In 2003, not long after Putin refused to provide direct military support to the USA in Iraq, Georgia’s so-called“Rose Revolution” erupted. This exacerbated a growing “face-off between the west and Russia in Georgia.” The United States, through institutions such like the National Endowment for Democracy and USAID used this as an opportunity to experiment. George Soros joined in the fun:
“[Soros] began laying the brickwork for the toppling of Georgian President Eduard Shevardnadze. That month, funds from his Open Society Institute sent a 31-year-old Tbilisi activist named Giga Bokeria to Serbia to meet with members of the Otpor (Resistance) movement and learn how they used street demonstrations to topple dictator Slobodan Milosevic. Then, in the summer, Mr. Soros’s foundation paid for a return trip to Georgia by Otpor activists, who ran three-day courses teaching more than 1,000 students how to stage a peaceful revolution.”
Direct conflict between Russia and Georgia was postponed until 2008, when a war between the two coincided with the global economic recession. This fight for control of the border regions of Abkhazia and South Ossetia provided the American bourgeoisie with a perfect opportunity to launch a new phase in its War on Terror; the re-demonization of Russia:
“In a speech given in Tbilisi on 10 May 2005, Bush had praised Georgia as ‘a beacon of liberty’ for the region and the world, and in the 00s the country became one of the most important recipients of the US aid on a per capita basis…President Saakashvili had powerful friends across party lines: in 2005, Senators John McCain and Hillary Clinton had jointly proposed to award him the Nobel Peace Prize…US plans for a Europe-based missile system were a constant source of tension, and Washington’s strong support for the independence of Kosovo in February 2008 was still prickling Russia. Moscow was also growing more and more irritated over the US support to Ukraine and Georgia…In the face of fierce opposition from Russia and significant skepticism in some of the leading EU nations, the NATO April 2008 summit in Bucharest, where Georgia and Ukraine had hoped to be granted a NATO Membership Action Plan (MAP), had ended with a confusing compromise solution where even the participants were uncertain about the decisions they had taken.”
Numerous neoconservative pundits and military-industrial bureaucrats flooded America’s airwaves with anti-Russian agitprop almost immediately after the war began. Two seminars, organized by the American Enterprise Institute and Brookings, featured influential neocon intellectuals like Robert Kagan, Fred Kagan, and Thomas Donnelly. These conferences took on an apocalyptic tone which was echoed by neocon op-eds in The Wall Street Journal, The Washington Post, The New York Times and The Los Angeles Times. Charles Krauthammer condemned NATO’s lack of aggression in responding to the Russia-Georgia war, whining that there, “No dissolution of the G-8. No blocking of Russian entry to the World Trade Organization. No statement of support for the Saakashvili government.” These concerns were echoed by Robert Kagan, who framed the war as an “end of dreams” that proved once and for all that, so long as Russia existed, there could be no “perpetual peace.”
Zbinew Brzenzski even chimed in: “Russia’s aggression toward Georgia should not be viewed as an isolated incident. The fact is, Putin and his associates in the Kremlin don’t accept the post-Soviet realities.The stakes are high. Ultimately, the independence of the post-Soviet states is at risk.” Finally, in August 2008, Bush Jr. gave a Presidential legitimacy to this cacophony of war cries: “Russia has invaded a sovereign neighboring state and threatens a democratic government elected by its people. Such an action is unacceptable in the 21st century…These actions have substantially damaged Russia’s standing in the world. And these actions jeopardize Russians’ relations – Russia’s relations with the United States and Europe.”
Few mainstream American media outlets noted the irony that a President who had overseen the largest boots on the ground American invasion since Vietnam a mere three years after the turn of the century was now calling Russia’s war with Georgia “unacceptable in the 21st Century.” Instead, one month after Bush’s speech, on the 7th anniversary of 9/11, The Wall Street Journal published an op-ed by American Enterprise Institute cretin Leon Aron, headlined “Russia’s Next Target Could Be Ukraine.” Aron’s op-ed opened with this statement: “Perhaps the most urgent question in the world affairs today is whether Russia’s invasion and continuing occupation of Georgia was a singular event. Or was it the onset of a distinct, and profoundly disturbing, national security and foreign policy agenda? Much as one would like to cling to the former theory, the evidence favors the latter.”
