The virus that spread to stock markets around the world and nearly destroyed the global financial system in 2008 has reemerged with a vengeance sending global equities deep into the red and wiping out more than $5 trillion in market capitalization in less than two weeks. On Tuesday, before the opening bell, major market index futures in the US plunged more than 400 points signaling another violent day of selling ahead. Worries that a slowdown in China will impact global growth pushed Asian and European markets deep into negative territory while US futures indicate that the Dow Jones is headed for its ninth triple-digit day in ten sessions. The deluge of bad news has battered confidence in the Fed and “sent global equities to their worst monthly slump in more than three years”. Millions of Mom and Pop investors have sold out already and are headed for the exits. Here’s a recap from Bloomberg:
“Mom and pop are running for the hills. Since July, American households — which account for almost all mutual fund investors — have pulled money both from mutual funds that invest in stocks and those that invest in bonds. It’s the first time since 2008 that both asset classes have recorded back-to-back monthly withdrawals, according to a report by Credit Suisse.
Credit Suisse estimates $6.5 billion left equity funds in July as $8.4 billion was pulled from bond funds, citing weekly data from the Investment Company Institute as of Aug. 19. Those outflows were followed up in the first three weeks of August, when investors withdrew $1.6 billion from stocks and $8.1 billion from bonds, said economist Dana Saporta.
“Anytime you see something that hasn’t happened since the last quarter of 2008, it’s worth noting,” Saporta said in a phone interview. ….Withdrawals from equity funds are usually accompanied by an influx of money to bonds, and an exit from both at the same time suggests investors aren’t willing to take on risk in any form.” (“Fed Up Investors Yank Cash From Almost Everything Just Like 2008“, Bloomberg)
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Has US policy in Syria fallen prey to the political ambitions of one man, Turkish President Recep Tayyip Erdoğan?
Certainly not. Washington has its own malignant agenda in Syria, which is to topple Syrian President Bashar al Assad, split the country into pieces, lock-down critical pipeline corridors, and establish a “Salafist principality” that will justify continued US intervention across the Middle East for the foreseeable future. These are the objectives of US policy and they haven’t changed because of anything Erdogan has done.
That’s not to say that Erdogan hasn’t complicated matters by requiring the US to play by Turkey’s rules. He has. Just look at the Incirlik deal. In theory, it looks like a win-win for US war-planners who will now be able to cross into Syrian airspace in 15 minutes instead of the two hours it took from Bahrain. But the devil is in the details which suggest constraints on the US military’s ability to conduct its own campaign or even choose its own targets. Take a look at this excerpt from an article in Al Monitor:
“Turkey wants to open Incirlik not only to US warplanes but also to the aircraft of anti-IS NATO members France, the United Kingdom, Belgium and Canada. What Turkey wants to accomplish here is to affix NATO legitimacy to the operation by reinforcing the perception that operations against IS targets in Syria are part of a NATO mission.
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Here’s your US foreign policy puzzler for the day: When is regime change not regime change?
When the regime stays in power but loses its ability to rule. This is the current objective of US policy in Syria, to undermine Syrian President Bashar al Assad’s ability to govern the country without physically removing him from office. The idea is simple: Deploy US-backed “jihadi” proxies to capture-and-hold vast sections of the country thereby making it impossible for the central government to control the state. This is how the Obama administration plans to deal with Assad, by making him irrelevant. The strategy is explained in great detail in a piece by Michael E. O’Hanlon at the Brookings Institute titled “Deconstructing Syria: A new strategy for America’s most hopeless war”. Here’s an excerpt:
“…the only realistic path forward may be a plan that in effect deconstructs Syria….the international community should work to create pockets with more viable security and governance within Syria over time… The idea would be to help moderate elements establish reliable safe zones within Syria once they were able. American, as well as Saudi and Turkish and British and Jordanian and other Arab forces would act in support, not only from the air but eventually on the ground via special forces. The approach would benefit from Syria’s open desert terrain which could allow creation of buffer zones that could be monitored for possible signs of enemy attack. Western forces themselves would remain in more secure positions in general—within the safe zones but back from the front lines—at least until the reliability of such defenses, and also local allied forces, made it practical to deploy and live in more forward locations.
