Andre Gunder Frank
On February 23, Andre Gunder Frank, renowned left-wing academic, writer and activist, passed away after a lengthy battle with cancer. Once suggested as a possible Cuban economy minister by Che Guevara, Frank packed his 76 years' of life with support for progressive struggle, and formidable output of economic and social analysis. At the time of his death, he was negotiating with Green Left Weekly to publish his final writing, written on January 18, in full. Here it is.
Uncle Sam has just reneged and defaulted on up to 40% of its trillions of dollars of foreign debt, and nobody has said a word, except for a line in the Economist. In plain English, that means that Uncle Sam runs a worldwide confidence racket with his self-made money based on the confidence that he has elicited and received from others around the world, and he is a also a dead-beat in that he does not honour and return the money he has received. How much of our dollar stake we lost depends on how much we, the creditors, originally paid for it. He let, or rather through his deliberate political economic policies, drove his dollar down by more than 40% from one euro to 80 cents at its highest, to 135 cents against the euro, yen, yuan and other currencies. And the dollar is still declining, indeed apt to plummet altogether.
There was also a spate of competitive devaluations in the 1930s, called the "Beggar thy neighbour policy" of shifting the costs for the neighbours to bear. True, with the decline of the dollar, so has the real value that foreigners pay decreased to service their debt to Uncle Sam. That works only if they can themselves earn a profit from an increase in value of other currencies against the dollar. Otherwise, foreigners earn and pay in the same devalued dollar, plus the loss from devaluation between the time they received dollar and had to repay it to Uncle Sam. China and other East Asians do earn in and have pegged their currencies to dollar, so they have already lost a substantial portion of their world's by far largest dollar stake. And they, like all others, will also lose the rest.
Uncle Sam's debt to the rest of the world already amounts to more than one third of his annual national domestic production (NDP), and it is still growing. That already makes his debt economically and politically never repayable, even if he wanted to, which obviously he does not. Uncle Sam's domestic debt — e.g. by consumers on credit cards and mortgages — is almost 100% of GDP and consumption, including that from China. Uncle Sam's federal debt is now $7.5 trillion, of which all but $1T was built up in the last three decades, the last $ 2T in the last eight years, and the last $1T in the last two years. Alas, that costs over $ 330B in interest, compared to $ 15B spent on NASA.
"Who Me, Worry?" Congress just raised the debt ceiling to $8.2 trillion. To help us visualize, $1 trillion in tightly packed $1000 dollar bills would match a building 40 stories high, so $7.5 trillion would be 300 stories — or about three times the height of the Empire State Building. Nearly half of that is owed to foreigners. All Uncle Sam's debt, including private household debt of about $10 trillion, plus corporate and financial debt, with their options, derivatives and the like, plus state and local government debt comes to an unimaginable $37 trillion. To help you, that is 1480 Empire State buildings high, and nearly four times Uncle Sam's NDP.
Uncle Sam's issue last year of a mere record-high $140 billion in high-yielding junk bonds must seem puny, even if they are the first to be defaulted, after or along with consumer and mortgage debt and business belly ups. Only some of that debt and its coming default can be managed domestically, but with dangerous limitations for Uncle Sam as noted below.
That is only one reason I want you to meet Uncle Sam, the deadbeat confidence man, who may remind you of the Meet Joe Black movie. For as we get to know Uncle Sam better, we will find that he is also a fraudster and a corrupt one at that.
Uncle Sam's Cold War proxy
Before we go on, lets first translate this jumble of numbers into plain English. It was already done back in 1948 by George Keenan, otherwise known as Mr. X, the architect of Uncle Sam's Containment Policy:
"We have about half the world's wealth ... but only 5% of
its population... In this situation ... our real job in the coming years is to devise a pattern of relationships which permit us to maintain this position of disparity... To do so we have to dispense with all sentimentality and day-dreaming, ... concentrate everywhere on our immediate national objectives...[and] deal in straight power concepts.
The less we are hampered by idealistic slogans, the better" — Department of State Policy Planning Study No. 23, 1948.
Of course, that statement was for Uncle Sam's private internal consumption only. For the rest of the world, including most Uncle Sammies, "idealistic slogans" do better. For they manifest the world's grandest ever Ponzi Scheme Confidence Racket run around the world by Uncle Sam. How else "to maintain this disparity"? Naked power helps, but it is not enough.
All the more so, given that since Mr. X wrote, the already then terribly UNfair world distribution of income has become about three times more unequal. For today, just consider this simple index: 265 million Uncle Sammies consume more oil, 22% of the world's total, than over three billion Asians, who all put together get 20% — and want more, especially the Chinese. To help him do it, he also relies on the Pentagon, which to boot is itself probably the biggest and least observed single polluter of all.
This observation also marks a continuity across that other wall, the one that fell in Berlin in 1989. For it shows that Mr. X's Cold War containment was not only or even primarily against the Russians, but also a containment of the other 95% of the world, and especially of the vast poor majority who suffers most from the disparity he observed. Indeed, he suggests that the East-West Cold War, that he was instrumental in starting already as Uncle Sam's ambassador in Moscow, was largely a proxy for the North-South war over both halves of the world's wealth. So that should leave us less surprised at the failure of the mistakenly anticipated "Peace Dividend" to materialise after that little wall fell down in 1989.
The other, or the real, war continues and only takes other forms or rather labels, for "human rights", "democracy," the "free market" and "free trade," "freedom" in general, indeed even "civilization", all of the last several of which are echoes of the "white man's burden" from the 19th century. Just add a few new "against", first "narco terrorism" by Bush Daddy vs. Noriega, and now just undefined "terrorism" by Bush Son vs. anybody and everybody "who is not with us". I forgot "weapons of mass destruction", the ones of which Uncle Sam has and uses the most, oh and weapons of mass deception that Uncle Sam uses like nobody's business. That is of course a sine qua non of any confidence racket, and he runs the world's grandest ever, as we will observe ad nauseam, starting right now.
Uncle Sam is the world's most privileged for having the exclusive right to print the world's reserve currency at will at a cost of nothing but the paper and ink it is printed on. By so doing , he can also export to foreigners the inflation that his irresponsible printing of money generates. For there are already at least three times as many US dollars floating around the world as at Uncle Sam's home. Additionally, his is also the only "foreign" debt that is mostly denominated in his own currency. Most foreigners' debt is also denominated in the same dollar, but they have to buy dollars from Uncle Sam with their own currency and real goods.
