Assessing the Illusion of Recovery

Understanding the Nature of the Global Economic Crisis

The people have been lulled into a false sense of safety under the ruse of a perceived “economic recovery.” Unfortunately, what the majority of people think does not make it so, especially when the people making the key decisions think and act to the contrary. The sovereign debt crises that have been unfolding in the past couple years and more recently in Greece, are canaries in the coal mine for the rest of Western “civilization.” The crisis threatens to spread to Spain, Portugal and Ireland; like dominoes, one country after another will collapse into a debt and currency crisis, all the way to America.

In October 2008, the mainstream media and politicians of the Western world were warning of an impending depression if actions were not taken to quickly prevent this. The problem was that this crisis had been a long-time coming, and what’s worse, is that the actions governments took did not address any of the core, systemic issues and problems with the global economy; they merely set out to save the banking industry from collapse. To do this, governments around the world implemented massive “stimulus” and “bailout” packages, plunging their countries deeper into debt to save the banks from themselves, while charging it to people of the world.

Then an uproar of stock market speculation followed, as money was pumped into the stocks, but not the real economy. This recovery has been nothing but a complete and utter illusion, and within the next two years, the illusion will likely come to a complete collapse.

The governments gave the banks a blank check, charged it to the public, and now it’s time to pay; through drastic tax increases, social spending cuts, privatization of state industries and services, dismantling of any protective tariffs and trade regulations, and raising interest rates. The effect that this will have is to rapidly accelerate, both in the speed and volume, the unemployment rate, globally. The stock market would crash to record lows, where governments would be forced to freeze them altogether.

When the crisis is over, the middle classes of the western world will have been liquidated of their economic, political and social status. The global economy will have gone through the greatest consolidation of industry and banking in world history leading to a system in which only a few corporations and banks control the global economy and its resources; governments will have lost that right. The people of the western world will be treated by the financial oligarchs as they have treated the ‘global South’ and in particular, Africa; they will remove our social structures and foundations so that we become entirely subservient to their dominance over the economic and political structures of our society.

This is where we stand today, and is the road on which we travel.

The western world has been plundered into poverty, a process long underway, but with the unfolding of the crisis, will be rapidly accelerated. As our societies collapse in on themselves, the governments will protect the banks and multinationals. When the people go out into the streets, as they invariably do and will, the government will not come to their aid, but will come with police and military forces to crush the protests and oppress the people. The social foundations will collapse with the economy, and the state will clamp down to prevent the people from constructing a new one.

The road to recovery is far from here. When the crisis has come to an end, the world we know will have changed dramatically. No one ever grows up in the world they were born into; everything is always changing. Now is no exception. The only difference is, that we are about to go through the most rapid changes the world has seen thus far.

Assessing the Illusion of Recovery

In August of 2009, I wrote an article, Entering the Greatest Depression in History, in which I analyzed how there is a deep systemic crisis in the Capitalist system in which we have gone through merely one burst bubble thus far, the housing bubble, but there remains a great many others.

There remains as a significantly larger threat than the housing collapse, a commercial real estate bubble. As the Deutsche Bank CEO said in May of 2009, “It’s either the beginning of the end or the end of the beginning.”

Of even greater significance is what has been termed the “bailout bubble” in which governments have superficially inflated the economies through massive debt-inducing bailout packages. As of July of 2009, the government watchdog and investigator of the US bailout program stated that the U.S. may have put itself at risk of up to $23.7 trillion dollars.

Read the full article.

Published on WSWS.

By John Chan
25 April 2009

China held an unprecedented display of its growing naval power this week to mark the 60th anniversary of the navy’s establishment. The parade of vessels off the coastal Qingdao city involved 25 Chinese warships, led by nuclear submarines, with 31 naval aircraft flying overhead. President Hu Jintao then reviewed another 21 warships from 14 other countries, including the US, Russia, France, India, Canada, South Korea and Australia. In all, 29 countries sent delegates to the event.

