America Has Been At War 93% of the Time: 222 Out of 239 Years Since 1776

America Has Been At War 93% of the Time

222 Out of 239 Years Since 1776

The U.S. Has Only Been At Peace For 21 Years Total Since Its Birth

 

In 2011, Danios wrote:

 Below, I have reproduced a year-by-year timeline of America’s wars, which reveals something quite interesting: since the United States was founded in 1776, she has been at war during 214 out of her 235 calendar years of existence.  In other words, there were only 21 calendar years in which the U.S. did not wage any wars.

To put this in perspective:

* Pick any year since 1776 and there is about a 91% chance that America was involved in some war during that calendar year.

* No U.S. president truly qualifies as a peacetime president.  Instead, all U.S. presidents can technically be considered “war presidents.”

* The U.S. has never gone a decade without war.

* The only time the U.S. went five years without war (1935-40) was during the isolationist period of the Great Depression.

*  *  *

Here is a graphic depiction of U.S. wars:

And here is the year-by-year timeline of America’s major wars:
****

 

Year-by-year Timeline of America’s Major Wars (1776-2011)

 

 

1776 – American Revolutionary War, Chickamagua Wars, Second Cherokee War, Pennamite-Yankee War

1777 – American Revolutionary War, Chickamauga Wars, Second Cherokee War, Pennamite-Yankee War

1778 – American Revolutionary War, Chickamauga Wars, Pennamite-Yankee War

1779 – American Revolutionary War, Chickamauga Wars, Pennamite-Yankee War


1780 – American Revolutionary War, Chickamauga Wars, Pennamite-Yankee War

1781 – American Revolutionary War, Chickamauga Wars, Pennamite-Yankee War

1782 – American Revolutionary War, Chickamauga Wars, Pennamite-Yankee War

1783 – American Revolutionary War, Chickamauga Wars, Pennamite-Yankee War

1784 – Chickamauga Wars, Pennamite-Yankee War, Oconee War

1785 – Chickamauga Wars, Northwest Indian War

1786 – Chickamauga Wars, Northwest Indian War

1787 – Chickamauga Wars, Northwest Indian War

1788 – Chickamauga Wars, Northwest Indian War

1789 – Chickamauga Wars, Northwest Indian War

1790 – Chickamauga Wars, Northwest Indian War

1791 – Chickamauga Wars, Northwest Indian War

1792 – Chickamauga Wars, Northwest Indian War

1793 – Chickamauga Wars, Northwest Indian War

1794 – Chickamauga Wars, Northwest Indian War

1795 – Northwest Indian War

1796 – No major war

1797 – No major war

1798 – Quasi-War

1799 – Quasi-War

1800 – Quasi-War

1801 – First Barbary War

1802 – First Barbary War

1803 – First Barbary War

1804 – First Barbary War

1805 – First Barbary War

1806 – Sabine Expedition

1807 – No major war

1808 – No major war

1809 – No major war

1810 – U.S. occupies Spanish-held West Florida

1811 – Tecumseh’s War

1812 – War of 1812, Tecumseh’s War, Seminole Wars, U.S. occupies Spanish-held Amelia Island and other parts of East Florida

1813 – War of 1812, Tecumseh’s War, Peoria War, Creek War, U.S. expands its territory in West Florida

1814 – War of 1812, Creek War, U.S. expands its territory in Florida, Anti-piracy war

1815 – War of 1812, Second Barbary War, Anti-piracy war

1816 – First Seminole War, Anti-piracy war

1817 – First Seminole War, Anti-piracy war

1818 – First Seminole War, Anti-piracy war

1819 – Yellowstone Expedition, Anti-piracy war

1820 – Yellowstone Expedition, Anti-piracy war

1821 – Anti-piracy war (see note above)

1822 – Anti-piracy war (see note above)

1823 – Anti-piracy war, Arikara War

1824 – Anti-piracy war

1825 – Yellowstone Expedition, Anti-piracy war

1826 – No major war

1827 – Winnebago War

1828 – No major war

1829 – No major war

1830 – No major war 

1831 – Sac and Fox Indian War

1832 – Black Hawk War

1833 – Cherokee Indian War

1834 – Cherokee Indian War, Pawnee Indian Territory Campaign

1835 – Cherokee Indian War, Seminole Wars, Second Creek War

1836 – Cherokee Indian War, Seminole Wars, Second Creek War, Missouri-Iowa Border War

1837 – Cherokee Indian War, Seminole Wars, Second Creek War, Osage Indian War, Buckshot War

1838 – Cherokee Indian War, Seminole Wars, Buckshot War, Heatherly Indian War

1839 – Cherokee Indian War, Seminole Wars

1840 – Seminole Wars, U.S. naval forces invade Fiji Islands

1841 – Seminole Wars, U.S. naval forces invade McKean Island, Gilbert Islands, and Samoa

