The perfect storm that’s about to
hit
Rising oil prices and a weak dollar
could shatter the global economy
By Jeremy Rifkin
Mar. 24 — The average nationwide price of a gallon of gasoline
in America reached a record high of $1.77 this month. The steady spike
in prices has left analysts wondering if this is a harbinger of even
more dramatic increases as motorists head into the spring and summer
months. Get ready for what might become the economy’s version of
the perfect storm later this summer. The devastation could quickly spread
to the UK and the rest of the world, with dire consequences for the
global economy. The first hint of what might be in store came last month
when OPEC announced its decision to withdraw 1m barrels of crude oil
a day from the market. OPEC is worried about the weakening value of
the dollar: it has lost one-third of its value in just under two years.
Since OPEC sells oil for dollars, the oil-producing countries are losing
precious revenue as the value of the dollar continues to erode. And
because oil-producing countries then turn around and purchase much of
their goods and services from the EU and must pay in euros, their purchasing
power continues to deteriorate. (The euro is currently valued at $1.23.)
How will the weaker dollar affect oil prices? Philip K Verleger, the
dean of US oil market analysts and a visiting fellow at the Institute
for International Economics, suggests that “oil-exporting countries
may decide to adjust their price band to reflect the falling value of
the dollar.” If the dollar continues to slide, he warns, we could
see oil prices rising from the current $38.18 a barrel to a record high
of $40 by midsummer.
There are other dark clouds on the horizon. US crude oil inventories
are at the lowest point since the mid 70s, and the retail gasoline market
is operating with little reserve margin as we move into the summer months,
where more travel will increase demand. The dwindling oil reserves are
made worse by the White House decision to replenish the strategic petroleum
reserve, further reducing the amount of gasoline available.
Verleger says gasoline could climb as high as $3.50 a gallon before
leveling off at $2 by the autumn. How high prices eventually soar could
depend on still other factors, including potential oil disruptions in
Venezuela and the Middle East. There is also the prospect that one or
two major refineries might fail during peak demand this summer - not
that unusual when increased consumer pressure forces refineries to produce
at peak capacity without taking the time for proper maintenance.
Here is where events potentially begin to feed off each other, creating
the conditions for the perfect storm for the economy. If the price of
oil increases to $40 a barrel with an accompanying rise in gasoline
prices, the already weak economic recovery could stall.
How then do we lower the price of a barrel of oil? We’d have to
strengthen the value of the dollar so that OPEC would not be forced
to raise prices to compensate for the deteriorating value of the currency.
But the dollar’s value is declining because of America’s growing
debt. The IMF is so concerned about US debt — the result of rising
budget deficits and trade imbalance — that it issued a report warning
that if steps weren’t taken to reverse the trend, it could threaten
the financial stability of the world economy.
An ever-weaker dollar makes foreign investors less interested in financing
the mushrooming US debt. The US could raise interest rates, making it
more attractive for foreign investors, but that would mean higher interest
rates for US companies and consumers, which could dampen the already
weak recovery and send us back into a recession in the US and around
the world.
So we have all the conditions coming together to create the perfect
economic storm: record oil prices triggering a restriction in US economic
growth and an increase in the federal budget deficit, accompanied by
further erosion in the value of the dollar -- with increased budget
deficits and the diminished value of the dollar leading in turn to higher
interest rates to convince foreign investors to lend the US additional
money, followed by a further retraction of the US economy as rising
interest rates lead to a drop in domestic investment and consumption.
The cascade of events touches off a tsunami that engulfs the rest of
the global economy, submerging the world in deep recession.
As long as the US and global economy are increasingly dependent on an
ever-dwindling supply of oil from the Middle East, the conditions for
a perfect economic storm will continue to haunt us. The solution, in
the long run, is to wean the world off its dependency on oil. That would
require much tougher fuel efficiency standards, greater energy conservation
measures, support of hybrid vehicles and a switch to renewable sources
of energy. Short of that, expect the storm clouds to gather in intensity.
Jeremy Rifkin is the author of The Hydrogen Economy and president
of the Foundation on Economic Trends in Washington, DC
Source: Guardian (UK)
The press and Fallujah: barbaric relativism
By Dave Lindorff
Apr. 2 — “Barbarism”-Reuters
“Grisly Deaths” The New York Times
“Grisly assault” Associated Press
“Savage behavior” Washington Post
Nobody wants to see the kind of ugly spectacle that occurred earlier
this week.
