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Empire in Decline - the first trigger domino
by Pepe Escobar via swan - OpEdNews Wednesday, Jul 16 2014, 11:28am
international / prose / post

Yes, it’s unravelling, largely as a result of its own misguided, foolish policies, however, the first real external threat to the dominance of the greenback has taken its first tentative steps in the form of the BRICS Bank.

The formation of this Bank fills the void made by the Latin American Bank of the South, a valiant gesture of independence and defiance that failed; however, it laid the ideological foundation for rapidly developing nations to break from the enslaving western controlled fraud-based western banking system -- indeed, the world’s default currency is un-pegged and is printed on demand by the New York Fed, its real value amounts to the cost of the paper and ink it is printed on but its inflated value is derived from other (sucker) nations supporting this ridiculous, ABUSED to the extreme, currency.

After the Bretton Woods agreement the USA was entrusted with supplying the world’s default currency providing it did not abuse that privilege. Why it didn’t dawn on members at the time that any nation that prints the world’s default currency MUST become the world’s most powerful nation, I have no idea! Former Fed chairman, Greenspan stated publicly that American debt is meaningless/illusion as it could just roll the presses to bail itself out of debt -- talk about ABUSE!

The world should have woken up on numerous occasions but it didn’t which allowed the USA to abuse the privilege to the extreme, but first a little history of the initial abuse.

Unsurprisingly it was during the Vietnam war when it became evident to the world that the USA was printing more money than it had assets to back the dollars it was printing, so the cat was out of the bag. Now consider the palette loads (billions) of shrink-wrapped greenbacks flown into Afghanistan to buy off war lords and regional leaders; this after Secretary of Defence, Rumsfeld, stated publicly that he could not account for $3.2 TRILLION dollars that passed through the Pentagon, an astonishing amount that remains unaccounted for to this day. So when we mention A-B-U-S-E of privilege there are no doubts as to the identity of the abuser.

What the US is today is a star-spangled dancing clown intoxicated on the fumes of the Fed’s printing presses. A clown so hopelessly out of control that tripping and falling/failing is inevitable.


Pepe Escobar’s story from the Asia Times follows:

BRICS against Washington consensus

The headline news is that this Tuesday in Fortaleza, northeast Brazil, the BRICS group of emerging powers (Brazil, Russia, India, China, South Africa) fights the (Neoliberal) World (Dis)Order via a new development bank and a reserve fund set up to offset financial crises.

The devil, of course, is in the details of how they'll do it.

It's been a long and winding road since Yekaterinburg in 2009, at their first summit, up to the BRICS's long-awaited counterpunch against the Bretton Woods consensus -- the IMF and the World Bank -- as well as the Japan-dominated (but largely responding to US priorities) Asian Development Bank (ADB).

The BRICS Development Bank -- with an initial US$50 billion in capital -- will be not only BRICS-oriented, but invest in infrastructure projects and sustainable development on a global scale. The model is the Brazilian BNDES, which supports Brazilian companies investing across Latin America. In a few years, it will reach a financing capacity of up to $350 billion. With extra funding especially from Beijing and Moscow, the new institution could leave the World Bank in the dust. Compare access to real capital savings to US government's printed green paper with no collateral.

And then there's the agreement establishing a $100 billion pool of reserve currencies - the Contingent Reserve Arrangement (CRA), described by Russian Finance Minister Anton Siluanov as "a kind of mini-IMF." That's a non-Washington consensus mechanism to counterpunch capital flight. For the pool, China will contribute with $41 billion, Brazil, India and Russia with $18 billion each, and South Africa with $5 billion.

The development bank should be headquartered in Shanghai -- although Mumbai has forcefully tried to make its case (for an Indian take on the BRICS strategy, see here)

Way beyond economy and finance, this is essentially about geopolitics -- as in emerging powers offering an alternative to the failed Washington consensus. Or, as consensus apologists say, the BRICS may be able to "alleviate challenges" they face from the "international financial system." The strategy also happens to be one of the key nodes of the progressively solidified China-Russia alliance, recently featured via the gas "deal of the century" and at the St. Petersburg economic forum.

