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Capitalism in an Apocalyptic Mood

An apocalyptic mood has seized the highest levels of global capital as the global financial system continues to implode. This implosion is but the latest financial crisis to wrack global capitalism. Financial crises are inevitable since capitalist growth has increasingly been driven by speculative bubbles such as the housing bubble in the United States. The increasingly uncontrolled financial gyrations stem from the increasing divergence between an expansive financial economy and a stagnant real economy. This “disconnect” stems from the persistent stagnationist trends in the real economy owing to overproduction or overcapacity. The search for profitability is capitalism’s driving force, and increasingly, significant profits can only be obtained from financial speculation rather than investment in industry. This is, however, a volatile and unstable process since the divergence between momentary financial indicators like stock and real estate prices and real values can proceed only up to a point before reality bites back and enforces a “correction.” The bursting of the US housing bubble is one such correction, and it is leading not only to a recession in the US but to a global downturn owing to the unprecedented level of integration fostered by corporate-led globalization. It will not be easy to restore dynamism by fostering another speculative bubble, for instance, by resorting to “military Keynesianism.”

“We have to pay for the sins of the past.” Klaus Schwab, key organizer of the Davos elite jamboree

Skyrocketing oil prices, a falling dollar, and collapsing financial markets are the key ingredients in an economic brew that could end up in more than just an ordinary recession. The falling dollar and rising oil prices have been rattling the global economy for sometime, but it is the dramatic implosion of financial markets that is driving the financial elite to panic.

Capitalist Apocalypse?

And panic there is. Even as it characterized Federal Reserve Board Chairman Ben Bernanke’s deep cuts amounting to a 1.25 points off the prime rate in late January as a sign of panic, the Economist admitted that “there is no doubt that this is a frightening moment.” The losses stemming from bad securities tied up with defaulted mortgage loans by “subprime” borrowers are now estimated to be in the range of about $400 billion, but, as the Financial Times warned, “the big question is what else is out there” at a time that the global financial system “is wide open to a catastrophic failure.” What is “out there” is suggested by the fact that it has only been in the last few weeks that a series of Swiss, Japanese, and Korean banks have owned up to billions of subprime-related losses. The globalization of finance was, from the beginning, the cutting edge of the globalization process, and it was always an illusion to think that the subprime crisis could be confined to US financial institutions, as some analysts had thought.

Some key movers and shakers sounded less panicky than resigned to some sort of apocalypse. At the global elite’s annual weeklong party at Davos in late January, George Soros sounded positively necrological, declaring to one and all that the world was witnessing “the end of an era.” World Economic Forum host Klaus Schwab spoke of capitalism getting its just desserts, saying, “We have to pay for the sins of the past.” “It’s not that the pendulum is now swinging back to Marxist socialism,” he told the press, “but people are asking themselves, ‘What are the boundaries of the capitalist system?’ They think the market may not always be the best mechanism for providing solutions.”

Ruined Reputations and Policy Failures

While some appear to have lost their nerve, others have seen the financial collapse diminish their stature.

As chairman of President’s Bush’s Council of Economic Advisers in 2005, Ben Bernanke attributed the rise in US housing prices to “strong economic fundamentals” instead of speculative activity, so is it any wonder, ask critics, why, as Fed Chairman, he failed to anticipate the housing market’s collapse stemming from the subprime mortgage crisis? His predecessor, Alan Greenspan, however, has suffered a bigger hit, moving from iconic status to villain of the piece in the eyes of some. They blame the bubble on his aggressively cutting the prime rate to get the US out of recession in 2003 and restraining it at low levels for over a year. Others say he ignored warnings about aggressive and unscrupulous mortgage originators enticing “subprime” borrowers with mortgage deals they could never afford.

