How the Dollar Could Eventually Collapse

Chinese are building a financial infrastructure that would free the world from dependency on the dollar

By WILLIAM TUCKER

Two events last week were a reminder, as if any were still needed.

The great issue in Washington that divides Republican and Democrats is whether we can go on running deficits and piling up the national debt without some day reaching a point of reckoning.

Democrats adhere to the Keynesian/Paul Krugman school, which says that “deficits don’t matter,” “we owe it to ourselves,” and that printing money is the best and fairest way to stimulate the economy. (Actually, this viewpoint is adopted by whichever party happens to be in power. The Republicans argued the same thing when they controlled the government during the Bush and Reagan years.)

The Republicans and other green-eyeshade types argue that out-of-control deficit spending can’t go on. It’s like a household budget. Any country that runs up a negative account balance will eventually hit bankruptcy. If it tries to inflate its way out of debt, people will start to doubt the value of money and the currency will collapse. Savings will be wiped out and the nation will become penurious.

So far the neo-Keynesians seem to be winning. Federal Reserve Chairman Ben Bernanke has been pursuing his policy of “quantitative easing” (which just means printing more dollars) for five years without producing any negative consequences. Inflation has remained low and the dollar has actually strengthened against some currencies, particularly the Euro as European countries sink into their own financial crises. True, we have now run up a national debt of approximately 100 percent of GDP, which is exactly where Greece was when things started to fall apart. But as everyone observes, no one really thinks the United States is as vulnerable as a little country 11 million people that lives on olives and tourism.

Then there is the example of Japan. The Japanese have had a national debt of 200 percent of GDP for nearly a decade. True, their economy has been in the doldrums for almost two decades and no one talks about the Japanese overtaking the American economy anymore. But once again the Japanese experience seems to confirm that “deficits don’t matter.” You can run up a huge national debt without suffering any immediate consequences.

Two things happened in London last week, however, that indicate there might be a flaw to this argument after all. There won’t be any consequences next week or the week after, but in the long run they may point to the place where America’s house of cards — or paper dollars — could eventually collapse. As Kenneth Rogoff, co-author ofThis Time It’s Different, says, “Any country that sits with a historically large debt for too long is taking a chance that some out-of-the-box event will shake up markets and raise interest rates to the point where funding becomes very painful. Wars and unexpected catastrophes do happen and the historical transformations that follow can occur.”

So here’s what happened in London:

·   The British, faced with declining natural gas production in the North Sea and reluctant to embrace fracking, are facing power blackouts this winter. So they have decided to go with nuclear. They have quickly discovered, however, that America no longer has a nuclear industry and France, the one European country that has embraced nuclear, is bogged down in bureaucracy and political opposition. So they have turned to the country where nuclear construction and technology are making rapid progress — China. Last week Chancellor of the Exchequer George Osborne announced he would allow Chinese nuclear companies to invest in British reactor projects and eventually take ownership of them.

·   Almost simultaneously, the Exchequer announced that Britain will allow Chinese banks to set up branches for wholesale banking in London. The decision is part of an effort to steal a mark on Frankfurt and Paris to become the hub of trading in the Yuan, the Chinese currency, in Europe. Having Chinese banks operating in London will allow direct trading between the Yuan and the British pound, instead of going by way of the dollar as things are done now.

Your Tax Money At Work

Lines Of Code In Healthcare.Gov

SOURCES

1.      Google Chrome - https://www.ohloh.net/p/chrome

2.    Linux Kernel - https://www.ohloh.net/p/linux

3.    Windows XP - https://www.facebook.com/windows/posts/155741344475532

4.    Facebook.com (likely larger, does not include several backend components) - http://www.quora.com/Facebook-Engineering/How-many-lines-of-code-is-Facebook

5.     OSX 10.4 - http://www.engadget.com/2006/08/07/live-from-wwdc-2006-steve-jobs-keynote/

6.    Debian 5/packages - http://debian-counting.libresoft.es/lenny/index.php?menu=Statistics

7.     Healthcare.gov - http://www.nytimes.com/2013/10/21/us/insurance-site-seen-needing-weeks-to-fix.html?pagewanted=2&_r=0

A democratic nightmare

Seeking to confront the rise of Eurosceptics and fill the democratic deficit

By The Economist

TO ITS critics the European Union was born in sin: a project devised by and for the elites, lacking democratic legitimacy. All attempts to make good the “democratic deficit”, a term coined in the 1970s, have failed. Direct elections to the European Parliament (EP)? Turnout has fallen ever since they were instituted in 1979. Give the assembly real power? The parliament has never had more clout, yet trust in the EU is at an all-time low.

