In the post-attack chaos, martial law will be declared and there won't be a 2006 election (or 2008 for that matter).
Posted by Jim Faith at May 17, 2006 10:04 AMSomehow I don't think the fallout and its effects on the GOP are of a primary concern to the powers that be. Maybe that's because the powers that be are Exxon, Mobil, BP, Chevron, et al. Their product is going to be purchased and burned regardless of the occupants of the White House or Congress. Bush and Cheney and all their henchmen and all their heirs will eventually retire to an assured opulent existence whether the DOW tanks, the economy collapses or China buys the state of New York. Fuck everybody else. Ned Beatty's lecture to Peter Finch in "Network" would be a good clip to review when thinking of the motives behind much of what we see happening.
Posted by steve duncan at May 17, 2006 10:24 AMO Ahab Bush sins greatly. He should remember the commandments. Thou Shalt Not Steal (the oil from Iraq and Iran) and thou shalt not bear false witness (by issuing licenses to lie to the telco princes) lest the Lord send him a lying counsellors who will lead the New Israel to disaster by telling his highness he can will in Megiddo!
Lord Bush, It's time to repent before you destroy your nation!
Posted by Micah at May 17, 2006 10:25 AMI don't see why this attack won't work. All you have to do is convince yourself that Iranians will be welcoming us with flowers and sweet coffee. I think Rummy thought this through as well as he thought through Iraq. It'll be good!
Of course, it might get sticky when that single Iranian fighter/bomber makes it's way at low altitude over Israel, then goes straight up, and the nuke Iran purchased from blah-wackystan after the Soviet collapse detonates in an air burst at 5,000 feet over Tel Aviv. That would certainly be a sticky situation...in my opinion.
But, as the neo-cons really think, "Nuke the fucking Sand Niggers!" Of course, they don't realize that Iranians are Persians, but no big diff. What the hell is a little knowledge and history if nothing but dangerous? By God, Jesus is on our side! Just ask Busch.
Posted by phidipides at May 17, 2006 10:54 AMAs I stated in my earlier post, the good Lord has sent Ahab Bush lying counsellors as he did for Ahab of old.
Lest he repent, the New Israel may face a new exile as did Israel of Old.
Awake O Neocons, lest a new nuclear day arise over Megiddo and you Neocons will not rapture because you have failed to be stewards of truth and love.
So saith Micah, the Prophet.
Posted by Micah at May 17, 2006 11:03 AMthe iran war will last six seconds, six minutes, i doubt six hours.
Posted by rummy at May 17, 2006 11:09 AMas the latest report on consumer prices reflects a larger-than-expected increase of .6% last month
Piffle! This is not related to the Feds dumping at least $800 billion in paper into the economy after shutting down the M-3 report. All that paper is good!
And don't worry about inflation! You see, you get value for the increase in costs! Even though inflation is pushing 9%, you still need to subtract the 4.5% of the pleasure factor you get from purchasing this stuff. Please don't make the same mistake in the future. I love that hedonic regression!
Posted by phidipides at May 17, 2006 11:11 AMThe Fed will do what Steve predicts, it has no choice, but tighter money isn't going to have any effect over a vector of irreversible and permanent price increases for the most essential "input" in our economy. All products and services are heavily dependent upon gasoline.
And phidipides' point about the likely surreptitious flooding of fed money to help "finance" the deficit will also have an inflationary effect. (Phidipides, have you seen if any reporters have asked about about why there are no more M3 numbers?)
We will be hit with stagflation three times worse than the 1970s, and no one will have the slightest ability to halt it, or even a clue what to do about it.
The colossal errors, willful indifference to reality and absurd misadministrations of the past 25 years on the energy front are comin' home to roost, and there isn't anything a COMPETENT, practical thinking administration can do to help us, let alone the most criminally ideological and incompetent one in American history.
Economic catastrophe, with most Amercicans already virtually submerged with personal debt......divisive politics? You ain't seen nothing yet!
Posted by euzoius at May 17, 2006 11:53 AMSoto:
Folks, this isn’t about nukes, it is about taking control of Iran and its oil, and stopping the Iranians from setting up their own oil market separate from the New York and London oil trading markets that would be denominated in Euros and not dollars.
