Marshall Auerback Speaks on BNN About Implications of Unrest in the Middle East Posted on January 29, 2011 by Yves Smith Portfolio strategist, hedge fund manager, and sometime Naked Capitalism guest blogger Marshall Auerback spoke on BNN about the implications of unrest in the Middle East for the economy and investors. Enjoy! You can view the clip here. 801830 Post navigation ← Guest Post: Inequality In America Is Worse Than In Egypt, Tunisia Or Yemen Bank of America Fighting to Reverse Foreclosure Freeze in Nevada → Subscribe to Post Comments 21 comments Paul Repstock January 29, 2011 at 2:47 am Doh! Mr. Aurback is definetly in his Ivory Tower cloud world. I don’t think he has any comprehension of the realities of the events he is theorizing about. The world he inhabits is the top couple of percentage points. In his world the “gini number”, from a previous post has little or no relevance. Inflation is really not important if food and fuel consume less than 5% of your income. I think I’m seeing a global groundswell here. The uprisings are not confined to the Middle East. The MSM makes no mention of it, but through out Central Europe there are large protests about government corruption. Another point Mr Aurback avoids is the effect on US corporate profits of a global backlash against totalitarian regimes, many American backed, but all corporate financed?? Paul Repstock January 29, 2011 at 2:57 am So far the picture in Egypt is pretty good. The army seems to have sympathy with the protestors, the Muslim Brotherhood leadership, discredited themselves by their selfserving calculation that they wouldn’t join the protests till they could gain control. Instead the ordinary members joined the people as ‘Egyptians’. Mr Mubarak lost the support of the military by trying to create a Dynasty and hand off to his son. Now all the really has as a core are the “Thug” secret police, who stand to loose their heads if Mubarak is ousted. Indigenous Centurion January 29, 2011 at 4:53 pm ” “Thug” secret police, who stand to loose their heads if Mubarak is ousted. ” Sadly, the clever thugs have defected to fly out of Egypt with number one son. Left behind will be the not so bright small-time-hoods to take the rap for the high-roller-thugs. Could Mubarak have also left behind his double, look-alike? Does Barabbas ironically have the ring of muBarak? Who knows. Will Mubarak’s political opponents form their own shadow government from new headquarters in the desert? Will old guard methodically defect from pretender government but slowly re-materialize as workers for de facto government? Then as moles work their respective paths upward through the ranks to reform the traditional brand of corruption into which Mediterranean Nations invariably evolve? Who knows. One thing for sure — Facebook will eventually go the way of all dynasties only to be replaced by a Brave New World Wide Web. The ping of Death ! DownSouth January 29, 2011 at 7:31 am • Paul Repstock said: “I think I’m seeing a global groundswell here. The uprisings are not confined to the Middle East.” I had breakfast yesterday with a friend who keeps his thumb very much on the political pulse here in Mexico. He thinks you might see a situation in Mexico in 2012 very similar to what is going on in Egypt now. He does not think the U.S.-backed derechista (rightist) regime here in Mexico can survive another election cycle. In 2012, he predicts, the Mexican people will no longer sit still for the flagrant and blatant election fraud that has kept the puppet regimes in power for so long. President Calderon’s “War on Drugs,” which comes out of the same playbook as Obama’s “War on Terror,” has been a absolute catastrophe. Instead of a “War on Drugs,” what most people want are changes to the underlying social and economic situation. The neoliberal policies of the ruling elite have created a vacuum which criminal organizations have rushed in to fill. The solution to this is for the government to represent the people, thus depriving the criminal mafias of their socio-economic base of support, without which they cannot survive. Furthermore, he said that if the U.S. oligarchy is so incompetent that it can’t even keep Mexico under its heel, this signals the end of the era of U.S. neo-imperialism. • Paul Repstock said: “Another point Mr Aurback avoids is the effect on US corporate profits of a global backlash against totalitarian regimes, many American backed, but all corporate financed??” Puppet dictatorships were installed and kept in power by the United States throughout the world in order to create a playground for international corporations. It’s all part and parcel of neo-imperialism. If U.S. neo-imperialism comes to an end, the multi-nationals are going to wake up in a new world that is not going to be nearly so friendly to their interests. rps January 29, 2011 at 11:47 am Puppet dictatorships were installed and kept in power by the United States throughout the world in order to create a playground for international corporations. It’s all part and parcel of neo-imperialism……” Excerpt from a speech delivered in 1933, by Major General Smedley Butler, USMC. “War is just a racket. A racket is best described, I believe, as something that is not what it seems to the majority of people. Only a small inside group knows what it is about. It is conducted for the benefit of the very few at the expense of the masses. I believe in adequate defense at the coastline and nothing else. If a nation comes over here to fight, then we’ll fight. The trouble with America is that when the dollar only earns 6 percent over here, then it gets restless and goes overseas to get 100 percent. Then the flag follows the dollar and the soldiers follow the flag. I wouldn’t go to war again as I have done to protect some lousy investment of the bankers. There are only two things