July 09, 2016
Dear Friends,
Here is the main page of the
interview:
https://solari.com/blog/the-emerging-multipolar-world-with-the-saker-russia-ukraine-the-risks-of-war/
https://solari.com/blog/the-emerging-multipolar-world-with-the-saker-russia-ukraine-the-risks-of-war/
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interview here:
You can get the transcript
in PDF format here:
I highly recommend that you
check out the rest of the Solari Reports and the Solari Books.
Enjoy!
The Saker
For the ones that feel the drive to translate this interview in their native languages, here it is the transcript that can be copied/pasted in a Word file:
For the ones that feel the drive to translate this interview in their native languages, here it is the transcript that can be copied/pasted in a Word file:
BUILDING
WEALTH IN CHANGING TIMES
The
Solari Report June 9, 2016
The
Emerging Multipolar World with Saker: Russia, Ukraine, and the Risks of War
THE
SOLARI REPORT The Emerging Multipolar World June 9, 2016 CATHERINE AUSTIN FITTS
C. Austin
Fitts: Ladies and gentlemen, it’s a privilege and a pleasure
to welcome back to The Solari Report, The Saker. We’re doing our quarterly
discussion of the emerging multipolar world. Today we’re focused on the
Ukraine, Russia, and the ‘lobbyists of war’.
Saker,
thank you again for joining us. You have a new piece out this morning. Maybe we
could just dive in and have you tell us a little bit about it and how to find
it on your website.
The Saker: Yes. Good
morning, Catherine. It’s always a pleasure to be with you. There are three of
us who are Russian bloggers in the United States: Dmitry Orlov, who you
probably know through the Orlov Club; Yevgeny Gurevich, who was the head of the
Russian version of the Saker blog, and myself. We’re basically trying to raise
the alarm because we believe that if nothing is done, there is a high risk of
war between the United States and Russia.
We
also believe, which I think is highly relevant, that war – even if it starts
locally in Europe – would rapidly escalate to a nuclear war. We don’t believe
it can stay confined to Europe, and the United States mainland would be hit.
Finally,
there is no reason for that. This is purely ideological that Russia has been
cornered into a position where she cannot retreat any further because, we think,
that over the past 20 years the West has been pushing Russia further and
further and further. Now American weapon systems are literally within artillery
range of St. Petersburg, and there are US and NATO forces deployed all around
Russia in Europe. We believe that if that continues, and if nothing is done to
change that course, the chances of war, nuclear war and intercontinental war,
would affect the US homelands. We are extremely worried about that, so we try
to raise the alarm.
C. Austin Fitts: Let’s step
back and build back up to how things have gotten this bad.
Bring
us up to date on what is going on in the Ukraine.
The Saker: Well, the
Ukraine is more of the same, but worse. It’s true that it has been going on
like that for a while now. Clearly, I think the major development is that the
central power is getting weaker and weaker and weaker, which allows more
extremist people to come into key positions.
Poroshenko
is still holding onto the central authority in Kiev. I would say exclusively, thanks
to US support, and if it weren’t for the support of the United States, he would
have probably been overthrown by now.
What
is worse, is that the people who are trying to take action against him are
really true neo-Nazis. What happened, to make a long story short, I think the
first revolution of the Maidan was, as some people would say, the revolution of
the millionaires against the billionaires. So the millionaires overthrew the
billionaires and took power.
I
would say the bulk of the very top of the junta in power in Kiev are very
wealthy individuals. Usually they’re referred to as the ‘oligarchs’. However,
there is another group that is very distinct from them, who are the neo-Nazis;
they’re real extremist people.
When
I say ‘neo-Nazi’, I don’t mean that as a slur. I mean they’re every bit as
ideologically focused and passionate as any member of the SS would be. Another
example, just to give a correct understanding, we’re not talking about
nationalists who just wave flags and sing songs. I would compare them to Daesh
in the Middle East in terms of their ideology and the kind of methods they’re
willing to use.
Now
we’re seeing a man like Andriy Parubiy who is the second man in power. He’s the
Speaker of the Ukrainian Rada. Probably most of our listeners have witnessed
the return of Nadezhda Savchenko to Kiev from Russia where she had been
convicted for the murder of two journalists. Putin pardoned her on the demand
of the families who wanted the two Russians arrested in the Ukraine in exchange
for her. Once she came back, I posted on my blog, both her initial speech when
she landed at the airport, and yesterday she spoke in front of the Ukraine
parliament.
Wow!
These people are the real thing. They’re not oligarchs. These are truly
ideological purists of their ideology, and they are direct threats to
Poroshenko.
The
latest that I’ve heard, and I cannot confirm it 100% but I’m pretty sure it’s
true, that one of the volunteer battalions – which is the polite word for
‘death squads’ – called the Aidar Battalion and actually said that if
Poroshenko signs the agreement (and he’s signed them already) and implements
them, and gives the status of autonomy to the Eastern Ukraine, they would
actually hang him.
C. Austin Fitts: Right.
The Saker: You have to
realize that in a country like Ukraine, we’re very much dealing with a
situation of a failed state. The local authorities, the regional governors, and
the various death squad commanders are all loyal to the Center to the degree
that the Center can provide either money or protection.
Another
Center can’t provide either. Money-wise, they’re running out of it. The West is
funding just the minimal needed, but it’s not enough to pay off all the local
warlords and oligarchs and gang heads, etc. In terms of protection, a state is
supposed to have the monopoly of violence. Well, the instrument of violence,
you would say legitimately, the Ukraine is just a place where the military –
for all practical purposes – cease to exist. They exist on paper, but in terms
of the real firepower, they’re all in the death squads in the volunteer
battalions of the Nazis.
The
Ukraine is slowly sinking into a Somalia-like kind of failed state, but, the
appearance is saved because as long as Poroshenko is in power and as long as
officially they can meet with Western leaders, and they can hug, etc., it looks
okay.
Well,
it’s not. When Nadezhda Savchenko came back to the Rada, the first thing she
said when she addressed the members of Parliament sitting there – which she
certainly considers the fat cats and cowards and has no respect for – was, “I
will never allow you to sit in these chairs and forget all the people who died
for our cause.”
That
was a threat. So I think the Ukraine is slowly falling into complete chaos. One
of the big questions is: Would the central authorities try to attack – yet
again – a third time, the Eastern Ukraine with the hope of doing what the
Argentinians did with Malvina’s war, and try to distract from internal problems
by creating external conflicts.
That
is the big question. On one hand, they might do it out of despair. On the
other, all the signs are that the Donetsk and Luhansk Republics are way
stronger militarily. At the end of the day, they are backed by Russia. So
they’re not going to succeed. It’s chaos, it is internal violence, and it’s the
different factions of those who came to power in the Maidan Revolution who are
going after each other. That’s how I would summarize the situation.
C. Austin Fitts: You’re going
to have steady depopulation because people are going to keep immigrating
elsewhere.
The Saker: Oh, that is
already happening.
C. Austin Fitts: Right, and the economy is just going to keep going down, down,
down. At some point, don’t pieces collapse into Russia?
The Saker: No, not
necessarily because I think pieces do collapse. The key word here is ‘pieces’.
What happens is in a situation like this, the ‘local authorities’ – and I use
that term very loosely – become far more relevant.