I've heard this idea about the Iranian Oil Bourse being a significant threat but if one does an Internet search one finds many articles saying it's insignificant. Why would it be such a big threat? After all, one can simply exchange their currency for Euros and then buy oil from Iran. Where's the threat ... where's the beef?
Posted by at May 17, 2006 12:11 PManon, the US needs oil producers to sell their oil in American dollars so that potential oil buyers will need American dollars. Otherwise no one will finance our debt and our economy will fail.
Posted by Sharon at May 17, 2006 12:52 PMDow drops 214 points, sees worst one-day drop in three years
hm....on the same day that Bush signs $70 billion in tax cut extensions......
Posted by ann at May 17, 2006 02:42 PMThe instant we or the Israelis decide to strike against Iran, gas prices will climb like a fucking rocket. Four-dollar per gallon gas? If we're lucky.
Posted by Toby Petzold at May 17, 2006 03:09 PMI've no doubt that BushCo want to attack Iran and grab its oil, but are they militarily and politically powerful enough to do it any more?
Back in 2003, Bush was riding high with 70% approval ratings, and the US military was the global 'hyperpower'. No longer. Bush's popularity is in free fall, and entering Nixon country. The US military have been shown to be incompetent in Iraq, and now the world just thumbs its nose at it.
Thoroughly disenchanted with Iraq, are Americans likely to welcome yet another war, with yet more body bags, justified by pretty much exactly the same lies they now know they were told about Iraq? No. An Iran war will most likely drive Bush's numbers even lower, particularly as gas prices jack up sharply.
I know Bush lives in a bubble where he thinks he's the 'decider'. But it is a bubble all the same. And it's in process of bursting.
Posted by idlex at May 17, 2006 05:33 PMThe profiteers, the Rupturists, the Greater Israelists, and the long-as-we're-at-war-we-stay- in-powerists want this badly, very badly. Drink a bottle of Maalox and read some of the comments at a typical right wing site. Blood, money and a-rab faces under their boot soles - thats all it takes to make 'em happy. They think.
Posted by jondee at May 17, 2006 06:11 PMNot meaning to sidetrack the discussion here, but the only poll numbers I give a shit about as far as policy is concerned concern the opinions of that small percentage of the populace who can be shown to recognize the name of Mohammed Mossadegh.
The numbers are on our side now, but they weren't 3 years ago and they may not be in the future. Democracy ain't easy, that's the god damned point. The ignorant should be taught and no one seems to be interested in that: not the politicians, not the press.
And no, not the 'liberals' either.
An interesting comment, Toby. Does that mean you do not support Bush anymore?
Posted by Brian Bell at May 17, 2006 10:06 PMOh, one other thing, addressed to all, I am slightly, slightly relieved to "hear" a leak that states that the strike being planned is not a nuclear first-strike, although I hope no strike happens in the near to immediate future at all.
I still don't understand this administration's fascination with so-called nuclear bunker busters. No concrete or tunnelling that man has devised yet can withstand a serious strategic bombing campaign of conventional bombs. World War II showed us that. It may take repeated hits, and possibly repeated bombing runs, but so long as the target is hit repeatedly, the concrete will crumble and the tunnels will collapse eventually. This whole idea about nuclear bunker busters seems to me to be a case of complete and utter insanity, and it also seems to point to something seriously wrong in the heads of the people planning for them such as Rummy, Cheney and Bush. It's like they're looking for an excuse to drop The Bomb. It's fuckin' nuts.
Posted by Brian Bell at May 17, 2006 10:15 PMSharon writes: anon, the US needs oil producers to sell their oil in American dollars so that potential oil buyers will need American dollars. Otherwise no one will finance our debt and our economy will fail.
However, in this article
Why Iran`s Oil Bourse can`t break the Buck from F. William Engdahl, 10 March 2006, we have the following:
A number of writings have recently appeared with the thesis that the announced plans of the Iranian government to institute a Tehran oil bourse, perhaps as early as this month, is the real hidden reason behind the evident march to war on Iran by the Anglo-American powers. The thesis is simply wrong for many reasons, not least that war on Iran has been in planning since the 1990s as an integral part of the United States' Greater Middle East strategy.
More significant, the oil-bourse argument is a red herring that diverts attention from the real geopolitical grounds behind the march toward war that have been detailed on this website, including in my piece, A high-risk game of nuclear chicken, which appeared in Asia Times Online on January 31.
