Covering Up. (I)

“The captain is in his bunk, drinking bottled ditch-water; and the crew is gambling in the forecastle. She will strike and sink and split. Do you think the laws of God will be suspended in favour of England because you were born in it?”

That’s one of the Creator’s favourite quotations, Captain Shotover’s voice from Shaw’s Heartbreak House, and one of that old vegetarian hoopla artiste’s few true prophecies. When you are in big trouble, run and hide. Delay, deny and deceive. And, above all, do your best to cover it up and hope nobody notices.
Is it, then, big trouble now for the United States? One hopes so. The great laid low make for good television. Lefties the world over have been panting for something bad to happen, partly because they hope to profit by it (though they are not now, and never have been, prepared to lift a finger to earn such profits) and partly because they hope such a collapse would make up for all their failures of nerve, thought and (much more rarely) action.
Take a quick look at Central Asia. The Americans are in occupation of an immense country of thirty million people, most of whom loathe and despise foreigners in general, most particularly Christian foreigners, especially Americans. They are being killed like flies as they scatter across the mountainous redoubts, and make up for this by sending in the gunships and the drones to slaughter wedding parties and gatherings of goatherds. What’s to be done?
President Obama appears to have the answer: foment civil war in Pakistan. Once the Pakistani government is sufficiently unpopular with its people, it will have to control them by terrorism. The soft people of the plains are invading the mountains to butcher the hard people of the hills. Do that often enough, and the war will become so serious that the plain people of Pakistan, hopes Obama, will have to take charge of the war in Afghanistan, too. That’s why they’re massacring civilians from Swat to Waziristan — all those places which we remember from nineteenth-century British imperial history.
Oh — massacring civilians in Pakistan, like doing the same in Afghanistan, is of course a very good way to encourage the survivors to join the resistance. There are a hundred and forty million people in Pakistan, most of whom are gradually growing pissed off with their government. Suicide bombs are exploding in the cities of the plain, matching the roadside bombs going off in the mountains.
All this is very politically convenient for Obama.
Where does a wise man hide a leaf? In a forest. Where does a wise man hide a book? In a library. Where does a wise man hide a war?
In a bigger war. And so Obama hopes that in the catastrophic bloodbath engulfing the region, everybody in the United States will gradually lose focus on Afghanistan and thus he will be able to escape political destruction at the hands of his commitment there. It could get rather big, of course — the vast shipments of arms now going to Pakistan are provided on the understanding that they won’t be used on India, although how that is going to be guaranteed, nobody knows. Meanwhile, the Americans are quietly running a terrorist campaign in south-east Iran through an organisation called the Jundallah, which operates out of Pakistan. Yea, verily Pakistan is making itself popular in the region, as is the United States. Maybe they will need their nukes yet.
But all that serves to pull only one of Obama’s chestnuts out of the electric blast furnace. There is, unfortunately, another one. This is the much bigger war between classes in the United States, and especially the war between the American ruling class and reality.
What happened in 2008 was that very large corporations and financial institutions had been surviving for a decade on deceit, incompetence and luck. The luck ran out, the deceit was exposed, the incompetence was there for all to see. These corporations and institutions should therefore, according to the rules of economics, have collapsed, and in fact a few did so.
There were, however, problems. There was pious concern about these institutions being “too big to fail” — of course they had already failed, so this was nonsense. However, there was much media hype around the collapse of the banking system in the early 1930s, when the buckets and benches were being kicked over from coast to coast and millions lost their life savings. At that time, something had to be done (what was done was the introduction of a system of banking regulation, which the banks spent the next few decades circumventing and dismantling). Today, however, Americans don’t have savings, for they are mostly heavily in debt. They owe big money to the banks — this was part of the problem, for Americans no longer had the cash to service their debts to the banks. Hence, if the banks failed, average Americans would become much richer. But the people who owned the banks would lose their incomes, and the people who owned the banks also owned the U.S. government, most particularly two tools of the financial service industry, Governor George Bush and Senator Barack Obama.
