- The United States desperately wants a war with Iraq,
but not for the espoused reasons of eliminating hard-to-find "weapons
of mass destruction."
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- The U.S. wants another war with Iraq in order to control
Iraq's immense oil-fields, to be used as collateral for more international
borrowing, and to increase the huge, unsupportable U.S. debt.
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- The U.S. has big, big economic problems. The debt-based
U.S. economy is being squeezed because international borrowing is getting
harder. The U.S. has been living off the savings of the rest of the world
for years, now absorbing some three-quarters of the world's debt finance.
The U.S. government, corporations and people are now the most indebted
in the world.
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- Altogether, the U.S. has borrowed nearly $40 trillion,
and needs $2 billion a day in debt finance to support its huge trade deficit.
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- The U.S. corporate debt market is a mess, with a corporate
credit crunch underway. Highly indebted, highly leveraged U.S. corporations
cannot borrow any more money, or pay their debt. Credit downgrades are
rising, along with credit downgrades to junk bond status for blue-chip
U.S. corporations, which are going bankrupt at a rapid pace.
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- The liquidation of their debt is destroying money and
negating efforts at reflating the U.S. dollar. Price deflation is appearing
in many sectors, worsening their troubles. The profits of U.S. corporations
are languishing, as prices fall and as the U.S. consumer shows signs of
exhaustion.
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- Japan-style deflation is starting to hit the west, and
with deflation, the most indebted face huge problems paying the interest
on their loans - they risk bankruptcy.
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- The U.S. has also lost some 8 trillion dollars in its
collapsing stock markets since March 2000. Stock markets are still collapsing
as a historic, 1920's-scale investment bubble deflates. The investment
bubble had boosted manufacturing capacity of uncompetitive, high-cost products.
U.S. stocks are still hugely overvalued, as measured by price-earnings
ratios, which indicates they have a lot further to fall. This erodes corporate
and consumer finance.
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- Meanwhile, China and other low-wage countries are garnering
the lion's share of the world's direct finance to expand their manufacturing.
Chinese and other low-wage countries increasingly export to the U.S., displacing
U.S. manufacturing. Over three-quarters of products used in the U.S. are
now made offshore, and imported.
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- This is all bad news for the U.S. dollar. Offshore investors
are fleeing the falling dollar, and are buying gold or the Euro with their
immense dollar holdings. Economist Peter Warburton has just warned that
the falling U.S. dollar will worsen the U.S. credit crunch. Islamic nations
are planning to exchange their U.S. petrodollars for the Euro and gold,
and this is another reason why the U.S. wants war: to keep them in line
and supporting the U.S. dollar.
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- In the U.S., only military contracts and low interest
rates are propping up the U.S. economy now and keeping it out of recession.
Low rates allow zero interest loans for new vehicle sales, and a huge housing
investment bubble with skyrocketing housing prices. Yet hugely indebted
U.S. consumers have reached their limit of borrowing and consumption, and
the real estate bubble is showing early signs of collapse.
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- If the U.S. grabs the Iraqi oil-fields, U.S. oil corporations
can then move in and develop what are believed to be the world's largest
oil reserves, surpassing even Saudi Arabia's oil-fields. That's money in
the bank, and collateral for new loans, and new debt. U.S. portfolio manager
and economics writer Marshall Auerback suggests the U.S. wants Iraqi oil-fields
to repair its credit rating. Increased Iraqi oil flow to the U.S. could
ultimately keep oil prices low, break OPEC, and prop up the U.S. economy.
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- Yet in the meantime, oil prices are high, slowing the
world economy, and oil prices could skyrocket in an actual war, pushing
the world economy into recession, or worse.
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- Thus, the U.S. wants war with Iraq as a way out of its
economic and financial mess. The world shouldn't let the U.S. get away
with it this time.
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- David McArthur is a Freelance Business Journalist Specialising
in electricity, energy and environmental news reporting and analysis.
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