Tuesday, July 17, 2007

Outsourcing the big decisions, like war finance

My greatest fear is that this Republican loss will be seen by our adversaries as a great victory. In the past year, U.S. resolve has been tested, and sadly we have not always risen to the occasion. We could be facing a replay of the end game in Vietnam, when insurgent leftists in the Democratic party brought about the defunding of military assistance for South Vietnam, and the North Vietnamese invaded and defeated our trusting ally. James S. Robbins

One of the great myths, or so I believe, about the Vietnam War, specifically the ending thereof, is that the Democrats pulled the plug on war funding. It's a myth which gains traction due to the faith that the powerful are always in control of their own destiny. Only we could stop us.

But, as I will argue, this notion doesn't ring too true to me.

We didn't stop us, we were forced, in part, to end the war because our foreign financiers were no longer willing to pay for it.

Decades before French Fries were renamed Freedom Fries in DC, the French, under De Gaulle, who knew a thing or two about the perils of fighting to keep colonial possessions, and even a bit about Indo-China (after all, we took over "management," if you will, of Vietnam from them) decided to stop accepting our paper and demanded Gold, instead. Eventually, this led to the collapse of the London Gold Pool and a few years later, Nixon's decision to close the gold window in 1971.

The resulting repricing of US debt left us with no other option but to end a war we were in no position to finance internally.

And thus outsourcing, on a grand scale, began in this country, right about the time our trade balance began to shift negative. I guess these silly economic abstractions like trade imbalances do have consequences.

With that in mind, I've been watching, what seems to me to be some political theater in Washington on the issue of ending the war. The Democrats can pull all the stunts they wish but I don't believe they can defund the war on terror. No, like more and more decisions in this sharecropper society (to borrow from Warren Buffett) we call the United States, we'll outsource this decision as well.

Our Congress won't defund this war, our financiers will do it.

Eventually, the rest of the world will tire of taking our paper for goods and then when faced with the decision to truly go it alone, to pay for the war internally, we will call it a day.

What might be the catalyst for such an event? What would cause our financiers, who have willingly accepted our negative real yield paper for years, to stop accepting it?

Perhaps an attack on Iran might be that catalyst.

Perhaps an attack on Iran, which, according to the Guardian, is now a very live option, or even just the threat of an attack might get the Chinese, who have been expanding economic ties with Iran, to rethink the terms of trade.

Given recent history, which demonstrated that the current administration has no intention of honoring contracts signed by rogue regimes, like Saddam's Iraq, with whom the Chinese and Russians had economic ties, I can't see why the rest of the world would continue financing our empire's expansion as our gains will be their losses.

So if you're interested in finding out when the current wars will be defunded, don't watch Washington. Watch Beijing or Moscow. Having already accepted the outsourcing of customer service call centers to India, it shouldn't be too hard to imagine that we would outsource Congress' responsibilities as well.

As the saying goes, he who has the gold makes the rules, and as GATA's work has shown, we don't have the gold any more, just pieces of paper masquerading as such.


STS said...

It isn't exactly outsourcing ... that is usually systematic, purposeful and achieves a measurable, rational goal: more profit.

It's more like gambling, or reckless driving. Look! I can drive this car at high speed without looking where I am going! I haven't hit anything yet ! (At least nothing that could hit me back ...)

We have kleptocratic leadership. A lot of rich "Republican" (authoritarian? monarchist? oligarchists? -- if that's a word) fundraisers who took Bush the Lesser for the sake of tax cuts they didn't particularly need and his brand-equity (aka royal blood).

Nothing worse than a ruling class which combines arrogance with stupidity.