Via SchwartzReport as so often, this is from http://www.pressenza.com/npermalink/icelandx-a-country-that-wants-to-punish-the-bankers-responsible-for-the-crisis. SR editor Stephan Schwartz comments: “I find this fascinating, and wonder why the Icelanders can hold bankers accountable, and can change the government, while we in the U.S. cannot.” Well, one reason may be, they’ve been at this self-government thing a lot longer than we have — since before the year 1000, if you can imagine that. Another, they’re a small country, and small countries are more manageable than large ones. Need a third reason? Maybe their politicians are not all in the bag.

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2010-10-08 Ventura column

Letters at 3AM: Where We Actually Live

BY MICHAEL VENTURA

Factions fling rhetoric at one another but don’t talk much about facts. One result is that, as a citizenry, we’ve lost sight of where we actually live and our politics are no longer about what’s going on in that strange place.

Here are fragments of an accurate description from The New York Times:

“More than a quarter of the nation’s bridges are structurally deficient or functionally obsolete. Leaky pipes lose an estimated seven billion gallons of clean drinking water every day. And aging sewage systems send billions of gallons of untreated wastewater … into the nation’s waterways each year” (Jan. 28, 2009, p.A16). “[A] significant water line bursts on average every two minutes somewhere in the country” (March 15, p.A1). “75 percent of [America’s] public schools have structural deficiencies and 25 percent have problems with their ventilation systems” (Feb. 20, p.A17). “Even upscale suburban districts are preparing for huge levels of layoffs” (May 20, p.A1). “Kansas City [Mo.] Will Shutter Nearly Half of Its Schools” (March 11, p.A20). “Costs Keep Rail Systems Outdated Across U.S.” (June 25, 2009, p.A13). “Millions of Miles of Pipe, and Years of Questions – Weak Oversight Cited in Nation’s System of Gas Lines” (Sept. 25, p.A1). California’s “[i]nfrastructure spending … has dropped from 20 percent of the state budget to 3 percent” (Sept. 28, p.A29). “Most summer school programs … from elementary through high school” have been canceled in Los Angeles (May 30, 2009, p.A9), as well as in Florida, North Carolina, Delaware, Washington, Maryland, and Ohio (July 2, 2009, p.A1). “Arizona Drops Children’s Health Program” (March 19, p.A17). “Money Shortage Forces Cut in Cases To Be Prosecuted” (May 9, 2009, p.A13). “Community Colleges Cutting Back on Open Access” (June 24, p.A15).

In Tracy, Calif., “residents will now have to pay every time they call 911 for a medical emergency. … Residents can pay a $48 voluntary fee for the year … [or] be charged $300 if they make a call for help” (Feb. 21, p.WK8).

In one Brooklyn neighborhood, “within a 10-minute walk, three day care centers, one senior center, one swimming pool, one after-school program and a health clinic are to close. Venture 20 minutes more, and six additional facilities – two day care centers, two after-school programs, a senior center and a health clinic – are also to shut down” (June 5, p.A1).

“[B]udget shortfalls have led 11 states to close enrollment in programs that provide drugs to people with H.I.V. and AIDS. … Arizona has ended many behavioral health services for 4,000 children. Oregon has made significant cuts to community health programs for nearly 1,500 mentally ill residents and is eliminating a program that helps 2,000 residents with Alzheimer’s or dementia receive care at home” (July 2, p.A24).

“Safety Is Issue as Budget Cuts Free Prisoners” (March 5, p.A1). Oregon, Illinois, Colorado, California, and Michigan were cited. The director of Michigan’s Department of Corrections, Patricia L. Caruso, said, “We can live in fear and make bad policy based on fear, or we can have some backbone and make policy based on what really helps our communities.” Then she admitted: “I worry about it. I say a rosary every day.”

“Firefighters have protested [cuts] in Florida,” as have nurses in Minnesota, which cut aid to health services, as has Alabama (Time, June 28, p.22). That article adds that Arizona cut kindergarten programs to half-days (a hard situation for working parents) and that funds for schools “plunged” in New Jersey, while Florida “slashed” university spending.