So Uncle Sam simply pays the Chinese and others with those dollars that have no real worth beyond its paper and ink. So especially poor China gives away for nothing at all to Uncle Sam hundreds of billions worth of real goods produced at home and consumed by rich Uncle Sam. Then China turns around and trades these same Uncle Sam paper dollar bills in for other Uncle Sam paper dollars called Treasury Certificate bonds, which are even more worthless, except that they pay a percent of interest. For as we already noted they will never be able to be cashed in and redeemed in full or even in part, and anyway they have already lost much of their value to Uncle Sam already.
In an earlier essay, I argued that Uncle Sam's power rests on two pillars only, the paper dollar and the Pentagon. Each supports the other, but the vulnerability of each is also an Achilles heel that threatens the viability of the other. Since then, Afghanistan and Iraq have shown much of the confidence in the Pentagon to have misplaced. That has helped reduce confidence and value also in $ in the dollar, which has in turn reduced Uncle Sam's ability to use that $ to finance his Pentagon foreign adventures. See my 2004 essay "Coup d' Etat and Paper Tiger in Washington, Fiery Dragon in the Pacific," which also conjures up the productive growth of China http://rrojasdatabank.info/agfrank/new_world_order.html#coup
Additionally we must realise that Uncle Sam's numbers above and below are also all literally relative. So far the relations — in particular with China — still favour Uncle Sam, but they also help maintain an image that is deceptive. Consider the following:
" ... a $2 toy leaving a US-owned factory in China is a $3 shipment arriving at San Diego. By the time a Uncle Sam consumer buys it for $10 at Wal-Mart, the Uncle Sam economy registers $10 in final sales, less $3 import cost, for a $7 addition to the US gross domestic product (GDP)" < http://archives.econ.utah.edu/archives/a-A HREF="mailto:list/2004w07/msg00083.htm"><list/2004w07/msg00083.htm>.
Moreover, ever clever Uncle Sam has arranged matters so as to earn 9% from his economic and financial holdings abroad, while foreigners earn only 3% real return on theirs, and only 1% on their Treasury certificates, invested in Uncle Sam's God's Country. Note that this difference of 6% is already double what Uncle Sam pays out, and his total 9% take is triple the 3% he gives back. Therefore, although the reciprocal foreign holdings by each other with Uncle Sam and abroad are now about equal, Uncle Sam is still the big net interest winner.
But Uncle Sam also earns quite well, thank you, from other holdings abroad, e.g. from service payments by mostly poor foreign debtors. The sums involved are not peanuts. For from his direct investments in foreign property alone, Uncle Sam profits now equal 50%, and including his receipts from other holdings abroad, now are a full 100%, of Uncle Sam's profits derived from all of his own domestic activities combined!
These foreign receipts add more than 4% to Uncle Sam's NDP. That helps nicely to compensate for the failure of domestic profits to recover even their 1972 level. That is because Uncle Sam has failed to make enough real good investments at home to boost productivity and profits. That extra profit from foreigners also compensates for much of Uncle Sam's still rising trade deficit of $600 billion a year from excess home consumption over what he himself produces. That has resulted in the trillions of dollars of his foreign debt. But Uncle Sam is playing his cards close to his chest and is understandably reluctant to make any official revelation of how high his foreign debt really is. Nonetheless, we may rest assured that his gross foreign debt is by far the world's largest and remains so also as net foreign debt even if we deduct foreigners' debts to him.
The productivity hype of then-US President Bill Clinton's "new economy" 1990s was limited to computers and IT, and even that proved to be a sham when the dot-com bubble burst. Also, not only the apparent increase in "profits" but also in "productivity" was being boosted by shop-floor, office and sales-floor worker speed-ups and/or longer work-times at the bottom. Walmart obliges its non-union workers — on threat of dismissal — to "clock-out" and return to work at no pay. At the top productivity and profits were boosted by "creative accounting" hype by Enron, Worldcom, Arthur Anderson and others of their likes engaged in shams.
Hooked on consumption
Why any and all this?, we may well ask. The simple answer is that Uncle Sam, who is increasingly hooked on consumption not to mention harder drugs, saves no more than 0.2% of his own income. Federal Reserve chairperson Alan Greenspan recently observed that this is so, because the richest 20% of Uncle Sammies, who are the only ones who do save, have reduced their savings to 2%. Yet, even these measly savings are more than counterbalanced by the 6% deficit spending of the Uncle Sam government, which does so largely on their behalf. That is what brings the average between the two together to those 0.2%. So Uncle Sam has a $400 billion reported budget deficit, which is really $600 billion if we count, as we should, the $200 billion Uncle Sam "borrows" from the temporary surplus in his own federal Social Security fund that he is also bankrupting. But never mind, Uncle Sam's President George Bush just promised to privatise much of that and let people buy their own old age "security" in the ever insecure market.
Apart from printing world money, Uncle Sam also has his "twin deficits", first his $600 billion budget deficit and then the above mentioned related $600 billion trade deficit, now at an $666 billion annual rate last month.
With them, Uncle Sam absorbs the savings of others who themselves are — often much — lower on the hog: Particularly their central banks place many of their reserves in world currency in the hands of Uncle Sam in Washington and some also in dollars at home. Their private investors send dollars to, or buy dollar assets from, Wall Street, all with the confidence that they are putting their wherewithal in the world's most safe Uncle Sam haven (that of course is part of the above mentioned confidence racket). From the central banks alone, we are looking at yearly sums of more than $100 billion from Europe, more than $100 billion from poor China, $140 billion from supersaver Japan, and many $10 billion investments by many others around the world, which includes investors and banks from the poor Third World.
Creating and collecting Third World debt
In addition, Uncle Sam also obliges the states in the Third World to act as collection agencies or even as repo goons, where goons are the ones sent out to repossess the Godfather's property by any means. Only in this case, it is not even that; for he is just taking new possessions, since the original debt has long since been paid off. The states raise taxes and fees from the population, but lower social spending on education and health to at home to divert funds to pay the debt abroad.
They also borrow in turn from private capital at home at high interest rates that the state pays to the rich lenders, but out of taxes collected from the poor. That way, income is "recycled" from poor to rich at home as well as from these poor via the foreign debt to the even richer abroad. These literally forced savings of the poor are then sent to Uncle Sam in the form of "service" on the dollar debt that is "owed" to him.