That same year, Ukrainian oligarch Viktor Pinchuk (the son-in-law of the aforementioned Leonid Kuchma), became “a large benefactor to foundations backed by [George] Soros.” This was the culmination of an investment spree Pinchuk had started four years earlier, when he established the Yalta European Strategy (YES) to promote, “Ukraine’s European and global integration.” The organization’s annual meeting quickly became “the main high-level platform in the region to discuss strategies for Wider Europe.” Two years after establishing YES, Pinchuk created the Pinchuk Foundation which “supports the Clinton Global Initiative, the educational programs of the Tony Blair Faith Foundation and of the Peres Center for Peace.” In 2007, Pinchuk, sold his Ukrsocbank, one of the largest banks in Ukraine, to UniCredit of Italy for $2 billion. He pledged a “five-year, $29-million commitment to the Clinton Global Initiative…to train future Ukrainian leaders ‘to modernize Ukraine.’” Between 2009 and 2013, including when Hillary Clinton was secretary of state, the Clinton Foundation received at least $8.6 million from Pinchuk’s own tax-deductible foundation.
At the time, the GOP were the ones calling Obama a “Putin puppet” for his perceived “softness” on Russia and “capitulation” to Putin. In 2009, Eric Cantor, the number 2 Republican in the House, described glancing at Obama’s America as identical to “looking at Putin’s Russia.” John Feehery, a conservative consultant and veteran House Republican spokesman, wrote on his blog that, “Like Obama, Putin has a fawning media that is intimidated by an uncertain marketplace and looking for any help to stay afloat.” Two years later, The Christian Science Monitor reported: “Republicans have been critical all along of Mr. Obama’s policy of building strong, practical relations with Moscow while soft-peddling US disapproval of Kremlin power abuses and human rights violations. But as recently as last December, more than a dozen Republican senators joined Democrats to win the needed two-thirds Senate ratification of the START nuclear arms reduction accord, which was understood in Moscow as a sign that pragmatism would always prevail in Washington.”
The death of Ukrainian-born Russian tax advisor Sergei Magnitsky in 2009 was blamed on the Kremlin by the US government and a bill-the Sergei Magnitsky Rule of Law Accountability Act-was up for a vote by 2011. This bill, which was finally passed in 2012, barred the Russian officials accused of killing Magnitsky from entering the United States and imposed financial penalties on them.”The Senate bill is purely anti-Russian, and for the time being at least, Obama has managed to blunt this. It’s greatly appreciated in Moscow…. We know that if any of the current Republican presidential nominees makes it to the White House, things will go very badly for the US-Russian relationship,” Dmitry Suslov. “The reset was a very good idea, but it’s reaching its limits,” remarked Gennady Yevstafyev, an independent foreign policy expert. “And, unfortunately, no one in Russia is optimistic about the prospect of Republicans coming to power in Washington next year.”
Indeed, the GOP bordered on open declarations of war with Russia. After Euromaidan and the beginning of the Ukrainian “civil war”, Wisconsin Senator Ron Jonson said “The economic approach is going to fail. When the economic approach fails, then what do we do? Are we ever going to consider providing even small arms?” Senator Lindsey Graham (king of the “anti-Trump” Republicans today) said that Obama was a “weak and indecisive president” and that that “invites aggression.”
Much like Russiagate, there has never been any proof of the official narrative regarding Magnitsky’s murder. This narrative is a convoluted story developed by American hedge fund manager William Browder wherein an elaborate conspiracy allowed Russian bureaucrats to carry out a $230 million tax fraud scam and then blame it on Browder’s company by stealing his corporate seal. In this version, Magnitsky was a courageous lawyer who stood up to the authoritarian and corrupt Russian government (which was not even technically led by Putin at the time but he’s often retconned into the story anyway) slain by brutal prison guards.
In reality, it’s likely that Browder’s company was actually responsible for the tax fraud scheme and that Magnitsky, who was not a lawyer but a long time taxman, was a participant who was killed in prison by the negligence of prison doctors, not guards. In spite of the media-spawned foregone conclusion that Browder’s narrative is unimpeachable, the hedge-fund manager spent a good deal of time and money making sure a 2017 documentary criticizing his version of events was never released in the European Union and was only shown once in the United States. Ironically, the director of the film was a hardcore critic of Vladimir Putin at a time when Browder was an apologist for the Russian president. Furthermore, the documentar was initially intended to dramatize and supplement Browder’s narrative and only became critical once the director ran into too many impossible to resolve contradictions in the story.