“More than one-third of the trains, equipment, and facilities of the nation’s seven largest rail transit agencies are near the end of their useful life or past that point” (USA Today, May 1, 2009, p.3).

The Wall Street Journal, Sept. 4, 2009, p.1: California, Maine, Maryland, Michigan, Rhode Island, and Colorado have “shuttered” most state offices one day per week; Detroit cut family services for foster kids; 7,000 state jobs were eliminated in Washington; 27,000 teachers were laid off in California; Maine families “cannot apply for food stamps or Medicaid”; Maryland has halved “the usual number of traffic patrols”; Georgia has 25,000 employees “facing furloughs”; lawyers there have trouble finding government personnel with whom to file papers at the State Court of Appeals. Five million Americans work for state governments; many of their jobs are no longer secure.

Public safety is directly threatened. “Budget cuts are forcing police around the country to stop responding to fraud, burglary and theft calls as officers focus limited resources on violent crime. … ‘If you come home to find your house burglarized and you call, we’re not coming,’ said [an] Oakland police spokeswoman” (USA Today, Aug. 25, p.1).

“There are more people in poverty now – 43.6 million – than at any time since the government began keeping accurate records (The New York Times, Sept. 25, p.A21). “Public employee layoffs and service cutbacks that states are enacting amount to an ‘anti-stimulus program’ that dwarfs the size of the federal government’s stimulus program” (The Week, July 16, p.4).

Pity the poor public official who tries to actually do something. “Daniel Varela Sr., … mayor of Livingston, Calif., … was booted from office last month in a landslide recall election. His crime? He had the temerity to push through the small city’s first water-rate increase in more than a decade to try to fix its aging water system, which he said spewed brownish, smelly water from rusty pipes” (The New York Times, Sept. 23, p.A1).

The unemployed, the part-timers who’d rather be full-time, and the many 18- to 24-year-olds living with parents total roughly 20 million able-bodied Americans. (The Week, Aug. 20, p.4).

I could fill five times this space with similar quotes. Piles of printouts surround me as I write. My files bulge with this stuff.

Republicans and the tea party cry for fewer taxes and smaller government without explaining how those policies address what’s actually going on where we actually live. The White House and most Democrats are unable or unwilling to recognize that what’s actually going on where we actually live is nothing less than a national emergency ultimately far more threatening to the viability of this country than acts of terrorism.

The United States is in critical need of repairs of every imaginable kind. There are 20 million able-bodied unemployed who could be trained to make those repairs. The solution is obvious. Pay the unemployed to be trained for the work needed. Employ these trained cadres to get the physical structure of America back to a fully functioning level and keep it at that level. Turn an unemployed, frightened, angry population into a population doing work that is useful and desperately needed, making them wage-earners whose spending and taxpaying would revive this economy from the ground up.

No one in power speaks of such a solution.

Instead, we spend hundreds of billions on wars that profit us nothing.

So far, state spending cuts mainly hurt the poor, the ill, the helplessly aged, the young, and the many thousands furloughed and laid off. But states will cut again next year and the year after – there’s no relief in sight. Sooner or later, every tier of this society will hurt. Even the rich need a functioning traffic system. Even they need water to run clean, bridges that stay up, dams that don’t falter, and firefighters and police with the capacity to respond.

Infrastructure has no politics. It either works or it doesn’t. A nation that lets its infrastructure crumble will wake one fine day to find itself crippled.

The fixing necessary is not about ideology; it’s about nuts and bolts. If we fail we are all headed down the same chute into whatever we’ll call a First World nation that crawls backward into a Third World swamp.


I’ve lost track of where I found this item, but I save it thinking, gee, I wonder what it will take before our own government starts to do the same thing? The answer, unfortunately, is probably the same as it was for Cuba: bankruptcy and the lack of alternatives.

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I find this an interesting and somewhat persuasive analysis of the on-going banking crisis — which of course is far greater than a banking crisis. As to whether it will play out as Chang thinks, well, analysis is a lot easier than prophecy. We’ll see.