1842 – Seminole Wars

1843 – U.S. forces clash with Chinese, U.S. troops invade African coast

1844 – Texas-Indian Wars

1845 – Texas-Indian Wars

1846 – Mexican-American War, Texas-Indian Wars

1847 – Mexican-American War, Texas-Indian Wars

1848 – Mexican-American War, Texas-Indian Wars, Cayuse War

1849 – Texas-Indian Wars, Cayuse War, Southwest Indian Wars, Navajo Wars, Skirmish between 1st Cavalry and Indians

1850 – Texas-Indian Wars, Cayuse War, Southwest Indian Wars, Navajo Wars, Yuma War, California Indian Wars, Pitt River Expedition

1851 – Texas-Indian Wars, Cayuse War, Southwest Indian Wars, Navajo Wars, Apache Wars, Yuma War, Utah Indian Wars, California Indian Wars

1852 – Texas-Indian Wars, Cayuse War, Southwest Indian Wars, Navajo Wars, Yuma War, Utah Indian Wars, California Indian Wars

1853 – Texas-Indian Wars, Cayuse War, Southwest Indian Wars, Navajo Wars, Yuma War, Utah Indian Wars, Walker War, California Indian Wars

1854 – Texas-Indian Wars, Cayuse War, Southwest Indian Wars, Navajo Wars, Apache Wars, California Indian Wars, Skirmish between 1st Cavalry and Indians

1855 – Seminole Wars, Texas-Indian Wars, Cayuse War, Southwest Indian Wars, Navajo Wars, Apache Wars, California Indian Wars, Yakima War, Winnas Expedition, Klickitat War, Puget Sound War, Rogue River Wars, U.S. forces invade Fiji Islands and Uruguay

1856 – Seminole Wars, Texas-Indian Wars, Southwest Indian Wars, Navajo Wars, California Indian Wars, Puget Sound War, Rogue River Wars, Tintic War

1857 – Seminole Wars, Texas-Indian Wars, Southwest Indian Wars, Navajo Wars, California Indian Wars, Utah War, Conflict in Nicaragua

1858 – Seminole Wars, Texas-Indian Wars, Southwest Indian Wars, Navajo Wars, Mohave War, California Indian Wars, Spokane-Coeur d’Alene-Paloos War, Utah War, U.S. forces invade Fiji Islands and Uruguay

1859 Texas-Indian Wars, Southwest Indian Wars, Navajo Wars, California Indian Wars, Pecos Expedition, Antelope Hills Expedition, Bear River Expedition, John Brown’s raid, U.S. forces launch attack against Paraguay, U.S. forces invade Mexico

1860 – Texas-Indian Wars, Southwest Indian Wars, Navajo Wars, Apache Wars, California Indian Wars, Paiute War, Kiowa-Comanche War

1861 – American Civil War, Texas-Indian Wars, Southwest Indian Wars, Navajo Wars, Apache Wars, California Indian Wars, Cheyenne Campaign

1862 – American Civil War, Texas-Indian Wars, Southwest Indian Wars, Navajo Wars, Apache Wars, California Indian Wars, Cheyenne Campaign, Dakota War of 1862,

1863 – American Civil War, Texas-Indian Wars, Southwest Indian Wars, Navajo Wars, Apache Wars, California Indian Wars, Cheyenne Campaign, Colorado War, Goshute War

1864 – American Civil War, Texas-Indian Wars, Navajo Wars, Apache Wars, California Indian Wars, Cheyenne Campaign, Colorado War, Snake War

1865 – American Civil War, Texas-Indian Wars, Navajo Wars, Apache Wars, California Indian Wars, Colorado War, Snake War, Utah’s Black Hawk War

1866 – Texas-Indian Wars, Navajo Wars, Apache Wars, California Indian Wars, Skirmish between 1st Cavalry and Indians, Snake War, Utah’s Black Hawk War, Red Cloud’s War, Franklin County War, U.S. invades Mexico, Conflict with China

1867 – Texas-Indian Wars, Long Walk of the Navajo, Apache Wars, Skirmish between 1st Cavalry and Indians, Snake War, Utah’s Black Hawk War, Red Cloud’s War, Comanche Wars, Franklin County War, U.S. troops occupy Nicaragua and attack Taiwan

1868 – Texas-Indian Wars, Long Walk of the Navajo, Apache Wars, Skirmish between 1st Cavalry and Indians, Snake War, Utah’s Black Hawk War, Red Cloud’s War, Comanche Wars, Battle of Washita River, Franklin County War

1869 – Texas-Indian Wars, Apache Wars, Skirmish between 1st Cavalry and Indians, Utah’s Black Hawk War, Comanche Wars, Franklin County War