During the 2011-2012 election season, Republican presidential candidate Mitt Romney, while receiving ostensible Russian stooge Robert Mercer’s money, joined in on the conservative anti-Russian hysteria. Romney, who was represented in both liberal and conservative media at the time as a moderate Republican, told the Washington Post that Putin, “dreams of rebuilding the Russian Empire”,that Obama’s reset with Russia, “had to end” and that America had to “show strength.” Later, in the middle of one 2012 presidential debate, quipped to Romney that “the 1980s are now calling to ask for their foreign policy back because, you know, the Cold War’s been over for 20 years.” Around this same time, antecedents to the Russiagate narrative proliferated throughout mainstream mass media. As Slate reported in October 2011:
“Over the summer reporter Eli Lake of the Washington Times wrote a series of provocative stories about US-Russia relations and the alleged failure of ‘reset,’ the Obama administration’s policy to improve ties to Moscow. The most sensational…alleged that a bomb blast near the U.S. Embassy in Tbilisi, Georgia, the previous September had been ‘traced to a plot run by a Russian military intelligence officer, according to an investigation by the Georgian Interior Ministry.’ The Russia officer was identified as Yevgeny Borisov.
‘If true, a Russian-sponsored attack on a U.S. Embassy would constitute the most serious crisis in U.S.-Russian relations since the Cold War and put to lie any ‘reset’ in bilateral relations,’ Lake quoted GOP Sen. Mark Kirk as saying of his story. A few days later, Lake reported, Kirk and four other senators — Jon Kyl, Lindsey Graham, Joe Lieberman and John McCain — sent a letter to Secretary of State Hillary Clinton demanding intelligence community briefings on the incident.
Lake’s original report on the bombing was sourced exclusively to government sources in Georgia, which fought a war in 2008 with Russia, its mortal foe. For ‘balance’ he included a quote from the Russian embassy denying any official involvement. The story was highly favorable to the Georgian government’s interests, as are a number of other stories that Lake has written about Georgia in recent years. During that period the neoconservative lobbyists at the Washington firm of Orion Strategies, which has received more than $1 million in fees from Georgia’s government since 2004, have worked closely with Lake.”
Orion Strategies was founded by Randy Scheunemann, a former advisor to Donald Rumsfeld. Previously, Scheunemann co-founded the Committee for the Liberation of Iraq, a lobby group composed of the usualf neocon think tankers and national security hawks, such as Bill Kirstol, John McCain, Joe Lieberman, Newt Gingrich, Jeanne Kikpatrick, Richard Perle, and our old friend James Woolsey. In 2008, Scheunemann became the top foreign policy advisor to McCain’s presidential campaign. Despite Scheunemann acting as one of the top lobbyists in the United States for the Georgian government, there was nothing like a “Georgiagate” media hysteria: “Where’s the outrage? Why isn’t there a congressional investigation of the McCain’s adviser’s entanglements?” In fact:
“...there’s a nice Iraq-Georgia connection through Scheunemann: the offices of Orion Strategies shared the same address as the neocon-inspired Iraqi National Congress, founded by charlatan Ahmed Chalabi, who was personally close to both McCain and Scheunemann, and the Committee for the Liberation of Iraq. They were all located on one, big, war-starting location.
Scheunemann tied it all up in one big bundle when his Orion Strategies helped organize ten members of the former Soviet bloc to support the invasion of Iraq. As Ken Silverstein reported in the Los Angeles Times, Orion ‘scored its biggest success last year when 10 Eastern European countries endorsed the U.S. invasion. Known as the ‘Vilnius 10,’ they showed that ‘Europe is united by a commitment to end Saddam’s bloody regime,’ Scheunemann said at the time.’ According to US News and World Report, Orion also represented Latvia, Macedonia, and Romania.