The scrutiny of Greenspan’s record and the failure of Bernanke’s rate cuts so far to reignite bank lending has raised serious doubts about the effectiveness of monetary policy in warding off a recession that is now seen as all but inevitable. Nor will fiscal policy or putting money into the hands of consumers do the trick, according to some weighty voices. The $156 billion stimulus package recently approved by the White House and Congress consists largely of tax rebates, and most of these, according to New York Times columnist Paul Krugman, will go to those who don’t really need it. The tendency will thus be to save rather than spend the rebates in a period of uncertainty, defeating their purpose of stimulating the economy. The specter that now haunts the US economy is Japan’s experience of virtually zero growth per annum and deflation in the nineties and early part of this decade despite one stimulus package after another after Tokyo’s great housing bubble deflated in the late 1980’s.

The Inevitable Bubble

Even as the finger-pointing is in progress, many analysts remind us that if anything, the housing crisis should have been expected all along. The only question was when it would break. As progressive economist Dean Baker of the Center for Economic Policy Research noted in an analysis several years ago, “Like the stock bubble, the housing bubble will burst. Eventually, it must. When it does, the economy will be thrown into a severe recession, and tens of millions of homeowners, who never imagined that house prices could fall, likely will face serious hardship.”

The subprime mortgage crisis was not a case of supply outrunning real demand. The “demand” was largely fabricated by speculative mania on the part of developers and financiers that wanted to make great profits from their access to foreign money that flooded the US in the last decade. Big ticket mortgages were aggressively sold to millions who could not normally afford them by offering low “teaser” interest rates that would later be readjusted to jack up payments from the new homeowners. These assets were then “securitized”with other assets into complex derivative products called “collateralized debt obligations” (CDO’s) by the mortgage originators working with different layers of middlemen who understated risk so as to offload them as quickly as possible to other banks and institutional investors. The shooting up of interest rates triggered a wave of defaults and many of the big name banks and investors— including Merrill Lynch, Citigroup, and Wells Fargo—found themselves with billions of dollars worth of bad assets that had been given the green light by their risk assessment systems.

The Failure of Self Regulation

The housing bubble is but the latest of some 100 financial crises that have swiftly followed one another ever since Depression-era capital controls began being lifted at the onset of the neoliberal era in the early 1980’s. The calls now coming from some quarters for curbs on speculative capital have an air of déjà vu to many observers. After the Asian Financial Crisis of 1997, in particular, there was a strong clamor for capital controls, for a “new global financial architecture.” The more radical of these called for currency transactions taxes such as the famed Tobin Tax that would slow down capital movements or for the creation of some kind of global financial authority that would, among other things, regulate relations between northern creditors and indebted developing countries.

Global finance capital, however, resisted any return to state regulation. Nothing came of the proposals for Tobin taxes. Even a relatively weak “sovereign debt restructuring mechanism” akin to the US Chapter Eleven to provide some maneuvering room to developing countries undergoing debt repayment problems was killed by the banks despite its being proposed by Ann Krueger, the conservative American deputy managing director of the IMF. Instead, finance capital promoted what came to be known as the Basel II process, described by political economist Robert Wade as steps toward global economic standardization that “maximize [global financial firms’] freedom of geographical and sectoral maneuver while setting collective constraints on their competitive strategies.” The emphasis was on private sector self surveillance and self policing aiming at greater transparency of financial operations and new standards for capital. Despite the fact that it was Northern finance capital that triggered the Asian crisis, the Basel process focused on making developing country financial institutions and processes transparent and standardized along the lines of what Wade calls the “Anglo-American” financial model.

While there were calls for regulation of the proliferation of many of the new, sophisticated financial instruments such as derivatives being placed on the market by developed country financial institutions, these got nowhere. Assessment and regulation of derivatives were to be left to market players who had access to sophisticated quantitative “risk assessment” models that were being developed.