That
is, what I see happening, is people in the various regions more or less openly
ignore Kiev and start to do their own thing because they’re better off doing
that. Really, they are.
You
would have the western Ukraine – Ivano-Frankivsk – doing their own thing; the
south, Odessa and the Black Coast region, doing its own thing; and the east
doing its own thing; and the center is the big question because they don’t have
a natural position there. What I see is a regionalization, not unlike what
happened in Somalia where war lords controlled certain sections of the country.
They will not become local potentates and will be able to provide protection
and money, because money will still be made during the situation of war.
When
an economy collapses, there is still a lot of money to be made; it’s just made
differently, and it’s concentrated in different hands.
C. Austin Fitts: Right,
especially if some of the farming continues.
The Saker: There’s much
more. There are still a lot of things that can be done. Trafficking is one big
thing. The Southern Ukraine has always had a very distinguished tradition of
doing that under every ruler, and it’s sort-of natural – which is really sad.
It’s ironic because what the people in the Southern Ukraine, particularly the
city of Odessa, did by doing constant black markets, bull marketeering and
trafficking is really what the Ukraine should have done openly and legally;
which has become a hub between East and West.
That
would have been the natural calling for the Ukraine - to be a neutral separator
between East and West - and a natural, obvious commerce and transfer of goods
and services kind of place. That is what is going to happen in the South. They
will still do it; they’ll just do it illegally.
C. Austin Fitts: So how does
what is happening in the Ukraine relate to the US-Russian relationship?
The Saker: I’m sorry; I
forgot to answer your question directly. I went off on a tangent here.
Regarding the pieces falling back to Russia and why I don’t think this is going
to happen, is because Russia has the ability and the desire to accept a large
number of refugees, but she has the ability to close the border to chaos.
C. Austin Fitts: Right.
The Saker: It’s not like
there’s no risk of infection. There is a risk, and I think Russia can cope with
it. I don’t believe that’s the case of most of Europe. They will deal with the
worst of the refugees. Russia has a very effectively functioning internal
security service; the FSB. They have large border troops and they actually
created the National Guard. All of this are the exact tools needed to build,
not a physical wall –like what the Ukrainians did. For a while they had a
project of building a moat along the Russian/Ukrainian border. Nothing came of
that, and millions of dollars were stolen over that. That was all that
happened.
An
administrative wall can be built by Russia to protect herself; but Europe is
the big question. We have already saw, with the wave of refugees from the
Middle East, that Europe is completely unable to cope with that kind of
phenomenon. That’s what I wanted to say about the pieces falling back to
Russia.
As
for the Russian-US relationship, what concerns me, is that the US will use that
chaos to the max to create a non-existing Russian threat because, disregarding
reality and facts, all of that will be blamed on Russia no matter how ludicrous
it is. It’s a famous trick. It’s weapons of massive destruction that Saddam
had; I think it was 45 minutes that would be the time needed for the Iraqis to
strike the UK. I also remember when the war started in Bosnia, the Prime
Minister of the UK was saying that a Serbian MiG could fly and bomb London. It
was that kind of nonsense.
I
think that’s what they’re going to do to try to instill a sense of panic and
fear because the United States desperately needs a crisis in Europe, and that
is exactly what Russia does not need. I think that’s going to be the next
major, major geopolitical process. There are determined attempts by the United
States to create a crisis at all cost in Europe and Russia who trying as hard
as she can to not get involved in it.
C. Austin Fitts: But if the US accuses or tries to blame all of it on Russia, you know, “Sticks and stones can break my bones, but names can never hurt me.” In other words, if they’re just trying to smear Russia, why does that have to go to that? Russia is remarkably able to stay immune to phony accusations.
The Saker: There are two
main scenarios, and both could happen. The least toxic one is the following
one: The idea to create a crisis is basically about big money. By creating a
sense of tension and panic, as in Latvia, who is already doing pre-invasion
drills because the Russian _________ . That’s how the local politicians are
trying to scare the population.
I
heard a report yesterday that most Latvians don’t believe that Russia wants to
invade. The same deal is going on – exactly the same thing – with Poland. The
guard in power there is constantly trying to ward off a Russian threat. What
that means is bigger military budgets. It’s very, very simple.
Professor
Stephen Cohen, during his recent appearance, had the figures for the military
spending, and they’re going up dramatically. Since NATO countries have to be
compatible with NATO standards, which means getting American equipment. So
that’s the first big thing. That’s a lot of money; it’s a multi-billion
business, which is going to help the US Military-Industrial Complex.
The
second thing that this provides, is career opportunities. It’s not irrelevant.
If you can make a name for yourself by making loud statements inside NATO,
being a hardliner, is also a career-enhancing thing to do. In Poland, they’re
competing to see who can be most Russophobic because, in the White House, that
is seen as career enhancing. So that’s why you have people like __________, for
example, in Lithuania, who make insane statements, and there are some Pols
doing the same thing. So that’s a political way of getting things done.
Finally,
the reality of punitive Russian threats being mentioned justifies NATO.
And
if you draw it out long enough, it means that NATO is going to be present in
Europe for another 50 years, and that means Europe will remain a US colony with
no foreign policy and no independent policy at all. It’s just going to be a
protectorate of the United States. That actually is a good scenario.
The
much scarier one is the idea that some people in the United States would like
to start a local war in Europe just to get the same objectives with a maximal
premium on it. Also, since the war in Europe would further weaken the EU
economies, that would actually have a side effect of strengthening,
comparatively, the dollar and the US economy.
That
is the scarier thing.So either they’re just trying to create attention but not
cross the line, and they think they can stop on time, or they actually want a
war in Europe but want it to be limited and contained. Myself and the
signatories of that appeal – which we call the ‘Russian Warning’ which you can
find on my blog at www.TheSaker.is – don’t believe that a war in Europe would be
confined to Europe because of modern equipment and the ways in which modern
wars are fought. That’s the really scary thing.
C. Austin Fitts: Right. This
is starting a war with somebody who has intercontinental ballistic missiles.
You
know, I’ve spent many, many years trying to understand what the deepseeded
hatred of Russia is. I used to have a relative who was in the US military, and
he would go off about how whether it took 100 years or not, we had to get the
Russians.
I
would get him to try to explain why that was the case, and I could never get a
coherent explanation. So let me just run some things by you.
Right
now if you look, one of the biggest industries in the United States, as you
said, is weapon sales and exporting military of a variety of ways. It’s a huge
business, and we’re number one in the world. Russia is number two. In many
respects, they’re the only one who can take us on in terms of development,
creation, and marketing of weaponry.
Of
course, we don’t admit to really having much in the way of space weaponry. It’s
a very ungoverned area and dynamic area, but Russia has the potential to really
threaten us on it.
So two things in my mind are, the competition
for weapon sales and supremacy in space. What other reasons are there? Where’s
this very deep-seeded hatred coming from?
The Saker:That is a
topic that really deserves a PhD thesis. As a matter of fact, a Swiss
journalist and a member of the parliament of the city of Geneva, Guy Mettan,
just released a book in French. I know it’s coming out in Russian, and I hope
it will be coming out in English. It’s called ‘Russie-Occident, Une guerre de mille ans’,
which means Russia & the West, A
Thousand Year War, and the subtitle is,
Russophobia from Charlemagne to the Ukrainian Crisis, because the roots are
extremely old. I would fully endorse his theory that the West has hated Russia
for the past millennium.