1870 – Texas-Indian Wars, Apache Wars, Skirmish between 1st Cavalry and Indians, Utah’s Black Hawk War, Comanche Wars, Franklin County War

1871 – Texas-Indian Wars, Apache Wars, Skirmish between 1st Cavalry and Indians, Utah’s Black Hawk War, Comanche Wars, Franklin County War, Kingsley Cave Massacre, U.S. forces invade Korea

1872 – Texas-Indian Wars, Apache Wars, Utah’s Black Hawk War, Comanche Wars, Modoc War, Franklin County War

1873 – Texas-Indian Wars, Comanche Wars, Modoc War, Apache Wars, Cypress Hills Massacre, U.S. forces invade Mexico

1874 – Texas-Indian Wars, Comanche Wars, Red River War, Mason County War, U.S. forces invade Mexico

1875 – Conflict in Mexico, Texas-Indian Wars, Comanche Wars, Eastern Nevada, Mason County War, Colfax County War, U.S. forces invade Mexico

1876 – Texas-Indian Wars, Black Hills War, Mason County War, U.S. forces invade Mexico

1877 – Texas-Indian Wars, Skirmish between 1st Cavalry and Indians, Black Hills War, Nez Perce War, Mason County War, Lincoln County War, San Elizario Salt War, U.S. forces invade Mexico

1878 – Paiute Indian conflict, Bannock War, Cheyenne War, Lincoln County War, U.S. forces invade Mexico

1879 – Cheyenne War, Sheepeater Indian War, White River War, U.S. forces invade Mexico

1880 – U.S. forces invade Mexico

1881 – U.S. forces invade Mexico

1882 – U.S. forces invade Mexico

1883 – U.S. forces invade Mexico

1884 – U.S. forces invade Mexico

1885 – Apache Wars, Eastern Nevada Expedition, U.S. forces invade Mexico
 
1886 – Apache Wars, Pleasant Valley War, U.S. forces invade Mexico

1887 – U.S. forces invade Mexico

1888 – U.S. show of force against Haiti, U.S. forces invade Mexico

1889 – U.S. forces invade Mexico

1890 – Sioux Indian War, Skirmish between 1st Cavalry and Indians, Ghost Dance War, Wounded Knee, U.S. forces invade Mexico

1891 – Sioux Indian War, Ghost Dance War, U.S. forces invade Mexico

1892 – Johnson County War, U.S. forces invade Mexico

1893 – U.S. forces invade Mexico and Hawaii

1894 – U.S. forces invade Mexico

1895 – U.S. forces invade Mexico, Bannock Indian Disturbances

1896 – U.S. forces invade Mexico

1897 – No major war

1898 – Spanish-American War, Battle of Leech Lake, Chippewa Indian Disturbances

1899 – Philippine-American War, Banana Wars

1900 – Philippine-American War, Banana Wars

1901 – Philippine-American War, Banana Wars

1902 – Philippine-American War, Banana Wars

1903 – Philippine-American War, Banana Wars

1904 – Philippine-American War, Banana Wars

1905 – Philippine-American War, Banana Wars

1906 – Philippine-American War, Banana Wars

1907 – Philippine-American War, Banana Wars

1908 – Philippine-American War, Banana Wars

1909 – Philippine-American War, Banana Wars

1910 – Philippine-American War, Banana Wars

1911 – Philippine-American War, Banana Wars

1912 – Philippine-American War, Banana Wars

1913 – Philippine-American War, Banana Wars, New Mexico Navajo War

1914 – Banana Wars, U.S. invades Mexico

1915 – Banana Wars, U.S. invades Mexico, Colorado Paiute War

1916 – Banana Wars, U.S. invades Mexico

1917 – Banana Wars, World War I, U.S. invades Mexico

1918 – Banana Wars, World War I, U.S invades Mexico

1919 – Banana Wars, U.S. invades Mexico

1920 – Banana Wars

1921 – Banana Wars

1922 – Banana Wars

1923 – Banana Wars, Posey War

1924 – Banana Wars
 
1925 – Banana Wars

1926 – Banana Wars

1927 – Banana Wars

1928 – Banana Wars

1930 – Banana Wars

1931 – Banana Wars

1932 – Banana Wars

1933 – Banana Wars

1934 – Banana Wars

1935 – No major war

1936 – No major war

1937 – No major war

1938 – No major war

1939 – No major war

1940 – No major war

1941 – World War II

1942 – World War II

1943 – Wold War II

1944 – World War II

1945 – World War II

1946 – Cold War (U.S. occupies the Philippines and South Korea)

1947 – Cold War (U.S. occupies South Korea, U.S. forces land in Greece to fight Communists)

1948 – Cold War (U.S. forces aid Chinese Nationalist Party against Communists)

1949 – Cold War (U.S. forces aid Chinese Nationalist Party against Communists)

