-many Starbucks.

  33. flipper   June 15, 2008 at 2:13 am

    Guest – it’s a pity the great Russian philosopherand sociologist Alexander Zinoviev is almost completelyunknown in the west. He has long ago described the stateof affairs you are reffering to as "monetary fascism".His books on the sociology are must read for everyone, but i do not think they have been ever translated toanything but French, and only a few of them. The problem is that all this buzzwords like "democracy" are onlybuzz, the product of propaganda. Democracy havenever existed and will never exist in the idialized sence mostpeople are putting into that word. Now, after the only alternativeproject of society has been dead since 1990, the western Democracy and Capitalism run unchecked. Those thingspeople are complaining about here are just a begining.it will all get much worse before it gets better.

  34. Free Tibet   June 15, 2008 at 7:27 am

    Had my doubts. Lot of talk about war from people that have never been in one. This thread turned out pretty good.

  35. BJ   June 15, 2008 at 2:41 pm

    @ Alessandro:reconstruction is not simply replacement but replacement with better material and better technology, i.e. improved productivity. And security is not a priori a bad thing to invest in and research. It’s just not as simple as that. @LB: it would be great if we could go back to economics – there’s more than enough questions to be solved there.

  36. Anonymous   June 15, 2008 at 2:44 pm

    Free Tibet – all people, i’ve ever talked about war do not like it. War is ugly. Even Bill Gross, who was in vietnam says so;). LB – i may be labeled antiamerican, but there is one pointyou are missing – many american politicians and pedestriansare so found of war, because they have no idea what itactually is. If you take any major european country, or russia, or china, or japan, etc – almost every family saw several membersdead, their homes destroyed, etc. Americans did not have thattype of war on their soil. They have now idea, how is itthen bombers destroy city you live in. I am willing to argue that this lack of fear of war, is one of the main reasons, whywar in Iraq or Iran may be easily sold to US public.

  37. London Banker   June 15, 2008 at 2:44 pm

    @ Free TibetI had my doubts too, but am always heartened to find welcome for my writing here and thoughtful interaction from [email protected] FlipperThere are translations of several Zinoviev books into English. Amazon.co.uk offers The Reality of Communism, The Radiant Future, The Concept of the Soviet Man, and The Yawning Heights, although not all are currently [email protected] HazletonAlways [email protected] Guest on 2008-06-14 21:13:23If you find any of my posts cross-posted elsewhere, please let me know. I’d be interested to follow the echo.

  38. flipper   June 15, 2008 at 4:26 pm

    LB – what has been translated, are bookson how "real communism" worked in USSR.A book which studies western democraciesin russian is called simply "The West".Those ugly sides of society are imho ingrainedin it’s function, after all "oligarch" comes fromancient greec, i bet residents of Aphens or Romewould instantly recognize many political situationsdiscussed here.

  39. DocBerg   June 15, 2008 at 5:00 pm

    This is easily the most profound economic and political essay ever posted on the Web. Kudos to Liberal Banker for his insights and candor. Another good source of analysis on war is a book, The Costs of War, edited by John V. Denson. The second edition is even better than the first. The book is an outgrowth of a conference held by the Mises Institute in Atlanta back in the mid 1990’s. I was there. It was utterly fantastic, and a lot of pieces fell into place for me there. War is essentially the ultimate consumerism. Weapons tend to vanish in a flash, and leave a residue of pain, death and destruction. Any prosperity that results is largely illusory, and is essentially the broken window fallacy writ large. I suspect that if the emperor had to lead the charge, then there would be far fewer wars. Every so often you find a warlike sociopath like Churchill or Theodore Roosevelt, or even Julius Caesar or Alexander of Macedon, but they are fortunately rather rare. Consider the likelihood of Bill Clinton, Dubyah, Cheney, or Tony Blair parachuting to certain death behind enemy lines, and you get the general idea.

