House of Paine

petras dish

a pre tour precise
   of uncle empire's next year  

"is this as bad ass as
                          it getz ????"


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JAMES PETRAS

"In 2005 the US economy defied 
all the known tenets of economic theory: "



"In the face of record high trade deficits,
 monstrous budget deficits,
 a failed war and major political scandals
 involving presidential aides, 
the dollar strengthened
 against the Euro and the Yen,
 the economy grew at 3.4%
 and all the major investment houses
 had record profits."


 "It seems the US economy 
defied the laws of gravity, 
floating above the political turmoil 
and structural vulnerabilities. "

"But the point of 'prophesy'
 is not to specify the day and hour 
of sharp decline and recession
 but to identify 
the deep structural vulnerabilities 
and the possible trigger events,
 which could detonate a crises"

"The US economy will continue to diverge
 in a double sense"

 The financial sector
 will expand overseas, 
especially the major investment houses 
like Goldman Sachs, J.P. Morgan, Citibank
 while the manufacturing sector 
led by the 'Big Three' automobile sector
 will decline even further,
 with a good chance that General Motors 
will go into bankruptcy. 
The US multi-nationals 
will expand on a world scale,
 buying into major banks and industries,
 especially in China,
 extending the economic reach 
of the empire,
 while the domestic economy 
will suffer 
as the housing and real estate
 speculative bubble collapses,
 high energy prices 
undermine export competitiveness,
 resulting in sharp decline
 in consumer spending.

 The US empire will increasingly become 
identified with its economic giants 
as its failed wars will lead to a withdrawal
 of combat troops
 and a reliance on airpower,
 local military forces,
 economic sanctions and accommodating
 to social liberal regimes.




The domestic social crisis 
will deepen as overseas profit opportunities expand.

 In 2006, over 90% of US workers 
will be paying
 for their costly individual health and pension plans 
or, if they cannot pay, 
they will lose coverage. 

Precarious work contracts 
are the norm for all but a small sector 
of public employees. 

Real inflation
 (including increased health, education,
 energy and pension costs) 
will rise to about two times 
the consumer price index 
and contribute to the further decline
 in actual living standards.

 A rapid deflation of the housing bubble 
would reduce the "paper value"
 of homeowners by half
 and force many
 who are heavily indebted into bankruptcy.

 Nevertheless, as happened in recent decades 
(after the Savings and Loan, Dotcom,
 Enron and other speculative failures),
 while millions of small speculators
 and investors in real estate
 will lose billions of dollars,
 their discontent will not find 
any political expression. 

The greater the inequalities in income,
 property and wealth
 between the financial and imperial economic elites,
 on the one hand,
 and the domestic wage and salaried classes,
 on the other,
 the lower the level of organized political 
and social opposition. 



In 2006 the US will become
 the developed country with the greatest inequalities, 
with the most sustained decline 
in living standards 
and the nation least able to organize
 a defense of social rights 
­ let alone an alternative 
- against the empire-centered 
model of capitalist accumulation.
 In a word, 
the domestic crisis of living standards
 will finance further economic empire building
 rather than challenge it.

US global expansion 
is sustainable
 because of fundamental changes taking place
 in India, China, Indo-China
 and the oil kingdoms of the Middle East.

 These countries have lowered many barriers 
to foreign investment, 
joint ventures and even majority ownership
 of high growth industries
, banks and energy sources.
 US , European and Japanese MNCs and banks 
will accelerate their entry 
beyond initial beachheads 
and move across all sectors of the economy,
 with greater depth: 
2006 will mark China's transition 
from "national capitalist" 
to a model of imperial and national led 
capitalist growth.

The US will continue to substitute 
an air war for a ground war in Iraq:
 For every 10,000 troops withdrawn,
 there will be hundreds of added air attacks.
 The US policy toward Iraq 
is a classic case of "rule or ruin"
 of Biblical proportions.

 Since the US or its puppet regimes cannot rule
, Washington's policy is to regress 
the country into an "Afghanistan"
 of warring clerical and ethnic warlords 
and tribal chieftains based on min-fiefdoms.

