Sunday, May 11, 2008

The War in Iraq and the US Economic Meltdown

The War in Iraq and the US Economic Meltdown
April 7th, 2008 Posted in Rogue Economics, Iraq

Transcript of Loretta’s interview on the Gary Null Show, 30/03/08.

There is definitely a link between the war in Iraq and what is going on in the economy, and I think that it is a link that exists on various levels. What is happening today in the economy is in part a result of this new state which has taken shape since the fall of the Berlin Wall, and the advent of globalization and the Market State. The Market State is a state where the government no longer takes care of the interests of the community, or the citizen, it is a state which creates the best economic condition for the individual to become rich (and when we talk of the individual we mean single individuals and also corporations).

This kind of mentality, this kind of philosophy, is at the base of what is happening with the sub prime market today, this is how this sort of pyramid scheme was created in the 1990’s. This is also the exact kind of philosophy that brought us to the war in Iraq. I think that it is ironic and at the same time tragic that these two phenomenon – the meltdown of the economy and the war in Iraq — are happening simultaneously.

They are also happening at the end of two terms of the Bush administration of Neo Cons, which to a certain extent has perfected the concept of the Market State. What is also very interesting is that we, meaning ‘us’ as consumers and voters in the West, do not have a real perception of this reality because we are living in what I describe as the Market Matrix. This is a sort of web of illusion very much like in the film ‘The Matrix’ whereby the reality that we perceive is not really what is happening. There are several filters of how we perceive reality, so when we talk about the situation in Iraq, and the troop surge is a very good example, people have been under the false impression that the surge is actually working.

The truth is, that as consumers and voters, we do not understand what is actually happening and the same thing is happening with the economy. People don’t know what is really happening. People don’t know why the mortgage meltdown is going to affect their everyday life but the truth is that it will. It will because if we do have a bank failure, something similar to Bear Sterns which was rescued at the eleventh hour a couple of weeks ago, if we do have one bank failing because of the sub prime then we will have a domino effect, one bank after another will fail because they are all interconnected.

They all subscribe to mortgage bank securities which were basically instruments through which a growing debt, (we are talking about people borrowing money in order to buy houses, pay their credit cards etc), is transformed from a growing debt into an asset. And this asset was then sold over and over on the secondary market. We can draw a parallel with how the war in Iraq was sold through lies and how the war in Iraq has continued to be sold to the Americans and the European as a success story. Transforming what is a disaster, what was right from the beginning a human disaster into something like a good policy, a policy to export democracy.

I think that this is something that we have to reflect on. It is true that the new candidates, the three of them, not only Obama and Hillary Clintion but also the Republicans, are presenting a picture which is somehow much much better than the real picture. Why is nobody attacking directly what is happening in Iraq? Why is nobody talking about the three trillion dollars which has been spent, (this is the calculation done by Stiglitz recently). If we had access to that kind of liquidity today, we would not be facing a major meltdown with the economy because of mortgages. The Fed cannot afford to bail out more than one or maybe two banks because the country does not have that liquidity, that liquidity went to fund a war that was wrong from the beginning.

Loretta Napoleoni speaking with Gary Null 31/03/08.
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