Last April 17, Scheunemann’s business partner, Michael Mitchell, signed another $200,000 contract to represent Georgia, on the very same day that McCain says that he had a telephone conversation with Georgia’s President Mikheil Saakashvili. Did McCain urge Saakashvili to sign the contract? Did Scheunemann and Mitchell urge Saakashvili to lobby McCain to support Georgia? The Post reported that Scheunemann “prepped” McCain for the call to Saakashvili. It’s a blindingly obvious conflict of interest, and frighteningly it’s one that conceivably could drag the United States into yet another war in that unstable part of the world.”
In 2011, Ken Silverstein once again analyzed Orion’s lobbying for Georgia:
“Orion seeks to create a media echo chamber on Georgia and Russia. Essentially it works like this: Tbilisi’s lobbyists generate contacts and information that they feed to sympathetic journalists. Orion frequently arranges interviews with Georgian officials and, not infrequently, stories centering on their charges magically appear soon afterward. Orion has wined and dined some reporters on its tab or picked up their travel expenses. There’s certainly nothing illegal about that but it’s worth noting that lobbyists are barred from maintaining these sorts of relationships with members of Congress because it so clearly presents, as we say in Washington, at least the appearance of impropriety…Orion also works very closely with experts and organizations cited by these reporters, like the Foreign Policy Initiative, whose board of directors includes William Kristol, Robert Kagan and other neocons from the PNAC and the Committee for the Liberation of Iraq…
Despite Orion’s commitments seeming to reflect a Republican bias, they worked alongside the Podesta Group while lobbying for Georgia in the 2010s. The Podesta Group, founded by brothers John and Tony Podesta, was said in 2011 to have “close ties to the Democratic Party and the Obama administration” while its CEO, Kimberly Fitts, was described “as a fixture in Republican politics.”
Ironically, in 2012, the Podesta Group were the subject of a federal investigation regarding compliance with the Foreign Agents Registration Act for their work for a Ukrainian group tied to the former Ukrainian President Viktor Yanukovych, overthrown in the Euromaidan Color Revolution for his ties to a rival group of oligarchs and hesitance to integrate Ukraine into the EU. From 2006-2016, including while his business was lobbying for later boogeyman of a Democratic administration, Tony Podesta and his wife donated more to the Democratic Party than any other lobbyists, while John, who had served as Bill Clinton’s chief of staff from 1998-2001, became counselor to President Barack Obama in 2014. In between these appointments, John founded the Center for American Progress, the Democratic answer to the Heritage Foundation or American Enterprise Institute.
Scheunemann received $150,000 from the Open Society Foundation of Soros for lobbying work between 2003-2010s. At the same time, Soros donated $3 million to the creation of Podesta’s CAP: “The idea for [CAP] began with discussions in 2002 between [Morton] Halperin and George Soros, the billionaire investor.… Halperin, who heads the office of Soros’ Open Society Institute, brought [former Clinton chief of staff] John Podesta into the discussion, and beginning in late 2002 Halperin and Podesta circulated a series of papers to funders” (The Open Society Foundation still donates between $500,000-$1,000,000 annually to the think tank).
While CAP is billed by the mainstream media (and itself) as a “New Deal” style organization, it has the fingerprints of New Democrats such as Clinton and Gore all over it. Harold Ickes, a chief fundraiser and former deputy chief of staff for the Clinton White House, was hired by Soros to get CAP off the ground and its major funders include the Bill and Melinda Gates Foundation, the Ford Foundation, the Rockefeller Fund, and Northrop Grumman. The latter is a major contributor to a slew of neoconservative think tanks, including the Center for a New American Security (CNAS) which penetrated deeply into the Obama administration and had as its CEO Euromaidan architect Victoria Nuland.
A poll released by Pew in 2013 showed that 60% of Americans did not trust Russia and that more than half believed that Putin could not be trusted to “do the right thing.” In spite of a slew of articles in the 2010s claiming American conservatives had fallen in love with Putin, the Pew study showed that: “68% of Republicans, 58% of Democrats and 57% of independents said Russia was untrustworthy. Majorities of Republicans (61%) and independents (58%) also said they did not have confidence in Putin when it came to world affairs. Among Democrats, fewer than half said they lacked confidence in the Russian president, but the balance of opinion was negative; 35% said they had confidence in Putin and 47% said they did not.” This illustrates not only that the GOP was far from being gradually subverted by Russian assets from within, but that Russiagate was the culmination, not the beginning, of a modern anti-Russian public relations campaign which started at least as early as Russia’s brief war with Georgia in 2008.
