Socio-Economics History Blog

Socio-Economics & History Commentary

A Short History of the Gold Cartel

  • Central bankers have always manipulated gold price. Gold is the main threat to their ability to print fiat currencies out of thin air. If they lose that power, central banks and governments lose their political power. James Turk writes :
      
    Governments want a low gold price to make national currencies look good.  Gold is recognizable the world over as the ‘canary in the coalmine’ when it comes to money.  A rising gold price blurts the unpleasant truth that a national currency is being poorly managed and that its purchasing power is being inflated. 
     
    This reality is made clear by former Federal Reserve chairman Paul Volcker.  Commenting in his memoirs about the soaring gold price in the years immediately following the end of the gold standard in 1971, he notes: “Joint intervention in gold sales to prevent a steep rise in the price of gold, however, was not undertaken. That was a mistake.”  It was a mistake because a rising gold price undermines the thin reed upon which all fiat currency rests – confidence.  But it was a mistake only from the perspective of a central banker, which is of course at odds with anyone who believes in free markets.
     
    The US government has learned from experience and taken Volcker’s advice.  Given the US dollar’s role as the world’s reserve currency, the US government has the most to lose if the market chooses gold over fiat currency and erodes the government’s stranglehold on the monopolistic privilege that it has awarded to itself of creating ‘money’. 
     
    So the US government intervenes in the gold market to make the dollar look worthy of being the world’s reserve currency when of course it is not equal to the demands of that esteemed role.  The US government does this by trying to keep the gold price low, but this aim is an impossible task.  In the end, gold always wins, i.e., its price inevitably climbs higher as fiat currency is debased, which is a reality understood and recognized by government policymakers.  So recognizing the futility of capping the gold price, they instead compromise by letting the gold price rise somewhat, say, 15% per annum.  In fact, against the dollar, gold is actually up 16.3% p.a. on average for the last eight years. In battlefield terms, the US government is conducting a managed retreat for fiat currency in an attempt to control gold’s advance.
     
    Though it has let the gold price rise, gold has risen by less than it would in a free market because the purchasing power of the dollar continues to be inflated and also because gold remains so undervalued notwithstanding its annual appreciation this decade.  These gains started from gold’s historic low valuation in 1999.  Gold may not be as good a value as it was in 1999, but it nevertheless remains extremely undervalued.
     
    For example, until the end of the 19th century, approximately 40% of the world’s money supply consisted of gold, and the remaining 60% was national currency.  As governments began to usurp the money issuing privilege and intentionally diminish gold’s role, fiat currency’s role expanded by the mid-20th century to approximately 90%.  The inflationary policies of the 1960s, particularly in the US, further eroded gold’s role to 2% by the time the last remnants of the gold standard were abandoned in 1971.  Gold’s importance rebounded in the 1970s, which caused Volcker to lament the so-called mistakes of policymakers.  Its percentage rose to nearly 10% by 1980.  But gold’s percent of the world money supply thereafter declined, reaching about 1% in 1999.  Today it still remains below 2%. 
     
    From this analysis it is reasonable to conclude that gold should comprise at least 10% of the world’s money supply.  Because it is nowhere near that level, gold is undervalued.
     
    So given the ongoing dollar debasement being pursued by US policymakers, keeping gold from exploding upward to a true free-market price is the first thing they gain from their interventions in the gold market.  The other thing they gain is time.  The time they gain enables them to keep their fiat scheme afloat so they can benefit from it, delaying until some future administration the scheme’s inevitable collapse.
     
    So how does the US government manage the gold price?  They recruit Goldman Sachs, JP Morgan Chase and Deutsche Bank to do it, by executing trades to pursue the US government’s aims.  These banks are the gold cartel.  I don’t believe that there are any other members of the cartel, with the possible exception of Citibank as a junior member.  The cartel acts with the implicit backing of the US government to absorb all losses that may be taken by the cartel members as they manage the gold price and further, to provide whatever physical metal is required to execute the cartel’s trading strategy.  How did the gold cartel come about?
     
