PROJET REGIONAL SUR LA BIOSECURITE ( PRB/UEMOA): LE CHEVAL DE TROIE POUR INTRODUIRE LES OGM EN AFRIQUE DE L'OUEST

Le Projet Régional sur la Biosécurité (PRB) de l’UMEOA – financé par la Banque Mondiale - est le « cheval de Troie » des Etats-Unis et des multinationales de biotechnologies ( Monsanto, Syngenta, etc.) pour frauduleusement introduire les OGM au niveau régional en Afrique de l’Ouest.

Comme écrit Grain dans son rapport sur le PRB :

"La Banque mondiale s'apprête à assurer le financement en provenance du Fonds pour l'environnement mondial (FEM) pour deux projets qui annihileront le débat public et introduiront de force les cultures génétiquement modifiées (GM) au coeur de l'agriculture paysanne. Les deux projets, l'un en Afrique de l'Ouest et l'autre en Amérique latine, accélèreront la diffusion des cultures GM dans les systèmes de semences des agriculteurs et même dans certains centres d'origine.

HARMONISER…

Les projets sont clairement motivés par des priorités extérieures. Il y a au coeur de ces projets une stratégie poursuivie depuis longtemps par la Banque mondiale et le gouvernement des Etats-Unis pour « harmoniser » les réglementations des cultures GM dans les régions afin de passer outre les processus nationaux plus sensibles à l'opposition locale. L'idée est d'établir des réglementations favorables dans un petit nombre de pays dont les gouvernements sont ouverts aux cultures GM et ensuite d'utiliser ces réglementations comme modèle pouvant être imposé aux pays voisins par la voie des organismes de politique régionale. De cette manière, l'harmonisation évite tout débat démocratique possible et fournit aux compagnies privées un guichet unique pour leurs cultures GM.

CONTAMINER…

L'autre objectif principal du projet est de faire progresser la stratégie actuelle de contamination de l'industrie GM. Les projets faciliteront ou introduiront les essais en champs et ouvriront la voie à la commercialisation des cultures GM, plus particulièrement des cultures fondamentales pour les systèmes agricoles paysans dans les régions respectives. Le projet latino-américain cherche en particulier à faciliter le "déploiement" des cultures GM dans les centres d'origine de ces cultures. La contamination sera inévitable, et la Banque mondiale le sait certainement. En effet, les projets supposent que les cultures GM seront introduites à large échelle dans les régions. Le "renforcement des capacités" en matière de biosécurité s'entend ici comme simple gestion de la contamination qui s'ensuivra."

Source : www.grain.org/nfg/?id=417

Pire, Ce projet n’a d’autres finalités que de dégager les responsabilités des multinationales vis-à-vis des dommages et préjudices causés par les OGM en les transférant aux pays de la sous-région.

De plus, l’objectif (officiel) déclaré du PRB de l’UMEOA est « d’élaborer et de mettre en oeuvre un cadre juridique communautaire de biosécurité en vue de permettre aux Etats membres de l’UEMOA de
faire face à leurs obligations vis-à-vis du Protocole de Cartagena, sur la prévention des risques biotechnologiques, relatif à la Convention sur la Diversité Biologique ». Paradoxalement, le PRB de l'UMEOA est en réalité en violation flagrante vis-à-vis de la Convention sur la Diversité Biologique qui reconnaît le droit de souveraineté des Etats sur leurs ressources biologiques et de toute les lois internationales qui réglemente les OGM.

La Convention sur la Diversité Biologique (1992) reconnaît le droit de souveraineté des états sur leurs ressources biologiques. De ce fait, la collecte de ces ressources est subordonnée à "l’accord préalable donné en connaissance de cause" par l’état qui possède ces ressources, avec comme un des objectifs « le partage juste et équitable des bénéfices tirés de l’exploitation des ressources génétiques. »

Le Protocole de Carthagène (2003) est un accord international fondé sur le « principe de précaution », qui vise à garantir le transfert, la manutention et l’utilisation en toute sécurité des OGM issus de la biotechnologie moderne. Il place sous haute surveillance la circulation et les échanges d'OGM et prend en compte les risques pour la santé humaine et pour l'environnement.

Ce protocole instaure une procédure d’information préalable permettant à tout pays importateur de refuser une cargaison de semences ou de produits alimentaires transgéniques en invoquant le principe de précaution. (principes de précaution et de prévention : règle de décision politique en l’absence de certitudes scientifiquement établies limitant, encadrant ou empêchant certaines actions potentiellement dangereuses, sans attendre que leur danger éventuel soit scientifiquement établi de façon certaine.)

Toutes ces conventions juridiques que le Mali a ratifiées prévoient un mécanisme d’information, de sensibilisation et de participation du Public à la prise de décision. C’est dire qu’en matière de sécurité en biotechnologie, la décision ne doit être prise qu’après une large information / sensibilisation des populations sur les avantages mais aussi et surtout les risques liés à l’utilisation des produits transgéniques et que le public doit être réellement impliqué à la prise de décision, ce qui n’est évidemment pas le cas du PRB/UMEOA.

Les pays qui adhèrent à la Convention, juridiquement contraignante, sont dans l’obligation d’en appliquer les dispositions.

La loi modèle de l’union africaine sur la sécurité en biotechnologie complète le protocole de Carthagène qui a été signé par le Mali. Elle accorde une importance particulière à l’évaluation et à la gestion des risques (articles 8 et 9). Selon cette loi « Aucune décision d’importation, d’utilisation confinée de dissémination ou de mise sur le marché d’un OGM ou dérivé d’OGM ne peut être prise par l’autorité compétente sans évaluation des risques pour la santé humaine, la diversité biologique et l’environnement, notamment ses conséquences sur l’environnement socio-économique et les normes culturelles.

La loi modèle pour la protection des droits des communautés de L’UA estime que la privatisation des formes de vie à travers le régime des droits de propriété intellectuelle viole le droit fondamental à la vie et va à l’encontre du concept africain du respect de la vie (non – brevetabilité du vivant). De solides arguments éthiques justifient l’exclusion des microorganismes, végétaux ou animaux du système de brevets.

Comme écrit la COPAGEN dans son rapport en réaction au Projet Régional de Biosécurité, « Il s’agit en fait d’une stratégie pour mettre sur la touche la souveraineté de chaque pays aux fins d’exécuter le programme OGM des sociétés transnationales en leur créant des conditions favorables d ’investissement dans les semences transgéniques dans la sous –région. En effet, en vertu des dispositions de l ’UEMOA, les décisions prises dans un pays peuvent être appliquées dans les autres si cette décision est entérinée par l’institution sous-régionale. C’est le principe de la subsidiarité. » C'est-à-dire qu’une législation mise au point au niveau régional s’impose aux Etats membres.

Comme il est prescrit dans la proposition du projet : "Si l'UEMAO est en mesure d'harmoniser les législations nationales de biosécurité et plus tard de faire appliquer une décision prise par l'un des pays dans les autres pays, cela améliorera considérablement la situation des investissements dans les biotechnologies pour les cultures de rente et les cultures vivrières dans la zone de l'UEMAO… en diminuant les couts liées aux transactions". Une fois l'adoption effectuée au sein de l'UEMAO, la Banque Mondiale déclare qu'elle cherchera à augmenter progressivement le projet au beaucoup plus gros marché que représente la CEDEAO.

De plus, les différentes versions du document complet du projet n’existent qu’en anglais alors que tous les pays de l’UEMOA, sauf un (la Guinée Bissau) ont le français comme langue officielle de l’administration publique. Cela est en contradiction flagrante avec les principes de participation effective du public au débat, puisque les documents sont inaccessibles en raison de la barrière linguistique.

Ci-joint le rapport de la COPAGEN relatif au PRB de l'UEMOA:

GRAIN - Afrique Francophone, 06 BP 2083 - COTONOU, BENIN www.grain.org/semences/

Semences de la biodiversité N° 55

Septembre 2006

DECLARATION LIMINAIRE DE LA CONFERENCE RELATIVE AU PROJET DE LA BANQUE MONDIALE SUR LA BIOSECURITE

Organisée à Cotonou, le 04 Juillet 2006, par JINUKUN et COPAGEN

(La coalition pour la protection du patrimoine génétique africain)

Quelles analyses critiques faisons-nous de ce projet :

Les points suivants méritent d’être soulignés par rapport à ce projet, qui de façon subtile comme à l’accoutumée, tente de cacher des objectifs mercantiles, au détriment de l’intérêt de nos Etats et des populations :

” Ce n’est pas un hasard si le coton, qui fait l’objet de beaucoup de polémiques au niveau international, liées entre autres aux problèmes de subventions des USA et de l’Europe, de l’accès aux marchés… est le premier produit proposé actuellement dans le cadre de ce projet.

” Le problème actuel du coton en Afrique de l’Ouest n’est pas celui de la production (quantité) mais bien ceux de la transformation/valorisation et de l’accès à des prix justes et équitables au producteur. Le coton Bt (coton OGM) ne sera donc pas la solution à ces problèmes.

” Il est évident que ce projet cherche à mettre en place un cadre réglementaire favorisant l’introduction des cultures génétiquement modifiées dans la région.

” Il est choquant de constater que nulle part dans ce projet, la question fondamentale des droits des communautés locales sur leurs ressources génétiques n’est prise en compte.

” Les OGM ne peuvent pas contribuer à « l’augmentation des revenus des producteurs » comme mentionné dans le projet. Les OGM qui sont faits pour l’agriculture industrielle, éliminent non seulement les petits producteurs, mais créent une dépendance vis-à-vis des semences produites par les multinationales.

” L’objectif environnemental global cité dans le projet, à priori « séduisant », cache l’objectif inavoué de légaliser les tests (officiels et cachés) menés dans nos pays.

” Ce projet qui veut faire de nos pays « un espace attractif pour les recherches et l’utilisation des biotechnologies » n’a d’autres finalités que de dégager les responsabilités des multinationales, en cas de dommages sanitaires, environnementaux, économiques, etc. causés par les OGM.

” L’UEMOA en tant qu’institution sous-régionale, n’a pas la légitimité d’autoriser la formulation et la mise en oeuvre d’un tel projet sur la biosécurité. En effet, ceci relève de la souveraineté de chaque pays, du moment où le protocole de Carthagena et la Convention sur la Biodiversité indiquent que chaque pays doit prendre en compte ses propres spécificités et est souverain sur ses
ressources biologiques.

” La Banque Mondiale, en tant qu’institution financière ne peut se donner le droit d’imposer à nos Etats une législation sur la biosécurité, pour légitimer l’utilisation et la consommation des produits qui font l’objet de polémiques et de rejet partout dans le monde.

Quelles conclusions tirées de cette analyse ?

Il est évident que ce projet de la Banque Mondiale intitulé : « Proposed West Africa Regional Biosafety Project » ne présente aucun intérêt ni pour notre sous-région, ni pour nos pays pris individuellement, pour les raisons suivantes :

Les OGM ne sont pas une solution pour l’Afrique. Plusieurs alternatives scientifiquement maîtrisables, économiquement rentables et socialement durables existent de nos jours, en plus de toutes les ressources locales que possèdent nos pays pour se nourrir, mais aussi pour produire de la richesse.

