The End of the American Century

After last Christmas 13 banks have fallen down in America. The Systemic Crisis has wiped off all the once-so-great Investment Banks. Last two, Morgan Stanley and Goldman Sachs submitted to FED's control and turned to normal Business Banks two weeks ago, and Bank of America bought off the falling Merrill Lynch. America is trying to tie down loose cannons before the storm strikes at full power.

Still the merging of two giant banks was like tying two loose cannons together in a situation where sailors haven't yet even seen the biggest waves. US Government tries to bailout the falling financial system by loading the dead weight of worthless loans to saving boat. It doesn't work.

The core of the Crisis are chronic structural problems of macro-economy. US Economy begun to sail towards disaster already three decades ago. United States is no longer a productive economy, as it was in 60's when two thirds of GNP came from industrial production; making and importing of goods.

Nowadays two thirds of GNP comes from consumption instead of production, and this Great Spending has been financed by loans. US Economy has been buffed up and overweight at the same time when her proportion and share of the World's Economy is reducing. The bottom of the ship has been rotten for a long time, and no one has really done anything to fix it.

US Economy shall crash and it can not be avoided anymore. After government take-over of Fannie Mae and Freddie Mac, the public debt grew above 20 000 billion (20 trillion) dollars. No state can stand under such weight when sum of interests of this huge debt is more than 600 billion in year, and annual national balance of economy is -800 billion (The World's military spending is 'only' c. 1 200 billion in year). So, in current speed, the US debt grows 1 400 billion every year.

If entire US annual GNP would be put together to pay this huge debt, there would still be 20 500 dollars of debt left to be paid by each American person (Including young children, sick, and disabled). Let's imagine that United States would go bankrupt, and there would be only one third of the current GNP left (the real productive value of US Economy) and it all would be put to pay the debt. In such case every single American would still have 51 000 dollars debt left to be paid, plus their private debts. The Financial Crisis we see today has launched a trap, that destroys people's consumption power; Soon the trust is gone and you can not have any credit. The Great Spending Feast that has lasted for three decades is about to end.

European economic research institute LEAP estimates that after the fall of American Economy, there will be at least 7 - 10 year long depression in entire North America before the regional economy finds back to the way of growth. Similar statements have said many experts, e.g. Warren Buffet. It takes a long time before a New Economic System can be build up of the broken pieces of current American Economy. When that happens, the Dollar will be gone in the history and is replaced by common North American currency.

The fall of America is inavoidable. US has a massive challenge ahead; She has to submit to new situation, where World Economy is no more run from Washington and USA will no longer be the World's leading Superpower or military might. The American Century is about to end.

USA made an ad hoc deal with Iran to lower the Oil prices before the Presidential elections

According to Israeli intelligence sources USA had secret negotiations with Iran some two weeks ago in order to make a temporary deal concerning the lowering of the oil price and easening the political tensions in Middle East before the US Presidential Elections.

"These talks between the US and Iranian delegations, representing President George W. Bush and Iranian supreme ruler Ayatollah Ali Khamenei, have yielded ad hoc understandings on controversial issues. One is an agreement not to allow the price of oil to rocket past $150 the barrel."

The ongoing diplomatic play in order to ease tensions between US and Iran are one of the results of the agreement. The deal is still temporary and it does not bind neither US nor Iran in long run.

The lowering of oil prices during last week is another result of US-Iranian agreement. According to the deal Iran does not allow the price of oil to climb above 150$ per barrel prior to elections. But in long run the situation is far from easy, since an Iranian OPEC delegate told recently that a war in Middle East could raise the price of oil barrel over 500$.

"Iranian OPEC-delegate says that the price of oil could raise up to 500$ per barrel if war in Middle East begins. […]

’–If the inflation of dollar keeps going on and the political crisis enworsens, the price could rise up till 500 dollars’, says Mohammad Ali Khatibi in Iranian Shahrvand-e-Emrooz magazine.

The question was about predictions that oil price could rise up to 200 dollars per barrel in two years. Crude oil price has dropped more than 24 dollars in two weeks.. […]

According to Khatibin the exportation of Iranian oil is endangered if the nuclear energy programme launches a military attack against Iran. [...]

’-In that case (of war) the price of oil doesn't rise but explodes’, he says.

Approximately 40 percent of the oil transportation of Persian Gulf go through the Strait of Hormuz on the southern coast of Iran. In case of war Tehran has threatened to begin to limit the traffic in the strait."

In other words the situation behind the scene is still the same. US Republican government has managed to ease economic pressure prior to the elections in order to help republican senator McCain to win.

A similar view had the White House spokesman Sean McCormack, who thinks that easening of the pressure put on Iran is a mere change in diplomatic tactic rather than in US strategy. Barack Obamas recent statement that he would like to begin straight bilateral negotiation with Iran could also affect, since the change in tactic can be seen as a republican answer to Obamas challenge.

The "Axis of Evil" has expanded - When does the US recognize this situation?

During last few years Russia and China have actively build a global strategic cooperative network and Economic and Military Alliance for themselves.

(Imge: CSTO logo)

Western media has more or less kept silence of the fact that NATO already has an opposing eastern military alliance; Collective Security Treaty Organization, CSTO. It was founded already in 2003 to become a new military dimension of former Soviet countries, and it was lead by Russia. In 2006 the alliance expanded and deepened when Russia, China and other Asian countries founded the Shanghai Cooperative Organization, a common Eurasian strategic economic and military cooperation union, which also includes Iran, Pakistan and India as observing members. Ever since the CSTO has operated in close military cooperation with SCO, which practically means China. It is assumed that Iran and Pakistan might join the SCO as full members in near future.

The main purpose of SCO is to make sure that the hands of USA and her allies can be kept off Central Asia's energy resources. Alliance's economic cooperation treaties have mainly been made between Russia, China, Iran and Central Asian countries and treaties mainly concern on cooperation in development and sharing of natural resources, especially oil and gas.

In year 2006 SCO/CSTO organized a huge military drill in Ural, Far East and Central Asia. It was the first time when Chinese troops had military practice in large scale outside the borders of People's Republic since 1945. The operations brought together tens of thousands of soldiers from China, Russia Uzbekistan, Kazakhstan and Armenia. SCO has similar common military communication, cooperative and command structure as NATO, and if needed they are ready to be used. As I write this article, CSTO is having their annual military exercise in Armenia. It's a CSTO's and Moscow's answer to US-Georgian military exercise organized at the same time. The message is clear; Two military alliances display their military might in Caucasus.

SCO has expanded their power also to other continents by Russia and China. During last years Iran, Venezuela Russia and Belarus have tighten their economic and military cooperation. Russian and Belarus oil companies have made cooperation deals with Iran and Venezuela concerning the development, pumping and transporting of their oil and gas resources. They have also made large scale military deals, since Russia and Belarus have become the main military suppliers for Iran and Venezuela. And as recently noticed, Russia is expanding her influence in Northern Africa.

China and Iran on other hand have strengthen their foothold in East and South Africa. China has become the most important economic and political supporter of Sudan and Zimbabwe, which means that inside SCO Russia and China seem to have divided Africa into their own interest areas; Russian oil & gas companies operate in North Africa and Chinese in East and South Africa while Iran supports her allies both in North and East Africa.

If we watch this situation from the American point of view, the name "Axis of Evil" could be used of this Russo-Chinese Alliance and their cooperatives. The fact is that the West is facing a new "Warsaw Pact", the SCO/CSTO and it has already expanded their power into South America and Africa. When will the western media and politicians realize and openly recognize this situation?