A Long Overdue Reckoning

The accelerating decline of the western financial, political and economic hegemony

Explosions. The primary export product of the West. Photo by Emanuel Kypreos on Unsplash

Western elites have completely given up on diplomacy, negotiations and economic cooperation as peaceful means of asserting themselves on the global stage. ‘Peace through strength’ has turned out to be yet another example of Orwellian doublespeak: feigning peaceful cooperation while preparing for war, irrespective of the outcome of talks. In light of the many international treaties broken by the West in the past decades — from the Intermediate-Range Nuclear Forces Treaty and the JCPOA to Minsk I and II — this should come as no surprise though. Irrespective of which party was in power the agenda of unipolar domination always took precedence over peace, people’s life, the threat of nuclear war, let alone the will of voters or the economic success of these nations. At the tail-end of Western hegemony, it seems, there is nothing but death and destruction.

“Civilizations die from suicide, not by murder.”

― Arnold Toynbee

Note, I’m posting this one day earlier than usual as things might change from one moment to the next. Thank you for reading The Honest Sorcerer, and special thanks to those who already support my work; without you this site could not exist. If you are new here and would like to see more in depth analysis of our predicament, please subscribe for free, or perhaps consider a paid subscription. You can also support my work by virtually inviting me for a coffee, or sharing this article with a friend. Thank you in advance!

Non-agreement Capable

The recent flare-up of the Iran-Israel conflict provided a vivid example of, and a stark reminder to other nations on, how the United States cannot be trusted. Were it not for the destruction of the Middle East and a threat of nuclear war, the whole situation could be described as an utmost absurdity. The United States — under the same president who unilaterally withdrew from the previous agreement with Iran (aka the Joint Comprehensive Plan of Action or JCPOA) and who ordered the killing of General Qasem Soleimani— set out to negotiate a treaty with Iran on a nuclear weapons program it never pursued. (Developing such a weapon would’ve gone against Iran’s religious doctrine and thus was forbidden by the Ayatollah, a fact even the Head of U.S. National Intelligence confirmed in front of congress in March—only to retract her statement yesterday, without a scintilla of evidence.)

Nevertheless negotiations went on, even as Israel has been making preparations to strike at Iran since at least 8 months already. That is, long before negotiations even started. Knowing the special relationship between the US and Israel, it is unfathomable that the Americans did not know about these actions. Were it not for a policy paper published in 2009 by Brookings Institute (a think tank funded and sponsored by big corporations and weapons manufacturers), one could still say that this was a mere coincidence. But after reading the chapter literally titled: ‘Leave it to Bibi: allowing or encouraging an Israeli military strike’ it is hard to call these “negotiations” anything else but a ruse. As Col. Jacques Baud pointed out in a discussion earlier this week, such perfidy is a violation of international law; not a negotiation tactic, let alone ‘Peace through strength’. This is war by all means. The whole story feels so 2003 again when the US went into war with Iraq… This time without even a vial presented as (forged) evidence. Make no mistake, this coming war has nothing to do with nuclear weapons (1)— much more with toppling the Iranian regime.

The process has exposed the western elites to be completely non-agreement capable. Again, this has nothing to do with what millions of hard-working Americans want or voted for. That no longer matters. Western elites have become a death cult, hermetically sealed from their own constituency and completely bereft of morals. Using diplomatic efforts to lull their adversaries into complacency, then asking their closest proxy to deliver a hit below their opponent’s belt resembles tactics used by the mafia, not by civilized statesmen. Just as a reminder: the very same scheme was carried out by the European proxies of America a few weeks earlier against the strategic bomber fleet of Russia. Operation Spider Web was in the preparation for 18 months and “has happened to be” executed just a day before negotiations took place in Istanbul. A coincidence? Hardly. This “audacious” act — together with a pure terrorist attack on a railway bridge killing many civilians — could not have been carried out without Western satellite intelligence and operational support. And just as it was the case with the attack on Iran it served US interests only. Hitting nuclear bombers some 4000km away from the front-line could not possibly improve the battlefield situation, but it was an ideal provocation aimed at derailing any peace initiatives and a moral boost to the western alliance to continue with their proxy-war on Russia. So, pray tell, why on Earth should then China — the next Eurasian country on the chopping block — trust that the west will negotiate in good-faith? Why would they make any concessions? Only to see their negotiators executed by drones and anti-tank guided missiles exploding in their hotel rooms while they sleep?