Les problèmes majeurs de l’agriculture dans nos pays sont entre autres : la maîtrise de l’eau, la fertilité des sols dans certains pays, l’accès aux moyens de production (notamment les questions de sécurisation foncière), l’accès aux crédits à des coûts acceptables, la transformation des produits pour une plus-value, l’accès aux marchés…

Les lois sur la biosécurité ne sont pas une fin en soi. L’essentiel est de prendre en compte les préoccupations des communautés locales et de respecter leurs droits sur les ressources biologiques qu’elles ont protégées pendant des générations.

L’UEMOA doit s’occuper de sa fonction originelle qui consiste à créer les conditions favorables pour permettre aux pays membres d’accéder aux marchés intérieurs et d’accompagner les initiatives économiques internes, en priorité au profit de nos populations. Elle ne doit pas constituer un frein au développement économique de nos Etats, en prônant des politiques d’ouverture suicidaires qui mettent en péril les intérêts de la population.

La Banque Mondiale a largement contribué à déstabiliser les économies des pays de la sous-région en particulier, et de celles de toute l’Afrique en général, à travers les PAS imposés aux Etats. Tout le monde est unanime aujourd’hui pour reconnaître que les PAS ont consisté à drainer l’essentiel des revenus de nos Etats vers l’extérieur. Les OGM s’inscrivent dans cette même logique de dépossession et de dépendance de l’Afrique.

Pour toutes les raisons évoquées ci-dessus, JINUKUN et COPAGEN:

- Demandent à l’UEMOA et aux décideurs des pays membres :

L’arrêt immédiat de toutes les actions relatives à la recherche de financement et à la mise en place du projet de la Banque Mondiale intitulé « Proposed West Africa Regional Biosafety Project » ;

Le respect des systèmes de gestion communautaires des ressources génétiques et des
connaissances associées;

La résistance à toutes les formes de pressions relatives à l’introduction des OGM dans l’agriculture africaine ;

La valorisation des ressources locales et des savoirs qui y sont associés ;
La promotion (application et diffusion) des alternatives aux OGM dans l’agriculture.

- Invitent les populations et les organisations de la société civile à :

Résister à toute tentative d’introduction des OGM dans l’agriculture ;

Valoriser les ressources locales pour une meilleure création de richesses de façon durable ;

S’informer et se former pour mieux comprendre les enjeux liés aux OGM afin d’agir en
connaissance de causes.

Fait à Cotonou, le 04 juillet 2006. JINUKUN et COPAGEN

JINUKUN est un réseau d’ONG locales et nationales, d’organisations paysannes, d’organisations communautaires de base et de scientifiques de
différentes spécialités du Bénin (biologistes, généticiens, sociologues, historiens, vétérinaires, …) travaillant pour une utilisation durable de la
biodiversité au Bénin et en Afrique. Le réseau a fait de la lutte contre les OGM, et de la protection des droits des agriculteurs et des communautés
locales, ses chevaux de bataille pour que la biodiversité du Bénin et d’Afrique soit réellement contrôlée par les communautés locales.
JINUKUN travaille en partenariat avec les organisations paysannes, les ONG qui interviennent dans le domaine de l’agriculture, de la protection
de la biodiversité ou de défense des consommateurs. Il produit une plaquette de liaison, du même nom, JINUKUN. JINUKUN est membre d’un
réseau intervenant en Afrique de l’Ouest : la Coalition pour la Protection du Patrimoine Génétique Africain (COPAGEN)

La Coalition pour la protection du patrimoine génétique africain (COPAGEN), est un mouvement social et citoyen. C’est un regroupement non formel d’organisations de la société civile de l’Afrique francophone au Sud du Sahara, manifestant un intérêt pour la gestion durable et la valorisation des ressources biologiques du continent ; elle comprend comme principaux acteurs, des Organisations paysannes, des ONG, des
associations de consommateurs, des associations de développement, des syndicats, des mouvements des droits de l’homme, des organisations de jeunes, de femmes, des individus etc. Le mouvement soutient les droits collectifs des communautés locales et des agriculteurs sur le patrimoine génétique africain, et rejette le génie génétique dans l’alimentation et l’agriculture. La mission de la coalition est d’oeuvrer pour la sauvegarde du patrimoine génétique africain, et pour une utilisation durable des ressources biologiques africaines, à travers la protection des droits des communautés locales et des agriculteurs. Le message de COPAGEN est : « Oui pour une recherche scientifique indépendante qui valorise les
ressources biologiques locales et les connaissances traditionnelles et endogènes dans l’intérêt des petits agriculteurs et des consommateurs
africains, non au brevetage du vivant et aux OGM face à tous les risques avérés et potentiels actuels qui y sont attachés. »
La coalition est actuellement active dans les pays suivants : Bénin, Burkina Faso, Côte d’Ivoire, Guinée Bissau, Guinée Conakry, Mali, Niger,
Sénégal et Togo

MODUS OPERANDI OF THE CRIMINAL US GLOBAL EMPIRE BUILDING BY THE BANKSTERS & THE MORALLY BANKRUPT so-called "ELITE"

THE NAKED HEGEMON

Why the emperor has no clothes

By Andre Gunder Frank

http://www.atimes.com/atimes/Global_Economy/GA06Dj01.html

Uncle Sam has reneged and defaulted on up to 40% of its trillion-dollar foreign debt, and nobody has said a word except for a line in The Economist. In plain English that means Uncle Sam runs a worldwide confidence racket with his self-made dollar based on the confidence that he has elicited and received from others around the world, and he is a also a deadbeat in that he does not honor and return the money he has received.

How much of our dollar stake we have lost depends on how much we originally paid for it. Uncle Sam let his dollar fall, or rather through his deliberate political economic policies drove it down, by 40%, from 80 cents to the euro to 133 cents. The dollar is down by a similar factor against the yen, yuan and other currencies. And it is still declining, indeed is apt to plummet altogether.

There was also a spate of competitive devaluations in the 1930s, called the "beggar thy neighbor policy" of shifting the costs for the neighbors to bear. True, as the dollar has declined, so has the real value that foreigners pay to service their debt to Uncle Sam. But that works only if they can themselves earn in currencies that have increased in value against the dollar. Otherwise, foreigners earn and pay in the same devalued dollars, and even then with some loss from devaluation between the time they got their dollars and the time they repay them to Uncle Sam. China and other East Asian nations do earn in dollars, to which they have pegged their currencies, so they have already lost a substantial portion of their dollar stake, by far the world's largest.

And they, like all others, will also lose the rest. For Uncle Sam's debt to the rest of the world already amounts to more than a third of his annual domestic production and is still growing. That alone already makes his debt economically and politically never repayable, even if he wanted to, which he does not. Uncle Sam's domestic, eg credit-card, debt is almost 100% of gross domestic product (GDP) and consumption, including that from China. Uncle Sam's federal debt is now US$7.5 trillion, of which all but $1 trillion was built up in the past three decades, the last $2 trillion in the past eight years, and the last $1 trillion in the past two years. Alas, that costs more than $300 billion a year in interest, compared with, for example, the $15 billion spent annually on the National Aeronautics and Space Administration (NASA). But no worries: Congress just raised the debt ceiling to $8.2 trillion. To help us visualize, $1 trillion tightly packed up in $1,000 bills would create a pile 100km high.

But nearly half is owed to foreigners. All Uncle Sam's debt, including private household consumer credit-card, mortgage etc debt of about $10 trillion, plus corporate and financial, with options, derivatives and the like, and state and local government debt comes to an unvisualizable, indeed unimaginable, $37 trillion, which is nearly four times Uncle Sam's GDP. Only some of that can be managed domestically, but with dangerous limitations for Uncle Sam noted below. That is only one reason I want you to meet Uncle Sam, the deadbeat confidence man, who may remind you of the film Meet Joe Black; for as we get to know him better below, we will find that he is also a Shylock, and a corrupt one at that.

The United States is the world's most privileged nation for having the monopoly privilege of printing the world's reserve currency at will and at a cost of nothing but the paper and ink it is printed on. Moreover, by doing so, Uncle Sam can export abroad the inflation he generates by the extra dollars he prints, of which there are already at least three times as many floating around the world as at Uncle Sam's home. Additionally, his is also the only country whose "foreign" debt is mostly denominated in his own world-currency dollars that he can print at will; while most foreigners' debt is also denominated in the same dollar, but they have to buy it from Uncle Sam with their own currency and real goods. So he simply pays the Chinese and others in essence with these dollars that already to begin with have no real worth beyond their paper and ink. So especially poor China gives away for nothing at all to rich Uncle Sam hundreds of billions of dollars' worth of real goods produced at home and consumed by Uncle Sam. Then China turns around and trades these same paper dollar bills in for more of Uncle Sam's paper called Treasury Certificate bonds, which are even more worthless, except that they pay a percent of interest. For as we already noted, they will never be able to be cashed in and redeemed in full or even in part, and anyway have the lost much of their value to Uncle Sam already.

In an earlier essay, I argued that Uncle Sam's power rests on two pillars only, the paper dollar and the Pentagon. Each supports the other, but the vulnerability of each is also an Achilles' heel that threatens the viability of the other. Since then, Iraq, not to mention Afghanistan, has shown confidence in the Pentagon not to be what it was cracked up to be; and with the in-part-consequent decline in the dollar, so has confidence in it and Uncle Sam's ability to use it to finance his Pentagon's foreign adventures (See Coup d'Etat and Paper Tiger in Washington, Fiery Dragon in the Pacific, which also conjures up the productive growth of China). Additionally we must realize that Uncle Sam's numbers above and below are also all literally relative. So far relations with other countries, in particular with China, still favor Uncle Sam, but they also help maintain an image that is deceptive. Consider the following:

A $2 toy leaving a US-owned factory in China is a $3 shipment arriving at San Diego. By the time a US consumer buys it for $10 at Wal-Mart, the US economy registers $10 in final sales, less $3 import cost, for a $7 addition to the US GDP. (Blaming 'undervalued' yuan wins votes, Asia Times Online, February 26, 2004)

Moreover, ever-clever Uncle Sam has arranged matters so as to earn 9% from his economic and financial holdings abroad, while foreigners earn only 3% on theirs, and among them on their Treasury Certificates only 1% real return. Note that this difference of 6 percentage points is already double what Uncle Sam pays out, and his total 9% take is triple the 3% he gives back. Therefore, although foreign holdings and Uncle Sam's are now about equal, Uncle Sam is still the big net interested winner, just like any Shylock, but no other ever did so grand a business.

But Uncle Sam also earns quite well, thank you, from other holdings abroad, eg from service payments by mostly poor foreign debtors. The sums involved are not peanuts or even small potatoes. For from his direct investments in foreign property alone, Uncle Sam's profits now equal 50%, and including his receipts from other holdings abroad now are a full 100% of profits derived from all of his own domestic activities combined. These foreign receipts add more than 4% to Uncle Sam's national domestic product. That helps nicely to compensate for the failure of domestic profits as yet to recover even their 1972 level, because Uncle Sam has failed to boost productivity sufficiently at home.

