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by Al Martin

Cycles of Change: From Political Turmoil To Economic Collapse

(2-14-11) The civil unrest currently sweeping the planet is a symptom of looking for someone to blame for the ongoing global economic disintegration. In the desperation to blame somebody, people are blaming the existing political order. Ultimately they should be blaming themselves for believing the lies theyíve been told by the existing political order. In the last analysis, whose fault is it? Itís like blaming the messenger, but whose fault was it for believing what the messenger said in the first place? The whole concept of the cookie cutter society in the post-WWII world was served on a bed of lies that people wanted to hearÖ

      Political turmoil and government changes will continue around the world. There will be the dissolution of old political parties as a new political order is promulgated. However reality governs, and reality dictates that there can only be superficial changes around the edges of the established order.

      What people want is some bold new direction -- and that canít happen. The time for that is now past. The building and subsequent collapse of the speculative bubble in the markets continues. There was Spec Bubble 1 (ca 2004-2007) and now we are beginning to build Spec Bubble II through the central banks and governmental action.

      Itís rather like an alcoholic who has a hangover. The speculative bubble was the party and then thereís the hangover -- and the only cure for the hangover is more hair of the dog. So you have to build a second speculative bubble to pick up asset prices in order to prevent the onset of pernicious deflation, which is exactly what global central banks are attempting to do.

      So what is the common link in all these protests, demonstrations and mini-revolutions? Itís tied to the establishment or maintenance of an old order that was kept in power by the United States and the Bushonian Cabal. All of this flows from the efforts to maintain control by a single faction in the United States Ė the Eastern Country Club Republican Faction. After all who kept the Japanese Emperor in power after the war? It wasnít anybody in the Roosevelt Regime.

      All the Middle Eastern countries now in turmoil had unpopular and dictatorial right wing governments, supposedly secular governments, which were maintained by France and Great Britain, when they could still afford them. So the United States becomes the great target of colonialism now. And itís really unfair to use that word because itís not really the direct political domination of a colonial power. It is simply the control of business and industry. Of course itís still monopoly capitalism around the world, but itís not the same as the occupation and long term colonial power of the past.

      The United States becomes the prime target now because after the 1950s the old European colonial powers could not afford to maintain their empires and their influence anymore. The Unites States had to assume that control.

      Now itís an interesting point in history because of the confluence of so many things both political and economic happening all at the same time. The larger picture is the shift of power from the West to the East, which as we have written, has happened before and is now happening again at a time, when the United States and the dictatorial regimes it supported in the post-war environment are now beginning to fall under stress, which is being created by the dramatic consolidation of wealth, as has occurred in the last 5 years. This is the final wealth consolidation push.

      What we have created even in the industrialized nations is an increasing division between haves and have-nots. We are essentially reverting to a pre-war politico-economic model, where all of the power and the money rest with a top 10-20% -- everywhere on the planet.

      It will be a return to feudalism, as it was in the past. The only difference is that now we have computers so it will be an age of technological neo-feudalism.

      The situation has been exacerbated by corporate-government fraud, most of which has originated in the United States, either by Eastern Country Club Republicans or those who have been taught by Eastern Country Club Republicans overseas. This would include overseas potentates who went to Yale, for example.

      So where is this going? Governments in the western industrialized power sphere are all reacting the same way. They are attempting the creation of a second speculative bubble to prevent the arrival of a pernicious deflationary cycle which would threaten to unravel the planetís economy more quickly than they can make preparations for that unraveling.

      Economics is the driving force of what is happening politically in Egypt, Tunisia, Algeria etc. All decisions are driven by economics not politics, which is the tail wagging the dog. The politics exist simply to create the ruling class and to maintain an existing order.

      Now the Egyptian people have shown that theyíre tired of being broke all the time. This is a pro-western regime that was supported in power for more than 30 years and yet the Egyptian standard of living has continuously declined.

      Since the Mubarak clan has an estimated net worth of 40 to 70 billion, a lot of it is probably in the United States since thatís where it would be best protected. This is money that heís stolen from the American people and ironically itís on deposit in American financial institutions.

      In the future there will be more political discontent and civil strife, a natural offshoot of economic stress. Now the planetís economy is in the final unwinding phase of an economic system that was unsustainable. That unraveling was meant to happen and it cannot be prevented. Therefore any political change is just a sop to Cerberus and a bone to the Unwashed. Because thatís all that can be done. It isnít going to change the outcome, which at the end of the decade is global economic collapse. The only thing you can do in the interim is to try to mitigate these political upsets and increasing civil strife by changing faces and changing the lies youíre telling the people and by giving them a few slices of bread.

      In the United States, draconian measures wonít even have to be taken because the people donít understand the nature of economic collapse.

      Thus the peopleís ability to resist a government and to turn their civil strife into any real threat to government is completely obliterated in a post-economically collapsed environment. The people no longer have any resources left, so they can organize themselves to stand against any government. Peopleís principal concern becomes their day to day needs.