It
began by a religious hatred that soon became a political one. My contention is
– and I know it’s a very controversial one – that the West has always had a
messianic ideology underlying its own self-identity. It used to be the papacy
that felt the Pope was the viceroy. If you want the deputy of Christ on Earth,
I’m not sure what the name is in English. He basically rules the church in the
name of Christ all over the planet and over all the Christians. If the
Christians, like the Orthodox, don’t obey, then they need to be subdued.
Then
other ideologies came. For the French Revolution it was the messianic
revolutionary ideologies. They again had to fight Russia as being the one who
didn’t allow things to go the proper way.
Of
course we had the episode with Hitler, which had its own racial ideology. Then
came the democracy and capitalism ideology. All those ideologies lay a claim to
universalism, and Russia is the big party pooper. It’s a country that, first of
all, doesn’t accept any of these ideologies. Secondly, it actually has the
military means and the population and resources to confront and fight them.
I
think the roots are very, very old. There is a Russophobia that takes it roots
at least one thousand years, and it’s not only that; there is more.
There
is a much more recent Russophobia which is one of the neocons. Their
Russophobia is a unique phenomenon because what they come from ideologically,
and very often their families, have roots in Trotskyism. These were the people
who really created the Soviet Union.
Trotsky
certainly was somebody who I consider one of the most brilliant people among
the Bolsheviks, next to Lenin. He created the Red Army. He installed the
Bolsheviks into power, won the civil war against the White Guards, and then the
Trotsky’s ruled until Stalin came to power.
When
Stalin came to power, he purged that entire element. I think that created a
fantastic deal of resentment on the part of already anti-Russian sentiment.
Trotsky’s were always very anti-Russian. The vast majority of them were Jews
who considered that Russia was an anti-semitic country. Here again, they
defined that as a Russian anti-Semitism, never mind that Stalin was Georgian
and couldn’t even speak Russian with the proper Russian pronunciation.
So
a lot of them fled, came abroad, created the basis of leftist movements in the
West, and then eventually flipped from the extreme left to the ‘extreme right’.
I don’t think these categories really mean much, but that’s how they’re used
today. We have the neocons, that are now the hardliners for the empire and for,
supposedly conservative values, who come from former Trotsky, who have a
personal hatred towards Russia just as they hate the Palestinians because they
dare to occupy ‘their Israel’.
C. Austin Fitts: Let me bring
in the money for a second, because we know that the US Treasury teamed up with
the Russian Mafia during the 1990’s to asset-strip Russia. That was from 1989
to 1997/1998, leading to the Russian bankruptcy, which is why Russia enjoys not
having a whole lot of debt right now.
Anyway,
the Russian Mafia is essentially 99% Jewish.
The Saker: Yes.
C. Austin Fitts: My question
is: How much of that money is really the money financing the neocons?
The Saker:I doubt it. I
really doubt it. Maybe I’m mistaken. I’m not a Mafia specialist, and when I say
that the Russian Mafia is 99% Jewish, I think we’re talking about the original
Soviet/Mafia during the democracy years in Russia, under Yeltsin.
C. Austin Fitts: Right.
The Saker: There is
definitely a non-Jewish Russian Mafia, too, mostly in Russia. Then the two, as far
as I know, work very nicely together with no problems. There is no racial
tension between them.
C. Austin Fitts: It’s all
business.
The Saker: Exactly! As
far as I know, I’ve never heard of any information linking the neocons directly
to Russian mobsters of any kind, unless you consider Khodorkovsky a Russian
mobster, which he was of course.
C. Austin Fitts:It would flow
through Wall Street.
The Saker: Is
Khodorkovsky financing Soros, or is Soros financing Khodorkovsky? I think it’s
the other way around, but I’m not sure. I might be mistaken.
C. Austin Fitts: Right. Well,
it would flow through Wall Street, so it certainly wouldn’t look like Russian
Mafia money.
The Saker: My
understanding of what I’ve observed, is the neocons managed to successfully
infiltrate first, the Republican Party, and then the Democratic Party. They did
that inside the United States by their own resources. I’m not aware of external
involvement but, then again, the fact that I don’t know something doesn’t prove
anything. Maybe it had; I don’t know. 12 Is Khodorkovsky financing Soros, or is
Soros financing Khodorkovsky? I think it’s the other way around, but I’m not
sure. I might be mistaken.
C. Austin Fitts: One of the
interesting things that I’ve seen about the neocons to the extent that I was
exposed to them during the Bush Administration is they really believe in chaos.
They really believe that the way to clean the slate is to bring chaos and wreck
the place, and somehow, magically, your new order is going to emerge from that.
It’s kind of an insanity that they just never seemed to give up on.
The Saker: But is that
really a neocon specific thing? I think all people driven by ideology of hate
are much better at destroying than at building.
C. Austin Fitts: Right.
The Saker: I think for
people who are driven by hit, and the neocons certainly are, building is just
not sexy. To destroy really well, that is interesting. That’s what they do
naturally. I don’t think they’re very good at building anything. What have the
Trotsky’s or the neocons ever built positive? I’m unaware of anything.
C. Austin Fitts: Leonard Cohen
has a line that I love. He says, “We were born blinded by the beauty of our
weapons.” That reminds me of the neocons.
Let’s
dive into Russia. One of the things that has amazed me is I’ve watched many
different people, companies, and countries cave in to the face of enormous
pressure by the US and things like financial sanctions. What’s been quite
remarkable is that all those tactics seem to have boomeranged and worked the
other way in Russia. The Russian population seems to support Putin in standing
up to the sanctions and fighting back and creating independence in a way that
you would never see happen in the United States. So it’s quite remarkable to watch
what’s happening.
The Saker: Yes, and it’s
due to a couple of factors. The first thing is to remember that the Russians
are very close to the Ukraine. They’re seeing what’s happening right across the
border, and have also – most of them at least – a vivid recollection of the
late 1980’s and early 1990’s. They have been shellshocked.
Recently
I was listening to a very interesting Russian analyst on the Russian radio
saying that the argument was presented by the West, and if we accept all the
West’s conditions, we will live in prosperity and be left in peace. He retorted
to the guy who I’m quoting; it’s called __________. He retorted, “But we’ve
already done that. We’ve caved to everything. We’ve sold everything. We’ve
completely bowed to the empire. We did everything asked for in the 1990’s, and
look where that got us.”
C. Austin Fitts: Right.
The Saker: That is really crucial to understand. That is
a very powerful argument because it really says what Russians are convinced of
in the Kremlin and the people – and I am personally, too, because I fully agree
with that – is that, if cornered, Russia has no other option.
Once
that is clear in your mind that this is not a, “Do I turn left or right,”
situation, but it is a, “Do I submit or fight?” And submission is not an option
either because submission really brings up what has happened to other countries
who ended up submitting – Libya, Iraq, Afghanistan. Russia does not want to go
there. Absolutely not.