The productivity hype of president Bill Clinton's "new economy" in the 1990s was limited to computers and information technology (IT), and even that proved to be a sham when the dot-com bubble burst. Also, not only the apparent increase in "profits" but also that of "productivity" were, at the bottom, on the backs of shop-floor, office and sales-floor workers working harder and longer hours and, at the top, the result of innovative accounting shams by Enron and the like. Such factors still compensate for and permit much of Uncle Sam's $600-billion-and-still-rising trade deficit from excess home consumption over what he himself produces. That is what has resulted in the multitrillion-dollar debt. Exactly how large that debt is Uncle Sam is reluctant to reveal, but what is sure is that it is by far the world's largest, even as net debt to foreigners, after their debt to him is deducted.

How has all this come about?

The simple answer is that Uncle Sam, who is increasingly hooked on consumption, not to mention harder drugs, saves no more than 0.2% of his own income. The Federal Reserve's guru and now you see it, now you don't doctor of magic, Alan Greenspan, recently observed that this is so because the richest 20% of Americans, who are the only ones who do save, have reduced their savings to 2%. Yet even these measly savings (other, poorer countries save and even invest 20%, 30%, even 40% of their income) are more than counterbalanced by the 6% deficit spending of the government. That is what brings the average saving rate to 0.2%. To maintain that $400-plus-billion budget deficit (more than 3% of national domestic product), which is really more the $600 billion if we count, as we should, the more than $200 billion Uncle Sam "borrows" from the temporary surplus in his own Federal Social Security fund, which he is also bankrupting. (But never mind, President George W Bush just promised to privatize much of that and let people buy their own old-age "security" in the ever-insecure market).

So with this $600-billion-plus budget deficit and the above-mentioned related $600-billion-plus deficit, rich Uncle Sam, and primarily his highest earners and biggest consumers, as well as of course the Big Uncle himself, live off the fat of the rest of the world's land. Uncle Sam absorbs the savings of others who themselves are often much poorer, particularly when their central banks put many of their reserves in world-currency dollars and hence into the hands of Uncle Sam in Washington, and some also in dollars at home. Their private investors send dollars to or buy dollar assets on Wall Street, all with the confidence that they are putting their wherewithal in the world's safest haven (and that, of course, is part of the above-mentioned confidence racket). From the central banks alone, we are looking at yearly sums of more than $100 billion from Europe, more than $100 billion from poor China, $140 billion from super-saver Japan, and many 10s of billions from many others around the globe, including the Third World. But in addition, Uncle Sam obliges them, through the good offices of their own states, to send their thus literally forced savings to Uncle Sam as well in the form of their "service" of their predominantly dollar debt to him.

His treasury secretary and his International Monetary Fund (IMF) handmaiden blithely continue to strut around the world insisting that the Third - and ex-Second, now also Third - World of course continue to service their foreign debts, especially to him. No matter that with interest rates multiplied several times over by Uncle Sam himself after the Fed's Paul Volcker's coup in October 1979, most have already paid off their original borrowings three to five times over. For to pay at all at interest rates that Volcker boosted to 20%, they had to borrow still more at still higher rates until thereby their outstanding foreign debt doubled and tripled, not to mention their domestic debt from which part of the foreign payments were raised, particularly in Brazil. Privatization is the name of the game there and elsewhere, except for the debt. The debt was socialized after it had been incurred mostly by private business, but only the state had enough power to squeeze the greatest bulk of back payments out of the hides of its poor and middle-class people and transfer them as "invisible service payments" to Uncle Sam.

When Mexicans were told to tighten their belts still further, they answered that they couldn't because they had already had to eat their belts. Only Argentina and for a while Russia declared an effective moratorium on debt "service", and that only after political economic policies had destroyed their societies, thanks to Uncle Sam's advisers and his IMF strong arm. Since then, Uncle Sam himself has been blithely defaulting on his own foreign debt, as he already had several times before in the 19th century.

Speaking of that, it may be well to recall at least two pieces of advice from that time: Lord Cromer, who administered Egypt for then-dominant British imperial interests, said his most important instrument for doing so was Egypt's debts to Britain. These had just multiplied when Egypt was obliged to sell its Suez Canal shares to Britain in order to pay off earlier debts and British prime minister Benjamin Disraeli explained and justified his purchase of the same on the grounds that it would strengthen British imperial interests. Today, that is called "debt-for-equity swaps", which is one of Uncle Sam's latter-day favorite policies to use the debt to acquire profitable and/or strategically important real resources, as of course also was the canal as the way to the jewel of the British Empire, India.

Another piece of practical advice came from the premier military strategist Carl von Clausewitz: make the lands you conquer pay for their own conquest and administration. That is of course exactly what Britain did in and with India through the infamous "Home Charges" remitted to London in payment for Britain administering India, which even the British themselves recognized as "tribute" and responsible for much of "The Drain" from India to Britain. How much more efficient yet to let foreign countries' own states administer themselves but by rules set and imposed by Uncle Sam's IMF and then effect a drain of debt service anyway. Actually, the British therein also set the 19th-century precedent of relying on the "imperialism of free trade" with "independent" states as far and as long as possible, using gunboat diplomacy to make it work (which Uncle Sam had already learned to copy by early in the 20th century); and if that was not enough, simply to invade, and if necessary to occupy - and then rely on the Clausewitz rule.
We shall note several recent instances thereof, and especially the Iraqi one, in the second article in this series.

After I wrote the above, I received by e-mail an excerpt from the Democracy Now! website, titled Confessions of an economic hit man: How the US uses globalization to cheat poor countries out of trillions

We speak with John Perkins, a former respected member of the international banking community. In his book Confessions of an Economic Hit Man he describes how as a highly paid professional, he helped the US cheat poor countries around the globe out of trillions of dollars by lending them more money than they could possibly repay and then take over their economies ...

JOHN PERKINS: Basically what we were trained to do and what our job is to do is to build up the American empire. To bring - to create situations where as many resources as possible flow into this country, to our corporations, and our government, and in fact we've been very successful. We've built the largest empire in the history of the world ... primarily through economic manipulation, through cheating, through fraud, through seducing people into our way of life, through the economic hit men. I was very much a part of that ... I was initially recruited while I was in business school back in the late '60s by the National Security Agency, the nation's largest and least understood spy organization ... and then [it] send[s] us to work for private consulting companies, engineering firms, construction companies, so that if we were caught, there would be no connection with the government ...

I became its chief economist. I ended up having 50 people working for me. But my real job was deal-making. It was giving loans to other countries, huge loans, much bigger than they could possibly repay. One of the conditions of the loan - let's say a $1 billion to a country like Indonesia or Ecuador - and this country would then have to give 90% of that loan back to a US company, or US companies ... a Halliburton or a Bechtel ... A country today like Ecuador owes over 50% of its national budget just to pay down its debt. And it really can't do it. So we literally have them over a barrel. So when we want more oil, we go to Ecuador and say, "Look, you're not able to repay your debts, therefore give your oil companies your Amazon rain [forests], which are filled with oil." And today we're going in and destroying Amazonian rain forests, forcing Ecuador to give them to us because they've accumulated all this debt ... [We work] very, very closely with the World Bank. The World Bank provides most of the money that's used by economic hit men, it and the IMF.

Last but not least, oil producers also put their savings in Uncle Sam. With the "shock" of oil that restored its real price after the dollar valuation had fallen in 1973, ever-cleverer-by-half Henry Kissinger made a deal with the world's largest oil exporter, Saudi Arabia, that it would continue to price oil in dollars, and these earnings would be deposited with Uncle Sam and partly compensated by military hardware. That deal de facto extended to all of the Organization of Petroleum Exporting Countries (OPEC) and still stands, except that before the war against Iraq that country suddenly opted out by switching to pricing its oil in euros, and Iran threatened do the same. North Korea, the third member of the "axis of evil", has no oil but trades entirely in euros. (Venezuela is a major oil supplier to Uncle Sam and also supplies some at preferential rates as non-dollar trade swaps to poor countries such as Cuba. So Uncle Sam sponsored and financed military commandos from its Plan Colombia next door, promoted an illegal coup and, when that failed, pushed a referendum in his attempt at yet another "regime change"; and now along with Brazil all three are being baptized as yet another "axis of evil").

After writing this, I found that the good (hit) man Mr Perkins was in Saudi Arabia too:

Yes, it was a fascinating time. I remember well ... the Treasury Department hired me and a few other economic hit men. We went to Saudi Arabia ... And we worked out this deal whereby the Royal House of Saud agreed to send most of their petrodollars back to the United States and invest them in US government securities. The Treasury Department would use the interest from these securities to hire US companies to build Saudi Arabia - new cities, new infrastructure - which we've done. And the House of Saud would agree to maintain the price of oil within acceptable limits to us, which they've done all of these years, and we would agree to keep the House of Saud in power as long as they did this, which we've done, which is one of the reasons we went to war with Iraq in the first place. And in Iraq we tried to implement the same policy that was so successful in Saudi Arabia, but Saddam Hussein didn't buy. When the economic hit men fail in this scenario, the next step is what we call the jackals. Jackals are CIA-sanctioned people that come in and try to foment a coup or revolution. If that doesn't work, they perform assassinations. Or try to. In the case of Iraq, they weren't able to get through to Saddam Hussein. He had - his bodyguards were too good. He had doubles. They couldn't get through to him. So the third line of defense, if the economic hit men and the jackals fail, the next line of defense is our young men and women, who are sent in to die and kill, which is what we've obviously done in Iraq.

To return to the main issue and call a spade a huge spade, all of the above is part and parcel of the world's biggest-ever Ponzi-scheme confidence racket. Like all others, its most essential characteristic is that it can only continue to pay off dollars and be maintained at the top as long as it continues to receive new dollars at the bottom, voluntarily through confidence if possible and by force if not. (Of course, the Clausewitz and Cromer formulas result in the poorest paying the most, since they are also the most defenseless: so that the ones sitting on/above them pass much of the cost and pain down to them.)

What if confidence in the dollar runs out?

Things are already getting shakier in the House of Uncle Sam. The declining dollar reduces the necessary dollar inflows, so Greenspan needs to raise interest rates to maintain some attraction for the foreign dollars he needs to fill the trade gap. As a quid pro quo for being reappointed by President George W Bush, he promised to do that only after the election. That time has now arrived, but doing so threatens to collapse the housing bubble that was built on low interest and mortgage - and remortgage - rates.

But it is in their house values that most Americans have their savings, if they have any at all. They and this imaginary wealth effect supported over-consumption and the nearly as-high-as-GDP household debt, and a collapse of the housing price bubble with increased interest and mortgage rates would not only drastically undercut house prices, it would thereby have a domino effect on their owners' enormous second and third remortgages and credit-card and other debt, their consumption, corporate debt and profit, and investment. In fact, these factors would be enough to plummet Uncle Sam into a deep recession, if not depression, and another Big Bear deflation on stock and de facto on other prices, rendering debt service even more onerous. (If the dollar declines, even domestic price inflation is de facto deflationary against other currencies, which Russians and Latin Americans discovered to their peril, and which we observe below.)

Still lower real US investment would reduce its industrial productivity and competitiveness even more - probably to a degree lower than can compensated for by further devaluing the dollar and making US exports cheaper, as is the confident hope of many, probably including the good Doctor. Until now, the apparent inflation of prices abroad in rubles and pesos and their consequent devaluations have been a de facto deflation in terms of the dollar world currency. Uncle Sam then printed dollars to buy up at bargain-basement fire-sale prices natural resources in Russia (whose economy was then run on $100 bills), and companies and even banks, as in South Korea. True, now Greenspan and Uncle Sam are trying again to get other central banks to raise their own interest rates and otherwise plunge their own people into even deeper depression.

