Tuesday, August 8, 2023

  

The Moral Legacy of Hiroshima and Nagasaki

By Dr. Rodrigue Tremblay 

(Author of the book about morals "The Code for Global Ethics" and his book about geopolitics "The New American Empire"

(N.B. First published on August 12, 2010)

When U.S. President Harry S. Truman decided on his own to use the atom bomb, a barbarous weapon of mass destruction, against the Japanese civilian populations of the cities of Hiroshima and of Nagasaki, on August 6 and on August 9, 1945, the United States sided officially on the wrong side of history.

General Dwight D. Eisenhower, Supreme Commander of the Allied Forces in Europe and 34th President from 1952 to 1960, said it in so many words: "... the Japanese were ready to surrender and it wasn't necessary to hit them with that awful thing." (Newsweek, November 11, 1963). More than 210 000 people died in Hiroshima and Nagasaki of a most cruel death in the August 1945 atomic bombing and its aftermath.

It seems that military man Eisenhower was more ethical than Freemason small-town politician Harry S. Truman regarding the fateful decision.

In being the first country to use nuclear weapons against civilian populations, the United States was then in direct violation of internationally accepted principles of war with respect to the wholesale and indiscriminate destruction of populations. Thus, August 1945 is a most dangerous and ominous precedent that marked a new dismal beginning in the history of humanity, a big moral step backward.

In future generations, it most certainly will be considered that the use of the atom bomb against the Japanese civilian populations of Hiroshima and Nagasaki was a historic crime against humanity that will stain the reputation of the United States for centuries to come. It can also be said that President Harry S. Truman, besides lying to the American people about the whole sordid affair (see official quotes in the link below), has left behind him a terrible moral legacy of incalculable consequences to future generations of Americans.

Many serf-serving reasons have been advanced for justifying Truman's decision, such as the objective of saving the lives of American soldiers by shortening the war in the Pacific, and avoiding a military invasion of Japan with a quick Japanese surrender. That surrender came on August 15, 1945, and it was made official on September 2, with the signing of the Japanese instrument of Surrender, nearly one month after the bombing of the cities of Hiroshima and Nagasaki.

Nazi Germany had capitulated on May 8, 1945, and World War II was already over in Europe. There was also the diplomatic fear that the Soviet Red Army could have invaded Japan, as they had done in Berlin, thus depriving the Unites States of a hard fought clear-cut victory against Japan.

But by the end of July 1945, according to military experts, the Japanese military apparatus had de facto been defeated. It is also true that the militarist Japanese Supreme Council for the Direction of the War was stalling with the aim of getting better capitulation terms, hoping for a negotiated settlement, especially regarding the future role of their emperor Hirohito as formal head of state.

In Europe, the allies had caused a recalcitrant Nazi Germany to accept an unconditional surrender and there were other military means to force the Japanese government to surrender. The convenient pretext of rushing a surrender carries no weight compared to the enormity of using the nuclear weapon on two civilian targets.

And even if President Truman was anxious to demonstrate the power of the atom bomb and impress his Soviet friends—and possibly also assert himself as a political figure vis-à-vis previous President Franklin D. Roosevelt, who had died a few months earlier, on April 12, 1945—this could have been done while targeting remote Japanese military targets, not on targeting entire cities. It seems that there were no moral considerations in this most inhuman decision.

Conclusion

Since that fateful month of August 1945, humanity has embarked upon a disastrous nuclear arms race and is rushing toward oblivion with its eyes open and its mind closed.

________________________________________________


International economist Dr. Rodrigue Tremblay is the author of the book about morals "The code for Global Ethics, Ten Humanist Principles" of the book about geopolitics "The New American Empire", and the recent book, in French, "La régression tranquille du Québec, 1980-2018". He holds a Ph.D. in international finance from Stanford University.

Please visit Dr Tremblay's site or email to a friend here.
or here:
https://www.globalresearch.ca/the-moral-legacy-of-hiroshima-and-nagasaki/20533

Posted Tuesday, August 8, 2023.
(Originally first published on August 8, 2010/ See the original article with quotations:
https://www.globalresearch.ca/the-moral-legacy-of-hiroshima-and-nagasaki/20533

*** To receive new postings of Dr. Tremblay's articles, 
please send Subscribe, to carole.jean1@yahoo.ca
To unsubscribe, please send Unsubscribe, to carole.jean1@yahoo.ca
______________________________________________________________

© 2023 Dr. Rodrigue Tremblay



Wednesday, July 26, 2023


President Biden Makes the CIA Director Member of his Cabinet: Message and Consequence

By Dr. Rodrigue Tremblay

(Author of the book about morals "The Code for Global Ethics" and his book about geopolitics "The New American Empire")

"For some time I have been disturbed by the way the CIA has been diverted from its original assignment. It has become an operational and at times a policy-making arm of the government." Harry S. Truman (1884-1972), 33rd U.S. President,(1945-1953), (in an editorial titled "Limit CIA Role to Intelligence", The Washington Post, Dec. 22, 1963, p. A11).

[The CIA] "has become so removed from its intended role... I never had any thought that when I set up the CIA that it would be injected into peacetime cloak and dagger operations... The last thing we needed was for the CIA to be seized upon as something akin to a subverting influence in the affairs of other people." Harry S. Truman  (1884-1972). Ibid.

" I think [the creation of the CIA] was a mistake. And if I'd known what was going to happen, I never would have done it." Harry S. Truman (in an interview with his biographer Mr. Merle Miller, in the 1960's).

" Let's remember, the CIA's job is to go out and create wars.Jesse Ventura (James George Janos) (1951- ), American former wrestler, actor, author and Governor of Minnesota, 1999-2003, (in 'Jesse Ventura suggests US may be behind Middle East violence' Sept. 15, 2012).

On Friday, July 21, 2023, President Joe Biden (1942- ) made an ominous decision: He elevated William Burns, the Director of the Central Intelligence Agency (C.I.A.), to the level of a member of his Cabinet. This made the CIA Director the second intelligence officer in the Biden Cabinet, alongside the Director of National Intelligence, Avril Haines.