Privatisation is the name of the game in the Third World as elsewhere, except for the debt! Only the debt was socialised after it had been incurred mostly by private business, but only the state had enough power to squeeze the greatest bulk of back payments out of the hides of its poor and middle-class people and transfer them as "invisible service payments" to Uncle Sam. When Mexicans were told to tighten their belts still further, they answered, "we can't because we already ate it yesterday". Only Argentina and for a while Russia declared, in effect, a moratorium on debt "service" and that only after political economic policies, imposed by Uncle Sam's advisers and his International Monetary Fund strong arm, had destroyed their entire societies like never before in "peace" time.
Uncle Sam's Treasury secretary and his IMF hand-maiden blithely continue to strut around the world insisting that the Third — and ex-Second, now also Third — World countries of course continue to service their foreign debts, especially to him. No matter that, with interest rates multiplied several times over by Uncle Sam himself after the US Federal Reserve Paul Volker's coup in October 1979, most have already paid off their original borrowings three to five times over.
To pay at those interest rates that Volker boosted to 20%, they had to borrow still more at higher rates until their outstanding foreign debt doubled and tripled. And so did their domestic debt from which part of the foreign payments were raised as particularly in Brazil. All that, while Uncle Sam blithely defaults on his own foreign debt, as he already has several times in the 19th century.
It may be well to recall at least two pieces of advice from that time: Lord Cromer, who administered Egypt for then dominant British imperial interests, said that his most important instrument for doing so was Egypt's debts to Britain. These had just multiplied when Egypt was obliged to sell its Suez Canal shares to Britain in order to pay off earlier debts. British Prime Minister Benjamin Disraeli explained and justified his purchase of the same on the grounds that it would strengthen British imperial interests. Today, such transactions are called debt-for-equity swaps, and are one of Uncle Sam's latter day favourite methods to use debt to acquire profitable and/or strategically important real resources, just as the Canal was the short cut to the jewel of the British Empire in India.
Another piece of practical advice came from the premier military strategist Clausewitz: Make the lands you conquer pay for their own conquest and administration. That is of course exactly what Britain did in India through the infamous "Home Charges" remitted to London in payment for Britain administering India. Even the British themselves recognised this as "tribute" that was responsible for much of "the drain" from India to Britain. How much more efficient yet to let foreign countries' own states administer themselves, but by rules set and imposed by the Uncle Sam-run IMF and then effect a drain of debt service anyway.
So therein, the British also set a 19th century precedent with "independent" states. It has since been called the "imperialism of free trade". As long as the rules work, fine. When they don't, a bit of gunboat diplomacy can help, and Uncle Sam had already learned to use that early in the 20th century. When even that was not enough, the next option was to invade, and if necessary to occupy — and then to rely on the Clausewitz rule to make the victims pay for their own occupation. We shall note several recent instances thereof below and pay special attention to the present one in Iraq.
Meantime as I write, but after I wrote the above, I received the following e-mail from Democracy Now:
"Confessions of an Economic Hit Man: How the US Uses Globalisation to Cheat Poor Countries Out of Trillions.
"We speak with John Perkins, a former respected member of the international banking community. In his book Confessions of an Economic Hit Man, he describes how, as a highly paid professional, he helped the US cheat poor countries around the globe out of trillions of dollars by lending them more money than they could possibly repay and then take over their economies.
"JOHN PERKINS: Basically what we were trained to do and what our job is to do is to build up the American empire. To bring — to create situations where as many resources as possible flow into this country, to our corporations, and our government, and in fact we've been very successful. We've built the largest empire in the history of the world... primarily through economic manipulation, through cheating, through fraud, through seducing people into our way of life,
through the economic hit men. I was very much a part of that ... I was initially recruited while I was in business school back in the late sixties by the National Security Agency, the nation's largest and least understood spy organisation...
and then [it] sends] us to work for private consulting companies, engineering firms, construction companies, so that if we were caught, there would be no connection with the government ...
"I became its chief economist. I ended up having 50 people working for me. But my real job was deal-making. It was giving loans to other countries, huge loans, much bigger than they could possibly repay. One of the conditions of the loan — let's say a $1 billion to a country like Indonesia or Ecuador — and this country would then have to give 90% of that loan back to a US company, or US companies ... a Halliburton or a Bechtel ... A country today like Ecuador owes over 50% of its national budget just to pay down its debt. And it really can't do it. So, we literally have them over a barrel. So, when we want more oil, we go to Ecuador and say, "Look, you're not able to repay your debts, therefore give your oil companies your Amazon rain forest, which are filled with oil."
"And today we're going in and destroying Amazonian rain forests, forcing Ecuador to give them to us because they've accumulated all this debt ... [We work] very, very closely with the World Bank. The World Bank provides most of the money that's used by economic hit men, it and the IMF [http://www.democracynow.org/article.pl?sid=04/11/09/1526251]
@sub = Consuming and controlling oil
Last but not least, oil producers also put their savings in Uncle Sam. With the "shock" of oil that restored its real price after its dollar valuation had fallen in 1973, ever cleverer by half, Henry Kissinger made a deal with the world's largest oil exporter in Saudi Arabia that it would continue to price oil in dollars, and these earnings would be deposited in Uncle Sam, partly compensated by military hardware in return. That deal de facto extended to all OPEC nations and still stands, except that before the war against Iraq, it suddenly opted out by switching to pricing its oil in euros, and Iran threatened do so as well. North Korea has no oil but trades entirely in euros. That constitutes the triple "rogue states axis of evil".
Today Venezuela is a major oil supplier to Uncle Sam and also supplies some at preferential rates as non-dollar trade swaps to other poor countries like Cuba. So Uncle Sam sponsored and financed military commandos from its Plan Columbia next door, promoted an illegal coup, and when that failed, a legal referendum in his attempt at yet another "regime change" there as well; and now along with Brazil all three are being baptized as yet another "axis of evil".
After writing this, I found that the good [hit] man Mr. Perkins was in Saudi Arabia too:
"Yes, it was a fascinating time. I remember well ... the Treasury Department hired me and a few other economic hit men. We went to Saudi Arabia ... And we worked out this deal whereby the Royal House of Saud agreed to send most of
their petro-dollars back to the United States and invest them in US government securities.
"The Treasury Department would use the interest from these securities to hire US companies to build Saudi Arabia — new cities, new infrastructure — which we've done. And the House of Saud would agree to maintain the price of oil within acceptable limits to us, which they've done all of these years, and we would agree to keep the House of Saud in power as long as they did this, which we've done, which is one of the reasons we went to war with Iraq in the first place. And in Iraq we tried to implement the same policy that was so successful in Saudi Arabia, but Saddam Hussein didn't buy.