Secondly,
there are the memories of World War II. A lot of them say, “My God! When we see
that hatred for us, the last time there was such Russophobia, we ended up with
German tanks running over us. So we will fight.”
At
that point, economic sanctions don’t make that much of a difference. I’m pretty
convinced that if the people of the United States were actually threatened in
their livelihood and their security, and their option was to submit or to
fight, they would fight just as much as the Russians would if they had the same
degree of conviction and they have no other option.
C. Austin Fitts: Right,
although you have to remember that Americans have no faith in their leadership.
The Saker:Yes. That is
absolutely true, whereas Russians do have a rock-solid faith in Putin. But then
I would say, “Why do they trust him so much?
Really,
his willingness to openly say that. For instance, there was a very famous
situation a couple of years ago in St. Petersburg where a journalist told
Putin, “You know the West is trying to humiliate us.”
Putin
replied, “No, no, no. You’re getting that wrong. They’re not trying to
humiliate us; they just want us to submit.”
That
kind of message – people receive that and it’s a shock for them. Prowestern
liberals right now in Russia must be most definitely under 5%. I would even say
they are 1-3%. When they start saying, “Look at that conversation. Was it worth
it? Look, we now have sanctions, etc.,” the typical argument of the rest –
which is over 80% of the people – is, first of all, “It’s not the sanctions
that hurt us; it’s the falling prices of oil primarily. Secondly, sanctions
were imposed long before the West became anti-Russian by moving NATO to our
borders during the very same years that we were submitting to every single
demand from the West. And finally, is having less French oysters or less French
cheese in Moscow a reason not to fight for our sovereignty?
Once
Russians accept that they’re at war, and I think they are; I call it an 80%
informational war, 15% economic war, and 5% military war. Once you accept that,
you realize that as the class-fare wars come, Russia is having it cheap,
particularly to compare it to the Ukraine. So that’s why Russians are standing
very steadfast. These sanctions’ price to pay is inevitable, and they’re convinced
that they’re paying the cheaper price by being steadfast.
C. Austin Fitts: They are. I agree with them completely.
The Saker: I agree as
well.
C. Austin Fitts: Now, there is
a very wide disparity, if you read the US friendly sources. Basically, what
they say, is the oil prices are going to continue low, and there’s no way the
Russian economy can survive. Ultimately, Putin will fall.
The Saker: I don’t buy
that at all.
C. Austin Fitts: Right, and
you don’t buy that at all. What I would love for you to talk a little bit about
is the oil price, the economy, and what you see as lying ahead for Russia.
The Saker: First of all,
the oil prices remaining low, is an assumption that needs to be questioned. How
long will it remain low? There are generalized prices worldwide, yes. But that
means it’s a problem for everybody, maybe for the West in terms of having an
economic crisis. For the Russian, it’s the effect of that crisis which is the
problem.
Really,
and most Russians agree to this, the problem of Russia is an economy that needs
to be diversified and that needs to do other things. It has other resources.
Russia has fantastic human resources and technology; nuclear technology, civil
nuclear technology, aerospace, computers, science, chemical engineering, you
name it. Also, Russia has other resources other than oil – water. Simple water
is going to be very expensive pretty soon, and Russia has plenty of it.
I
think it was McCain who said that Russia is just a large gas station. That’s an
oversimplification. It was that for years, particularly during the Yeltsin
years where everything was being sacrificed and the legacy of the Soviet Union,
which left a huge technological and economic legacy, everything was squandered
and destroyed for the quick fix of selling oil. That is true, but that also
brought the crisis about. So Russians don’t want to go that way anymore, and
they’re counting on the human potential, particularly, to come out of it.
The
last projections I saw, were that renowned economists predict that next year Russia
will get out of the recession, with very small fingers but will marginally come
out, which is not bad at all compared to the situation in Europe or in other
countries.
There
is a global crisis, which is bad for Russia anyway. It triggers low oil prices,
which is bad for Russia, of course, and then there are sanctions, which present
short- to mid-term problems for Russia, particularly in credit. But none of
these are fully necessarily crucial.
Right
now there is a fight between several economists in Russia. Specifically to name
them, on one hand, there is Kudrin, the former Minister, and Sergey Glaziev, an
advisor, who are now members of the same board of economic advisors to Putin.
He put them all together on one board, and very recently they had a meeting
behind closed doors. Rumor has it that the two clashed pretty strongly on the
options, and basically, Putin’s decision was, “We shall not sacrifice
sovereignty for economic rationale. However, we will undertake further needed
economic reforms.” I think in a way it’s a blessing for Russia in that
situation.
C. Austin Fitts:Right. I was
going to say that the sanctions have done a lot to help the internal
agriculture build up its capacity.
The Saker: Yes. C.
Austin Fitts: That ultimately would really help Russia be more sovereign. Of
course, we haven’t brought up the values. One of the things that is going on here
– and I’m going to grossly oversimplify – is we have the Orthodox Church up
against Washington – what term should I use? – ‘nealism’. Saker: That’s as good
as anything.
C. Austin Fitts: So there’s a
deep values issue and it translates into the economics of: Are we in an economy
that organizes around people, or are we an economy that organizes around
harvesting people for big corporations? Is that fair to say?
The Saker: I think that
is happening in Russia, yes, but I would say that most of the economic circles
in Russia are also turbo-capitalists.
There
are exceptions. Some of them are very well known, but that is one reason why
there is a large segment of the population of Moscow that hates Putin. That’s
where you will find the most pro-US people – people who think that capitalism
will allow them to get rich.
What
protects Putin is that the majority of people have a say, and by their votes
they get to resist that pressure.
Conceptually,
the way I see it, is there is a struggle for sovereignty in almost every
country between big money and the people. As long as people retain the
sovereignty, big money has to essentially serve them.
When
big money becomes the ruler, it’s not one dollar is one vote, like it is in the
United States; then the people become an expendable commodity. That struggle is
still happening in Russia. I wouldn’t say it’s that clear.
There
is a lot of Orthodox or traditional Islam, but I would say that many people are
still looking. Very often you’ll hear Russians saying Russia needs a new
national idea. It’s there. It’s ‘social’ as opposed to ‘socialism’ because they
say Russia is a social state. Fairness is also a big part of that, and
morality. I think most people do support traditional families and respect for
traditional values. It’s there, but again, it’s brewing. It hasn’t reached as
strong a consensus as, for instance, the defense of Russia against the empire,
which now has totally solidified any social context.
What
you’re mentioning – these value things – are being hotly debated, and I would
say it’s in a brewing stage; it’s not finalized yet.
C. Austin Fitts: Right.
So
let’s talk about war. From where I sit – and I’m not watching this anywhere
nearly as closely as you are, let alone half the depth of your knowledge – it
hasn’t looked to me like it was getting close to war. I’m curious as to why you
think Russia would be close. I mean, Russia knows the dangers of war, and Putin
has been a very masterful bureaucrat about walking up to the line and then
backing away and protecting his turf without getting tricked into anything that
I would describe as stupid, let alone a nuclear war.
So
what is it that has inspired this warning, and why do you think we’re in danger
of going to a new level of crisis?
The Saker: First it was
a general principle. It takes two for peace; it takes one for war. That’s
really crucial to see.
