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October 10, 2008
Is There A Foreign Force Waging War Against the US Economy? (Part One)
In the fog of economic mayhem ravaging American and international economies, experts are having a hard time determining the root causes of the current financial crisis. One parameter is established: The Ground Zero of this economic fear is located in Wall Street, a few blocks away from the other Ground Zero, where al Qaeda destroyed the World Trade Center and massacred thousands of Americans and other nationals.
While we know who caused the destruction of the twin towers and why they did it, the question of who is causing the crumbling of the world economy, starting with America, and why, remains unanswered. It will take probably years and the best economists to investigate the web that led to the most dangerous crisis in international finance since the late 1920s. But to political economists and international relations analysts, there are some leads to explore while pure economists are proceeding with only their reconstruction of the crisis.
The latter may not ever reach definitive conclusions, and for political reasons. Too many strategic interests are at stake in the convulsions we are witnessing. From a stratospheric view, we see a US economy bleeding intensely; and as its government, in the midst of an electoral transition, is trying to administer some financial medicine, we can see that serious illnesses are breaking out in several economies around the world. The international community is waking up to watch another dimension of globalization: the lethal domino effect. When the greatest economy goes down, the international economic system follows.
But strategic analysts cannot avoid asking the following questions: Was the crisis system-induced or was it provoked or at least helped to spread? The main answer is found in the American genesis of the collapse. In sum, experts say, a huge mismanagement by both Wall Street and Washington ended up flooding Main Street with loans impossible to pay back. The mechanisms of the problem seem to be simple: American bankers and lenders messed up. They overestimated the ability of the markets to absorb these monies destined to help small consumers to leap into a higher social level, and to return their loans on time. And since millions of real estate buyers weren’t actually able to afford what they bought, the financial tidal wave hit back at the banking institutions, crumbling them. And as the financial giants were falling on Wall Street, a Tsunami was unleashed on all continents, hitting monetary institutions from Tokyo to London. This equation – in a micro nutshell - is the official story of the beginnings of the crisis, but certainly not the end of it.
As we continue to watch the economic spasms, we proceed along another line of basic questions. Other than raw capitalist greed, why did the lenders initially increase their offers into the markets? Who or what led the flood of cash? Many argue that the trend of pushing out-of-control loans to unqualified segments of society emanated from political operatives on the Left. Meaning that pressure groups, including national politicians, induced Wall Street to cross the fine line of appropriate banking policy to grant almost any loan seeker, regardless of his capacity to pay back the mortgage loan. But even if that were true, market analysts would have figured out the weaknesses of such a plan. So the next question is: on what grounds was the huge release of funds rationalized?
One answer could be that an assumption was made that jobs would always provide income for the payments of such mortgages. So, up to this stage, blame can be leveled in two directions. First, towards those politicians who threatened political retaliation if the financial system didn’t lend beyond rational limits; and second, Wall Street financiers who risked breaking the financial system by relying on poor judgment regarding the public’s ability to overcome economic challenges. Economists and those investigative committees expected to be formed will tell us more about the American roots of this economic debacle.
A thorough psycho-economic observation of the public’s financial behavior, however, tells us that there may be more to the crisis. It reveals that an outside “push” – I now coin it economic terrorism - may have been the tipping point of the collapse. For monitoring how and why buyers massively abandoned their plans shows that it followed, or coincided, with an abrupt rise in the cost of gas dividends. With the numbers at the pumps going ballistic, the cost of living suddenly rose, goods became less attainable and the price of enjoying, let alone using, the newly purchased properties soared. Hence, undoubtedly the lifestyle that was sought by the tens of millions of homes buyers wasn’t possible to achieve anymore; thus they surrendered financially in droves, taking the system down with them.
Economists will tell us if this diagnosis stands up. But if it does, then we cannot avoid investigating the factor that caused the strategic stress in real estate, which turned into economic chaos. In bypassing a narrow economic analysis, we can detect clearly the connection between the dizzying ups in petrol pricing and the slowing of American buying capacity. Stunningly, one can conclude that while it is sadly true that both Wall Street’s corruption and politicians’ abuse of the system handed the tools of doom to the middle class, Main Street’s rapid disenfranchisement was manufactured overseas, thousands of miles away, at the hands of OPEC, or perhaps in some quarters of the oil-producing Cartel.
Indeed, as economic commentators tell us (including a strong accusation leveled by real estate tycoon Donald Trump on Fox News against OPEC), oil powers are behind the instability that crumbled the will of millions of middle class Americans over the past three years. If we go back in time, we can see that oil pricing by OPEC’s hard core shows clearly that US leadership wasn’t able to convince the top producers from the Gulf to give American oil consumers a chance. Most producing regimes replied that demand – mostly from China and India - was putting pressure on production. Pressed by Washington to produce more, the “regimes” alleged it would affect the selling price and thus minimize their profits, but promised they would try to “be understanding” of US needs in energy.
This attitude gave the producers discretion over price, while Jihadi propagandists roamed the media accusing Washington of putting unbearable pressure “on the region” to follow American injunctions in setting petrol’s prices. Was there a connection between the oil regimes and the Jihadi propagandist machine? We have no answer to that now, but clearly an oil strategy was in the works with a calculated impact on the US economy. This charge is still in its early stages, it will be challenged ferociously, but it will stand as long as limpid answers are not provided.
Continued in the upcoming part two: The OPEC War against American Energy Independence
FamilySecurityMatters.org Contributing Editor Dr. Walid Phares is the Director of the Future Terrorism Project at the Foundation for the Defense of Democracies and a visiting scholar at the European Foundation for Democracy. He is the author of The Confrontation: Winning the War against Future Jihad.
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