Updated: The Dollar Dethroned

China, Debt, Economy, Federal Reserve Bank, Political Economy

As has been lamented on this space time and again, the trashing of the dollar by the Bush/Barack soul mates has resulted in the currency’s demise as “the bedrock of world trade.”

It’s a slow and sad demise: “The latest sign of the ground shifting beneath our feet is [the report by the Independent today] of plans by Gulf states, China, Russia, France and Japan to end their practice of conducting oil deals in US dollars, switching instead to a diverse basket of currencies.”

“It is not hard to see the motivation for oil exporters to move away from the dollar. The value of the US currency has fallen sharply since last year’s meltdown. And fears are growing, in the light of a spiralling US government deficit, that a further depreciation is likely. They do not want to sell their wares in return for a currency with an uncertain future.”

“It is also easy to see why China would like a world trading system that is underpinned by other currencies as well as the dollar. For the past decade Beijing has been recycling the proceeds of its giant national trade surplus into purchases of US government bonds and other dollar-denominated assets. China too stands to make a significant loss if the value of the dollar falls. For China, however, the timing is much more sensitive. Beijing needs to reduce its dollar holdings, but if it does so too quickly it will bring about the very devaluation it fears. This explains why Chinese officials appear to want this transition to take place gradually over the next decade.”

[SNIP]

The usual tele-Demopublicans will depict this economic impetus as an act of political treachery. But what else can these nations do? Fall on their proverbial swords for the US?

Update (Oct. 7): “Stop printing money,” “We don’t care what you think,” and “You’re a moron”: This is a sweet sample of the heckling that greeted Rep. Steve Israel (D-Huntington), during a healthscare townhall meeting. It’s always encouraging when protesters associate a massive new government program with the debt (dah!), the demise of the dollar, and ultimate economic ruin. I know; this seems obvious to readers on this space, but signs that such basic comprehension is spreading are to be celebrated.

Dissing The Dalai Dodo

Barack Obama, Celebrity, China, Hollywood, Pop-Culture

Members of the fashionable left generally line up for the Dalai Lama. That’s why Obama is making such a song-and-dance of dissing the old dodo, famous for his fortune-cookie profundities and for giving celebrity airheads “intellectual” arsenal.

Dissing: Da Man will not be meeting with Da Dalai “during the Lama’s five-day trip to the U.S. capital beginning on Monday, the first time in 18 years the exiled Tibetan leader has visited Washington without seeing the president,” reports Yahoo News.

Dodo-in-chief doesn’t want to annoy our biggest creditors: China.

So long as Clueless Clooney and Bono are still welcome at the White House, we’re all safe.

I almost forgot. Read more about the One Who Is Lauded By The Lame—whence come the Lama’s pseudo-spiritual qiups; who financed him as he sat on his well-robed behind, etc.—in “Deifying The Dalai Lama.”

Update II: Taleban Storm Nato Outpost

Foreign Policy, Terrorism, The Military, War

One of the most ruthless generals of the French Wars of Religion was Blaise de Monluc. Unlike our military’s modern-day cheerleaders, he had no illusions about the saintliness of his warriors and their commanders. “Acknowledging the atrocities of soldiers, he declared that princes carried a heavier load of sin, for ‘there is no evil in war of which they are not the cause.'” (TLS, September 25, 2009)

Yet dare to even entertain the idea that the American military is not always a force for good, and that the princely Stanley McChrystal, commander of the 100,000-strong US and Nato force in Afghanistan, is not omniscient and should never be made omnipotent with respect to the Afghanistan war—and you are unpatriotic.

Left and Right: this is the prevailing wisdom.

By now you’ve heard that, by Times’ telling, “300 insurgents swarmed out of a village and mosque and attacked a pair of isolated American outposts in a remote mountainous area of eastern Afghanistan with machineguns, rockets and grenades.

They first stormed the Afghan police post at the foot of the hill in the province of Nuristan, a Taleban and al-Qaeda stronghold on the lawless Pakistan border. They then swept up to the Nato post. The battle lasted all day. American and Afghan soldiers finally repelled them, with the help of US helicopters and warplanes — but at heavy cost.”

What does the fact that “Eight American soldiers and two Afghan policemen were killed,” and that the Taleban “captured 35 policemen whose fate would be decided by the movement’s provincial council” tell you?

Americans are fighting to the death for a futile fantasy; while the Pashtun police men wink and nod at their Taleban brethren, not quite able to decide whether the latter are friends or foes.

To wit: One battalion “lost two soldiers, with three wounded, late on Friday when an Afghan policeman opened fire on his American colleagues during a joint operation to clear the Taleban from villages around the Nerkh valley.

