Friday, March 24, 2006

The Fool's Gold of NeoConservatism

Commentary by Martin Kelly
December 14, 2004

I want to know where the neocons are putting their money. My guess is it’s going into gold.

A rise in the price of gold is still the surest sign of impending economic trouble, and for months the smart money has been buying the yellow stuff like there’s no tomorrow. Gold is the ultimate shelter fund; unlike the paper the US Treasury spews out with abandon, it never loses its value, and is the best means of protecting wealth in troubled times. According to Pat Buchanan, writing in ‘The American Conservative’, the price of gold has risen from $260 to at least $447 per troy ounce over the period of Bush’s administration. According to the December 12 ‘Sunday Times’, it could hit $500 before Christmas. One analyst, Ross Norman, has predicted a high of $575.

If one speculates on whether the price of gold will go to $575 per troy ounce, one has to consider the other conditions that would need to apply before it happens; a dollar in your pocket that is worthless; not tens of thousands but tens of millions unemployed; savings destroyed; mortgages destroyed; outright failure of the stock market; very possibly, acute civil disturbance, if not actual panic in the streets.

If the dollar continues to fall, the USA, and therefore the world, will be staring into the abyss of the worst recession in history, which historians of the future will record was totally avoidable had the President of the United States bothered to exercise a fraction of the fiscal discipline required of those who entrusted him with their government and their money. The neocons will always spout the crock that ‘Yeah, Reagan built up a budget deficit, so Bush is just doing what Reagan did, blah, blah,’ Yes, President Reagan did build up a budget deficit, but there are three critical differences between the Reagan budget deficit and the Bush budget deficit.

Firstly, Dutch took over running the government when it was within three months of going bust. He had to spend the money. Bush didn’t.

Secondly, at that time the USA was running a huge trade surplus with the rest of the world. American exports were still generating earnings. They’re not now – the trade deficit is, what, 6% of GDP? Then, there was money coming into the bank; now, it’s all going out.

Thirdly, Dutch was doing something productive with the money – he was opposing the Soviets! He was making America safer! What is Bush doing? Illegal immigration at a rate of 4,000 per day? That’s not making America safer. Cutting taxes in a time of war? That’s not making America safer. Not killing any bill that’s been put in front of him, something Dutch had no hesitation doing? That’s not making America safer. Putting perfectly productive Americans out of work and exporting their incomes to ensure American business stays ‘competitive’, a canard repeated by Irwin Stelzer, the arch-neocon and Rupert Murdoch’s Emissary on Earth, in his December 12 ‘American Account’ column? That’s not making America safer.

And since when did America need to ‘compete’ with anyone? You’re America, for God’s sake!

Dutch Reagan was the greatest economist ever to have sat in the Oval Office. That whirring noise you can hear coming from California is the sound of him spinning in his grave.

Many commentators have noted that if the dollar continues to fall, it will lose its status as the world’s reserve currency, the only one that’s good wherever you are. This is a distinct possibility, and unlike the few other occasions when the reserve currency has changed, as, for example, from pounds sterling to the dollar in the ‘40’s and ‘50’s, there is no alternative currency waiting to spring up and take the dollar’s place.

The consequences of a dollar collapse for the USA would be dreadful; for the rest of the world, it would be a catastrophe.

The outrageously careless economics of George W. Bush have been lauded by his neoconservative cheerleaders, who are happy to tell him only what he wants to hear, a practice best reserved for despots and potentates, not Presidents of the United States. The President does not seem inclined to deep thought or piercing insight; having a group of Machiavellian yes-men giving you economic and security ‘advice’ is not as hard as, say, maybe going to bed a little later in the evening, once all the necessary details of the job have been mastered.

The current condition of the American economy is as much a failure of ethics as of knowledge. The neocons have no concern that there is a broad gap between rich and poor, a new thing that is the consequence of embracing unbridled free markets and unrestricted international free trade. Instead, their economics are only those of naked self-interest. Some of the saner ones, like Bruce Bartlett, whose worship of the free market is probably the only thing keeping him a semi-detached neoconservative, are starting to get cold feet, and are saying out loud that a collapse in the dollar is on the cards if the current policy continues.

But the neos couldn’t care less – opportunity in adversity, right? If Wall Street tanks, there will be plenty of rich pickings for the private equity specialists like the Carlyle Group, one of whose directors is George H.W. Bush, to pick up. This mindset was beautifully expressed in the December 12 ‘Sunday Telegraph’ by Luke Johnson, a millionaire pizza salesman who happens to be the son of Tony Blair’s guru Paul Johnson, a former leftist firebrand turned bloated boor of the new right. In his ‘Maverick’ column, Junior wrote of successful capitalism that ‘the result is the survival of the fittest – or perhaps just the richest’.

Which is why, as they are money and power people, my guess is that many of the neos have been hedging their bets by buying gold, and the dumb suckers who will hang on to their greenbacks for auld lang syne can take the hit like they usually do.

Maybe yes, maybe no. But right now, there is a substantial public interest in the disclosure by those who have promoted and argued the insane fools’ gold politics of neoconservatism of what steps they are taking to protect their personal assets when the economic collapse that is neoconservatism’s inevitable consequence actually happens.
The first to disclose should be Richard Perle.