 The debate over a new war 
against Iran is still not resolved 
because of the deep divisions 
in Washington,
 Israeli military threats 
and the spy trial of two leaders 
of the major pro-Israel lobby,
 the American Israel Public Affairs Committee)
. Washington can be expected 
to push for Security Council economic sanctions
 which will likely fail because
 of a China/Russia veto.
 Subsequently it is possible,
 especially if Netanyahu is elected Prime Minister,
 that Israel will attack 
Iranian experimental nuclear energy sites, 
with the complicity of their partners 
in the White House and Congress. 

Israeli aggression will likely unleash
 a series of proxy wars in Lebanon, 
Iraq (including "Kurdish" Iraq) and beyond, 
leading to an escalation 
of US casualties and weakening
 Washington's client regimes 
(Saudi Arabia, Jordan, Egypt etc)



In Washington, Congress and both political parties 
will be further discredited
 as Jack Abramoff,
 the self-confessed lobbyist-swindler
 will implicate dozens of Congress members,
 party leaders and government officials 
in an enormous bribery scandal.
 The trial and prosecution 
of Congressional leaders,
 especially Republican heads of Congress,
 may prevent any new regressive
 and repressive legislation 
from being enacted,
 but may spur the President 
to engage in an overseas military adventure
(bombing Iran) 
to paper over the crisis. 

On the other hand, 
another failed military intervention 
by the White House 
in the context of a discredited Congress 
led by felonious party leaders
 could ignite a grass roots movement 
for impeachment.

A weakened US military,
 the decline of orthodox neo-liberal clients,
 and failed diplomatic initiatives
 in regional forums,
 is forcing the US toward "accommodating" 
center-left politicians in Latin America.

 Washington's greater flexibility 
will find expression 
in the continuing good working relations 
with the Presidents 
of Brazil, Uruguay, Argentina 
and probably Bolivia.
 The State Department's hostility 
toward Venezuela's President Chavez
 will be tempered by its loss
 of internal levers of power,
 and the close working relations
 between the US and Venezuelan oil companies.
 The US will likely not intervene 
in the elections in Colombia,
 Chile, Mexico or Brazil,
 because each of the major candidates
 are well within the US neo-liberal orbit.

The improbable outcome in Peru,
 where a 'nationalist' former military officer
 close to Chavez is a major contender,
 will likely result in heavy backing
 for the conservative candidate.
 Washington will probably engage
 in some rear-guard 'dirty tricks'
 in the Venezuelan Presidential elections,
 knowing in advance that Chavez 
is likely to win by a substantial majority.

In other words,
 Washington will lose its automatic voting majority 
in Latin America 
and be forced to shelve 
some of its most blatant attempts 
to impose economic dominion,
. Nevertheless none of its strategic military bases, 
extensive financial and resource holdings 
and lucrative debt payments 
will be threatened by the election 
of 'center-left' Presidents.
 The major caveat to this potential
 'co-habitation' outcome 
is a successful popular uprising 
if the center-left fails: 
In that case Washington 
will likely intervene with local proxies, 
detonating regional opposition.

In summary, 2006 will certainly be 
an extremely volatile and uncertain year 
for the Empire.

 The military defeats, 
internal crises , a big decline in the dollar
 and a general weakening of domestic economic fundamentals
 are juxtaposed 
to growing overseas economic expansion,
 high rates of financial profits, 
extremely weak internal opposition
 and accommodating elites in Asia and South America.
 The greatest threat to empire building
 is not domestic
 nor in the competitive marketplace
 but in a possible war against Iran ­
 either a US or Israeli attack
 could set in motion 
a series of severe economic political and military
 shocks 
which would radically change 
all previous predictions
 and outcomes regarding 
the state of the Empire for 2006. 

The second big shock 
in the making is the growing popular revolt
against the monstrous inequalities 
and terrible working conditions
 imposed by the Chinese ruling class 
in alliance with foreign capital.

 A further shock could emerge beyond 2006 
if and when the current commodity boom collapses
 and undermines the export strategy 
of the center-left regimes in Latin and Central America
.In that context
 it is likely that there will be 
a new wave of extra-parliamentary,
 anti-imperialist movements 
that could send tremors throughout the Empire.