"When the economic hit men fail in this scenario, the next step is what we call the jackals. Jackals are CIA-sanctioned people that come in and try to foment a coup or revolution. If that doesn't work, they perform assassinations. Or try to. In the case of Iraq, they weren't able to get through to Saddam Hussein. His bodyguards were too good. He had doubles. They couldn't get through to him.
"So the third line of defence, if the economic hit men and the jackals fail, the next line of defence is our young men and women, who are sent in to die and kill, which is what we've obviously done in Iraq." — from <http://www.democracynow.org/article.pl?sid=04/11/09/1526251>.
The world's biggest Ponzi scheme
To return to the main issue and call a spade a huge spade, all of the above strategies are part and parcel of the world's biggest ever Ponzi scheme confidence racket. Like all other ones, its most essential characteristic is that it can only continue to pay off dollars and be maintained at the top as long as it continues to receive new dollars at the bottom, voluntarily through confidence if possible, and by force if not.
But what if and when confidence runs out, and dollars no longer come? Things are already getting shakier at the Uncle Sam house. The declining dollar reduces the necessary
dollar inflows. Last month, they were only $48 billion against outflows of $55 billion.
So Dr Greenspan needs to raise interest rates to attract the foreign dollars he needs to fill the trade gap. As a quid pro quo for being reappointed by President Bush, he promised to do that only after the election. That time has now arrived, but doing so threatens to collapse the housing bubble that was built on low interest and mortgage — and re-mortgage — rates. But it is in their house values that most of Uncle Sam's people have their savings, if they have any. They and this imaginary wealth effect supported over-consumption and the nearly as high as NDP household debt.
Volker's high-interest-rate successor at the Fed, Greenspan lowered interest rates almost to zero, which made borrowing and mortgages — that is debt — cheap and plentiful. That increased the demand for consumer goods and houses. The former are cheap from China, but the latter drives up the price and "value" of houses, which has encouraged upgrading to still more expensive ones, increased "collateral", and still more borrowing, and still more consumption.
So too did capital flight from East Asia after its 1997 financial crisis. It fled to Uncle Sam's safe haven, both to Washington into Treasury certificates and to New York into Wall Street equities. At the same time, Uncle Sam benefited from the crisis by buying devalued East Asian currencies and using them to buy up East Asian real resources, and in Korea also banks, at bargain basement reduced prices. That is what generated the big bull market of rising stock prices and again apparent greater wealth, which also supported more consumption. Since then, the stock market has already crashed again.
When the housing market also crashes with Dr. Greenspan's present and future increase in interest rates, and therefore mortgage costs, a collapse of the housing price bubble would not only drastically undercut house prices. It would thereby have falling domino effects on the owners' enormous second and third re-mortgages, consumer credit card and other debt, their consumption, corporate debt and profit and investment. In fact, these factors would be enough to also plummet Uncle Sam into deep recession, if not depression, and another Big Bear deflation on stock and de facto on other prices, rendering debt service even more onerous.
If the dollar declines, even domestic dollar price inflation is de facto deflationary against other currencies, as Russians and Latin Americans discovered to their peril. Still-lower real Uncle Sam investment would reduce its industrial productivity and competitiveness even more — probably to a degree lower than can be compensated by further devaluing the dollar and making its exports cheaper as is the confident hope of many, probably including the good Dr.
Until now, the apparent inflation of prices abroad in rubles and pesos and their consequent devaluations have been a de facto deflation in terms of the dollar world currency. Uncle Sam then printed dollars in order to buy up, at fire sale bargain dollar prices, natural resources in Russia [whose economy was then run on $100 bills], and companies and even banks, as in South Korea. True, now Dr. Greenspan and Uncle Sam are trying again to get other central banks also to raise their interest rates, thereby plunging his own people into even deeper depression. But even if he can, thereby also cancelling out the relative attractiveness of his own interest rate hike, how could that save Uncle Sam himself?
So far beyond Osama bin Laden, Al Qaeda and all terrorists put together, the greatest real world threat to Uncle Sam is that these dollars does not keep coming in. For instance, foreign central banks and private investors (it is said that "overseas Chinese" have a tidy trillion in dollars) could any day decide to place more of their money elsewhere than in the declining dollar and abandon poor of' Uncle Sam to his destiny. China could double its per capita income very quickly — if it made real investments at home instead of financial ones with Uncle Sam. Indeed Henry G.K. Liu writes, albeit a bit unrealistically, that "if the US$430 of Chinese exports were consumed domestically at their final market price, US$2.15 trillion would be added to China's 2003 GDP of $1 trillion, tripling it". (<http://archives.econ.utah.edu/archives/a-list/2004w07>).
Dumping dollars for euros or east Asian currency?
Central banks, European and others, can now put their reserves — in rising! — Euros or even soon to be revalued Chinese Yuan. Not so far down the road, there may be an East Asian currency, e.g. a basket, first of ASEAN + three (China, Japan, Korea) — and then + India as well. While India's total exports in the past five years rose by 73%, those to ASEAN countries rose double that rate and six-fold to China.
India has become an ASEAN summit partner, its prime minister just declared that India wants ever-closer relations with ASEAN, and its ambitions stretch still further to an ASEAN Economic Community, stretching from India to Japan. Not for nothing, in the 1997 East Asian currency and then full economic crisis, Uncle Sam strong-armed Japan to stop it starting a proposed East Asian currency fund that would have prevented at least the worst of the economic crisis. But now, China is already taking steps toward such an arrangement, only on a much grander financial and now also economic scale.
A day after writing the above, I read in the November 17 Economist a report on the previous week's summit meeting of ASEAN+3 in Malaysia. Its prime minister announced that this summit should lay the groundwork for an East Asian Community
EAC that "should build a free-trade area, co-operate on finance, and sign a security pact ... that would transform East Asia into a cohesive economic block ... In fact, some of these schemes are already in motion ... China, as the region's pre-eminent economic and military power will doubtless dominate... and host the second East Asia Summit." The report goes on to recall that in 1990, Uncle Sam shot down a previous initiative for fear of losing influence in the region. Now the report is entitled "Yankee stay home."
Or what if already long before that comes to pass, exporters of oil simply cease to price it in ever-devaluing dollars, and instead make a mint by switching to the rising euro and/or a basket of East Asian currencies. For that would at one stroke, in order still to be able to buy oil, vastly diminish the world demand for and price of dollars by obliging anyone who wants to buy oil to purchase and increase the demand price of the euro or Yen/Yuan instead of dollars. That would crash dollars and tumble Uncle Sam in one fell swoop, as foreign and even domestic owners of dollars would also sell off as many of them as fast as they could and other countries' central banks would switch their reserves out of dollars in the no-longer-safe-haven Uncle Sam.