      During the Great Depression of the 1930s, there were movements that sprang up for change and to overthrow democracy and capitalism. New political parties were formed in the major industrialized nations. There was civil strife, riots and agitation, but after 1933 that all fell apart. The American Communist Party and Socialist Party fell apart because their members didnít have jobs and couldnít feed themselves. They may have had guns but they couldnít afford bullets for the guns. And this is also the practical reality of a post-economically collapsed environment. People have no ability to offer any resistance or be any threat to the government. And even though government itself is weakened in such an environment, it still maintains the semblance of strength. It may appear as strong as it was in the past because any potential opposition against it is gone.

      There will certainly be more calls for change and more political upheaval on the planet, particularly in regions where there is a glaring disparity in wealth as there is in the Middle East, Southeast Asia and China. There will be growing discontent and civil strife as governments will fall under the old power structure that will be replaced by new names and new faces which have the same limitations as the old names and faces, namely there is nothing they can do to change the underlying causes that caused the people to protest to begin with. Itís the same with the United States.

      The only difference is that the social safety net is much larger and this has prevented the United States from unraveling into more civil unrest. But as time goes by we see even the Democratic regime we have now is having to reduce the social safety net which will be contracted and contracted more and more. However it will be done in a phased manner so that as it is contracted and government weakens, Americansí ability to effect any change is weakened progressively faster.

      This is what happens with seminal changes as we are entering. A global economic collapse, just as it did in the 1930 constitutes a seminal change. A collapse will weed out all of the weak links, i.e. all of the economically unproductive.

      From 1932 -1937, about 6% of the entire population starved to death or died of some deprivation. But that has to happen after protracted periods of prosperity, for example, from 1880 to 1930, another period of protracted prosperity, wherein enormous amounts of wealth were made in the United States and in all of the western powers. Even then wealth was concentrated up as always.

      With economic prosperity, the working class forgets their place and they start to demand more Ė an easier life, better working conditions, fewer hours and more benefits. They want to be able to afford a home which they could never afford before. Then they want to buy an icebox, another item which was largely responsible for the credit crunch created in the later 1920s.

      Suddenly the working class had the ability to buy things on credit, something which had been reserved only for the wealthy class before. When you allow that to happen, the working class becomes increasingly less productive. Productivity declines as unit labor cost increases. This causes inflation to decrease and demand to fall while prices rise. It is an entire cycle that ends in economic collapse because the working people have to be starved back into submission. You have to put them back down where they belong.

      People have to understand their place in society. There is one great dividing line between classes of people Ė those who have the knowledge to make money make money every day will always prosper and they will always survive. Those that do not possess that knowledge and possess only the knowledge of a 9-5 job and have been suckered into the debt-financed consumption society and the cookie cutter model of society with the wife, the kids, the dog and the mortgages -- look what happened to those people in the 1930s. And people donít think thatís not going to happen again? It is already happening.

      And the working class have to understand this. They were only meant to reproduce themselves to create the workers of the future Ė but they were never meant to rise. They were meant to live out lives of abject misery, as the working class has done throughout history. That is their function.

      And now theyíve gotten too soft. They have to be taught their place through economic deprivation Ė which is what economic collapses do. Economic collapses are necessary phenomena. Thatís why they keep happening.

      Despite what people think and believe in the Great American Lie that you can be born from nothing and rise to the heights Ė it is of course largely nonsense. However it goes down well with the Unwashed.

      But what people have to understand is that there is an existing economic order and there always has been. It is necessary to maintain an organized society and in that order there has to be Chiefs and there has to be Indians. The fraction has to be about the same in every country on the whole planet, wherein 82% are Indians and 18% are Chiefs.

      If you start to disturb that fraction as was done from about 1910 -1930 by giving the 82% of the Indians notions that they can suddenly become Chiefs -- that is the stuff that economic collapses are made of.

      Why? Because you have to teach the Indians that they really are Indians and thatís all theyíre going to be -- and that is their function and their role. They canít be Chiefs. And thatís the long and short of itÖ

    * AL MARTIN is an independent economic-political analyst with 25 years of experience as a trader on NYMEX, CME, CBOT and CFTC. As a former contributor to the Presidential Council of Economic Advisors, Al Martin is considered to be a source of independent analysis for financially sophisticated and market savvy investors.

After working as a broker on Wall Street, Al Martin was involved in the so-called "Iran Contra" Affair as a fundraiser for the Bush Cabal from the covert side of government aka the US Shadow Government.

His memoir, "The Conspirators: Secrets of an Iran Contra Insider," (http://www.almartinraw.com) provides an unprecedented look at the frauds of the Bush Cabal during the Iran Contra era. His weekly column, "Behind the Scenes in the Beltway," is published weekly on Al Martin Raw.com, which also publishes a bimonthly newsletter called "Whistleblower Gazette."

Al Martin's new website "Insider Intelligence" (http://www.insiderintelligence.com) will provide a long term macro-view of world markets and how they are affected by backroom realpolitik.



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