    There was an abrupt change in government policy circa 1990.  It was introduced by then Federal Reserve chairman Alan Greenspan in order to bail out the banks back then, which like now were insolvent.  Taxpayers were already on the hook for hundreds of billions to bail out the collapsed ‘savings & loan’ industry, so adding to this tax burden was untenable.  He therefore came up with an alternative. 
     
    Greenspan saw the free market as a golden goose with essentially unlimited deep pockets, and more to the point, that these pockets could be picked by the US government using its tremendous weight, namely, its financial resources for timed interventions in the free market combined with its propaganda power by using the media.  In short, it was easier to bail out the insolvent banks back then by gouging ill-gained profits from the free markets instead of raising taxes.
     
    Banks generated these profits by the Federal Reserve’s steepening of the yield curve, which kept long-term interest rates relatively high while lowering short-term rates.  To earn this wide spread, banks leveraged themselves to borrow short-term and use the proceeds to buy long-term paper.  This mismatch of assets and liabilities became known as the carry-trade. 
     
    The Japanese yen was a particular favorite to borrow.  The Japanese stock market had crashed in 1990, and the Bank of Japan was pursuing a zero interest rate policy to try reviving the Japanese economy.  A US bank could borrow Japanese yen for 0.2% and buy US T-notes yielding more than 8%, pocketing the spread, which did wonders for bank profits and rebuilding their capital base. 
     
    Gold also became a favorite vehicle to borrow because of its low interest rate.  This gold came from central bank coffers, but they refused to disclose how much gold they were lending, making the gold market opaque and ripe for intervention by central bankers making decisions behind closed doors.  The amount lent by central banks has been reliably estimated in various analyses published by GATA to be 12,000 to 15,000 tonnes, nearly one-half of central banks total holdings and 4-to-6 times annual new mine production of 2500 tonnes.  The banks clearly jumped feet first into the gold carry-trade.
     
    The carry-trade was a gift to the banks from the Federal Reserve, and all was well provided the yen and gold did not rise against the dollar because this mismatch of dollar assets and yen or gold liabilities was not hedged.  Alas, both gold and the yen began to strengthen, which if allowed to rise high enough would force marked-to-market losses on those carry-trade positions in the banks.  It was a major problem because the losses of the banks could be considerable, given the magnitude of the carry-trade.
     
    So the gold cartel was created to manage the gold price, and all went well at first, given the help it received from the Bank of England in 1999 to sell one-half of its gold holdings.  Gold was driven to historic lows, as noted above, but this low gold price created its own problem.  Gold became so unbelievably cheap that value hunters around the world recognized the exceptional opportunity it offered, and demand for physical gold began to climb.  As demand rose, another more intractable and unforeseen problem arose for the gold cartel. 
     
    The gold borrowed from the central banks had been melted down and turned into coins, small bars and monetary jewelry that were acquired by countless individuals around the world.  This gold was now in ‘strong hands’, and these gold owners would only part with it at a much higher price.  Therefore, where would the gold come from to repay the central banks?
     
    While yen is a fiat currency and can be created out of thin air by the Bank of Japan, gold in contrast is a tangible asset.  How could the banks repay all the gold they borrowed without causing the gold price to soar, further worsening the marked-to-market losses on their remaining positions? 
     
    In short, the banks were in a predicament.  The Federal Reserve’s policies were debasing the dollar, and the ‘canary in the coalmine’ was warning of the loss of purchasing power.  So Greenspan’s policy of using interventions in the market to bail-out banks morphed yet again. 
     
    The gold borrowed from central banks would not be repaid because obtaining the physical gold to repay these loans would cause the gold price to soar.  So beginning this decade, the gold cartel would conduct the government’s managed retreat, allowing the gold price to move generally higher in the hope that, basically, people wouldn’t notice.  Given its ‘canary in a coalmine’ function, a rising gold price creates demand for gold, and a rapidly rising gold price would worsen the marked-to-market losses of the gold cartel.
     