This could be more than a symbolic move to reward a political ally. In fact, this could be a message that the Biden administration plans to be more heavily involved in foreign affairs in the near future, especially if the Ukraine war were to escalate from a proxy war to a more open U.S.-Russia military conflict.

This could also indicate that the U.S. president, mired in a low approval rating in public polls, has concluded that the only way for him to win a second term would be to wage a political campaign as Commander-in-Chief. That worked very well for President George W. Bush (1946- ) during the 2004 presidential campaign, after his administration's military invasion of Iraq in March 2003, under false pretenses. Indeed, it has been demonstrated that it is easier for American politicians to win reelection during wartime elections.

A quick history of the CIA

President Harry S. Truman (1884-1972) created the Central Intelligence Agency in 1947. His initial aim was to form a small information gathering office to keep the U.S. president informed on world affairs. Today, the CIA has evolved into the equivalent of a secret government for foreign affairs, within the U.S. government. Its annual budget, close to $100 billion, is larger than the budgets of three quarters of the world's countries.

One of the CIA's missions over time, besides collecting information and spying, has been to carry on covert operations and illegal acts to advance narrow American interests around the world. Most Americans are unaware of such secret operations conducted in their name.

President Harry S. Truman, founder of the CIA, wrote that he was deeply disappointed about how the agency had evolved

On December 22, 1963, only one month after the assassination of President John F. Kennedy, former President Truman wrote an editorial in the Washington Post, in which he revealed that he had serious misgivings about the increasing role of the CIA within the U.S. government.

Indeed, the former president and initiator of the CIA feared that it had been "diverted from its original assignment" (intelligence collection and analysis) and that it had "become an operational and at times a policy-making arm of the Government."

Truman's conclusion was quite damning: "There is something about the way the CIA has been functioning that is casting a shadow over our historic position and I feel that we need to correct it".

What President Truman and other American thinkers have feared is that the United States be turned into a lawless military empire with a self-serving imperial hubris. Indeed, a military empire in a perpetual state of war, however well disguised, cannot remain a democracy, because this would contradict the values of freedom and liberty at home.

Conclusion

President Truman's words and warnings reverberate today, considering that the current American president is elevating the CIA Director to the level of a Secretary in his Cabinet.

President Joe Biden does not seem to have the same apprehensions about the danger to American democracy by having the CIA directly involved in the making of American foreign policy. This is not the first time that Joe Biden has distanced himself from American traditions. In fact, while forming his Cabinet, in 2021, he reneged on the tradition of naming a civilian as Secretary of Defense when he instead chose to name retired Army Gen. Lloyd Austin to the post.

With such decisions, President Joe Biden reveals his preference for an imperial America, in contradiction to what President Harry S. Truman intended when he created the CIA. Biden may be more of a militarist and a warmonger than many people think.

___________________________________________________


International economist Dr. Rodrigue Tremblay is the author of the book about morals "The code for Global Ethics, Ten Humanist Principles" of the book about geopolitics "The New American Empire", and the recent book, in French, "La régression tranquille du Québec, 1980-2018". He holds a Ph.D. in international finance from Stanford University.

Please visit Dr Tremblay's site or email to a friend here.

Posted Wednesday, July 26, 2023.

*** To receive new postings of Dr. Tremblay's articles, 
please send Subscribe, to carole.jean1@yahoo.ca
To unsubscribe, please send Unsubscribe, to carole.jean1@yahoo.ca
______________________________________________________________

© 2023 Dr. Rodrigue Tremblay





Tuesday, May 16, 2023

 

Disastrous Proxy Wars by Great Powers Create Military, Monetary, Financial and Economic Chaos in the World

By Dr. Rodrigue Tremblay

(Author of the book about morals "The Code for Global Ethics" and his book about geopolitics "The New American Empire")

"In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex... Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together." Dwight D. Eisenhower (1890-1969), 34th President of the United States, (1953-1961), (in his 'Farewell Address', Jan. 17, 1961)

"Were the Soviet Union to sink tomorrow under the waters of the ocean, the American military-industrial complex would have to remain, substantially unchanged, until some other adversary could be invented. Anything else would be an unacceptable shock to the American economy." George F. Kennan (1904-2005), American diplomat and historian, (in his preface to Norman Cousins' 1987 book 'The Pathology of Power')

"A nation cannot become free and at the same time continue to oppress other nations." Fredrich Engels (1820-1895), German social scientist and father of Marxist theory, (in "Speech on Poland', 1847)

Sometimes politicians like to sprinkle their speeches and statements with words like "diplomacy" and "peace". This does not insure, in so doing, that they really mean what they say. In fact, such grandiloquent talk could be a cover-up for their real intentions, which may be the very opposite to diplomatic solutions and peaceful coexistence to solving world problems. In the realm of politics, actions count more than words.

A good point in this case could be what U.S. President Joe Biden meant when he said, during a talk at the State Department on February 4, 2021: "diplomacy is back at the center of our Foreign Policy."

He repeated the same message a few months later, in a speech at the United Nations, on September 21, 2021, saying that "we're opening a new era of relentless diplomacy", and pledging that "we are not seeking a new Cold War or a world divided into rigid blocs." 

And to be well understood, Mr. Biden made the following commitment: "We must redouble our diplomacy and commit to political negotiations, not violence, as the tool of first resort to manage tensions around the world." He even went on quoting the opening words of the 1948 Universal Declaration of Human Rights: "The equal and inalienable rights of all members of the human family is the foundation of freedom justice, and peace in the world."

These were noble pledges.

The reality: The U.S. Government has largely abandoned multilateralism for a unilateral foreign policy mainly concentrated on NATO

However, what has really happened during the first three years of the Biden administration?

Following in the footsteps of a few preceding administrations, the Joe Biden administration has de facto abandoned the search for the common good of all countries within a multilateral approach. Indeed, far from actively leading the world with diplomacy in the hope of reducing military conflicts around the world, the Biden administration has embarked upon a bellicose foreign policy.