That would drive the dollar down even more, and of course halt any more dollar-inflow to Uncle Sam by the foreigners who have been financing the Uncle Sam consumption spree. Since selling oil for falling dollars instead of rising euros is evidently bad business, the world's largest exporters in Russia and OPEC have been considering doing just that. In the meantime, they have raised the dollar price of oil so that in euro terms it has remained about stable since 2000. So far, many oil exporters and others still place their increased amount of dollars with Uncle Sam, even though he now offers an ever less attractive and less safe haven, but Russia is now buying more euros with some of its dollars.
So, many countries' central banks have begun to put ever more of their reserves into the euro and currencies other than Uncle Sam's dollars. Now even the best friend indeed, the Central Bank of China, the greatest friend of Uncle Sam in need, has begun to buy some euros. China has also begun to use some of its dollars — as long as they are still accepted by them — to buy real goods from other Asians and thousands of tons of iron ore and steel from Brazil. Brazil's president recently took a huge business delegation to China, and the Chinese one just went to Argentina. They are going after African oil and South African minerals too.
A doughnut
All Ponzi schemes build a financial pyramid. Many who pay into them also live in a financial world themselves, but others need to derive their in-payment through earnings from production in the real world. In today's world of financial transactions that every day are 100-fold more than all payments for real goods and services put together, the financial ones put the real ones into the shadow behind their brilliance. Moreover, to over-simplify a very complex matter into more intelligible lay people's language, options, derivatives, swaps and other recent financial instruments have been ever-further compounding already compounded interest on the real properties in which their stake and debts are based, which has contributed to the spectacular growth of this financial world.
Nonetheless, the financial pyramid that we see in all its splendour and brilliance, especially in its centre at Uncle Sam's home, still sits on top of a real world producer (merchant) consumer base, even if the financial one also provides credit for these real world transactions.
Now what if we look at the world as a doughnut, analogous to so many cities in Uncle Sam rust belt. The centre is derelict and hollowed out as production and consumption has moved to the surrounding suburbs (in automobile Detroit, the windows of the principal department store Hudson's have been boarded up for years, even as Detroit has built an expensive "Renaissance Center" to re-gentrify it's city center, a process that has "succeeded" in some other cities).
We might look at the entire world in doughnut terms, with the whole of Uncle Sam in the empty hole in the middle that produces almost nothing it can sell abroad. The main exceptions are agricultural goods and military hardware that are heavily subsidised by the Uncle Sam government from its taxpayers and dollar paper printing press, and even so he runs a $600 billion budget deficit.
The big difference in this Uncle Sam doughnut is that both the budget and the $600+ billion trade deficit are financed by foreigners, as we have seen. Uncle Sam would exclude most of them as immigrants, but gladly receives the real goods they produce. As world consumer of last resort, as already suggested, Uncle Sam performs this important function in the present world political economic division of labour: everybody else produces and needs to export, and Uncle Sam consumes and needs to import.
The crash of the US dollar would (will?) crumble this entire world-embracing and organising political economic doughnut and throw hundreds of millions of people, not to mention zillions of dollars and their owners, into turmoil with unforeseen and perhaps unforeseeable consequences.
Many people, high and low on the world totem pole, have a big stake in avoiding that, even if it requires continuing to blow the empty Uncle Sam up like a balloon. Or to refer to a well know simile, to continue to pretend that the emperor with no clothes is dressed up and to send him some to boot.
That still includes China, for which a financial show down with Uncle Sam would be a blessing in disguise: that would oblige China to change political economic course, and instead of giving its goods away for free to Uncle Sam, to turn production and consumption inward to its poor interior and to the near outward in East Asia, all of which it could and should be doing already; and the latter China has recently begun to do, but not yet the former.
So what will happen to the rich on top of the Uncle Sam Ponzi scheme, when the confidence of poorer central banks and oil exporters in the middle runs out, and the more destitute poorest around the world, confident or not, can no longer make their in-payments at the bottom? The Uncle Sam Ponzi Scheme Confidence Racket would — or will? — come crashing down, like all other such schemes before, only this time with a worldwide bang. It would cut the world's present Uncle Sam consumer demand of last resort down to real world size and hurt many exporters and producers elsewhere in the world. In fact, it may involve a wholesale fundamental reorganisation of the world political economy now run by Uncle Sam.
Catch-22
Of course, crashing the dollar would also in one fell swoop wipe out, that is default on, Uncle Sam's debt altogether. Thereby, it would simultaneously also make all foreigners and rich Uncle Sammies lose the whole of their dollar asset shirt. They are still desperately trying to save as much of it as possible by not going for the crash, that is for broke. They are trying to protect the remainder of their dollar-investment shirt by keeping their dollar-sustaining pump going. The whole business of maintaining the Uncle Sam Ponzi Scheme poses the world's biggest and craziest Catch-22 since MAD, and it is just about as mad.
All the more reason why it must be resolved. But the way out of the mad Catch-22 need not be a soft landing. It can be hard one indeed. This dissolution of the Uncle Sam Ponzi Scheme will be costly and the greatest costs will as usual probably be dumped on the poorest who are least able to bear these costs, but who are also least able to protect themselves from being forced to do so. And the historically necessary transition out from under the Uncle Sam-run doughnut world can bring the entire world into the deepest depression ever. Only East Asia is in a relatively good position to save itself from being pulled — or pushed — to the bottom, but even then also after paying a high cost for this transition.
However, the world is facing an even MADer global geopolitical and military Catch 22.
It remains the great unknown and perhaps unknowable. How would (will?) Uncle Sam react as a Paper (money) Tiger that is wounded by a crash of the Ponzi Scheme Confidence Racket from which he — and millions of unknowing Uncle Sammies — have lived the good life? To compensate for less bread and civil rights but more "Patriot" acts at home, a more chauvinist Uncle Sam can provide a World War III circus abroad.
A crash of the dollar will pull the financial rug out from under, and his discourage his foreign victims from continuing to pay for new Pentagon adventures abroad. But some more wars may still be possible with the weapons he would still have and some more military Keynesian government deficit spending at home, also for the new "small" nukes he is preparing for the occasion. That could well — nay horribly — be the cost to the world of the current policies to "defend freedom and civilization". The Super Catch-22 is that almost nobody other than Osama bin Laden wants to run that risk.