Europe’s economic crisis is making this chronic problem acute. One reason is that, particularly in the euro zone, Brussels is intruding ever deeper into national life, meddling in everything from budgets to pensions and wage-setting. Another reason is the expected backlash from voters in next May’s election to the EP. There will be big gains for anti-EU and anti-immigrant parties of all colours—from the sharp-tongued nativists of the UK Independence Party to the thuggish neo-Nazis of Golden Dawn in Greece. Eurosceptic parties could top the polls in France, Britain and the Netherlands; they will do well in Finland and Italy; and in milder guise they could win seats for the first time in Germany.

The sense of alarm is palpable. François Hollande, the French president, says the rise of nationalists and Eurosceptics would bring “regression and paralysis”. Enrico Letta, Italy’s prime minister, reckons Eurosceptics could win up to a third of the seats. Radicals and populists are a disparate bunch, preferring to give speeches than influence policy, so centrists should still be able to get parliamentary business done. Perhaps the bigger influence will be the poisoning of domestic politics, which would hamper decision-making by governments.

How to respond? Mr Letta is among those who want to galvanise pro-European forces by turning the European election into a contest for the next president of the European Commission. The main European political “families”, the broad coalitions of national parties that dominate parliament, say they will each campaign behind a “presidential” candidate. The Socialists seem likely to choose Martin Schulz, the feisty German president of the EP. The greens plan an open primary. The conservatives, likely to remain the biggest grouping, still seem to be in a quandary.

Advocates hope to inject excitement, strengthen the commission’s democratic mandate, focus the contest on European issues, and raise the stakes to avoid the ballot turning into a protest against unpopular national governments. Unless there is some blood-and-guts politics, they say, citizens will turn to populists.

Capital Accumulation Versus Capital Consumption

Economies are Not Destroyed in a Day

by Nicolás Cachanosky

Earlier this month, Argentina's leading conservative paper, La Nación published an unsigned editorial comparing the economies of Argentina and Venezuela. The editorial concluded that as economic freedom declines in Argentina, and as Argentina adopts more of what Chavez called “twenty-first century socialism,” it is becoming increasingly similar to Venezuela. Is this true? Will Argentina suffer the same fate as Venezuela where poverty is increasing and toilet paper can be a luxury?

The similarities of regulations and economic problems facing both countries are indeed striking in spite of obvious differences in the two countries. Yet, when people are confronted with the similarities, it is common to hear replies like “but Argentina is not Venezuela, we have more infrastructure and resources.”

Institutional changes, however, define the long-run destiny of a country, not its short-run prosperity.

Imagine that Cuba and North Korea became, overnight, the two most free-market, limited-government countries in the world. The two countries would have immediately gained civil liberties and economic freedom, but they would still have to accumulate wealth and to develop their economies. The institutional change affects the political situation immediately, but a new economy requires time to take shape. For example, as China opened parts of its economy to international markets, the country started to grow, and we are now seeing the effects of decades of relative economic liberalization. It is true that many areas in China continue to lack significant freedoms, but it would be a much different China today had it refused to change its institutions decades ago.

The same occurs if one of the wealthiest and developed countries in the world were to adopt Cuban or North Korean institutions overnight. The wealth and capital does not vanish in 24 hours. The country would shift from capital accumulation to capital consumption and it might take years or even decades to drain the coffers of previous accumulated wealth. In the meantime, the government has the resources to play the game of Bolivarian (i.e., Venezuelan) populist socialism and enjoy the wealth, highways, electrical infrastructure, and communication networks that were the result of the more free-market institutional realities of the past.

Eventually, though, highways start to deteriorate from the lack of maintenance (or trains crash in the station killing dozens of passengers), the energy sector starts to waver, energy imports become unavoidable, and the communication network becomes obsolete. In other words, economic populism is financed with resources accumulated by non-populist institutions.