    So the objective is to allow the gold price to rise around 15% p.a., while at the same time enable the cartel members to intervene in the gold market with implicit government backing in order to earn profits to offset the growing losses on its gold liabilities.  Its trading strategy to accomplish this task is clear.  The gold cartel reverse engineers the black-box trend-following trading models.
     
    Just look at the losses taken by some of the major commodity trading managers on their gold trading over the last decade.  It is hundreds of millions of dollars of client money lost, and gained for the gold cartel to help offset their losses from the gold carry-trade.  All to make the dollar look good by keeping the gold price lower than it should be and would be if it were allowed to trade in a market unfettered by government intervention.
     
    There are only two outcomes as I see it.  Either the gold cartel will fail in the end, or the US government will have destroyed what remains of the free market in America.  I hope it is the former, but the continuing flow of events from Washington, D.C. and the actions of policymakers suggest it could be the latter.

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May 7, 2009 Posted by | Economics | , | Comments Off on A Short History of the Gold Cartel

Does Mises’ Equation Give a Basis for Gold Price?

  • The question for most gold bulls is: How high will the price of gold be? And by when? This article in Seeking Alpha uses Mises’ equation to work out the potential rise in gold price:
      
    Assuming you agree to a strict Austrian approach to life and love, Mises advocated sound monetary policy by returning to a gold standard and developed this equation for a “regression” to a properly backed currency called the gold cover ratio:
     
                   GCR = (C+D+T+S+L) / G
     
    Where C is cash, D is demand deposits, T time deposits, S savings, and L banks long term liabilities. And our favorite variable G is oz of gold at Fort Knox.
     
    Thorsten Polleit, Honorary Professor at Frankfurt School of Finance and Management, did some calculations for this and found (as of March ’09):
     
    1.   backing all of M1 with gold. M1 divided by gold oz. results in
    $6000 per oz.
     
    2.   backing M2 with gold and you get $31,000 per oz.  
    3.   backing Euro M3 and gold is E26,000
     
    But the real impact of Mises’ work is not in what the price of gold should or could be but rather the conclusion that no matter what the government does (e.g. quantitative easing, free running printing presses, artificially low interest rates, stimulus packages, bank bailouts, TARP, TALF, etc, etc) we still get a serious erosion if not all out loss of the exchange value of fiat money.

     
    Deflation (mark to market) results in bank failures wiping out bond holders or savers or both but monetizing any substantial portion of the bubble debt means hyperinflation. No escape. This is why Geithner looks like such an idiot. Not because he’s not smart.
     
    Government debt issuance only buys time. Sooner or later rates go up and voila, insolvency as payments usurp ever larger chunks of real working capital and wages.
     
    Thus Mises concludes that a market agreed upon currency with real valuation and without government intervention behind it is the only way to avoid fiat money crisis after crisis. After all, when they first established the Federal Reserve they too saw the need to tie it to a gold standard and did again in legislation intended to abolish the Fed again in 1936…

Disclaimer – I am not a financial advisor. This is not an advice to buy, sell or hold any stocks or bonds or any precious metals.

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May 7, 2009 Posted by | Economics | , | Comments Off on Does Mises’ Equation Give a Basis for Gold Price?

Flu Pandemic Propaganda and Profit

  • The current A/H1N1 flu hysteria appears overblown. What is the real agenda behind it? It looks like this is just a beta test run for the eventual Big One. Kurt Nimmo reports:
      
    Residents of the United Kingdom have received a  propaganda leaflet on the so-called swine flu pandemic. In addition to instructing the commoners on how to sneeze, the leaflet explains government plans for pandemics. 
      
    “While the current situation is serious, there’s good reason for us to be confident that we can deal with it.” How will the government deal with the next pandemic and the one after that? By stockpiling expensive drugs — Tamiflu and Relenza — that do nothing to prevent the flu.
     