Focused on disciplining developing countries, the Basel II process accomplished so little in the way of self regulation of global financial from the North that even Wall Streeter Robert Rubin, formerly Secretary of the Treasury under President Clinton, warned in 2003 that “future financial crises are almost surely inevitable and could be even more severe.” As for risk assessment of derivatives such as the “collaterized debt obligations” (CDOs) and “structured investment vehicles” (SIVs)-the cutting edge of what the Financial Times has described as “the vastly increased complexity of hyperfinance”—the process collapsed almost completely, with the most sophisticated quantitative risk models left in the dust as risk was priced according to one rule by the sellers of securities: Underestimate the real risk and pass it on to the suckers down the line. In the end, it was difficult to distinguish what was fraudulent, what was poor judgment, what was plain foolish, and what was out of anybody’s control. As one report on the conclusions of a recent meeting of the Group of Seven’s Financial Stability Forum put it:

There is plenty of blame to go around for the financial chaos: The US subprime mortgage market was marked by poor underwriting standards and ‘some fraudulent practices.’ Investors didn’t carry out sufficient due diligence when they bought mortgage-backed securities. Banks and other firms managed their financial risks poorly and failed to disclose to the public the dangers on and off their balance sheets. Credit-rating companies did an inadequate job of evaluating the risk of complex securities. And the financial institutions compensated their employees in ways that encouraged excessive risk-taking and insufficient regard to long-term risks.

The Specter of Overproduction

It is not surprising that the G 7 report sounded very much like the post-mortems of the Asian financial crisis and the dot.com bubble. One chieftain of a financial corporation chief writing in the Financial Times captured the basic problem running through these speculative manias, perhaps unwittingly, when he claimed that “there has been an increasing disconnection between the real and financial economies in the past few years. The real economy has grown…but nothing like that of the financial economy, which grew even more rapidly-until it imploded.” What his statement does not tell us is that the disconnect between the real and the financial is not accidental, that the financial economy expanded precisely to make up for the stagnation of the real economy.

This growing gap between the financial and the real cannot be comprehensively understood without referring to the crisis of overaccumulation that overtook the center economies in the late seventies and 1980’s, a phenomenon that is also referred to as overproduction or overcapacity.

The golden period of postwar growth globally that skirted major crises for nearly 25 years was due to the massive creation of effective demand via rising wages for labor in the North, the reconstruction of Europe and Japan, and the import-substituting industrialization in Latin America and other parts of the South. This was done principally via state intervention in the economy. This dynamic period came to a close in the mid-seventies, with stagnation setting in, owing to global productive capacity outrunning global demand, which was constrained by continuing deep inequalities in income distribution. According to the calculations of Angus Maddison, the premier expert on historical statistical trends, the annual rate of growth of global gross domestic product (GDP) fell from 4.9 per cent in what is now regarded as the golden age of the post-World War II Bretton Woods system, 1950-73, to 3 per cent in 1973-89, a drop of 39 per cent. These figures reflected the wrenching combination of stagnation and inflation in the North, the crisis of import substitution industrialization in the South, and erosion of profit margins all around.

In the eighties and nineties, global capital blazed three escape routes from the specter of stagnation. One was neoliberal restructuring, which included redistribution of income towards the top via tax cuts for the rich, deregulation, and an assault on organized labor. Neoliberalism took the form of Thatcherism and Reaganism in the developed North and World Bank and International Monetary Fund (IMF)-imposed structural adjustment in the global South.

Another was corporate-driven globalization or “extensive accumulation,” which opened up markets in the developing world and moved capital from high-wage to low-wage areas. As Rosa Luxemburg long ago pointed out in her classic The Accumulation of Capital, capital needs to constantly integrate precapitalist societies to the capitalist system to shore up the fall in the rate of profit. In the last two decades, the most spectacular case of incorporating a precapitalist society into the global capitalist system was China, which became both the world’s second biggest exporter and the primary destination of foreign investment. This was, however, a double edged sword for capitalism, as we shall later see.

A third was the process we are mainly concerned with here: “intensive accumulation or “financialization,” that is, the channeling of investment towards financial speculation, where much greater returns were to be derived than in industry, where profits were largely stagnant. Finance capital forced the elimination of capital controls, the result being the rapid globalization of speculative capital to take advantage of differentials in interest and foreign exchange rates in different capital markets. These volatile movements, the result of capital’s liberation from the fetters of the post-war Bretton Woods financial system, was one source of instability. Another was the proliferation of novel sophisticated speculative instruments like derivatives that escaped monitoring and regulation. Instability derived ultimately from the fact that speculative finance boiled down to an effort to squeeze more “value” out of already created value instead of creating new value since the latter option was precluded by the problem of overproduction in the real economy.