Cuts succeeded where stimulus failed

America has shown that stimulus is pointless — how can a poor person spend himself to prosperity?

by Arthur B. Laffer

All the drama coming out of Washington in the last few weeks has obscured some seriously good news: federal government spending is falling. And not at a trickle: think the White Cliffs of Dover. Not since the economic boom following 1945 have Americans seen such a rapid decline in the government’s claim on the nation’s resources — falling by a welcome $94 billion over two years. You need to go back to the end of the Korean war to find a time when US government spending has actually declined over two years. If Republicans in the House stick to the sequester and future caps already built into current budget law, federal spending will stay at this low level for years to come.

For liberals who thought that Barack Obama’s second term would mean a new multi-trillion-dollar Great Society spending binge, such as we saw from 2009 to 2011, all this is a cold shower of fiscal reality. For Keynesians who believe that government spending cuts are ‘austerity’, this is also miserable news: they expect the worst. But the signs are that this contraction in the size of government is a big plus for the American economy. It’s now happening much more quickly here than it is in Britain. Americans are moving faster towards fiscal sanity — and are already feeling the benefit.

It is clear, now, that a massive stimulus administered was an abject failure. It condemned America to the worst recovery in its history — including the 1930s. But when politicians make decisions while either panicked or drunk, the consequences are rarely edifying or attractive. US Treasury secretary Hank Paulson hyperventilating before Congress to pass his three-page stimulus bill granting him total authority to spend $700 billion to save the economy was a sight to behold. Why, he even insisted the need was so urgent that there was no time for hearings, reviews or oversight. And passed it was — with some $2.8 trillion additional stimulus funds over the coming few years. And what happened? American unemployment levels soared.

Whose Islam?

It was a busy weekend for Nothing to Do with Islam

By mark steyn

The "war" part of the war on terror is pretty much over, and we're now fighting it culturally, rhetorically. Which is not something we do well. Take the British prime minister and his traditional nothing-to-do-with-Islam statement, issued in the wake of the Kenyan shopping-mall carnage:

These appalling terrorist attacks that take place where the perpetrators claim they do it in the name of a religion: They don't. They do it in the name of terror, violence and extremism and their warped view of the world. They don't represent Islam, or Muslims in Britain or anywhere else in the world.

Same with the Muslims who beheaded a British soldier, Drummer Rigby, on a London street in broad daylight. On that occasion, David Cameron assured us that the unfortunate incident was "a betrayal of Islam. . . . There is nothing in Islam that justifies this truly dreadful act."

How does he know? Mr. Cameron is not (yet) a practicing Muslim. A self-described "vaguely practicing" Anglican, he becomes rather less vague and unusually forceful and emphatic when the subject turns to Islam. At the Westgate mall in Nairobi, the terrorists separated non-Muslim hostages from Muslims and permitted the latter to leave if they could recite a Muslim prayer—a test I doubt Mr. Cameron could have passed, for all his claims to authority on what is and isn't Islamic. So the perpetrators seem to think it's something to do with Islam—and, indeed, something to do with Muslims in the United Kingdom, given that the terrorists included British subjects (as well as U.S. citizens).

It was a busy weekend for Nothing to Do with Islam. Among the other events that were nothing to do with Islam were the murder of over 85 Pakistani Christians at All Saints' Church in Peshawar and the beheading of Ricardo Dionio in the Philippines by BIFF, the aggressively acronymic breakaway faction (the Bangsamoro Islamic Freedom Fighters) from the more amusingly acronymic MILF (the Moro Islamic Liberation Front). Despite a body count higher than Kenya, the Pakistani slaughter received barely a mention in the Western media. You'd be hard put to find an Anglican church in England with a big enough congregation on a Sunday morning to kill 85 worshipers therein, but in Peshawar, a 99 percent Muslim city, the few remaining Christians are not of the "vaguely practicing" Cameron variety. Viewed from London, however, they've already lost: One day there will be no Christians in Peshawar and the city will be 100 percent Muslim. It may be "nothing to do with Islam," but it's just the way it is: We accept the confessional cleansing of Pakistan, as we do of Egypt, because it's part of "the Muslim world." Nairobi, on the other hand, is not, and a murderous assault on an upscale shopping mall patronized by Kenya's elite and wealthy secular expats gets far closer to the comfort zone wherein David Cameron "vaguely practices": In a "clash of civilizations" in which one side doesn't want to play, a shattered church has less symbolic resonance than a shattered frozen-yogurt eatery.