This is a policy inspired by neoconservative advisers, and it calls for increased military U.S. interventions abroad, on a permanent basis, outside of the framework of the U.N. Charter, which, it should be emphasized, was signed by all member nations. It has instead chosen to mainly pursue its foreign policy within the narrow framework of an increasingly offensive NATO.

Presently, there are two mainly U.S.-NATO-led proxy wars that are of immediate concern: a hot one in Ukraine directed at Russia, and one brewing in Taiwan and aimed at China.

In Ukraine, this has taken the form of the U.S. and other NATO countries shipping huge amounts of arms and equipment, and even some covert operations personnel, to that country neighboring Russia, including illegal depleted uranium weapons.

Even if public opinion in Western countries is still strongly behind the Russian-Ukrainian war, especially among the young and less among older generations, one of the consequences of the war, according to some polls, has been to isolate somewhat the United States and its NATO allies in certain parts of the world. In some countries, for example, notably in Asia, Africa and South America, the position seems to be "none of our business".

Fall-outs from the American-NATO-led proxy wars against Russian and China

According to official propaganda, Russian embarked upon an 'unprovoked' war against Ukraine, on February 24, 2022. However, things are a bit more complicated, because the United States and NATO have been heavily involved in that unnecessary war since at least 2014, and credibly since 1991, as far as the U.S. government is concerned.

First of all, after the collapse of the Soviet Union, in 1991, it is widely established through declassified documents that U.S. Secretary of State James Baker, and the representatives of important European nations, made a solemn commitment to Russia, on February 9, 1990, that NATO would not be expanded "one inch" into Eastern Europe—conditional to Russia's acceptance of the reunification of the two Germanys.

Secondly, as professor John Mearsheimer of the University of Chicago has often said (and I agree), there would not have been a Ukraine War if Joe Biden had not been in the White House. It was, indeed, President Biden's insistence on having NATO expand to the very doorsteps of Russia, with missiles pointed toward Moscow, that was the main reason why Russia felt directly threatened and why it invaded Ukraine.

Even Pope Francis arrived at the same conclusion, that the main trigger of the Ukraine War was "NATO barking at Putin's door."

Thirdly, let us remember that it was the Obama administration (2009-2017), with then Vice-President Joe Biden involved, that bankrolled, to a large extent, the overthrow of the elected pro-Russia Ukrainian government of Viktor Yanukovych, in February 2014.

This was clearly established by then U.S. Assistant Secretary of State for European and Eurasian Affairs Victoria Nuland (a well-known neocon), who confirmed publicly, on December 13, 2013, that the U.S. government had invested $5 billion in Ukraine, under the pretext of 'promoting democracy', One may ask if it is an accepted practice by democracies to overthrow elected governments?

Fourthly, published documents indicate that the policy of encircling Russia militarily, an act of war implicitly not allowed under the U.N. Charter, is a neoconservative idea originating from the Rand Corporation—a think-tank heavily financed by the military-industrial complex (MIC) and deeply involved in framing U.S. foreign policy.

Indeed, the policy of an aggressive military stand against Russia is well outlined in a 2019 report, entitled "Overextending and Unbalancing Russia". Therefore, when Defense Secretary Gen. Lloyd Austin said publicly, on April 25, 2022, that the Biden administration's objective in Eastern Europe was to "see Russia weakened", it was a clear indication that the Rand Corporation's strategy of militarily encircling Russia had become the official foreign policy of the Biden administration, even at the risk of turning such a localized conflict into a global one.

That may be a reason why people in the know do not swallow the propaganda line that the U.S. and NATO are in Ukraine to "save democracy". In fact, there is no democracy in Ukraine, since the Ukrainian government of Volodymyr Zelensky has abolished eleven political parties.

Failed attempts by third parties to bring peace to Ukraine

The above could explain why the Biden administration has been quick to turn down any attempt to prevent or to end the Ukraine War.

For example, even when it was still possible to avoid a conflict, on December 7, 2021, during a Biden-Putin direct phone talk, President Biden undiplomatically turned down demands to consider Russian security considerations and stop pushing NATO right to Russia's border. [N.B.: It is relevant to remember that when the shoe was on the other foot, in October 1962, and the USSR wanted to place missiles in Cuba, at 90 miles from the USA, it was seen by the John F. Kennedy administration in Washington D.C. as an unacceptable breach of American security.]

The Israeli government and the government of Turkey both have attempted to mediate a peace between Russia and Ukraine, but without any success.

First, in the beginning days of the conflict, in early March 2022, then Israeli Prime Minister (June 2021-June 2022) Naftali Bennett attempted to mediate a speedy end to the Russia-Ukraine confrontation. He came very close to succeeding when Russian President Vladimir Putin dropped his demand to seek Ukraine's disarmament and Ukrainian President Voldymyr Zelensky promised not to join NATO. A bilateral peace deal was ready to be signed in April 2022.

Secondly, in March 2022, the Turkish government also tried to bring a peace agreement closer between Russia and Ukraine. After successful talks were held in Istanbul, between officials of both countries, the two sides agreed on the framework for a tentative deal.

Considering that both Russia and Ukraine were willing to make concessions and with peace deals close at hand, why did the Israeli and the Turkish attempts at mediation fail?

Former Israeli Prime Minister Bennett gave an answer: the Biden administration commissioned then-British Prime Minister Boris Johnson to go to Kyiv and sabotage any peace deal. Some Western powers saw it to their advantage that the war in Ukraine continue.

Not too surprisingly, the latest attempt to end the Ukraine War—China's 12-point peace proposal for a "Political Settlement for the Ukraine Crisis", made on February 24, 2023—has so far also been derailed.

It would seem that those who planned for and 'invested' much in such a war do not wish to lose face. For one, President Biden has branded the Chinese plan (which calls for de-escalation toward a cease-fire in Ukraine, respect for national sovereignty, establishment of humanitarian corridors, resumption of peace talks and a stop to unilateral sanctions), as "not rational".