Global Collapse of the Fiat Money System

By Matthias Chang

URL of this article: www.globalresearch.ca/index.php?context=va&aid=20853

Global Research, August 31, 2010

Future Fast Forward

Readers of my articles will recall that I have warned as far back as December 2006, that the global banks will collapse when the Financial Tsunami hits the global economy in 2007. And as they say, the rest is history.

Quantitative Easing (QE I) spearheaded by the Chairman of Federal Reserve, Ben Bernanke delayed the inevitable demise of the fiat shadow money banking system slightly over 18 months.

That is why in November of 2009, I was so confident to warn my readers that by the end of the first quarter of 2010 at the earliest or by the second quarter of 2010 at the latest, the global economy will go into a tailspin. The recent alarm that the US economy has slowed down and in the words of Bernanke “the recent pace of growth is less vigorous than we expected” has all but vindicated my analysis. He warned that the outlook is uncertain and the economy “remains vulnerable to unexpected developments”.

Obviously, Bernanke’s words do not reveal the full extent of the fear that has gripped central bankers and the financial elites that assembled at the annual gathering at Jackson Hole, Wyoming. But, you can take it from me that they are very afraid.

Why?

Let me be plain and blunt. The “unexpected developments” Bernanke referred to is the collapse of the global banks. This is FED speak and to those in the loop, this is the dire warning.

So many renowned economists have misdiagnosed the objective and consequences of quantitative easing. Central bankers’ scribes and the global mass media hoodwinked the people by saying that QE will enable the banks to lend monies to cash-starved companies and jump start the economy. The low interest rate regime would encourage all and sundry to borrow, consume and invest.

This was the fairy tale.

Then, there were some economists who were worried that as a result of the FED’s printing press (electronic or otherwise) working overtime, hyper-inflation would set in soon after.

But nothing happened. The multiplier effect of fractional reserve banking did not take off. Bank lending in fact stalled.

Why?

What happened?

Let me explain in simple terms step by step.

1) All the global banks were up to their eye-balls in toxic assets. All the AAA mortgage-backed securities etc. were in fact JUNK. But in the balance sheets of the banks and their special purpose vehicles (SPVs), they were stated to be worth US$ TRILLIONS.

2) The collapse of Lehman Bros and AIG exposed this ugly truth. All the global banks had liabilities in the US$ Trillions. They were all INSOLVENT. The central banks the world over conspired and agreed not to reveal the total liabilities of the global banks as that would cause a run on these banks, as happened in the case of Northern Rock in the U.K.

3) A devious scheme was devised by the FED, led by Bernanke to assist the global banks to unload systematically and in tranches the toxic assets so as to allow the banks to comply with RESERVE REQUIREMENTS under the fractional reserve banking system, and to continue their banking business. This is the essence of the bailout of the global banks by central bankers.

4) This devious scheme was effected by the FED’s quantitative easing (QE) – the purchase of toxic assets from the banks. The FED created “money out of thin air” and used that “money” to buy the toxic assets at face or book value from the banks, notwithstanding they were all junks and at the most, worth maybe ten cents to the dollar. Now, the FED is “loaded” with toxic assets once owned by the global banks. But these banks cannot declare and or admit to this state of affairs. Hence, this financial charade.

5) If we are to follow simple logic, the exercise would result in the global banks flushed with cash to enable them to lend to desperate consumers and cash-starved businesses. But the money did not go out as loans. Where did the money go?

6) It went back to the FED as reserves, and since the FED bought US$ trillions worth of toxic wastes, the “money” (it was merely book entries in the Fed’s books) that these global banks had were treated as “Excess Reserves”. This is a misnomer because it gave the ILLUSION that the banks are cash-rich and under the fractional reserve system would be able to lend out trillions worth of loans. But they did not. Why?

7) Because the global banks still have US$ trillions worth of toxic wastes in their balance sheets. They are still insolvent under the fractional reserve banking laws. The public must not be aware of this as otherwise, it would trigger a massive run on all the global banks!

