The following video by Storm Clouds Gathering provides an excellent summary of continuing Chinese efforts to chip away at the US dollar. These include a recent trade agreement between China and Australia to use the yuan and Australian dollar – rather than the US dollar – in bilateral trade. China entered into a similar trade agreement with Russia in 2010 and with Japan in 2011. Another major concern for the Obama administration is recent massive Chinese gold purchases, which suggest they may intend to create a gold-backed currency to rival the US dollar.

The film underlines the obvious build-up for war couched in US government’s increasing belligerence towards China, Syria, Iran and North Korea. The main intended target of this saber rattling is China, America’s main economic rival. However, for the most part, Obama’s true military intentions remain hidden from public view owing to proxy wars with China’s allies (Syria, Iran and North Korea). Historically the main purpose of such proxy wars has always been psychological – to overcome civilian resistance to military aggression.

The video also reminds us that the so-called war on terror is really a war about control of the international financial system. Up until the recent defection of China and its allies and now Russian, Japan and Australia, it was only possible to purchase oil in US dollars – which came to be known as petrodollars. For many years, all countries relying on imported oil were forced to keep reserves of US dollars. After the US abandoned first the gold and then the silver standard, the US dollar maintained its value by virtue of its relative monopoly on the buying and selling of oil. If the petrodollar dies, so does the US dollar does and with it the US economy.

Two of the most significant US military invasions of the last decade relate to threats against the petrodollar. The first occurred in 2003, after Saddam Hussein tried to set up an oil bourse that would trade oil in euros rather than dollars. The second occurred in 2010 when Gaddafi tried to introduce a new currency called the “gold dinar” to be used for Libyan oil purchases.

photo credit: Jonathan_W via photopin cc

Crossposted at Daily Censored

Wenzhou: birthplace of Chinese capitalism

Last week I was surprised to learn that private lending is illegal in China. In view of the country’s economic miracle, I was even more surprised to learn that small and medium sized enterprises (SMEs), which make up 90% of businesses, are ineligible for start-up or bridge funding from Chinese banks. The latter are still government owned.  The vast majority of Chinese SMEs are financed by private “illegal” loans, amounting to 3.7 trillion yuan or $US 500 billion dollars per year. About half of this financial activity occurs in Zheijiang province, whose most prominent city is Wenzhou, the birthplace of China’s private economy. It’s currently home to 360,000 small businesses that make a major portion of the world’s consumer goods.

70% Interest Rates and “Penalties” for Missed Payments

Until recently, government enforcement of the ban on private lending has been piecemeal and arbitrary. They supposedly go after lenders when the rate of interest exceeds four times the interest charged by state-owned banks (currently about 6%). However many lenders get away with charging interest rates as high as 70%. Borrowers have been happy to pay high rates for start-up funding, owing to the immense profit potential of small factories producing consumer goods for export.

Loans are typically informal. The loan originators pool savings from family members and friends. Borrowers are often friends, as well, and loans are typically agreed with a handshake, rather than a formal contract. People who miss an interest payment get a visit from thugs who beat them up. With the recent slowdown of the Chinese economy, many borrowers, unable to make monthly interest payments have fled Wenzhou. There has also been one high profile suicide.

About 60% of borrowers had taken out loans to invest in the local property boom. When the Chinese government intervened in November to rein in the real estate bubble (by limiting the number of houses people could purchase and increasing the size of deposit required), Wenzhou lenders lost millions of dollars, when loans became tied up in unsellable homes and commercial buildings. At the end of 2011, the shortage of finance capital caused approximately one fifth of Wenzhou’s 360,000 SMEs to cease operating – owing to the unavailability of bridge financing.

Death: the Government Penalty for Usury

In the most high profile illegal lending prosecution, Wu Yung, one of China’s most famous multi-millionairesses was sentenced to death in 2009 for charging an “unreasonably high rate of interest.” The 2011 credit crunch, as well as the uproar Wu Yung’s sentence provoked in the legal and small business community, has spurred the Chinese government to legalize and reform private lending. They are starting with a pilot program in Zheijan and Shenzhen province, based on legislation drafted by Zhou de Wen, head of Wenzhou’s small and medium business association. It will provide government support for the creation of numerous small private funding institutions, including rural banks, micro-financing firms and most importantly,  a private equity fund run by the city government, to invest in its private companies.