In Fallujah, Iraq, four US mercenaries were killed and then had their
bodies burned, hacked up, dragged through the streets and ultimately
hung trophy-like from a bridge over the Euphrates River.
That said, the way this event was covered by the Western press shows
a marked tendency to view the war through politically, culturally and
journalistically biased eyes.
It may well be appropriate to call the mutilation of corpses barbaric,
grisly and savage, or even, as the White House said, “despicable,”
but then, one has to recall that American troops have long done the
same kind of thing. Remember those photos of severed ears and noses
hanging from GIs’ belts during the Vietnam War, and the bodies
of suspected Viet Cong partisans being dragged behind personnel carriers?
More to the point, what is one to call the US occupation force’s
rules of engagement, which call for American forces to fire off everything
they’ve got in all directions when they come under attack, even
if they are in the middle of a residential block?
In fact, it was only a few days before the killing of the four employees
of the North Carolina-based mercenary contracting firm Blackwater Security
Consulting, that US troops in Fallujah had, in the words of a New York
Times report, “battled insurgents killing a number of civilians.”
Civilian deaths in Iraq, including innocent women and children, are
the dirty secret of this terrible war and occupation. They number in
the tens of thousands by most accounts, though the American occupation
authority has blocked Iraqi medical officials from tallying the number,
for obvious reasons.
Do we call this random deadly use of force in highly populated areas
barbaric, grisly, or savage?
No. In fact, the military calls it “justified,” on those rare
occasions when it actually investigates the killing of innocents.
To date, no American soldier has been prosecuted for a war crime in
Iraq, or for an improper use of deadly force -- though one soldier was
disciplined for abusing a prisoner of war.
Actually, another New York Times article that ran the same day as the
report on the mutilation of the American mercenaries’ bodies actually
hinted at the barbaric nature of the US occupation. Referring to the
killing a few days earlier of two Arab journalists, it reported that
the US military had “accepted responsibility” for the deaths.
The journalists, the military said, had had the misfortune of driving
directly behind a vehicle that appeared to be running a military checkpoint.
As a result they were hit as well when the threatening vehicle was fired
on. The Pentagon report added, by way of justification of the deaths,
that the journalists were driving in a “beaten zone.”
What’s a “beaten zone”? An area which is being saturated
with heavy weapons fire.
Barbaric? Grisly? Savage behavior? Despicable? You bet. But nobody in
the US media calls it that. Only when the killing and abuse is done
at the hands of Iraqi Insurgents (actually the White House calls them
terrorists, not insurgents) do such words apply.
And what about the four unfortunate mercenaries? What exactly were they
doing in Fallujah, a hotbed of insurrection?
The Washington Post quoted government sources as saying the men were
contracted by the occupation authority to guard “food convoys”
coming into Fallujah.
In fact, these men are part of a private army of thousands of highly-paid
mercenaries -- most of them former US soldiers, though also including
many veterans of the South African white military, the Chilean army,
and other military units known for their barbarism and savage behavior.
While these people are euphemistically called “private security
agents,” they are not really anything like the rent-a-cops you
find strolling the aisles at your local Kmart. They are a private army,
exempt from the rules of war and from government oversight, employed
by the US to boost troop strength in Iraq at a time that it is politically
impossible for the Bush Administration to do so overtly.
The White House may call the killing of the four men a “senseless
loss of life,” but for the insurgents battling the US occupation,
while the deaths may have been brutal, they were hardly senseless. It
was, for them, an act of war.
We can expect the government to try to beat the patriotic drum, trying
to pump up a jingoistic fervor among the public, but the media should
not be joining in this cheap propaganda.
The American public deserves better from its news purveyors.
If journalists are going to call some of the dreadful things that are
happening in Iraq barbaric, grisly, or savage, they had better start
being honest about it, and applying those terms to all the acts that
merit such adjectives -- no matter who commits them.
Dave Lindorff, currently a Fulbright senior scholar in Taiwan, is
completing a book of Counterpunch columns titled This Can’t be
Happening! to be published this fall by Common Courage Press.
Source: CounterPunch
