Posts tagged State of the Union
Posts tagged State of the Union
January 30, 2012
The State of the Union is treated with utmost seriousness by the dominant news media. All four major TV networks and the cable news channels carry the event. My local newspaper devoted most of the front page and big chunks of the inside pages to its coverage: photos, accounts, sidebars, response, and analysis.
But it’s actually a spectacle that crowds out the real news. News about the impact American diplomacy is having on our future standard of living. News about the U.S. dollar’s reserve status winding down.
On the day of the State of the Union address, news flashed around the world – but not on your favorite network or in your morning paper – that India and Iran have agreed to end-run the U.S.-imposed sanctions on Iran.
They will use gold to do so.
Those sanctions, which have now been agreed to by the European Union as well, will ratchet up in July. Their enforcement means that banks and financial institutions involved in oil transactions with Iran will be barred from doing any business with financial institutions in the United States and Europe.
According DEBKAfile, a news source based in Israel, Iran has taken steps to bypass American and European banks and their currency desks altogether, agreeing instead to sell its oil to India for gold. China is expected to soon agree to use gold in buying oil from Iran as well. It’s a move that would leave the long-standing global dollar pricing of petroleum in tatters.
The gold-for-oil agreement means three things:
- It hastens the unwinding of the U.S. dollar’s global reserve currency status.
The rest of the world is actively developing alternatives to the U.S. dollar. Although it will mean a falling standard of living for the American people, U.S. policies and secretaries of state, like Condoleezza Rice and Hillary Clinton, have spurred what will become a stampede away from the dollar. DEBKAfile also reports that both China and Russia have secret mechanisms already in place to pay Iran in non-dollar currencies for its oil. And only a month ago, China and Japan, the world’s second- and third-largest economies, agreed to develop direct yen/yuan trading, forgoing the dollar as the reserve currency intermediary.
- It accelerates the global monetization of gold.
Both China and India have been aggressively adding to their gold reserves. Other countries are following suit. The Keynesians, who have been in charge of American monetary policy, having destroyed the value of the dollar and enabled our ruinous debt, may actually believe that gold is a “barbarous relic.” But it is clear that their opinions have little functional value in the real world. The world is turning to gold more and more as U.S. debt continues to mount. Indeed, is there a better alternative monetary unit to be found? Certainly, it’s not the euro. Jim Grant of Grant’s Interest Rate Observer says gold is the only answer to the question, “if not the dollar, then what?”
- It reveals the growing global impotence of the U.S.
Long able to enforce reluctant countries to adhere in its missions and embargoes around the world, the U.S. is finding its will frustrated. Nations that once had to weigh the favor of the U.S. against their own commercial and domestic political interests are increasingly ignoring the global dictates of the U.S. State Department. In 2003, Turkey, where the prospect of a U.S. invasion of Iraq was wildly unpopular, refused even bribes to allow the U.S. to stage the invasion from its soil. Today, the threat of a U.S. or Israeli strike on Iran is meeting with growing disapproval, especially from countries like China and India rely heavily on Iranian oil.
The elephant in the room that wasn’t even mentioned.
Could this just all be coincidence . . . or is there something more sinister brewing here?
Wednesday, January 25, 2012
From John Stossel:
Has Barack Obama learned nothing in three years? During his State of the Union address, he promised “a blueprint for an economy.” But economies are crushed by blueprints. An economy is really nothing more than people participating in an unfathomably complex spontaneous network of exchanges aimed at improving their material circumstances. It can’t even be diagrammed, much less planned. And any attempt at it will come to grief.
Politicians like Obama believe they are the best judges of how we should conduct our lives. Of course a word like “blueprint” would occur to the president. He, like most who want his job, aspires to be the architect of a new society.
But we who love our lives and our freedom say: No, thanks. We need no social architect. We need liberty under law. That’s it.
Obama — and most Republicans are no different — doesn’t understand the real liberal revolution that transformed civilization. The crux of that revolution is that law should define general visible rules of just conduct, applicable to all, with no eye to particular outcomes. In other words, as Nobel laureate F.A. Hayek taught, the only “purpose” of law is to enable us all to pursue our individual purposes in peace.
If Obama really wanted, as he says, a society in which “everybody gets a fair shot,” he would work to shrink government so that the sphere of freedom could expand. Instead, he expands government and raises taxes on wealthier people, as though giving politicians more money were a way to make society better. Instead, the interventionist state rigs the game on behalf of special interests.
What should Obama have said in his speech? Here’s what I wish he’d said:
Peter Schiff Scrutinizes the President’s State of the Union Address:
“We are teetering on the edge of a cliff.”
The President is preparing for his State of the Union address and is no doubt planning to include a lot of talk about holding financial criminals accountable, reversing income inequality, and getting the economy back on track, all lies of course once one examines what the president is actually doing.
The administration recently leaked a plan to give banks immunity from prosecution in exchange for a minuscule cash payment.
The Nation continues:
The Associated Press reports that a proposed deal could be announced within weeks. Five banks—Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial (formerly GMAC)—would pay the federal government $25 billion… Civil immunity would be granted to the banks for any role in foreclosure fraud, and there would be no investigations.
Van Jones writes in the Huffington Post:
[A]fter months of negotiation with big banks, the White House may announce a settlement that would let the banks off the hook for their role in the foreclosure crisis — paying a tiny fraction of what’s needed in exchange for blanket immunity from future lawsuits.
He also notes the various steps the Administration must take in order to achieve some form of justice, terms which will never be agreed to willingly by the banks.
To add some perspective, the total revenue (granted that is not profit) of all those banks combined in 2010 was about $450 billion. That means the payment will be about 5 percent of those revenues. More importantly, the agreement will provide the banks with immunity from prosecution and forbid future investigations. (More here)
These proposals are only floated after they’ve been negotiated and agreed to by the parties involved. They predate an official announcement only to gauge the public’s response. So far, the broadcast press has been fairly mute and bank stocks have been up all day.
The payoff was no doubt designed by Treasury Secretary Timothy Geithner, who President Obama described in Ron Suskind’s book, Confidence Men, as a member of the Administration “the American people deserved.” For once we fear he may be right. We do deserve this.
Full text of the State of the Union speech here.