Creation of these sanctuaries would produce autonomous zones that would never again have to face the prospect of rule by either Assad or ISIL….
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China’s meteoric rise has Washington worried, not because China is a threat to its neighbors or to US national security, but because China’s influence is expanding across the region. It’s creating the institutions it needs to finance its own development (AIIB and New BRICS Bank), it’s building the infrastructure needed to connect the continents with state-of-the-art high-speed rail (New Silk Road), and its attracting allies and trading partners who want to participate in its plan for growth and prosperity. This is why Washington is worried; it’s because China has transformed itself into an economic powerhouse that doesn’t conform to the neoliberal model of punitive austerity, pernicious privatization, and madcap asset inflation. China has slipped out of the empire’s orbit and charted its own course, which is why Washington wants to provoke Beijing over its negligible land reclamation activities in the South China Sea. Washington thinks it can succeed militarily where it has failed economically and politically. Case in point; check this out from Bloomberg News:
“The U.S. and Japan are conducting separate military drills with the Philippines near the disputed South China Sea,…The annual CARAT Philippines joint exercise started Monday off the east coast of Palawan island and will run until June 26, according to U.S. Navy spokesman Arlo Abrahamson. The Philippine and Japanese navies are holding drills around the same island through June 27, Japan’s Maritime Self-Defense Force said last week.
The U.S. has backed Southeast Asian nations including the Philippines as tensions escalate with China over territorial claims in the South China Sea, while Japan is providing patrol vessels to the Philippine coast guard….The drill includes a sea phase with the littoral combat ship USS Fort Worth, diving and salvage ship USNS Safeguard and a P-3 Orion surveillance aircraft and at least one Philippine frigate, according to the U.S. Navy….
Japan’s exercises with the Philippines will take place adjacent to the Spratly Islands, where China has created more than 2,000 acres of land in waters also claimed by the Philippines, Vietnam, Brunei, Taiwan and Malaysia. Japan will send a P-3C anti-submarine, maritime surveillance aircraft and 20 personnel.” (“U.S., Japan Join Philippines in Navy Drills Near South China Sea”, Bloomberg)
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“Since its founding, the United States has consistently pursued a grand strategy focused on acquiring and maintaining preeminent power over various rivals, first on the North American continent, then in the Western hemisphere, and finally globally.” Robert D. Blackwill and Ashley J.Tellis, Revising U.S. Grand Strategy Toward China, The Council on Foreign Relations Special Report, March 2015
“It is for the people of Asia to run the affairs of Asia, solve the problems of Asia and uphold the security of Asia.” Xi Jinping, President of the People’s Republic of China
The United States will do whatever is necessary to maintain its dominant position in the world. Less than two years ago, no one thought that Washington would topple a regime on Moscow’s doorstep, insert a US-backed stooge in Kiev, arm and train neo-Nazi extremists in the Ukrainian Army, instigate and oversee a vicious war of aggression in the East, threaten to deploy NATO to within five hundred miles of the Russian capital, reassemble the Iron Curtain by building up forces, weaponry and missile systems in E. Europe and the Balkans, and repeatedly provoke a nuclear-armed adversary (Russia) by launching asymmetrical attacks on its economy, its financial system and its currency. The reason Washington pursued such a risky strategy is because EU-Russian economic integration posed a direct threat to US global hegemony, so steps had to be taken to thwart the project. The US used all the tools at its disposal to drive a wedge between Brussels and Moscow, to sabotage the plan to create a free trade zone from “Lisbon to Vladivostok”, and to prevent the emergence of a new rival. Washington powerbrokers did what they felt they had to do to preserve their lofty position in the current world order. Now their focus has shifted to the Asia-Pacific where they intend to take similar action against another potential rival, China.
According to the Economist, China’s Gross Domestic Product (GDP) will surpass that of the United States by 2021. In other words, if present trends persist, China will become the world’s biggest economy in less than a decade. But what are the chances that present trends will continue if Beijing is embroiled in a conflagration with the US; a conflagration where the US turns China’s trading partners against Beijing like it did with Moscow, a conflagration in which more of China’s resources are devoted to national defense rather than economic growth, a conflagration in which oil shipments from the Middle East are interrupted or cut off completely?
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