US and Afghan investigators are trying to determine whether the policeman was a covert member of the Taleban or made a mistake. Either way, the attack fuelled the distrust that many Nato soldiers feel towards the Afghan security forces they are training as part of the coalition’s eventual exit strategy.

‘You don’t trust anybody, especially after an incident like this,’ said Specialist Raquime Mercer, 20, whose close friend died in the attack.”

Save your breath; Most Afghans have more affinity for the Taliban than for the democracy wielding Wilsonians.

Update I (Oct. 5): The Neocons-cum-Republicans, who have no principles other than to line up behind their man and against Obama, are cheering Gen McChrystal’s London sojourn to lobby for more troops. What’s next on the army commander’s media blitz? An appearance alongside McKenzie Philips on Larry King? Is there any aspect of American life that is not conducted in public or on camera?

It’s got to be obvious that the general knows nothing about the chain of command. He lacks discipline or a code of conduct. McChrystal’s a lobbyist in fatigues, guarding his fiefdom.

More importantly, Gen. David Petraeus conducted himself similarly. Although he didn’t lobby abroad for his cause, he assumed a decidedly political role. However, at the time, Republicans and their boy, Bush, were on board with Petraeus’ push for more war.

Update II: Diana West excerpts extensively from “From New Deal to New Frontier in Afghanistan: Modernization in a Buffer State.” This is worth a read, as are most of Diana’s posts.

With respect to the Helmand-Valley project in Afghanistan, Diana has mined Prof. Cullather for the Money quote:

Nation-building did not fail in Afghanistan for want of money, time, or imagination. In the Helmand Valley, the engines and dreams of modernization had run their full course, spooling out across the desert until they hit limits of physics, culture, and history.

More good material via Myron, written by Jim Sauer, “a retired Marine Corps Sergeant Major and combat veteran with over thirty years of service. Since retiring he has worked in support of U.S. Government efforts in Iraq, Afghanistan, and Israel”:

The hard fact is that the “hearts and minds” of the Afghan “people” are not for sale! The descendants of “The Great Khan” and their tribal cousins have no interest in being Westernized in any way. And, the human sewers that serve as their political leadership can only be rented. Americans are interlopers in a land where interlopers generally have their heads lopped off.

'The Recovery That Isn’t'

Debt, Free Markets, Inflation, Labor

As you go over the alarming new unemployment numbers, remember what was said in this space with respect to that “unbeatable bit of political fraud; that fig leaf of a ‘jobless recovery’: “A jobless economic recovery is the equivalent of a housewarming for the homeless.”

It was revealed today that “employers shed 263,000 jobs in September. The losses propelled the headline unemployment rate to a 26-year high of 9.8%. U6, the Bureau of Labor Statistics’ most complete measure of unemployment, has risen to a dismal 17%. This figure includes those people who want to work full time, but have simply given up looking, or who have accepted part-time work in the interim. As it is similar to the methodology used during the Great Depression, U6 offers better historical perspective on the severity of our current crisis.”

More from Peter Schiff: “Those who do cling to the absurd belief that, absent exponential productivity gains, the economy can expand while workers are being laid off will undergo a massive test of their convictions now that it’s clear the employment picture is bleak. Today’s weaker-than-expected report on non-farm payrolls revealed that employers shed 263,000 jobs in September. The losses propelled the headline unemployment rate to a 26-year high of 9.8%. U6, the Bureau of Labor Statistics’ most complete measure of unemployment, has risen to a dismal 17%. This figure includes those people who want to work full time, but have simply given up looking, or who have accepted part-time work in the interim. As it is similar to the methodology used during the Great Depression, U6 offers better historical perspective on the severity of our current crisis.”

“Taken together with yesterday’s larger-than-expected pickup in unemployment claims (first time claims rose by 17,000 to 551,000), today’s report makes it certain that the job market is still contracting, even while some indicators like GDP and consumer confidence are moving in the opposite direction.”

“There is no question that the sense of panic has temporarily subsided. In recent interviews, Treasury Secretary Geithner has been almost giddy in his descriptions of the recovery – all the while crediting his own policies for averting disaster. Americans are once again taking the government’s bait by spending money they don’t have to buy things they can’t afford. Evidence of this trend was contained in data released earlier this week which showed that even while income growth was largely stagnant, U.S. consumers showed the biggest month-over-month increase in personal spending in ten years! With the same report showing a 25% drop in the savings rate, the source of the spending money is clear. But depleting savings and increasing borrowing does not a recovery make.”

“To really recuperate, the government must allow market forces to restructure our economy. The government and individuals must rein in their spending; we must replenish our stock of savings, allow interest rates to rise, asset prices to adjust to economic reality, insolvent businesses to fail, and wages to reflect productivity. To accomplish these goals, subsidies that distort market forces must be removed and regulations that undermine our competitiveness must be repealed.”