Global Economic Crisis

In a previous post on this website and the Huffington Post, I warned that the current Obama strategy for conducting the war in Afghanistan is doomed to failure (see http://www.huffingtonpost.com/…/can-the-us-win-the-war-in_b_212831.html ). Of course, President Barack Obama did not consult me when he decided to vastly increase the U.S. investment in lives and treasure in pursuit of achieving what the Soviet Union and British Empire had failed at; subduing Afghanistan.

With all this focus on U.S. options for Afghanistan, little has been said about Al-Qaeda’s goal. Even official U.S. sources admit that Washington is spending over $5 billion a month to support 100,000 U.S. troops confronting as few as fifty (yes, 50) Al-Qaeda members presently situated in Afghanistan. Perhaps Al-Qaeda’s goal is to achieve a maximum return on investment; 50 of its members stationed in Afghanistan, in the process further eroding the U.S. fiscal imbalance at a time of acute economic crisis in America. The leadership of Al-Qaeda has stated on several occasions that they seek to draw the United States into an Afghan quagmire, inflicting upon it the same empire-shattering blow incurred by the once powerful but no longer existing Soviet Union.

The leader of Al-Qaeda, Osama bin Laden, has stated that his objective is to drain the U.S. financially, bringing about its fiscal collapse and ultimate insolvency. If that is in fact Al-Qaeda’s objective, it appears that not only Obama, but almost the entire political leadership in the United States which currently supports the war, both Democrats and Republicans, have become unwitting allies of Osama bin Laden. This is a policy that is bankrupt both figuratively and literally, especially with America currently gripped by a ruinous economic crisis.

How long will Washington be able to borrow vast sums of money in the global bond market, solely to pursue 50 followers of Osama bin Laden in Afghanistan? Perhaps only as long as the Federal Reserve can hold off the next stage of the American banking crisis and real estate meltdown. Once the United States is engulfed by a full-fledged sovereign debt crisis, it will be exceptionally difficult, to say the least, for a financially bankrupt U.S. government to justify throwing away nearly $100 billion a year on a war that has become increasingly devoid of rational purpose.

When the global financial crisis first arose, leading to a worldwide credit crunch, it became apparent that the economic policies of George W. Bush would be the defining issue of the 2008 presidential campaign, spelling doom for the Republican nominee. When the Republican candidate, Senator John McCain, proclaimed that the economic fundamentals of the U.S. were sound, he insured that Barack Obama would win the election and become the 44^th president of the United States. In fact, the fundamentals of the American economy are as feeble as were those of the Soviet Union before it collapsed.

Barack Obama is a very intelligent politician, and is already being compared to President Franklin Roosevelt, who presided over the New Deal economic policies of the 1930s in the depths of the Great Depression. However, Barack Obama may also be compared to Mikhail Gorbachev, the last leader of the once-mighty Union of Soviet Socialist Republics.

Gorbachev, like Obama, is a highly intelligent man. He was selected by the Soviet elite as their last-ditch candidate to save the crumbling Soviet Union. In spite of his best efforts, he failed. The economy of the Soviet Union imploded, leading to the total disintegration of the Soviet State, which once was deemed an equal superpower rival to the United States of America. Will Obama’s fate be that of Franklin Roosevelt, or Mikhail Gorbachev? There are disturbing parallels between the United States of 2009 and the Soviet Union in its last years of existence. These may prove more relevant than the comparisons some American economists are trying to draw between Obama’s and Roosevelt’s America.

Consider the following: prior to its extinction, the Soviet Union was driven to bankruptcy by bloated military expenditures, exacerbated by a losing war in Afghanistan. Its economy was immune to reform due to the tyranny of central planners. In the America that gave birth to the global financial crisis and credit crunch, the government’s finances have been driven to the brink of bankruptcy by vastly excessive military expenditures, run amok by a losing war in Afghanistan and an unnecessary war in Iraq. Its economy, supposedly a paean of free-market flexibility, has now proven to be a myth constructed by the financial alchemists of Wall Street and pseudo central-planners of the Federal Reserve and Treasury Department. Just as the Soviet Union used tax-payer money to bail out failed industries, the United States through its Treasury Department and Federal Reserve Bank have deemed failed financial enterprises “too big to fail,” warranting hundreds of billions of dollars in deficit borrowing that tax payers are responsible for in an equally futile rescue bid.

Obama, like Gorbachev, will be tied to an elite that has a vested stake in salvaging a doomed system, even at the risk of national insolvency. If Barack Obama has the intellectual stamina to resist the American financial elite and recognize that the Global Economic Crisis calls for a total restructuring of the economic order of the United States, he will go down in history as the president that saved America’s economy and preserved its status as the dominant economic power in the world. If, however, he is unable to unshackle himself from the failed policies of the American financial elite, he will be doomed to share the fate of Mikhail Gorbachev as that of being a valiant failure.