Category Archives: Economic interventionism
Economic interventionism is an action taken by a government in a market economy or market-oriented mixed economy, beyond the basic regulation of fraud and enforcement of contracts, in an effort to affect its own economy. Economic intervention can be aimed at a variety of political or economic objectives, such as promoting economic growth, increasing employment, raising wages, raising or reducing prices, promoting equality, managing the money supply and interest rates, increasing profits, or addressing market failures. The term economic intervention assumes the state and economy are inherently separate from each other, and therefore applies to capitalist market or mixed economies where government action would make an “intervention” (although this does not apply to state-owned enterprises that operate in the market).
10/05/13 By STEVEN R. HURST
– An unmistakable sense of unease has been growing in capitals around the world as the U.S. government from afar looks increasingly befuddled — shirking from a military confrontation in Syria, stymied at home by a gridlocked Congress and in danger of defaulting on sovereign debt, which could plunge the world’s financial system into chaos.
While each of the factors may be unrelated to the direct exercise of U.S. foreign policy, taken together they give some allies the sense that Washington is not as firm as it used to be in its resolve and its financial capacity, providing an opening for China or Russia to fill the void, an Asian foreign minister told a group of journalists in New York this week.
Concerns will only deepen now that President Barack Obama canceled travel this weekend to the Asia Pacific Economic Cooperation Forum in Bali and the East Asia Summit in Brunei. He pulled out of the gatherings to stay home to deal with the government shutdown and looming fears that Congress will block an increase in U.S. borrowing power, a move that could lead to a U.S. default.
The U.S. is still a pillar of defense for places in Asia like Taiwan and South Korea, providing a vital security umbrella against China. It also still has strong allies in the Middle East, including Israel and the Gulf Arab states arrayed against al-Qaida and Iran.
But in interviews with academics, government leaders and diplomats, faith that the U.S. will always be there is fraying more than a little.
“The paralysis of the American government, where a rump in Congress is holding the whole place to ransom, doesn’t really jibe with the notion of the United States as a global leader,” said Michael McKinley, an expert on global relations at the Australian National University.
The political turbulence in Washington and potential economic bombshells still to come over the U.S. government shutdown and a possible debt default this month have sent shivers through Europe. The head of the European Central Bank, Mario Draghi, worried about the continent’s rebound from the 2008 economic downturn.
“We view this recovery as weak, as fragile, as uneven,” Draghi said at a news conference.
Germany’s influential newspaper Sueddeutsche Zeitung bemoaned the U.S. political chaos.
“At the moment, Washington is fighting over the budget and nobody knows if the country will still be solvent in three weeks. What is clear, though, is that America is already politically bankrupt,” it said.
Obama finds himself at the nexus of a government in chaos at home and a wave of foreign policy challenges.
He has been battered by the upheaval in the Middle East from the Arab Spring revolts after managing to extricate the U.S. from its long, brutal and largely failed attempt to establish democracy in Iraq. He is also drawing down U.S. forces from a more than decade-long war in Afghanistan with no real victory in sight. He leads a country whose people have no interest in taking any more military action abroad.
As Europe worries about economics, Asian allies watch in some confusion about what the U.S. is up to with its promise to rebalance military forces and diplomacy in the face of an increasingly robust China.
Global concerns about U.S. policy came to a head with Obama’s handling of the civil war in Syria and the alleged use of chemical weapons by the regime of President Bashar Assad. But, in fact, the worries go far deeper.
“I think there are a lot of broader concerns about the United States. They aren’t triggered simply by Syria. The reaction the United States had from the start to events in Egypt created a great deal of concern among the Gulf and the Arab states,” said Anthony Cordesman, a military affairs specialist at the Center for International Studies.
Kings and princes throughout the Persian Gulf were deeply unsettled when Washington turned its back on Egypt’s long-time dictator and U.S. ally Hosni Mubarak during the 2011 uprising in the largest Arab country.
Now, Arab allies in the Gulf voice dismay over the rapid policy redirection from Obama over Syria, where rebel factions have critical money and weapons channels from Saudi Arabia, Qatar and other Gulf states. It has stirred a rare public dispute with Washington, whose differences with Gulf allies are often worked out behind closed doors. Last month, Saudi Foreign Minister Saud al-Faisal warned that the renewed emphasis on diplomacy with Assad would allow the Syrian president to “impose more killing.”