“Any country on the planet to trust the United States is remarkably foolish” — John Mearshimer

Destroying trust in the US and the West in general was a bipartisan effort. It took decades to reach this low point, with all the lies perpetuated to start wars, finding excuses to leave treaties, double-crossing allies and breaking every possible rule and moral guideline ever established in the post WWII system. Is it any wonder then that 79% of the world now favors China over the US according to the Democracy Perception Index (see page 43), with 55% of them having a net negative perception of America? (Note, how even faithful European allies share that view, despite their leaders doing everything to keep the continent in the U.S. orbit.) Contrary to the western narrative this is not due to Chinese propaganda, but the destructive policies pursued by one U.S. administration after the other.

No longer made in the West. Photo by Homa Appliances on Unsplash

Stock-buy-back capitalism

In an economy where it is much easier to spend profits on buying up one’s own stocks or paying them out as high dividends than to invest money in production, talent etc. we should not wonder why things no longer work. You see in a system where the top 10 percent holds about 93 percent of U.S. households stock market wealth, and where one can buy politicians by funding their campaigns, we should not be surprised that every government policy serves only the richest among us. Boosting the stock and housing market at all costs to further increase the wealth and power of an already wealthy and powerful elite, however, came with consequences detrimental to the rest of the economy.

As a result of globalization and the rabid pursuit of shareholder interests companies in the West have long lost their edge in innovation, project management and entrepreneurship. American and European companies alike have completely forgotten how to make things domestically at a competitive price and quality. Local supply chains are broken and grossly ineffective: often operating on long lead times and extremely high order quantities to justify costs. As simple a product as a grill scrubber or a hot sauce bottle could not be made in America without parts or tooling sourced from Asia. How do we expect to revive the auto industry then, or make armaments without rival nations delivering key components and raw materials? I guess you know the answer. As Eurasianet writes in the wake of a conference in Washington:

Analysts and defense officials are increasingly skeptical that the US defense industrial base is prepared for an extended, high-intensity conflict, let alone multiple ones. After two decades of counterterrorism operations focused on small, specialized forces and limited procurement of high-end platforms like F-35s, the US now faces a steep ramp-up challenge.

Note, that all these “counter-terrorism operations” and proxy wars have achieved was that they drove the four western targeted nations of Russia, China, Iran and North Korea together. The article goes on to say:

Amid tightening ties between the four countries, this likely means that short, geographically contained wars — the kind of confrontations that the US military has largely anticipated — are things of the past, US military officials said on May 13 in Washington at a conference hosted by the Center for Strategic and International Studies (CSIS).

“I think you have to immediately believe that if there is a fight in one geographic area, because of these relationships, they will immediately metastasize or have a geographic, a geopolitical protraction. It can’t be avoided,” said General Christopher Mahoney, assistant commandant of the US Marine Corps.

Mahoney’s warning echoes growing concern within the Pentagon that America’s traditional assumptions about conflict escalation no longer hold. “The idea of a short, sharp conflict, I think, is a fantasy,” Mahoney said. “It just will not happen.”

Western nations are out of weapons from artillery shells to long range and air defense missiles as a consequence of de-industrialization and their failed proxy war in Eastern Europe eating up all their stocks. Boutique armament factories in the west operate on a for profit basis, meaning that they will not invest in expanding production for ad-hoc wars of choice here and there. These companies are geared towards expensive long term contracts delivering one boondoggle after the other, not a steady stream of ammo.

