These are a few words describing the major fault lines in the present that will shape our future. This is about the long view, sitting on the Turkish mountains looking over a deeply troubled Syria and a Middle East that has been the beating heart of the world ever since Adam himself probably farmed these very slopes.

[*The blogging on this site will restart after Trump’s inauguration. The last article has an insert dated Dec 2 on Syria].

Trump will be coming to power with every single member of the Pentagon capitalist complex trying to pre-empt the new president into their multiple conflicting projects for merchandising death.

There is the Netanyahu extreme right wing government in the lead. Much ink has already been spilled on this. Netanyahu’s demands for a major war in the Middle East to create a Greater Israel maybe his ticket out of prison, but it is the most potent element in the international mix that could derail Trump’s coming single-term presidency. Trump vows to end ‘forever wars’ to fix America, reduce budget deficits, and make America efficient (with Elon Musk’s help it seems). Netanyahu is pushing for the exact opposite outcome. Let’s see who wins and who suckers who.

There are also the Euroamerican arms manufacturers. This ranges from well known firms like Boeing and Raytheon in the US that have a chokehold on the US Congressional budget to the German firms, Krauss-Maffei Wegmann Maschinenbau, builder of the Leopard tank and Rheinmetall, which fund the Green and Liberal parties no less, and which have been crucial drivers of war in Ukraine since the very beginning. The Germany of Angela Merkel is now the war state of Marie-Agnes Strack-Zimmermann.  

The denial of cheap Russian gas with the blowing up of the Nord Stream pipeline set a course for Germany’s deindustrialisation. More and more firms, like Siemens, are moving to the United States. Volkswagen is closing down factories for the first time since Adolf Hitler sponsored the company the 1930s. The arms manufacturers are the only game in town. Promoting war is now central to foreign policy. The German navy recently contributed to the Israeli effort against Lebanon. So much so, that the Lebanese government (known as the ‘terror group’ in Israeli media) vetoed Germany’s attempted self-inclusion on the new international policing force for the monitoring of the latest ceasefire.

There are the Starmer and Macron governments, but also newcomers like Ukrainian intelligence, which is now using its ample grants of money from the US, the UK, and the EU to fund takfiri groups in Syria. They used to be called jihadi groups. But the term jihadi, which in Arabic refers to the general life struggle of every individual, and also includes fighting for one’s land against colonial oppression, isn’t used anymore. The term takfiri is more descriptive of the fighters in northern Syria. It means to condemn everyone not committed to your own narrowminded doctrine. It also involves occasionally cutting the heads off such offenders [see post-script below 7 Dec].

Starmer leads in the Ukraine War it seems with his Kursk offensive. Britain lost its way in the world after being unable to make the necessary social changes in the country to take advantage of the opportunities offered by Brexit. So it suddenly took NATO on as its main article of faith. The article on this site about why the Ukraine War became a British war, discusses how Seymour Hersh’s explanations of the blowing up of the Nord Stream pipelines didn’t really fit the facts. His explanations seemed unrealistically convoluted. Britain, with its very close links with Danish intelligence (the explosions took place in Danish territory), most probably set the explosives for the USAF’s killer blow. The Russians said so at the time and they have recently uncovered more proof of that allegation. The British firm BAE systems is a top member of the Pentagon’s capitalist club. For Britain, however, unlike Germany, the investment in war seems more political than industrial. It is an attempt to coax favours from the United States. But will this work with Trump?

In fact, European leaders are lining up to woo Trump and to negotiate any way possible out of the president elect’s plan to hike tariffs on all imports into the US. Macron has stolen a march on Britain by having Trump make his first foreign trip about the reopening of Notre Dame. There will be lots of music and champagne and parades of French Dragoons to WOW the Donald. France is stuck economically with Europe’s German growth engine now in steep decline. If Daimler-Benz and BASF are now essentially US firms, and Siemens is leading a whole pack of firms settling in America, France has to rapidly shift its attention to the US market.

The steep rise in US manufacturing activity was discussed in a previous article as having little to do with a Biden “reshoring” policy under the CHIPS ACT, and much more to do with Japanese firms moving to the US because they are being increasingly coerced away from the Chinese market by US sanctions. This also applies to German firms having to give up on the Russian market. Siemens had massive contracts with Russia for power stations before sanctions brought an end to that. This is quite apart from the problem of being cut off from Russian gas because of Anglo-American sabotage operations.