There exists a perception today, by both critics and supporters of the Russiagate narrative, that the GOP, or at least a significant portion of it, suddenly dropped the New Cold War rhetoric when Trump became their nominee in 2016. But even earlier in the year, Republicans were still beating the anti-Putin drum. And, more to the point, Putin repeatedly signaled that he did not want a Republican to win the election. As CNBC reported in June 2015: “No leader abroad draws more Republican criticism than Putin does. The candidates’ message is clear: If any of them are elected president, US relations with Russia will turn even more negative.” The real kicker is that Putin’s new position of strength in the world was blamed on Hillary Clinton: “Republicans link their criticism of Putin to the foreign policy record of Clinton, who as the chief U.S. diplomat carried out Obama’s ‘reset’ in relations with Moscow in 2009, soon after Obama succeeded George W. Bush as president. They say Obama and Clinton eased up on Putin when they should have applied more pressure.” The same month that this article was published, Pew published a survey that is quite interesting in retrospect:
“Two-thirds of GOP members see Russia as a military threat, but only 56% of Democrats share their fear. And while half of Republicans say Russia is to blame for the violence in eastern Ukraine, just 39% of Democrats agree.
There is a similar partisan divide over what to do about the situation in Ukraine. Republicans are far more likely than Democrats to support military assistance. Six-in-ten Republicans voice support for NATO sending arms to the Ukrainian government compared with 39% of Democrats.
The smallest partisan division is over economic aid to Kyiv: 69% of Republicans back such assistance, as do 60% of Democrats.
Substantial percentages of both parties favor keeping U.S. and EU economic sanctions against Russia about the same: 44% of Republicans and 54% of Democrats. However, 40% of Republicans would increase those sanctions, while only 23% of Democrats approve of such action.
Members of both parties support NATO membership for Ukraine. Such support is greater among members of the GOP (71%) than among Democrats (59%). Moreover, there is a partisan difference about U.S. obligations to come to the military assistance of other NATO members. Nearly seven-in-ten Republicans (69%) say that Washington should come to the aid of its allies in the event of Russian aggression. But only 47% of Democrats back that long-standing U.S. treaty obligation, while 48% oppose it.”
This gives us an idea of just how sudden and top-down the Russiagate blitz was. When we factor in that Hillary Clinton won the popular vote by nearly 3 million votes, it becomes even stranger that, ahead of the 2020 election, “only 42 percent of Republicans saw Russia as a critical threat, a 10-point drop” while “among Democrats, the figure had jumped to 64 percent seeing the nation as a serious danger, a 19-point increase.” So exactly what the hell happened here? Why did Trump become President in 2016, why did, in spite of all evidence to the contrary, his “movement” insist he was a challenge to the establishment from without it, and why did the Democrats, by promoting the idea that he was “Putin’s Puppet”, apparently agree? I argue that it begins with research and investment into data analysis and alternate-reality gaming among the bourgeoisie and State apparatus and the practical implementation of this research for social engineering.
Sometime immediately before or immediately after the start of Euromaidan in 2014, the much longer imperialist plan for the 21st Century evolved. NATO and its relatives in the American national security state, along with the global financial institutions such as the IMF, World Bank, WTO etc, decided that Russia and China needed to be brought as close to a direct military confrontation with the West as possible, even if this meant the explosion of a conflict comparable to the World Wars. Remember all those warships Obama placed in the South China Sea as part of the “pivot to Asia?” Remember Russia being blamed for the downing of MH17 despite Ukraine’s government (not to mention the United States) having far more of an incentive to down the plane as a false-flag?
In other words, not only is Russiagate completely false (and by proxy so is QAnon), but, at some point, it was decided that Donald J. Trump had to win the 2016 election. Perhaps this was not always the case, and I’m not saying everyone who participated in the 2016 election were simply play-acting. Perhaps the choice was made as late in the game as the summer of 2015. But once that choice was made, the primary objective of an interagency, bipartisan, inter-imperialist coalition was always to get Trump into the White House, disseminate numerous disinformation campaigns (of which Russiagate and QAnon are just two paradigmatic examples), and prime the public not for a “New Cold War” but for a new World War.