While President Joe Biden has concentrated his efforts on fueling the fire of war in Ukraine, Chinese President Xi Jinping seems to have filled the void and has developed the stature of a peace broker around the world.

In the end, considering the many parties involved in the conflict (Russia, Ukraine, United States, NATO, European Union), and their intransigence, the UN Secretary General, Antonio Guterres, threw in the towel and confessed, on May 9, 2023, that peace negotiations in Ukraine were "not possible at this time". Warmongers are in charge in many nations, and no ceasefire can be expected at this time in Eastern Europe.

Flight from the U.S. dollar as a consequence of financial and economic sanctions

Holding financial assets denominated in U.S. dollars has recently become a risky proposition. Any government imprudent enough to do so exposes itself to political pressures from the U.S. government and, if it does not abide, its dollar assets could be arbitrarily frozen, unilaterally seized or simply confiscated. The list of countries so punitively 'sanctioned' has been getting longer and longer each month.

One would think that an international currency should not be 'weaponized' in that way, unless one really wishes to destabilize the entire international monetary and financial system and create chaos in the world economy.

On April 16, 2023, even the U.S. Treasury Secretary Janet Yellen (1946- ) mused aloud about the possibility of the U.S. dollar loosing its dominance in international finance and as a reserve currency.

Indeed, even if it is not easy, some countries have stopped settling their cross-border trade in U.S. dollars and are either using the Chinese Yuan, the Indian Rupee (INR), bilateral barter or their local currencies to do so. There are calls on the part of the BRICS nations (Brazil, Russia, India, China and South Africa) to avoid using the U.S. dollar, as a response to unilateral U.S.-led financial and economic sanctions.

Such a movement to dedollarize global trade is an ominous development for international monetary and financial markets, with potentially enormous consequences, both monetary and economic.

In fact, the entire international monetary framework of the Bretton Woods System of payments, established in 1944 around the U.S. dollar (linked at the time to gold at a fixed rate of $35 per ounce), could be in jeopardy. Indeed, if the international payment system were to become more fragmented, the volume of international trade and the flows of capital movements could decline, and this could have a disastrous impact on the growth of the world economy.

Conclusions

As things stand now, despite efforts, hopes do not look promising for a quick resolution to the proxy war in Ukraine, and for lowering the escalating tensions over Taiwan.

First, if Great Powers hiding behind their veto at the U.N. Security council cannot contribute to peace in the world, they should at least not actively contribute to war. Unfortunately, in the 21st Century, the United Nations has become the carpet on which Great Powers wipe their feet.

Secondly, with its proxy wars, the U.S. government should realize that it is losing its moral ascendency and influence in the world. And it is evident why this is the case: the Biden administrations's current neocon-inspired foreign policy of using NATO as its main instrument of intervention around the world, especially with its proxy conflicts with Russia and China, while snubbing the United Nations and its Charter, is shrouded with risks and may be a very bad idea.

Indeed, such a policy is isolating the United States and its NATO allies from the rest of the world. In the future, this could undermine their legitimacy, efficiency and influence outside North America and Western Europe. Pushed to the limit, such a development could result in unraveling the very international framework of global institutions that was established in the aftermath of World War II.

Thirdly, if one adds the persistent and threatening danger of a nuclear war to the equation, it would seem obvious to clear minds that a negotiated peace in Ukraine, in particular, should be preferable to a murderous and disastrous war, without ends, with few possible winners, other than arms dealers, and many losers all around.

____________________________________________________________

International economist Dr. Rodrigue Tremblay is the author of the book about morals "The code for Global Ethics, Ten Humanist Principles" of the book about geopolitics "The New American Empire", and the recent book, in French, "La régression tranquille du Québec, 1980-2018". He holds a Ph.D. in international finance from Stanford University.

Please visit Dr Tremblay's site or email to a friend here.

Posted Tuesday, May 16, 2023.

*** To receive new postings of Dr. Tremblay's articles, 
please send Subscribe, to carole.jean1@yahoo.ca
To unsubscribe, please send Unsubscribe, to carole.jean1@yahoo.ca
______________________________________________________________

© 2023 Dr. Rodrigue Tremblay


Wednesday, March 22, 2023

 

Wednesday, March 22, 2023

American Recurring Banking and financial Crises: the Historical and Regulatory Context

By Dr. Rodrigue Tremblay

(Author of the book about morals "The Code for Global Ethics" and his book about geopolitics "The New American Empire")

"All crises have involved debt that, in one fashion or another, has become dangerously out of scale in relation to the underlying means of payment." John K. Galbraith (1908-2006), Canadian-born American economist, (in 'A Short History of Financial Euphoria' 1994).

"History shows that once an enormous debt has been incurred by a nation, there are only two ways to solve it: one is simply declare bankruptcy, the other is to inflate the currency and thus destroy the wealth of ordinary citizens." Adam Smith (1723-1790), Scottish economist, father of modern economics, (in 'The Wealth of Nations', 1776).

"Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output."  Milton Friedman (1912-2006), (in 'The Counter-Revolution in Monetary Theory', 1970).

Some six years from now will be the 100th anniversary of the 1929 stock market crash, marking the onset of the Great Depression (1929-1939).

These were crucial events in the United States and in many other countries. In the U.S., in particular, it heralded a period of nationalism, protectionism and sweeping banking regulations.

The 1929 crash occurred after a period called the "Roaring Twenties", which followed World War I (1914-1918) and the Spanish flu pandemic of 1918-1919. It was a period of general economic prosperity, with many economic innovations and industries (automobile, electricity, telephone, radio, films etc.), being propelled by low interest rates and ongoing speculation.

What turned the stock market crash into a severe economic downturn was the failure of many banks and the credit crunch that followed.

Many American banks had followed the risky banking practice of lending large portions of their deposits for stock market speculation, and they did not survive the crash. Altogether, during the 1930 decade, it is estimated that as many as 9,000 U.S. banks failed, creating an important contraction of the money supply.

