Sell America to Pay Off its Debts

I am reproducing an interestign article in anews paper.

Sell America to Pay Off its Debts

Eric Margolis

It is one of history’s great ironies that Winston Churchill entered World War II vowing ‘never to preside over the fall of the British Empire,’ yet he ended up doing just that in 1945 when his nation emerged from the conflict bankrupt and demoralised. Six decades later, the United States has also gone bankrupt thanks to a national orgy of borrowing, the replacement of manufacturing by financial manipulation, two ruinous foreign wars, and a government whose stunning incompetence and ignorance was exceeded only by its reckless imperial arrogance.

The financial panic that has gripped the globe, and the ignominious collapse of once mighty Wall Street, proved the American colossus was a financial paper tiger. Washington’s furious printing of untold billions of new dollars to prop up its sinking economy, finance this year’s staggering $1 trillion deficit, and pay gargantuan foreign debts looks very likely to unleash a storm of dangerous inflation that will infect the world’s financial system.

Recall the great economist John Maynard Keynes warned that the quickest way to destroy a nation was by wrecking its currency through inflation.

The world balance of power is already shifting. For example, Pakistan’s new President, Asif Zardari, just went cap in hand to China, seeking $4-6 billion in emergency loans. Pakistan is on the verge of bankruptcy and may shortly default on its debt, risking social chaos.

But Pakistan’s patron, the United States, which has been paying that nation’s politicians and army $1.2 billion per annum to support the occupation of Afghanistan, has no cash to spare for Pakistan. So Pakistan is turning to China. The US-led occupation of Afghanistan is likely to be adversely affected by Washington’s new pauper status.

Bankrupt people, companies, and nations have to sell assets to meet their debt obligations. China and Japan alone hold over $1.5 trillion of US government securities in the form of US Treasury notes and bonds (which are really IOU’s). Their nervous central bankers now want real assets rather than more paper. So there is talk of America’s Asian creditors demanding their IOU’s be converted into shares in US corporations and property.

Sovereign wealth funds from the Arab oil states and Singapore may soon demand chunks of premier US corporations and property.

In the 19th century, European imperial powers used to force loans on China, Egypt, the Gulf, Iran, and Latin America. When the locals could not pay off these debts, parts of their territory were seized. Russia was forced to sell Alaska to the US for next to nothing when it could not repay its debts.

The British, French, Germans, Russians, Americans and Japanese carved up China’s coast. These imperial foreclosures created the trading ‘concessions’ of Hong Kong, Shanghai, Tsingtao, Tianjin, and Port Arthur.

Now, it’s payback time for China. How ironic that the Chinese Communists have ended up with a so-far sound financial system while the Wall Street bandit capitalists have gone bust.

To help pay is monster debts, I suggest Washington consider selling Louisiana back to France.

Canada, whose banking system remains solid, ought to pick up Florida for a song. Switzerland would do well to spend some of its gold and buy Vermont and New Hampshire.

Mexico will want to buy Texas, Arizona and New Mexico. Russia, of course, will buy back Alaska and Washington State. China will purchase California. San Francisco will become ‘New Shanghai’ and Los Angeles, ‘New Beijing.’

Japan will buy up Washington State, Oregon, Montana, and Hawaii. Holland will repossess New York State, and Germany will buy Pennsylvania and Minnesota.

Pakistan’s move into China’s financial embrace is a harbinger of things to come. Unless the US quickly repairs its economy, its world power could slip away as quickly as post-war Britain’s, leaving China, Japan, Russia, the EU, the Arab oil states, and India as the world’s new super-powers.

This may not be so awful. All power, as Briton’s Lord Acton famously said, corrupts; and absolute power corrupts absolutely.

As the world’s sole super-power, the US under the Bush administration became totally corrupted by imperial hubris, financial fraud, lust for resources, and greed.

A world with more balanced, diffused power may be preferable. But such profound historical change is always dangerous and unpredictable. Right now, China looks like top dog. Chairman Mao will be smiling.

Eric S. Margolis is a veteran American journalist and contributing foreign editor of The Toronto Sun