After saying Assad must be removed from power and then threatening military strikes over the regime’s alleged chemical weapons attack, the U.S. is now working with Russia and the U.N. to collect and destroy Damascus’ chemical weapons stockpile. That assures Assad will remain in power for now and perhaps the long term.
Danny Yatom, a former director of Israel’s Mossad intelligence service, said the U.S. handling of the Syrian crisis and its decision not to attack after declaring red lines on chemical weapons has hurt Washington’s credibility.
“I think in the eyes of the Syrians and the Iranians, and the rivals of the United States, it was a signal of weakness, and credibility was deteriorated,” he said.
The Syrian rebels, who were promised U.S. arms, say they feel deserted by the Americans, adding that they have lost faith and respect for Obama.
The White House contends that its threat of a military strike against Assad was what caused the regime to change course and agree to plan reached by Moscow and Washington to hand its chemical weapons over to international inspectors for destruction. That’s a far better outcome than resorting to military action, Obama administration officials insist.
Gulf rulers also have grown suddenly uneasy over the U.S. outreach to their regional rival Iran.
Bahrain Foreign Minister Sheik Khalid bin Ahmed Al Khalifa said Gulf states “must be in the picture” on any attempts by the U.S. and Iran to open sustained dialogue or reach settlement over Tehran’s nuclear program. He was quoted Tuesday by the London-based Al Hayat newspaper as saying Secretary of State John Kerry has promised to consult with his Gulf “friends” on any significant policy shifts over Iran — a message that suggested Gulf states are worried about being left on the sidelines in potentially history-shaping developments in their region.
In response to the new U.S. opening to Iran to deal with its suspected nuclear weapons program, Israeli Prime Minister Benjamin Netanyahu told the U.N. General Assembly that his country remained ready to act alone to prevent Tehran from building a bomb. He indicated a willingness to allow some time for further diplomacy but not much. And he excoriated new Iranian President Hassan Rouhani as a “wolf in sheep’s clothing.”
Kerry defended the engagement effort, saying the U.S. would not be played for “suckers” by Iran. Tehran insists its nuclear program is for peaceful energy production, while the U.S. and other countries suspect it is aimed at achieving atomic weapons capability.
McKinley, the Australian expert, said Syria and the U.S. budget crisis have shaken Australians’ faith in their alliance with Washington.
“It means that those who rely on the alliance as the cornerstone of all Australian foreign policy and particularly security policy are less certain — it’s created an element of uncertainty in their calculations,” he said.
Running against the tide of concern, leaders in the Philippines are banking on its most important ally to protect it from China’s assertive claims in the South China Sea. Defense Secretary Voltaire Gazmin said Manila still views the U.S. as a dependable ally despite the many challenges it is facing.
“We should understand that all nations face some kind of problems, but in terms of our relationship with the United States, she continues to be there when we need her,” Gazmin said.
“There’s no change in our feelings,” he said. “Our strategic relationship with the U.S. continues to be healthy. They remain a reliable ally.”
But as Cordesman said, “The rhetoric of diplomacy is just wonderful but it almost never describes the reality.”
That reality worldwide, he said, “is a real concern about where is the U.S. going. There is a question of trust. And I think there is an increasing feeling that the United States is pulling back, and its internal politics are more isolationist so that they can’t necessarily trust what U.S. officials say, even if the officials mean it.”
EDITOR’S NOTE — Steven R. Hurst, The Associated Press’ international political writer in Washington, has covered foreign affairs for 35 years, including extended assignments in Russia and the Middle East.
AP writers Brian Murphy in Dubai, United Arab Emirates, Robert H. Reid in Berlin, Hrvoje Hranjski in Manila, Gregory Katz in London, Josef Federman in Jerusalem, Rod McGuirk in Canberra, Australia, and Sarah DiLorenzo and David McHugh in Paris contributed to this report.
