ECONOMIC BLITZKRIEG
by Dave S.
Brian Bloom’s latest insightful article at www.gold-eagle.com got me thinking again. In an attempt to understand the tremendous, unprecedented economic and political developments of the past few years, I am putting forth the hypothesis that the ‘powers that be” in the West are engaged in a strategy of ‘Economic Blitzkrieg’ similar to Hitler’s military strategy of WWII. Their primary purpose is to engineer a ‘fast crash’ of the global political-economy to incapacitate the rest of the world before it knows what hit them. In effect, they plan to do economically that which was done militarily during WWII: they will destroy the global economy and pick up the pieces later, rebuilding the system under their control once all competitors have been vanquished.
Hitler’s great insight was to recognize that speed was a weapon in and of itself. He conquered and divided Western Europe before those countries knew what hit them. The game was over before his adversaries knew what hit them. In the same manner, the Western world’s powers, led by the US, are INTENTIONALLY engineering a fast crash-economic blitzkrieg” of the global economy because they realize that although they will suffer, the rest of the world will either not recognize what is happening or be able to respond quickly enough to prevent it, and will suffer DISPROPORTIONATELY. It is this disparity in relative outcomes that, similar to a war of attrition, the US is convinced will give it decisive RELATIVE power versus its competitors on the world stage after the dust settles.
The wars in Iraq and Afghanistan are part of the overall strategy. Iraq gives the US control over the world’s second largest source of oil (they already de-facto control the world’s largest source of oil, Saudi Arabia). They will control access to the oil spigot that the entire industrialized world needs to power their economies. Afghanistan gives them control over the world’s largest source of opium. This free cash flow will help to pay down the debt and could also be used effectively for medicinal purposes (morphine) should all-out war occur, or more probably, be used to control the drug trade and enslave the masses through drug addiction. Citibank is and has been the world’s largest conduit of money laundered profits from the drug trade in Mexico and now in Afghanistan (remember the article in the WSJ a few years back about former President Salinas and his links to CitiMexico and the drug trade?). In fact, it can be argued that the free cash flow currently being generated from the explosion of this trade is all that’s keeping the Western banks alive at this point (see www.lifeaftertheoilcrash.net for many articles providing ‘proof’).
The central components of this economic blitzkrieg are the proliferation of ’structured debt’ products that have infected the entire world’s banking systems and the resulting rapid ‘de-globalization’ of the world’s trading system. As I have mentioned many times, the global trade system depends and ultimately rests on the global financial system. Trade can’t happen without trade finance. Once the global financial system disintegrates, the disintegration of global trade and the resulting collapse of the real economy aren’t far behind. As George Soros mentioned last week, the global financial system has already disintegrated. What we are witnessing now, and what the markets are discounting, is the resulting disintegration of what was once called ‘globalization’. The central point to my argument is that this ‘ECONOMIC BLITZKRIEG’ is a PLANNED event. It’s not happening by accident. The Western world is deeply in debt and the situation is out of control. They have no choice now but to crash the system and attempt to restart it at a later date when they might be more able to control the outcomes.
The resulting de-globalization of the world economy is forcing all countries back into a reliance on their domestic political economy for survival. The USA realizes that its domestic market is still the largest and deepest in the world. Assuming that it can preserve its territorial integrity and domestic unity, in any game in which all countries must go it alone the USA will be the RELATIVE winner and come out the strongest. It would then be in a position, after the crash, to rebuild the world on its terms, creating and managing institutions to control the global economy as it did with the Bretton Woods Accord in the aftermath of WWII.
Central to this strategy, the West is moving to gain control of the global banking system, while simultaneously destroying it! UK Prime Minister, Gordon Brown, was just in Washington proposing this very solution to the global banking crisis. In not so many words, he proposed, that the US/UK take control of the situation in a blatant attempt manage the crisis. If you analyze the actions undertaken by the Fed and its minions to solve or manage the crisis, it quickly becomes clear that they have no real interest in helping ordinary citizens manage their debts, and are only tangentially concerned with protecting depositor funds to the extent of avoiding a panic. The Fed is primarily concerned with preserving the structure of the Western banking system and the companies and institutions that support it FOR THEIR OWN PURPOSES. They have protected the bankers at every turn. And will continue to do so. Those bankers who don’t go along with the program will be replaced.
