WHY LATVIA COLLAPSED? WHY WE SHOULD CARE

Latvia’s Government Has Fallen

by Tom Barnes with Gordon Duff STAFF WRITERS 

This happened yesterday as a result of a total failure of the economy to meet the needs of the people.  There were riots in the streets.  Iceland’s government fell for similar reasons six weeks ago.  To read the story from today’s New York Times, please click on this web address:  http://www.nytimes.com/2009/02/21/world/europe/21latvia.html?th&emc=th 

Why does this apply to veterans?  Only because this is a harbinger of things to come and this will affect how our country reacts to world situations which threaten our national security. Therefore it has the potential to make more disabled veterans. 

This is a lot more dangerous for American national security than it looks on first blush.  Latvia, along with Estonia and Lithuania is a former Baltic area satellite of the former Soviet Union.  They are starved for cash. 

Right now they have been floated a loan by the European Union but the EU itself is having problems with banks folding every week. The EU has little debt but member states, some of which retain their original currency like Britain and Sweden plus their actual currency, the Euro, being worth between 1.25 and 1.60 but "spending" like .25 at the store.

 Europeans think they are underwriting socialist medical care and other services with high prices at a huge VAT tax. But in actuality, they have little militarily with US bases making up the bulk of Europe’s defense. 

They have a greatly lower standard of living which is the result of lack of commercial competition at the wholesale and retail level.   With the exception of subsidies in countries like France where wine, cheese, bread and candy cost next to nothing, meat in most of Europe is unattainable.  Latvia, Lithuania and Estonia are Germanic states taken over by Stalin in 1940. 

They were key to the destabilization of the USSR.  (Gordon has an office in Lithuania, so he is familiar with the country).  If you do some checking with international finance people on the sly you will find that they think that  the US banking system will be federalized in 6 months.  Few institutions are survivable in their view.     

Soon their liquidity will dry up.  At some point the cash will run out.  This is happening all over the world but when it happens so abruptly to a satellite of the Soviet Union, we lose influence immediately.  And that is very dangerous for us. 

Last week Kyrgysthan threw us out and we lost an Air Base which is vital to our needs in Afghanistan.  How did this happen?  The Russians offered these people, a former satellite republic of the USSR, more money than we were willing to pay In order to maintian the air base, the US had to bring full support behind the government there, which had moved from "mild dictatorship" to one of the most brutal governments on Earth. 

The Russians have no problem with this turn of events. Prior to putting in the base, we had a policy that promoted democracy.  After getting in the base, we supported a government there much worse than the Taliban.  It seems to be our dilemma everywhere, that is, support the dictator and get what we want or support democracy and get very little. . 

Eventually the Russians will offer the Latvians more cash than the western Europeans.  They will do the same in the Ukraine before the year is out, watch and see.  Then they will offer arms at a much cheaper price than we are willing to sell them to nations to which we normally sell arms.

  They will offer cash in greater amounts than either the western Europeans or the USA is capable of offering and they will buy friends.  Then they will have the potential to send armies and navies into areas where they had influence when the Soviet Union was extant. 

At that point a new Cold War is on and apparently this is what Putin has been wanting for over a decade.  Why?   One would have to understand the historical Russian mindset to get to that level of comprehension.  I am not there.  But since the days of Peter the Great Russia has felt “left out” of the world’s major spheres of influence and decision making mechanisms. 

Much like France she yearns for the “old days” when she mattered on the world stage.  She is willing to spend cash where the West cannot afford to do so to buy influence. This is so that she can “matter” again. 

And this could possibly spell war.  She is buying our allies from underneath us because she is willing to sacrifice what the West is not willing to do. Russia’s financial wherewithall to do this was based on unsustainable oil prices.  Now with the collapse of oil prices, her own oligarchs are going bankrupt, which is destabilizing the corrupt system built by Putin and attacking his credibility. 

Putin has depended on western Europe buying gas thru the pipeline system into Vienna.  However, with the ability of Europe to receive gas in the form of LPG/LNG or direct from proposed trans-Sahara pipelines. Russia may find herself with cold winters again, no European cash to keep up their massive inflation. 

This is not good for us. Russia’s people do not have the creature comforts that are demanded as necessities in the West, so she can afford to take her economy down to bare bones and take that money she would normally spend on her people and buy friends with it. 

The Third World War is starting and the weapon of choice is cash. America and Americans need to understand what is happening.  A large standing army and navy is useless in the face of economic subterfuge by Russia. 

They will soon be joined in their efforts by the non-aligned countries and Hugo Chavez in Venezuela will be in the forefront of this effort by non-aligned countries to “buy” American influence in the world out from under our feet. 

The recent Bush Administration turn to the extremism of neo-conservative craziness bordering on Nazism has turned the world against us.  The world’s smaller countries are now ripe for a new set of influences.  They have looked at Bush’s vision of America and found it hollow, empty and the root cause of their present economic problems. 

In Bush’s view, greed was good, it was capitalism, it was money making more money and all would be well if we just left it alone.  Well, now we see the fruits of that poisoned tree coming to bear when the entire system collapses due to the magic of “fantasy wealth” wrapped up in make-believe derivatives that only a Ph.D. from Harvard or the Wharton School of Business or the London of School of Economics could actually figure out. 

Our money was fake.  It was not real.   Look at Bernard Madoff.  He stole $50 billion dollars from people in the largest Ponzi Scheme in the history of the Western World.  How did he do it?  By using nothing more than an appeal to greed and by offering people with lots of money and little foresight the “promise” of making even more money. 

Even an M.B.A. from the Joe Doakes School of Lots of Money would have understood upon very little investigation that Madoff was not following any of the common rules of finance and security selling that everyone else on the planet was required to follow. 

They guy was making a constant gain of about 12% a year for his clients, and that was regardless of what was happening in the economy.  That is simply impossible.  No one questioned that, why?  They had no questions because of greed. Now, what is my larger point?  My point is this. We pushed a fantasy view of unrealistic financial growth on the world for decades. 

This probably goes back all the way the to the 1930’s but only a Ph.D. in Economics would really understand the grandfathering roots of this tragedy.  We sold the world the idea that money could grow and grow and that there is no limits to economic growth.  Try and remember that the very definition of economics is  (1) The study of production, distribution, selling and use of goods and service (2) the branch of social sciences that deals with the financial considerations of the production, distribution, and consumption of goods and services. 

At some point the goods and services that we were selling were smoke and mirrors.  They were nothing more than me calling you over the phone and offering you a set of financial packages that more or less represented nothing more than me promising you that you would make money if you bought my “package deal”.  If was all fantasy. 

Nothing real was being bought or sold.  It was “high finance” in the worst sense of that term.  I was selling you nothing and for awhile you were willing to buy it because others were making money selling and buying nothing also.  The whole idea of “high finance” has gotten out of hand.  We set up this crazy situation and now our enemies will cash in.  They are not selling nothing.  They are giving people cash who have nothing. 

This is a very dangerous situation for us and it is going to get worse.  Cash is now the preferred weapon of our enemies. This is something that the 25 million member American veteran community needs to project itself into.  We are being undermined by our enemies (and if not enemies at least our adversaries) because they are willing to spend cold cash to buy off our allies and former friends.  This is a whole lot more dangerous for us than it looks.  We need to pay attention here and quickly learn the rules of “warfare by cash”.