In a separate but related development, the Chinese supreme court has commuted Wu Yung’s death sentence and ordered her retried.

Prime Minister Wen Jia Bao with President dos Santos

(This is the second of two blogs contrasting US and Chinese foreign policy in Angola and other oil-rich African countries.)

The Angolan civil war ended in 2002 with one million dead, four million permanently exiled and a country rich in natural resources littered with landmines and crumbling infrastructure. The MPLA government was left with the daunting task of clearing landmines, rebuilding the decimated infrastructure, retrieving weapons from a heavily-armed civilian population and resettling tens of thousands of refugees who had fled the fighting. Eduardo dos Santos, who has been president for more than 30 years, remains immensely popular, with the MPLA winning an 82% majority in the 2008 election, the second in Angolan history.

In addition to underwriting Angola’s oil industry, low interest Chinese loans and investment have helped fund mineral prospecting in the country’s copper, iron and gold mines, as well as financing landmine clearance necessary to re-establish coffee and cotton plantations. Now that oil revenues are no longer needed to purchase armaments and pay government troops, they are used for national reconstruction projects – roads, airports, bridges, hospitals and schools. Angolan refugees in their millions once clamored for admission to Portugal. Now the reverse is happening. With Portugal in severe recession, more than 10,000 Portuguese natives emigrated to Angola last year, in search of business and employment opportunities.

Extreme Income Inequality

The Angolan middle class is doing great. The Porsche dealer in Luanda, the capitol city, can’t keep up with orders. Ironically Angola was also in the unique position of having 4G mobile access ahead of most of Europe and much of the US. The government partnered in this venture with the Chinese phone giant ZTE. The latter provided all the equipment, including the handsets, and most of the installation engineers.

Unfortunately the majority of the Angolan people has yet to benefit from the economic boom. Seventy percent of the population still lives below the poverty line. Half the country lives on less than $2 and one-fifth of all children die before their fifth birthday (though this number has improved significantly with the end of the civil war).

The Angolan “Arab Spring”

Unita, the official opposition in Parliament, complains bitterly that the ruling party silences any and all criticism. In 2011 a group of young Angolans, influenced by the “Arab Spring” movement, protested in the capital demanding Santos’ resignation. Their protests were quickly and forcefully put down by the Angolan police. Dos Santos also receives unfavorable publicity about human rights abuses in Cabinda province, home to a separatist movement that predates the civil war. Much of the country’s oil wealth comes from Cabinda. Human rights groups allege that Angolan troops deployed there have committed civilian atrocities.

Given the CIA’s historic links with Unita, their historic opposition to the MPLA and the role of CIA-funded foundations, such as National Endowment for Democracy (NED), United States Agency for International Development, and Center for Applied Nonviolent Strategies (CANVAS) in funding and training other “Arab Spring” activists (see Smoking Gun: US Role in Arab Spring, it’s hard to believe the CIA doesn’t have their sticky fingers in Angola’s “Arab Spring,” as well. The Agency also finds separatist movements hard to resist, especially those in regions suitable for cocaine or heroin trafficking (as in Kosovo and Balochistan – see Our CIA Freedom Fighters in Pakistan).

It may be pure coincidence that Angola is a growing transshipment hub for Nigerian traffickers transporting Brazilian cocaine to Nigeria or Europe.

Portuguese president Passos Coelho with President dos Santos

(This is the first of two blogs contrasting US and Chinese foreign policy in Angola and other oil-rich African countries.)

Forget China and India. The World Economic Forum predicts that six of the ten most rapidly growing economies in 2012 will be on the African continent. Both Ghana and Nigeria have exceeded China as the fastest growing economies in the world. Based on GDP growth for the first quarter of 2012, the Ghanaian economy will grow by 16^% this year. The Nigerian GDP, which dropped to 3.4% in 2010-2011 is expected to hit 10% in 2012. Nigeria’s dip in economic growth related in part to the global financial crisis and in part to investor jitters over the militant environmental movement in Ogoniland, where most Nigerian crude is produced. Shell’s shameless production practices have led to massive coastline degradation, air pollution and health problems. The Ogoni people, who receive no employment or other economic benefits from Shell’s exploitation of their most valuable resource, are understandably angry. There is the additional and related problem of massive “bunkering” (illegal diversion of oil from the Shell pipeline), with total loss amounting to 7% of Nigeria’s total oil production.