Let's play geopolitical ball

Just as Brazil managed, against plenty of odds, to stage an unforgettable World Cup -- the melting of the national team notwithstanding -- Vladimir Putin and Xi Xinping now come to the neighborhood to play top class geopolitical ball.

The Kremlin views the bilateral relation with Brasilia as highly strategic. Putin not only watched the World Cup final in Rio; apart from Brazilian President Dilma Rousseff, he also met German chancellor Angela Merkel (they discussed Ukraine in detail). Yet arguably the key member of Putin's traveling party is Elvira Nabiulin, president of Russia's Central Bank; she is pressing in South America the concept that all negotiations with the BRICS should bypass the US dollar.

Putin's extremely powerful, symbolic meeting with Fidel Castro in Havana, as well as writing off $36 billion in Cuban debt could not have had a more meaningful impact all across Latin America. Compare it with the perennial embargo imposed by a vengeful Empire of Chaos.

In South America, Putin is meeting not only with Uruguay's President Pepe Mujica -- discussing, among other items, the construction of a deepwater port -- but also with Venezuela's Nicolas Maduro and Bolivia's Evo Morales.

Xi Jinping is also on tour, visiting, apart from Brazil, Argentina, Cuba and Venezuela. What Beijing is saying (and doing) complements Moscow; Latin America is viewed as highly strategic. That should translate into more Chinese investment and increased South-South integration.

This Russia-China commercial/diplomatic offensive fits the concerted push towards a multipolar world -- side by side with political/economic South American leaders. Argentina is a sterling example. While Buenos Aires, already mired in recession, fights American vulture funds -- the epitome of financial speculation -- in New York courthouses, Putin and Xi come offering investment in everything from railways to the energy industry.

Russia's energy industry of course needs investment and technology from private Western multinationals, just as Made in China developed out of Western investment profiting from a cheap workforce. What the BRICS are trying to present to the Global South now is a choice; on one side, financial speculation, vulture funds and the hegemony of the Masters of the Universe; on the other side, productive capitalism -- an alternative strategy of capitalist development compared to the Triad (US, EU, Japan).

Still, it will be a long way for the BRICS to project a productive model independent of the casino capitalism speculation "model," by the way still recovering from the massive 2007/2008 crisis (the financial bubble has not burst for good.)

One might view the BRICS's strategy as a sort of running, constructive critique of capitalism; how to purge the system from perennially financing the US fiscal deficit as well as a global militarization syndrome -- related to the Orwellian/Panopticon complex -- subordinated to Washington. As Argentine economist Julio Gambina put it, the key question is not being emergent, but independent.

In this piece, La Stampa's Claudio Gallo introduces what could be the defining issue of the times: how neoliberalism -- ruling directly or indirectly most of the world -- is producing a disastrous anthropological mutation that is plunging us all into global totalitarianism (while everyone swears by their "freedoms").

It's always instructive to come back to Argentina. Argentina is imprisoned by a chronic foreign debt crisis essentially unleashed by the IMF over 40 years ago - and now perpetuated by vulture funds. The BRICS bank and the reserve pool as an alternative to the IMF and World Bank offer the possibility for dozens of other nations to escape the Argentine plight. Not to mention the possibility that other emerging nations such as Indonesia, Malaysia, Iran and Turkey may soon contribute to both institutions.

No wonder the hegemonic Masters of the Universe gang is uneasy in their leather chairs. This Financial Times piece neatly summarizes the view from the City of London -- a notorious casino capitalism paradise.

These are heady days in South America in more ways than one. Atlanticist hegemony will remain part of the picture, of course, but it's the BRICS's strategy that is pointing the way further on down the road. And still the multipolar wheel keeps rolling along.

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