1950 – Korean War, Jayuga Uprising

1951 – Korean War

1952 – Korean War

1953 – Korean War

1954 – Covert War in Guatemala

1955 – Vietnam War

1956 – Vietnam War

1957 – Vietnam War

1958 – Vietnam War

1959 – Vietnam War, Conflict in Haiti

1960 – Vietam War

1961 – Vietnam War

1962 – Vietnam War, Cold War (Cuban Missile Crisis; U.S. marines fight Communists in Thailand)

1963 – Vietnam War

1964 – Vietnam War

1965 – Vietnam War, U.S. occupation of Dominican Republic

1966 – Vietnam War, U.S. occupation of Dominican Republic

1967 – Vietnam War

1968 – Vietnam War

1969 – Vietnam War

1970 – Vietnam War

1971 – Vietnam War

1972 – Vietnam War

1973 – Vietnam War, U.S. aids Israel in Yom Kippur War

1974 – Vietnam War

1975 – Vietnam War

1976 – No major war

1977 – No major war

1978 – No major war

1979 – Cold War (CIA proxy war in Afghanistan)

1980 – Cold War (CIA proxy war in Afghanistan)

1981 – Cold War (CIA proxy war in Afghanistan and Nicaragua), First Gulf of Sidra Incident

1982 – Cold War (CIA proxy war in Afghanistan and Nicaragua), Conflict in Lebanon

1983 – Cold War (Invasion of Grenada, CIA proxy war in Afghanistan and Nicaragua), Conflict in Lebanon

1984 – Cold War (CIA proxy war in Afghanistan and Nicaragua), Conflict in Persian Gulf

1985 – Cold War (CIA proxy war in Afghanistan and Nicaragua)

1986 – Cold War (CIA proxy war in Afghanistan and Nicaragua)

1987 – Conflict in Persian Gulf

1988 – Conflict in Persian Gulf, U.S. occupation of Panama

1989 – Second Gulf of Sidra Incident, U.S. occupation of Panama, Conflict in Philippines

1990 – First Gulf War, U.S. occupation of Panama

1991 – First Gulf War

1992 – Conflict in Iraq

1993 – Conflict in Iraq

1994 – Conflict in Iraq, U.S. invades Haiti

1995 – Conflict in Iraq, U.S. invades Haiti, NATO bombing of Bosnia and Herzegovina

1996 – Conflict in Iraq

1997 – No major war

1998 – Bombing of Iraq, Missile strikes against Afghanistan and Sudan

1999 – Kosovo War

2000 – No major war

2001 – War on Terror in Afghanistan

2002 – War on Terror in Afghanistan and Yemen

2003 – War on Terror in Afghanistan, and Iraq

2004 – War on Terror in Afghanistan, Iraq, Pakistan, and Yemen

2005 – War on Terror in Afghanistan, Iraq, Pakistan, and Yemen

2006 – War on Terror in Afghanistan, Iraq, Pakistan, and Yemen

2007 – War on Terror in Afghanistan, Iraq, Pakistan, Somalia, and Yemen

2008 – War on Terror in Afghanistan, Iraq, Pakistan, and Yemen

2009 – War on Terror in Afghanistan, Iraq, Pakistan, and Yemen

2010 – War on Terror in Afghanistan, Iraq, Pakistan, and Yemen

2011 – War on Terror in Afghanistan, Iraq, Pakistan, Somalia, and Yemen; Conflict in Libya (Libyan Civil War)


In most of these wars, the U.S. was on the offense. Danios admits that some of the wars were defensive.   However, Danios also leaves out covert CIA operations and other acts which could be considered war.


Let’s update what’s happened since 2011:

2012 – War on Terror in Afghanistan, Iraq, Somalia, Syria and Yemen

2013 – War on Terror in Afghanistan, Iraq, Somalia, Syria and Yemen

2014 – War on Terror in Afghanistan, Iraq, Somalia, Syria and Yemen; Civil War in Ukraine

2015 – War on Terror in Somalia, Somalia, Syria and Yemen; Civil War in Ukraine


So we can add 4 more years of war. That means that for 222 out of 239 years – or 93% of the time – America has been at war. (We can quibble with the exact numbers, but the high percentage of time that America has been at war is clear and unmistakable.)

Indeed, most of the military operations launched since World War II have been launched by the U.S.

And American military spending dwarfs the rest of the world put together.

No wonder polls show that the world believes America is the number 1 threat to peace.

 

 via Washington’s Blog @ http://www.washingtonsblog.com/2015/02/america-war-93-time-222-239-years-since-1776.html

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Fall of the American Empire

Fall of the American Empire

America is self-destructing & bringing the rest of the world down with it

by Tanya Cariina Hsu

"I believe that banking institutions are more dangerous to our liberties than standing armies. "

-Thomas Jefferson, US President; 1743 - 1826

Americais dying. It is self-destructing and bringing the rest of the world down with it. Often referred to as a sub-prime mortgage collapse, this obfuscates the real reason. By associating tangible useless failed mortgages, at least something 'real' can be blamed for the carnage. The problem is, this is myth. The magnitude of this fiscal collapse happened because it was all based on hot air.

