We have spent much time trying create a narrative to tie together the themes of biosphere extinction, debt catastrophe and the failure of counterinsurgency. It may be as simple as this: the oil empire built by the US was undone by the unanticipated consequences of debt and climate change. There never was a grand strategy, just the application of overwhelming force that no longer holds sway. No one knows what comes next.
What do we know is that the empire doesn’t work, the debt machine has been exposed as a fake, and the biosphere is really starting to show signs of non-viability.
In no particular order: the LIBOR (London Interbank Offered Rate) debt scandal is huge and should be the top political issue of all time. LIBOR is the means of setting global interest rates by a few men in London after polling 16 leading banks. This sets the rate for your mortgage, credit cards and student loans. And it has been systematically fixed for years. These manipulations were of the order of five or ten basis points (1%=100 basis points), which sounds negligible. But $550 trillion of credit is affected by this rate: some estimate as much as $800 trillion. Apparently tiny changes save or cost the banks billions. So far from this being a “free” market, it’s been fixed.
Not only that, it’s not just Barclays, who have paid a minimal fine of $450 million as part of their acceptance of wrong-doing. LIBOR rates automatically exclude the highest two rates and the lowest two. So to actually change LIBOR at least six, probably eight, maybe all 16 banks had to be involved. If the mafia had done this, we’d have 800 year prison sentences being handed down under RICO statutes. Don’t hold your breath to see a bankster do time. Because government must have known: or, equally scandalously, they didn’t. Either way, in a functioning political system of any kind, heads would roll. If they don’t, we’ll know that the empire has no functioning bureaucracy and that it has all been outsourced to the financial sector.
It’s been obvious for some time that global counterinsurgency has morphed into a drone-enabled assassination program, a kind of automatic merger of COINTELPRO and Murder Inc. It doesn’t work very well. Why does this matter? Because if non-US nations buy US Treasury bonds as tribute to the global empire, as David Graeber has argued, it rather makes a difference whether that empire can keep order.
Here the US has benefited from the disaster that has become the eurozone so that rumors that circulated in 2007 about oil being priced in euros have disappeared. Global liquidity has nowhere else to go except the dollar. One group of mainstream economists have described the US dollar as being on the “oil standard.” In this view, the empire kept peace in oil-producing regions and in exchange, oil was priced in dollars and not too highly. Since the invasion of Iraq, the connection that kept the dollar strong when oil prices were high has been broken.
It still makes sense to think of the dollar as a petro-currency and of its empire as being boosted by oil. In 2007, it was predicted that the US would produce about 30% of its oil needs in 2010. In fact, it currently produces about 45% of its needs, due to massive exploitation of all available resources and greater fuel efficiency. From not being in the top ten oil producers in 2005, it is now number three.
Big oil is very much alive and well as a result. The five largest oil companies made $136 billion in net profits in 2011, with no sign of decreases this year. US Representatives that receive significant campaign contributions from Big Oil get over $150,000 each: all 250 of them. Ironically, the supposed oil man, Bush, has been replaced by a far more oil friendly regime.
There are just two tiny problems. The oil is running out, one, and the biosphere is dramatically transforming, two. Which is why, three, things aren’t going so well.
The International Energy Authority, a totally pro-fossil fuel organization, has been sounding the alarm for some time. On the one hand, according to their chief economist Fatih Birol
We think that the crude oil production has already peaked in 2006, but we expect oil to come from the natural gas liquids, the type of liquid we have through the production of gas, and also a bit from the oil sands. But in any case it will be very challenging to see an increase in the production to meet the growth in the demand, and as a result of that, …the age of cheap oil is over.
Across the country, 3300 temperature records were set or tied in June. 172 new all-time temperature records were set. The climate scientists are now able to tie these weather events directly to carbon emissions, while also being able to say that events like the cold winter in the UK in 2011-12 were not so caused.
If you were, say, running for office and needed to win in the Midwest, where 600 heat records were set in June, you might make something of all this: if that is, you had any idea what to do about it. Time’s up for pretending that everything will be OK, that some invention will come along or whatever else.
So what’s left for the empire? Good question.