As Sun Tzu wrote in the Art of War some two-and-a-half millennia ago: “Every battle is won or lost before it is ever fought.” The odds — based on the material requirements to wage a war against Iran — does not favor the West but who am I to tell… It might happen that the Iranian regime will eventually collapse, making the situation all the more tougher for Russia and China. But then, what’s next? Another proxy-war featuring Taiwan, the Philippines, South Korea and Japan versus China — this time with the assistance of an obedient Iran and its large stockpile of ballistic missiles? Or just good ol’ economic hardship brought about by a rise of oil prices? (China imports a large chunk of it’s oil from Iran at a steep discount thanks to Western sanctions preventing Iran selling its oil at market prices).

Iran ethno-religious distribution 2004. Source

Or how about not winning at all? Just creating another mess of a country in West Asia, smashed into smithereens and unable to act on its own… You know, divide and conquer. Why not? Consider the following scenario: the Iranian regime gets finally decapitated, and a civil war is successfully instigated by turning ethnic minorities on the Persian majority (see page 113). The Azeris up north could be “encouraged” to join Ilham Aliyev’s irredentist dream of a Greater Azerbaijan, while the Baluchis down south could gain “independence” and become a serious nuisance for Pakistan, who also happen to have a large Baloch minority of their own (see map above). Two birds with one stone. Well, it all seems perfectly “logical” for the engineers of empire, but will it work…? (2) One thing seems to be sure. The ruling class in the West will not ask for outside opinion, nor listen to those who understand the material realities on the ground. As Glenn Diesen writes:

Why is there a tendency in the West to underestimate opponents? Iran’s „regime” would collapse, Russia could easily be defeated and their economy is weak, China cannot innovate, etc.

These assumptions are not the result of informed debate. We are not allowed to dissent as recognising the strength of opponents is denounced as being „pro-Iran”, „pro-Russia” or „pro-China”.

Bad analysis results in bad policies. What kind of policies do we get when it is not permitted to discuss the security concerns of opponents, not allowed to have an honest discussion about their strength, not allowed to speak with our opponents etc. Our culture of censorship and cancellation has made us blind, deaf and dumb.

He, too, believed himself to be indispensable. Photo by Clemens van Lay on Unsplash

Fighting the inevitable

Western elites are in for a rude awakening, if not in Iran, then elsewhere. Sowing chaos through proxy wars, invasions, training separatists and supporting terrorism around the world has its own limitations and drawbacks. Peter Hanseler argues that the biggest problem facing the US — and the entire Collective West — is the instability of the financial markets, and that destabilizing the world will eventually come back to hurt Western economies. However, the “problem” runs much deeper than that. The West is facing a systemic predicament stemming from an absolute overshoot of its finite resource base, combined with imperial overreach and an unhinged ruling caste. In fact, the West is already in an early phase of collapse, and not even a complete reorganization of the global economic order could save it now. Hanseler concludes:

The days when the US could dictate to the rest of the world what should happen are over. The US’s position of power during the Bretton Woods negotiations no longer exists and Donald Trump has shown in the last few days that he does not deserve goodwill.

Western dominance hinged on its unfettered access to oil, mineral resources and cheap labor around the world and the acceptance of the US dollar as the world reserve currency. Despite neoliberal economic narratives, energy is still the economy and there is no such thing as a post-industrial nation. The amount of energy a nation commands — from fossil fuels to electricity — is directly proportionate to their wealth. The reason why America ruled the world after WWII was that they bombed all rivaling economies in Europe and Japan into smithereens while maintaining a strict control over the flow of oil, the fuel powering this civilization to this very day. With the economic rise of China and the fall in the US share of world energy consumption, however, those days are definitively over.