In 1996, Richard Perle and Douglas Feith, two neo -conservatives later to play an important role in formulation of Bush administration's Pentagon policy in the Middle East, authored a paper for then newly elected Israeli prime minister Benjamin Netanyahu. That advisory paper, "A Clean Break: A New Strategy for Securing the Realm", called on Netanyahu to make a "clean break from the peace process". Perle and Feith also called on Netanyahu to strengthen Israel's defenses against Syria and Iraq, and to go after Iran as the prop of Syria.
More than a year before President George W Bush declared his "shock and awe" operation against Iraq, he made his now-infamous January 2002 State of the Union address to Congress in which he labeled Iran, along with Iraq and North Korea, as a member of the "axis of evil" trio. This was well before anyone in Tehran was even considering establishing an oil bourse to trade oil in various currencies.
The argument by those who believe the Tehran oil bourse would be the casus belli, the trigger pushing Washington down the road to potential thermonuclear annihilation of Iran, seems to rest on the claim that by openly trading oil to other nations or buyers in euros, Tehran would set into motion a chain of events in which nation after nation, buyer after buyer, would line up to buy oil no longer in US dollars but in euros. That, in turn, goes the argument, would lead to a panic selling of dollars on world foreign-exchange markets and a collapse of the role of the dollar as reserve currency, one of the "pillars of Empire". Basta! There goes the American Century down the tubes with the onset of the Tehran oil bourse.
Some background considerations
That argument fails to convince for a number of reasons. First , in the case of at least one of the oil-bourse theorists, the argument is based on a misunderstanding of the process I described in my book, A Century of War, regarding the creation in 1974 of "petrodollar recycling", a process with which then-US secretary of state Henry Kissinger was deeply involved, in the wake of the 400% oil-price hike orchestrated by the Organization of Petroleum Exporting Countries (OPEC).
The US dollar then did not become a "petrodollar", although Kissinger spoke about the process of "recycling petrodollars". What he was referring to was the initiation of a new phase of US global hegemony in which the petrodollar export earnings of OPEC oil lands would be recycled into the hands of the major New York and London banks and re-lent in the form of US dollar loans to oil-deficit countries such as Brazil and Argentina, creating what soon came to be known as the Latin American debt crisis.
The dollar at that time had been a fiat currency since August 1971 when president Richard Nixon first abrogated the Bretton Woods Treaty and refused to redeem US dollars held by foreign central banks for gold bullion. The dollar floated against other major currencies, falling more or less until it was revived by the 1973-74 oil-price shock.
What the oil shock achieved for the sagging dollar was a sudden injection of global demand from nations confronted with 400% higher oil-import bills. At that time, by postwar convention and convenience, as the dollar was the only reserve currency held around the world other than gold, oil was priced by all OPEC members in dollars as a practical exigency.
With the 400% price rise, nations such as France, Germany and Japan suddenly found reason to try to buy their oil directly in their own currencies - French francs, Deutschmarks or Japanese yen - to lessen the pressure on their rapidly declining reserves of trade dollars. The US Treasury and the Pentagon made certain that did not happen, partly with some secret diplomacy by Kissinger, bullying threats, and a whopping-big US military agreement with the key OPEC producer, Saudi Arabia. At that time it helped that the shah of Iran was seen in Washington to be a vassal of Kissinger.
The point was not that the US dollar became a "petro" currency. The point was that the reserve status of the dollar, now a paper currency, was bolstered by the 400% increase in world demand for dollars to buy oil. But that was only a part of the dollar story. In 1979, after the accession to power of the ayatollah Ruhollah Khomeini in Iran, oil prices shot through the roof for the second time in six years. Yet, paradoxically, later that year the dollar began a precipitous free-fall, not a rise. It was no "petrodollar".
Foreign dollar-holders began dumping their dollars as a protest against the foreign policies of the administration of US president Jimmy Carter. It was to deal with that dollar crisis that Carter was forced to bring in Paul Volcker to head the Federal Reserve in 1979. In October 1979 Volcker gave the dollar another turbocharge by allowing interest rates in the US to rise some 300% in weeks, to well over 20%. That in turn forced global interest rates through the roof, triggered a global recession, mass unemployment and misery. It also "saved" the dollar as sole reserve currency. The dollar was not a "petrodollar". It was the currency of issue of the greatest superpower, a superpower determined to do what it needed to keep it that way.