The banking industry renamed insurance betting guarantees as 'credit default swaps' and risky gambling wagers were called 'derivatives'. Financial managers and banking executives were selling the ultimate con to the entire world, akin to the snake-oil salesmen from the 18th century but this time in suits and ties. And by October 2008 it was a quadrillion-dollar (that's $1,000 trillion) industry that few could understand.

Propped up by false hope, America is now falling like a house of cards.

It all began in the early part of the 20th century. In 1907 J.P. Morgan, a private New York banker, published a rumour that a competing unnamed large bank was about to fail. It was a false charge but customers nonetheless raced to their banks to withdraw their money, in case it was their bank. As they pulled out their funds the banks lost their cash deposits and were forced to call in their loans. People now therefore had to pay back their mortgages to fill the banks with income, going bankrupt in the process. The 1907 panic resulted in a crash that prompted the creation of the Federal Reserve, a private banking cartel with the veneer of an independent government organisation. Effectively, it was a coup by elite bankers in order to control the industry.

When signed into law in 1913, the Federal Reserve would loan and supply the nation's money, but with interest. The more money it was able to print, the more 'income' for itself it generated. By its very nature the Federal Reserve would forever keep producing debt to stay alive. It was able to print America's monetary supply at will, regulating its value. To control valuation however, inflation had to be kept in check.

The Federal Reserve then doubled America's money supply within five years, and in 1920 it called in a mass percentage of loans. Over five thousand banks collapsed overnight. One year later the Federal Reserve again increased the money supply by 62%, but in 1929 it again called the loans back in, en masse. This time, the crash of 1929 caused over sixteen thousand banks to fail and an 89% plunge on the stock market. The private and well-protected banks within the Federal Reserve system were able to snap up the failed banks at pennies on the dollar.

The nation fell into the Great Depression and in April 1933 President Roosevelt issued an executive order that confiscated all gold bullion from the public. Those who refused to turn in their gold would be imprisoned for ten years, and by the end of the year the gold standard was abolished. What had been redeemable for gold became paper 'legal tender', and gold could no longer be exchanged for cash as it had once been.

Later, in 1971, President Nixon removed the dollar from the gold standard altogether, therefore no longer trading at the internationally fixed price of $35. The US dollar was now worth whatever the US decided it was worth because it was 'as good as gold'. It had no standard of measure, and became the universal currency. Treasury bills (short-term notes) and bonds (long-term notes) replaced gold as value, promissory notes of the US government and paid for by the taxpayer. Additionally, because gold was exempt from currency reporting requirements it could not be traced, unlike the fiduciary (i.e. that based upon trust) monetary systems of the West. That was not in America's best interest.

After the Great Depression private banks remained afraid to make home loans, so Roosevelt created Fannie Mae. A state supported mortgage bank, it provided federal funding to finance home mortgages for affordable housing. In 1968 President Johnson privatised Fannie Mae, and in 1970, Freddie Mac was created to compete with Fannie Mae. Both of them bought mortgages from banks and other lenders, and sold them onto new investors.

The post World War II boom had created an America flush with cash and assets. As a military industrial complex, war exponentially profited the US and, unlike any empire in history, it shot to superpower status. But it failed to remember that, historically, whenever empires rose they fell in direct proportion.

Americans could afford all the modern conveniences, exporting its manufactured goods all over the world. After the Vietnam War, the US went into an economic decline. But people were loath to give up their elevated standard of living despite the loss of jobs, and production was increasingly sent overseas. A sense of delusion and entitlement kept Americans on the treadmill of consumer consumption.

 

In 1987 the US stock market plunged by 22% in one day because of high-risk futures trading, called derivatives, and in 1989 the Savings & Loan crisis resulted in President George H.W. Bush using $142 billion in taxpayer funds to rescue half of the S&L's. To do so, Freddie Mac was given the task of giving sub-prime (below prime-rate) mortgages to low-income families. In 2000, the "irrational exuberance" of the dot-com bubble burst, and 50% of high-tech firms went bankrupt wiping $5 trillion from their over-inflated market values.

After this crisis, Federal Reserve Chairman Alan Greenspan kept interest rates so low they were less than the rate of inflation. Anyone saving his or her income actually lost money, and the savings rate soon fell into negative territory.