Even though the Federal Reserve central bank had been established in 1913, it was somewhat clumsy in designing and in implementing monetary policy. For instance, it did not widely use open market purchases to inject badly needed monetary liquidity in the economy, as money supply was contracting. Instead, in order to meet the requirements of the international Gold standard system of the time, the Fed kept raising its discount rate to prevent an exodus of money and gold from the United States, thus contributing to creating a deflation.

The financial crisis really became an international one when the large Austrian bank Creditanstalt failed, on May 11, 1931. This was a bank that had debts with many other banks. Its failure impacted negatively other international banks, and it contributed to making the financial crisis a truly international one.

All this is to say that a cascade of bank failures is a very dangerous phenomenon in a market economy. That is why there is an obvious need to prevent unduly risky investments by banks, through appropriate public regulation, to protect the public interest.

Why can deposit-financed commercial banks fall victim to a run on the bank?

The answer to the above question lies in the 'fractional reserve banking' system under which banks operate. Essentially, commercial banks borrow short-term funds from depositors and invest most of that money in profitable longer-term loans. For security and liquidity, they are required to maintain a mandatory minimum percentage of their deposits as cash reserves, the so-called fractional reserve, to be available for the withdrawal of deposits. The rest is considered capital to be loaned and invested in loans and in securities.

However, if confidence in a bank comes into question, especially if its loans or investments have lost value for any reason, (as indicated in the section of 'unrealized losses' in its books), people could fear for the safety of their deposits, and they may attempt to withdraw their savings during a panicky run on the bank. Such a panic or a crisis of confidence is bound to deplete a bank's meager reserves, and the lending institution may then face a liquidity crisis, and not be able to reimburse all depositors.

Without outside intervention, this could force a bank to close its doors and declare bankruptcy. If many banks find themselves in the same precarious illiquid situation, the entire banking system could enter into a systemic banking crisis, through a widespread contagion or domino effect.

Two major legislative attempts to regulate and two attempts to deregulate banks in the U.S.

The onslaught of the 1929 Stock market crash and the unfolding of the Great Depression, which translated into 15 million Americans losing their jobs and half of the country's banks failing by 1933, made the adoption of banking reforms a necessity.

In 1933, President Franklin D. Roosevelt (1882-1945) signed into law the famous Glass-Steagall Act of 1933, which forced a clear separation between commercial banks, which rely on deposits from the public, and investment banks, which borrow money by issuing shares or bonds. And, because commercial banks have a fiduciary mandate to protect depositors' money, they also had to follow strict guidelines for their lending in order to avoid making too risky investments, which could jeopardize their solvency.

Moreover, in order to prevent financial panics and destabilizing runs on the bank, the Banking Act of 1933 established the Federal Deposit Insurance Corporation (FDIC), whose purpose was to restore trust in the American banking system. It guaranteed that small depositors would not lose their money if a bank becomes insolvent. On the other hand, insured banks had to follow strict rules of investing.

Even though the Glass-Steagall Act was slightly amended over time, its main features remained the foundation of the stability of the U.S. banking system for some sixty-six years, that is to say until 1999.

The 1999 Gramm-Leach-Billey Act to deregulate the American banking system

American banks had often lobbied Congress and the U.S. government to relax the rules of investing contained in the Glass-Steagall Act. In November 1999, then Democratic President Bill Clinton signed the Gramm-Leach-Billley Act (GLBA) into effect, after Congress had voted overwhelmingly in its favor, with a vote of 90-8 in the Senate and by a vote of 362-57 in the House.

That law repealed important sections of the Glass-Steagall Act. Its main feature was to remove the legal barriers that prevented financial institutions from merging commercial banking, investment banking and insurance services in a single holding entity. The purpose was to permit a consolidation of the American banking industry and create large financial conglomerates deemed to be financially more stable.

Some congressmen and many economists argued that the new law was a step backward in the wrong direction, because it could make banks too large to be managed, and because it could make it easier for them to increase the level of risk-taking in their investments. The end result would be to render such large financial conglomerates "too big to fail". This, in turn, would imply that the government would have no other choice but to bail them out with public money, in case of insolvencies.

The Dobb-Frank Act of 2010 vs. the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018

In 2007-2008, the Subprime Mortgage Crisis broke out in the United States, with three large investment banks failing (Bear Stearns, Merrill Lynch and Lehman Brothers). This time, the culprit was largely unregulated derivative financial products, such as mortgage-backed securities (MBS) and collateralized debt obligations (CDO), which lost a lot of their value when the housing bubble burst and widespread mortgage defaults ensued.

The failure of those large investment banks played a central role in the 2008-2009 global recession, dubbed the 'Great Recession'.

A partial rollback of banking regulations in 2018

After the economic debacle of 2008-2009, the Barack Obama administration and the Democratic-controlled Congress came to the conclusion that new banking standards were required if future financial crises were to be avoided. And, President Barak Obama signed the Dodd-Frank Act on July 21, 2010.

That law was designed to prevent the excessive risk-taking behavior that had led to the 2007-2008 financial crisis and cost hundreds of billions of dollars in public bailouts of failed financial institutions. With that objective in mind, the 2010 law intended to eliminate the classification of banks deemed 'too big to fail', by submitting medium size banks to the same stringent regulatory supervision as very large banks.

However, a well-known politico-banking scenario again came into play.

Some bankers began complaining that the new investment rules to prevent excessive risk taking were too strict. Their main demand was that the threshold for the new regulations to apply, i.e. to banks with assets worth $50 billion and above, should be raised to $250 billion and above. In simpler terms, the demands were that the new stricter banking regulations should apply only to very large banks, the so-called 'too-big-to-fail' banks, and not to medium-sized banks with assets and liabilities below $250 billion.