While GDP growth in Angola isn’t expected to reach the top ten (they are only expected to grow by 10%), the country has become an even bigger magnet for foreign investment than Ghana or Nigeria. Moreover, like Nigerian president Jonathan Goodluck, their president Eduardo dos Santos has committed to help bail out the floundering Eurozone (the latter by helping their former colonial master Portugal).

The two main features all three countries share is a flourishing oil export industry and generous low interest Chinese loans. The latter has allowed them to develop their respective oil industries while simultaneously escaping the treacherous clutches of the IMF, World Bank and western investment banks.

US vs Chinese Foreign Policy in Africa

Here once again we see the stark contrast between US and Chinese foreign policy. Ever since African colonies began to win independence, the US has opted for covert and overt military intervention to destroy African infrastructure, thereby suppressing nationalistic struggles that might threaten the economic interests of US oil companies and their stockholders. China, in contrast, has embarked on a long term investment/development strategy that offers immediate economic and infrastructure support for countries devastated by years of western economic exploitation and civil war – and significant long term investment returns for the Chinese economy. In hindsight, US taxpayers would clearly have benefited more if the Reagan, Bush I and II, Clinton and Obama administrations had opted for a Chinese-style development/investment strategy in Africa. It’s a great pity we were never given a choice or even told the truth about Africom and the US military agenda in Africa.

The US media would have us believe that Africa is still a famine stricken backwater of warring tribes incapable of getting along with one another. This is extremely ironic, given that most of the civil wars that have plagued the continent – and the resulting famines – were the direct result of CIA destabilization campaigns, often involving mercenaries funded and trained by the CIA and/or our NATO allies.

Angola’s 27 Year CIA-Sponsored Civil War

Recently there has been special focus on Angola, as April 4^th was the ten year anniversary of the country’s 27 year civil war. Angola already had a well-established oil export industry when they first gained independence in 1975. Their big mistake was installing a nationalist government determined to use their oil wealth to improve the lives of ordinary Angolans. The same scenario, of Big Oil against freedom and self-determination, played out here as in the Middle East. The main US foreign policy objective there was to suppress Arab nationalism. With the support and encouragement of the US, South Africa’s apartheid regime invaded Angola to overthrow the new government, run by the MPLA (Popular Movement for the Liberation of Angola). When Cuba sent fighters to support the government, the CIA intervened by funding and training Unita (National Union for the Total Independence of Angola), a rival group led by Jonas Savimba. This, in turn, led to Soviet intervention on the side of the Angolan government.

After 16 years of fighting, which killed up to 300,000 people, a peace deal led to elections. But Unita rejected the outcome and resumed the war, killing an additional hundreds of thousands of Angolans. Another peace accord, backed by UN peacekeepers, was signed in 1994 and the UN. As the fighting steadily worsened, the peacekeepers withdrew in 1999. Subsequent concerns about a link between the civil war and the unregulated “blood diamond” trade led the UN to freeze bank accounts used in the gem trade.

The death of Unita leader Jonas Savimbi in a gunfight with government forces in February 2002 led the rebels to sign a ceasefire in April which ended the conflict.

To be continued.

Venus fly trap - a meat eating plant

As a strong sustainability activist, I feel quite embarrassed admitting that I derive nearly all my dietary protein from animal sources (eggs and fish). Explaining why I do so is even more embarrassing – an autoimmune disease that makes it virtually impossible for me to digest plant protein, in the forms of nuts and legumes (peas, dried beans, lentils, etc.). I have spent the last year researching traditional cultures that ferment and/or sprout their nuts and legumes to make them more digestible. I have been experimenting with some of these methods, as well as adding Kombu (a form of seawood), which makes legumes more digestible by removing the phytic acid. None of this works thus far. Whenever I eat nuts and legumes, it’s like taking a double dose of Ex-Lax.