8) Bernanke, the US Treasury and the global central bankers were all praying and hoping that given time (their estimation was 12 to 18 months) the housing market would recover and asset prices would resume to the levels before the crisis. .

Let me explain: A House was sold for say US$500,000. Borrower has a mortgage of US$450,000 or more. The house is now worth US$200,000 or less. Multiply this by the millions of houses sold between 2000 and 2008 and you will appreciate the extent of the financial black-hole. There is no way that any of the global banks can get out of this gigantic mess. And there is also no way that the FED and the global central bankers through QE can continue to buy such toxic wastes without showing their hands and exposing the lie that these banks are solvent.

It is my estimation that they have to QE up to US$20 trillion at the minimum. The FED and no central banker would dare “create such an amount of money out of thin air” without arousing the suspicions and or panic of sovereign creditors, investors and depositors. It is as good as declaring officially that all the banks are BANKRUPT.

9) But there is no other solution in the short and middle term except another bout of quantitative easing, QE II. Given the above caveat, QE II cannot exceed the amount of the previous QE without opening the proverbial Pandora Box.

10) But it is also a given that the FED will embark on QE II, as under the fractional reserve banking system, if the FED does not purchase additional toxic wastes, the global banks (faced with mounting foreclosures, etc.) will fall short of their reserve requirements.

11) You will also recall that the FED at the height of the crisis announced that interest will be paid on the so-called “excess reserves” of the global banks, thus enabling these banks to “earn” interest. So what we have is a merry-go-round of monies moving from the right pocket to the left pocket at the click of the computer mouse. The FED creates money, uses it to buy toxic assets, and the same money is then returned to the FED by the global banks to earn interest. By this fiction of QE, banks are flushed with cash which enable them to earn interest. Is it any wonder that these banks have declared record profits?

12) The global banks get rid of some of their toxic wastes at full value and at no costs, and get paid for unloading the toxic wastes via interest payments. Additionally, some of the “monies” are used by these banks to purchase US Treasuries (which also pay interests) which in turn allows the US Treasury to continue its deficit spending. THIS IS THE BAILOUT RIP OFF of the century.

Now that you fully understand this SCAM, it is left to be seen how the FED will get away with the next round of quantitative easing – QE II.

Obviously, the FED and the other central banks are hoping that in time, asset prices will recover and resume their previous values before the crisis. This is a fantasy. QE II will fail just as QE I failed to save the banks.

The patient is in intensive care and is for all intent and purposes brain dead, although the heart is still pumping albeit faintly. The Too Big To Fail Banks cannot be rescued and must be allowed to be liquidated. It will be painful, but it is necessary before there is recovery. This is a given.

Warning:

When the ball hits the ceiling fan, sometime early 2011 at the earliest, there will be massive bank runs.

I expect that the FED and other central banks will pre-empt such a run and will do the following:

1) Disallow cash withdrawals from banks beyond a certain amount, say US$1,000 per day; 2) Disallow cash transactions up to a certain amount, say US$10,000 for certain transactions; 3) Transactions (investments) for metals (gold and silver) will be restricted; 4) Worst-case scenario – the confiscation of gold AS HAPPENED IN WORLD WAR II. 5) Imposition of capital controls etc.; 6) Legislations that will compel most daily commercial transactions to be conducted through Debit and or Credit Cards; 7) Legislations to make it a criminal offence for any contraventions of the above..

Solution:

Maintain a bank balance sufficient to enable you to comply with the above potential impositions.

Start diversifying your assets away from dollar assets. Have foreign currencies in sufficient quantities in those jurisdictions where the above anticipated impositions are least likely to be implemented..

CONCLUSION

There will be a financial tsunami (round two) the likes of which the world has never seen.

Global banks will collapse!

Be ready.