Why? Well, the 2008 crisis kicked off an era of slow motion economic stagnation not seen since the 1970s. Between 2014-2019 (that is, before the COVID-19 Pandemic), the IMF issued several editions of its annual “World Outlook” report which each concluded, with exponentially increasing severity, that economic growth had slowed significantly over those five years:
- 2014: “Largely due to weaker-than-expected global activity in the first half of 2014, the growth forecast for the world economy has been revised downward to 3.3 percent for this year, 0.4 percentage point lower than in the April 2014 World Economic Outlook (WEO). The global growth projection for 2015 was lowered to 3.8 percent.”
- 2016: “Global growth is projected to slow to 3.1 percent in 2016 before recovering to 3.4 percent in 2017. The forecast, revised down by 0.1 percentage point for 2016 and 2017 relative to April, reflects a more subdued outlook for advanced economies following the June U.K. vote in favor of leaving the European Union (Brexit) and weaker-than-expected growth in the United States”
- 2019: “Global growth is forecast at 3.0 percent for 2019, its lowest level since 2008–09 and a 0.3 percentage point downgrade from the April 2019 World Economic Outlook. Growth is projected to pick up to 3.4 percent in 2020 (a 0.2 percentage point downward revision compared with April), reflecting primarily a projected improvement in economic performance in a number of emerging markets in Latin America, the Middle East, and emerging and developing Europe that are under macroeconomic strain. Yet, with uncertainty about prospects for several of these countries, a projected slowdown in China and the United States, and prominent downside risks, a much more subdued pace of global activity could well materialize.”
As Pam and Russ Martens pointed out in 2016: “Long stretches of anemic performance suggest that a ‘cyclical’ situation may have given way to a ‘secular’ or long-term trend.” The Martens also correctly remind us of two things: 1)The importance of consumerism in domestic US economy 2)The fact that the only real impediment to the Great Recession eclipsing the Depression in severity was an unprecedented amount of Federal Reserve liquidity infused into “the market” through massive “quantitative easing” and record numbers of both individual and corporate debt:
“In the United States, almost 70 percent of GDP stems from consumption by the consumer. When workers are stripped of an adequate share of the nation’s income and wealth, they are crippled as consumers. This leads to corporate downsizing, plant closures, layoffs – which leads to even less consumer spending and a repetitive downward spiral.
This downward spiral has been slowed by three rounds of quantitative easing by the Federal Reserve and a more than doubling of the national debt. Had this massive flow of money not cushioned the fall, we would likely be staring in the face of raging deflation rather than secular stagnation. But the money spigot cannot remain open forever.
The staggering amount of money that the Federal government has thrown at a financial crisis manufactured by Wall Street speculators is unprecedented in the history of the country. When Bill Clinton took office in January 1993, the U.S. national debt stood at $4 trillion. The country was then more than two centuries old; had paid for the Revolutionary War, the Civil War, and financed a multitude of FDR programs to climb out of the Great Depression – caused by the 1929 stock market crash and the Wall Street speculators the prior time they had gotten their hands on bank deposits. The nation had also paid for World Wars I and II and the Vietnam War. Today, the national debt stands at $19 trillion. It has more than doubled since President Obama took office.”
As Christopher Leonard wrote in Business Insider earlier this year:
“Between 1913 and 2008, the Fed used this power to gradually increase the money supply from effectively zero to roughly $900 billion. Then between late 2008 and mid-2014, the Fed created a program called ‘quantitative easing,’ which tried to bolster the economy by injecting 3 trillion new dollars into the system. That’s three centuries worth of money printing in about five years. During the same period, the Fed launched another unprecedented program — it kept interest rates pegged at zero…
…When the Fed pumps new money into the banking system through quantitative easing, it does so by buying up long-term Treasuries, which pushes down yields. In turn, investors — from average Americans saving for retirement to complex hedge funds — are forced into what has become known as the ‘search for yield,’ a scramble to earn what they need by putting their money into riskier investments.