Now Britain and France face a similar problem. America will be remaking itself – is remaking itself  – by cannibalising its imperial vassals. The élites dominating these states will be taking – what from the point of view of their publics will be – increasingly irrational decisions as they try to navigate the present in the context of the weighty demands of an America trying but not knowing exactly how to restructure itself. What is the future of the American vassal state? Is the imposition of martial law in South Korea a sign of things to come?

Such dread will eventually provide the political climate for the overturning of élites. But it will likely only happen after a serious decline will have set in. If Japan is anything to go by, the suppression of citizens by what are essentially comprador élites can take the form of the complete depoliticization of populations and their withdrawal into steep moral and social decay. The role of comprador elites in the exploitation of local populations on behalf of empire in this – our – era of globalization, gave rise to Samir Amin’s concept of “maldevelopment.” The Arab philosopher ibn Khaldun, the first sociologist in the modern sense of the term, wrote, however, that renewal ultimately always comes to a society in unexpected ways and usually emerges from its periphery.

China and the Sinodollar market: The elephant in the room today, however, is China. While everyone is obsessed with Ukraine and the Middle East, the Middle Kingdom is going its own way, quietly changing the world as we know it.

From the time of the Volcker shock of 1979, when interest rates went to stratospheric heights to rid the American system of inflationary expectations, exchange controls were abolished in the US and Britain, and Thatcher’s Big Bang took place in 1983, a dollar financial empire has ruled the world economy. This has been mediated by the City of London and Wall Street. Some have argued convincingly that the British state was the pro-active element in its creation, with the Federal Reserve simply following blindly as it lost control of its currency. The reason the British state (through the Bank of England – UK Treasury – City of London nexus) could do this was because since the 1950s, Communist countries that feared putting their dollars in American banks, put them in British banks instead. They created the offshore Eurodollar market where eventually in the 1960s American multinationals like the Ford Motor Co. could find the funding for their expansion abroad, and where eventually by the 1970s, Arab oil surpluses could find a home.

Never before in history has a country given up its own currency as a means of payment for the rest of the world to use. America could do this because it had the structural power that allowed it (with the Nixon shock in 1971) to refuse to settle its debts in gold. American debt became the reserve base for the rest of the world’s diverse national monetary systems. This has since allowed the US government to run up huge debts to finance the defence budget, America’s principal welfare system for the empire’s rich in the Euroamerican military-industrial complex (MIC).

The reserve currency status of the dollar has also cost the American population dearly as it overvalues the dollar, driving up costs for US companies and reducing the attractiveness of local investment. The US Trade Act 1974 set the international legal framework for American multinationals to morph into a web of “transnational enterprises” (TNE’s) (Big Pharma, Big Tech, Big Oil + MIC) over time that channelled vast untaxed money flows into the coffers of the transnational class of rich (that remain largely uninvested in cash balances) and that came to dominate world trade. But it would be the offshore Eurodollar market – the imperial dollar – that from the beginning brought into being the mountain of claims on the world’s assets that these TNE’s needed to fund themselves.

However, with the globalisation that followed the Act of 1974 culminating in the inclusion of China in the World Trade Organisation in 2001, new countries grew that challenged the system. Russia, faltering into bankruptcy in the 1990s under the idiotic rule of Mikhail Gorbachev, and after the drunken interregnum of Boris Yeltsin, would turn itself around under the influence of a mix of elites (from the Russian MIC and oligarch classes) mediated by the Bonapartist figure of Vladimar Putin. It is now one of the great powers again. It has revolutionised warfare, and lately introduced the conventional kinetic equivalent of a nuclear weapon, but without the radioactive fallout. Russia asked for equality in the international system but the United States refused to row back on its doctrine of absolute dominance and so trapped it in a war not of its choosing, but which Russia won long ago.

Besides the war we have a new regime of sanctioning madness that is made possible by America’s control over the world’s payments systems (SWIFT, PAYPAL, VISA, MASTERCARD and the BITCOIN now much favoured by the IRS and Homeland Security, who are quietly acquiring the source codes to cryptocurrency).

This is destroying the status of the dollar empire. The extraordinary act of confiscating $300bn of Russia’s foreign reserves in 2022 has led to strong reactions on the part of surplus countries around the world, especially China and Saudi Arabia.

This site has covered Saudi Arabia’s decoupling from empire, which was driven initially by climate change and the dangers of declining revenue from fossil fuels as markets switch to renewables.