Libya has plunged unnoticed into its worst political and economic crisis since the defeat of GaddafiTuesday 03 September 2013 by Patrick Cockburn
A little under two years ago, Philip Hammond, the Defence Secretary, urged British businessmen to begin “packing their suitcases” and to fly to Libya to share in the reconstruction of the country and exploit an anticipated boom in natural resources.
Yet now Libya has almost entirely stopped producing oil as the government loses control of much of the country to militia fighters.
Mutinying security men have taken over oil ports on the Mediterranean and are seeking to sell crude oil on the black market. Ali Zeidan, Libya’s Prime Minister, has threatened to “bomb from the air and the sea” any oil tanker trying to pick up the illicit oil from the oil terminal guards, who are mostly former rebels who overthrew Muammar Gaddafi and have been on strike over low pay and alleged government corruption since July.
As world attention focused on the coup in Egypt and the poison gas attack in Syria over the past two months, Libya has plunged unnoticed into its worst political and economic crisis since the defeat of Gaddafi two years ago. Government authority is disintegrating in all parts of the country putting in doubt claims by American, British and French politicians that Nato’s military action in Libya in 2011 was an outstanding example of a successful foreign military intervention which should be repeated in Syria.
In an escalating crisis little regarded hitherto outside the oil markets, output of Libya’s prized high-quality crude oil has plunged from 1.4 million barrels a day earlier this year to just 160,000 barrels a day now. Despite threats to use military force to retake the oil ports, the government in Tripoli has been unable to move effectively against striking guards and mutinous military units that are linked to secessionist forces in the east of the country.
Libyans are increasingly at the mercy of militias which act outside the law. Popular protests against militiamen have been met with gunfire; 31 demonstrators were shot dead and many others wounded as they protested outside the barracks of “the Libyan Shield Brigade” in the eastern capital Benghazi in June.
Though the Nato intervention against Gaddafi was justified as a humanitarian response to the threat that Gaddafi’s tanks would slaughter dissidents in Benghazi, the international community has ignored the escalating violence. The foreign media, which once filled the hotels of Benghazi and Tripoli, have likewise paid little attention to the near collapse of the central government.
The strikers in the eastern region Cyrenaica, which contains most of Libya’s oil, are part of a broader movement seeking more autonomy and blaming the government for spending oil revenues in the west of the country. Foreigners have mostly fled Benghazi since the American ambassador, Chris Stevens, was murdered in the US consulate by jihadi militiamen last September. Violence has worsened since then with Libya’s military prosecutor Colonel Yussef Ali al-Asseifar, in charge of investigating assassinations of politicians, soldiers and journalists, himself assassinated by a bomb in his car on 29 August.
Rule by local militias is also spreading anarchy around the capital. Ethnic Berbers, whose militia led the assault on Tripoli in 2011, temporarily took over the parliament building in Tripoli. The New York-based Human Rights Watch has called for an independent investigation into the violent crushing of a prison mutiny in Tripoli on 26 August in which 500 prisoners had been on hunger strike. The hunger strikers were demanding that they be taken before a prosecutor or formally charged since many had been held without charge for two years.
The government called on the Supreme Security Committee, made up of former anti-Gaddafi militiamen nominally under the control of the interior ministry, to restore order. At least 19 prisoners received gunshot shrapnel wounds, with one inmate saying “they were shooting directly at us through the metal bars”. There have been several mass prison escapes this year in Libya including 1,200 escaping from a prison after a riot in Benghazi in July.
The Interior Minister, Mohammed al-Sheikh, resigned last month in frustration at being unable to do his job, saying in a memo sent to Mr Zeidan that he blamed him for failing to build up the army and the police. He accused the government, which is largely dominated by the Muslim Brotherhood, of being weak and dependent on tribal support. Other critics point out that a war between two Libyan tribes, the Zawiya and the Wirrshifana, is going on just 15 miles from the Prime Minister’s office.
Diplomats have come under attack in Tripoli with the EU ambassador’s convoy ambushed outside the Corinthia hotel on the waterfront. A bomb also wrecked the French embassy.