What was done was to borrow immense amounts of money — many trillions of dollars — and give virtually all of it to the banks and the failing companies (a few billions were earmarked for other projects as window-dressing, though it is not clear how much was paid). A trillion dollars is three thousand dollars for every American. The kind of money Bush and Obama were splashing around would have rescued every working-class and lower-middle-class American’s savings account. But instead it was going to a tiny minority who proceeded to use the money to further their private interests — protecting banks and corporations from the consequences of their mismanagement and greed. As a result the banks and corporations went ahead and did what one might expect them to do — pay their top managers huge bonuses and shut down their least profitable enterprises, which were usually to do with manufacturing and services to the general public.
So the “bailout” accelerated the rise in unemployment, which is now at levels not seen since the slump of the 1940s. Officially it’s around 11%, but unemployment figures have been fudged for decades and probably the real figure is something like 15%. Not up at Great Depression or South African levels yet, but still, the trend is in that direction.
An obvious consequence of the bailout which nobody mentioned was that the U.S. government was creating money without creating extra production. This means that they were creating inflation. This didn’t show up at first, because the money was going to such a narrow group of people, but gradually the cost of living in America has started to rise and the international value of the dollar has started falling.
Bonehead economics would tell you that this should be good for America, since now it can sell its goods cheaply. Unfortunately, America doesn’t manufacture much that the world wants. Also, the rest of the world is also in recession and therefore isn’t buying much. Even more unfortunately, big American companies used the crisis as an excuse to shut down some manufacturing industry which they considered unprofitable. So, as the dollar falls, the result is that the dollar cost of imports — the trade deficit — gets bigger. Prices go up for American consumers, so possibly they will eventually buy less (especially since they can no longer borrow as they used to) but that means they have to get used to a lower standard of living (those who have jobs at all). Hence they have less money for services which have been America’s biggest job-creators. Obama and Bush have saved the stock exchange for the moment, but it looks as if they have ruined everything else.
This is because of international confidence. America has operated the world’s reserve currency, the dollar, meaning the currency which other countries fell back on for security when their own currencies became unstable. But the American currency is not stable; it has been free-floating since 1971. That only worked because America had the power to rig the world’s money-markets in the dollar’s favour. What now seems to be happening is that this power is dwindling fast.
In the last decade there has been much talk about many countries moving away from dependence on the dollar, but this was mostly nationalist hype due to the well-founded detestation which most people felt for the American government. It wasn’t supported by global banks. But now it is starting to look as if the dollar is no longer a particularly sound investment. It is blindingly clear that the American financial industry, their biggest foreign earner, has absolutely no idea what it is doing and cannot be trusted to deliver the goods. International banks are heavily invested in that industry, so they cannot pull out overnight, but increasingly, they probably would want to. Hence new talk about moving towards the euro or the yen or the renmenbi makes economic sense as well as political sense.
But if America loses control of the world’s financial markets and the dollar falls, there is no sign that it can recover its lost manufacturing industry. The financial system in America has been exposed as a bunch of incompetent crooks, but partly thanks to Bush and Obama it is powerful enough to continue running the show. Obama happily and repeatedly supported financial aid to the American insurance industry which has prevented him from introducing a sane health-care policy (his current plan reproduces most of the flaws of the present system, except that the medical-legal-insurance complex will soon be more able to bleed the American taxpayer as well as the sick and injured). Basically, the American elite does not want to be a competitive country; they want to make money and would be happy doing this anywhere else in the world.
Unfortunately, without financial muscle, and with their military muscle increasingly inept, demoralised, under-equipped and dispersed across half a dozen worthless little wars, it does not look as if being an uncompetitive country is going to be a winning strategy for the United States. These are the little facts which President Obama has to cover up with his rhetoric of hope and his live webcam footage of his kids playing with their new puppy. Maybe he can get away with it for the three years he has left — so long as there are no more economic shocks in store. History, however, suggests that there are such shocks, and that he won’t get away with it.


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