But even if he can, thereby also canceling out the relative attractiveness of his own interest-rate hike, how could that save Uncle Sam? What remains the great unknown and perhaps still unknowable is how a more wounded, Ponzi-less Uncle Sam would react with more "Patriotic" acts at home and abroad with the weapons - including the now almost ready "small" nukes - he would still have, even if his foreign victims no longer paid for new ones. So, to compensate for less bread and civil rights at home, an even more patriotic, nay chauvinist, circus at the cost of others abroad is the real danger of the current policies to "defend freedom and civilization".

So, far beyond Osama bin Laden, al-Qaeda and all the terrorists put together, the greatest real-world threat to Uncle Sam is that the inflow of dollars dries up. For instance, foreign central banks and private investors (it is said that "overseas Chinese" have a tidy trillion dollars) could any day decide to place more of their money elsewhere than in the declining dollar and abandon poor ol' Uncle Sam to his destiny. China could double its per capita income very quickly if it made real investments at home instead of financial ones with Uncle Sam. Central banks, European and others, can now put their reserves in (rising!) euros or even soon-to-be-revalued Chinese yuan. Not so far down the road, there may be an East Asian currency, eg a basket first of ASEAN + 3 (China, Japan, South Korea) - and then + 4 (India). While India's total exports in the past five years rose by 73%, those to the Association of Southeast Asian Nations (ASEAN) rose at double that rate and sixfold to China. India has become an ASEAN summit partner, and its ambitions stretch still further to an economic zone stretching from India to Japan. Not for nothing, in the 1997 East Asian currency and then full economic crisis, Uncle Sam strong-armed Japan not to start a proposed East Asian currency fund that would have prevented at least the worst of the crisis. Uncle Sam then benefited from it by buying devalued East Asian currencies and using them to buy up East Asian real resources, and in South Korea also banks, at bargain-basement reduced-price fire sales. But now, China is already taking steps toward such an arrangement, only on a much grander financial and now also economic scale.

A day after writing the above, I read in The Economist (December 11-17, 2004) a report on the previous week's summit meeting of ASEAN + 3 in Malaysia. That country's prime minister announced that this summit should lay the groundwork for an East Asian Community (EAC) that "should build a free-trade area, cooperate on finance, and sign a security pact ... that would transform East Asia into a cohesive economic block ... In fact, some of these schemes are already in motion ... China, as the region's pre-eminent economic and military power, will doubtless dominate ... and host the second East Asia Summit." The report went on to recall that in 1990, Uncle Sam shot down a similar initiative for fear of losing influence in the region. Now it is a case of "Yankee Stay Home".

Or what if, long before that comes to pass, exporters of oil simply cease to price it in ever-devaluing dollars, and instead make a mint by switching to the rising euro and/or a basket of East Asian currencies? That would at one stroke vastly diminish the world demand for and price of dollars by obliging anyone who wants to buy oil to purchase and increase the demand price of the euro or yen/yuan instead of the dollar. That would crash the dollar and tumble Uncle Sam in one fell swoop, as foreign - and even domestic - owners of dollars would sell off as many of them as fast as they could, and other countries' central banks would switch their reserves out of dollars and away from Uncle Sam's no-longer-safe haven. That would drive the dollar down even more, and of course halt any more dollar inflow to Uncle Sam from the foreigners who have been financing his consumption spree. Since selling oil for falling dollars instead of rising euros is evidently bad business, the world's largest oil exporters in Russia and OPEC have been considering doing just that. In the meantime, they have only raised the dollar price of oil, so that in euro terms it has remained approximately stable since 2000. So far, many oil exporters and others still place their increased amount of dollars with Uncle Sam, even though he now offers an ever less attractive and less safe haven, but Russia is now buying more euros with some of its dollars.

So also many countries' central banks have begun to put ever more of their reserves into the euro and currencies other than Uncle Sam's dollar. Now even the Central Bank of China, the greatest friend of Uncle Sam in need, has begun to buy some euros. China itself has also begun to use some of its dollars - as long as they are still accepted by them - to buy real goods from other Asians and thousands of tons of iron ore and steel from Brazil, etc. (Brazil's president recently took a huge business delegation to China, and a Chinese one just went to Argentina. They are going after South African minerals too.)

So what will happen to the rich on top of Uncle Sam's Ponzi scheme when the confidence of poorer central banks and oil exporters in the middle runs out, and the more destitute around the world, confident or not, can no longer make their in-payments at the bottom? The Uncle Sam Ponzi Scheme Confidence Racket would - or will? - come crashing down, like all other such schemes before, only this time with a worldwide bang. It would cut the present US consumer demand down to realistic size and hurt many exporters and producers elsewhere in the world. In fact, it may involve a wholesale fundamental reorganization of the world political economy now run by Uncle Sam.

THE BEGINNING OF THE END OF THE $US DOLLAR & OF THE AMERICAN POLITICO-ECONOMIC & MILITARY EMPIRE...

The Chinese, Russians and other so-called "leaders" in Eurasia have FINALLY decided to stop financing their own US-led politico-economic enslavement & military encirclement by the US banksters and their political puppets.

The American Empire Is Bankrupt

By Chris Hedges

http://www.truthdig.com/report/item/20090614_the_american_empire_is_bankrupt/

14 June 2009

This week marks the end of the dollar’s reign as the world’s reserve currency. It marks the start of a terrible period of economic and political decline in the United States. And it signals the last gasp of the American imperium. That’s over. It is not coming back. And what is to come will be very, very painful.

Barack Obama, and the criminal class on Wall Street, aided by a corporate media that continues to peddle fatuous gossip and trash talk as news while we endure the greatest economic crisis in our history, may have fooled us, but the rest of the world knows we are bankrupt. And these nations are damned if they are going to continue to prop up an inflated dollar and sustain the massive federal budget deficits, swollen to over $2 trillion, which fund America’s imperial expansion in Eurasia and our system of casino capitalism. They have us by the throat. They are about to squeeze.

There are meetings being held Monday and Tuesday in Yekaterinburg, Russia, (formerly Sverdlovsk) among Chinese President Hu Jintao, Russian President Dmitry Medvedev and other top officials of the six-nation Shanghai Cooperation Organization. The United States, which asked to attend, was denied admittance. Watch what happens there carefully. The gathering is, in the words of economist Michael Hudson, “the most important meeting of the 21st century so far.”

It is the first formal step by our major trading partners to replace the dollar as the world’s reserve currency. If they succeed, the dollar will dramatically plummet in value, the cost of imports, including oil, will skyrocket, interest rates will climb and jobs will hemorrhage at a rate that will make the last few months look like boom times. State and federal services will be reduced or shut down for lack of funds. The United States will begin to resemble the Weimar Republic or Zimbabwe.

Obama, endowed by many with the qualities of a savior, will suddenly look pitiful, inept and weak (as he is (emphasise is mine)). And the rage that has kindled a handful of shootings and hate crimes in the past few weeks will engulf vast segments of a disenfranchised and bewildered working and middle class. The people of this class will demand vengeance, radical change, order and moral renewal, which an array of proto-fascists, from the Christian right to the goons who disseminate hate talk on Fox News, will assure the country they will impose.

I called Hudson, who has an article in Monday’s Financial Times called “The Yekaterinburg Turning Point: De-Dollarization and the Ending of America’s Financial-Military Hegemony.” “Yekaterinburg,” Hudson writes, “may become known not only as the death place of the czars but of the American empire as well.” His article is worth reading, along with John Lanchester’s disturbing exposé of the world’s banking system, titled “It’s Finished,” which appeared in the May 28 issue of the London Review of Books.

“This means the end of the dollar,” Hudson told me. “It means China, Russia, India, Pakistan, Iran are forming an official financial and military area to get America out of Eurasia. The balance-of-payments deficit is mainly military in nature. Half of America’s discretionary spending is military. The deficit ends up in the hands of foreign banks, central banks. They don’t have any choice but to recycle the money to buy U.S. government debt. The Asian countries have been financing their own military encirclement. They have been forced to accept dollars that have no chance of being repaid. They are paying for America’s military aggression against them. They want to get rid of this.”

China, as Hudson points out, has already struck bilateral trade deals with Brazil and Malaysia to denominate their trade in China’s yuan rather than the dollar, pound or euro. Russia promises to begin trading in the ruble and local currencies. The governor of China’s central bank has openly called for the abandonment of the dollar as reserve currency, suggesting in its place the use of the International Monetary Fund’s Special Drawing Rights. What the new system will be remains unclear, but the flight from the dollar has clearly begun. The goal, in the words of the Russian president, is to build a “multipolar world order” which will break the economic and, by extension, military domination by the United States.

China is frantically spending its dollar reserves to buy factories and property around the globe so it can unload its U.S. currency. This is why Aluminum Corp. of China made so many major concessions in the failed attempt to salvage its $19.5 billion alliance with the Rio Tinto mining concern in Australia. It desperately needs to shed its dollars.

“China is trying to get rid of all the dollars they can in a trash-for-resource deal,” Hudson said. “They will give the dollars to countries willing to sell off their resources since America refuses to sell any of its high-tech industries, even Unocal, to the yellow peril. It realizes these dollars are going to be worthless pretty quickly.”

The architects of this new global exchange realize that if they break the dollar they also break America’s military domination. Our military spending cannot be sustained without this cycle of heavy borrowing. The official U.S. defense budget for fiscal year 2008 is $623 billion, before we add on things like nuclear research. The next closest national military budget is China’s, at $65 billion, according to the Central Intelligence Agency.

There are three categories of the balance-of-payment deficits. America imports more than it exports. This is trade. Wall Street and American corporations buy up foreign companies. This is capital movement. The third and most important balance-of-payment deficit for the past 50 years has been Pentagon spending abroad. It is primarily military spending that has been responsible for the balance-of-payments deficit for the last five decades. Look at table five in the Balance of Payments Report, published in the Survey of Current Business quarterly, and check under military spending. There you can see the deficit.

To fund our permanent war economy, we have been flooding the world with dollars. The foreign recipients turn the dollars over to their central banks for local currency. The central banks then have a problem. If a central bank does not spend the money in the United States then the exchange rate against the dollar will go up. This will penalize exporters. This has allowed America to print money without restraint to buy imports and foreign companies, fund our military expansion and ensure that foreign nations like China continue to buy our treasury bonds. This cycle appears now to be over. Once the dollar cannot flood central banks and no one buys our treasury bonds, our empire collapses. The profligate spending on the military, some $1 trillion when everything is counted, will be unsustainable.

“We will have to finance our own military spending,” Hudson warned, “and the only way to do this will be to sharply cut back wage rates. The class war is back in business. Wall Street understands that. This is why it had Bush and Obama give it $10 trillion in a huge rip-off so it can have enough money to survive.”

The desperate effort to borrow our way out of financial collapse has promoted a level of state intervention unseen since World War II. It has also led us into uncharted territory.