The F-16 dollar backing
Since 1979 the US power establishment, from Wall Street to Washington, has maintained the status of the dollar as unchallenged global reserve currency. That role, however, is not a purely economic one. Reserve-currency status is an adjunct of global power, of the US determination to dominate other nations and the global economic process. The United States didn't get reserve-currency status by a democratic vote of world central banks, nor did the British Empire in the 19th century. They fought wars for it.
For that reason, the status of the dollar as reserve currency depends on the status of the United States as the world's unchallenged military superpower. In a sense, since August 1971 the dollar is no longer backed by gold. Instead, it is backed by F-16s and Abrams battle tanks, operating in some 130 US bases around the world, defending liberty and the dollar.
A euro challenge?
For the euro to begin to challenge the reserve role of the US dollar, a virtual revolution in policy would have to take place in Euroland. First the European Central Bank (ECB), the institutionalized, undemocratic institution created by the Maastricht Treaty to maintain the power of creditor banks in collecting their debts, would have to surrender power to elected legislators. It would then have to turn on the printing presses and print euros like there was no tomorrow. That is because the size of the publicly traded Euroland government -bond market is still tiny in comparison with the huge US Treasury market.
As Michael Hudson explains in his brilliant and too-little -studied work Super Imperialism, the perverse genius of the US global dollar hegemony was the realization, in the months after August 1971, that US power under a fiat dollar system was directly tied to the creation of dollar debt. The US debt and the trade deficit were not the "problem", they realized. They were the "solution".
The US could print endless quantities of dollars to pay for foreign imports of Toyotas, Hondas, BMWs or other goods in a system in which the trading partners of the United States, holding paper dollars for their exports, feared a dollar collapse enough to continue to support the dollar by buying US Treasury bonds and bills. In fact in the 30 years since abandoning gold exchange for paper dollars, the US dollars in reserve have risen by a whopping 2,500%, and the amount grows at double-digit rates today.
This system continued into the 1980s and 1990s unchallenged . US policy was one of crisis management coupled with skillful and coordinated projection of US military power. Japan in the 1980s, fearful of antagonizing its US nuclear-umbrella provider, bought endless volumes of US Treasury debt even though it lost a king's ransom in the process. It was a political, not an investment, decision.
The only potential challenge to the reserve role of the dollar came in the late 1990s with the European Union decision to create a single currency, the euro, to be administered by single central bank, the ECB. Europe appeared to be emerging as a unified, independent policy voice of what French President Jacques Chirac then called a multipolar world. Those multipolar illusions vanished with the unpublicized decision of the ECB and national central banks not to pool their gold reserves as backing for the new euro. That decision not to use gold as backing came amid a heated controversy over Nazi gold and alleged wartime abuses by Germany, Switzerland, France and other European countries.
Since the shocks of September 11, 2001, and the ensuing declaration of a US "global war on terror", including a unilateral decision to ignore the United Nations and the community of nations and go to war against a defenseless Iraq, few countries have even dared to challenge dollar hegemony. The combined defense spending of all nations of the EU today pales by comparison with the total of current US budgeted and unbudgeted military spending. US defense outlays will reach an official, staggering level of US$663 billion in the 2007 fiscal year. The combined annual EU spending amounts to a mere $75 billion, and is tending to decline, in part because of ECB Maastricht deficit pressures on its governments.
So today, at least for the present, there are no signs of Japanese, EU or other dollar holders engaging in dollar-asset liquidation. Even China, unhappy as it is with Washington's bully politics, seems reluctant to rouse the American dragon to fury.
The origins of the oil bourse
The idea of creating a new trading platform in Iran to trade oil and to create a new crude-oil benchmark apparently originated with the former director of the London International Petroleum Exchange, Chris Cook. In a January 21 article in Asia Times Online (What the Iran 'nuclear issue' is really about), Cook explained the background. Describing a letter he had written in 2001 to the governor of the Iranian Central Bank, Dr Mohsen Nourbakhsh, Cook explained what he advised then:
In this letter I pointed out that the structure of global oil markets massively favors intermediary traders and particularly investment banks, and that both consumers and producers such as Iran are adversely affected by this. I recommended that Iran consider as a matter of urgency the creation of a Middle Eastern energy exchange, and particularly a new Persian Gulf benchmark oil price.