    “There is no evidence that Tamiflu, the drug being stockpiled by Britain, the United States and Europe, will work if a flu pandemic takes off in humans, according to a review published today by the Lancet medical journal,” the
    Guardian reported in January. “While the drugs might reduce patients’ symptoms, the authors say the use of Tamiflu could actually increase the spread of the flu virus. If people take the drug and have fewer symptoms they may end up going to work and spreading the potentially lethal virus.”
     
    “Not long ago, President Bush sought to instill panic in this country by telling us a minimum of 200,000 people will die from the avian flu pandemic, but it could be as bad as 2 million deaths in this country alone,” writes
    Joseph Mercola. “This hoax is then used to justify the immediate purchase of 80 million doses of Tamiflu, a worthless drug that in no way shape or form treats the avian flu, but only decreases the amount of days one is sick and can actually contribute to the virus having more lethal mutations.”
     
    In response to this hype — or rather, the reason for the hype — the United States placed an order for 20 million doses of this worthless drug at a price of $100 per dose. It cost the taxpayers around $2 billion.
     
    Tamiflu was originally manufactured by Gilead Sciences and licensed to Hoffman-La Roche. Dr. Evil himself, Donald Rumsfeld, was appointed chairman of Gilead Sciences in 1997. Former Sec. of State George Schultz — CFR, Trilateral, and Bilderberg member — is on the board of Gilead Sciences. Rumsfeld and Schultz stand to make a killing — literally — on the Tamiflu ruse.
     
    The propaganda leaflet distributed by the UK admits that Tamiflu and Relenza “are not a cure” for the flu, but that didn’t stop the British government from buying millions of doses of the “antiviral” drugs. Britain will also buy into a vaccine after it is developed, according to the propaganda leaflet.
     
    The last time a government attempted to mass vaccinate a population against “swine flu” it resulted in disaster. It was 1976 and after a few soldiers at Fort Dix, New Jersey, came down with the flu (one soldier died) then president Gerald Ford ordered a mass vaccination program. The motivating force behind the scheme was a $135 million windfall profit for the major drug manufacturers. It was hyped by our old friend, Dr. Evil, Donald Rumsfeld, then Sec. of Defense, who turned the issue into a political football. The mass vaccination scam was pushed along by the Disease Control Center in Atlanta, Georgia.
     
    On April 15, 1976, Congress passed Public Law 94-266, which provided $135 million of taxpayers’ funds to pay for a national swine flu inoculation campaign, later to be dubbed the Great Swine Flu Massacre, supposedly designed to immunize “every man, woman, and child.” The vaccine cooked up by Big Pharma left some victims dead and others crippled with Guillain-Barré syndrome, but this was not a concern for the drug companies because the government had granted them indemnification, that is to say they would not be held responsible.
     
    It is said the new vaccine will be manufactured by Baxter International, the drug company responsible for contaminating “experimental virus material” with a mix of H3N2 seasonal flu viruses and unlabelled H5N1 viruses and then sending this out to an Austrian research company, Avir Green Hills Biotechnology, who subsequently sent portions of it to sub-contractors in the Czech Republic, Slovenia and Germany.
      
    “People familiar with biosecurity rules are dismayed by evidence that human H3N2 and avian H5N1 viruses somehow co-mingled in the Orth-Donau facility. That is a dangerous practice that should not be allowed to happen, a number of experts insisted,”
    Helen Branswell wrote for the Canadian in February. 
     
    “Accidental release of a mixture of live H5N1 and H3N2 viruses could have resulted in dire consequences.” Indeed. The process of mixing viruses, known as reassortment, is one of two ways to create pandemic viruses. WHO bent over backwards to make excuses for this “mistake” and said it could not reveal more information because it would give away proprietary information about Baxter’s production process.
     