“We have in effect had to declare war to get us out of the hole created by our economic system,” Lanchester wrote in the London Review of Books. “There is no model or precedent for this, and no way to argue that it’s all right really, because under such-and-such a model of capitalism ... there is no such model. It isn’t supposed to work like this, and there is no road-map for what’s happened.”

The cost of daily living, from buying food to getting medical care, will become difficult for all but a few as the dollar plunges. States and cities will see their pension funds drained and finally shut down. The government will be forced to sell off infrastructure, including roads and transport, to private corporations. We will be increasingly charged by privatized utilities—think Enron—for what was once regulated and subsidized. Commercial and private real estate will be worth less than half its current value. The negative equity that already plagues 25 percent of American homes will expand to include nearly all property owners. It will be difficult to borrow and impossible to sell real estate unless we accept massive losses. There will be block after block of empty stores and boarded-up houses. Foreclosures will be epidemic. There will be long lines at soup kitchens and many, many homeless. Our corporate-controlled media, already banal and trivial, will work overtime to anesthetize us with useless gossip, spectacles, sex, gratuitous violence, fear and tawdry junk politics. America will be composed of a large dispossessed underclass and a tiny empowered oligarchy that will run a ruthless and brutal system of neo-feudalism from secure compounds. Those who resist will be silenced, many by force. We will pay a terrible price, and we will pay this price soon, for the gross malfeasance of our power elite.


-----------------------------------------------------------------------------------
Note regarding prof. Michael Hudson's article - De-Dollarization: Dismantling America’s Financial-Military Empire: The Yekaterinburg Turning Point:

In the above article, prof. Michael Hudson bases his argument on the following contradictory premise. He writes that foreign Central Banks “ face a hard choice: either to recycle these dollars back to the United States by purchasing US Treasury bills, or to let the “free market” force up their currency relative to the dollar. …this buildup is not really voluntary…, but simply a lack of alternatives.”

However, in Chris Hedges' article, he is quoted by Chris Hedges as saying that China is frantically spending its dollar reserves to buy factories and property around the globe so it can unload its U.S. currency.

Hedges writes: “China is trying to get rid of all the dollars they can in a trash-for-resource deal,” Hudson said. “They will give the dollars to countries willing to sell off their resources since America refuses to sell any of its high-tech industries, even Unocal, to the yellow peril. It realizes these dollars are going to be worthless pretty quickly.”

I wrote to prof. Michael Hudson to point out these contradictory claims and to ask him to clarify his claims into this important issue.

Sadly, however, instead of responding to my inquiry with a coherent argument and an intelligent response, Prof Michael Hudson chose to respond to my inquiry with sarcasm...

Please find below a copy of my inquiry and his "response".

From: arya@yajnacentre.com
Subject: email of inquiry to professor Michael Hudson
To: crg.online@yahoo.com
Received: Monday, June 15, 2009, 10:37 AM

TO: Global ResearchHello,Could you please forward the following email of inquiry to professor Michael Hudson. Thank you!Dear Professor Michael Hudson

I have just read your very informative article - De-Dollarization: Dismantling America’s Financial-Military Empire: The Yekaterinburg Turning Point - published in globalisation.ca.I am writing to you to ask you to shed some light into the following issue related to the subject of your article:

You write:

Central banks “ face a hard choice: either to recycle these dollars back to the United States by purchasing US Treasury bills, or to let the “free market” force up their currency relative to the dollar... – thereby pricing their exports out of world markets and hence creating domestic unemployment and business insolvency.

When China and other countries recycle their dollar inflows by buying US Treasury bills to “invest” in the United States, this buildup is not really voluntary. It does not reflect faith in the U.S. economy enriching foreign central banks for their savings, or any calculated investment preference, but simply a lack of alternatives.”

Questions:

1) Why do Central Banks not use their $US reserves to buy other foreign currencies (i.e. Euro, Yen, etc.) as reserves, or gold, stocks, real estate, etc- both at home and abroad - or invest their $US reserves into their own economies to build up public infrastructures to create employment, revenue and thus economic growth?

2) Why do countries such as US-creditor nations such as China, Japan, etc. not sell their goods/services in other currencies such as the Euro, Yen, etc.?
I thank you for shedding some light into these interrogations and I look forward to your response.

Please note that I have posted a copy of your article on my blog at the following link:
http://yajnacentre.blogspot.com/2009/06/beginning-of-end-of-us-dollar-hegemony.html
Best regards,

Arya Tajdin

Prof. Hudson's 1st response to my email


My book Super imperialism deals with these questions in detail. I have many articles on line explaining this too.
Rushing out now...
MH

My follow-up email


prof MH,

I have just read two very informative articles on the same subject which seem to contradict what you are writing, namely that central banks “ face a hard choice: either to recycle these dollars back to the United States by purchasing US Treasury bills, or to let the “free market” force up their currency relative to the dollar. …this buildup is not really voluntary…, but simply a lack of alternatives.”

The first article I refer to - The American Empire Is Bankrupt - has been written by Chris Hedges on 14 june 2009. The full article can be viewed at:

www.truthdig.com/report/item/20090614_the_american_empire_is_bankrupt/?lnIn his article Hedges quotes you as saying:

“The balance-of-payments deficit is mainly military in nature. Half of America’s discretionary spending is military. The deficit ends up in the hands of foreign banks, central banks. They don’t have any choice but to recycle the money to buy U.S. government debt.”

But then you add that China is frantically spending its dollar reserves to buy factories and property around the globe so it can unload its U.S. currency.

Hedges writes: “China is trying to get rid of all the dollars they can in a trash-for-resource deal,” Hudson said. “They will give the dollars to countries willing to sell off their resources since America refuses to sell any of its high-tech industries, even Unocal, to the yellow peril. It realizes these dollars are going to be worthless pretty quickly.”

So on the one hand you write “they don’t have any choice but to recycle the money to buy U.S. government debt.” while also stating that “China is trying to get rid of all the dollars they can in a trash-for-resource deal…” ?

These claims seem to be contradicting each other and only serve to further reinforce the confusion raised by your contradictory claims around this important issue as you have chosen not to respond to my inquiry…

Furthermore, another article THE NAKED HEGEMON - Why the emperor has no clothes by Andre Gunder Frank – written on the same subject also seems to contradict your claim.

Please find below a relevant excerpt from the article on this issue:

The greatest real-world threat to Uncle Sam is that the inflow of dollars dries up. For instance, foreign central banks and private investors could any day decide to place more of their money elsewhere than in the declining dollar and abandon poor ol' Uncle Sam to his destiny. China could double its per capita income very quickly if it made real investments at home instead of financial ones with Uncle Sam. Central banks, European and others, can now put their reserves in (rising!) euros or even soon-to-be-revalued Chinese yuan.

Or what if, long before that comes to pass, exporters of oil simply cease to price it in ever-devaluing dollars, and instead make a mint by switching to the rising euro and/or a basket of East Asian currencies? That would at one stroke vastly diminish the world demand for and price of dollars by obliging anyone who wants to buy oil to purchase and increase the demand price of the euro or yen/yuan instead of the dollar. That would crash the dollar and tumble Uncle Sam in one fell swoop, as foreign - and even domestic - owners of dollars would sell off as many of them as fast as they could, and other countries' central banks would switch their reserves out of dollars and away from Uncle Sam's no-longer-safe haven. That would drive the dollar down even more, and of course halt any more dollar inflow to Uncle Sam from the foreigners who have been financing his consumption spree. Since selling oil for falling dollars instead of rising euros is evidently bad business, the world's largest oil exporters in Russia and OPEC have been considering doing just that. In the meantime, they have only raised the dollar price of oil, so that in euro terms it has remained approximately stable since 2000. So far, many oil exporters and others still place their increased amount of dollars with Uncle Sam, even though he now offers an ever less attractive and less safe haven, but Russia is now buying more euros with some of its dollars. ( see also the following recent news article Russia Dumps US Dollar as basic reserve currency source: http://www.globalresearch.ca/index.php?context=va&aid=13691)

So also many countries' central banks have begun to put ever more of their reserves into the euro and currencies other than Uncle Sam's dollar. Now even the Central Bank of China, the greatest friend of Uncle Sam in need, has begun to buy some euros. China itself has also begun to use some of its dollars - as long as they are still accepted by them - to buy real goods from other Asians and thousands of tons of iron ore and steel from Brazil, etc. (Brazil's president recently took a huge business delegation to China, and a Chinese one just went to Argentina. They are going after South African minerals too.)

Full article available at the following link:

http://www.atimes.com/atimes/Global_Economy/GA06Dj01.html

I would very much appreciate it if you would take the time to clarify your claims on this important issue.Arya Tajdin.

http://yajnacentre.blogspot.com/2009/06/beginning-of-end-of-us-dollar-hegemony.html

Prof. Hudson's "response" to my email

From: Michael Hudson
Subject: Re: email of inquiry to professor Michael Hudson
To: arya@yajnacentre.com
Date: Wednesday, June 17, 2009, 1:46 PM

The world is contradictory.
MH

My response to prof. Hudson:

From:
"arya@yajnacentre.com"
Add sender to Contacts
To:
"Michael Hudson"

MH,

Is that the best response you can provide...? From a logical and intellectual point of view, it is truly mind-boggling to comprehend how - from a contradictory premise - you can deduct and conclude that "the world is contradictory"!

I, however, can deduct my own logical conclusions about your writings from both your contradictory claims, incoherent articles and your "response" to my inquiry.

Needless to say, I will not waste any more precious time reading your books & articles (as you suggested) since you evidently cannot write coherently (and politely)!

Please note that I shall publish the emails exchanged between us on my blog.

Sincerely,

Arya Tajdin.

I also wrote to Global Research to express my disappointment. Below is a copy of my email sent to Global Research.

TO: Global Research

ATT: Prof. Michel Chossudovsky,
Director

Dear Prof. Chossudovsky,

I am writing to you to express my utter disappointment at prof. Michael Hudson. In fact, I wrote to him to inquire about a (contradictory) claim he made in his recently published article in Global Research. ( pls see copy below)

Sadly, he chose to respond with sarcasm instead of responding to my inquiry with a coherent argument and an intelligent response. Of course, his "response" says a lot about himself...

I have been a regualr reader of Global Research for many years, and needless to say I find such experiences very disappointing and I hereby wished to express my disappointment to you.

Please find below a copy of the emails exchanged between us.

Sincerely,
Arya Tajdin

MORGELLONS: UNKNOWN SKIN DISEASE MAY BE LINKED TO GM FOODS (GMO's)

Photo of the fibrous structures that were in the skin of a Morgellons sufferer.

www.morgellonsusa.com

GMO and Morgellons Disease

by Barbara H. Peterson

http://www.globalresearch.ca/index.php?context=va&aid=8464

March 27, 2008

Since the Clinton administration made biotechnology “a strategic priority for U.S. government backing” (1), giant transnational agri-business concerns have aggressively taken over the global food chain by flooding it with Genetically Modified Organisms (GMO) without regard for the consequences to the earth or its inhabitants. This takeover not only has the potential for global economic devastation, but threatens the earth’s population with far-reaching health concerns as well. One health concern that seems to coincide with the GMO revolution is Morgellons disease. What if the advent of Morgellons disease has something to do with the ingestion of GMO foods?

