Phil > How can you argue differently when the evidence is apparent daily?
I see you are throwing down the gauntlet so let me present some articles in support of my position.
>>The Yellow Man’s Burden by Carlton Meyer
sandersresearch.com
Recent turmoil in the markets was blamed on subprime mortgage loans in the USA. However, the potential losses are not great and limited to just a few sectors. These are not unsecured loans; they are backed by real estate. This has left investors confused since all the world’s stock markets tumbled for no apparent reason. There is concern this will stall the U.S. economy and slow world economic growth. However, those familiar with economics and history have a better explanation — fear that Asian nations may stop propping up the American economy. The USA consumes 6.5% more each year than it produces, and the debt from this “current account deficit” accumulates each year. This awkward relationship cannot last forever, and was once described by Gore Vidal as “the yellow man’s burden.”
The decline in the American housing market was no surprise and has slowed the American economy. The negative impact on the housing construction industry is obvious, but few have noted that trillions of dollars entered the U.S. economy in recent years through refinancing. It became common for Americans to refinance their home loan at a lower rate and larger amount to obtain extra cash, or to take out a second mortgage, both made possible by the rapid appreciation of home values.
This easy money was used to buy new things, or to pay off credit card debt. This was considered a wise financial move since mortgage interest rates were low while the federal tax code allows a tax deduction for mortgage interest. This artificial economic boost no longer exists, and the paid-off credit card debt has mostly reappeared. A rational person might ask how a rapid rise in value of real estate can make a nation richer, since it produces no real goods or services. This can only occur if it results in the import of foreign capital in the form of investments. Foreign money is driving the surge in housing prices in the UK as well, which have risen twice as fast as in the USA in recent years.
The American housing market has not crashed, but slid downward just 3.2% nationwide over the past year.[1] Prices should stabilize soon due to population growth, tax advantages, and the inflation protection offered by real estate, although values may remain flat for several years. This will result major problems for local governments that enjoyed a spending boom as soaring housing prices resulted in soaring property taxes. This provided an economic boost in the form of greater local government spending and pay raises for government workers. In contrast, local governments now face declines in tax revenue as homeowners apply for reassessments to lower their tax bill.
There is no reason to think the American economy will crash. It will sputter along with low economic growth, so long as Asian nations continue to lend their dollar surpluses back into the U.S. economy. However, there is increasing fear that Asian nations have tired of American fiscal irresponsibility, arrogance, and investment swindles that cost them billions of dollars. The declining value of the U.S. dollar these past few years irritated Asian nations holding U.S. treasury bonds, whose 4% annual interest resulted in net losses measured against their appreciating domestic currency.
As a result, Asian banks purchased billions of dollars in investment-grade American Mortgage Backed Securities (MBS) that paid a higher rate. This seemed reasonable, until the ratings of these securities were downgraded, causing their values to decline. Rather than apologize, President Bush dispatched his director of Housing and Urban Development, Alphonso Jackson, to China in July to encourage further investments in the American mortgage market.[2] This desperate sales trip flopped and was quickly followed by further declines in the value of the U.S. dollar and American MBS.
Traditionally, banks suffered losses if their loans went into default. Loan officers scrutinized applications and rejected those with suspicious or unverifiable information. As MBS became popular, banks quickly sold off their loans to raise capital, so they no longer suffered the consequences of bad loans. Loan officers learned that the quantity of loans they approved was more important than the quality, especially if they earned commissions. This profitable racket has now unraveled, resulting in yet another blow to the U.S. economy as several investment banks and mortgage lenders suffer losses with their holdings of unsold MBS. They have begun to lay off workers and revise earnings.
The response from the American Federal Reserve was to create and pump more dollars into the system, keeping weak banks and investment funds afloat, yet pushing the value of the dollar even lower. Meanwhile, American banks have trouble finding buyers for new MBS as angry Asian bankers look for alternatives. Chan Akya recently described this as “the robbery of the century” and explained:
“The subprime banana skin has thus claimed a number of victims, including Asian central banks that are forced to hold billions in US dollar securities because of their currency manipulation that pushes up reserves. It almost seems poetic justice that the manipulators are given losses by the very people they think they are helping, namely over-consuming Americans... A more defensible long-term strategy for these central banks is to cut their reserve holdings by floating their currencies against the US dollar and invest in their own countries instead of in some distant delinquent borrower. With more than $3 trillion in such reserves being invested (wasted) on low-return US and European securities just across Asia, perhaps it is time for citizens to raise the question with their central banks: Just whom are you working for, your citizens or American homeowners?”[3]
There is no doubt that many Asian bankers are pondering this advice. China recently announced that it will follow the lead of several smaller Asian nations and set up a government-run foreign investment fund. This agency will take over $200 billion of China's $1.3 trillion stockpile of foreign exchange assets from the People's Bank of China with a mandate to diversify the country's investment portfolio and seek higher returns. Bankers believe some two-thirds of the reserves are now invested in dollar assets, principally bonds. China will hire foreign asset management firms to invest on its behalf and hire overseas management and investment professionals to help run the fund.[4]
Asian governments investing directly in western corporations are increasingly common, through what are known as “Sovereign Wealth Funds.” These funds are slowly buying up hard western assets in the form of real estate and corporations. The USA, Britain, and several other European nations are slowly pawning off their national assets to maintain their expected standard of living despite declining production. Moreover, if Asian nations choose to invest in hard assets, Americans must worry about who will buy the hundreds of billions of dollars in low-yielding U.S. treasury bonds each year, which keep the superpower super. Two decades ago, historian Gore Vidal warned of this inevitable worldwide power shift:
“Now the long-feared Asiatic colossus takes its turn as world leader, and we — the white race — have become the yellow man’s burden. Let us hope that he will treat us more kindly than we treated him.”[5] <<
As far as the US Army being exhausted is concerned, here are 1,800,000 links and I will let you choose for yourself.
google.com
The US itself may not be exhausted but its army certainly is and a draft although mooted, especially by chicken-hawks, is most unlikely. Likewise, the US economy, although functioning as if it is in a permament boom, resembles a bucket of water which is full of holes and however much water is put into that bucket, more will run out.
> Who is willing to oppose the clear will of the U.S. and Israel?
No one, directly, but many nations are quite happy to give the US more and more rope in order to hang itself, as it is doing. IMO, the longer the US remains embroiled in its present wars of fantasy the worse it will be for the US and, in turn, for Israel which is clearly prepared to fight to the last American.
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