Redistribution and blackmail
Meantime, back on the farm, as the saying goes in Texas, what does Uncle Sam himself blithely do with the world's hard earned savings and money? His consumers still overconsume it without 99.9% of them knowing what they are doing, since hardly anyone tells them so. And Uncle Sam's government uses much and all of its increase of hundreds of billions of dollars for the Pentagon. That money is not spent to pay its poor professional soldiers who come mostly from small-town rural USA and took the only job they could get, and even less is spent on its hapless reservists. They told defence minister Donald Rumsfeld in Kuwait that he does not even provide them with sufficient and safe equipment. Rummy replied, "I am an old man, I just got up, and I need time to get my thoughts together".
But at home in the Pentagon, Rummy faces no such problem. There he knows very well what he is doing, privatising war also in Iraq as at home. The Military-Industrial Complex against which General Eisenhower warned in his 1958 parting Presidential address is alive and kicking, more than ever under the stewardship of "Vice" President Cheney and his De(a)Sec Rumsfeld. With their jobs disastrously well done, both are being kept on for a second term. So is Paul Wolfowitz "of Arabia" who with Douglas Feith is one of the duo at the Pentagon that went to Israel. Regarding the latter, the German Der Spiegel Dec 20,2004:33 quotes Tommy Franks, who was the commander of the Iraq invasion, as calling "the greatest total idiot that there is on God's Earth, with whom I have to battle almost every day").
Between 1994 and mid-2003, Uncle Sam's Pentagon made more than 3000 contracts valued at more than $300 billion with 12 Uncle Sam private military companies (PMCs). But, according to the Center for Public Integrity's International Consortium of Investigative Journalists, cited in Mafruza Khan e-mail on August 16 2003, more than 2700 of those contracts were given to only two companies: to Kellogg Brown & Root (KBR), a subsidiary of Cheney's Halliburton, and to Booz Allen Hamilton. In Iraq, these PMCs now have as many operatives as Uncle Sam and British troops combined. But of course that is still "small" potatoes, since the bulk of Pentagon money is Uncle Sam-ed to buy expensive weapons systems from the only four major Uncle Sam "defence" contractors and the likes of Vice-President Cheney's Halliburton. Uncle Sam then uses these arms unilaterally to twist others arms by armed threat and blackmail, and if that is not enough to invade the world that provided the money in the first place. After all, Uncle Sam has to do what it must to keep the money coming in.
Vigilante law
Uncle Sam unilateralism is not so much, as often mistakenly supposed, just going it alone. Yes, unilateralism is to proclaim fighting for "freedom" (whose? — we may ask) and "saving civilization", as Uncle Sam President Bush and his even more eloquent British mouthpiece Tony Blair proclaim every day. The simplest way to "save" civilization was by simply abolishing in a day its most precious gift of the whole body of international law to keep the peace, which the West had taken centuries to develop, admittedly also in its own imperial interests. Still, it was the best and only international law we had, and at the very least better than nothing at all. Now the only "Law of the West" that remains is indeed 'The law of the West': The spaghetti western vigilante law of posses that, with or without a conniving judge, take the 'law' into their own hands to form a lynch party. Then they go after whom and where and when they please. Alas, now in the real world the self- appointed posses operate "out of area" on a much grander scale than any fictional spaghetti western film could ever have imagined.
That also means disembowelling and paralysing the UN institution that was established to guard the peace, except when Uncle Sam, after its own wars, always recycles the UN to pick up the pieces he shattered in Yugoslavia, Afghanistan and now Iraq. But in so doing, it also means, to dupe, threaten, cajole and blackmail all others — friends and foes alike — to do his bidding on every issue, big and small. He has trained a whole civilian army of officials to do that. That way, Uncle Sam "unilaterally" throws his still apparent weight around in all other international institutions that deal with endeavours from agriculture and aviation to zoology. But Uncle Sam extorts real unilateral favours for himself even more through his bilateral relations. That is why the World Trade Organisation was dead on arrival. Indeed, Uncle Sam now prefers to Uncle Same bilateral relations unilaterally, as he increasingly isolates himself internationally. So, he can exercise even more military, political and economic bargaining power over any one of his victims than he any longer can over all or even many of them in international institutions.
And when that bargaining is not enough, or even if it could be, Uncle Sam simply attacks when he feels like it and invades little Grenada (population, all of 300,000); Nicaragua (with the help of arch-enemy Iran); Panama (7000 civilians killed in one night to capture one man only, Daddy Bush's one-time friend and ally Noriega — there is an all smiles photo of them shaking hands); Iraq in 1991 (that was even a money making venture as Uncle Sam extorted more dollars from his allies to pay for the war than it actually cost him! But Iraq was contaminated by Uncle Sam's depleted uranium, which has multiplied birth defects there — and which caused the infamous "Gulf War syndrome" among his and British troops, which Uncle Sam denies and refuses to acknowledge). The less said about Somalia the better. Yugoslavia was attacked in part to make an example out of what can happen when a state is weak enough and, yet in abject defiance of Uncle Sam and his IMF, maintains some state ownership of important means of production and still provides social welfare state protection to the population. That is like still Belarus today, where Uncle Sam also tried to get "regime change", but military action is more difficult on the border of Russia, unless it is in accord as against Afghanistan or is bought off. Moreover, Yugoslavia only gave up in 1999 after Russia withdrew its support from it; because Uncle Sam successfully used political economic blackmail and partly bought it off in Berlin.
Then Afghanistan became a targeted victim, again with the help of Iran and Russia. That is after Uncle Sam created and sponsored the Taliban government that eradicated opium. But the "liberated" Afghanistan now grows opium again, even more than before the Taliban eradicated it, so that opium now accounts for one third of Afghanistan's GDP, according to the new announcement upon taking office by the new president who was installed by Uncle Sam.
At the same time as I write, Uncle Sam is launching a renewed military offensive against the Taliban; but there is no more mention of bin Laden. And now innocent Iraq is already an Uncle Sam target and victim again. Who's next? Iran? Syria? — not Libya, it is now obediently making oil deals with Uncle Sam; and not North Korea that made nukes to protect itself against precisely that.
Sorry, I neglected to mention two additional, perhaps possible alternatives, prior to invasion. One is of course sponsoring, organising, or even making a military or otherwise coup d' etat of which the CIA has a proud record: Iran in 1953, Guatemala in 1954, Congo in 1960, Vietnam in 1961, Brazil in 1964, Guyana in 1964, Indonesia in 1964-65, Dominican Republic in 1965, Ghana in 1966, Greece in 1967, Cambodia in 1970, Chile in 1973, Argentina in 1976, Bolivia again and again, Fiji in 1987, Nicaragua in 1990 by "election" under threat of continuing the Contras war, Haiti again and again — against the ex-puppet Uncle Sam put there in the first place, just to name a few of the better known ones.