The disconnect between the real economy and the virtual economy of finance was evident in dot.com bubble of the 1990’s. With profits in the real economy stagnating, the smart money flocked to the financial sector. The workings of this virtual economy were exemplified by the rapid rise in the stock values of Internet firms which, like Amazon.com, still had to turn a profit. The dot.com phenomenon probably extended the boom of the 1990’s by about two years. “Never before in US history,” Robert Brenner wrote, “had the stock market played such a direct, and decisive, role in financing non-financial corporations, thereby powering the growth of capital expenditures and in this way the real economy. Never before had a US economic expansion become so dependent upon the stock market’s ascent.” But the divergence between momentary financial indicators like stock prices and real values could only proceed to a point before reality bit back and enforced a “correction.” And the correction came savagely in the dot.com collapse of 2002, in the form of the wiping out of $7 trillion in investor wealth.

A long recession was avoided, but it was only by encouraging another bubble, the housing bubble, and here, as noted earlier, Greenspan played a key role by cutting the prime rate to a 45-year low of 1 per cent in June 2003, holding it there for a year, then raising it only gradually, in quarter-percentage-increments. As Dean Baker put it, “an unprecedented run-up in the stock market propelled the US economy in the late nineties and now an unprecedented run-up in house prices is propelling the current recovery.” The result was that real estate prices rose by 50 per cent in real terms, with the run-ups, according to Baker, being close to 80 per cent in the key bubble areas of the West Coast, the East Coast, North of Washington, DC, and Florida. How big was the bubble created? It is estimated by Baker that the run-up in house prices “created more than $5 trillion in real estate wealth compared to a scenario where prices follow their normal trend growth path. The wealth effect from house prices is conventionally estimated at five cents to the dollar, which means that annual consumption is approximately $250 billion (2 per cent of gross domestic product [GDP]) higher than it would be in the absence of the housing bubble.”

The China Factor

The housing bubble fueled US growth, which was exceptional given the stagnation that has gripped most of the global economy in the last few years. During this period, the global economy has been marked by underinvestment and persistent tendencies toward stagnation in most key economic regions apart from the US, China, India, and a few other places. Weak growth has marked most other regions, notably Japan, which was locked until very recently into a one per cent GDP growth rate, and Europe, which grew annually by 1.45 per cent in the last few years.

With stagnation in most other areas, the US has pulled in some 70 per cent of all global capital flows. A great deal of this has come from China. Indeed, what marks this current bubble period is the role of China as a source not only of goods for the US market but also capital for speculation. The relationship between the US and Chinese economies is what I have characterized elsewhere as “chain-gang economics”: On the one hand, China’s economic growth has increasingly depended on the ability of American consumers to continue their debt financed spending spree to absorb much of the output of China’s production. On the other hand, this relationship in depends on a massive financial reality: the dependence of US consumption on China’s lending the US Treasury and private sector dollars from the reserves it accumulated from its yawning trade surplus with the US-some one trillion so far, according to some estimates. Indeed, a great deal of the tremendous sums China-and other Asian countries—lent to American institutions went to finance middle class spending on housing and other goods and services, prolonging the US’s fragile economic growth but only by raising consumer indebtedness to dangerous, record heights.