The Republican-dominated U.S. Congress acquiesced to the demands formulated by the banking lobby. —On March 14, 2018, the Senate passed the Economic Growth, Regulatory Relief and Consumer Protection Act, exempting hundreds of U.S. banks that the Dodd-Frank Act's banking regulations had placed in the category of banks having between $50 billion and $250 billion of assets.

The new 2018 regulatory law also weakened the so-called Volcker Rule, which prohibits banking entities from engaging in proprietary trading and forbids banking entities from investing in or sponsoring hedge funds or private equity funds. —Thereafter, on May 24, 2018, President Donald Trump signed the partial repeal of the 2010 Dobb-Frank law.

The onset of a new banking crisis in March 2023

During the fatidic weekend of March 10-12, 2023, three American banks, whose total financial assets were below the $250 billion asset threshold, failed and required immediate intervention by regulators to prevent a wider contagion.

They were the Silicon Valley Bank ($212 billion assets), with significant exposure to the technology sector, the Signature Bank ($110 billion assets) and the smaller Silvergate Bank ($11 billion assets), the last two banks catering partly to cryptocurrencies users and to cryptocurrency-related firms.

The March 19, 2023 shotgun merger of the large Credit Suisse bank with the larger Swiss UBS bank is also indicative that large international banks can be fragile and may require an intervention on the part of regulators.

The U.S. Fed's role in creating monetary conditions leading to banking and financial crises

In the aftermath of the 2006-2009 financial and economic turmoil, the U.S. Fed and other large central banks in Europe embarked upon a nonconventional and risky monetary policy of massive money creation, with the so-called policy of quantitative easing (QE), and of artificially pushing interest rates way down, even to negative nominal interest rates, in some instances.

A clear indication of how the U.S. Federal Reserve central bank has been pumping liquidity into the monetary system can be seen in how fast its balance sheet, part of the monetary base of the economy, increased. It stood at roughly 0.9 trillion U.S. dollars, in 2007, but grew to 8.34 trillion U.S. dollars, as of March 8, 2023, an enlargement of more than 900 per cent.

This has had the consequence of the Fed bringing down nominal interest rates close to zero, just as other central banks in Europe and in Japan have also done.

However, a sure result of keeping interest rates artificially ultra low, for too long, is to create financial bubbles, in the bond market, in the stock market and in the real estate market. Lo and behold, in recent years, these markets have reached price levels that are way above their historical average.

This may have pleased some investors and some traders, but it may also have painted the central bank into a corner, if inflation gets out of hand and the central bank has to raise interest rates to fight it.

For reference: in the mid-summer of 2021, it was obvious that inflation in the U.S. was much above the targeted rate of 2 percent and was rising, but the Fed continued nevertheless its quantitative easing policy of purchasing $140 billion of bonds and mortgage-backed securities, each month.

The Fed's view at the time was that inflation was a 'transitory' phenomenon, not expected to last. Therefore, the Fed kept pushing liquidity into the U.S. economy until March of 2022, when it was obliged to reverse course as inflation was getting up steam. —By then, indeed, the inflation rate was already at 8.5 percent.

The fact of the matter is, when central banks raise interest rates after they have kept them ultra low for too long, it becomes very tricky for them to fight inflation without placing their banking sector in jeopardy.

That is because a sustained rise in interest rates causes the prices of bonds and of other securities already issued to fall, along with the price of real estate and of stock prices. Banks that are saddled with so-called 'unrealized losses', at such a critical time, may find themselves in financial difficulty, when they cannot afford to raise rates on their deposits, or appeal to outside help.

Conclusions

First, we may contrast public regulation of new drugs and public regulation of new financial products.

When it comes to the health of people, and when pharmaceutical companies propose new drugs or medications, such new medical products must be submitted, tested and approved by a public federal agency. In the United States, the Food and Drug Administration (FDA), founded in 1906, is responsible for regulating and approving new drugs and medications, before they can be distributed and sold.

However, when it comes to the health of the economy, it is much easier for the banking industry to invent risky new financial products and sell them to the public. Indeed, there is no statutory testing of the viability of such new financial products before their distribution. It's only after the fact—when it is discovered that they have been toxic for the financial system and the overall economy—that their use is curtailed and may be more strictly regulated.

Maybe the banking industry should be treated more as a public utility infrastructure, essential for the good functioning of the economy, in order to prevent market economies from following a disruptive boom and bust cycle, each 15-20 years.

Second, the recurrent periods of financial and economic instability could be a consequence of the dual mandate given to central banks. Indeed, besides serving as lender of last resort, in times of liquidity crises, a central bank's important role is to supervise the fiduciary money creating process, in order to prevent both inflation and deflation.

However, in 1978, the U.S. Congress adopted the Full Employment and Balanced Growth Act, which gave the Federal Reserve central bank an explicit "dual mandate".

Indeed, not only must the Fed manage and supervise the banking system and the money supply, in order to avoid inflation or deflation, but it must also "promote effectively the goals of maximum employment, stable prices, and moderate long term interest rates."

At times, such a dual mandate may enter into contradiction and make monetary policy most difficult to implement. This may also explain the kind of yoyo monetary policy that the Fed has adopted recently, pushing interest rates way down and pushing them way up, when inflation becomes a threat.

Economic growth and employment creation in the long run are primarily a government responsibility through its fiscal, industrial and other economic policies, even though monetary policy may influence economic activity and employment in the short-run.

Especially in times of inflation, a central bank with a dual mandate may find itself in a conundrum. That is because to control inflation, it must slowdown the rate of increase of the money supply and raise interest rates, thus slowing down economic growth and employment.

However, we may point out that the European Central Bank (ECB) does not have an explicit dual mandate. It has only one primary objective and that is price stability, subject to which it may pursue secondary objectives. Similarly for the Bank of Canada, whose primary mandate is to maintain low and stable inflation, while supporting "maximum sustainable employment".

Finally, in general, let us keep in mind that the more private bankers are shielded from their errors and mistakes by generous public bailouts, the more they will be tempted to invent esoteric and risky debt instruments, and the more the economy will be subjected to destabilizing financial crises.