Another alternative is better known, and attempted several times against on Fidel Castro in Cuba, with explosive cigars and other imaginative CIA "dirty tricks" — all of which have been unsuccessful. So was the bombing of Cornel Quadhaffi's tent home that killed his daughter. But our good Mr. Perkins relates a successful CIA attempt:
"The Japanese wanted to finance and construct a sea-level canal in Panama. [Panamanian President Omar] Torrijos talked to them about this, which very much upset Bechtel Corporation, whose president was George Schultz and senior council was Casper Weinberger. When [US President Jimmy] Carter was thrown out, when he lost the election, and [Republican Ronald] Reagan came in and Schultz came in as secretary of state from Bechtel, and Weinberger came from Bechtel to be secretary of defence, they were extremely angry at Torrijos — tried to get him to renegotiate the Canal Treaty and not to talk to the Japanese. He adamantly refused. He was a very principled man. He had his problem, but he was a very principled man. He was an amazing man, Torrijos. And so, he died in a fiery aeroplane crash, which was connected to a tape recorder with explosives in it, which — I was there. I had been working with him. I knew that we economic hit men had failed. I knew the jackals were closing in on him, and the next thing, his plane exploded with a tape recorder with a bomb in it. There's no question in my mind that it was CIA. sanctioned, and most — many Latin American investigators have come to the same conclusion. Of course, we never heard about that in our country." <http://www.democracynow.org/article.pl?sid=04/11/09/1526251>.
Torrijos had previously signed a treaty with President Carter handing over the Panama Canal to — Panama!
Simple inspection also reveals that being too good a political friend or tool of Uncle Sam can also be just about the riskiest, that is foolish, thing any political leader can do; for it can easily spell his political or physical death sentence after Uncle Sam stabs him in the back. A successor of Torrijos, as we noted, is now sitting in an Uncle Sam jail after loyally serving and smiling in a photo with George Bush Snr. But the line is long and goes all the way around the world starting in the 1950s and 1960s: Rhee in Korea, Diem in Vietnam, Trujillo in the Dominican Republic, Somoza in Nicaragua, virtually everybody in Haiti from Papa and Baby Doc to the priest Aristide installed by Clinton and removed by Bush, the Shah of Iran — put there after the 1953 CIA coup against Mossadeq after he had nationalised Irani oil but was let go when his usefulness faded, as was Mobutu after three decades in Zaire, Yugoslavia's Milosevic — he was the necessary and reliable implementor of the Uncle Sam Dayton agreement in Bosnia, and of course the Taliban — Uncle Sam himself formed and put it in charge of Afghanistan, not to mention one Osama bin Laden — he also served Uncle Sam there.
(Not?) incidentally, simple inspection of the facts on the ground also reveals that, when the above "lines of defence" failed and Uncle Sam went to war, except for little Grenada, Uncle Sam has never won by his military force, unless in the Pacific war against Japan. World War II was won in Europe at Stalingrad in 1943 by Russian troops, who would have reached Berlin even if Uncle Sam had not arrived later. The Korean War was and remains a stalemate. The war against Vietnam was lost. The war against Yugoslavia was "won" only when the Russians withdrew their support, and then all but seven Yugoslav tanks and all of its planes left Kosova unharmed. Only its and Yugoslavia's civilian infrastructure had been bombed to smithereens, and its and the wider Balkan landscape was polluted for eons by Uncle Sam's renewed use of depleted uranium. The war against Afghanistan is being lost, and so is the war against Iraq, despite the reported use once again of depleted uranium, also again of napalm as in Vietnam and even of gas.
From Casablanca to Jakarta
Nonetheless, Uncle Sam has plenty other geo-political economic military plans going again. For starters, he has already built 800 military bases around the world and especially in the oil rich "heartland" of [1950s US presidential advisor with a focus on Eastern Europe] Zbigniew Brzezinski global "Chessboard" and to surround China.
The Pentagon is also to redeploy 60% of a US Submarine fleet to the Western Pacific. All that is for future use but also already present political influence. Apart from that, Uncle Sam's President Bush has a new "Plan for the Middle East", which now stretches from Morocco beyond Pakistan — to Muslim Indonesia?
Just what this plan involves is not yet clear, but civil society is already paving the way as well: Yale University Press already lists Pakistan among its "Middle Eastern" Studies, and Swissair has a paper place mat that places Karachi, Delhi and Mumbai on its "Middle Eastern" destinations.
What is clear is that Israel is to remain Uncle Sam's political and military stalking horse in the region, as it has always been. Never mind whether Republicans or Democrats rule in Washington, Israel's hunting dog-like role for Uncle Sam in its oil-rich area of operation remains, and so does the security Israel enjoys from Uncle Sam's international diplomatic, political and military protection, no matter what, as well as Uncle Sam's direct economic and military support without which Israel could not exist.
Only now, Israel's assigned and self-appointed regional reach may expand even further as the two above-mentioned high-placed Pentagon neo-conservatives even went there to make a plan for the racist chauvinist Likud party now in power. And Bush himself went to Africa, especially West Africa to look at its oil.
In the Americas, his Plan "Colombia" (it has oil too) has been extended to the whole Andean region (Ecuador also exports oil), he has yet another plan for the Amazon (maybe some oil is to be found there and in the meantime he built a huge base there, allegedly for NASA which is not unknown to engage in military ventures), a plan to "take care of", with World Bank help, the world's largest underground deposit of sweet water under Iguazu Falls, where Brazil, Argentina and Paraguay meet, and he is already again training 40,000 Latin American military personnel at a time at home.
Just recently Rummy went to Ecuador to meet with, lay out his plans for, and reportedly cajole, his counterpart assembled "defence" ministers form all the Latin American countries.
All this is a giant global military political economic foundation on which to maintain Uncle Sam's financial Ponzi Scheme Confidence Racket, and cheap at twice the price for those that end up with the dollars as long as he can pay for it all with the self-made paper dollars that so far also maintain the global Ponzi business. Well to be honest, it's not only for the dollars. After all that is only useful if you can actually buy something with it, especially the oil that keeps the foundation running.
Not only does Uncle Sam have to buy ever more oil, today with self-printed dollars, perhaps tomorrow with Euros or Yuan. He also has to try to make sure to have his hand on every spigot; so he can control who else can, and especially who cannot buy it. So that is why we now find him attempting political and financial control of the oil spigots, wherever he still can, and for establishing a military presence as in Central Asia, or Uncle Saming military power to go in as to Iraq.