It is therefore with wry amusement that I have seen a myth being widely propagated on the Internet that the genesis of this "Iran bourse" project is a wish to subvert the US dollar by denominating oil pricing in euros.
As anyone familiar with the Organization of Petroleum Exporting Countries will know, the denomination of oil sales in currencies other than the dollar is not a new subject, and as anyone familiar with economics will tell you, the denomination of oil sales is merely a transactional issue: what matters is in what assets (or, in the case of the United States, liabilities ) these proceeds are then invested.
A full challenge to the domination of the US dollar as the world central-bank reserve currency entails a de facto declaration of war on the "full-spectrum dominance" of the United States today. The mighty members of the European Central Bank Council well know this. The heads of state of every EU country know this. The Chinese leadership as well as the Japanese and Indians know this. So does Russian President Vladimir Putin.
Until some combination of those Eurasian powers congeal in a cohesive challenge to the unbridled domination of the United States as sole superpower, there will be no euro or yen or even Chinese yuan challenging the role of the dollar. The issue is of enormous importance, as it is vital to understand the true dynamics bringing the world to the brink of possible nuclear catastrophe today.
As a small ending note, a good friend in Oslo recently forwarded me an article from the Norwegian press. At the end of December, Sven Arild Andersen, director of the Oslo bourse, announced he was fed up with depending on the London oil bourse trading oil in dollars. Norway, a major oil producer, selling most of its oil into euro countries in the EU, he said, should set up its own oil bourse and trade its oil in euros. Will Norway - a member of the North Atlantic Treaty Organization - become the next target for the wrath of the Pentagon?
Thanks for covering this, Steve. It's not getting a lot of coverage in the lefty blogosphere while those of the Right are doing all they can to whip up the hate in anticipation of the attack.
Maybe some of your readers will pressure Dem House members to cosponsor HCR 391 that conveys the sense of Congress that Bush must come to Congress before raining down more bombs. Also, put the heat of Harry Reid who has signed on to some enabling legislation for this attack, the Iran Freedom Support Act sponsored by Santorum.
Posted by goinsouth at May 18, 2006 06:06 AMVery informative stuff. These clowns are falling into a huge strategic blunder, far larger than invading Iraq.
FYI 'irregardless' is not a word, in fact it ends up being a double negative. Use either regardless or irrespective.
Posted by Casey Khan at May 18, 2006 07:22 AMNot meaning to sidetrack the discussion here, but the only poll numbers I give a shit about as far as policy is concerned concern the opinions of that small percentage of the populace who can be shown to recognize the name of Mohammed Mossadegh.
ooo! ooo!
mossadegh was a reformist, democratically elected leader of iran in the fifties. he wanted to nationalize the oil industry so the CIA supported the coup that deposed him and put in the shah. so much for democracy.
imo, military action against iran will make iraqmire look like a good idea in comparison.
Posted by benjoya at May 18, 2006 08:32 AMA full challenge to the domination of
the US dollar as the world
central-bank reserve currency entails
a de facto declaration of war on the
"full-spectrum dominance" of the
United States today. The mighty
members of the European Central Bank
Council well know this. The heads of
state of every EU country know this.
The Chinese leadership as well as the
Japanese and Indians know this. So
does Russian President Vladimir
Putin.
Maybe not. However, a spike in oil prices as well
as a sharp decline in the dollar could, and probably would cause at least a major ression
and spiralling inflation in this country. There
by inducing even more investers to dump their
dollar holdings as the dollar would no longer be considered a stable currency.
So many economists so little time.
Posted by jondee at May 18, 2006 08:12 PMThe US demand for oil from a conquered Iran,runs along with the wish of Israel to dominate the region...unattainable if Iran is a nucleur power..so the Israeli line is to have the US do the dirty work on Iran,. Israel isn't copmcerned about the effect of this on the US economy or the voters...Israel follows its own policies and thinks of none other than the need of then Jewish homeland..and there's never been a time when Jewish influences have been more dominant in the Us than now !
Posted by brian at May 23, 2006 04:27 AM