____________________________________________________________

International economist Dr. Rodrigue Tremblay is the author of the book about morals "The code for Global Ethics, Ten Humanist Principles" of the book about geopolitics "The New American Empire", and the recent book, in French, "La régression tranquille du Québec, 1980-2018". He holds a Ph.D. in international finance from Stanford University.

Please visit Dr Tremblay's site or email to a friend here.

Posted Wednesday, March 22, 2023.

*** To receive new postings of Dr. Tremblay's articles, 
please send Subscribe, to carole.jean1@yahoo.ca
To unsubscribe, please send Unsubscribe, to carole.jean1@yahoo.ca
______________________________________________________________

© 2023 Dr. Rodrigue Tremblay


Tuesday, February 14, 2023

 

Is the U.S. Biden Administration Behind the Blowing up of the Nord Stream 1 and 2 Pipelines between Russia and Western Europe?

By Dr. Rodrigue Tremblay

(Author of the book about morals "The Code for Global Ethics" and his book about geopolitics "The New American Empire")

[NATO's goal is] "to keep the Russians out, the Americans in, and the Germans down." Lord Ismay, first NATO Secretary-General (1952-1957).

"Near-term-thinking [by political and business decision-makers] is not only deeply irresponsible—it is immoral." Antonio Guterres, Secretary-General of the United Nations, (in a speech to the General Assembly, Monday February 6, 2023).

"Ukraine, a new and important space on the Eurasian chessboard, is a geopolitical pivot because its very existence as an independent country helps to transform Russia. Without Ukraine, Russia ceases to be a Eurasian empire." Zbigniew Brzezinski (1928-2017), Polish-born American political theorist. (In his book 'The Grand Chessboard', 1997).

"Peace is the virtue of civilisation. War is its crime." Victor Hugo (1802-1885), French novelist and political figure, (in 'Œuvres complètes de Victor Hugo', 1885)

A preamble is necessary to understand what follows.

Since the end of World War II in 1945, the influence of the U.S. government in European affairs has been front and center. During the Cold War (1945-1989) between the United States and the Soviet Union (USSR), Europe relied on the U.S., first for financial assistance with the Marshall Plan of 1947, and secondly, for military protection with the creation of the North Atlantic Treaty Organization (NATO), in 1949, a mutual security and military alliance.

After the fall of the Soviet Union in 1991, there was a realization in Washington that Europe could become less dependent on the United States. Indeed, the demise of the USSR also meant the collapse of the Warsaw Pact, the Soviet-controlled military defense alliance. Therefore, there was no logical reason to keep NATO alive. The question was then, to dismantle NATO or not?

Because NATO was the main source of U.S. influence in Western Europe, the George H.W. Bush administration and its Secretary of State, James Baker, decided not to dismantle NATO. However, they promised Russia that the military alliance would not expand into Eastern Europe. This promise was broken by the Clinton administration and subsequently by other American administrations, and NATO did expand eastward, with vehement protests from Russia, because it considered such an expansion a threat to its security.

Nevertheless, economic ties between Western Europe and Russia grew stronger over the years, through mutual trade and investment. In 2012, a new pipeline, Nord Stream 1, came into operation, bringing cheap Russian natural gas to Germany. German companies have greatly profited from this cheap source of energy. Some German companies have even been selling their excess imports of Russian natural gas to other European countries. In June of 2015, a decision was made to build a second pipeline, the Nord Stream 2, to double the quantity of Russian natural gas destined to Germany and to other European countries.

The above announcement raised strong fears in the U.S. government that Western European countries were becoming too dependent economically on Russia, and this, just as NATO was expanding in Eastern Europe to include former allies of Russia: Poland, Hungary, the Czech Republic, Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia, Slovenia, Albania and Croatia.

Thereafter, all successive Congresses and U.S. Administrations have strongly opposed the building of the Nord Stream 2 pipeline. They feared that the new pipeline would greatly increase Europe's dependency on Russian natural gas, and that this could have serious geopolitical consequences.

The war between Russia and Ukraine, which flared up on February 24, 2022, after the Russian invasion, but which really started in 2014, is, to a large extent, the result of NATO's expansion, which has de facto encircled Russia militarily. It is also a by-product of the American foreign policy goal to reverse Western Europe's growing economic ties with Russia.

As the Brzezinski's quote above states very clearly, the country of Ukraine is only a pawn in a much larger game by the United States government, designed to cut the economic ties between Russia, Germany and the entire European Union (EU).

Who sabotaged the pipelines Nord Stream 1 & 2?

On Monday, September 26, 2022, the day of Rosh Hashanah (which literally means "beginning of the year" in Hebrew*), U.S. President Joe Biden is alleged to have ordered the destruction of the undersea gas pipelines Nord Stream 1 and 2, linking Russia and Germany. (N.B. The pipeline Nord Stream 1 went into operation in 2012, whereas Nord Stream 2 was completed in 2021, but has never gone into operation.)

If confirmed, such an act of state terrorist sabotage would be considered an obvious act of war on the part of the Biden administration. It would also most likely have important political, geopolitical and economic consequences in the coming months and years.

That is precisely what is revealed in an explosive, well documented, coherent and lengthy report, entitled "How America Took Out the Nord Stream Pipeline", dated February 8, 2023, and written by celebrated American journalist Seymour Hersh (1937- ). Pulitzer prizewinner Seymour Hersh has had a long and successful career as an investigative journalist specializing in American military affairs and American military involvements abroad.

Mr. Hersh reports in much detail—while citing reliable sources that must remain anonymous for the time being—how a top secret plan to destroy the 750 mile-long natural gas pipelines under the Baltic Sea, linking Russia and Germany, was drawn up in Washington D.C., by an interagency group under the direction of Jake Sullivan, Biden's National Security Adviser, beginning in the late fall of 2021.

It is important to note that such planning would have taken place months before Russia launched its military invasion of Ukraine, on February 24, 2022, with the objective of preventing Ukraine from joining NATO.