But the act of confiscation of funds accelerated the change as Saudi foreign policy took on an entirely new shape, dominated by the Chinese brokered peace deal with Iran in March 2023. This peace treaty became the framework for a ‘New Diplomacy’ in the region, which flourished throughout the turbulent period of Israel’s new wars on Gaza and Lebanon. We now see Saudi Arabia doubling down on this policy in the face of Israeli threats against Iran. Trump will find Saudi Arabia much changed since his first term, when he and Jared Kushner sought to sideline Palestine with their ‘Deal of the Century.’ The terms on which the empire will re-establish itself in the Middle East will be dearer.

Talks is endless about a BRICS currency and the demise of the dollar. If there is no actual sign of an immanent demise of the dollar, this is because China has, since 2022, created the equivalent of City of London’s Eurodollar market of the 1950s and 1960s – the Sinodollar market. Chinese dollar surpluses are no longer repatriated to the United States to buy dollar assets. US authorities are now worried about a gap of $700bm rising by $1bn dollars a day in the US balance of payments. Saudi Arabia and the UAE are massive investors in Chinese banks holding their dollar deposits. Talk of a BRICS currency or Petroyuan or indeed speculation about internationalizing the Renminbi (which would hurt Chinese business) is a red herring. World leaders at the BRICS countries at the Kazan conference last October were not planning a new international system. They are being guided by China into a takeover of the exiting dollar system.

But that isn’t all. China has, since 2015, also taken to hiding its dollar reserve assets in a sprawling new “shadow” banking system. If the United States Treasury ever felt like helping itself to Chinese dollar reserves, as it did with Russia’s, sanctions designed to target these dollars would have to strike at a much wider swath of China’s economy than would otherwise have been the case. This would make for unimaginable complexities because of China’s penetration of international trade. If sanctions are now normally understood to have a boomerang effect, this new Chinese financial maze would produce the more painful effect of shooting oneself directly in the centrebone of the foot.

China is the elephant in the room no one is talking about as the world obsesses with the Middle East and Ukraine. The trap is set by Netanyahu for Trump and his Israel firsters to sleepwalk into the looming rise of the Middle Kingdom to unshakeable hegemonic status. How will China take over the dollar market? Much as British banks did in the 1960s, by Chinese banks starting to lend dollars instead of local currency. Given that China dominates world trade in no uncertain terms it can issue all the dollar credits the world needs. In 2020, the US was about three times more exposed to Chinese manufacturing production than vice versa. Chinese intermediate good exports permeate the manufacturing sectors of all OECD countries to such extent that decoupling is now unimaginable.

So will the Federal reserve simply lose control of the dollar to the Sinodollar market in the 2020s as it did to the Eurodollar market in the 1960s? If it did, this would represent a loss of control outside the ambit of the “Atlantic Ruling Class” and would probably enrage Washington and London elites. These are the real questions to be asking.

The way China is mostly shaping our future, however, is through an extraordinary process of definancialization, putting finance at the service of productive activity as a result of a major restructuring of financial and real estate regulation. At the heart of this project is the deleveraging of the housing market under the Communist Party slogan of ‘homes are for living in.’ The fact is that, in the future, the competitive status of an economy will be determined by how cheap the housing is for its workforce. This will impact the Western economies hard as deflationary forces will become an inevitable part of restructuring.

The United States is an ageing empire. The imperial dollar, created it seems by the Federal Reserve’ cooperating in a ‘special relationship’ with a British state trying to reinvent itself after WWII, together with the stratospheric corruption associated with Pentagon capitalism, has sharply undermined the country’s long term productivity. The key thing is, however, that productivity numbers don’t show this. These figures lie because they have been altered to show finance as a productive activity, when it isn’t really. This is something which the Chinese have understood. America has frittered its resources over three generations and it doesn’t even have a functioning military to show for the unmentionable expense and all the hullabaloo – even though perceptions die hard.  

The last time the world was at war, Europe wasn’t paying attention and America emerged to dominate the world. During these forever wars, it is America not paying attention to the rise of China. While economists sit down to try to work out the numbers to see who’s winning, the numbers they are using are all lying numbers. China is changing the way the human race is going to count in the future, in more ways than one – in a formal calculational sense and a substantive value sense.

P.S. 7 Dec. Takfiri leader of HTS, al-Jolani is being interviewed here https://youtu.be/1tLBPbEXScA by CNN now being whitewashed as a ‘jihadi.’ US support for al-Qaeda (rebranded twice to become HTS now) goes at least back to 2012 when the Hillary Clinton emails revealed Jake Sullivan’s confirmation that ‘AQ is on our side in Syria’ in https://wikileaks.org/clinton-emails/emailid/23225