Secondly,
when you say that it doesn’t look like we are close or came close, let me ask
you this: What would have happened if Russians would have retaliated for the
way the Turks shut down the Russian Sukhoi SU-24 over Syria?
The
Russian options would have been anything between shooting down the plane that
did it and, as far as I know, that plane was protected by America’s F-15C. It
would have been an air combat. Or, a much simpler option for the Russians,
would have been to send a cruise missile on the air base from which that
airplane took off.
Let’s
say Russia would have retaliated against the Turks, which certainly would not
have backed down. Imagine a shooting war started with Russia and Turkey. Are
you really confident that NATO would have said to the Turks, “You guys started
it. You’re on your own?” I am not. I think that’s probably what they would have
done. I want to believe that they would have done it.
As
far as I know, common sense prevails. Putin did not order retaliation and
interestingly, instead of calling Putin to apologize or even explain himself,
the Turkish president immediately went to Brussels and said, “I just poked the
big guy. Help me.” As far as I know, NATO sent him the signal, “You’re on your
own. You started that shit. We don’t want to get involved.”
C. Austin Fitts:But I can’t
believe the Turks would have done that without the US.
The Saker: Just like the
war in Georgia. The US is not a single actor. We all know that the CIA
disagrees with the State Department. The State Department disagrees with the
Pentagon. They all have their different agenda. The situation in the US where
Americans are bombing units where the US special forces are right there next to
them. It’s kind of a crazy situation.
C. Austin Fitts:Right.
The Saker: I want to
believe that this will happen in the future again, that when push comes to
shove, military people say, “We don’t want any part of that.”
On
both ends, I’m happy that the Georgian situation was resolved without a war and
the Turkish situation was resolved without a war. Are you confident that the
next time around it will be resolved without a war?
Imagine
this: The Latvians do something truly stupid – something idiotic – just to make
themselves relevant on the map again, like attacking the Russian Navy vessel.
Russia shoots back. Then what? This is how it could start. It could start very
low and dumb, and end up very dramatic. Secondly, the neocons; would you put it
past them to actually deliberately start a war? I wouldn’t.
C. Austin Fitts: I wouldn’t.
The Saker: I think we
should take the rhetoric very seriously.
C. Austin Fitts: Right.
The Saker: So these are
the two things that worry me – an escalation that nobody really wanted or a
crackpot being in power.
C. Austin Fitts: And who would
be more dangerous in terms of Clinton or Trump? Who is going to give more power
to the neocons?
The Saker: Well, I’m
limited in my ability to answer this one. I cannot conceive of somebody worse
than Clinton is the first part of my answer. To me she’s something unreal. She
is the perfect marriage of evil and incompetence and arrogance. She is scary.
Trump
is an unknown card to me. I don’t know. I read somewhere that somebody said
about him that he is 95% crazy and 5% patriotic, which puts him head and
shoulders above just about everybody else. I don’t know. I really don’t know.
I would say anything but Clinton. I don’t like
choosing the lesser of two evils, but in the next election if I had to decide –
even though it’s a horrible choice – I would go with Trump over Clinton because
with Clinton I have no hope. With Trump I do have hope.
C. Austin Fitts: Right. It’s
really funny. I did an interview the other day and I kept saying that Clinton
is the no-hope choice.
The Saker: Yes, it
really is.
C. Austin Fitts: She is 100%
no-hope.
The Saker: Yes. It’s
really getting the worst possible person – and worse by every single criteria.
I think she’s incompetent, she’s dishonest, she is evil, she is arrogant, she
is detached from reality, and she doesn’t understand foreign policy. Her
statement about the war in Libya is just appalling. I think she is trying to
prove that she is the bigger guy on the block; she wants to show Putin that she
will show him. No, she won’t. That’s what is really scary to me.
C. Austin Fitts: If you look
at Haiti and if you look at Libya, what you’re talking about is going in and
destroying a country. You’re talking about raping a place and taking the gold
and taking the minerals and taking the oil. It’s raping the landscape. The
remarkable thing about it is the Clintons are so good at the PR that says, “Oh,
we’re helping women. We’re helping.”
The
PR is quite astonishing. It almost makes you long for Cheney, “They have it; we
need it. We’re going to take it.”
The Saker: Yes.
Absolutely.
C. Austin Fitts: A man of integrity.
The Saker: Yes! I
remember when the last Bush term was coming to an end. I was telling my wife,
“I can’t imagine we’ll ever regret this one.” Well, after sitting with Obama, I
frankly do regret ‘W’. I really do. I get a stomach ache every time I see or
hear Obama speak, and I’m afraid that if Hillary gets elected I’m going to
regret Obama – which is horrible.
C. Austin Fitts: Right.
The Saker: It’s such a
depressing statement to have to make.
C. Austin Fitts: It’s
interesting because we’ve seen a process develop in the United States where you
get leaders who speak very conceptually in a way that is divorced from reality
on the ground. If you watch Putin; it took me a long time to get a beat on him.
I finally realized, “Oh, he’s a bureaucrat.”
He
is a brilliant, capable, astute bureaucrat who keeps returning to the facts on
the ground and the rules and the law, and he’s willing to deal with complexity
– and he’s capable of dealing with complexity. When you deal with someone like
Obama or Clinton, whom are just marketing fluffy into the cameras and talking
concepts that don’t relate to anything going on on the ground, you can see why
you have these remarkable dialogues between them.
The Saker: I don’t like
when people say Putin is a former KGB officer because they confuse the KGB with
the Foreign Intelligence Service. In this case it would seem that he is a KGB
officer in the sense that he has a hard degree in law, and he was trained to
understand complexity.
If
I had to say one word to characterize him, I wouldn’t use the word
‘bureaucrat’; I would say ‘officer’. The guy is an officer, and he’s a Foreign
Intelligence Officer. That means that complexity is his natural environment.
C. Austin Fitts: Right. The
reason I say bureaucrat is that I use it as a compliment. I used to work at HUD
and you would get these SES – Senior Service. They were as smart and as capable
line management as you would ever meet in this world. They were very astute
about navigating hostile environments and surviving, and they knew how to use
facts and the rules.
Because
they were responsible to operationalize things; they kept coming back to
reality in a way that would drive the politicians mad. One is dealing with
reality and the other is talking into the camera and playing a media game.
The Saker: I totally
agree with that. That’s definitely him; I would just add two qualities, which
your colleagues at HUD did not have, and that is that I think the man is a man
of principle and of personal courage.
C. Austin Fitts: Right. Now
when you say that there are groups of people in Russia who hate him, why do
people hate Putin?
The Saker: Well, because
that’s the Old Russian disease. It’s the ruler versus the elites. Russia has
the worst tradition of having the czar fight the aristocrats.
By
creating such a strong power of one person and not by being a dictator, but by
his personal charisma and popularity, he is depriving the former elites of a
lot of their power.
C. Austin Fitts: Right.
The Saker: He is a
direct threat to those who wish they were oligarchs with, not only money, but
with political power. What he did was allowed them to keep most of their money,
but the clear understanding was, “Don’t you dare stick your nose in politics.”
That was sort of the balance.
The
Russian oligarchy and those who did really well in Moscow now are
proportionately suffering from the difficulties, and they are very mad at him
because they have difficulties abroad. They don’t get to have their second
Porsche for the same deal, and they really think that all this patriotic stuff
is not important because they don’t care about their country at all.
