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TEOFWAWKIT: The End of the World as We Know It

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This is the first of two articles exploring the likelihood that capitalism is on the verge of collapse and what a post-capitalistic world might look like.

Global Capitalism: a House of Cards

As the global recession and debt crisis worsens, even mainstream analysts are starting to speculate that global capitalism is on the verge of collapse. At the moment, most attention is focused on European "debt contagion." European Union economists are terrified that the Greek government will default on their debt. A Greek default makes it inevitable that Spain and Italy will also default. The mechanism here relates to the totally unregulated, speculative way in which "sovereign debt" (the money countries borrow from private banks to finance government operations) is financed.

Investment banks in France, Germany, London and New York have already jacked up the interest rates they charge Italy and Spain -- high risk investments always command higher interest rates. Higher debt repayments will make Italian and Spanish default inevitable, which will increase interest rates on Japanese, British and US debt -- as all three countries have very high debt levels. Owing to the size of their economies, default in Japan or the US is very likely to crash the global economy.

The Endgame

There are three schools of thought as to how the capitalist endgame is likely to play out. The first predicts a scenario in which the Asian tiger economies (China and India) collapse when the US, Japan and UK do -- given that national economies are hopelessly intertwined as a result of globalization. This school also predicts that any serious global instability will pop the Chinese real estate (debt) bubble. When this happens, the Chinese economy will crash, like the US economy did when the subprime derivatives bubble burst in 2008. The creation of debt bubbles (the bubbles leading to the 1987 market crash and 2001 dot com collapse are examples), involves the creation of vast amounts of credit (i.e. wealth that only exists on paper), which are all wiped out simultaneously when the bubble bursts. This sudden loss of economic wealth inevitably bankrupts large numbers of businesses and causes massive job loss.

The second school believes that only the US, Europe and Japan will collapse, while the economies of China, India and its Asian and non-Asian trading partners (for example, Australia and New Zealand) will continue to prosper. In this scenario the coming debt crisis and crash will merely accelerate the gradual role reversal of the past two decades -- with China rising to the status of economic superpower and the US, Europe and Japan becoming third world nations.

The third school supports the scenario I believe Wall Street and the Pentagon have in mind, in which the US and its NATO allies confront China militarily to prevent it from replacing the US as the world superpower. Evidence that the Pentagon has already chosen this tack is seen in the strategic alliances it has formed around Middle East and North African oil resources. Many foreign analysts believe that the US wars in the Middle East and Libya are really proxy wars with China over oil resources. They worry that these proxy wars have the potential to degenerate into a full scale war between the US and China -- which would surely destroy both economies.

China's regional allies in this global struggle are Pakistan, Iran, Saudi Arabia, Angola, Russia, Palestine and (indirectly through Pakistan) a Taliban-controlled Afghanistan. US allies are NATO, India, Israel and Iraq (thanks to permanent US military installations in Iraq).

America's Proxy Energy Wars

Obama's and Hillary Clinton's recent threats against Pakistan for allegedly promoting Taliban terrorism are pure rhetoric. Their purpose is to conceal the strategic importance of Pakistan (and Afghanistan) in US competition with China over oil and national gas resources. It also conceals the reality that the undeclared US war against Pakistan (approximately 2,000 civilians have been killed since the drone attacks started in 2004 -- see http://en.wikipedia.org/wiki/Drone_attacks_in_Pakistan) is really a proxy war against China.

Pakistan is China's strongest ally in protecting the oil supply critical to its booming economy is Pakistan. At present China imports 46% of its oil. In contrast the US imports 60%. (See http://english.peopledaily.com.cn/90001/90778/90860/6891500.html). Twenty percent of Chinese oil imports come from Saudi Arabia and somewhat less from Angola (see http://www.presstv.ir/detail/183746.html.) Ten percent of China's oil imports come from Iran.

Growing Military Tensions in Pakistan

Until recently, all oil originating from Saudi Arabia and Iran had to be transported via the Persian Gulf and the Strait of Hormuz, which is under the control of the US Navy (see http://www.foreignaffairs.com/articles/62604/dennis-blair-and-kenneth-lieberthal/smooth-sailingthe-worlds-shipping-lanes-are-safe). To counterbalance this de facto US control over their oil transhipments, China built a port in Gwadar (in Balochistan province) Pakistan to facilitate overland oil transport -- via an extensive Chinese-built super highway and eventually the IPIC (the Iran- Pakistan- India-China) pipeline.