Beijing invited foreign navies in the name of creating a “harmonious ocean” and showing transparency in its military build-up, but tensions were not far from the surface. Japan, which China regards as a regional rival, was not invited. To justify its large military expenditure, Beijing frequently recalls China’s past humiliation at the hands of the major powers, particularly Japan’s invasion of the country and the atrocities of the Japanese militarist regime in the 1930s.

Building China as a “sea power” and “going deep blue” have become common phrases in the state media, and investors have rushed to buy shipbuilding stocks as the naval expansion has continued. This week China showcased its advanced air defence destroyers, stealth frigates, amphibious assault ship and fighter-bombers. The newest Chinese submarines, however—the subject of keen interest in the US in particular—did not take part.

The Pentagon’s intelligence gathering on China’s naval expansion has already provoked tensions. In March, several small Chinese maritime patrol boats confronted the US spy ship Impeccable in the South China Sea near Hainan Island, where a new submarine base has been built. Washington is clearly concerned about China’s future ability to challenge American dominance in the Pacific.

For decades, the Chinese navy consisted of relatively small craft to protect the coastline. Now, it is developing a large blue water fleet. Last December, China sent two destroyers and a supply ship to the Gulf of Aden near Somalia. The operation—the navy’s first long-distance operation—was nominally to protect Chinese vessels from pirates, but clearly designed to flex China’s naval muscle.

Despite speculation that he would do so, President Hu did not announce that China would start building its first aircraft carriers. Following US criticism of the program, China’s naval head Wu Shengli told reporters that Beijing would announce the plan in other ways. A major shipbuilding company has publicly confirmed that it has received a navy order to construct carriers. Beijing obviously felt that making such an announcement during the naval display would only fuel further tensions.

Head of the US Navy, Admiral Gary Roughead, told reporters in Beijing that while China’s naval development was understandable, “I think it is important however that as we create a naval capability, indeed any military capability, that there should be clear communications with regards to what the intentions of that capability are.” Roughead specifically raised the aircraft carrier program, saying: “The real issue is: how are those aircraft carriers used, and what is the intent of that capability?”

The answer is no mystery. Like the US and its allies, China is building its navy to protect its economic and strategic interests around the globe. An aircraft carrier would allow the Chinese regime to quickly place a major naval group, with aircraft and troops, anywhere in the world—as Washington regularly does to threaten and exert pressure. In the immediate region, such a capacity would enhance Beijing’s ability to exert its influence in its maritime territorial disputes with Japan, Vietnam and the Philippines as well as over Taiwan.

Over the past decade, the Chinese navy has expanded significantly. The combined tonnage of large warships (such as frigates and destroyers) is now five times greater than in the 1980s. China now has 77 large surface warships, 56 submarines, 84 amphibious landing ships, 31 mine warfare ships and 387 small attack crafts. The navy’s airborne component has 800 aircraft and the marines have 56,000 troops. The greatest expansion has been in the submarine fleet. In the period 1995-2007, 38 vessels were added and the total is expected to reach 85 in eight years, including nuclear-powered attack and ballistic missile submarines.

In the discussion in US strategic circles about China’s growing naval threat, the rhetoric is inflated. Although quantitatively the Chinese navy is the world’s second largest after the US, Chinese naval technology is decades behind the US and other major naval powers. China’s newest Shang class nuclear-powered attack submarine is believed to be equivalent to the US navy’s Los Angeles class, which operated from the 1970s to the 1990s. While China is planning to build an aircraft carrier, the US has 11 nuclear-powered carriers with a total tonnage equal to the entire Chinese navy. According to the Pentagon’s 2009 report, only 20 percent of the weapon systems in China’s warplanes, 40 percent of its submarines and 30 percent of its surface warships are up to Western standards.