    “Baxter confirmed over the weekend that it is working with the World Health Organization on a potential vaccine to curb the deadly swine flu virus that is blamed for scores of deaths in Mexico and has emerged as a threat in the U.S.,” the
    Chicago Tribune reported on April 27. “Shares of Baxter were up 2.4 percent, or $1.16, to $49.23 a share in trading Monday on the New York Stock Exchange.”
     
    During Bush’s flu pandemic scare-mongering a couple years ago, Baxter and other mega-drug companies were “awarded” around $1 billion to “increase and speed production [of a vaccine], particularly after the spread of bird flu.”
     
    Is it possible Baxter attempted to reassort viruses into a pandemic strain in order to realize fantastic profits?  “Over the years, Baxter has worked with governments around the world to develop and produce vaccines to protect against infectious disease or potential threats from bioterrorism,” writes the Tribune.
     
    Bioterrorism? In February, “Indonesia’s Health Minister has implicated the U.S. government in an international conspiracy to develop the bird flu virus into a deadly bio-weapon in a new book which is also endorsed by Indonesia’s President,” writes
    Paul Joseph Watson. “In the book, [Dr. Siti Fadilah Supari] accuses the U.S. government of seeking a monopoly on controlling the virus for two reasons. Firstly to be able to dominate the vaccine market and make vast profits from providing the cure and secondly to potentially develop the strain into a potent biological weapon.”
     
    Meanwhile, the commoners will be propagandized ad nauseam on the threat and will have leaflets dropped on their doorsteps. According to experts cited endlessly by the corporate media, the Big Kahuna of pandemic viruses will emerge this autumn so we have to be prepared for the worse case scenario.
     
    Martial law may be required to fight this new plague. Here in the states,
    Massachusetts is ahead of the curve — a recently passed bill, S18, gives the Governor the power to authorize the deployment and use of force to distribute supplies and materials and local authorities will be allowed to enter private residences for investigation and to quarantine individuals.
     
    In 2005, Bush ordered, and HHS developed, the National Strategy for Pandemic Influenza, a plan funded by Congress that went into effect in 2006. And then there are the various CONPLAN preparations devised by the Pentagon and Northcom to deal with pandemic influenza of the sort “accidentally” cooked up by Baxter.
     
    “The pandemic is being presented to public opinion as an issue of National Security, with a view to triggering the militarization of civilian institutions in blatant violation of the Posse Comitatus Act,” writes
    Michel Chossudovsky. “The hidden agenda consists in using the threat of a pandemic and/or the plight of a natural disaster as a pretext to establish military rule.” It also serves as a pretext to make the cash registers at Baxter and Big Pharma sing. 
     
  • See also :
     
    Live Avian Flu Virus Placed in Baxter Vaccine Materials Sent to 18 Countries
    US Air Force Study Suggests 2009 Influenza Pandemic in 1996 

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May 7, 2009 Posted by | Medicine & Health | | 4 Comments

Bilderberg Group Plans Economic Depression

  • I have no doubt that this current economic and financial crisis is engineered to drive the world to a 1 world government. Paul J Watson reports:
      
    On the eve of the 2009 Bilderberg Group conference, which is due to be held May 14-17 at the 5 star Nafsika Astir Palace Hotel in Vouliagmeni, Greece, investigative reporter Daniel Estulin has uncovered shocking details of what the elitists plan to do with the economy over the course of the next year.
     
    The Bilderberg Group meeting is an annual confab of around 150 of the world’s most influential powerbrokers in government, industry, banking, media, academia and the military-industrial complex. The secretive group operates under “Chatham House rules,” meaning that no details of what is discussed can ever be leaked to the media, despite editors of the world’s biggest newspapers, the Washington Post, the New York Times and the Financial Times, being present at the meeting.
     
    According to Estulin’s sources, which have been proven highly accurate in the past, Bilderberg is divided on whether to put into motion, “Either a prolonged, agonizing depression that dooms the world to decades of stagnation, decline and poverty … or an intense-but-shorter depression that paves the way for a new sustainable economic world order, with less sovereignty but more efficiency.”
     