Staggering job losses

September 4, 2010

For a graphic look at the reality of the economic situation, showing the enormity of the problem that President Obama has had to grapple with (and be blamed for) click on this link, which comes to me via a friend. (If clicking on the link doesn’t do it, try copying the link and pasting it. I never know why sometimes these things work and sometimes they don’t, but there’s always a work-around. Unfortunately, there is so often a need for a work-around!)

http://calculatedriskimages.blogspot.com/2010/09/employment-recessions-august-2010.html

Also this, which I discovered at the same very interesting site on Sept. 5.

http://calculatedriskimages.blogspot.com/2010/09/percent-job-losses-aligned-at-bottom.html

If you can’t make these links work, perhaps easiest would be for you to go to the site and look down the left-hand margin for the various graphics available. http://calculatedriskimages.blogspot.com/

It always bemuses me, how often an absolutely accurate analysis of a situation is followed by a laughably simplistic prediction of the “inevitable” outcome. Doesn’t matter how often, or  how recently, history has once again proven to be complex and unpredictable, people peering into their crystal balls consistently make straight-line projections that prove to be fiction — sometimes, nightmares. Apparently the gifts of analysis and of fore-vision are different gifts, and rarely given both to the same person at the same time.

Nonetheless, this is excellent analysis.

The Ecstasy of Empire: How Close Is America’s Demise?

Without a revolution, Americans are history

By Paul Craig Roberts

URL of this article: www.globalresearch.ca/index.php?context=va&aid=20650

Global Research, August 16, 2010

The United States is running out of time to get its budget and trade deficits under control.  Despite the urgency of the situation, 2010 has been wasted in hype about a non-existent recovery.  As recently as August 2 Treasury Secretary Timothy F. Geithner penned a New York Times Column, “Welcome to the Recovery.”

As John Williams (shadowstats.com) has made clear on many occasions, an appearance of recovery was created by over-counting employment and undercounting inflation. Warnings by Williams, Gerald Celente, and myself have gone unheeded, but our warnings recently had echos from Boston University professor Laurence Kotlikoff and from David Stockman, who excoriated the Republican Party for becoming big spending Democrats.

It is encouraging to see a bit of realization that, this time, Washington cannot spend the economy out of recession. The deficits are already too large for the dollar to survive as reserve currency, and deficit spending cannot put Americans back to work in jobs that have been moved offshore.

However, the solutions offered by those who are beginning to recognize that there is a problem are discouraging. Kotlikoff thinks the solution is massive Social Security and Medicare cuts or massive tax increases or hyperinflation to destroy the massive debts.

Perhaps economists lack imagination, or perhaps they don’t want to be cut off from Wall Street and corporate subsidies, but Social Security and Medicare are insufficient at their present levels, especially considering the erosion of private pensions by the dot com, derivative and real estate bubbles. Cuts in Social Security and Medicare, for which people have paid 15% of their earnings all their life, would result in starvation and deaths from curable diseases.

Tax increases make even less sense. It is widely acknowledged that the majority of households cannot survive on one job. Both husband and wife work and often one of the partners has two jobs in order to make ends meet. Raising taxes makes it harder to make ends meet–thus more foreclosures, more food stamps, more homelessness. What kind of economist or humane person thinks this is a solution?

Ah, but we will tax the rich. The usual idiocy. The rich have enough money. They will simply stop earning.

Let’s get real.  Here is what the government is likely to do.  Once the Washington idiots realize that the dollar is at risk and that they can no longer finance their wars by borrowing abroad, the government will either levy a tax on private pensions on the grounds that the pensions have accumulated tax-deferred, or the government will require pension fund managers to purchase Treasury debt with our pensions. This will buy the government a bit more time while pension accounts are loaded up with worthless paper.

The last Bush budget deficit (2008) was in the $400-500 billion range, about the size of the Chinese, Japanese, and OPEC trade surpluses with the US. Traditionally, these trade surpluses have been recycled to the US and finance the federal budget deficit. In 2009 and 2010 the federal deficit jumped to $1,400 billion, a back-to-back trillion dollar increase. There are not sufficient trade surpluses to finance a deficit this large. From where comes the money?