The China-US coupling has had massive consequences for the global economy. One has to do with the addition of massive new productive capacity by American and other foreign investors moving to China. This has aggravated the persistent problem of overcapacity and overproduction. One indicator of persistent stagnation in the real economy is the aggregate annual global growth rate, which averaged 1.4 per cent in the 1980’s and 1.1 per cent in the 1990’s, compared to 3.5 per cent in the 1960’s and 2.4 per cent in the 1970’s. Moving to China to take advantage of low wages may shore up profit rates in the short term but, as it adds to overcapacity in a world where a rise in global purchasing power is limited owing to growing inequalities, it erodes profits in the long term. And indeed, the profit rate of the largest 500 US transnational corporations, which fell drastically from +4.9 per cent in the 1954-59, to +2.04 in 1960-69, to -5.30 in 1989-89, -2.64 in 1990-92, and -1.92 in 2000-2002. Behind these figures, notes Philip O’Hara, was the specter of overproduction: “Oversupply of commodities and inadequate demand are the principal corporate anomalies inhibiting performance in the global economy.” The succession of speculative manias in the US have had the function of absorbing investment that did not find profitable returns in the real economy and thus not only artificially propping up the US economy but also “holding up the world economy,” as one IMF document put it. Thus, with the bursting of the housing bubble and the seizing up of credit in almost the whole financial sector, the threat of a global downturn is very real.

Decoupling or Chain-Gang Economics?

In this regard, talk about a process of “decoupling” of regional economies, especially the Asian economic region, from the United States has been without substance. True, most of the other economies in East and Southeast Asia have been pulled along by the Chinese locomotive. In the case of Japan, for instance, a decade-long stagnation was broken in 2003 by the country’s first sustained recovery, fueled by exports to slake China’s thirst for capital and technology-intensive goods; exports shot up by a record 44 per cent, or $60 billion. Indeed, China became the main destination for Asia’s exports, accounting for 31 per cent while Japan’s share dropped from 20 to 10 per cent. As one account pointed out, “In country-by-country profiles, China is now the overwhelming driver of export growth in Taiwan and the Philippines, and the majority buyer of products from Japan, South Korea, Malaysia, and Australia.”

However, as research by Jayati Ghosh and C.P. Chandrasekhar has underlined, China is indeed importing intermediate goods and parts from these countries but only to put them together mainly for export as finished goods to the US and Europe, not for its domestic market. Thus, “if demand for Chinese exports from the US and the EU slow down, as will be likely with a US recession, this will not only affect Chinese manufacturing production, but also Chinese demand for imports from these Asian developing countries.” Perhaps the more accurate image is that of a chain gang linking not only China and the United States but a host of other satellite economies whose fates are all tied up with the now deflating balloon of debt-financed middle class spending in the US.

New Bubbles to the Rescue?

One must not, however, overestimate the resiliency of capitalism. Many are now asking: After the collapse of the dot.com boom and the housing boom, is there a third line of defense against stagnation owing to overcapacity? One theory is that military spending could be a way that the government might pull the US out of the jaws of recession. And, indeed, the military economy did play a role in bringing the US out of the 2002 recession, with defense spending in 2003 accounting for 14 per cent of GDP growth while representing only four per cent of the GDP of the US. According to estimates cited by Chalmers Johnson, defense-related expenditures will exceed $1 trillion for the first time in history in 2008.

Stimulus could also come from the related “disaster capitalism complex” so well studied by Naomi Klein—that “full fledged new economy in home land security, privatized war and disaster reconstruction tasked with nothing less than building and running a privatized security state both at home and abroad.” Klein says that, in fact, “the economic stimulus of this sweeping initiative proved enough to pick up the slack where globalization and the dot.com booms had left off. Just as the Internet had launched the dot.-com bubble, 9/11 launched the disaster capitalism bubble.” This subsidiary bubble to the real estate bubble appears to have been relatively unharmed so far by the collapse of the latter.

It is not easy to track the sums circulating in the disaster capitalism complex, but one indication is that InVision, a General Electric affiliate, producing high tech bomb detection devises used in airports and other public spaces received an astounding $15 billion in Homeland Security contracts between 2001 and 2006.

Whether or not “military Keynesianism” and the disaster capitalism complex can in fact play the role played by financial bubbles is open to question. For to feed them, at least during the Republican administrations, has meant reducing social expenditures, resulting in their positive employment effects being overwhelmed fairly quickly by reductions in effective demand. A study Dean Baker cited by Johnson found that after an initial demand stimulus, by about the sixth year, the effect of increased military spending turns negative. After 10 years of increased defense spending, there would be 464,000 fewer jobs than in a scenario of lower defense spending.