During the 1990s, advertisers went into overdrive, marketing an ever more luxurious lifestyle, all made available with cheap easy credit. Second mortgages became commonplace, and home equity loans were used to pay credit card bills. The more Americans bought, the more they fell into debt. But as long as they had a house their false sense of security remained: their home was their equity, it would always go up in value, and they could always remortgage at lower rates if needed. The financial industry also believed that housing prices would forever climb, but should they ever fall the central bank would cut interest rates so that prices would jump back up. It was, everyone believed, a win-win situation.

Greenspan's rock-bottom interest rates let anyone afford a home. Minimum wage service workers with aspirations to buy a half million-dollar house were able to secure 100% loans, the mortgage lenders fully aware that they would not be able to keep up the payments.

So many people received these sub-prime loans that the investment houses and lenders came up with a new scheme: bundle these virtually worthless home loans and sell them as solid US investments to unsuspecting countries who would not know the difference. American lives of excess and consumer spending never suffered, and were being propped up by foreign nations none the wiser.

It has always been the case that a bank would lend out more than it actually had, because interest payments generated its income. The more the bank loaned, the more interest it collected even with no money in the vault. It was a lucrative industry of giving away money it never had in the first place. Mortgage banks and investment houses even borrowed money on international money markets to fund these 100% plus sub-prime mortgages, and began lending more than ten times their underlying assets.

After 9/11, George Bush told the nation to spend, and during a time of war, that's what the nation did. It borrowed at unprecedented levels so as to not only pay for its war on terror in the Middle East (calculated to cost $4 trillion) but also pay for tax cuts at the very time it should have increased taxes. Bush removed the reserve requirements in Fannie Mae and Freddie Mac, from 10% to 2.5%. They were free to not only lend even more at bargain basement interest rates, they only needed a fraction of reserves. Soon banks lent thirty times asset value. It was, as one economist put it, an 'orgy of excess'.

It was flagrant overspending during a time of war. At no time in history has a nation gone into conflict without sacrifice, cutbacks, tax increases, and economic conservation.

And there was a growing chance that, just like in 1929, investors would rush to claim their money all at once.

To guarantee, therefore, these high risk mortgages, the same financial houses that sold them then created 'insurance policies' against the sub-prime investments they were selling, marketed as Credit Default Swaps (CDS). But the government must regulate insurance policies, so by calling them CDS they remained totally unregulated. Financial institutions were 'hedging their bets' and selling premiums to protect the junk assets. In other words, the asset that should go up in value could also have a side-bet, just in case, that it might go down. By October 2008, CDS were trading at $62 trillion, more than the stock markets of the whole world combined.

These bets had absolutely no value whatsoever and were not investments. They were just financial instruments called derivatives - high stakes gambling, 'nothing from nothing' - or as Warren Buffet referred to them, 'Weapons of Financial Mass Destruction'. The derivatives trade was 'worth' more than one quadrillion dollars, or larger than the economy of the entire world. (In September 2008 the global Gross Domestic Product was $60 trillion).

Challenged as being illegal in the 1990s, Greenspan legalised the derivatives practice. Soon hedge funds became an entire industry, betting on the derivatives market and gambling as much as they wanted. It was easy because it was money they did not have in the first place. The industry had all the appearances of banks, but the hedge funds, equity funds, and derivatives brokers had no access to government loans in the event of a default. If the owners defaulted, the hedge funds had no money to pay 'from nothing'. Those who had hedged on an asset going up or down would not be able to collect on the winnings or losses.

The market had become the largest industry in the world, and all the financial giants were cashing in: Bear Stearns, Lehman Brothers, Citigroup, and AIG. But homeowners, long maxed out on their credit, were now beginning to default on their mortgages. Not only were they paying for their house but also all the debt amassed over the years for car, credit card and student loans, medical payments and home equity loans. They had borrowed to pay for groceries and skyrocketing health insurance premiums to keep up with their bigger houses and cars; they refinanced the debt they had for lower rates that soon ballooned. The average American owed 25% of their annual income to credit card debts alone.

In 2008, housing prices began to slide precipitously downwards and mortgages were suddenly losing value. Manufacturing orders were down 4.5% by September, inventories began to pile up, unemployment was soaring and average house foreclosures had increased by 121% and up to 200% in California.

The financial giants had to stop trading these mortgage-backed securities, as now their losses would have to be visibly accounted for. Investors began withdrawing their funds. Bear Stearns, heavily specialised in home loan portfolios, was the first to go in March.

Just as they had done in the 20th century, JP Morgan swooped in and picked up Bear Stearns for a pittance. One year prior Bear Stearns shares traded at $159 but JP Morgan was able to buy in and take over at $2 a share. In September, Washington Mutual collapsed, the largest bank failure in history. JP Morgan again came in and paid $1.9 billion for assets valued at $176 billion. It was a fire sale.

Relatively quietly over the summer Freddie Mac and Fannie Mae, the publicly traded companies responsible for 80% of the home mortgage loans, lost almost 90% of their value for the year. Together they were responsible for half the outstanding loan amounts but were now in debt $80 to every $1 in capital reserves.