Will Global Population Drop Without Fossil Fuels?

In my last blog I talked about Richard Heinberg’s prediction that without fossil fuels, the Earth could feed at most two billion people. Organic farmers in the Biointensive (an amalgamation of the eighty year old Biodynamic and the French Intensive movements) dispute this figure, pointing to studies showing that Biointensive methods actually increase crop yields by 150-200% (see http://www.theecologist.org/trial_investigations/268287/10_reasons_why_organic_can_feed_the_world.html). Given WHO and World Hunger studies revealing that our current system of industrial agriculture feeds only 84% of the world (the other 16% are continuously on the verge of starvation – see http://www.prb.org/Journalists/PressReleases/2005/MoreThanHalftheWorldLivesonLessThan2aDayAugust2005.aspx), we could estimate that a switch from industrial to Biointensive agriculture could potentially feed a global population of 7.8 billion.

Now here’s the catch: nearly all the research in Biointensive agriculture concerns yields of grains and vegetable crops. Preliminary research applying biointensive methods to the grazing of livestock reveals that an agricultural system providing every global resident a meat-based is only possible for a global population of 2-3 billion.

The average energy input required to produce meat protein is eleven times greater that that required for grain protein production. A meat based diet also requires ten times more land than a plant based diet http://en.wikipedia.org/wiki/Environmental_vegetarianism) and 100 times more water (http://www.ajcn.org/content/78/3/660S.long). In the US alone, the amount of energy, land and water used to raise livestock grains to would be sufficient to feed an additional 840 million people eating a plant-based diet. (http://www.ajcn.org/content/78/3/660S.long).

The Privilege of Eating Meat

At the moment approximately 1/3 of the planet (those in the privileged industrialized world) consume meat (http://www.ajcn.org/content/78/3/660S.long). Owing to shortages of cropland, fresh water, and energy resources the other 2/3 (4.7 billion people) of the planet are compelled to survive on a plant-based diet. With rapid industrial development in India and China, these ratios are changing rapidly. A growing middle class in both countries is developing an insatiable demand for meat, dairy and other animal-based products. In New Zealand this is a daily news item, as China and India purchase the bulk of Australia and New Zealand’s meat and dairy exports.

Hard Choices for Activists

What this means, in essence, is that sustainability and social justice activists are faced with some hard choices. It we are genuine in our commitment to replace capitalism with a more egalitarian society, we need to face the hard reality that no society is truly egalitarian if only rich people eat meat. Thus according to my calculations, a truly equal distribution of land and water resources will either require a strong commitment to reduce global population to 2-3 billion – or a commitment by 1/3 of the planet to give up their meat-based diet.

If we fail to make this choice – and do nothing – we will be left with a scenario in which Malthusian forces (war, famine and disease) drastically reduce global population for us.

My last blog suggested that the current US wars in the Middle East, North Africa and Central Asia are really proxy wars with China over oil and gas resources. I continue the discussion by outlining the crucial Chinese and US alliances in the region.

The prime ministers of China and Pakistan

China‘s Strategic Alliance with Pakistan

Obama’s and Hillary Clinton’s recent threats against Pakistan for allegedly promoting Taliban terrorism are pure rhetoric. Their purpose is to conceal the strategic importance of Pakistan (and Afghanistan) in US competition with China over oil and national gas resources. It also conceals the reality that the undeclared US war against Pakistan (approximately 2,000 civilians have been killed since the drone attacks started in 2004 – see http://en.wikipedia.org/wiki/Drone_attacks_in_Pakistan) is really a proxy war against China.

Pakistan is China’s strongest ally in protecting the oil supply critical to its booming economy is Pakistan. At present China imports 46% of its oil. In contrast the US imports 60%. (See http://english.peopledaily.com.cn/90001/90778/90860/6891500.html). Twenty percent of Chinese oil imports come from Saudi Arabia and somewhat less from Angola (see http://www.presstv.ir/detail/183746.html.) Ten percent of China’s oil imports come from Iran.