The Fed is willing to allow common stock and bond holders to suffer large capital losses as CITI, BAC, WFC and much of the primarily dealers and bank stocks go to a price level of 1 or 2. This serves their purposes. At this level, they are effectively dead as functioning companies or investments, BUT NOT AS VEHICLES OF CONTROL. The Fed intends and has taken effective control of the banking system to be used as the vehicle to implement the policies of government with regards to controlling the global financial system of the future. And it doesn’t include the depositors in said banks in making these decisions. Now under Fed control, depositors can be herded into groups. Regulations are being formulated to later control access to funds, capital flight, and to prevent citizens from controlling what is left of their own money. If you have not already done so, leaving ANY bank under government control is prudent.
In this regard, we can interpret the equity stakes taken in the US banking system by Sovereign wealth funds in Singapore and the Middle East, and by our Japanese “allies” as positioning for a post-crash financial restructuring. They are client-states in the great game of geopolitics, and they are moving to make sure they have some ’skin’ in the game. This is also my analysis of why investors like Warren Buffet are doing what they are doing. He has taken huge short term losses as a result of investments in GE, GS and WFC, but has at least assured himself of a seat at the table in the global financial poker game.
As an aside, I can’t believe the Singaporeans Chinese through and through, would have been so stupid as to tie their horse to the West’s wagon. They have lost billions in equity investments in BAC and Citi, and have to be regretting their strategic blunder. They have to realize their future lies in partnership with China, as does most of Asia, ex Japan. This suggests that China is in quiet cooperation with the West, to the detriment of Russia, India and maybe Western Europe, all independent large powers threatened by these developments. China’s geopolitical interests lie naturally in allying with Russia to form a huge Asia-Pacific continental power. But perhaps the animosity between the two is so deep that it overwhelms rational geopolitical calculations.
The structured debt products and the financial engineering behind them were the ultimate product of a weakened US industrial infrastructure and the abuse of dollar hegemony in international finance. The US has outsourced so much production and so weakened its industrial base that by the 1990s “profits” could only be manufactured by financial engineering. The books have been cooked for years. Remember the days when GE beat every earnings estimate by one penny? It all financial engineering without true earnings. It’s no coincidence that companies like GE and GM that are now insolvent were the largest players in the consumer finance game. The market has now clued in to this fact and is rendering the verdict that the industrial and financial core of the US economy is effectively bankrupt. Ditto for AA and probably CAT.
It’s possible the US never intended to infect the rest of the world with bad debt, and that it only did so out of desperation due to lack of real economic growth and growing solvency. Toxic assets are now acting exactly like an ‘economic virus’ infecting the financial system of every country involved in the global game of finance and trade. Those countries most deeply involved like Japan, Western Europe, Russia and China (OUR COMPETITORS BY THE WAY) are being hurt the worst. Relatively small and geopolitically unimportant countries like Thailand and the Philippines are, ironically, faring better.
In effect, the US financial system would have collapsed regardless, and the strategy now being pursued is THE ONLY ONE LEFT if the US is to preserve its hegemony over the global political economy. Leaders in the US now realize the game is up, and are pursuing a STRATEGY OF LAST RESORT.
This strategy is going to impose enormous pain on the average US citizen, and to all people around the world. The risks are very high and leaders have to believe that they will be able to maintain social order and prevent the disintegration of the Union. To that end, they have drawn up all sorts of plans for martial law (the articles are too numerous to mention, but u can look it all up on the internet). If they can’t preserve the territorial integrity of the US, and the domestic economy disintegrates and fractures political, the strategy will fail. It’s why numerous Russian analysts keep pointing to the break-up of the USA, because they realize that is the key to whether the US will emerge as the relative winner in the post-crash world. States like New Hampshire are already asserting their constitutional rights in an attempt to limit the power of the Federal government. And its only a matter of time before a relatively prosperous state like Wyoming begins to question why its citizens have to contribute to bailing out deadbeat states like California and Florida. This trend will continue and ultimately force the Federal government into a corner. Civil war is no longer out of the question.