Soon after the explosion of September 26, 2022, some American media surprisingly called the sabotaging of the strategic natural gas pipelines Nord Stream 1 and 2 a wartime "mystery". Some media even alleged that Russia could have blown up its own pipelines for some foggy reasons. Now it appears that the mystery can be dissipated, thanks to the diligence and hard work of American journalist Hersh.

Even though the sabotage action by U.S. Navy diving specialists (with the active cooperation of Norway) was supposed to remain a well-guarded secret and be shrouded in deniability, President Joe Biden could not resist from commenting publicly about the top-secret plan, even before the plan was to be executed.

Indeed, on February 7, 2022, during a joint news conference with German Chancellor Olaf Scholz in Washington D.C., Mr. Biden went on record, declaring the following: [If Russia invades Ukraine], "then there will be no longer a Nord Stream 2. We will bring an end to it." He added, to be perfectly clear, in a response to a follow-up question by a journalist: "We will, I promise you, we will be able to do that."

Therefore, what journalist Hersh is now revealing in detail in his 5,000-word report is not a complete surprise, considering that President Joe Biden himself had clearly indicated that it was his intention to eliminate the natural gas pipelines linking Russia to Germany.

Moreover, what has now been made public are the enormous efforts made by the Biden administration to keep the sabotage plan top secret.

First, Congress was kept in the dark about the plan. Second, according to Seymour Hersh, special diving commandos of the U.S. Navy were secretly recruited and trained for the mission of placing mines in the deep sea, on the Nord Stream pipelines in Danish waters, off the coast of Bornholm Island. Third, the placing of explosive charges on the pipelines, in June 2022, was dissimulated within NATO military exercises named Baltops 22, and was conducted by the U.S. Sixth Fleet, which was in the area at the time.

In addition, since such explosives could be remotely detonated, the precise date for the destruction of the pipelines was left to President Biden to decide.—He is alleged to have chosen the date of Monday September 26, 2022.

Political, legal, economic and geopolitical ramifications of the sabotage

Now that the cat would seem to be out of the bag and the so-called "mystery" would appear to have been elucidated, the consequences of this act of state sabotage could be enormous and numerous.

First politically, not all members of the US. Congress will be pleased to learn that laws have been circumvented to keep them in the dark, when all the while President Biden was vaguely hinting that Russia could be behind the sabotage of its own installations, a few days after he had himself ordered the blowing up of the pipelines.

Congressional hearings on the issue would seem to be required, with testimonies under oath by some of the individuals most involved. Even Mr. Biden's impeachment could be considered.

This is a reminder of the fabrication and pretext used by the Lyndon B. Johnson administration, after the 1964 Gulf of Tonkin incident, in order to justify an escalation of U.S. military involvement in the Vietnam War.

Also, one might remember the September 2000 report published by the PNAC (Project for a New American Century). Written under the supervision of neoconservative Deputy Defense Secretary Paul Wolfowitz, an avid campaigner for the war against Iraq, the report proposed that there was a need for "a new Pearl Harbor", to galvanize the country behind the objective of "re-arming America".

One year later, just by coincidence or otherwise, there came the catastrophic event of September 11, which effectively reshaped U.S. foreign policy.

When a government operates in complete secrecy, independently from democratic legislative institutions, it may take a long time for citizens to learn the whole truth behind certain so-called "mysterious" events.

Secondly, the sabotage event demonstrates that one objective (possibly the primary objective), in having Ukraine join NATO and in provoking Russia, was to create a direct confrontation with Russia, which could 'justify' the destruction of the Russian-German pipelines. Therefore, the people of Germany are bound to ask German Chancellor Olaf Scholz for a public accounting of his role in the entire sordid affair. It is not beyond possibility that Mr. Scholz could be called to submit his resignation.

Thirdly, legally, the Russian government and the international consortium that owns the destroyed pipelines can be expected to launch a barrage of suits under international law and request billions of dollars in damages. Other victims of the resulting rise in the price of natural gas could follow suit. Russia would also be expected to launch a formal accusation against the U.S. for having so openly violated the United Nations Charter.

Fourthly, as more information starts to filter out over the coming weeks, European governments and the E.U. leadership—having bought Washington's official narrative that the push to admit Ukraine into NATO and the European Union was primarily based on a respect for Ukraine's independence—may have to reassess their motives for supporting a war leading to nowhere, except possibly into World War III.

Indeed, if the Ukrainian war has been an American-led fabricated war from the start, beginning with the U.S.-backed overthrow of the elected Ukrainian government, in 2014,  some among the most staunch European supporters of the war could realize that they have been manipulated.

Finally, journalist Hersh's revelations could also disrupt, and possibly even derail, any plan that the U.S. and NATO could have had to escalate the war in Ukraine.

Conclusion

This sad modern episode in the long history of human warfare should teach us all a lesson. Indeed, in matters of wars or other crimes, the first question should always be "Cui Bono?" or "Who profits?"

In general, when a war breaks out, you can be assured that it is in the interest of one of the parties, the one who actively sought it out, and not necessarily the one who shot first.

Finally, it must be said that in matters of wars of aggression, no government can be trusted.

___________________________________________________

*As a U.S. Senator, Joe Biden said on several occasions that he was a "Zionist" and that one does not need to be Jewish to be a Zionist.

___________________________________________________

International economist Dr. Rodrigue Tremblay is the author of the book about morals "The code for Global Ethics, Ten Humanist Principles" of the book about geopolitics "The New American Empire", and the recent book, in French, "La régression tranquille du Québec, 1980-2018". He holds a Ph.D. in international finance from Stanford University.

Please visit Dr Tremblay's site or email to a friend here.

Posted Tuesday, February 14, 2023.

*** To receive new postings of Dr. Tremblay's articles, 
please send Subscribe, to carole.jean1@yahoo.ca
To unsubscribe, please send Unsubscribe, to carole.jean1@yahoo.ca
__________________________________________________________________________

© 2023 Dr. Rodrigue Tremblay