Growing Military Tension in Pakistan

Until recently, all oil originating from Saudi Arabia and Iran had to be transported via the Persian Gulf and the Strait of Hormuz, which is under the control of the US Navy (see http://www.foreignaffairs.com/articles/62604/dennis-blair-and-kenneth-lieberthal/smooth-sailingthe-worlds-shipping-lanes-are-safe). To counterbalance this de facto US control over their oil transhipments, China built a port in Gwadar (in Balochistan province) Pakistan to facilitate overland oil transport – via an extensive Chinese-built super highway and eventually the IPIC (the Iran- Pakistan- India-China) pipeline.

Since 2002, covert CIA support for the Baloch separatist movement and daily “terrorist” bombings and assassinations have seriously disrupted operations at the Gwadar Port (see “Our CIA Freedom Fighters in Pakistan” at http://stuartbramhall.aegauthorblogs.com/2011/03/07/our-cia-freedom-fighters-in-pakistan/). As this obviously has more effect on the Pakistan economy than on China, the Pakistani government has recently given China permission to build a naval base in Gwadar http://corredorbioceanico.wordpress.com/2011/06/14/great-game-in-the-indian-ocean/.This move is also partly motivated by continued US violation of Pakistan’s sovereignty with CIA drone strikes in Waziristan.

China’s Other Strategic Alliances

As US influence in Saudi Arabia declines (in 2003 they demanded the US withdraw their troops from Saudi military bases – see http://en.wikipedia.org/wiki/United_States_withdrawal_from_Saudi_Arabia), the Chinese also strengthen political and economic ties with the Saudis.

Meanwhile as the US prepares to withdraw from Afghanistan, the US State Department is extremely concerned about growing Chinese investment and influence in Afghanistan, especially in view of China’s strong alliance with Pakistan and the latter’s historic links with the Taliban (which seems positioned to take power following US withdrawal). Important context often omitted by the US media is that the CIA collaborated with Pakistan to create the Taliban in CIA-funded Madrassas (fundamentalist Islamic schools) to fight the Soviet occupation of Afghanistan (1979-1988). The subsequent Taliban takeover was fully supported by both Bush senior and Clinton, in the belief that they had the ability to bring peace and stability to a country devastated by decades of civil war. Both were essential to enable US oil companies to employ Afghanistan as a transit route for newly discovered Caspian Sea oil and gas. It was only when the Taliban balked at the Bush administration’s proposed oil-gas pipeline in 2001 that they became the enemy.

It’s no surprise that China is also one of the strongest political and economic supporters of Hamas and the Palestinian peace process (see http://www.chinadaily.com.cn/china/2011-03/26/content_12231765.htm). At present Israeli terrorist victims are suing a Chinese bank that provided major financial support to Hamas (http://www.jpost.com/International/Article.aspx?id=228728).

US Allegiances in the Middle East

India, Pakistan’s long time enemy, is a strong ally of the US (second only to Israel) in this strategic war over resources. Indian intelligence (RAW) is a longstanding supporter of Afghanistan’s Northern Alliance. With US military support, the Northern Alliance install Hamid Karzai as president of Afghanistan following the US invasion, although Karzai only controls a small area around Kabul. RAW provided the Northern Alliance with weapons, training and financial support while the US and Pakistan were still supporting the Taliban. In addition, RAW provides major support for the Baloch separatist movement in Pakistan (see “Our CIA Freedom Fighters in Pakistan” at http://stuartbramhall.aegauthorblogs.com/2011/03/07/our-cia-freedom-fighters-in-pakistan/). According to many Pakistani analysts, it’s also responsible for cross border terrorism on the Kashmir-Pakistan border (see http://www.newscenterpk.com/indian-double-game-with-bangladesh.html).

This is the first of a series of posts discussing the likelihood that capitalism is on the verge of collapse and what a post-capitalistic world might look like.

Fatal Debt Contagion

As the global recession and debt crisis worsens, even mainstream analysts are starting to speculate that global capitalism is on the verge of collapse. At the moment, most attention is focused on European “debt contagion.” European Union economists are terrified that the Greek government will default on their debt. A Greek default makes it inevitable that Spain and Italy will also default. The mechanism here relates to the totally unregulated, speculative way in which “sovereign debt” (the money countries borrow from private banks to finance government operations) is financed.