Since 2002, covert CIA support for the Baloch separatist movement and daily "terrorist" bombings and assassinations have seriously disrupted operations at the Gwadar Port (see "Our CIA Freedom Fighters in Pakistan"). As this obviously has more effect on the Pakistan economy than on China, the Pakistani government has recently given China permission to build a naval base in Gwadar http://corredorbioceanico.wordpress.com/2011/06/14/great-game-in-the-indian-ocean/\. This move is also partly motivated by continued US violation of Pakistan's sovereignty with CIA drone strikes in Waziristan.

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http://www.stuartbramhall.com

I am a 63 year old American child and adolescent psychiatrist and political refugee in New Zealand. I have just published a young adult novel THE BATTLE FOR TOMORROW (which won a NABE Pinnacle Achievement Award) about a 16 year old girl who (more...)
 

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Communities that have created these bottom-up com... by Dr Stuart Jeanne Bramhall on Saturday, Jul 23, 2011 at 7:31:01 PM
We are fortunate to still have a yearly Town Hall ... by Bia Winter on Sunday, Jul 24, 2011 at 7:52:00 AM
Wow, direct democracy. What a novel idea.... by Dr Stuart Jeanne Bramhall on Sunday, Jul 24, 2011 at 8:43:47 PM
There's still plenty of room up here!(And we need ... by Bia Winter on Monday, Jul 25, 2011 at 7:06:52 AM
This is so cutting edge.  It's what I love mo... by Susan Lindauer on Saturday, Jul 23, 2011 at 8:22:09 PM
Thanks, Susan. I read all your articles and really... by Dr Stuart Jeanne Bramhall on Saturday, Jul 23, 2011 at 9:00:19 PM
Thank you.Thoughtful and accurate analysis about a... by bogi666 on Sunday, Jul 24, 2011 at 4:02:07 AM
Nice to see alternate analysis. Harkens back to th... by martin weiss on Sunday, Jul 24, 2011 at 10:50:34 AM
I agree. I think the pervasive fear apathy of the ... by Dr Stuart Jeanne Bramhall on Sunday, Jul 24, 2011 at 9:14:12 PM
These "Proxy Wars" are squabbles between siblings.... by Jack Heart on Sunday, Jul 24, 2011 at 11:03:53 AM
What really bothers me, Jack, is despite all this ... by Dr Stuart Jeanne Bramhall on Sunday, Jul 24, 2011 at 9:21:16 PM
Capitalism is a system based on greed as the motiv... by Philip Pease on Sunday, Jul 24, 2011 at 11:29:11 AM
The rampant corruption of our political and financ... by Jim Prues on Sunday, Jul 24, 2011 at 2:48:43 PM
In my experience, Cincinnati is a pretty radical p... by Dr Stuart Jeanne Bramhall on Monday, Jul 25, 2011 at 5:31:28 PM
You did a great job on describing oil politics (ac... by lwarman on Sunday, Jul 24, 2011 at 3:02:41 PM
I am hearing this from other people too. All along... by Jack Heart on Sunday, Jul 24, 2011 at 10:32:51 PM
...I mean the inland waterways. I have seen a numb... by Bia Winter on Monday, Jul 25, 2011 at 7:19:04 AM
There's a great video about what Cuba did that peo... by Dr Stuart Jeanne Bramhall on Monday, Jul 25, 2011 at 5:33:43 PM
While I freely admit the machine gun and IED ... by tombaxter on Sunday, Jul 24, 2011 at 3:23:55 PM
I can't dispute anything  you say, Tom. I'm n... by Dr Stuart Jeanne Bramhall on Monday, Jul 25, 2011 at 5:37:36 PM
Capitalism is already dead and has evolved into it... by Mike Preston on Sunday, Jul 24, 2011 at 4:10:41 PM
I checked your links out and they're really fascin... by Dr Stuart Jeanne Bramhall on Sunday, Jul 24, 2011 at 9:24:03 PM
Any system based on personal greed is bound to dev... by Bia Winter on Monday, Jul 25, 2011 at 7:23:06 AM
once the brainwashing machine (television) gets de... by Odyseus_97 on Sunday, Jul 24, 2011 at 7:14:28 PM
According to Wikipedia, there have been approximat... by Dr Stuart Jeanne Bramhall on Sunday, Jul 24, 2011 at 9:29:29 PM
...most of us would gladly join Canada!... by Bia Winter on Monday, Jul 25, 2011 at 7:25:18 AM
Someone already put forth the idea that Oregon, Wa... by Odyseus_97 on Monday, Jul 25, 2011 at 12:10:04 PM
once the brainwashing machine (television) gets de... by Odyseus_97 on Sunday, Jul 24, 2011 at 7:15:32 PM