The Pentagon warned that China was “closing gaps in the creation of a precision-strike capability” against ships operating in the western Pacific. Even though China had become a regional naval power a decade earlier than expected, Toshi Yoshihara, a professor at the US Naval War College told South China Morning Post on April 21 that China still had a “long, long way to go” to catch up to the US. Although not yet a blue-water navy, he said, “that does not mean that the Chinese navy is incapable of posing problems to regional navies, and the US Navy operating within or near the seas around China”.

China’s military build-up is clearly aimed at countering the overwhelming military predominance of the US, particularly in the Pacific. The Pentagon’s massive defence spending is over nine times that of China. Moreover, Washington has been building a series of alliances and basing agreements, stretching from Japan and South Korea to Australia, India and into Central Asia, which amounts to a strategy of encircling China. US naval strategy has been based on securing the control of key “choke points” such as the Malacca Strait.

China’s first priority in building its navy is to protect its supply lines, particularly the huge imports of energy and raw materials on which its manufacturing industry depends. In 2008, China surpassed Japan as the world’s second largest importer of oil after the US, with 46 percent of its imported oil coming from the Middle East and 32 percent from Africa. More than 80 percent of these supplies pass through the Malacca and Lombok/Makkasar Straits.

As well as building up its naval fleet, China is establishing a string of port facilities in Pakistan, Sri Lanka, Bangladesh and Burma along the sea lanes to the Middle East. This strategy inevitably collides not only with Washington’s determination to retain its global military and naval dominance to defend its own economic interests, but also with India’s and Japan’s strategic and economic ambitions in the Asian region.

Far from opening a new era of “harmonious oceans,” the naval parade in Qingdao is a symptom of a dangerous new period of intensifying rivalries, which is being fuelled by the deepening global economic crisis.

The managing director of the International Monetary Fund, Dominique Strauss-Kahn, warned on Monday that the global economic situation is “dire” and could lead to social upheaval and war. The statement is the latest in a series of worried pronouncements from leading international figures in the financial and political establishment.

The IMF is projecting a 1 percent decline in the global economy this year, which Strauss-Kahn noted would be “the first setback of the world economy in over 50 years.” The IMF chief was speaking before a meeting of the International Labour Organization (ILO) in Geneva, Switzerland.

The economic crisis, Strauss-Kahn said, would affect “dramatically unemployment for many countries. It will be at the roots of social unrest, some threats to democracy and maybe for some cases, it can also end in war.”

Without citing specific countries, Strauss-Kahn also warned of regions of the world where “the financial collapse risk does exist.”

The implications of the economic collapse for working people internationally are still in their initial stages. The ILO predicted in January that up to 50 million jobs would be eliminated throughout the world in 2009. This is likely an underestimation, as the economic crisis has sharply accelerated over the past several months.

Strauss-Kahn’s position is one of concern over the prospect of mass opposition to the policies of the ruling elite as the economic situation deteriorates. He pleaded for the capitalist powers to implement policies that would prevent the crisis from “becoming a wasteland of unemployment.” The major architects of the capitalist system over the past several decades are keenly aware that they have created an economic catastrophe that threatens social upheaval.

While Strauss-Kahn did not specify what he meant by the danger of war, his remarks came in the midst of hardening conflicts between the major powers over economic policy in the run-up to the G-20 summit meeting of major economies in London next month.

Read the full article on Global Research

The financial crisis is spreading around the globe like wildfire…
March 2009

What can we expect in the near future?

A colossal surge in unemployment around the world
A horrendous explosion of hunger and poverty
A crippling decrease in international trade
A devastating collapse of global tourism
An unprecedented implosion of economies
A disastrous devaluation of currencies and paper money
A threatening increase in social unrest and turmoil
A critical rise in accusations threatening political stability
An unpredictable collision between religions and ideologies
An unforgiving breakdown of law and order throughout the world
A concerning shift towards a police state in nations around the globe
An escalation in global tensions culminating in World War Three…

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