  40. Psyops   June 15, 2008 at 6:38 pm

    [email protected] Banker. What a lapsus…

  41. London Banker   June 16, 2008 at 7:09 am

    @ DocBergI do not think that Churchill fits the profile of a warmongering sociopath. He was adventurous as a young soldier and journalist, and certainly saw a good deal of action in Cuba, India, Sudan and the Boer War, but his enthusiasm seem to have been partly driven by his desire to sell stories as a correspondent. Certainly it is hard to imagine any recent Western political leaders who would lead a division on the Western Front in WWI or escape from a POW camp to travel 300 miles cross-country in [email protected] PsyOpsI am not offended at being called Liberal, in either the economic or political sense of the term.

  42. OuterBeltway   June 16, 2008 at 8:19 am

    I am certainly looking for liberal, progressive thinking. I certainly wasn’t raised to it, but my dominant value is "whatever works". So-called "conservative" thinking is not effectively addressing the rapid, macro changes affecting the world today. Not every problem can be solved by beating people over the head with a Bible or a Bomb.The term "conservatism" means "keep things the same", and regardless of what the label means, the behavior exhibited by people calling themselves "conservative" is to try to keep the world "the same as it used to be". The "same" isn’t working for the West. Our standard of living is falling, and we are wasting resources trying to force others to lend/hand over their wealth. The chess board looks much different today than it did in 1950; there are many more, and much better prepared competitors. Therefore new thinking is required. Find your most comfortable label for it, but by all means, seek it out, identify what works, and tell the rest of us. Once we make it through the next 50 years, by all means revert to "conservatism".

  43. Capone   June 17, 2008 at 3:59 pm

    somewhat off topic venting sorry LB…rn"Americans did not have that type of war on their soil. They have now idea…"rnnor do Americans understand hyperinflation… Europe has seen and understands and is sensitive hence ECB and BofE tightening and being disciplined while Fed until now pis _ _ d into the wind… the question I have is how can so many bright folks here see these things and understand them and discuss them all day every day – yet Americans all run in circles drinking Starbuck’s while the head of the Federal Reserve, speaking of War, dropped bomb after bomb via rate cuts on the American dollar over the past 9 months ? the flames and smoke from the public bombing campaign of the dollar initiated by the Fed have suddenly entered Americans view via inflation and now the reason ? Not the dollar – the increase in inflation is due to supply and demand of commodities ! bull oc _ _ ! bull shi_ this is an outrage ! Ha Ha Ha Why aren’t more people raising this point on camera ? Whether peak oil is to blame or not, WHAT a convenient distraction that is now from the fact the oil exporting countries want more depreciated dollars for their resource ! Good for them ! They understand the currency shell game. rn

  44. PEter   June 21, 2008 at 1:27 pm

    Absolutely one of the most retarded articles I have read. This is left wing little thinking, proving the ability of critical thinking is a lost art.The theory being we went to war in Iraq, oil went up in price, so therefore the war caused the oil spike. I have met two year olds that think more complexly than that. The fact that Iraq is pumping more oil now than before the war but prices are still rising is meaningless. How about the growth in China, India and Middle East demand for oil? Does that effect the price?I would also think that the Japanese would disagree with your contention that war does not bring prosperity, they have done very will since we bombed them back to the stone age.Simply put, this article is just for small minded people who want easy answers to difficult questions. This so happens to be the simple mindedness which we find in all our socialist/progressive/Marxist thinkers in today’s left. The reason for every problem we find in the world today is somehow related to Bush and capitalism. Forget that capitalism and free markets are what makes your life so much better today than fifty years ago. If we lived in your socialist world we would have all the advancements that came out of communist Russia, China and North Korea. More simply put, we would live just like the poor people you supposedly want to help, like the morons in liberal utopia New Orleans that were too stupid to leave when they were warned that the floods were coming so they looked to the government to save them. What kind of idiot does not know to run when the flood is coming and thinks it is the government’s responsibility to save them?On the other hand that is what the progressive rulers of the world want, a population that needs to rely on their anointed elitist greatness to help them live.