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Crisis in the U.S.
The U.S. political and economic systems are in serious crisisa crisis affecting its biggest multinational corporations and therefore the economy, a political crisis affecting the state in its relationship to internal security and external belligerancy and a crisis of the political system that not only fails to represent the electorate but is also incapable of responding to the crisis.
The economic crisis, referred to in the financial press as the crisis of corporate governance, involves multi-billion dollar fraud by many of the biggest energy, oil, media companies, investment banks, accounting firms, and mega-conglomerates in the U.S. and in the world. The number of pensioners, employees, and investors who have lost their savings number in the tens of millions.
The chief executive of Goldman Sachs, Henry Paul- son, a financial leader on Wall Street declared that U.S. corporations are in a position of low repute not seen in my lifetime. According to the Financial Times and the Wall Street Journal, the problem is corporate greed and loss of investor trust.
The real problem is not just individual greed, but the entire deregulation of the banking and corporate sectors and the speculative nature of the U.S. economy. The problem is systemic: the concentration of economic power and corporate control over the political system means that CEOs design the legislation and write the rules that allow them to commit large-scale fraud and take huge short-term profitsbefore their companies collapse. The case of Enron and El Paso Oil and their dominant role in shaping the Bush-Cheney energy policy is emblematic of the symbiotic relationship, just as Clintons ties to Wall Street led to the deregulation of financial and banking sectors.
The systemic consequences of large-scale and all-pervasive fraud has been the de-legitimation of big investment banks among investors and a massive decline in foreign investment in the U.S. From January to February 2001, $78 billion flowed into the U.S. During the same two months in 2002 only $14.6 billion of foreign funds were invested in U.S. stocks and bonds. The decline of foreign flows has substantially weakened the dollar. It threatens to push the U.S. external accounts deficit to crisis levels, forcing a major retrenchment in imports and living standards. The precipitous decline in foreign investment in the U.S. is because investors no longer trust corporate reports on profits and, particularly, no longer trust U.S. auditors reports and U.S. CEOs. The result is that the stock market has declined, stock losses in 2002 continue for the third straight year, big corporate bankruptcies are on the rise, while profits decline.
The political crisis is deeply embedded in the larger political context of the events preceding and following 9/11. The revelations of Washingtons prior know- ledge of a terrorist plot to hijack airplanes in the U.S.including warnings of an attack on public and private buildingshas raised fundamental questions. The official version of the Bush admin- istration, State Department, CIA/ FBI, and the Congressional Democrats is that there was a failure of intelligenceindividual bureaucrats failed to act, the bureaucracy was not efficient or was understaffed. Among most critical intellectuals, journalists, and experts on intelligence, the official explanations fail to deal with several important discrepancies. First of all, Condaleeza Rice, the National Security Adviser, publicly stated that during the summer of 2001 the Bush administration believed, al Qaeda might hijack an aircraft and use it to bargain for the release of prisoners . I dont think anyone could have predicted that these people would take an airplane and slam it into the World Trade Center (Financial Times, May 18-19, 2002).
Rice admitted, We only expected a traditional hijacking. The Bush administration ignored warnings from France, Egypt, Israel, and England that a terrorist action was imminent; it ignored warnings from FBI agents in Arizona and Minnesota of possible airplane hijackings by terrorists training as airline pilots, and it ignored a CIA briefing to President Bush on August 6, 2001 stating that al Qaeda was planning a hijacking.
Most observers believe that with so many warnings converging from so many responsible sources to high level Bush officials (according to Condoleeza Rice), there is another explanation: the Bush/ Cheney/Rumsfeld regime was prepared to allow a traditional hijacking to take placein order to exploit it for both narrow and global political interests. They did not suspect that the terrorists would attack the WTC and the Pentagon.
Several other issues raise suspicion that high officials in the Bush administration were involved in facilitating the hijackings: the terrorist leaders had multiple entry visasnot easy to obtain for ordinary tourists. The terrorists functioned openlyentering flight schools and seeking U.S. Department of Agriculture loans to buy crop-duster airplanes. Thirdly, many received their visas from Saudi Arabia, where a former U.S. Consul official has stated that many visas were issued under pressure from the CIAprobably to recruits for U.S.-sponsored Islamist wars in Bosnia, Kosova, Chechnya, and Central Asia. There is a good possibility that at least some of the terrorists were double agentsone reason for the so-called intelligence failures and the refusal after 9/11 to reveal prior knowledge.
There is a large body of historical study on U.S. foreign policy, which demonstrates that Washington manufactures crises to justify war. The examples range from the bombing of the Maine as a prelude to the U.S.-Spanish-Cuban War to Roosevelts foreknowledge of Pearl Harbor to President Johnsons infamous Tonkin Incident during the Vietnam War to Bushs fathers invention of the Iraqi destruction of infant incubators in Kuwait. In each case, the president declared an unprovoked attack and mobilized the public for large-scale warfare of conquest and colonization. In the case of the U.S. war in Afghanistan, it is public record that on September 10, 2001, the Bush administration had a plan to attack the Taliban and al Qaeda, which it fully implemented after September 11.
War has been an essential instrument of empire building for the last four U.S. presidents. President Reagans successful wars against Grenada and Panama contributed to his popularity, weakened the Vietnam Syndrome, and allowed his regime to reverse progressive social legislation.
This pattern was repeated and extended by Bush (father) in the U.S. war against Iraqthe military victory led to the proclamation of a new world order based on Washingtons supremacy. Clintons war against Yugoslavia and the continuation of the bombing of Iraq was accompanied by the total deregulation of the economy, the savaging of the remnants of the welfare program, and the information technology, bio-tech, fiber optics speculative bubble.
Bush (son) as a minority president, elected through voter fraud in Florida, used the Afghan war to increase public backing, vastly expand military and secret police budgets and powers, and to subsidize big business and vastly increase U.S. political and military empire throughout Asia, Latin America, and the former Soviet Union. The initial terrorist act, and the cover-up of U.S. involvement, has led to serious decline in democratic freedoms and the constant threat of new terrorist plots to increase police state intervention in all aspects of civil society.
Both the admissions of mistakes by the Bush administration and the Congressional critics charges of incompetence have served the police-military apparatus well. Home defenseextended police powers and personnelreceived an additional $37 billion dollars, on top of the original $29 billion dollars. The newly created Department of Homeland Security will have 170,000 agents and staff.
As state spending on the police and military skyrockets, private investors are pushed aside, budget deficits soar, foreign investors turn to more lucrative sites, and the U.S. economy destabilizes.
There are no corrective mechanisms in sight. Unlike previous epochs when large-scale corporate-banking scandals occurred, major reforms were implemented. Today there is neither a popular reform movement nor congress- ional opposition. The reason for the lack of a corporate reform movement is that the same corrupt banks and corporationslike Enron, Merril Lynch, etc.contribute to and finance both political parties.
Washingtons cover-up of its linkages leading to 9/11 is related to their cover-up in the anthrax attacks. Leading journalists and micro-biologists have identified the U.S. military research laboratory at Fort Detrick, Maryland as the source and have identified two U.S. micro-biologists as likely suspects. The FBI has refused to act. The reason is that the scientists were engaged in weaponizing anthrax and other chemical and biological agentswork that violates the Chemical and Biological Treaty of 1991. No Congressional investigation. No mass media expose. No public outcry. The crisis deepens and apologists for the empire brush off systemic critics as conspiracy theorists. But critical intellectuals and activists continue to prod the public conscience, hoping for more democratic politics to emerge. Z
James Petras teaches sociology at SUNY Binghamton. He is the author of numerous articles.