That is both to use it as a lever of control and/or to warn its neighbours what may happen to them if they fail to continue to play along with Uncle Sam. Fortunately for him, most of East Asia and especially China also seem to be obliged to buy foreign oil, even if tomorrow perhaps no longer with dollars but with Yuan/Yen. On the other hand, sad but true, the world's biggest seller of oil is Russia, whose spigots remain beyond Uncle Sam control. But how could Uncle Sam continue to pay for and maintain all these bold Uncle Sam ventures in defence of freedom with that self made paper dollars if nobody accepts it any more? And why should anybody?
The December 10 Financial Times offers some additional tip-of-the-iceberg examples of Uncle Sam defence of freedom in Iraq. Though poor Iraq sits on top of the world's largest still-unexploited pool of ever-more precious oil, it remains in the background or only at the bottom of this story. In two different reports, the FT relates how three helicopters flew 14 tons of $100 bills in to the Kurds, who long since have been an Uncle Sam Fifth Column in the area. The money, much of the $1.8 billion Uncle Sam pay-off to the Kurds, was part of Iraq's earnings in the UN "oil-for-food" fund. Initially, of course, the bills were simply the product of the self-same Uncle Sam printing press, for which Iraq had exported real oil.
It did not come from the $18 billion that Uncle Sam's Congress appropriated for "reconstruction" of Iraq. As an FT graph graphically showed, no more than $388 million — or 2.15% — of that Uncle Sam money had yet been spent, and only $5 billion of it had even been budgeted by Uncle Sam in Iraq by the time Uncle Sam pro-consul Paul Brenner went home with a job well done.
No, instead, in his wisdom the good Uncle had thought it best to have spent $13 billion of the $20 billion of Iraqi funds. By the time the new Iraqi government took over some tasks from Uncle Sam, they discovered that the full $20 billion of their funds had been spent, $11 billion from sales of oil. How come? — we may ask. So simple is the answer of the "responsible" finance officer, Uncle Sam Admiral Oliver, "I know we spent some money from (the Iraqi) fund. It was purely the matter that we'd run out of US money" — of which there was only another $17.5+ billion unspent. We might wonder whether the good general was schooled in Clausewitz on war and happened to discover his good advice about making the conquered victim pay for his own military occupation.
The Iraqi representative on the funding disbursement and oversight committee attended only one of its 43 meetings; but why bother with more, when most expenditures were authorised without any meeting at all? So although Uncle Sam funds were budgeted for all sorts of projects, they were nonetheless paid out of Iraqi funds. Of these, many disbursements were even made without any contract whatsoever, in one case a mere $1.4 billion. Most others occurred without any multiple competitive, nor otherwise open bids.
The Uncle Sam funds, on the other hand, remained virtually unspent in Iraq. Maybe Admiral Oliver had "run out of Uncle Sam money" in Iraq, because it remained with Uncle Sam at home in Washington; and if disbursed at all, it simply changed hands and bank accounts right there. After all, that is much more efficient than it would be to send it back and forth, and a bit of it might not even get back. No matter; Uncle Sam's Congress has already appropriated another $30 billion to "prepare for transition to elections" in Iraq in January 2005.
All that being the case, it would of course be altogether undesirable for Iraqi, let alone Uncle Sam's, funds to be squandered on any Iraqi service of old foreign debt to others. So it was only logical to strong-arm "allies" who can't help already losing Uncle Sam debt to them, also to forgive the Iraqi debt. That is, as we may recall from above, while Uncle Sam still insists that the rest of the Third World must continue servicing their debts to him! For God forbid that any re-payment of Iraqi debt should go instead to those un-Godly Russians, traitorous French or even to the Chinese best friend indeed, who most invested in Iraq, a dastardly thing to do in the first place, when Uncle Sam has much more worthy causes for the Iraqi money.
And what are these worthy Uncle Sam causes? The largest single payment of $1.4 billion was of course to Halliburton. Yet we now know that at the same time this company was also cheating even its generous Uncle Sam benefactor out of hundreds of millions more dollars on the side, buying petrol for $x in Kuwait and selling it in Iraq for $5-10x and other sly frauds. Altogether, Halliburton got Iraq contracts for a cool $10 billion — plus change.
Vice-President Dick Cheney, linked to Halliburton, also has an interest in UNOCAL, which has long-wanted to build an oil pipeline from Central Asia to the Indian Ocean through Afghanistan, first with the help of the Taliban, which Uncle Sam had put in charge there for precisely that purpose. But alas, the Taliban was not up to its assigned task of keeping order for the construction of the pipeline, and so had to go. Now Uncle Sam and UNOCAL will instead use the good offices of the new Afghani President and Uncle Sam Ambassador there, both of whom just "happen" to be former UNOCAL people.
Without the shadow of a doubt, most of the other abundant Iraqi, and so far sparse Uncle Sam, dollars that were spent in Iraq went to other Uncle Sam cronies, with some crumbs off the table for Britain, corporations and even to private and military individuals who have their fingers in the till. Alas, we will never know who they all are; since, as Uncle Sam's inspector-general there explained, "I was, candidly, not interested in having army auditors because I thought we had to slide into the Iraqi system as quickly as possible."
All of the above "speculation" of mine was written before the UN International Advisory and Monitoring Board for Development in Iraq (IAMBDI) issued a report on its findings about the Uncle Sam stewardship. Before we get to the report, we should keep in mind that the FT observes diplomatically "the UN has been reluctant to take Uncle Sam to task publicly over its spending of Iraqi funds".
The FT quotes directly from the report: "There were control weaknesses ... inadequate accounting systems, uneven application of agreed-upon contracting procedures and inadequate record keeping ... Of particular concern ... were contracts with sometimes billions of dollars that were awarded to US companies such as Halliburton from Iraqi funds without competitive tender."
Yesterday, Uncle Sam's President George Bush gave Uncle Sam's highest civilian award, The Medal of Freedom, to L. Paul Bremer III, the Uncle Sam civilian pro-consul who oversaw it all, and to General Tommy Franks, who led the invasion that made it all possible in the first place. George Tenet, the director of the CIA that provided all the bogus Uncle Sam information to "legitimatise" the whole enterprise to begin with and who has since been discredited and forced to resign was not forgotten either and received the third award.
In conclusion
Uncle George W. Sam says its only right for our boys to lay their lives on the line to protect freedom fo