One of the many failings of the post-Gaddafi government is its inability to revive the moribund economy. Libya is wholly dependent on its oil and gas revenues and without these may not be able to pay its civil servants. Sliman Qajam, a member of the parliamentary energy committee, told Bloomberg that “the government is running on its reserves. If the situation doesn’t improve, it won’t be able to pay salaries by the end of the year”.
April 24, 2013
By Paul Craig Roberts
For Americans, financial and economic Armageddon might be close at hand. The evidence for this conclusion is the concerted effort by the Federal Reserve and its dependent financial institutions to scare people away from gold and silver by driving down their prices.
When gold prices hit $1,917.50 an ounce on August 23, 2011, a gain of more than $500 an ounce in less than eight months, capping a rise over a decade from $272 at the end of December 2000, the Federal Reserve panicked. With the United States dollar losing value so rapidly compared to the world standard for money, the Federal Reserve’s policy of printing $1T annually in order to support the impaired balance sheets of banks and to finance the federal deficit was placed in danger. Who could believe the dollar’s exchange rate in relation to other currencies when the dollar was collapsing in value in relation to gold and silver?
The Federal Reserve realized that its massive purchase of bonds in order to keep their prices high (and thus interest rates low) was threatened by the dollar’s rapid loss of value in terms of gold and silver. The Fed was concerned that large holders of U.S. dollars, such as the central banks of China and Japan and the OPEC sovereign investment funds, might join the flight of individual investors away from the dollar, thus ending in the fall of the dollar’s foreign exchange value and thus decline in U.S. bond and stock prices.
Intelligent people could see that the U.S. government could not afford the long and numerous wars that the neoconservatives were engineering or the loss of tax base and consumer income from off-shoring millions of U.S. middle-class jobs for the sake of executive bonuses and shareholder capital gains. They could see what was in the cards, and began exiting the dollar for gold and silver.
Central banks are slower to act. Saudi Arabia and the oil emirates are dependent on U.S. protection and do not want to anger their protector. Japan is a puppet state that is careful in its relationship with its master. China wanted to hold on to the American consumer market for as long as that market existed. It was individuals who began the exit from the U.S. dollar.
When gold topped $1,900, Washington put out the story that gold was a bubble. The presstitute media fell in line with Washington’s propaganda. “Gold looking a bit bubbly” declared CNN Money on August 23, 2011.
The Federal Reserve used its dependent “banks too big to fail” to short the precious metals markets. By selling naked shorts in the paper bullion market against the rising demand for physical possession, the Fed was able to drive the price of gold down to $1,750 and keep it more or less capped there until recently, when a concerted effort on April 2-3 drove gold down to $1,557 and silver, which had approached $50 per ounce in 2011, down to $27.
The Federal Reserve began its April Fool’s assault on gold by sending the word to brokerage houses, which quickly went out to clients, that hedge funds and other large investors were going to unload their gold positions and that clients should get out of the precious metal market prior to these sales. As this inside information was the government’s own strategy, individuals cannot be prosecuted for acting on it. By this operation, the Federal Reserve, a totally corrupt entity, was able to combine individual flight with institutional flight. Bullion prices took a big hit, and bullishness departed from the gold and silver markets. The flow of dollars into bullion, which threatened to become a torrent, was stopped.
For now it seems that the Fed has succeeded in creating wariness among Americans about the virtues of gold and silver, and thus it has extended the time that it can print money to keep the house of cards standing. This time could be short or it could last a couple of years.
For the Russians and Chinese, whose central banks have more dollars than they want, and for the 1.3B Indians in India, the low dollar price for gold that the Federal Reserve has engineered is an opportunity. They see the opportunity that the Fed has given them to purchase gold at $350-$400 an ounce less than two years ago as a gift.
The Fed’s attack on bullion is an act of desperation that, when widely recognized, will doom its policy.
The Fed is creating 1T new dollars per year, but the world is moving away from the use of the dollar for international payments and, thus, as reserve currency. The result is an increase in supply and a decrease in demand. This means a falling exchange value of the dollar, domestic inflation from rising import prices and a rising interest rate and collapsing bond, stock and real estate markets.