But even more important as a limit to military Keynesianism and disaster capitalism is that the military engagements to which they are bound to lead are likely to create quagmires such as Iraq and Afghanistan that could trigger a backlash both abroad and at home. This would eventually erode the legitimacy of these enterprises, reduce their access to tax dollars, and erode their viability as sources of economic expansion in a contracting economy.

Yes, global capitalism may be resilient, but it looks like its options are increasingly limited. The forces making for the long term stagnation of the global capitalist economy are now too heavy to be easily shaken off by the economic equivalent of mouth-to-mouth resuscitation.

Assistant Secretary of the Treasury:

“The “world’s only superpower” is so broke it can’t even finance its own wars.”

..thaaat can’t be GOOD!

War Abroad and Poverty at Home

By Paul Craig Roberts

The US Senate has voted $165 billion to fund Bush’s wars of aggression against Afghanistan and Iraq through next spring.

As the US is broke and deep in debt, every one of the $165 billion dollars will have to be borrowed. American consumers are also broke and deep in debt. Their zero saving rate means every one of the $165 billion dollars will have to be borrowed from foreigners.

The “world’s only superpower” is so broke it can’t even finance its own wars.

Each additional dollar that the irresponsible Bush Regime has to solicit from foreigners puts more downward pressure on the dollar’s value. During the eight wasted and extravagant years of the Bush Regime, the once mighty US dollar has lost about 60% of its value against the euro.

The dollar has lost even more of its value against gold and oil.

Before Bush began his wars of aggression, oil was $25 a barrel. Today it is $130 a barrel. Some of this rise may result from run-away speculation in the futures market. However, the main cause is the eroding value of the dollar. Oil is real, and unlike paper dollars is limited in supply. With US massive trade and budget deficits, the outpouring of dollar obligations mounts, thus driving down the value of the dollar.

Each time the dollar price of oil rises, the US trade deficit rises, requiring more foreign financing of US energy use. Bush has managed to drive the US oil import bill up from $106 billion in 2006 to approximately $500 billion 18 months later–every dollar of which has to be financed by foreigners.

Without foreign money, the US “superpower” cannot finance its imports or its government’s operation.

When the oil price rises, Americans, who are increasingly poor, cannot pay their winter heating bills. Thus, the Senate’s military spending bill contains more heating subsidies for America’s growing legion of poor people.

The rising price of energy drives up the price of producing and transporting all goods, but American incomes are not rising except for the extremely rich.

The disappearing value of the US dollar, which pushes up oil prices and raises the trade deficit, then pushes up heating subsidies and raises the budget deficit.

If oil was the reason Bush invaded Iraq, the plan obviously backfired. Oil not merely doubled or tripled in price but quintupled.

America’s political leaders either have no awareness that Bush’s wars are destroying our country’s economic position and permanently lowering the living standards of Americans or they do not care. McCain says he can win the war in Iraq in five more years and in the meantime “challenge” Russia and China. Hillary says she will “obliterate” Iran. Obama can’t make up his mind if he is for war or against it.

The Bush Regime’s inability to pay the bills it is piling up for Americans means that future US governments will cut promised benefits and further impoverish the people. Over a year ago The Nation reported that the Bush Regime is shedding veteran costs by attributing consequences of serious war wounds to “personality disorders” in order to deny soldiers promised benefits.How Specialist Town Lost His Benefits, By Joshua Kors, March 29, 2007

Previous presidents reduced promised Social Security benefits by taxing the benefits (a tax on a tax) and by rigging the cost of living adjustment to understate inflation. Future presidents will have to seize private pensions in order to make minimal Social Security payments.

Currently the desperate Bush Regime is trying to cut Medicaid health care for the poor and disabled.

The Republican Party is willing to fund war, but sees everything else as an extravagance. The neoconized war party is destroying the economic prospects of American citizens. Is “war abroad and poverty at home” the Republican campaign slogan for the November election?

http://www.vdare.com/roberts/080523_war.htm

Paul Craig Roberts email him was Assistant Secretary of the Treasury

Arrogance, Bloody-mindedness and Chauvinism:

The ABC of the British Media!