With Dollar Demise in Focus, Beijing Pushes “New World Order”

An editorial that sent shockwaves around the world

by  Alex Newman

From establishment mouthpieces in the West to the brutal Communist Chinese regime’s propaganda outlets in the East, discussion and even brazen calls for ending the U.S. dollar’s (USD) prized status as the global reserve currency are increasingly coming out in the open. Of course, as The New American magazine has documented extensively over the years, the eventual implosion of America’s fiat currency — and all that entails — has been in the works for quite some time. What is remarkable now, however, is that the prospect is being trumpeted in headlines around the world as Beijing loudly pushes for a global currency and what it calls a “new world order.”

The real culprits behind the decline of the dollar, of course, include wild debt-based currency printing by the privately owned U.S. Federal Reserve and a broader global agenda to build what both China’s dictatorship-run Xinhua “news” service and the Western establishment often refer to as a “new world order.” However, instead of pointing to the true causes of the potential looming implosion of America’s fiat currency, the party line in China and the West alike seems to be: Blame it on the U.S. Constitution, the political system created under it, and reluctance among some lawmakers to continue raising the debt limit indefinitely.

Prominent American and British media outlets have even been publishing pieces openly discussing the possible end of the dollar’s reign in recent days. “The sun is setting on dollar supremacy, and with it, American power,” declared an October 14 headline in the U.K. Telegraph, one of Britain’s most influential newspapers. Among the U.S. press, the New York Times, for example, ran a piece late last week entitled “At Risk: Currency Privilege of the Dollar.” Another NY Times article, also published on October 16 in the Economic Times, warned: “Dollar's role as world's leading reserve currency may be at risk.” CNBC, meanwhile, headlined its own article about it, “Default fears put dollar's reserve status at risk.” There were plenty of others, too.   

Despite the fact that the U.S. government takes in more than enough in taxes to pay its existing bills without more borrowing — though it would certainly require cuts in spending — senior bureaucrats and officials around the world have been busy making similar remarks about the demise of the dollar. International Monetary Fund (IMF) boss Christine Lagarde, for example, said if Congress refuses to raise the already sky-high debt ceiling to allow even more borrowing, it would cause so much disruption in the world economy that “the standing of the US economy would, again, be at risk.” Swedish Finance Minister Anders Borg said: “As it is an enormous advantage to be a reserve currency it seems completely insane to even contemplate creating insecurity around that status.” 

Iran and the Petrodollar Threat to U.S. Empire

The U.S. has shot itself in the foot

By Christopher Doran

Over the last few years, Iran has unleashed a weapon of mass destruction of a very different kind, one that directly challenges a key underpinning of American hegemony: the U.S. dollar as the exclusive global currency for all oil transactions. 

It began in 2005, when Iran announced it would form its own International Oil Bourse (IOB), the first phase of which opened in 2008. The IOB is an international exchange that allows international oil, gas, and petroleum products to be traded using a basket of currencies other than the U.S. dollar. Then in November 2007 at a major OPEC meeting, Iran's President Mahmoud Ahmadinejad called for a “credible and good currency to take over U.S. dollar’s role and to serve oil trades”. He also called the dollar “a worthless piece of paper.” The following month, Iran—consistently ranked as either the third or fourth biggest oil producer in the world—announced that it had requested all payments for its oil be made in currencies other than dollars. 

The latest round of U.S. sanctions targets countries that do business with Iran's Central Bank, which, combined with the U.S. and EU oil embargoes, should in theory shut down Iran's ability to export oil and thus force it to abandon its nuclear program by crippling its economy. But instead, Iran is successfully negotiating oil sales via accepting gold, individual national currencies like China's renmimbi, and direct bartering.

China and India are by far the most significant players, with Russia playing a supporting role. China is Iran's number one oil export market, followed by India. Both have been paying for at least part of their Iranian oil imports with gold, and according to the Financial Times, have also been paying in their own currencies, the Chinese renmimbi and Indian rupee.[1] As neither currency is easily convertible as international currency, they will be used to pay for Chinese and Indian imports. And on 22 June, Russian media reported that China imported almost 524,000 barrels per day in May, a whopping 35% jump from the previous month.[2]

There is only so much the U.S. can do if China continues to do business with Iran. China holds $1 trillion dollars of U.S. debt, and the U.S. is utterly dependent on cheap Chinese manufacturing. Significantly, just as the newest and toughest round of U.S. sanctions kicked in at the start of July, Iran's PressTV announced that China would be investing at least $20 billion to develop the north and south Azadegan and Yadavaran oil fields which will produce 700,000 barrels per day. Azadegan is estimated to contain 42 billion barrels, making it one of the world’s largest oil deposits.[3]

