The Clusterfuck Nation Chronicle

Commentary on the Flux of Events

Thanks to several correspondents who informed me it was Karl Marx who made that crack about history repeating itself first as tragedy and then as farce. Apparently Marx said this in connection with Napoleon Bonaparte and his nephew Napoleon III -- which seemed very unfair, since Nappy III (Louis Napoleon, ruled 1851 - 1870) was in many ways a far more beneficent figure than his glorious uncle.

Anyway, this is off the point, which is that Gulf War II -- if that's what we call it -- has now moved beyond its farcical opening hours into the kind of deadly seriousness we expect of real war. The Iraqis have stopped rolling over. American soldiers are dying in combat (or being executed after capture). The mystery of why Saddam failed to fire up his oil wells in the south has not been cleared up yet, and the greater oil fields of northern Iraq are apparently intact for the moment. No nerve gas or bio-weapons have been deployed yet, or even found in the captured zones, but I don't take this to mean that they don't exist. Rather, I assume they are carefully concealed. We seem to be entering a pretty down-and-dirty phase of this conflict.

As it unfolds, a clearer sense emerges of why it is happening.

First, this is the result of brushing the issue of proliferation under the rug for decades. We're now faced with a set of irresponsible states who have the means to fabricate terrible weapons, and the will to either use them directly against American interests or engage and assist non-state proxies to do it. The US has to at least demonstrate the will to oppose them.

It's not an accident that this war is occurring in a place that holds the world's second largest reserves of oil, but it is not the primary purpose of the war. The primary purpose is to occupy forward positions adjacent to Iran and cause Iran to think very carefully about mounting a nuclear arms program, which they are close to starting.

Iraqi oil, if extracted optimally, under the most favorable circumstances, will only postpone the world fossil fuels reckoning by a few years. There is a persistent buzz on the internet -- strangely absent in the other media -- that the war is also about the threat of oil-exporting nations converting their transactions to being euro-based rather than in dollars as has been the standard for decades. Saddam Hussein was in the process of doing just this. It seems abstruse, perhaps, but with the dollar losing value against the euro, dollar-denominated oil sales tend more and more to subsidize American users and penalize non-Americans, who have to get dollars to buy oil. They get dollars by selling us manufactured goods. But the dollars they get are worth less and less every month.

The reason the dollar loses value is because we import much more stuff (including products and oil) than we export. Our global trade account is wildly out of balance, and has been for years. The only thing compensating for it has been the belief -- despite apparent trends -- that the US is still the world's most stable society and therefore the best place to park surplus wealth -- which is done in dollar-denominated investment instruments like stocks. So exported dollars have steadily returned here from abroad, propping up our credibility.

The slow-motion crash of the stock markets has made foreigners think twice about parking their wealth in the US. Meanwhile, we've outsourced our manufacturing capacity to Mexico and Asia so that the American economy has come to be based solely on the creation of suburban sprawl, financed on credit, which is to say hallucinated money. Suburban sprawl is a meta-machine for consumption of resources. It produces nothing of value in and of itself. The world is onto this.

The US economy is therefore in the process of losing its legitimacy. As this occurs, the world will not want to assign the dollar the role as its reserve currency -- i.e. the unit of money presumed to be backed by the strongest society, nor will they want to use the dollar as the basis for oil sales. As more foreign investment is withdrawn from the US and put into euros or possibly even Chinese yuan, the value of the dollar is apt to fall sharply.

By the way, I would not interpret the recent "war rally" in the stock markets as having any significance. The markets, like the world, are onto the true nature of the US economy -- that's why they have been declining steadily since 2000. They are only going through a temporary delirium based on the end of uncertainty about whether war would actually happen.

So, getting back to the internet buzz, the idea was that if the US could get Iraqi oil back onto dollar-denominated transactions, it could halt the world trend against the dollar and postpone the erosion of economic legitimacy. This is said to account for the hostile attitude of France and Germany (the euro's chief backers) toward the Iraq adventure. Europe would benefit hugely from oil sales denominated in their own currency.

Assuming that this theory has something to it, I doubt that the US can halt the trend away from the dollar in any case. OPEC may decide to shift all their oil trade to the euro no matter what the US is able to achieve in the way of controlling Iraq.
And, course, the US is doing absolutely nothing to address our phony-baloney sprawl economy. In fact, the notion that we are entitled to this manner of living is very much conflated (on purpose) with our stated reasons for going to war. And if there is anything evil about our Iraq adventure, it is that. I don't blame George W. Bush for many of things my friends do -- being a shill for big business, etc. -- but I do blame him for failing to understand that our bad living habits are liable to kill our country as readily as any gang of Jihadistas.