    The information takes on added weight when one considers the fact that Estulin’s previous economic forecasts, which were based on leaks from the same sources, have proven deadly accurate. Estulin correctly predicted the housing crash and the 2008 financial meltdown as a result of what his sources inside Bilderberg told him the elite were planning based on what was said at their 2006 meeting in Canada and the 2007 conference in Turkey.
     
    Details of the economic agenda were contained in a pre-meeting booklet being handed out to Bilderberg members. On a more specific note, Estulin warns that Bilderberg are fostering a false picture of economic recovery, suckering investors into ploughing their money back into the stock market again only to later unleash another massive downturn which will create “massive losses and searing financial pain in the months ahead,” according to a
    Canada Free Press report.
     
    According to Estulin, Bilderberg is assuming that U.S. unemployment figures will reach around 14% by the end of the year, almost doubling the current official figure of 8.1 per cent.
     
    Estulin’s sources also tell him that Bilderberg will again attempt to push for the enactment of the Lisbon Treaty, a key centerpiece of the agenda to fully entrench a federal EU superstate, by forcing the Irish to vote again on the document in September/October despite having rejected it already, along with other European nations, in national referendums.
       ….
    Daniel Estulin, Jim Tucker, and other sources who have infiltrated Bilderberg meetings in the past have routinely provided information about the Bilderberg agenda that later plays out on the world stage, proving that the organization is not merely a “talking shop” as debunkers claim, but an integral planning forum for the new world order agenda.
     
    Indeed, just last month Belgian viscount and current
    Bilderberg-chairman Étienne Davignon bragged that Bilderberg helped create the Euro by first introducing the policy agenda for a single currency in the early 1990’s. Bilderberg’s agenda for a European federal superstate and a single currency likely goes back even further.  A BBC investigation uncovered documentsfrom the early Bilderberg meetings which confirmed that the European Union was a brainchild of Bilderberg.
     
    In spring 2002, when war hawks in the Bush administration were pushing for a summer invasion of Iraq,
    Bilderbergers expressed their desire for a delay and the attack was not launched until March the following year. In 2006,  Estulin predicted that the U.S. housing market would be allowed to soar before the bubble was cruelly popped, which is exactly what transpired.
     
    In 2008, Estulin predicted that Bilderberg were creating the conditions for a financial calamity, which is exactly what began a few months later with the collapse of Lehman Brothers.
     
    Bilderberg has routinely flexed its muscles in establishing its role as kingmaker. The organization routinely selects presidential candidates as well as running mates and prime ministers.
     
    Bill Clinton and Tony Blair were both groomed by the secretive organization in the early 1990’s before rising to prominence.
      …..
    It remains to be seen what kind of mainstream media press coverage Bilderberg 2009 will be afforded because, despite the proven track record of Bilderberg having a central role in influencing subsequent geopolitical and financial world events, and despite last year’s meeting being held in Washington DC,
    the U.S. corporate media oversaw an almost universal blackout of reporting on the conference, its attendees, and what was discussed.
     
    Once again, it will be left to the alternative media to fill the vacuum and educate the people on exactly what the globalists have planned for us over the coming year.
     

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May 7, 2009 Posted by | Economics, GeoPolitics | , , | 6 Comments

Alex Jones: Update on Swine Flu from Mexico City

May 7, 2009 Posted by | Medicine & Health | | Comments Off on Alex Jones: Update on Swine Flu from Mexico City

USA Using Patriot Act Against its Own Citizens

  • WRAL.com reports :
      
    Sixteen-year-old Ashton Lundeby’s bedroom in his mother’s Granville County home is nothing, if not patriotic. Images of American flags are everywhere – on the bed, on the floor, on the wall.
     
    But according to the United States government, the tenth-grade home-schooler is being held on a criminal complaint that he made a bomb threat from his home on the night of Feb. 15. The family was at a church function that night, his mother, Annette Lundeby, said.
     