Investment banks in France, Germany, London and New York have already jacked up the interest rates they charge Italy and Spain – high risk investments always command higher interest rates. Higher debt repayments will make Italian and Spanish default inevitable, which will increase interest rates on Japanese, British and US debt – as all three countries have very high debt levels. Owing to the size of their economies, default in Japan or the US is very likely to crash the global economy.

The Endgame

There are three schools of thought as to how the capitalist endgame is likely to play out. The first predicts a scenario in which the Asian tiger economies (China and India) collapse when the US, Japan and UK do – given that national economies are hopelessly intertwined as a result of globalization. This school also predicts that any serious global instability will pop the Chinese real estate (debt) bubble. When this happens, the Chinese economy will crash, like the US economy did when the subprime derivatives bubble burst in 2008. The creation of debt bubbles (the bubbles leading to the 1987 market crash and 2001 dot com collapse are examples), involves the creation of vast amounts of credit (i.e. wealth that only exists on paper), which are all wiped out simultaneously when the bubble bursts. This sudden loss of economic wealth inevitably bankrupts large numbers of businesses and causes massive job loss.

The second school believes that only the US, Europe and Japan will collapse, while the economies of China, India and its Asian and non-Asian trading partners (for example, Australia and New Zealand) will continue to prosper. In this scenario the coming debt crisis and crash will merely accelerate the gradual role reversal of the past two decades – with China rising to the status of economic superpower and the US, Europe and Japan becoming third world nations. Based on the current strength of the New Zealand dollar – rising over the past nine years from $US 0.50 to $US 0.82 – it strikes me that most global currency traders subscribe to this second school of thought.

The third school supports the scenario I believe Wall Street and the Pentagon have in mind, in which the US and its NATO allies confront China militarily to prevent it from replacing the US as the world superpower. Evidence that the Pentagon has already chosen this tack is seen in the strategic alliances it has formed around Middle East and North African oil resources. Many foreign analysts believe that the US wars in the Middle East and Libya are really proxy wars with China over oil resources. They worry that these proxy wars have the potential to degenerate into a full scale war between the US and China – which would surely destroy both economies.

China’s regional allies in this global struggle are Pakistan, Iran, Saudi Arabia, Angola, Russia, Palestine and (indirectly through Pakistan) a Taliban-controlled Afghanistan. US allies are NATO, India, Israel and Iraq (thanks to the permanent American military installations in Iraq).

To be continued, with a discussion of how these regional alliances play out in current proxy wars.

China, Japan and “Middle East” investors bailed out the Euro on January 25^th. This hopefully will spare Portugal and Spain from IMF intervention and the harsh structural adjustment “austerity” cuts the IMF has recently imposed on Greece and Ireland.

According to Klaus Regling, the head of the European Financial Stability Facility (EFSF), the AAA rated Euro bond auction (worth 5 billion euros) was “nine times subscribed (there were nine times as many bidders as bonds),” making it the biggest order book on record.

China bought 38% of the bonds and Japan 20%, with unspecified Middle East investors purchasing an unspecified amount. The Euro bond pays 2.89% interest.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8282038/Asian-investors-lead-massive-demand-for-first-Euro-bail-out-bond.html

South Africa has now been formally accepted into the BRIC (Brazil, Russia, India, China) economic alliance. The term BRIC was coined by Goldman Sachs in 2001 to describe the growing influence of large resource-rich emerging economies, which between 2000 and 2008 have accounted for half of global economic growth. The BRIC countries are not formally linked but have held summits and taken steps to boost financial cooperation and investment opportunities among them. There seems to be an unstated agenda of building a strong economic alliance to counterbalance the economic strength of the US and the European Union. Especially given the Americans’ belligerent approach to resource acquisition (via military domination), as we enter a period of relative resource scarcity.

According to China’s state news agency Xinhua, BRIC has accepted South Africa as a full member of the group. South African President Jacob Zuma was informed in a letter from Chinese President Hu Jintao in a letter of invitation to attend the third BRIC leaders’ summit, to be held in April 2011 in Beijing.