The Federal Reserve’s orchestration against bullion cannot ultimately succeed. It is designed to gain time for it to be able to continue financing the federal budget deficit by printing money and also to keep interest rates low and debt prices high in order to support the banks’ balance sheets.
When the Fed can no longer print due to dollar decline which printing would make worse, U.S. bank deposits and pensions could be grabbed in order to finance the federal budget deficit for a couple of more years. Anything to stave off the final catastrophe.
By its obvious and concerted attack on gold and silver, the U.S. government could not give any clearer warning that trouble is approaching. The values of the dollar and of financial assets denominated in dollars are in doubt.
How the Fed Tanked Gold & Silver
By Paul Craig Roberts
I was the first to point out that the Federal Reserve was rigging all markets, not merely bond prices and interest rates, and that the Fed is rigging the bullion market in order to protect the U.S. dollar’s exchange value, which is threatened by the Fed’s quantitative easing. With the Fed adding to the supply of dollars faster than the demand for dollars is increasing, the price or exchange value of the dollar is set up to fall.
A fall in the dollar’s exchange rate would push up import prices and, thereby, domestic inflation, and the Fed would lose control over interest rates. The bond market would collapse and with it the values of debt-related derivatives on the “banks too big to fail” balance sheets. The financial system would be in turmoil and panic would reign.
Rapidly rising bullion prices were an indication of loss of confidence in the dollar and were signaling a drop in the dollar’s exchange rate. The Fed used naked shorts in the paper gold market to offset the price effect of a rising demand for bullion possession. Short sales that drive down the price, trigger stop-loss orders that automatically lead to individual sales of bullion holdings once their loss limits are reached.
According to bullion trader and whistle-blower Andrew Maguire, on Friday, April 12, the Fed’s agents hit the market with 500 tons of naked shorts. Normally, a short is when an investor thinks the price of a stock or commodity is going to fall. He wants to sell the item in advance of the fall, pocket the money, and then buy the item back after it falls in price, thus making money on the short sale. If he doesn’t have the item, he borrows it from someone who does, putting up cash collateral equal to the current market price. Then he sells the item, waits for it to fall in price, buys it back at the lower price and returns it to the owner who returns his collateral. If enough shorts are sold, the result can significantly drive down the market price.
A naked short is when the short seller does not have or borrow the item that he shorts, but sells shorts regardless. In the paper gold market, the participants are betting on gold prices and are content with the monetary payment. Therefore, generally, as participants are not interested in taking delivery of the gold, naked shorts do not need to be covered with the physical metal. In other words, with naked shorts, no physical metal is actually sold.
Consider the 500 tons of paper gold sold on April 12. At the beginning gold price that day of about $1,550, that 500 tons comes to $24.8B. Who has that kind of money?
What happens when 500 tons of gold sales are dumped on the market at one time or on one day? It drives the price down. Investors who want to get out of large positions would spread sales out over time so as not to lower their sales proceeds. The sale took gold down by about $73 per ounce. That means the seller or sellers lost up to $73 dollars 16 million times, or $1.2B. [Over the next two days it dropped $200 per ounce. That equals a $3.2B fall.—Ed.]
Who can afford to lose that kind of money? Only a central bank that can print it.
Paul Craig Roberts is a former assistant undersecretary of the U.S. Treasury and former associate editor of The Wall Street Journal. He is the author of many books including The Tyranny of Good Intentions, Alienation and the Soviet Economy, How the Economy Was Lost and others.
- The Assault On Gold – Paul Craig Roberts (paulcraigroberts.org)
Freedom was illegal in the Colonies in 1776 and Freedom is still illegal in America today. Those that signed the Declaration of Independence knew that a tyrannical government would never relinquish its power without resistance.
Governments are supposed to protect the rights of the people, but if they are not held in check, they will begin to abuse the people that they were created to protect. Rather than protecting the people, governments tend to protect the ruling class and enslave everyone else. This scheme will work as long as the people cling to the illusion that they are free.
Goethe, a well known German philosopher, once stated “None are more hopelessly enslaved than those who falsely believe they are free.”.
It has been the job of the media and government schools to indoctrinate the people into believing that they are free. Slaves are much more productive and easy to control than individuals that know that the financial elite are calling the shots.