Military Keynesianism & Iran

From the Guardian:

Washington is stepping up attempts to isolate Tehran after accusing factions in the Iranian government of a plot to assassinate the Saudi ambassador to Washington on US soil.

The US announced new economic sanctions against five Iranians, including four senior members of the Quds force, the special operations unit of the Iranian Revolutionary Guards, which American officials have implicated in the alleged plot.

Sanctions were already in place but the US secretary of state, Hillary Clinton, said a “very strong message” needed to be sent to the Iranian regime.

She said she and Barack Obama want to “enlist more countries in working together against what is becoming a clearer and clearer threat” from Iran.

What was that someone said about war being the easiest way to wipe the debt clean? Instilling a sense of purpose in divided, angry and confused populations? Creating humungous profits for the military-industrial complex?

Oh yes!

From Marc Faber (via Zero Hedge):

The problem I have with the investment universe is that I find it difficult to envision how the US and western Europe can return to healthy sustainable growth without a complete purge of the financial system and some type of catalyst. Something that restores some measure of social cohesion among people;  it could be hyperinflation, a complete credit market collapse, widespread sovereign defaults, civil strife, major military confrontation.”

As I have continuously noted since the very beginning, America has a hell of a lot to lose through drift (not least the dollar-denominated status of energy and resources) — power is drifting Eastwards, and an increasingly indebted, self-doubting, nihilistic and stagnant population is shifting America from its cherished status as world policeman to that of a second-rate economic power.

Simply, all the capital that America has exported in exchange for the Nixonian energy and consumption free lunches will come back to buy up American productive assets.

No amount of nuclear weapons, and no amount of currency manipulation allegations can save America from this fate.

So Washington’s present rationale might well be that with Eurasia strengthening and uniting behind an increasingly untrustworthy, authoritarian and anti-American set of leaders (Ahmadinejad Putin, Wen), now might be the last chance America has to preserve American imperial hegemony (and the dollar as the global reserve currency). Throw the dice, sell some weapons, shake the barley, see where the chips land.

After all, if the people of Eurasia want (American style) democracy and capitalism, a regional war would be the best chance that they have of taking the Arab spring up an echelon, and onto the streets of Tehran, Beijing, and Moscow.

The problem with that great-American-hope is that it’s not the people of Eurasia who seem to have a problem with their government, but the people of America. For better or worse, Eurasian autocratic dirigisme seems to be yielding better economic results on the global stage than American-style liberal democracy.

After the dust settles and the debt is purged we can again walk the road to sustainable economic development. The problem, and the great worry, is getting there.

8 thoughts on “Military Keynesianism & Iran

    • mmm… 1984

      To be honest Eurasia is doing quite well. Look at their stats. Constant improvement. In the minds of their citizens, things have not been better (Especialy from a low base)

      When you think Ukraine, Belarusia, Russia, Kazakstan, Mongolia, and China have pretty much missed the great credit bubble. Have huge mineral and agricultural resources, well trained and skilled populations, and strong armies, it is not hard to feel optimistic.

      Remember; most of these populations are homogenous (To a degree), so they are quite patriotic to the motherland, and their autocratic leaders.

  1. Your analysis seems to suggest that you desire more authoritarian governments rather than progressive governments in order to save the economy! Surely our first priority is to help people and not the economy. The economy simply means less money in your pocket and more money in the pockets of corporations! I sense a little Marxist-Leninism in your tone and phrase. That will only lead to repression on global scale that Capitalism could only achieve if it was let loose from all regulations! Think about what you advocate before advocating a system that would turn human beings into disposable cogs in a tyranical regime!!!

    • If you had bothered to read anything I’ve written you’d know that “helping individuals not corporations” is the strategy I’ve advocated since the very beginning.

      The economy simply means less money in your pocket and more money in the pockets of corporations!

      No, it doesn’t “the economy” includes a diverse range of factors including unemployment, manufacturing output, imports/exports, GDP, confidence, etc. From my perspective, helping “the economy” means creating the circumstances where people can work to create sustainable development. That’s the government’s role, nothing more.

      I sense a little Marxist-Leninism in your tone and phrase

      Not at all. Precisely the opposite. I want to see liberal-democratic governments change strategy, to level the playing field between the capitalist economies and the authoritarian ones. The main spoke in this wheel is actually Western military spending, which creates an artificial stability that subsidises the cost of Eurasian/Chinese exports and keeps insurance costs artificially low. “The world is flat” has not created a free market, but precisely the opposite: it’s subsidising the success of authoritarian regimes. If the West adopted a Ron Paul-style foreign policy where defence meant defence, global shipping costs would rise enough to make Western manufacturing significantly more competitive, and allow Western labour markets and supply chains to recover. This is not government interference: this is supporting open, transparent and competitive markets.

  2. Some people claim China is heading for a huge bust.

    China’s Hard Landing Looms?
    Wednesday, October 12, 2011 – by Staff Report

    “The idea is that the Chinese have discovered a better way of doing business – using the state to organize private industry. The same ridiculous notions were floated when Japan was going through the boom part of its boom-bust cycle. The Americans helped Japan build out its “Western style” economy and they’ve helped with China’s as well. In Japan’s case, things have not ended well. In China’s they likely won’t either.

    The Chicoms, in fact, have had decades to get this right but they made the mistake of installing the kind of faux-capitalism that Western elites implemented and ran for the past century. It didn’t work for the West and it seems to have trapped the Chicoms as well.”

    • The key difference between American bailouts and Chinese ones is that American ones are financed with debt and money printing, and Chinese ones are financed from their huge hard-earned cash hoard, and their trade surpluses. They can afford to bail out the entire Chinese property market. The real question is whether this will cause them to stop subsidising the American Treasury.

    • In terms of Keynes’ basic observation that governments should save during the fat years to spend during the lean ones, Keynes was right. But his work has been grossly misinterpreted to suggest 1/ that broken windows are good for growth, & 2/ government should do everything for everyone and should accumulate deficits in both lean and fat years.

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