BRIC Ignored by Mainstream Media

BRIC receives very little attention in the mainstream media – except for the discussion they had at their summit in 2009 about launching their own currency to compete with the dollar and the euro. All four BRIC countries have fairly large US currency reserves (oil can only be purchased in US dollars). All are very keen to diversity these holdings, owing to continuing US debt problems, which have caused the US dollar to lose 30% of its value related to other currencies over the last decade. China has now publicly announced its willingness to back the euro by buying debt (i.e. making loans) to financially troubled EU countries, such as Greece, Spain and Italy, who are unable to afford the high interest rates Goldman Sachs and other bond holders want to charge them.

The S&P BRIC-40 Stock Index

BRIC receives much more attention in the financial press. In fact there is a Standard and Poor BRIC-40 stock index (see http://www2.standardandpoors.com/spf/pdf/index/BRIC40_faq.pdf). The BRIC-40 index is a “basket” of stocks of the 40 largest and “most liquid” companies in Brazil, Russian, India, and China. All companies are expected to exhibit substantial growth in the coming decade, in parallel with economic growth in their parent countries.

Many financial analysts are “bullish” on the BRIC-40, in contrast to Wall Street stocks, despite enormous Wall Street profits this year. Most companies achieved these profits by laying off workers and reducing their labor costs. However instead of investing the profits in expansion and future growth, many have used it to buy back shares to inflate their stock price (see (see http://www.washingtonpost.com/wp-dyn/content/article/2010/10/06/AR2010100606772.html). This lack of future orientation has serious implications for future profits – as there is little scope to lay off even more workers in coming years.

Wall Street analysts are scratching their heads why BRIC would want to invite South Africa to join them. The South African economy is less than ¼ the size of the economy of Russia, BRIC’s smallest partner. I think they seriously underestimate the political influence, as the most developed African country, over the rest of the continent.

List of BRIC Resources By Country:

Brazil: aluminum, gold, iron ore, manganese (ingredient in steel, nickel, rock phosphate (essential in agriculture and increasingly scarce), platinum (essential in catalytic converters, neurosurgical and dental equipment, computers and cancer drugs), tin, uranium, petroleum, timber, diamonds.

Russia: has the world’s largest mineral and energy supply and is known as an “energy superpower”, containing 22% of the world’s oil, 16% of the world’s coal, and 40% of the world’s natural gas. Other resources include timber, iron ore, nickel, potassium (essential for agriculture), lead, petroleum, zinc, aluminum, tin, platinum, titanium, copper, tungsten phosphates and mercury are the most popular natural resources that Russia provides. Russia has the largest reserves of fresh water in the world.

India: coal (third-largest reserves in the world), iron ore, manganese, mica, aluminum, titanium, chromite, natural gas, diamonds, petroleum, limestone and thorium.

China: the largest producer of gold and one of the largest producers of rare minerals, such as antimony, zinc and tungsten, in the whole world. Also coal, iron ore, magnetite, petroleum, aluminum, natural gas, mercury, tin, lead, manganese, molybdenum, vanadium and uranium.

South Africa: gold, chromium, antimony, coal, iron ore, manganese, nickel, phosphates, tin, uranium, gem diamonds, platinum, copper, vanadium, salt, and natural gas.

I spent yesterday trying to get my head around what’s really happening in Afghanistan. I would strongly discourage other people from trying this. Mainstream coverage of the NATO occupation is full of the type of paradoxical and contradictory messages that are known to cause insanity. In fact the whole thing reminds me of a Road Runner cartoon. I strongly recommend readers watch the following before proceeding (click on Making Progress link to watch).

