Now that all the enthusiastic partying over that 300 point increase in the Dow has ended, it's time to get back to reality as most of the world sees it.
The Australian, out of Sydney, Australia, is among the first extra-national publication to declare that the US must pay the bill for a long luxury ride, and cites as justification The Wall Street Journal article which ruefully admitted, "the US could no longer keep running up a tab on luxury imported goods, electronics and, more importantly, oil, on the 'national credit card'."
Lost amid all the boisterous revelry over Fed Chairman Bernanke's abandonment of inflation control in favor of economic stimulus was the cost of the action: the dollar is collapsing relative to foreign currencies. This decline threatens the status of the American dollar as the favored reserve currency, and hastens the time when the world's central banks drive that last stake through the heart of the 1944 Bretton Woods Agreement and fly solo.
What this means in simple Texican lingo? The pricing of oil in dollars may be coming to an end – and with it American hegemony. But having more of a less-valuable currency – even if only on paper – conquers the understanding that such a fact requires. And they don't like any links to information, either.
For those who aren't sniggering behind their barbed-wire-bastioned Airstreamers over their inflated portfolios, several nations are considering delinking their currencies from the dollar. Some are doing so in order to keep exported American inflation from overheating their domestic economies as they no longer have any concern for their former economic master's welfare. After all, you aren't going to worry about your neighbor's barn burning down if your own roof is beginning to smolder!
But more ominous are the recent moves by Gulf States to convert their weakening and less-valuable dollars into tangible assets. Is it not an article of faith in the investor's world to sell an under-performing asset to allow purchase of one which holds far more promise of profit? As a result, Abu Dhabi bought 7.5 per cent of Carlyle Group, and Dubai and Qatar each bought large holdings in NASDAQ and the London Stock Exchange. Better to hold something of real value than to be stuck with the empty promises of a worthless promissory note.
There are indications that the long-term goal of such a purchase would be to move the economic centers of the world to the Gulf. Columnist James Pethokoukis of U.S. News & World Report thinks this is a grand idea. Quoting geopolitical strategist Tom Barnett, Pethokoukis writes:
"Do I want Dubai to become a Hong Kong/Singapore of the Middle East? Sure. Because I want the Middle East to connect up to the world. In fact, that's the whole purpose behind our Big Bang strategy of toppling Saddam: connecting the Middle East up to the global economy faster than the jihadists can disconnect it."
This is an empty and false statement, as Islamia has demonstrated ample desire to purchase modern products from the more-developed world. The only problem for the American business media is that too much of this commerce goes to America's competitors.
It's another article of faith that when an entity gains an advantage, it will do anything to defend it, and damn the morality! It will even cast logic overboard and fight to its own death just to avoid admitting defeat. Once again under George W. Bush, we have that same opportunity to prove that fools and their prosperity are soon parted, as he declared, "I'm comfortable with the process to go forward."
"Connecting up to the world" will prove to be very expensive to America, because we will have surrendered direct control over our financial markets to foreign investment entities controlled by their home governments. Weren't NAFTA and GATT enough of an intrusion into our sovereignty?
Heavens! No! Of course not! Profit is the only item of importance in the Ferengi world of investment, as demonstrated by the Motley Fools, who proclaim opposition to allowing "nationalistic chauvinism" to interfere with the consolidation of the world market ownership into fewer hands.
That didn't work well for the majority with mass media ownership in the United States, but such results are only worrisome to Leona Helmsley's "Little People", right? Not so fast!
Bigger isn't always better, as The Financial Times of London reminds potential bourse investors. They see a bidding war evolving that would make the cost of a stake in the major stock exchanges "decidedly expensive". There are indications that Asian exchanges are next.
Regardless of whether the Gulf State tycoons succeed in their quest to own large portions of the world's stock exchanges, the message should be very clear that the era of automatic American economic leadership of the world is ended. Despite our attitude that no one can tell us how to run our country, we are losing our separation from foreign influence and control. We are also being "connected up to the world" through the greed of our own richest citizens, who would sell our birthright for a mess of gold pottage.
Through such travesties as NAFTA and GATT, our own laws are subject to veto by faceless and unaccountable foreign bureaucrats who have learned well the lessons taught by American cronyism. We may well find ourselves faced someday with a directive from those who own the agencies of our domestic employment telling us to adopt, for instance, a certain religion or face termination. After all, certain Christian organizations have already been allowed by the corporatist government to do that very thing. After such an established precedent, who is to say that the devotees of Asatru won't become the owners of America and decree mandatory adherence to their religion if you desire to retain your employ?
Of course, you could always eat your shotgun shells instead. I hear they go great with barbed wire.