America has more leverage with India, but with the “BRICs”—Brazil, Russia, India and China—showing increasing solidarity in dealing with the U.S. and Europe, U.S. options are still limited. In January Bloomberg reported that all Russian trade with Iran was being conducted in Russian rubles and Iranian rials, and not U.S. dollars.[4]

The Growing Rift With Saudi Arabia Threatens To Severely Damage The Petrodollar

All options are on the table 

by Michael Snyder

The number one American export is U.S. dollars.  It is paper currency that is backed up by absolutely nothing, but the rest of the world has been using it to trade with one another and so there is tremendous global demand for our dollars.  The linchpin of this system is the petrodollar.  For decades, if you have wanted to buy oil virtually anywhere in the world you have had to do so with U.S. dollars.  But if one of the biggest oil exporters on the planet, such as Saudi Arabia, decided to start accepting other currencies as payment for oil, the petrodollar monopoly would disintegrate very rapidly.  For years, everyone assumed that nothing like that would happen any time soon, but now Saudi officials are warning of a "major shift" in relations with the United States.  In fact, the Saudis are so upset at the Obama administration that "all options" are reportedly "on the table".  If it gets to the point where the Saudis decide to make a major move away from the petrodollar monopoly, it will be absolutely catastrophic for the U.S. economy.

The biggest reason why having good relations with Saudi Arabia is so important to the United States is because the petrodollar monopoly will not work without them.  For decades, Washington D.C. has gone to extraordinary lengths to keep the Saudis happy.  But now the Saudis are becoming increasingly frustrated that the U.S. military is not being used to fight their wars for them.  The following is from a recent Daily Mail report...

Upset at President Barack Obama's policies on Iran and Syria, members of Saudi Arabia's ruling family are threatening a rift with the United States that could take the alliance between Washington and the kingdom to its lowest point in years. 

Saudi Arabia's intelligence chief is vowing that the kingdom will make a 'major shift' in relations with the United States to protest perceived American inaction over Syria's civil war as well as recent U.S. overtures to Iran, a source close to Saudi policy said on Tuesday. 

Prince Bandar bin Sultan told European diplomats that the United States had failed to act effectively against Syrian President Bashar al-Assad and the Israeli-Palestinian conflict, was growing closer to Tehran, and had failed to back Saudi support for Bahrain when it crushed an anti-government revolt in 2011, the source said.

Saudi Arabia desperately wants the U.S. military to intervene in the Syrian civil war on the side of the "rebels".  This has not happened yet, and the Saudis are very upset about that.

Of course the Saudis could always go and fight their own war, but that is not the way that the Saudis do things.

So since the Saudis are not getting their way, they are threatening to punish the U.S. for their inaction.  According to Reuters, the Saudis are saying that "all options are on the table now"...

Why climate change is good for the world

Don't panic! The scientific consensus is that warmer temperatures do more good than harm

By Matt Ridley

Climate change has done more good than harm so far and is likely to continue doing so for most of this century. This is not some barmy, right-wing fantasy; it is the consensus of expert opinion. Yet almost nobody seems to know this. Whenever I make the point in public, I am told by those who are paid to insult anybody who departs from climate alarm that I have got it embarrassingly wrong, don’t know what I am talking about, must be referring to Britain only, rather than the world as a whole, and so forth.

At first, I thought this was just their usual bluster. But then I realised that they are genuinely unaware. Good news is no news, which is why the mainstream media largely ignores all studies showing net benefits of climate change. And academics have not exactly been keen to push such analysis forward. So here follows, for possibly the first time in history, an entire article in the national press on the net benefits of climate change.

There are many likely effects of climate change: positive and negative, economic and ecological, humanitarian and financial. And if you aggregate them all, the overall effect is positive today — and likely to stay positive until around 2080. That was the conclusion of Professor Richard Tol of Sussex University after he reviewed 14 different studies of the effects of future climate trends.