Morgellons Disease – What is it?


Very little can be found regarding this disease. Originally, sufferers were told that their problem was imaginary. This was of little comfort to the people who were suffering.

Morgellons Disease sufferers report strange, fiber-like material sticking out of sores or wounds that erupt on the skin. This is accompanied by painful, intense itching, that has been described as “an ever present sensation as if something is crawling under the skin.” (2)

On May 18, 2006, KGW, a local news channel reporting out of the Oregon area published this story:

Strange sickness: Mystery disease horror story (excerpt)

[Dr. Drottar] The disabled family practice doctor felt like bugs were crawling under her skin.

"If I fully tell people what has gone on with me medically, they think they’re in the twilight zone,” said Drottar.

She woke up with the feeling that fluid was flowing just below her skin. Often black or blue hair like fibers protruded from her skin, she said.

“I thought I had been exposed to asbestos. I thought I was having asbestos fibers come out of my skin. I was pulling long, thin, small hair-like fibers that were extremely sharp that could literally pierce through my finger nails,” Drottar said.

In addition to the feeling of bugs and the fibers, Drottar also suffered from severe depression, chronic fatigue and a weakened immune system. As a result, she had to give up her family practice, Drottar said. (3)

Morgellons and GMO – the Link

Little information has been revealed concerning the long-term health effects of GMO crops on humans or animals, and even less information can be had regarding research correlating Morgellons with GMO foods. This is suspicious right off the bat, because it would seem that there would be a natural curiosity regarding a link between Genetically Modified Organisms that people ingest regularly and inorganic fibers that protrude from a person’s skin. This would be right up a geneticist’s alley, and quite worthy of intensive research. So, why aren’t there a ton of published studies? Why is it so difficult finding anything related to this? Could it be that companies such as Monsanto have enough clout to effectively squash these stories? If they have enough clout to ruin countries by deceiving impoverished farmers into purchasing patented GMO seeds, and then take it a step further and force these poor people to purchase seeds year after year instead of harvesting their own, then they have enough clout to ask our more than willing corporate government to manipulate the press...again.

According to Mike Stagman, PhD,

“Genetic Engineering is a nightmare technology that has already caused MANY disease epidemics -- documented but unpublicized.” (4)

Well Monsanto, you let at least one study slip through. With the help of a couple of search engines, the following article by Whitley Strieber published on October 12, 2007, titled “Skin Disease May Be Linked to GM Food” was found, which concludes that the fibers taken from a Morgellons sufferer contain the same substance that is "used commercially to produce genetically-modified plants." Here is the article:

Skin Disease May Be Linked to GM Food

12-Oct-2007

Many people—and most physicians—have written off Morgellons disease as either a hoax or hypochondria. But now there is evidence that this mysterious disease may be REAL and related to GENETICALLY MODIFIED food!

The skin of Morgellons victims oozes mysterious strands that have been identified as cellulose (which cannot be manufactured by the human body), and people have the sensation of things crawling beneath their skin. The first known case of Morgellons occurred in 2001, when Mary Leitao created a web site describing the disease, which had infected her young son. She named it Morgellons after a 17th century medical study in France that described the same symptoms.

In the Sept. 15-21 issue of New Scientist magazine, Daniel Elkan describes a patient he calls "Steve Jackson," who "for years" has "been finding tiny blue, red and black fibers growing in intensely itchy lesions on his skin." He quotes Jackson as saying, "The fibers are like pliable plastic and can be several millimeters long. Under the skin, some are folded in a zigzag pattern. These can be as fine as spider silk, yet strong enough to distend the skin when you pull them, as if you were pulling on a hair."

Doctors say that this type of disease could only be caused by a parasite, but anti-parasitic medications do not help. Psychologists insist that this is a new version of the well-known syndrome known as "delusional parasitosis." While this is a "real" disease, it is not a physically-caused one.

But now there is physical evidence that Morgellons is NOT just psychological. When pharmacologist Randy Wymore offered to study some of these fibers if people sent them to him, he discovered that "fibers from different people looked remarkably similar to each other and yet seem to match no common environmental fibers."

When they took them to a police forensic team, they said they were not from clothing, carpets or bedding. They have no idea what they are.

Researcher Ahmed Kilani says he was able to break down two fiber samples and extract their DNA. He found that they belonged to a fungus.

An even more provocative finding is that biochemist Vitaly Citovsky discovered that the fibers contain a substance called "Agrobacterium," which, according to New Scientist, is "used commercially to produce genetically-modified plants." Could GM plants be "causing a new human disease?" (5)

GMO – Not on My Watch!

The giant transnational corporations behind the GMO revolution are hitting us in our most vulnerable spot – our bellies. Most people have been brought up with an innate trust that what they purchase from the stores is safe to eat. This is no longer true, since most processed foods contain genetically engineered ingredients that can have disastrous effects on both animal and human health. What you purchase from the corner store might just change your DNA and create such frightening symptoms that the general public simply does not believe it. What is worse is that when you go to the doctor to get help, he/she tells you what you are experiencing is all in your head. This is rubbish! It is up to people who care to make the correlations between what we eat and what happens to our bodies. Remember the old saying – “you are what you eat?” Well, this author believes it is true.

Notes

1) Engdahl, F.W. (2007). Seeds of Destruction.

2) Stagman, M. Phd. (2006). GMO Disease Epidemics: Bt-cotton Fiber Disease. Retrieved from http://portland.indymedia.org/en/2006/08/344305.shtml

3) Porter, L. (2006). Strange sickness: Mystery disease horror story. Retrieved from http://www.kgw.com/news-local/stories/kgw_051806_news_sweeps_strange_sickness_morgellons.53b2569a.html

4) Stagman, M. Phd. (2006). GMO Disease Epidemics: Bt-cotton Fiber Disease. Retrieved from http://portland.indymedia.org/en/2006/08/344305.shtml

5) Strieber, W. (2007). Skin Disease Might be Linked to GM Food. Retrieved from
http://www.unknowncountry.com/news/?id=6486

Barbara H. Peterson is a Writer and Activist,
http://spktruth2power.wordpress.com

BIOFUELS LEADING TO LAND GRAB AROUND THE WORLD...

Biofuels and ‘Land Grabs’ in Poor Nations

By James Kanter

http://greeninc.blogs.nytimes.com/2009/06/12/biofuels-and-land-grabs-in-poor-nations/

12 June, 2009

Current protections against land-grabs in developing countries are “absolutely insufficient,” said Olivier De Schutter, the U.N.’s special rapporteur on the right to food.

Olivier De Schutter, the United Nations special rapporteur on the right to food, warned on Thursday that biofuels remain an important driver behind big land acquisitions and land leases in poor countries that jeopardize local inhabitants’ food security.

About one-fifth of the activities that Mr. De Schutter deemed as “land grabs” – often backed by hedge funds or sovereign wealth funds – are projects in parts of Africa and Asia aimed at growing crops to make feedstock for biofuels.

“There still is a vast market for first-generation agrofuels,” said Mr. De Schutter, who added that he considered the safeguards adopted by the European Union in 2008 “absolutely insufficient to monitor to the impacts on the countries concerned by shifts in land use for agrofuels production.”

Next-generation biofuels made from plants that would reduce competition with food crops were still in development and so the existing incentives for biofuels in the United States and European Union remained a cause for grave concern, he said.

These newer fuels “were too distant for the moment to say that we can continue to insist on the use of agrofuels for transport.”

He also underlined that second-generation agrofuels “will be hugely water consuming.”

Mr. De Schutter was in Brussels to propose a set of principles and measures to curb “land grabbing” by investors seeking agricultural lands for major crops, like soy and jatropha, which are often exported to produce food for rich-world consumers or to produce biofuels.

He said some large-scale land investments provided much-needed new infrastructure and employment.

But he said that new rules were needed because some investments were leading to evictions, sudden losses of farm and grazing lands, and greater competition for water resources.

Mr. De Schutter was appointed to his post in 2008 by the U.N. Human Rights Council.

Russia Dumps US Dollar as basic reserve currency

source: http://www.globalresearch.ca/index.php?context=va&aid=13691

May 20, 2009

The US dollar is not Russia’s basic reserve currency anymore. The euro-based share of reserve assets of Russia’s Central Bank increased to the level of 47.5 percent as of January 1, 2009 and exceeded the investments in dollar assets, which made up 41.5 percent, The Vedomosti newspaper wrote.

The dollar has thus lost the status of the basic reserve currency for the Russian Central Bank, the annual report, which the bank provided to the State Duma, said.

In accordance with the report, about 47.5 percent of the currency assets of the Russian Central Bank were based on the euro, whereas the dollar-based assets made up 41.5 percent as of the beginning of the current year. The situation was totally different at the beginning of the previous year: 47 percent of investments were made in US dollars, while the euro investments were evaluated at 42 percent.

The dollar share had increased to 49 percent and remained so as of October 1. The euro share made up 40 percent. The rest of investments were based on the British pound, the Japanese yen and the Swiss frank.

The report also said that the reserve currency assets of the Russian Central Bank were cut by $56.6 billion. The losses mostly occurred at the end of the year, when the Central Bank was forced to conduct massive interventions to curb the run of traders who rushed to buy up foreign currencies. The currency assets of the Central Bank had grown to $537.6 billion by October 2008. Therefore, the index dropped by almost $133 billion within the recent three months.

The majority of Russian companies, banks and most of the Russian population started to purchase enormous amounts of foreign currencies at the end of 2008. The dollar gained 16 percent and the euro 13.5 percent over the fourth quarter. The demand on the US dollar was extremely high, and the Central Bank was forced to spend a big part of its dollar assets, experts say.

The change of the structure of the currency portfolio of the Bank of Russia has not affected the official peg of the dual currency basket, which includes $0.55 and 0.45 EUR.

The investments of the Bank of Russia in state securities of foreign issuers have been considerably increased, the report said. About a third of Russia’s international reserves are based on US Treasury bonds.

Russia became one of the largest creditors of the US administration last year, the US Department of the Treasury said. Russia increased its investments in the debt securities of the US Treasury from $32.7 billion as of December 2007 to $116.4 billion as of December 2008.

THE BEGINNING OF THE END OF THE US DOLLAR HEGEMONY...

De-Dollarization: Dismantling America’s Financial-Military Empire

The Yekaterinburg Turning Point

by Prof. Michael Hudson

source: http://www.globalresearch.ca/index.php?context=va&aid=13969

June 13, 2009

The city of Yakaterinburg, Russia’s largest east of the Urals, may become known not only as the death place of the tsars but of American hegemony too – and not only where US U-2 pilot Gary Powers was shot down in 1960, but where the US-centered international financial order was brought to ground.

Challenging America will be the prime focus of extended meetings in Yekaterinburg, Russia (formerly Sverdlovsk) today and tomorrow (June 15-16) for Chinese President Hu Jintao, Russian President Dmitry Medvedev and other top officials of the six-nation Shanghai Cooperation Organization (SCO). The alliance is comprised of Russia, China, Kazakhstan, Tajikistan, Kyrghyzstan and Uzbekistan, with observer status for Iran, India, Pakistan and Mongolia. It will be joined on Tuesday by Brazil for trade discussions among the BRIC nations (Brazil, Russia, India and China).