Three or four times a year, as if on cue to feed a public purposefully kept hungry for unfounded diatribes against the “them” which creates the “us”, a media outlet from the west in general and Britain in particular carries aggressive and nonsensical remarks about Russia. This momentarily diverts the attention away from the ever more catastrophic state of affairs in these countries, while Russia’s economy grows in leaps and bounds.

The most recent example is an article by Jonathan Dimbleby in The Daily Mail online (of 17th May 2008) called “Russia: A totalitarian regime in thrall to a Tsar who’s creating the new Fascist empire”. Was this written before lunch? In this abrasive and arrogant diatribe, the author attempts to hype up the public thirst for his documentary Russia – A Journey With Jonathan Dimbleby, currently being shown on BBC.

In this case, there is far more than the odd nonsensical remark. The article prints out into four pages of insulting, derogatory comments about Russia, its people, its President, its Institutions and singles out Vladimir Putin as the “Tsar” of “cryptofascism”.

After reading two lines, it is crystal clear that there are two options. The first, to disregard the author, the newspaper which printed his drivel and the biased and xingoistic corporation which airs this study in insolence, as the wastes of time and space they all are and have always been as far as newsworthiness is concerned. The sheer pig-headed arrogance of Dimbleby’s piece reveals an individual as hog-ignorant as he is downright rude and whose inaccuracies are as shockingly puerile as they are risibly hollow.

It is therefore fitting and wholly unsurprising that the content of these four pages – which make pre-recycled toilet paper seem like a work of art – be printed in a newspaper more renowned for “Spanking Sarah” and “Three-titted Tess” type stories, and serialised in print and on film by the British Bullshit Corporation, from whom one has grown to expect a descending spiral of execrable quality, its staff being more identifiable with daintily tip-toeing through the tulips in pink ballet frocks than producing objective facts.

The second option, and one which we shall follow given the depth of the insults against Russia and all things Russian, is to confront this 4-page study in Russophobic arrogance, bloody-mindedness and chauvinism which tries so desperately hard to shape British public opinion.

The insults and the replies

For someone who received 10,000 miles-worth of good-natured, open-hearted Russian hospitality, Jonathan Dimbleby is an extremely ungrateful, boorish and ill-mannered guest. Instead of referring to the billions of positive experiences he must have had, but which were probably blocked and filtered by a warped mind, the article is a tissue of insults from beginning to end, more befitting of a grade-school playground temper tantrum than a balanced piece of journalism.

Starting with Russia’s President, Dimbleby was particularly disparaging, calling him (Putin’s) Little Sir Echo, claiming he has “a walk-on role” and stating “you can forget any talk from the new President about ‘stamping out’ corruption”. Just who does Mr. Dimbleby think he is? He forgets the fact that President Dmitry Medvedev was democratically elected by the Russian people with more than 70% of the vote in a free and fair election. It is not only difficult, but impossible, to find such rude and unwarranted personal attacks on the British Head of State in the Russian Press, which puts Mr. Dimbleby and his masters firmly in their place.

The author then made a statement which is so absurd that a fit of hysterics delayed the writing of this piece by half an hour: Russia´s armed forces are “a joke”, followed by references to “those clapped out missiles in Red Square”. Then maybe Mr. Dimbleby would care to pinpoint a target anywhere on the globe and watch those “clapped out” missiles blast a crater one thousand miles in diameter around it. As regards the first statement, it is obvious the author knows as much about the military as he does about good manners, for if modern warfare is won and lost in the air, and Russia has the best military aircraft on the planet, then the joke is on him and would be on NATO if it were foolish enough to think it could engage Russian military forces in conflict. They never could, that is why they never have, otherwise for sure they would have tried.

Recently, a retired General of the USAF said of the SU-30MK aircraft: “Russian aviation has surpassed that of the US and its NATO allies”. Not to mention the S-37 or the SU-27, an aircraft which according to some sources the Russians offered to use in a friendly dogfight over the Atlantic a few years ago with the USA, who declined the offer.