we should fight for. One is the defense of our homes and the other is the Bill of Rights. War for any other reason is simply a racket. There isn’t a trick in the racketeering bag that the military gang is blind to. It has its “finger men” to point out enemies, its “muscle men” to destroy enemies, its “brain men” to plan war preparations, and a “Big Boss” Super-Nationalistic-Capitalism. It may seem odd for me, a military man to adopt such a comparison. Truthfulness compels me to. I spent thirty- three years and four months in active military service as a member of this country’s most agile military force, the Marine Corps. I served in all commissioned ranks from Second Lieutenant to Major-General. And during that period, I spent most of my time being a high class muscle- man for Big Business, for Wall Street and for the Bankers. In short, I was a racketeer, a gangster for capitalism. I suspected I was just part of a racket at the time. Now I am sure of it. Like all the members of the military profession, I never had a thought of my own until I left the service. My mental faculties remained in suspended animation while I obeyed the orders of higher-ups. This is typical with everyone in the military service. I helped make Mexico, especially Tampico, safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefits of Wall Street. The record of racketeering is long. I helped purify Nicaragua for the international banking house of Brown Brothers in 1909-1912. I brought light to the Dominican Republic for American sugar interests in 1916. In China I helped to see to it that Standard Oil went its way unmolested. During those years, I had, as the boys in the back room would say, a swell racket. Looking back on it, I feel that I could have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents.” Dirk77 January 29, 2011 at 11:37 pm Thanks rps. How could I have lived so long and not come across this guy or this speech? wc4d January 30, 2011 at 10:30 am Thanks, too, rps. I’ve seen the ‘War is a racket’ quote, never thought to look for the actual speech. We do have military leaders today who might think like that, Shinsecki, along with several Bush fired because they told him the truth, but ones who speak out, as with Ike and Smedley, only do so on their way out the door. Can this change? I don’t pretend to know, only to hope. doom January 29, 2011 at 11:44 pm Yes, this is covered as mideast regional instability but it’s nuch more of a continuation of the nameless and officially ineffable revolutions in Venezuela and Bolivia and Ecuador. Same treaty-law underpinnings of self-determination and dignity, which sound vague to Americans only because they’ve been strictly quarantined from economic, social and cultural rights. Civic discourse in the US, on topics international or domestic, is one big furious effort to divert attention from ESC rights. Those are the ultimate threat to the predator state and its satellites. Jack Rip January 29, 2011 at 5:53 am The Egyptian’s unrest outcome is uncertain. Without assignment of probabilities there are several possibilities: Mubarak may yet survive to govern several more years, the popular uprising may prevail and the country will turn more democratic and the Muslim Brotherhood, don’t underestimate this century old power, may take over and in essence create a Sunni Iran that is exceedingly poor. The first possibility will only delay a dramatic change by several years while the last may turn the whole Middle East into a boiling caldron. Aurback’s political assessment is reasonable and his economic assessment is definitely right. I don’t see the unrest getting anywhere in Yemen or even Jordan, a country clearly split between Jordanians and Palestinians with a military that is basically Jordanian. Other crucial Arab countries such as Saudi and Syria are excessively stable to allow any unrest to raise its head high (they’ll cut it off right away). DownSouth January 29, 2011 at 8:04 am Jack Rip said: “Other crucial Arab countries such as Saudi and Syria are excessively stable to allow any unrest to raise its head high (they’ll cut it off right away).” What does that mean? That if the Saudi princes can’t keep a lid on it, Obama won’t hesitate to send in U.S. troops? Indeed, realpolitik may come into play here. Auerback said something I believe is very mistaken. Beginning at minute 5:30 he said: Look, I’ve been in the position where I’ve said you have an environment in the West where you’ve got fundamentally self-contained economies. We can feed ourselves. We can supply our energy needs. That’s a problem the emerging markets have that they aren’t able to do that. The West can supply its own energy needs? I don’t think so. Take a look at world oil reserves by nation and region here and the same for natural gas here. The West can feed itself? I don’t think so. Food production is a highly energy intensive endeavor. Without energy, what happens to food production? Greg January 29, 2011 at 10:18 am I’m pretty sure the west can supply its energy needs for quite some time. Between Canada, Mexico and the US, along with our stored reserves, we could maintain present consumption levels for a couple years ( I read somewhere that our reserves would supply us for a year) If we were to make changes in consumption we could extend that a little while. Dont underestimate the power of crises to initiate great change. If we were to see the mother of all negative shocks to the system via some black swan event in the middle east, I’m quite sure we could and would hunker down and take care of our own. I dont think our leaders would hesitate to go on market lockdown for a while. Everyone could be fed, not at the level we are currently enjoying but certainly enough calories to stay healthy, and the lights would be kept on. Life would be significantly altered but the US is