Their
logic would be, “Why do we need Crimea? When it was in Ukraine we went on
holidays there.” Or the other option is, “Why do we need Crimea? I’ll take my
holidays in ________ or Thailand.”
C. Austin Fitts: The other
thing is, you’ve got all the money on the planet, and, this is true the world
over, working people like that, offering them all sorts of opportunities,
commissions, wealth, and a piece of the action if they’ll just play ball and
arrange some kind of compromise of the Russian sovereignty for the benefit of
this player and that player.
You’ve
got all the money in the world singing the sweet song of, “Oh, come play with
us, and let’s change the model in Russia.”
The Saker: Yes,
absolutely.
C. Austin Fitts: A lot of
those people aren’t very good at withstanding that game. There are a couple of
other points I wanted to bring up. One is that we just watched the first
railroad line go from China all the way into Iran. I think cutting the days of
transport relative to shipping by sea down from 41 days. What’s happening along
the Silk Road is you’re watching an investment in infrastructure that is absolutely
tying Europe to Asia and Asia to Europe. Russia, of course, is sitting right in
the middle of that. The economics of that is part of the reason the US keeps
trying to tie Europe back into the United States and make trouble on the Silk
Road.
The Saker: Absolutely.
C. Austin Fitts: Maybe talk a
little bit about that and the tightening up of these two big markets and what
that has to do with what is happening.
The Saker:Well, that’s
a big component of this, of course. The zone was from the Atlantic to the
Eurail, or actually from Lisbon to Vladivostok, which is a bigger version of
that. The idea would be, of course, to create a very prosperous land mass.
There
was a conference a couple of days ago of the leaders of the economic union.
They were again trying to discuss, “How can we offer a trade common space to
the European Union as a whole?”
Of
course, naturally, everybody would benefit from that. You would have access to
Asia. Russia would play the role of a super-Ukraine, a space between Far East Asia
and Europe. Everybody would profit from that, but who would be excluded? It’s
pretty obvious that it’s the United States.
So
the United States is desperate to cut China out of the Pacific Rim region and
to cut Russia away from Europe because they realize that, inherently – to use
the expression that a dollar is backed by space weapons – I like to say, it’s
backed by aircraft carrier battle groups. It’s the same concept.
Right
now the dollar has only firepower to make it “attractive,” but when Russia and
China are involved, that is just not real because the US cannot afford a war
with China or Russia. So the only option left is to create a crisis to try to
prevent a second Soviet Union. Hillary said very clearly in one of her speeches
when she had just resigned from Secretary of State, “We’re going to do
everything we can to prevent a second Soviet Union.” That included an economic
integrated space.
C. Austin Fitts: Right.
The Saker: That’s a
fundamental, crucial national strategic priority for the one percenters in the
US to not allow the mainland – the big Eurasian mass – to integrate and begin
prospering.
C. Austin Fitts: Right, and to
flourish.
One
thing I want to mention is that Bayer just made an offer to Monsanto which
Monsanto turned down, but there’s no doubt, that there is blood in the water on
Monsanto. We have a number of big US multinationals conceding that they’re
going to walk away from GMO or GMO labeling. The whole GMO push, it appears, is
failing.
Now
they’re always consolidating and coming back again, and it’s fair to say that
the consumer rejection is unbelievably powerful and strong, and the demand for
fresh and organic and non-GMO growth rates are compelling.
This
is one of the few things in the economy that is really growing, and I really do
think that Putin very cleverly fed into this. When the sanctions were going on,
no GMO’s were allowed in Russia; it’s outlawed. I think that gave a lot of
political support in an informal way to activists all over the world who were trying
to stop GMO.
The Saker: Yes, but I
don’t believe it was part of the counter sanctions: It was a general strategic
decision to outlaw GMOs in Russia, considering the import of them is a form of
terrorism. So it’s very strictly regulated now.
C. Austin Fitts:Explain what
that means.
The Saker: That means
that you can get 20 years of hard labor if you try to bring in GMOs and you
start growing them.
C. Austin Fitts: Really?
Twenty years of hard labor?
The Saker:You could get
20 years of hard labor. Yes you could. In theory, that is what you are risking.
They consider that a form of terrorism because it threatens Russian national
security and the food supply, which they consider a national asset. They are
very dead-set against it.
Secondly,
let’s be cynical about it. It’s not only because they’re such wonderful
feelings, but also they realize that they have a huge export potential of
essentially organic food. They have corn, as much as you want. The water, the
wheat, you name it – the Russians have it and in huge amounts because all of
their food is essentially non-GMO.
C. Austin Fitts: Right.
Global
slowdown: We’re seeing signs all over the world that the economy is slowing for
many reasons. The reality is that the more global things are, the more things
seem to slow down, and the more push there is for military this and military
that.
One
of the few sectors of the stock market that is doing well are the defense
contractors. Is part of your call for warning about war concern that global
slowdown is going to inspire leaders to turn to war to distract their
populations?
The Saker: Yes,
absolutely. When a government is illegitimate and an economy is in crisis, an
external war is always a very useful thing for a politician, unfortunately.
C. Austin Fitts: Right. One of
the things I talked a lot about last year in the Annual Wrap Up, and I keep
talking about, is the fact that without any announcement or democratic
decision, essentially the Treaty of Westphalia has been torn up. Sovereign
governments in many places no longer have a monopoly on force within that
jurisdiction. We’re seeing all sorts of supernatural players who have their own
private armies and are using physical force to get their way.
Starting
wars is great business for them, so you’re seeing more and more of the military
infrastructure turn private and marketing their capacity by starting conflicts.
My
impression is, that within Russia, force is still the monopoly of the state.
This kind of behavior is not going on inside of Russia the way it is, for
example, in the Middle East. Does that growth of all these private players fit
into this?
The Saker: I think it’s
probably above them. I would agree, first of all, with you that in Russia there
is a monopoly of force. Absolutely. It’s actually being centralized. I
mentioned the recent creation of the National Guard, which will put a number of
agencies under one command. The Ministry of Internal Affairs is also
streamlined and rationalized, so there it is.
There
was a little bit of a question with Ramzan Kadyrov being a bit too independent
in the Ukraine; but since his units are now basically part of the National
Guard, the problem is solved.
Yes,
in Russia there is a monopoly on force, but are these private actors triggering
these conflicts? Frankly, I think it’s probably above them in a sense of even
bigger interest. I would go for big finance and banking. Those have the most
interest in creating these wars and intentions.
Now,
do the private providers of violence benefit? Yes, immensely. Of course, that
is their turf.
C. Austin Fitts: Right. Every
week we have a ‘Let’s Go to the Movies’ because I like to use movies to
describe different phenomena of what is happening. This week we’re going to
have 13 Hours, which is the movie that was made trying to describe what went on
in Benghazi.
The Saker: I just saw it
yesterday.
C. Austin Fitts: Oh really?
Fabulous! Perfect! So one theory as to what in the world was going on is that
Stevens and the CIA group there in Benghazi were rounding up the weapons that
they found in Libya and transferring them over to the anti-Assad group in
Syria.
Do
you think there is any merit to that theory?