The attendees have assured American diplomats that dismantling the US financial and military empire is not their aim. They simply want to discuss mutual aid – but in a way that has no role for the United States, NATO or the US dollar as a vehicle for trade. US diplomats may well ask what this really means, if not a move to make US hegemony obsolete. That is what a multipolar world means, after all. For starters, in 2005 the SCO asked Washington to set a timeline to withdraw from its military bases in Central Asia. Two years later the SCO countries formally aligned themselves with the former CIS republics belonging to the Collective Security Treaty Organization (CSTO), established in 2002 as a counterweight to NATO.

Yet the meeting has elicited only a collective yawn from the US and even European press despite its agenda is to replace the global dollar standard with a new financial and military defense system. A Council on Foreign Relations spokesman has said he hardly can imagine that Russia and China can overcome their geopolitical rivalry,1 suggesting that America can use the divide-and-conquer that Britain used so deftly for many centuries in fragmenting foreign opposition to its own empire. But George W. Bush (“I’m a uniter, not a divider”) built on the Clinton administration’s legacy in driving Russia, China and their neighbors to find a common ground when it comes to finding an alternative to the dollar and hence to the US ability to run balance-of-payments deficits ad infinitum.

What may prove to be the last rites of American hegemony began already in April at the G-20 conference, and became even more explicit at the St. Petersburg International Economic Forum on June 5, when Mr. Medvedev called for China, Russia and India to “build an increasingly multipolar world order.” What this means in plain English is: We have reached our limit in subsidizing the United States’ military encirclement of Eurasia while also allowing the US to appropriate our exports, companies, stocks and real estate in exchange for paper money of questionable worth.

"The artificially maintained unipolar system,” Mr. Medvedev spelled out, is based on “one big centre of consumption, financed by a growing deficit, and thus growing debts, one formerly strong reserve currency, and one dominant system of assessing assets and risks.”2 At the root of the global financial crisis, he concluded, is that the United States makes too little and spends too much. Especially upsetting is its military spending, such as the stepped-up US military aid to Georgia announced just last week, the NATO missile shield in Eastern Europe and the US buildup in the oil-rich Middle East and Central Asia.

The sticking point with all these countries is the US ability to print unlimited amounts of dollars. Overspending by US consumers on imports in excess of exports, US buy-outs of foreign companies and real estate, and the dollars that the Pentagon spends abroad all end up in foreign central banks. These agencies then face a hard choice: either to recycle these dollars back to the United States by purchasing US Treasury bills, or to let the “free market” force up their currency relative to the dollar – thereby pricing their exports out of world markets and hence creating domestic unemployment and business insolvency.

When China and other countries recycle their dollar inflows by buying US Treasury bills to “invest” in the United States, this buildup is not really voluntary. It does not reflect faith in the U.S. economy enriching foreign central banks for their savings, or any calculated investment preference, but simply a lack of alternatives. “Free markets” US-style hook countries into a system that forces them to accept dollars without limit. Now they want out.

This means creating a new alternative. Rather than making merely “cosmetic changes as some countries and perhaps the international financial organisations themselves might want,” Mr. Medvedev ended his St. Petersburg speech, “what we need are financial institutions of a completely new type, where particular political issues and motives, and particular countries will not dominate.”

When foreign military spending forced the US balance of payments into deficit and drove the United States off gold in 1971, central banks were left without the traditional asset used to settle payments imbalances. The alternative by default was to invest their subsequent payments inflows in US Treasury bonds, as if these still were “as good as gold.” Central banks now hold $4 trillion of these bonds in their international reserves – land these loans have financed most of the US Government’s domestic budget deficits for over three decades now! Given the fact that about half of US Government discretionary spending is for military operations – including more than 750 foreign military bases and increasingly expensive operations in the oil-producing and transporting countries – the international financial system is organized in a way that finances the Pentagon, along with US buyouts of foreign assets expected to yield much more than the Treasury bonds that foreign central banks hold.

The main political issue confronting the world’s central banks is therefore how to avoid adding yet more dollars to their reserves and thereby financing yet further US deficit spending – including military spending on their borders?

For starters, the six SCO countries and BRIC countries intend to trade in their own currencies so as to get the benefit of mutual credit that the United States until now has monopolized for itself. Toward this end, China has struck bilateral deals with Argentina and Brazil to denominate their trade in renminbi rather than the dollar, sterling or euros,3 and two weeks ago China reached an agreement with Malaysia to denominate trade between the two countries in renminbi.[4] Former Prime Minister Tun Dr. Mahathir Mohamad explained to me in January that as a Muslim country, Malaysia wants to avoid doing anything that would facilitate US military action against Islamic countries, including Palestine. The nation has too many dollar assets as it is, his colleagues explained. Central bank governor Zhou Xiaochuan of the People's Bank of China wrote an official statement on its website that the goal is now to create a reserve currency “that is disconnected from individual nations.”5 This is the aim of the discussions in Yekaterinburg.

In addition to avoiding financing the US buyout of their own industry and the US military encirclement of the globe, China, Russia and other countries no doubt would like to get the same kind of free ride that America has been getting. As matters stand, they see the United States as a lawless nation, financially as well as militarily. How else to characterize a nation that holds out a set of laws for others – on war, debt repayment and treatment of prisoners – but ignores them itself? The United States is now the world’s largest debtor yet has avoided the pain of “structural adjustments” imposed on other debtor economies. US interest-rate and tax reductions in the face of exploding trade and budget deficits are seen as the height of hypocrisy in view of the austerity programs that Washington forces on other countries via the IMF and other Washington vehicles.

The United States tells debtor economies to sell off their public utilities and natural resources, raise their interest rates and increase taxes while gutting their social safety nets to squeeze out money to pay creditors. And at home, Congress blocked China’s CNOOK from buying Unocal on grounds of national security, much as it blocked Dubai from buying US ports and other sovereign wealth funds from buying into key infrastructure. Foreigners are invited to emulate the Japanese purchase of white elephant trophies such as Rockefeller Center, on which investors quickly lost a billion dollars and ended up walking away.

In this respect the US has not really given China and other payments-surplus nations much alternative but to find a way to avoid further dollar buildups. To date, China’s attempts to diversify its dollar holdings beyond Treasury bonds have not proved very successful. For starters, Hank Paulson of Goldman Sachs steered its central bank into higher-yielding Fannie Mae and Freddie Mac securities, explaining that these were de facto public obligations. They collapsed in 2008, but at least the US Government took these two mortgage-lending agencies over, formally adding their $5.2 trillion in obligations onto the national debt. In fact, it was largely foreign official investment that prompted the bailout. Imposing a loss for foreign official agencies would have broken the Treasury-bill standard then and there, not only by utterly destroying US credibility but because there simply are too few Government bonds to absorb the dollars being flooded into the world economy by the soaring US balance-of-payments deficits.

Seeking more of an equity position to protect the value of their dollar holdings as the Federal Reserve’s credit bubble drove interest rates down China’s sovereign wealth funds sought to diversify in late 2007. China bought stakes in the well-connected Blackstone equity fund and Morgan Stanley on Wall Street, Barclays in Britain South Africa’s Standard Bank (once affiliated with Chase Manhattan back in the apartheid 1960s) and in the soon-to-collapse Belgian financial conglomerate Fortis. But the US financial sector was collapsing under the weight of its debt pyramiding, and prices for shares plunged for banks and investment firms across the globe.

Foreigners see the IMF, World Bank and World Trade Organization as Washington surrogates in a financial system backed by American military bases and aircraft carriers encircling the globe. But this military domination is a vestige of an American empire no longer able to rule by economic strength. US military power is muscle-bound, based more on atomic weaponry and long-distance air strikes than on ground operations, which have become too politically unpopular to mount on any large scale.

On the economic front there is no foreseeable way in which the United States can work off the $4 trillion it owes foreign governments, their central banks and the sovereign wealth funds set up to dispose of the global dollar glut. America has become a deadbeat – and indeed, a militarily aggressive one as it seeks to hold onto the unique power it once earned by economic means. The problem is how to constrain its behavior. Yu Yongding, a former Chinese central bank advisor now with China’s Academy of Sciences, suggested that US Treasury Secretary Tim Geithner be advised that the United States should “save” first and foremost by cutting back its military budget. “U.S. tax revenue is not likely to increase in the short term because of low economic growth, inflexible expenditures and the cost of ‘fighting two wars.’”6

At present it is foreign savings, not those of Americans that are financing the US budget deficit by buying most Treasury bonds. The effect is taxation without representation for foreign voters as to how the US Government uses their forced savings. It therefore is necessary for financial diplomats to broaden the scope of their policy-making beyond the private-sector marketplace. Exchange rates are determined by many factors besides “consumers wielding credit cards,” the usual euphemism that the US media cite for America’s balance-of-payments deficit. Since the 13th century, war has been a dominating factor in the balance of payments of leading nations – and of their national debts. Government bond financing consists mainly of war debts, as normal peacetime budgets tend to be balanced. This links the war budget directly to the balance of payments and exchange rates.

Foreign nations see themselves stuck with unpayable IOUs – under conditions where, if they move to stop the US free lunch, the dollar will plunge and their dollar holdings will fall in value relative to their own domestic currencies and other currencies. If China’s currency rises by 10% against the dollar, its central bank will show the equivalent of a $200 million loss on its $2 trillion of dollar holdings as denominated in yuan. This explains why, when bond ratings agencies talk of the US Treasury securities losing their AAA rating, they don’t mean that the government cannot simply print the paper dollars to “make good” on these bonds. They mean that dollars will depreciate in international value. And that is just what is now occurring. When Mr. Geithner put on his serious face and told an audience at Peking University in early June that he believed in a “strong dollar” and China’s US investments therefore were safe and sound, he was greeted with derisive laughter.7

Anticipation of a rise in China’s exchange rate provides an incentive for speculators to seek to borrow in dollars to buy renminbi and benefit from the appreciation. For China, the problem is that this speculative inflow would become a self-fulfilling prophecy by forcing up its currency. So the problem of international reserves is inherently linked to that of capital controls. Why should China see its profitable companies sold for yet more freely-created US dollars, which the central bank must use to buy low-yielding US Treasury bills or lose yet further money on Wall Street?

To avoid this quandary it is necessary to reverse the philosophy of open capital markets that the world has held ever since Bretton Woods in 1944. On the occasion of Mr. Geithner’s visit to China, “Zhou Xiaochuan, minister of the Peoples Bank of China, the country’s central bank, said pointedly that this was the first time since the semiannual talks began in 2006 that China needed to learn from American mistakes as well as its successes” when it came to deregulating capital markets and dismantling controls.8

An era therefore is coming to an end. In the face of continued US overspending, de-dollarization threatens to force countries to return to the kind of dual exchange rates common between World Wars I and II: one exchange rate for commodity trade, another for capital movements and investments, at least from dollar-area economies.

Even without capital controls, the nations meeting at Yekaterinburg are taking steps to avoid being the unwilling recipients of yet more dollars. Seeing that US global hegemony cannot continue without spending power that they themselves supply, governments are attempting to hasten what Chalmers Johnson has called “the sorrows of empire” in his book by that name – the bankruptcy of the US financial-military world order. If China, Russia and their non-aligned allies have their way, the United States will no longer live off the savings of others (in the form of its own recycled dollars) nor have the money for unlimited military expenditures and adventures.