Making Progress

The most recent scandal relates to President Hamid Karzai paying tens of thousands of dollars to negotiate with an imposter who claimed to represent the Taliban – who turned out to be a Pakistani shopkeeper. (see http://www.pakistankakhudahafiz.com/2010/11/27/karzai-aide-blames-british-for-taliban-impostor/)

The Taliban Seem to Be Winning

It’s no longer a secret that Karzai is very keen on negotiating a peace settlement with the Taliban – and that they refuse to meet with him. They have no reason to. They’re winning. The Taliban control most of Afghanistan outside the central area immediately surrounding Kabul. The US media no longer publishes maps of the areas under Taliban. The most recent one I could find is from 2008:

None of this is surprising, given that the Taliban enjoys strong support of the civilian population in the areas they control (who regard Karzai as a US puppet and a crook and only in the Afghan presidency thanks to massive electoral fraud). See http://www.csmonitor.com/World/Middle-East/2010/1117/Taliban-placed-IEDs-threaten-lives-and-stability-in-Kandahar-Afghanistan).

Is the US Funding the Taliban?

The Taliban are also extremely well funded. As was pointed out in a 2009 Reuter’s report, less of this funding comes from narcotics trafficking than previously believed. Most of it actually comes (indirectly) from outside development assistance. The Taliban go around to various tribal leaders and demand payment not to blow up bridges and other reconstruction projects. (see http://blogs.reuters.com/global/2009/08/13/who-is-funding-the-afghan-taliban-you-dont-want-to-know/)

In Farah province, for example local officials report that the Taliban are winding up with 40 percent of the money coming in for the National Solidarity Program, one of the country’s most successful community reconstruction projects.

What’s Really Happening in Kandahar

Reporting over the last few months has focused on the US/NATO surge to retake Afghanistan’s second largest city, Kandahar. The Taliban “control” Kandahar (exerting some political control, as well as having a strong military presence). The headlines a few months ago proclaimed that thanks to the 2010 “surge” in US troops, the Taliban had been “defeated militarily”” and driven out of Kandahar.

The US press was vague as to where they were “driven” to. The conventional wisdom is that the Taliban cease to engage US troops because 1) they go underground and fade into the very sympathetic local population (http://opinionasia.com/article/print/837 and http://www.cbsnews.com/2994-501704_162-0.html or 2) they retreat to the tribal areas of Pakistan, where they enjoy strong support from Baloch separatists.

The Pakistani tribal areas are very mountainous and remote and don’t lend well to a conventional military campaign. Our forces there are mainly CIA personnel, and the best we can do is drop bombs on a few Taliban leaders (and hundreds of civilians) from unmanned drones and train Baloch separatists in bomb making and other terrorist activities. It’s an open secret that the Pentagon would like to see energy and resource-rich Balochistan secede from Pakistan as a US-friendly state (which would also include parts of southern Iran. (see http://metaexistence.org/usagenda.htm)

More recent reports on Kandahar are less optimistic. According to Reuter, NATO commander Nick Carter reports they won’t know till June whether the Kandahar campaign has been successful (see http://news.yahoo.com/s/nm/20101028/wl_nm/us_afghanistan_kandahar – the San Francisco Examiner also carried this report but seem to have taken this page down)

Are Americans Being Lied To?

Besides US designs on Balochistan, there are three other crucial elements left out of mainstream coverage.

• First, the CIA created the Taliban in the first place (presumably to defeat the Soviet occupation – but more importantly because the US wants strategic control of the region).
• Second, both Afghanistan and Pakistan have immense importance as energy transit routes for our economic rivals India and China. With dwindling global oil and natural gas resources, competition over Middle East oil and gas has become extremely intense. The Chinese have invested massively in Balochistan, particularly in the water port in Gwadar and its supporting infrastructure. Which Pakistani commentators agree will give China a virtual monopoly on Iranian gas and oil. In fact many Pakistani commentators believe that Pakistan is the true target – that the US would prefer to fight the Taliban in Pakistan’s tribal areas. Especially if this could facilitate the establishment of Balochistan (which would include the Baloch regions of Iran – fracturing a major US enemy) as a separate state.
• Third, 60% of Americans oppose the war in Afghanistan. This is starting to be reflected in mainstream commentary. Moreover an increasing number of mainstream commentators believe we could compete with China much more effectively by putting Americans back to work – by rebuilding America’s severely compromised manufacturing base instead of wasting trillions of dollars in Afghanistan, Pakistan, Yemen and Iraq (that war ain’t over – Obama’s 2011 budget includes $549 billion for Iraq).