The Saker: Already, at
that time, I don’t know. I really don’t know. It seems to me it was awfully
planned. My impression is that most of these covert operations are more
short-term and then almost knee-jerk possibly.
What
is certain is that after Gaddafi fell, as he predicted, the weapons and the
Jihadi started flowing into Syria. How much of a role did the CIA play with
that? I figure at a certain moment they definitely got involved very heavily
and assisted just as they did during the war in Bosnia. But was it at the
moment in Benghazi when the Ambassador was killed? Were they doing just that?
Maybe, but I really wouldn’t know.
C. Austin Fitts: So do you
have a theory on what in the world happened or why the United States did not
provide proper security or was not willing to intercede and protect?
The Saker: Well, unless
I’m proved otherwise, I usually like to go and assume incompetence and poor
planning and poor understanding and lack of specialists. I’m not going to go
into some theory saying that it was triggered deliberately or any of that. I
think it was probably just incompetence and lack of understanding of the local
culture on so many levels.
You
don’t just go into a country as complex as Libya and come with a bunch of
weapons and then think that things will be simple. That doesn’t make any sense.
Frankly, I think a lot of things can be explained by simple stupidity.
C.
Austin Fitts: Right. I think that can be explained by stupidity. I guess the
question is: Why did the United States let them hang for a whole 24 hours?
That’s what I find quite amazing.
The Saker: Well, what
were their options? I think the movie shows that there was a turf war, first of
all. Who is in charge of doing what?
Than,
when you send somebody in to rescue, you have a chance of then having to rescue
the rescuers. The military is very adverse to that kind of open ended ‘go and
fix it’ kind of stuff. That’s actually logical.
There
comes a point where you don’t send in rescues because you don’t want to have
more. That actually makes sense to me. The real question for me is: How did
they get there, and how did they so misread the local environment? There is
normally what is called an intelligence preparation of the battlefield, where
you should have a pretty good understanding of what is happening. If the movie
is anywhere near correct, there seems to be complete miscommunication and turf
war at every single level over and over again.
Competing
turf is actually one of the big ways that the United States has a tradition in.
If you look at the invasion of Grenada, it’s another one of those where you end
up with a cluster mainly due to turf wars and bureaucratic infighting. I very
much recognize the same kind of pattern in what seems to have happened in
Benghazi.
C. Austin Fitts: Right. One of
the things I’ve observed from Washington from afar, is we’ve had 20 or 30 years
of people being promoted who are good at kissing you-know-what as opposed to
competency. When corruption takes over, you get this incredible debasement
within the bureaucracy. The military has been more protected, but, you start
running, for example, the military around who generates purchases and sales for
defense contractors and various bureaucracies over who makes money for
corporations.
You
have all these political considerations related to harvesting the Federal
budget and the Federal credit that have nothing to do with fundamental
competency.
The Saker:Absolutely.
C. Austin Fitts: You lose your
ability to really create an operational capacity. One of the things that
frightens me is that if you look at what Clinton was doing with the email
server and then what the Foundation was doing; racketeering, dovetailing with
what she was doing on the private server at the state department.
The
message to all the people who have to operationalize foreign policy – whether
it’s in the military, whether it’s in the intelligence agencies, or whether
it’s the line agencies – is that who is coming in is a group of people, both cabinet
level and sub-cabinet level, who feel free to just racketeer. Their business is
harvesting the situation. In the meantime, they expect you to go off and tee up
all the situations they’re going to harvest. Well, it’s putting you in
incredible danger.
The Saker: Yes,
absolutely.
C. Austin Fitts: So why in the
world would you perform? You wouldn’t.
The Saker: No,
absolutely. And to make a parallel with Libya, I strongly suspect that until
Gaddafi was overthrown, you had all the business people cruising around their
country, and they probably had very poor intelligence. Once they came in, how
many language specialists did they have? How many locals could they really
trust? What was the quality of their information, and which part of that was
presented to the politicals to paint a rosy picture?
C. Austin Fitts: Right.
The Saker: If you’re
detached from reality, or as you say; if you can’t cope with complexity, as
soon as you end up with a complex situation, it’s bound to blow up in your
face. So that’ what happened.
C. Austin Fitts: I hate to say
it, but it’s what Putin said about negotiating with Obama. He said it’s like
negotiating with a pigeon. He walks into the board, knocks the players over,
shits, and then leaves and says that he won.
The Saker:I can’t
disagree with that. That’s exactly the problem, and that’s why I’m afraid of a
war in Europe. It’s a complex situation, and it’s getting dangerous, too.
C. Austin Fitts: Yes, it is
getting dangerous.
The Saker: A lot of bad
actors are presenting very bad advice. For instance, all the East European
governments were making themselves relevant by getting that ridiculous notion
that they were about to be invaded by Russia, and they’re really not helping
the situation one bit.
C. Austin Fitts: This morning’s poll in The Guardian indicates that Brexit is now in the lead. So if the vote was taken today and, if the poll is correct, Britain will leave the European Union. It’s far from over because we’re not at the vote yet, but if Britain pulls out, then you’re going to talk about more acceleration of some of these trends, I think.
The Saker: Yes, and I
still believe that the Mediterranean countries – Spain, very much France and
Italy and Greece of course – have a potential of revolting. But particularly
Italy and France where the social tensions are huge. I would not exclude the
possibility of some kind of big political event resulting in a change of power,
and then France starting to pull out of NATO and/or the EU because they’re
suffering tremendously from the crazy situation, and they’re aware of it.
C. Austin Fitts: Here’s the
thing. Both in the EU and in the United States, you have in leadership
positions a group of people who have been centralizing political and economic
power. The problem is that centralization has been very destructive to the
economy in many different ways – not just in the EU, but in the US and
globally.
Now,
they’ve managed to centralize a great deal of power and, you can argue that if
you’re in the US or the EU and you’re looking at the rise of Asia, you’re
thinking, “Okay, we want to have much more centralized clout so we can go
compete with those guys because they’re so huge.”
Maybe
you can argue it that way, but at some point, it seems to me, that we could
fund the centralization of power by issuing more government debt. You
centralize power, it hurts the economy, you turn around and you issue more
debt, and you give people government checks. You cover over the externalities
of destroying the marketplace by pumping it up with debt. Now the debt growth
model is over.
What
I’m seeing globally is a whole world of leaders who are going to be forced to
get back into fundamental productivity, and how do you keep the centralization
going? You can’t. If you look at the plans to further centralize here in the
United States; education, government, healthcare, what you’re talking about
doing is something which is so unnatural and so destructive of local economies
that you’re going to get a revolt of some kind – or you’re going to destroy the
economy.
The Saker: Let me ask
you this: Do you believe that the people who made it all happen – the entire
‘elite’ and the ruling class who built its career and academic credentials and
everything- are capable of reforming themselves and changing course, or do we
have to get rid of them before any of that happens?
C. Austin Fitts: I’m not quite
sure, because if you look at the 20% who implement policy, they’re looking
around at this point. You’ve got a lot of very intelligent people in that
group, and they’re looking around at the destruction of the fundamental economy
coming out of the centralization. I think they’re beginning to see things where
they realize: 1) We could get reengineered out by the robots, and 2) This is
sufficiently inhuman and we’re worried about the health and well being of our
own families.