To be precise, Prof Tol calculated that climate change would be beneficial up to 2.2˚C of warming from 2009 (when he wrote his paper). This means approximately 3˚C from pre-industrial levels, since about 0.8˚C of warming has happened in the last 150 years. The latest estimates of climate sensitivity suggest that such temperatures may not be reached till the end of the century — if at all. The Intergovernmental Panel on Climate Change, whose reports define the consensis, is sticking to older assumptions, however, which would mean net benefits till about 2080. Either way, it’s a long way off.

France's Irrepressible 'Industrial Renewal' Clown on a Roll

Montebourg Announces Fictional Deal Between Goodyear and Titan to Save Union Jobs 

By Mike "Mish" Shedlock

The politics in France get curiouser and curiouser (to put things mildly).
On Monday, the Minister of Productive Recovery, Arnaud Montebourg, announced a deal between Titan and Goodyear that would save union jobs in tire manufacturing plants.
The problem, and a significant one, is that Goodyear did not agree to the deal. Heck, the CEO of Titan denies even making an offer.

Via translation from Les Echo, please consider Goodyear Amiens: new imbroglio between Montebourg and Titan 

 It's a pretty mess that would be almost amusing if it was not hundreds of jobs at stake Monday, the Minister of Productive Recovery Arnaud Montebourg, told AFP that the U.S. tire manufacturer Titan had made a new offer of a partial recovery for the site of Goodyear Amiens Nord, which employs 1,200 workers, the closure was announced in January by the company management.

The proposal concerns the activity of agricultural tires and covers "333 jobs in the Amiens plant whose maintenance is guaranteed for four years," the minister said. Titan International would even be willing to invest "one hundred million minimum on the site".
Alas, Maurice Taylor, the CEO of Titan, contacted by AFP, declined to confirm this announcement. "I am not aware of anything related to your country of great wines and beautiful women," he responded ... Besides, "the management of Goodyear has not received any new offer" from Titan.

This tire story has an amusing background.

Blonde children and Roma

When the two great hysterias of our age clash

by Ed West

The media seem to be in a pickle over the removal of a blonde girl from a Roma family in Dublin, which followed the arrest of a couple in Athens who had a suspiciously Nordic-looking child with them.

It’s a fascinating story because for the first time I can remember the two great hysterias of our age have finally clashed – racism and child-snatching, the Guardian’s obsession versus the Sun’s.

It has also pitted the almost immovable object of media taboo against the unstoppable force of the human-interest story. The highbrow media maintains a sort of code of decency about reporting the Roma, so that you will never read anywhere an accurate analysis of anti-Roma prejudice. I don’t think this actually sways anyone, because you’d have to be a total cretin not to see the causes, rather it informs the official opinion people are supposed to have in public.

However ‘missing child turns up alive’ is the most powerful story of all time and nothing will keep it off the homepage. It goes back to the Bible and the Greeks and early-modern European fairy tales, and it’s a narrative still poignant because of the children who are missing today, such as Madeleine McCann.

Perhaps because of the BBC’s remit to promote multiculturalism, their coverage of the affair has seemed highly editorialised towards informing the public that Roma are not going around snatching children, rather than just reporting a story. And as it is, it strikes me as extremely unlikely that there is any sort of trend here, and the Dublin family may well be innocent victims of circumstances.

But neither does that mean there is some campaign against the Roma, or that the Gardai should be blamed for their actions. Roma tend to have a lot of informal family adoption but they rarely adopt non-Roma and, knowing this, someone in Greece understandably got suspicious and then someone in Ireland did.

Contrary to the media cant, this doesn’t suggest that in Europe we treat blonde children better and want to snatch them away from swarthy parents. We just live in a society where it’s impolite to notice social patterns, yet one where it’s the police’s job to look out for them; to hone all those evolution-bred skills to notice when something doesn’t quite fit, like the wrong person in the wrong place or a child with someone very unlikely to be her birth or adoptive parents. So pity the poor policeman who has to traverse between the Scylla of race relations and the Charybdis of child-snatching hysteria.

The Times They Are a-Changin

Get out the popcorn, pull up a chair, and let the show begin!

by Justin Raimondo

There are no major stories to cover, but lots of seemingly minor ones that all point to major trends in the works. Let’s start with the news that the Heritage Foundation is "censoring" pro-surveillance material coming out of that policy-wonk factory: yes, you heard me, although "censoring" is Politico reporter Josh Gerstein’s phraseology. Funny, but we never heard about "censorship" of any anti-surveillance, pro-civil liberties views in all the years of the Bush administration, or anywhere at any time for that matter. Gee, I wonder if this means Gerstein and/or Politico have a certain bias when it comes to matters such as these. Ya think?

