The State of the Empire, 2006

[Wind Dancer]

Rotting Within, Tremors Without
The State of the Empire, 2006

By JAMES PETRAS

In 2005 the US economy defied all the known tenets of economic theory: In the face of record high trade deficits, monstrous budget deficits, a failed war and major political scandals involving presidential aides, the dollar strengthened against the Euro and the Yen, the economy grew at 3.4% and all the major investment houses had record profits. It seems the US economy defied the laws of gravity, floating above the political turmoil and structural vulnerabilities. But the point of 'prophesy' is not to specify the day and hour of sharp decline and recession but to identify the deep structural vulnerabilities and the possible trigger events, which could detonate a crises.

The US economy will continue to diverge in a double sense. The financial sector will expand overseas, especially the major investment houses like Goldman Sachs, J.P. Morgan, Citibank while the manufacturing sector led by the 'Big Three' automobile sector will decline even further, with a good chance that General Motors will go into bankruptcy. The US multi-nationals will expand on a world scale, buying into major banks and industries, especially in China, extending the economic reach of the empire, while the domestic economy will suffer as the housing and real estate speculative bubble collapses, high energy prices undermine export competitiveness, resulting in sharp decline in consumer spending. The US empire will increasingly become identified with its economic giants as its failed wars will lead to a withdrawal of combat troops and a reliance on airpower, local military forces, economic sanctions and accommodating to social liberal regimes.

The domestic social crisis will deepen as overseas profit opportunities expand. In 2006, over 90% of US workers will be paying for their costly individual health and pension plans or, if they cannot pay, they will lose coverage. Precarious work contracts are the norm for all but a small sector of public employees. Real inflation (including increased health, education, energy and pension costs) will rise to about two times the consumer price index and contribute to the further decline in actual living standards. A rapid deflation of the housing bubble would reduce the "paper value" of homeowners by half and force many who are heavily indebted into bankruptcy. Nevertheless, as happened in recent decades (after the Savings and Loan, Dotcom, Enron and other speculative failures), while millions of small speculators and investors in real estate will lose billions of dollars, their discontent will not find any political expression. The greater the inequalities in income, property and wealth between the financial and imperial economic elites, on the one hand, and the domestic wage and salaried classes, on the other, the lower the level of organized political and social opposition.

-more-

James Petras, a former Professor of Sociology at Binghamton University, New York, owns a 50 year membership in the class struggle, is an adviser to the landless and jobless in brazil and argentina and is co-author of Globalization Unmasked (Zed). His new book with Henry Veltmeyer, Social Movements and the State: Brazil, Ecuador, Bolivia and Argentina, will be published in October 2005. He can be reached at: [e-mail]

http://www.counterpunch.org/petras01142006.html

[AX10]

1. Remember, this so called "growth" is being financed by...

massive debts. At some point, the debts will be called in and we will have to pay up, or else.

[Wind Dancer]

2. Exactly, WE will have to pay.

The ruling elite's wealth has increased dramatically since 2000 and will continue to do so while the worker's lose insurance and pensions. The unemployed numbers will increasingly grow while illegals are forced to work for the mega corporations for little money with no protection.

Straussian philosophy is alive and well in America today.

It all reminds me of "War Is A Racket", by By Major General Smedley Butler. The technology and U.S. control make it far more dangerous now.

Secretly each nation is studying and perfecting newer and ghastlier means of annihilating its foes wholesale. Yes, ships will continue to be built, for the shipbuilders must make their profits. And guns still will be manufactured and powder and rifles will be made, for the munitions makers must make their huge profits. And the soldiers, of course, must wear uniforms, for the manufacturer must make their war profits too.

But victory or defeat will be determined by the skill and ingenuity of our scientists.

If we put them to work making poison gas and more and more fiendish mechanical and explosive instruments of destruction, they will have no time for the constructive job of building greater prosperity for all peoples. By putting them to this useful job, we can all make more money out of peace than we can out of war -- even the munitions makers.

So...I say,

TO HELL WITH WAR!

http://www.ratical.org/ratville/CAH/warisaracket.html#c3