The success of any such strategy also depends on its existence never seeing the light of day in the mainstream media. The general populous have to be encouraged to believe that the economic crisis is a shot out of the dark, a ‘black swan’, an accident. It can’t seem to have been managed or planned. Meanwhile, the gutting of individual pension plans (IRAs) is well under way, as is the looming pension funding crisis at the corporate and state level. The financial landscape in the post-crash environment will be one of mass impoverishment and desperation, thus trapping people into a form of economic slavery to the system. It won’t be possible to physically impose a martial law solution over the entire country, as there aren’t enough troops and manpower to effectively do so. So some other method of control will be necessary. It is clear now that that method with be debt slavery of the average person.
Why isn’t any of this being mentioned in the Western media? Well, the primary reason is that Western mainstream media outlets like FOX and CNBC are the captive entities of large conglomerates operating in partnership with the political leadership base in the West. FOX is owned by News Corp, hardly anyone’s vision of a political neutral corporation. And CNBC is owned byparent, GE, which is at the of the maelstrom, and is itself threatened with imminent insolvency. The only objective and independent sources of information are grassroots blogs and websites accessed on the internet. The impending bankruptcy of large segments of the print media (the NYT, San Francisco Chronicle and Chicago Tribune) will only contribute to the ability of the powers that be to control the flow of news to the mainstream public. Bottom line: if you really want to know what’s going on, you are going to have to use the internet to search independent sources of information.
So, what’s the ultimate outcome of this greatest power grab in history? Time will tell, but my money is on red. I believe that the situation will continue to devolve and that the depression being unleashed will worsen. Government will see to that. However, I believe that ultimately governments will fail in their efforts to ‘control’ and manage the fast crash to their liking. People are too smart. The world has awoken. Four billion people not currently living in the West will have a voice in how the post-crash world will evolve. There is a grassroots movement underway in all countries that will prove too powerful to control. The ultimate helplessness of our elected politicians and their manipulators will root out the corruption, egotism and greed that has infected the political establishment. Human evolution demands it.
How can the average citizen prepare for such events? First, we have to apply sound independent judgment and analysis. Read every bit of independent journalism you can floating all over the web. Financially, getting out of debt is the single smartest thing an investor can do. This is the primary method of control being applied in what is effectively economic martial law. While there may be a short term rally in the stock market, recognize that this is a planned crash. It will only be contained, but not stopped. The ultimate stock market lows are much farther out in the future, probably in the 2012-2014 time-frame, and at much lower levels. Recognize that your IRA probably won’t provide for your retirement. Own physical gold and implement a program to dollar cost average into gold on a monthly basis. By a farm or some type of real estate that can self-liquidate its own debt (i.e. real estate that can generate cash flow to pay the mortgage). Limit your need to access funds via the established US financial system of banks and brokerages. Accumulate cash currency. Begin thinking of ways you can obtain the goods and services you need WITH-OUT money (i.e. barter). Prepare for growing discord and shortages of basic goods in the real economy as the financial collapse morphs into an economic collapse. Finally, prepare for the possible disintegration of political and social organizations we have taken for granted our entire lifetime.
This analysis is, of course, at odds with anything you will read in well respected journals and newspapers. The proof of its validity is in asking yourself one question. Did any of the mainstream experts, political pundits, newspapers, and media outlets predict and alert YOU to the greatest economic crisis in modern history so you could protect yourself? The answer is, no they didn’t. Why is that? When one thinks about it analytically, it’s not really possible to believe that history works by accident. Our political leaders are many things (egotistical and psychopathic come to mind…), but stupid they are not. I have learned that in order to truly understand the world and why what happens does happen, you have to turn it upside down on its head. It’s painful at first realization, but afterwards you have the comfort of knowing what’s really going on and can plan for it accordingly.
I am open to hearing rebuttals, counter-arguments, reasoned criticism, and comment.
-Dave S.
ECONOMIC BLITZKRIEG
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