The Saker: Do you think
it could get that far? Do you think the 20% could actually think like that,
even if they get their extra yachts and their end-of-year premium and maybe a
career promotion if they just play ball?
C. Austin Fitts: You know, I’m
seeing ambivalence in some of them. I don’t know what percentage that is, but
here’s the thing; it goes back to what is happening between Russia and the
United States.
I
told you the story of having lunch. I was sitting with my lawyers in a
Washington restaurant. Something happened with respect to my litigation, and
the conversation was about what was going on in Washington. A chill went down
my back, Saker, and I realized that this thing is so perverted and so nuts that
I want nothing to do with it. I’m walking out; I’m walking out of the
establishment, and I’m going out in the wilderness. Even if I die in the
wilderness, that is preferable to being part of this because this is so sick
and perverted. I want nothing to do with it, and I know it can’t win because
anything that has within it the seeds of a demonic economy can liquidate
economies, but, ultimately, it’s like a tapeworm; it eats its own host.
The Saker: All I can say
is I hope and pray that there are more people like you who think that way. I
mean, yes, it can happen that a system gets so morally discredited that nobody
wants to set up for it, and everybody wants out. That’s actually what happened
in the Soviet Union in large part.
I
hope that is true; I want to believe that is true. That’s really the purpose of
my blog.
C. Austin Fitts: I don’t know
that that is true, but I will tell you the number one problem in the economy
right now is liquidity doesn’t come from money; it comes from trust.
It
doesn’t come from force; it comes from trust.
Now
you can force a lot, and you can throw money at it with government debt, but
when the government debt game runs out, you’ve got to have trust, and the trust
is breaking down. That’s what is really hurting the economy, and it’s
interesting. I just bought and have been reading a book by the former governor
of the Bank of England, Mervyn King. In his second chapter he’s talking about
the breakdown of trust and how trust makes the economy go around, not money.
I
did not expect to hear this from one of the guys who helped engineer the
bailouts, although clearly he was opposed to it in the beginning.
The Saker: Do you think
I’m cynical or ignorant if I say my impression is that what makes money go
around is corruption?
C. Austin Fitts: Despite the
overwhelming amount of corruption, I disagree. The powerful need for financial
liquidity is one of the reasons I am hopeful we can reduce the level of
corruption.
If
you look at a publicly traded stock, let’s say a company has publicly traded
stock, it’s making a dollar earnings per share a year, and its stock is trading
at a multiple of 20 times earnings. Therefore, one share is worth $20.
Now
if I’m running a narcotics trafficking business, I have a much higher margin
than that company has. Let’s say the company makes batteries and it has a 10%
margin. I’m running narcotics, and I have a 30-40% margin plus I don’t have to
pay taxes. I have to pay a lot of bribes, but I don’t have to pay taxes. So
I’ve got much higher margins, but I can’t translate that higher margin into a
20 times multiple. I can’t do an IPO and run public company based on illegal
activities. My multiple is (1X) one times.
Now,
look at the system that it takes to put in place a way of creating the
financial liquidity engine that generates significant capital gains. You’ve got
to have the widespread market believing that they can put money in a brokerage
account, and they can trust the system. They have to trust the rule of law.
They have to trust the systems respect for property rights and contracts. That
kind of leverage depends on enormous amounts of trust in the system by a wide
variety of market participants and players. One of the problems you have is
this: For the last 30 years, the Anglo-American alliance has been stretching
that trust and breaking it down by leveraging financial liquidity with
increasing organized crime cash flows and margins. This includes exploding
amounts of financial fraud. That depends on secrecy, media manipulation, double
standards and legal immunity provided by national security law and an endless
flow of covert operations and dirty tricks.
The
reason people keep getting scared of the financial system is because they’re
worried that that trust could go, and it could. So financial liquidity depends
on trust. When I was on Wall Street we would sit, and have syndicates of people
making hundreds of billions of dollars of commitments – all verbally – and they
kept those commitments because if not, you were out forever if you didn’t keep
your word.
Trust
is what makes the system go, not money. Corruption being used to centralize
control is eroding that trust and that is at the heart of what is destroying
markets and productivity in the system. Corruption is in the process of taking
the multiples down.
The Saker: Do you think
there is more distrust towards Anglo-American banking or finance out there than
to the rest of the world? Isn’t all of banking and financing basically linked
to one trans-national entity? Or would you say there is a separate, gradually
less reputable Anglo-American finance and banking system?
C. Austin Fitts: Here’s the
question. At the top, it’s a mystery. Yes, there is an Anglo-American system
that has had enormous amounts of liquidity and leverage, and the others have
not begun to build the networks and the systems they need. That’s what we’re
watching the Chinese, Russians and the BRICS nations start to do now. That’s
why the Americans and the Anglo-American alliance are feeling so insecure.
The
others are starting to come together and build their relationships and the
practical coalitions and different systems you need to make that happen. To me,
that is one of the most interesting phenomenon that is going on there, but the
question still remains: Who is at the top?
If
you look at what is happening on this planet economically, the number one
problem is it’s being harvested. The question is: Where in the hell is the
money going, and who is really in charge? That’s still a mystery. I don’t know,
and I’ve spent my life trying to figure it out. Who is doing this?
The Saker:I feel better
about not knowing it either.
C. Austin Fitts: Well, we’re
figuring it out. We’re chipping away at it. It’s really funny. There’s a
science fiction movie called Jupiter
Ascending. I don’t know if you’ve seen it, but at one point a woman who is
the sister of the man who supposedly owns Earth turns to the protagonist, who
is a woman from America, and says, “You know, my dear, Earth is just a very
small part of a much bigger corporation.”
The Saker: I saw that.
Yes, it is pretty good.
C. Austin Fitts: It’s a
perfect scene. I said, “Oh, that’s where the money is going.” Anyway Saker,
you’ve been very generous with your time. Before we go, just say one last
thing. If you’re listening to this and you want to make sure war doesn’t
happen, what do you do? How can we contribute to prayers for peace in a
practical way?
The Saker: First of all,
by raising the alarm about the prospects of war and explaining to people,
particularly in the United States, that this time it will not be limited to
Europe. Secondly, never vote or support or donate to any politician who
contributes to creating that problem. Never go against your conscience, and
live only by the truth. Thirdly, take action yourself and start writing,
protesting, speaking, and trying to convince people that a war does not need to
happen. There is no objective reason for that whatsoever.
C. Austin Fitts: In your
article, which I will republish at Solari, you made a very good point about
this popular notion that Americans are used to getting the benefits of war in
many respects and not paying the price, although, I’m from the Southern United
States, and we’ve lost a lot of wonderful young people to war, so we’re a
little bit more sensitive.
The Saker: Absolutely,
but it’s kept hidden from the general public. Everybody knows a veteran who has
been wounded or killed by now. I know. It’s hidden. And the costs will be way
higher.
C. Austin Fitts:Much, much
higher. Yes. Well, you’re the best. Thank you, and we look forward to the next
quarter. Be thinking about what we’re going to talk about. Saker: I’m returning
the compliment. Thank you very much. It’s been a pleasure.
C. Austin Fitts: Goodbye.
The Saker: Goodbye.
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