    “Undoubtedly, they were given false information, or they would not have had 12 agents in my house with a widow and two children and three cats,” Lundeby said.
     
    Around 10 p.m. on March 5, Lundeby said, armed FBI agents along with three local law enforcement officers stormed her home looking for her son. They handcuffed him and presented her with a search warrant.
     
    “I was terrified,” Lundeby’s mother said. “There were guns, and I don’t allow guns around my children. I don’t believe in guns.” Lundeby told the officers that someone had hacked into her son’s IP address and was using it to make crank calls connected through the Internet, making it look like the calls had originated from her home when they did not.
     
    Her argument was ignored, she said. Agents seized a computer, a cell phone, gaming console, routers, bank statements and school records, according to federal search warrants.
     
    “There were no bomb-making materials, not even a blasting cap, not even a wire,” Lundeby said.
        ….
    “Never in my worst nightmare did I ever think that it would be my own government that I would have to protect my children from,” Lundeby said. “This is the United States, and I feel like I live in a third world country now.”
     
    Lundeby said she does not think this type of case is what the Patriot Act was intended for. Boyce agrees. “It was to protect the public, but what we need to do is to make sure there are checks and balances to make sure those new laws are not abused,” he said.

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May 7, 2009 Posted by | Social Trends | | Comments Off on USA Using Patriot Act Against its Own Citizens

Ron Paul: We are in the Midst of Inflation

  • Senator Ron Paul questions Ben Bernanke about inflation and how the FedRes intends to drain liquidity from the market in the event of 7-8% inflation but no growth?

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May 7, 2009 Posted by | Economics | , , | Comments Off on Ron Paul: We are in the Midst of Inflation

What is the Unites States preparing in Pakistan?

  • The war in Pakistan is escalating. United States is involved in another war. The military industrial complex needs war right? For corporate profit, for testing new equipment, for building up new capabilities… Many young American lives are going to be extinguished because of this on going corruption of government and corporations: fascism. Of course, the loss of Pakistani lives are just incidental collateral damage.
     
  • World Socialist website reports:
      
    Pakistani President Asif Ali Zardari will undoubtedly come under renewed pressure to allow US military forces to wage war within Pakistan when he visits Washington this week for a trilateral summit meeting with President Obama and Afghanistan’s Hamid Karzai.
     
    For weeks, the US political and military establishment and the American media have been mounting an increasingly shrill campaign to bully Islamabad into fully complying with US diktats in what Washington has redefined as the AfPak (Afghanistan-Pakistan) war theater.
     
    At the US’s behest, the Pakistani military has for the past 10 days been mounting a bloody offensive—including strafing by warplanes and heavy artillery—against Pakistani Taliban militia in the North West Frontier Province (NWFP). The offensive has caused large numbers of civilian casualties and forced tens of thousands of poor villagers to flee.
     
    Between 600,000 and a million Pakistanis have been turned into refugees by the Pakistani state’s drive to pacify the NWFP and the country’s traditionally autonomous Federally Administered Tribal Areas (FATA), so as to bolster the US occupation of Afghanistan.
     
    The US ruling elite has welcomed the latest round of bloodletting, but it is far from satisfied. The flurry of threats, implicit and explicit, against Pakistan, its people and government has continued unabated in the run-up to Zardari’s Washington visit.
     
    At an April 29th press conference, Obama described Pakistan’s civilian government as “very fragile” and not having “the capacity to deliver basic services” to its people, or to gain their “support and loyalty.” But he praised the Pakistani military and the “strong” US-Pakistani “military consultation and cooperation.”
     
    Given Washington’s pivotal role in sustaining a succession of military dictatorships in Islamabad, Obama’s statement was widely interpreted both in Pakistan and within the US political establishment as signaling that Washington is considering sponsoring a military coup.
     