Trillions of dollars injected into the system forced investors to chase yield by putting their money in risky assets like shares of unprofitable companies, securitized leveraged loans, and bonds for shady overseas companies. This, in turn, created what Wall Street traders call the ‘everything bubble.’ Usually, asset bubbles pop up in a certain segment of the economy, like housing or high-flying tech stocks, but traders are worried that the search for yield has pushed so many dollars into so many risky assets that the bubbles are everywhere at once…
…during the Fed’s decadelong experiment, the value of stocks rose steadily in spite of weak economic growth — the Dow Jones Industrial Average skyrocketed 77% between 2010 and 2016. One typically caustic hedge-fund trader described to me the frothy stock market of 2016 as being like the crowded deck of the Titanic as it sank. The deck wasn’t crowded because it was a great place to be; it was crowded because people had nowhere better to go.”
The fact of the matter is not only that there was no recovery after 2008, but that there was never meant to be one. Instead, the Federal Reserve created a decade-long grace period for the bourgeoisie to asset strip the domestic economy and attempt to tie up some loose ends in its neo-colonial pursuits (such as in Afghanistan, Iran, Syria, Ukraine, Venezuela, Bolivia, etc) before The Big One really got underway. This stripping rapidly descended upon the savings, pension funds, 401ks etc of “average Americans” themselves, who, like their corporate counterparts, continued to sink deeper and deeper into debt (for those still a part of the “middle class”, in order to halt their re-proletarianization, for those who had already been proletarianized, to halt their exit from the labor-aristocracy).
Likewise, the majority populations of peripheral nations were, as always, more aggressively exploited than the middle and working classes of the United States itself. One study from 2009 reports: “Large industrialized nations like the United States, Japan, and Germany have benefited from increasing global demand for relatively stable economies in which to invest. Instead, it is several developing countries, notably those with vulnerable capital accounts and weak macroeconomic fundamentals, that are experiencing severe economic downturns disproportionate to their roles in the crisis.” The top 10 countries most affected in the initial fallout from 2008 include Mexico, Ghana, Jamaica, and Argentina. Funnily enough, the list is rounded out by several nations from Central Asia, Central Europe, and Eastern Europe: Kazakhstan, Bulgaria, Hungary, Russia and, at number one, Ukraine. As reported in 2013:
“For years Russia provided Ukraine with underpriced gas while Ukraine’s export prices increased rapidly. As a result, Ukraine had been enjoying fast but unsteady economic growth, which significantly dropped in 2008 and went into a deep recession in 2009. Thanks to two IMF loans in 2008 and in 2010, in exchange for a commitment to lowering the growing budget deficit, the Ukrainian economy was able to recover from the recession. Despite the growth resumption in 2010, the growth rates remain slow with 2012 estimates at approximately 3% of GDP. The economy experienced multiple external shocks as a result of the global economic crisis as the foreign demand fell. Foreign direct investment has also fallen, partly due to the global economic crisis, and partly due to poor investor climate in Ukraine. Public finances still face severe challenges which are expected to force the government to reach out for further financial assistance from the international community. The government has already requested that IMF postpone loan repayment dates, resulting in a downgrade from ‘positive’ to ‘negative’ in Standard and Poor’s credit rating of Ukraine.”
From the crash in 2008 to the start of the Ukrainian civil war in 2014, the number of billionaires in the world doubled, standing at 1,645. Six years later, there were 2,095 billionaires, more than ever, with this group exploding its wealth to a collective $3.78 trillion during the COVID-19 pandemic. America minted a record number of millionaires in 2011 and five years later it was producing 1,700 a day, an upward trajectory that was not halted by 2020, with more than five million people becoming millionaires globally during the pandemic. At the same time, three firms combined became the largest shareholders in 88% of the S&P 500. These firms-BlackRock, Vanguard, and State Street-are known as passive index funds. As an article published by Cambridge University Press in 2017 states:
“Since the outbreak of the global financial crisis, private as well as institutional investors have massively shifted capital from expensive, actively managed mutual funds to cheap, index mutual funds and exchange traded funds (ETFs), which we subsume under the term passive index funds…Between 2008 and 2015 investors sold holdings of actively managed equity mutual funds worth roughly U.S. $800 billion, while at the same time buying passively managed funds to the tune of approximately U.S. $1 trillion—a historically unprecedented swing in investment behavior. As of year-end 2015, passive index funds managed total assets invested in equities of more than U.S. $4 trillion. Crucially, this large and growing industry is dominated by just three asset management firms: BlackRock, Vanguard, and State Street. In recent years they acquired significant shareholdings in thousands of publicly listed corporations both in the United States and internationally. The rise of passive index funds is leading to a marked concentration of corporate ownership in the hands of the Big Three.”