In any case, the kerfluffle seems to be over former US Senator and now Heritage president Jim DeMint’s decision not to publish a paper by former Bush administration legal mavens Steven Bradbury and the evil David Addington, which – surprise! surprise! – came to the conclusion that government spying on practically everyone is perfectly "legal." Forget the Fourth Amendment – the Bushian concept of the "unitary presidency," like the old absolutist dogma of "divine right of kings," trumps everything.According to Shane Harris over at Foreignpolicy.com, however, the "anti-surveillance" stance taken by DeMint and Heritage isn’t a "traditional conservative position," and – scarier still – it indicates that the fears of "mainstream Republicans" who have been "fretting" deMint would "turn the prominent conservative thinktank into a political proxy for the most extreme elements of the GOP" have been proved right.

Oh no!

According to Harris, those evil "debt-deniers" (that’s a new one!) and "defund-Obamacare die-hards" who "propelled" Harris’s beloved federal government into a shutdown (except the drones were still flying) "have found a political, if not quite intellectual center of gravity at Heritage." Not quite intellectual enough for the scholarly Harris, a recipient of the military contractor’s equivalent of the Nobel Prize: the Gerald R. Ford Prize for national security reporting. Coincidentally, Harris is also associated with the New America Foundation, the Obama administration’s favorite foreign policy thinktank.

Ten or so paragraphs later, in which various assorted neocons vent their rage, Harris delivers the considered judgment of Those In The Know on the revamped and "radicalized" Heritage: "The lunatics have taken over the asylum."

Only "extreme elements of the GOP" want to rein in Obama’s spymasters – except that these "extremists" constitute the majority of the American people, who overwhelmingly oppose the NSA’s invasion of their privacy. Oh, but you see, they don’t count: the only people who matter are all those Very Serious People in Washington, D.C., which – as we all know – is the Center of the Universe.

The Scramble for Africa’s Oil

Oil-rich nations are bedeviled by the Resource Curse

BY CHARLES HUGH SMITH

The global scramble for Africa's estimated 25 billion barrels of oil is on. Those scrambling to secure (and/or exploit) the continent's abundance of fossil fuels include each oil-rich nation's political and economic Elites, international oil corporations, regional powers, trading blocs and the four major (and energy-hungry) economic players: the E.U., the U.S., Japan and China.

Oil-rich nations are bedeviled by the Resource Curse. An abundance of natural resource wealth distorts the national economy and politics in a number of ways: private investment in other less exploitable/profitable sectors of the economy stagnates, leaving the government and economy highly dependent on resource revenues; local Elites quickly gain control of the income stream from the resource wealth and divert it to their own accounts and cronies, institutionalizing corruption, and this diversion of national income to Elites starves the nation of investment in infrastructure, education, transportation networks and all the other foundations of a vibrant, competitive economy.

In geopolitical terms, oil-rich nations become "areas of interest" to neighboring states and energy-hungry global powers, further complicating and distorting national development.

Though many hope that this flood of energy wealth can be used to fund much-needed infrastructure, education and public health projects throughout the continent, the key systems of governance, governmental transparency, an open media and a political process that enables public participation are problematic in many (if not all) of Africa's energy-rich nations.

Unfortunately, these systemic weaknesses render these nations even more vulnerable to the distortions of the Resource Curse.

No energy-importing power center can afford to be sidelined in the scramble for Africa's fossil fuel wealth. Sadly, that insures global and regional powers will continue jockeying for oil leases (vulnerable to cancellation when corrupt regimes change hands), development contracts and political influence within controlling Elites, a process that rewards the least savory aspects of corrupt regimes.

Global rivals who have lost out will be tempted to support armed rebellions that weaken their rival's influence, encouraging conflicts that are inherently destabilizing, not just to the oil-rich nations but to the region.

Arrayed against these powerful forces of corruption and destabilization are grassroots groups supporting democracy and national development and some non-governmental organizations (NGOs) funded by foundations.

In the abstract, almost everyone agrees that this energy wealth should benefit all residents of oil-rich nations. But as long as it is cheaper in terms of time and money to secure oil by making deals with kleptocrats and corrupt Elites, there will be few incentives for major powers to risk losing access to oil/natural gas by supporting policies that would spread the wealth and encourage democracy.