/US is Collapsing, So Let’s Start a War with Iran

US is Collapsing, So Let’s Start a War with Iran

Modern day Americans have never experienced a total collapse, only peripheral crises and crashes. Thanks to Hollywood, many in the public are under the delusion that a collapse is an overnight affair. They think that such a thing is impossible in their lifetimes, and if it did happen, it would happen as it does in the movies – they would simply wake up one morning and find the world on fire. Historically speaking, this is not how it works. The collapse of an empire is a process, not an event.

For now, the United States economy is growing at a roughly 2 percent rate and keeps adding jobs at a healthy clip. There is no sign of the kind of huge, obvious bubble that triggered the last two recessions, the equivalent of dot-com stocks in 2000 or housing in 2007. Most leading forecasters are rating the chances of a near-term recession are only about one in three. So, everything must be okay, right?

But Donald Trump knows something we don’t. There are danger signals abound as analysts aware of the situation try to warn the populace of the underlying decay of the system and where it will inevitably lead. The next major crash has begun in the form of plunging fundamentals, and far too many conservatives are placing their heads in the sand for the selfish sake of proving the political left wrong.

Declines in US manufacturing, US freight, global exports and imports, mass closures in US retail, as well as all-time highs in consumer debt, corporate debt and national debt are being shrugged off and rationalized as nothing more than “hiccups” in an otherwise booming economy. The Fed’s repo market purchases, barely keeping up with demand from liquidity starved corporations are also not being taken seriously. Year end numbers are coming in, and it’s not pretty. The writing is on the wall.

  • Shipping is the lifeblood of the economy. For the twelfth month in a row there has been year-over-year declines, according to the Cass Freight Index for Shipments. US freight railroads continue to show declines in traffic, suggesting the industrial recession could persist into 2020. The Association of American Railroads (AAR) published a new report that shows US weekly rail traffic for the week ending December 21 was down 10.5% to 507,589 carloads and intermodal units compared with the same week last year.  Truckload freight volumes have also been falling since 2018. The trucking industry is in a serious recession.
  • More than 9,300 stores closed in 2019 as the retail apocalypse drags on. An estimated 75,000 stores that sell clothing, electronics and furniture will close by 2026. Yes, online sales are growing but the retail collapse is still is far greater than the growth in online sales and it fundamentally affects a major economic pillar: real estate. This is serious.
  • Consumer debt is at a record high. And most importantly, there is a buildup of corporate debt. Businesses have taken on more debt in an era of low interest rates, which leaves them more vulnerable to failure if the economy were to soften or interest rates were to rise. A pullback because of trade wars could cause a wave of bankruptcies that turns a mild slowdown into something worse.

Alan Greenspan, also former head of the Fed declared recently: “There are (in fact) two bubbles: a stock market bubble and a bond market bubble.” His biggest worry is the bond market, which he fears rising inflation will smash, with dire consequences. He made these remarks on Bloomberg Television. Since then, the bond market is indeed in negative territory, although its fall hasn’t been precipitous. Inflation has nudged up, yet at a thus-far tame pace. The big worry is an inverted yield curve, where the two-year Treasury yields more than the 10-year, an infallible portent of recession. The burgeoning national debt and an ever-mounting budget deficit worry him. “We are dealing with a fiscally unstable long-term outlook in which inflation will take hold,” he warned (which is code for rising interest rates) i.e. precisely the least desired scenario with record personal and corporate debt in the U.S.

Here are three more recent predictions: The Independent: “Next global financial crisis will strike in 2020, warns investment bank JPMorgan – sparked by automated trading systems.” Forbes: “2020s Might Be the Worst Decade In U.S. History – triggered by contagion from a global credit crisis.” Mark Zandi, chief economist at Moody’s Analytics, said that “2020 is a real inflection point.”

We are witnessing the beginning of a new crash, and the final phases of a collapse of our way of life. The economic boom narrative among conservatives is a farce designed to trick us into complacency. The bubble that we warned about under the Obama Administration has been popped under the Trump Administration. Nothing has changed in the ten years since the 2008 crash except that the motivation for keeping the crash hidden is quickly disappearing.

Can they prolong and stave off crisis? Yes, for a short while. Federal deficit spending hit a record 1 Trillion dollars last year, and Trump borrowed a record $2 Trillion dollars to stave off a crisis. This sort of spending and borrowing however, can’t stop the inevitable. Once the machine of a crash has been set in motion the best, they can do is slow down the Titanic; they cannot change its path towards the iceberg.

Obviously in this climate a major political distraction is necessary. One such distraction now appears imminent.  A war with Iran.

Yesterday, I wrote a blog about how General Suleimani was in fact a U.S. operative who had helped the U.S. with its regional programs (https://www.baharmedia.net/2020/01/why-would-trump-kill-an-important-american-operative-suleimani/) – everything from the invasion of Afghanistan, to fighting ISIS, to stabilizing Iraq after the U.S. invasion. Suleimani had helped promote regional stability and peace. Trump would not have killed a person like him if his goal was to promote peace and stability. It is clear now, that Trump’s agenda is to provoke a war. I woke up this morning with yet another report of yet another air attack on a vehicle convoy of Iran-backed militias in Iraq. There is clearly a serious escalation taking place.

The great irony about the strike on Suleimani, whose status approached that of national icon, is that it has hardened popular Iranian sentiment against the US while simultaneously shoring up the regime. It has also united opposite political factions in Iraq and hardened popular Iraqi sentiment against the U.S. In effect, he has left everyone with no option but to look tough and plan an all-out response i.e. war!  

Note, that this is after he had campaigned on a platform of removing U.S. troops from the theater. It’s a major change. Obviously, he too, sees no option but war to stave off a collapse in the U.S.!

Another great irony of this ‘option’ is that it will only exacerbate the collapse – not stave it off. It will lead to a huge spike in oil prices, and thus to inflation which in turn will destroy any capacity for consumers and corporations (and the US government) to manage their record debt loads. In fact, any sort of escalation right now will be counter productive.

Another irony of all this is that as tensions ratchet up with Iran, the president has found himself in the position of having to deal with a U.S. national security establishment that he doesn’t trust and has spent years belittling. Be it the CIA, FBI, State Department and elsewhere, the president has insulted the men and women who work to keep us all safe. He has attacked their professionalism and expertise. He has also shunned many in the military and belittled longtime American allies—in the Middle East and elsewhere! He is tragically alone.

From where I sit, none of his actions make sense. There is no strategy, no plan. None of these actions fundamentally help the U.S. deal with the issues it is facing. He is only making it worse.