In 2008, such a small number of active mutual funds had become major shareholders in such a large number of firms that the situation recalled that of 20th Century finance capitalism under the control of figures like JP Morgan or JD Rockefeller. In contrast, however, the 21st Century hedge funds mostly “eschewed active participation in corporate governance.” These funds are called passive because they ignore the search for yield to invest in large, established companies across the entire economy. However, these “passive” funds are arguably more involved in the governance of corporations than the “active” mutual funds:
“...the concentration of corporate ownership may entail a re-concentration of corporate control, since passive asset managers have the ability to exercise the voting power of the shares owned by their funds. Indeed, there are indications that the Big Three are beginning to actively exert influence on the corporations in which they hold ownership stakes. In the words of William McNabb, Chairman and CEO of Vanguard: ‘In the past, some have mistakenly assumed that our predominantly passive management style suggests a passive attitude with respect to corporate governance. Nothing could be further from the truth.’ In a similar vein, Larry Fink, founder, CEO and Chairman of BlackRock writes in a letter to all S&P 500 CEOs that he requires them to engage with the long-term providers of capital, i.e., himself…
In 2016, BlackRock, Vanguard, and State Street significantly expanded their corporate governance teams. Furthermore, according to the article,”passive funds have increased their market share from 4 percent of total equity mutual fund assets in 1995 to 16 percent in 2005. From 2005 to 2015, index funds have doubled their market share to 34 percent.” By 2015, “passive index funds (equity) had at least U.S. $4 trillion in assets under management…thus surpassing the assets under management of the entire hedge fund industry.” The implications become clear when we consider how profitable passive index funds will become compared to the rest of the economy over the next decade:
“As global economic growth rates are not picking up—a situation which has been characterized as ‘secular stagnation’ or the ‘new mediocre’—average returns for most international equity and debt markets are expected to be comparatively low in the near to medium future. McKinsey Global Institute has even forecasted that over the next twenty years average returns for US and European equities could be as low as 4 percent per year, while U.S. and European government bonds could even have return rates of zero.This further bolsters the competitive advantage of low-cost passive investors vis-à-vis actively managed funds. Ernst & Young has forecasted annual growth rates for the ETF industry of between 15 and 30 percent in the next few years. According to PwC, assets invested in ETFs are predicted to double until 2020.”
In other words, another massive financial crash is on the way, the Western bourgeoisie knows this, and, conveniently, control of the majority of massive, well established corporations is being highly consolidated into a handful of investment funds which are capable of not only weathering the crisis but profiting from it. Ever since the turn of the 21st Century, a “tightening of the screws” has been taking place wherein the dissolution of the middle class throughout the first world is pushing millions of its inhabitants into more desperate forms of reactionary compromise with portions of the bourgeoisie which they have dubbed to be “anti-elite” despite being from the very ruling class so reviled by the new populists. In turn, the periphery is becoming even more aggressively exploited, often under the guise of philanthropy or military adventures to deliver “democracy” to nations under the control of “tyrants.”
But this is not the end of it. We must consider, no matter how bleak the possibility, that the Western bourgeoisie has not only known about the inevitable disruptive effects of climate change, the logical conclusion of the capitalist mode of production itself, for decades and actively suppressed this knowledge, but that they made the aforementioned preparations as a means of getting their ducks in a row before the ecological crisis gets too out of hand. Indeed, we must consider that these preparations are actually another means of profiting from the crisis. Some would say that the BRICS nations, five of the largest in the world, are not entirely opposed to this strategy, whatever geostrategic and economic disagreements their respective bureaucracies have with those of the West. I don’t deny this is a very real possibility However, those disagreements do exist. Why not gamble on a war capable of getting the “enemies” of the United States (which is itself, in its desperation, growing increasingly alienated from former allies like the Gulf Monarchs and even, to some extent, the Israeli settler-colonial gangster state) in line?