Two charts explaining the fall of the US and the rise of China. In terms of energy use, the United States is no longer the world hegemon it used to be in the late 1940's. In 2009, China surpassed the US as the world’s dominant energy glutton. Credit: Blair Fix

Knowing that oil production in the US is already peaking and is about to decline, the gap will open wider still. Europe is long out of the game, as they are in the process of cutting their last lines of cheap energy supply from Russia, and are already quickly de-industrializing as a result. Now, on top of all that we have tariffs, an escalating trade war with China and now concerns about possible oil supply disruptions from the Middle East. Rates for chartering supertankers on the Persian Gulf-to-Asia route have already soared by up to 30%, hurting not only the European but the Asian economies as well. So while oil prices might seem relatively low compared to the risk of disruption, fuel prices — especially that of diesel, used in long distance transport, mining and agriculture — are already soaring. The price of NY Harbor Ultra Low Sulfur Diesel Futures went up by more than 20% in just one month, putting further pressure on manufacturing companies on top of cost increases from tariffs on raw materials and shortages due to Chinese constraints on rare earth mineral exports.

And if that wasn’t enough, the Dollar keeps falling in value compared to other currencies, further reducing the purchasing power of the average American. (The dollar index fell just as fast as it did in the second half of 2020 during the height of the COVID pandemic: down 11.5 points in less than six months.) Meanwhile China announced that its digital yuan cross-border settlement system will be fully connected to the ten ASEAN nations and six Middle Eastern countries, implying that about 38% of global trade could bypass the US dollar dominated SWIFT network when its done. De-dollarization is definitely gathering pace. China is already dumping the dollar, not only when it comes to trade, but also in regards to holding treasuries; leaving the UK, Japan and Europe to prop up the US economy. As a result of this falling demand 10 year treasury note yields are now firmly over 4.4%, a 1.2 percentage points above 2018 levels. (According Trump-math cutting 1% point interest rates the US saves 300 billion USD on annual interest payment, which is at current rates are above 1 trillion a year.)

Should these trends of declining western share of world energy consumption and de-dollarization continue — and there is little reason to doubt they will — the world economy will be permanently split into a rapidly declining west and a still prosperous east, no matter who “wins” in Iran. Thus when, and not if, the great financial crash arrives to Wall Street, little of it will be felt in Shanghai, Moscow or other ASEAN and BRICS nations. Sure, they will feel the sudden fall in orders and manufacturing jobs will have to be cut as a result, but the rapidly growing South Asian markets will eventually soak up the excess supply of goods and services previously sold to Western nations. Paraphrasing Charles de Gaulle:

The pages of history books are full of indispensable nations.

Similarly, there are now multiple organizations providing financial and insurance services completely free from western influence making the shift to a multi-polar world not only possible, but inevitable. Then, of course, as oil and other energy and mineral resources continue their long decline following their respective depletion curves, these newly built alliances will eventually falter — giving rise to another round of hostilities… Rinse and repeat a several times, till we got nothing but localized, low-tech, scavenger economies all across the globe. After all, it is physics and geology which will have the final word.

Until next time,

B

The Honest Sorcerer is a reader-supported publication. Please consider a subscription or perhaps buying a virtual coffee… Thanks in advance!

Notes:

(1) Under existing nuclear agreements, Iran appears to be within its rights to possess the enrichment program that the US is objecting to. Nevertheless, and despite the fact that Iranian negotiators had already agreed to the Western level of enrichment, Israel attacked Iran without warning or provocation.

(2) What if western plans to subdue Iran misfire? Or what happens if Russia and China enters the fray? And what about Armageddon-cultists urging the West’s only nuclear armed proxy to launch its deadliest weapons on Tehran? All good questions, and all good reasons not to push the envelope further by launching yet another unwinnable war resulting in nothing but chaos and suffering… The words of Smedley D. Butler come to mind here who warned us in 1935 already, that War Is a Racket: “I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism. I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902–1912. I brought light to the Dominican Republic for the American sugar interests in 1916. I helped make Honduras right for the American fruit companies in 1903. In China in 1927 I helped see to it that Standard Oil went on its way unmolested. Looking back on it, I might have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents.”