Adonis Diaries

Posts Tagged ‘legal mechanism

If you analyse the causes of wars since the 17th centuries you will discover the modern definition of war.  War is the unethical, immoral, but legal mechanism to rounding up the surplus turbulent and employed lower middle class citizens and suspending paying off interest on sovereign debts to “enemy” creditors, due to political and economic internal crisis.”

The expedient short-term political decision of aggressing other nations is reasoned to getting two birds in one shot.  First, The vast pool of unemployed lower middle class citizens, constituting 60% of the population, are sent abroad and thus, relieving the internal political pressures for any change in the political and economic structure; hopefully, many will die and reduce or eliminate the danger of political upheaval.  Second, the enemy is targeted to be one of the major creditors, invariably judged to be weaker militarily, so that the government will default on the contracted sovereign debt, not only on the interest portion, but on the principal as well.

What are the consequences?  On the short-term, we may consider two cases.

First case, the enemy creditor turned out not to be that weak militarily and the war lasted longer than expected (as is inevitably the case).  Thus, a treaty is signed after the cease-fire, and the creditor becomes a mandatory power controlling the economy; which means the creditor gets the right of cutting out its share first of any income before the government obtains its share.  In general, the creditor obtains the monopoly of the main exporting product  such any raw material, cotton, rubber, oil… The creditor might demand war reparation as well, if he judges that the political system of the enemy is strong enough to withstand political backlash.  In fact, all defeated governments have in mind projects and plans to preempting the high probability that the returning defeated army might revolt and demand political changes.

Second case, the enemy creditor lose the war, but since he is considered a developed “modern” nation, by the standards of the period, the victor will end up just defaulting on the sovereign debt.  Both nations are back borrowing like crazy in order to maintaining the political status-quo.  Now the creditors to the two warring nations are powerful nations and eventually will impose their control in the medium-term.  The two nations have been superseded in economic power. Historical examples are recorded of the fates of Venise, Genoa, and Holland.

The consequences of the third case are on relatively the longer-term. The enemy creditor is weak militarily and also considered among the developing countries.  The victor colonize the enemy creditor in order to generating quickly raw materials and opening another market for its products. The victor finds out that he needs to borrow money in order to build infrastructures in the colonized country for producing and transporting the raw materials.  Slavery turns out counterproductive:  First, there is resistance to foreign armies and colons; and second, harsh measures decimate the population and slow down production and market population; and third, the powerful creditors put pressures to having a share in the production.  In the long-term, the powerful creditors supplant the victor as the colonial power.

There are many examples to back up these real scenarios.  The US was the major creditor to colonial Spain and ended up taking hold of Cuba and the Philippines.  England was the main creditor to monarchic Egypt and got hold of the Suez Canal from the French who made it possible.  England allowed France to colonize Algeria hoping that France would be able to repaying its sovereign debts.  France withdrew from South Vietnam and left it to the US because it could no longer sustain a losing national resistance battle:  That was a mean French decision since the US will be broke after ten years of fighting the Viet Cong: Nixon had no choice in 1968 but to leave the dollar uncovered by gold, thus, forcing the US to back up its useless paper money through military threats that is going till now.  Unfortunately, China and Japan are no weak enemy creditors to chastise them at every political and economic crisis.

By 1914, Germany was the first industrial nation in Europe, the most powerful militarily, and the most populous after Russia (65 million).   Germany was the prime creditors of Russia, France, and even England.  All European nations adopted isolationist policies in trades, meaning setting high tariffs for imported goods in order to protect internal productions.  Germany needed the Congo (a Belgium colony) to export its surplus of goods and citizens, other wise, imminent political problems might be generated by joblessness and inflation if no resolution of its surpluses in goods and men were found.  France and England refused Germany any relief valves and were uncomfortable with being debtors to Germany.  The WWI could have been avoided if borders were opened for free exchange of goods among the European States.  The US was also very worried that opening the borders in Europe would certainly permit Germany to becoming the next superpower.  The war generated 18 million of casualty, and over 20 million during the flu epidemic, and set the stage for WWII.

The most current case is the Iraqi’s preemptive war that lasted already 9 years. In 2002, the US was broke, as usual, but also witnessing high unemployment rate.  Afghanistan was supposed to be the enemy. Wrong.  Iraq was targeted because of its rich oil production: “democracy stupid”.  A quick razzias was planned but turned out sour and deadly.  Not only oil production in Iraq slowed down drastically, but the US had to borrow over one trillion dollars to “prosecute” the war.  All the allies withdrew and China replaced the US in the vast African market under the helpless watch and tacit agreement of the US administration. To make things worst, sovereign debt of the US increased exponentially, as well as unemployment rate.  Back to the devilish cycle with a harsher financial crash.


adonis49

adonis49

adonis49

September 2020
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