Everything Cycles
Recession is in the news. Lots of economists are predicting anything from a “short downturn” to an actual long-term depression.
Couple this news with George Bush’s recent announcement to Congress of arms sales to Saudi Arabia that may top out at $20 billion and include bomb-guidance kits that turn unguided bombs into precision munitions with built-in satellite and motion-sensing navigation systems. The idea is to make Saudi Arabia stronger than Iran, and simultaneously give Israel even more, higher-tech weaponry to make them stronger than Saudi Arabia. Does this sound like a dangerous and foolish game to you? It does to me, too.
The Saudis are heavily invested in American banks and credit institutions, which are already posting record losses. Citibank, with heavy Saudi investment, is posting a 24 billion dollar loss! That’s just one.
Ok. Now envision that the Saudis are loaded up with many billions of dollars worth of super-high-tech, devastatingly violent stuff. Then the depression hits.
As the depression deepens and our economy slumps more and more, so does the global economy. Our money is driving China’s expansion. The world is tied to our economy and as we go down, so does everyone else. Anyone over 30 has seen this before.
The Saudis are already, right now, pumping some of their reserve billions of dollars into the banks and credit companies they’re invested in, to keep our economy propped up, but they’re going to take huge losses. They already are but they have to do it as a serious depression would destroy them.
Prices come down in depressions. In the Great Depression after the 1929 stock market crash, property values went to nearly zero in many areas. Oil prices dropped. In a depression, oil prices could drop to a fourth or less what they are now, worldwide.
The Saudi monarchy has an uneasy alliance with the Wahabbists who own the Religious Police. If a depression occurs and oil prices collapse, the monarchy will also collapse and the Wahabbists will take over. Our government knows this, which is why they suck up to the Saudis. The alternative is unthinkable.
If the monarchy collapses, the Wahabbists will have control of all those billions of dollars of high tech destruction and they will be quick to use it. Most likely on Israel and possibly on Iran.
Our economy is in trouble. I’m no pro but too many of the pros are saying so.
The White House and the Saudis have been playing a losing game, called Oil Greed. By driving up the price of oil, the Saudis have done their part in dramatically increasing both global inflation and the corresponding decrease in spendable income. Oil products now take up a much larger percentage of living costs. As I posted last year, Saudi oil production is declining according to the graphs at this link and this is the best reason for the great increase in the price of oil.
Simultaneously, our government has poured vast sums into the war effort, neglecting our infrastructure and internal security in the process. This is part of the reason the border wall money disappeared, and why New Orleans still doesn’t have it’s levees properly rebuilt. Bridges and roads are decaying, old crumbling schools aren’t being replaced, dams are neglected, habitat is disappearing under waste and pollution. Our human systems are falling apart as the gold goes to Iraq and all the thousands of construction and repair jobs that would otherwise be done to maintain our nation are gone.
Our manufacturing has vastly diminished as a result of the rising trade deficit because such a vast amount of consumer goods are being imported because of cheaper overseas labor, and this in turn has eliminated many jobs in the United States. “About 1.78 million jobs since 1998 and 935,000 jobs since 2000 that have been lost due to rising net manufactured imports.” That’s a lot of jobs. No wonder we’re heading into a recession.
If Iran doesn’t push us into a big war in the Middle East, or the collapse of Saudi oil production, a severe, prolonged recession or depression will.
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January 16th, 2008 at 11:36 am
Can’t be bothered to find the link of course, but wasn’t the cost of the Iraq war put at over a trillion dollars more than a year ago? Even by US wealth standards that must make a difference.
On cheaper overseas labour I entirely agree. As an engineer, I have always held that money, like water, flows downhill, from rich to poor. Although we continually hear of the benefits of a global economy, no globalisation enthusiast I have challenged on this has ever, and I mean EVER, been able to point to any major studies or even any significant examples to support their viewpoint. The reality is that it benefits the elite who control our industries and our governments. What do the rest of us matter?
The actions of US and UK governments in allowing a global free market, far more than those of France or Germany who have protected their industries, has been insane. Neither the US nor the UK now has any viable global car industry. By contrast, French and German car manufacturers have done well.