    This was underscored by reports citing the chief of the US Central Command, General David Petraeus, as saying that if the Zardari government did not demonstrate over the next two weeks that it can crush the Taliban insurgency in the country’s northwest, the US will have to determine its “next course of action.” Petraeus went on to declare Pakistan’s military “superior” to the country’s civilian government.
     
    Such was the outcry in Pakistan that State Department spokesman Robert Wood was forced to deny Friday that Islamabad faces a two-week “time frame.” Nonetheless, he bluntly asserted that Washington expects Pakistan to make a “110 percent effort” in the fight against the Taliban, and not for “two days, two weeks, two months,” but for the foreseeable future.
      ….. 
    The evidence that the Obama administration is preparing some new crime in Pakistan so as to ratchet up its war in Central Asia is overwhelming.
      ….. 
    Obama, at his press conference last week, claimed that the US wants to respect Pakistani sovereignty. “But,” he added, “we also recognize that we have huge strategic interests, huge national security interests in making sure Pakistan is stable.”
     
    In other words, the US will violate Pakistan’s sovereignty at will. Since last August, the US has mounted dozens of missile strikes within Pakistan and one Special Forces ground attack.
     
    Last week, Defense Secretary Robert Gates announced that the Obama administration is asking the US Congress to give the Pentagon the same powers in relation to military aid to Pakistan that it has in respect to military assistance to the puppet governments in Iraq and Afghanistan. Under this “unique” arrangement, military aid to Pakistan would no longer flow through the State Department or be subject to Foreign Assistance Act restrictions, but rather be entirely controlled by the Pentagon.
     
    Then there is the extraordinary lead article in yesterday’s New York Times, headlined “Pakistan Strife Raises US Doubts on Nuclear Arms.” Written by the newspaper’s White House correspondent, David Sanger, the article has all the markings of a CIA or Pentagon put-up job, concocted with the aim of manipulating public opinion and justifying a major escalation of the US political and military intervention in Pakistan.
     
    The article is based entirely on the statements of unnamed “senior American officials.” It claims, notwithstanding Obama’s statement of last week affirming confidence in the Pakistani military’s control of the country’s nuclear arsenal, that there is a real and growing threat that Taliban or Al Qaeda operatives could snatch a Pakistani nuclear weapon or infiltrate its nuclear facilities.
     
    To explain how the Islamicists could circumvent the elaborate controls the Pakistani military, with US assistance, has placed over its nuclear arsenal, the article advances a thriller-type scenario. Islamicists would first trigger a confrontation between India and Pakistan, then seize a weapon when Pakistan seeks to move it closer to the border with its eastern neighbor.
      
    The Times, it should be recalled, played a major role in seeking to mobilize US public opinion behind the invasion of Iraq. Front and center in this campaign was the lie that the Iraqi government was in league with Al Qaeda and might give them access to nuclear weapons Saddam Hussein was supposedly developing.
     
    That the Times’s article was part of a coordinated campaign was underscored by an interview given to the BBC by Obama’s national security adviser, Gen. James Jones, on Monday, the same day that the Times article appeared.
     
    Jones singled out as the top US concern the safety of Pakistan’s nuclear arsenal, and made a thinly veiled threat against the Pakistani government, saying, “If Pakistan doesn’t continue in the direction that it presently is, and we’re not successful there, then, obviously, the nuclear question comes into view.”
     
    He went on to say that Pakistan’s nuclear weapons falling into the hands of the Taliban would be “the very, very worst case scenario” and added, choosing his words carefully but pointedly, “We’re going to do anything we can within the construct of our bilateral relations and multilateral relations to make sure that doesn’t happen.”
     
    The Obama administration and the Pentagon are clearly weighing their options in respect to Pakistan and its role in the US thrust for geo-political advantage in oil-rich Central Asia. One thing is certain: What they are preparing will lead to greater violence and suffering for the people of the region and will further subvert the democratic will and aspirations of the Pakistani people.

end

May 7, 2009 Posted by | GeoPolitics | , | 8 Comments