one of only a few places (China and Russia being two others) that has everything it needs (not wants) within its borders. Paul Repstock January 29, 2011 at 1:52 pm Greg…”I dont think our leaders would hesitate to go on market lockdown for a while. “.. Are you peeking in their playbook again??? Naughty naughty! I reiterate, I don’t fear the “Black Swan”, nearly as much as the the hand holding the Black Queen. Market lockdown”..Lol..We aren’t dealing with small time here..I see: rationing, state of emergency, Movement Restrictions (‘You want to go to New York..Where is your travel permit?), forced relocations (The nation needs your land for the greater good)….This has happened in many other places. Why not the US? russel1200 January 30, 2011 at 3:54 am To add to this point. Think 726, 19, 4.4. That is the total strategic reserve, how much we use each day, and how much we are actually able to pump from our reserve on a daily basis. It is a very good peaks and valleys source, but a very bad sole source. It would be very tight. http://reflexionesfinales.blogspot.com/2010/11/peak-oil-and-pentagon.html Yearning to Learn January 29, 2011 at 10:19 am The West can feed itself? I don’t think so. Food production is a highly energy intensive endeavor. Without energy, what happens to food production? I don’t know about “the west”, but the US can easily feed itself, even without imported energy. There are a few things that I truly think the US population will not tolerate, and one of them is starving in US streets. If things got bad we would see export controls on food, and also a change in our agriculture. Our leaders are some of the most corrupt in the galaxy, but they’re not dumb enough to let the people starve in the streets. obviously, we are nowhere near being able to provide our energy needs. attempter January 29, 2011 at 10:42 am We can provide more than enough of our energy needs if we cut out the parasitic luxuries. And we can certainly feed ourselves. High-input industrial agriculture is less productive than diversified organic agriculture, which uses far less energy. We’d need less energy if we actually went back to earning our keep by working for our bread. As the unemployment, underemployment, and declining wage stats show, there’s an astronomical amount of untapped labor ready to go to work for itself and feed itself, bountifully, in the process. This would replace vast amounts of fossil fuel inputs. Doing this as self-managing stewards on the land, self-managers or in co-ops, it would be pleasurable, spiritually enriching, socially bonding work. It would be everything the commodification nightmare is not. All this assumes restitution of the land on that Food Sovereignty basis, which is the people’s right and responsibility and which we have the power to do at will. (Politically redeeming the land would be the first step. Then we’d have to restore the soil, which has been denuded throughout most of suburbia. That’s another laborious but doable task.) But if people cling to capitalism and bank-run governments and feudal land enclosure and the delusion of “growth”, then yes, nothing will work and we will end up starving. That’s what people mean when they say “there’s not enough energy” and “we can’t grow enough food”. They’re assuming the continuation of the corporatist death march to its dead end. Paul Repstock January 29, 2011 at 1:55 pm Careful what you ask for Rus. Read my post above. Then see what a rationale you are providing them????????? attempter January 29, 2011 at 4:51 pm I guess I’m relying on the expectation that even Americans won’t be such soft, craven sheep that they’ll let government and corporation rip out their gardens and confiscate their fruit carts. And then the movement builds from there. Of course I could be wrong, but that’s the bet I make. rps January 29, 2011 at 12:34 pm “Our leaders are some of the most corrupt in the galaxy, but they’re not dumb enough to let the people starve in the streets.” 2 strikes here. 1) A civics course would correct “Our leaders” as Our Public Servants. 2) History has shown that yes, they are “dumb enough” to let people starve in the streets and shoot them as well. As a offspring of a surviving GDII parent the memories of starving homeless families would rate as PTSD. The 1896 Great Depression is an eye opener as well. During GDII the US was also in the midst of the Dust Bowl created by over-farming that eradicated the praries and unbalanced the ecosystem. Today, Agricorporate farming does a fine job of destroying ecosystems, polluting waterways, etc…. Wash, rinse, and repeat. My motto, never underestimate stupid and men sinking to the lowest level of existence…..greed. ECONOMISTA NON GRATA January 29, 2011 at 2:35 pm What many of you don’t understand is that revolutions do not evolve in a vacuum….. This is a major “Black Swan” event…. The whole world is watching…. km January 29, 2011 at 7:24 pm Didn’t, won’t watch the clip but, let me guess, Auerback’s response to the Egypt situation is for Bernanke to print more money and for Obama to spend more money rps January 29, 2011 at 7:38 pm From Der Spiegel:Nile Insurgency Creates Uncertain Future for Egypt “….Egyptians today must be well over 30 and Libyans well over 40 to even remember being ruled by someone other than Hosni Mubarak or Moammar Gadhafi. But the Tunisians have proven that aura is ultimately irrelevant, and that even icons are replaceable. It is a realization akin to the shock the people of Eastern Europe experienced after the fall of their communist regimes, or even that of the subjects of Europe’s monarchs after the French Revolution.” No time limits for the despots in power and their offspring awaiting succession. Perhaps the citizens of the Arab World are done with archaic rulers. And I thought 8 years of Bush was a lifetime…… Comments are closed.