It is clear by now who are the aggressors and who stands for peace. It is clear which side is all spoiling for a fight but which is all hot air and which is prepared but prefers to respect international law. Remember Iraq? Maybe Mr. Dimbleby could tell us where Saddam Hussein’s WMD are now, because we are still waiting.

It is all there in these four pages of unadulterated bilge – Russia is “an unstable beast” and “in many ways…a Third World country”, the Russians are patriotic (is that so bad?) and xenophobic, cynical and fatalistic. This coming from an author whose country exported the football hooligan, a study in xenophobia and crypto-fascism, a term he likes to use, the country where knife crime is rife and where a Harry Potter actor has just been stabbed to death in real life. Then there are gems like “Russia has a bloody and tormented history”. What is that supposed to mean? What about England’s massacres in Scotland? What about the Croke Park Massacre in Dublin in 1920 when the Black and Tans murdered civilians at a sports event? What about the Amritsar massacre in 1919? Or the Qissa Khwani bazaar massacre in 1930? Or the Boston Massacre in 1770? Or Natal, 1906? Indeed British history is studded with bloody and tormented events.

A cherry on the cake is provided by the statement that Khodorkovsky “used his oil wealth to promote human rights and democracy” and now (sob) he is in jail…without any mention whatsoever of the small detail that he forgot to pay thousands of billions of USD in taxes.

To round off his insolent, impudent and intrusive piece of nonsense, Dimbleby refers to Vladimir Putin as “autocratic” with a “totalitarian grasp on power”. The truth: Vladimir Putin was democratically elected not once, but twice and unlike Britain’s Prime Minister, enjoys a huge popularity for a very good reason, not because he is autocratic and totalitarian but because he is honest and competent and produces the goods.

Where did Dimbleby, the Daily Mail and the BBC get this from? Like others who have been ably dealt with in this column, they get it from an innate desire to humiliate and scorn, insult and deride Russia and Russians. Brainwashed by decades of Cold War rhetoric and hatred, they simply cannot move on, because the perpetration of this nonsense justifies their positions.

The proof of the pudding is the fact that Dimbleby blows his cover in the first four-line paragraph which describes his BBC-sponsored trip to Russia, which he describes as “deeply disturbing” and in which he tells us that he met “impoverished potato pickers”, a “witch” and “mountain herdsmen who worship fire and water”. Nothing mentioned in his piece of the intelligent, hardworking cultured professionals and intellectuals he would have met anywhere between Moscow and Vladivostok.

Finally, the claim that Communism is “consigned to the dustbin of history” and predictable references to the “collapse” of the Soviet Union provide us with what we knew all along before we even read the first line of the article: it is no more and no less than an attempted exorcism of Dimbleby’s fears and the fears of Russia’s enemies that they have got it wrong. If they write it enough times, even they will believe it. The voluntary dissolution of the USSR was present in its Constitution from the outset and the more we look at the capitalist monetarist model lurching from one disaster to the next, the more we understand that the Communist model, with a few adjustments introduced, will indeed provide a very attractive solution for the future.

If pieces like that makes them happy, so be it. If Mr. Dimbleby can look himself in the mirror and feel proud of himself after travelling ten thousand miles across a country and finding what he put in the Daily Mail article to write, how wonderful for him. If the Daily Mail thinks it gains anything by printing such unsubstantiated prattle, bully for them and if the BBC really thinks it enhances its reputation by once again sponsoring Russophobic imbecility, then this corporation really does deserve the nickname we christened it with.

So suppose this schmuck, his supporters and sponsors flushed themselves down the nearest latrine and consigned themselves to the sewer of international journalism where they belong, among the rats, fleas and vermin which like themselves, scavenge like the vile parasites they have become?

Timothy BANCROFT-HINCHEY
and Lisa KARPOVA
PRAVDA.Ru

http://english.pravda.ru/opinion/columnists/24-05-2008/105326-abcbritishmedia-0