US officials wanted to attend the Yekaterinburg meeting as observers. They were told No. It is a word that Americans will hear much more in the future.

------------------------------------------------------------------------------------

Note regarding prof. Michael Hudson's article - De-Dollarization: Dismantling America’s Financial-Military Empire: The Yekaterinburg Turning Point:

In the above article, prof. Michael Hudson bases his argument on the following contradictory premise. He writes that foreign Central Banks “ face a hard choice: either to recycle these dollars back to the United States by purchasing US Treasury bills, or to let the “free market” force up their currency relative to the dollar. …this buildup is not really voluntary…, but simply a lack of alternatives.”

However, in Chris Hedges' article The American Empire is Bankrupt - (see copy on this blog at: www.yajnacentre.blogspot.com/2009/06/beginning-of-end-of-us-dollar-of.html), prof. Hudson is quoted as saying that China is frantically spending its dollar reserves to buy factories and property around the globe so it can unload its U.S. currency.

Hedges writes: “China is trying to get rid of all the dollars they can in a trash-for-resource deal,” Hudson said. “They will give the dollars to countries willing to sell off their resources since America refuses to sell any of its high-tech industries, even Unocal, to the yellow peril. It realizes these dollars are going to be worthless pretty quickly.”

I wrote to prof. Michael Hudson to point out these contradictory claims and to ask him to clarify his claims into this important issue.

Sadly, however, instead of responding to my inquiry with a coherent argument and an intelligent response, Prof Michael Hudson chose to respond to my inquiry with sarcasm...

Please find below a copy of my inquiry and his "response".

From: arya@yajnacentre.com
Subject: email of inquiry to professor Michael Hudson
To: crg.online@yahoo.com
Received: Monday, June 15, 2009, 10:37 AM

TO: Global ResearchHello,Could you please forward the following email of inquiry to professor Michael Hudson. Thank you!Dear Professor Michael Hudson

I have just read your very informative article - De-Dollarization: Dismantling America’s Financial-Military Empire: The Yekaterinburg Turning Point - published in globalisation.ca.I am writing to you to ask you to shed some light into the following issue related to the subject of your article:

You write:

Central banks “ face a hard choice: either to recycle these dollars back to the United States by purchasing US Treasury bills, or to let the “free market” force up their currency relative to the dollar... – thereby pricing their exports out of world markets and hence creating domestic unemployment and business insolvency.

When China and other countries recycle their dollar inflows by buying US Treasury bills to “invest” in the United States, this buildup is not really voluntary. It does not reflect faith in the U.S. economy enriching foreign central banks for their savings, or any calculated investment preference, but simply a lack of alternatives.”

Questions:

1) Why do Central Banks not use their $US reserves to buy other foreign currencies (i.e. Euro, Yen, etc.) as reserves, or gold, stocks, real estate, etc- both at home and abroad - or invest their $US reserves into their own economies to build up public infrastructures to create employment, revenue and thus economic growth?

2) Why do countries such as US-creditor nations such as China, Japan, etc. not sell their goods/services in other currencies such as the Euro, Yen, etc.?
I thank you for shedding some light into these interrogations and I look forward to your response.

Please note that I have posted a copy of your article on my blog at the following link:
http://yajnacentre.blogspot.com/2009/06/beginning-of-end-of-us-dollar-hegemony.html
Best regards,

Arya Tajdin

Prof. Hudson's 1st response to my email


My book Super imperialism deals with these questions in detail. I have many articles on line explaining this too.
Rushing out now...
MH

My follow-up email


prof MH,

I have just read two very informative articles on the same subject which seem to contradict what you are writing, namely that central banks “ face a hard choice: either to recycle these dollars back to the United States by purchasing US Treasury bills, or to let the “free market” force up their currency relative to the dollar. …this buildup is not really voluntary…, but simply a lack of alternatives.”

The first article I refer to - The American Empire Is Bankrupt - has been written by Chris Hedges on 14 june 2009. The full article can be viewed at:

www.truthdig.com/report/item/20090614_the_american_empire_is_bankrupt/?lnIn his article Hedges quotes you as saying:

“The balance-of-payments deficit is mainly military in nature. Half of America’s discretionary spending is military. The deficit ends up in the hands of foreign banks, central banks. They don’t have any choice but to recycle the money to buy U.S. government debt.”

But then you add that China is frantically spending its dollar reserves to buy factories and property around the globe so it can unload its U.S. currency.

Hedges writes: “China is trying to get rid of all the dollars they can in a trash-for-resource deal,” Hudson said. “They will give the dollars to countries willing to sell off their resources since America refuses to sell any of its high-tech industries, even Unocal, to the yellow peril. It realizes these dollars are going to be worthless pretty quickly.”

So on the one hand you write “they don’t have any choice but to recycle the money to buy U.S. government debt.” while also stating that “China is trying to get rid of all the dollars they can in a trash-for-resource deal…” ?

These claims seem to be contradicting each other and only serve to further reinforce the confusion raised by your contradictory claims around this important issue as you have chosen not to respond to my inquiry…

Furthermore, another article THE NAKED HEGEMON - Why the emperor has no clothes by Andre Gunder Frank – written on the same subject also seems to contradict your claim.

Please find below a relevant excerpt from the article on this issue:

The greatest real-world threat to Uncle Sam is that the inflow of dollars dries up. For instance, foreign central banks and private investors could any day decide to place more of their money elsewhere than in the declining dollar and abandon poor ol' Uncle Sam to his destiny. China could double its per capita income very quickly if it made real investments at home instead of financial ones with Uncle Sam. Central banks, European and others, can now put their reserves in (rising!) euros or even soon-to-be-revalued Chinese yuan.

Or what if, long before that comes to pass, exporters of oil simply cease to price it in ever-devaluing dollars, and instead make a mint by switching to the rising euro and/or a basket of East Asian currencies? That would at one stroke vastly diminish the world demand for and price of dollars by obliging anyone who wants to buy oil to purchase and increase the demand price of the euro or yen/yuan instead of the dollar. That would crash the dollar and tumble Uncle Sam in one fell swoop, as foreign - and even domestic - owners of dollars would sell off as many of them as fast as they could, and other countries' central banks would switch their reserves out of dollars and away from Uncle Sam's no-longer-safe haven. That would drive the dollar down even more, and of course halt any more dollar inflow to Uncle Sam from the foreigners who have been financing his consumption spree. Since selling oil for falling dollars instead of rising euros is evidently bad business, the world's largest oil exporters in Russia and OPEC have been considering doing just that. In the meantime, they have only raised the dollar price of oil, so that in euro terms it has remained approximately stable since 2000. So far, many oil exporters and others still place their increased amount of dollars with Uncle Sam, even though he now offers an ever less attractive and less safe haven, but Russia is now buying more euros with some of its dollars. ( see also the following recent news article Russia Dumps US Dollar as basic reserve currency source: http://www.globalresearch.ca/index.php?context=va&aid=13691)

So also many countries' central banks have begun to put ever more of their reserves into the euro and currencies other than Uncle Sam's dollar. Now even the Central Bank of China, the greatest friend of Uncle Sam in need, has begun to buy some euros. China itself has also begun to use some of its dollars - as long as they are still accepted by them - to buy real goods from other Asians and thousands of tons of iron ore and steel from Brazil, etc. (Brazil's president recently took a huge business delegation to China, and a Chinese one just went to Argentina. They are going after South African minerals too.)

Full article available at the following link:

http://www.atimes.com/atimes/Global_Economy/GA06Dj01.html

I would very much appreciate it if you would take the time to clarify your claims on this important issue.Arya Tajdin.

http://yajnacentre.blogspot.com/2009/06/beginning-of-end-of-us-dollar-hegemony.html

Prof. Hudson's "response" to my email

From: Michael Hudson
Subject: Re: email of inquiry to professor Michael Hudson
To: arya@yajnacentre.com
Date: Wednesday, June 17, 2009, 1:46 PM

The world is contradictory.
MH

My response to prof. Hudson:

From:
"arya@yajnacentre.com"
Add sender to Contacts
To:
"Michael Hudson"

MH,

Is that the best response you can provide...? From a logical and intellectual point of view, it is truly mind-boggling to comprehend how - from a contradictory premise - you can deduct and conclude that "the world is contradictory"!

I, however, can deduct my own logical conclusions about your writings from both your contradictory claims, incoherent articles and your "response" to my inquiry.

Needless to say, I will not waste any more precious time reading your books & articles (as you suggested) since you evidently cannot write coherently (and politely)!

Please note that I shall publish the emails exchanged between us on my blog.

Sincerely,

Arya Tajdin.

I also wrote to Global Research to express my disappointment. Below is a copy of my email sent to Global Research.

TO: Global Research

ATT: Prof. Michel Chossudovsky,
Director

Dear Prof. Chossudovsky,

I am writing to you to express my utter disappointment at prof. Michael Hudson. In fact, I wrote to him to inquire about a (contradictory) claim he made in his recently published article in Global Research. ( pls see copy below)

Sadly, he chose to respond with sarcasm instead of responding to my inquiry with a coherent argument and an intelligent response. Of course, his "response" says a lot about himself...

I have been a regualr reader of Global Research for many years, and needless to say I find such experiences very disappointing and I hereby wished to express my disappointment to you.

Please find below a copy of the emails exchanged between us.

Sincerely,
Arya Tajdin


article notes

1 Andrew Scheineson, “The Shanghai Cooperation Organization,” Council on Foreign Relations,

Updated: March 24, 2009: “While some experts say the organization has emerged as a powerful anti-U.S. bulwark in Central Asia, others believe frictions between its two largest members, Russia and China, effectively preclude a strong, unified SCO.”

2 Kremlin.ru, June 5, 2009, in Johnson’s Russia List, June 8, 2009, #8.

3 Jamil Anderlini and Javier Blas, “China reveals big rise in gold reserves,” Financial Times, April 24, 2009. See also “Chinese political advisors propose making yuan an int’l currency.” Beijing, March 7, 2009 (Xinhua). “The key to financial reform is to make the yuan an international currency, said [Peter Kwong Ching] Woo [chairman of the Hong Kong-based Wharf (Holdings) Limited] in a speech to the Second Session of the 11th National Committee of the Chinese People’s Political Consultative Conference (CPPCC), the country’s top political advisory body. That means using the Chinese currency to settle international trade payments …”

4 Shai Oster, “Malaysia, China Consider Ending Trade in Dollars,” Wall Street Journal, June 4, 2009.

5 Jonathan Wheatley, “Brazil and China in plan to axe dollar,” Financial Times, May 19, 2009.

6 “Another Dollar Crisis inevitable unless U.S. starts Saving - China central bank adviser. Global Crisis ‘Inevitable’ Unless U.S. Starts Saving, Yu Says,” Bloomberg News, June 1, 2009. http://www.bloomberg.com/apps/news?pid=20601080&sid=aCV0pFcAFyZw&refer=asia

7 Kathrin Hille, “Lesson in friendship draws blushes,” Financial Times, June 2, 2009.

8 Steven R. Weisman, “U.S. Tells China Subprime Woes Are No Reason to Keep Markets Closed,” The New York Times, June 18, 2008.