To guarantee they would stay alive, the Federal Reserve stepped in and took over Freddie Mac and Fannie Mae. On September 7th 2008 they were put into "conservatorship": known as nationalisation to the rest of the world, but Americans have difficulty with the idea of any government run industry that required taxpayer increases.

What the government was really doing was handing out an unlimited line of credit. Done by the Federal Reserve and not US Treasury, it was able to bypass Congressional approval. The Treasury Department then auctioned off Treasury bills to raise money for the Federal Reserve's own use, but nonetheless the taxpayer would be funding the rescue. The bankers had bled tens of billions from the system by hedging and derivative gambling, and triggered the portfolio inter-bank lending freeze, which then seized up and crashed.

The takeover was presented as a government funded bailout of an arbitrary $700 billion, which does nothing to solve the problem. No economists were asked to present their views to Congress, and the loan only perpetuates the myth that the banking system is not really dead.

In reality, the damage will not be $700 billion but closer to $5 trillion, the value of Freddie Mac and Fannie Mae's mortgages. It was nothing less than a bailout of the quadrillion dollar derivatives industry which otherwise faced payouts of over a trillion dollars on CDS mortgage-backed securities they had sold. It was necessary, said Treasury Secretary Henry Paulson, to save the country from a "housing correction". But, he added, the $700 billion taxpayer funded takeover would not prevent other banks from collapsing, in turn causing a stock market crash.

In other words Paulson was blackmailing Congress in order to lead a coup by the banking elite under the false guise of necessary legislation to stop the dyke from flooding. It merely shifted wealth from one class to another, as it had done almost a century prior. No sooner were the words were out of Paulson's mouth before other financial institutions began imploding, and with them the disintegration of the global financial system - much modeled after the lauded system of American banking.

In September the Federal Reserve, its line of credit assured, then bought the world largest insurance company, AIG, for $85 billion for an 80% stake. AIG was the largest seller of CDS, but now that it was in the position of having to pay out, from collateral it did not have, it was teetering on the edge of bankruptcy.

In October the entire country of Iceland went bankrupt, having bought American worthless sub-prime mortgages as investments. European banks began exploding, all wanting to cash in concurrently on their inflated US stocks to pay off the low interest rate debts before rates climbed higher. The year before the signs had been evident, when the largest US mortgage lender Countrywide fell. 

Soon after, the largest lender in the UK, Northern Rock, went under - London long having copied Wall Street creative financing. Japan and Korea's auto manufacturing nosedived by 37%, global economies contracting. Pakistan is on the edge of collapse too, with real reserves at $3 billion - enough to only buy a month's supply of food and oil and attempting to stall payments to Saudi Arabia for the 100,000 barrels of oil per day it provides to the country. Under President Musharraf, who left office in the nick of time, Pakistan's currency lost 25% of its value, its inflation running at 25%.

Meanwhile energy costs had soared, with oil reaching a peak of almost $150 per barrel in the summer. The costs were immediately passed on to the already spent homeowner, in rising heating and fuel, transport and manufacturing costs. Yet 30% of the cost of a barrel of oil was based upon Wall Street speculators, climbing to 60% as a speculative fear factor during the summer months. As soon as the financial crisis hit, suddenly oil prices slid down, slicing oil costs to $61 from a high of $147 in June and proving that the 60% speculation factor was far more accurate. This sudden decline also revealed OPEC's lack of control over spiraling prices during the past few years, almost squarely laid on the shoulders of Saudi Arabia alone. When OPEC, in September, sought to maintain higher prices by cutting production, it was Saudi Arabia who voted against such a move at the expense of its own revenue.

Europe then decided that no more would it be ruined by the excess of America. 'Olde Europe' may have had enough of being dictated to by the US, who refused to compromise on loans lent to their own broken nations after WWII. On October the 13th, the once divided EU nations unilaterally agreed to an emergency rescue plan totaling $2.3 trillion. It was more than three times greater than the US package for a catastrophe America alone had created.

By mid October, the Dow, NASDAQ and S&P 500 had erased all the gains they made over the previous decade. Greenspan's pyramid scheme of easy money from nothing resulted in a massive overextension of credit, inflated housing prices, and incredible stock valuations, achieved because investors would never withdraw their money all at once. But now it was crashing at break-neck speed and no solution in sight. President Bush said that people ought not to worry at all because "America is the most attractive destination for investors around the globe."

 

Those who will hurt the most are the very men and women who grew the country after WWII, and saved their pensions for retirement due now. They had built the country during the war production years, making its weapons and arms for global conflict. During the Cold War the USSR was the ever-present enemy and thus the military industrial complex continued to grow. Only when there is a war does America profit.

Russiawill not tolerate a new cold war build-up of ballistic missiles. And the Middle East has seen its historical ally turn into its worst nightmare, be it militarily or economically. No longer will these nations continue to support the dollar as the world's currency. The world's economy is no longer America's to control and the US is now indebted to the rest of the world. No more will the US be able to demand its largest Middle Eastern oil supplier open up its banking books so as to be transparent and free from corruption and terrorist connections lest there be consequences - the biggest act of criminal corruption in history has just been perpetrated by the United States.

It was the best con game in town: get paid well for selling vast amounts of risk, fail, and then have governments fix the problem at the expense of the taxpayers who never saw a penny of shared wealth to begin with.

There is no easy solution to this crisis, its effects multiplying like an infectious disease.

Ironically, least affected by the crisis are Islamic banks.

They have largely been immune to the collapse because Islamic banking prohibits the acquisition of wealth via gambling (or alcohol, tobacco, pornography, or stocks in armaments companies), and forbids the buying and selling of a debt as well as usury. Additionally, Shari'ah banking laws forbid investing in any company with debts that exceed thirty percent.

"Islamic banking institutions have not failed per se as they deal in tangible assets and assume the risk" said Dr. Mohammed Ramady, Professor of Economics at King Fahd University of Petroleum & Minerals. "Although the Islamic banking sector is also part of the global economy, the impact of direct exposure to sub-prime asset investments has been low" he continued. "The liquidity slowdown has especially affected Dubai, with its heavy international borrowing. The most negative effect has been a loss of confidence in the regional stock markets." Instead, said Dr. Ramady, oil surplus Arab nations are "reconsidering overseas investments in financial assets" and speeding up their own domestic projects.

Eight years ago, in May 2000, Saudi Islamic banker His Highness Dr. Nayef bin Fawaaz ibn Sha'alan publicly gave a series of economic lectures in Gulf states. At the time his research showed that Arab investments in the US, to the tune of $1.5 trillion, were effectively being held hostage and he recommended they be pulled out and reinvested in the tangibles of the Arab and Islamic markets. "Not in stocks however because the stock market could be manipulated remotely, as we have seen in the last couple of years in the Arab market where trillions of dollars evaporated" he said.

He warned then that it was a certainty that the US economic system was on the verge of collapse because of its cumulative debts, ever-increasing deficit and the interest on that debt. "When the debts and deficits come due, they just issue new Treasury bonds to cover the old bonds due, with their interest and the new deficit too." The cycle cannot be stopped or the debt cancelled because the US would no longer be able to borrow. The consequence of relieving this cycle would be a total collapse of their economic system as opposed to the partial, albeit massive, crash of 2008.

"Islamic banking", said Dr. Al-Sha'alan, "always protects the individuals' wealth while putting a cap on selfishness and greed. It has the best of capitalism - filtering out its negatives - and the best of socialism - filtering out its negatives too." Both systems inevitably had to fail. Additionally, Europe and Japan did not need to be held accountable and indebted to America anymore for protection against the Soviets.

"The essential difference between the Islamic economic system and the capitalist system", he continued "is that in Islam wealth belongs to God - the individual being only its manager. It is a means, not a goal. In capitalism, it is the reverse: money belongs to the individual, and is a goal in and of itself. In America especially, money is worshipped like God."

In sum, the crash of the entire global economic system is a result of America's fiscal arrogance based upon one set of rules for itself and another for the rest of the world. Its increased creative financing deluded its people into a false sense of security, and now looks like the failure of capitalism altogether.

The whole exercise in democracy by force against Arab Muslim nations has almost bankrupted the US. The Cold War is over and the US has nothing to offer: no exports, no production, few natural resources, and no service sector economy.

The very markets that resisted US economic policies the most, having curbed foreign direct investments into America, are those who will fare best and come out ahead.

But not before having paid a very high price.

Tanya Cariina Hsu is a political researcher and analyst focusing on Saudi Arabian and US relations. One of the contributors to recent written testimony on the Kingdom of Saudi Arabia for the US Congressional Senate Judiciary Committee on behalf of FOCA (Friends of Charities Association) in its Hearing on Capitol Hill in Washington D.C., her analysis has been published and critically acclaimed throughout the US, Europe and the Middle East.

The first to break the barrier against public discussion of the Israeli influence upon US foreign policy decision making, in Capitol Hill's "A Clean Break" Symposium in Washington D.C. in 2004, as the Institute for Research: Middle East Policy (IRmep) Director of Development and Senior Research Analyst, Ms. Hsu remains an International Fellow with the Institute.

Born in London, she re-located to Riyadh, Saudi Arabia in 2005 and is currently completing a book on US policy towards Saudi Arabia.

Global Research Articles by Tanya Cariina Hsu

FROM - http://www.globalresearch.ca/index.php

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