The answer is from individuals fleeing the stock market into “safe” Treasury bonds and from the bankster bailout, not so much the TARP money as the Federal Reserve’s exchange of bank reserves for questionable financial paper such as subprime derivatives. The banks used their excess reserves to purchase Treasury debt.

These financing maneuvers are one-time tricks. Once people have fled stocks, that movement into Treasuries is over. The opposition to the bankster bailout likely precludes another. So where does the money come from the next time?

The Treasury was able to unload a lot of debt thanks to “the Greek crisis,” which the New York banksters and hedge funds multiplied into “the euro crisis.” The financial press served as a financing arm for the US Treasury by creating panic about European debt and the euro. Central banks and individuals who had taken refuge from the dollar in euros were panicked out of their euros, and they rushed into dollars by purchasing US Treasury debt.

This movement from euros to dollars weakened the alternative reserve currency to the dollar, halted the dollar’s decline, and financed the massive US budget deficit a while longer.

Possibly the game can be replayed with Spanish debt, Irish debt, and whatever unlucky country swept in by the thoughtless expansion of the European Union.

But when no countries remain that can be destabilized by Wall Street investment banksters and hedge funds, what then finances the US budget deficit?

The only remaining financier is the Federal Reserve. When Treasury bonds brought to auction do not sell, the Federal Reserve must purchase them. The Federal Reserve purchases the bonds by creating new demand deposits, or checking accounts, for the Treasury. As the Treasury spends the proceeds of the new debt sales, the US money supply expands by the amount of the Federal Reserve’s purchase of Treasury debt.

Do goods and services expand by the same amount?  Imports will increase as US jobs have been offshored and given to foreigners, thus worsening the trade deficit.  When the Federal Reserve purchases the Treasury’s new debt issues, the money supply will increase by more than the supply of domestically produced goods and services. Prices are likely to rise.

How high will they rise? The longer money is created in order that government can pay its bills, the more likely hyperinflation will be the result.

The economy has not recovered. By the end of this year it will be obvious that the collapsing economy means a larger than $1.4 trillion budget deficit to finance. Will it be $2 trillion? Higher?

Whatever the size, the rest of the world will see that the dollar is being printed in such quantities that it cannot serve as reserve currency. At that point wholesale dumping of dollars will result as foreign central banks try to unload a worthless currency.

The collapse of the dollar will drive up the prices of imports and offshored goods on which Americans are dependent. Wal-Mart shoppers will think they have mistakenly gone into Neiman Marcus.

Domestic prices will also explode as a growing money supply chases the supply of goods and services still made in America by Americans.

The dollar as reserve currency cannot survive the conflagration. When the dollar goes the US cannot finance its trade deficit. Therefore, imports will fall sharply, thus adding to domestic inflation and, as the US is energy import-dependent, there will be transportation disruptions that will disrupt work and grocery store deliveries.

Panic will be the order of the day.

Will farms will be raided? Will those trapped in cities resort to riots and looting?

Is this the likely future that “our” government and “our patriotic” corporations have created for us?

To borrow from Lenin, “What can be done?”

Here is what can be done. The wars, which benefit no one but the military-security complex and Israel’s territorial expansion, can be immediately ended. This would reduce the US budget deficit by hundreds of billions of dollars per year.  More hundreds of billions of dollars could be saved by cutting the rest of the military budget, which in its present size, exceeds the budgets of all the serious military powers on earth combined.

US military spending reflects the unaffordable and unattainable crazed neoconservative  goal of US Empire and world hegemony. What fool in Washington thinks that China is going to finance US hegemony over China?

The only way that the US will again have an economy is by bringing back the offshored jobs. The loss of these jobs impoverished Americans while producing over-sized gains for Wall Street, shareholders, and corporate executives. These jobs can be brought home where they belong by taxing corporations according to where value is added to their product. If value is added to their goods and services in China, corporations would have a high tax rate. If value is added to their goods and services in the US, corporations would have a low tax rate..

This change in corporate taxation would offset the cheap foreign labor that has sucked jobs out of America, and it would rebuild the ladders of upward mobility that made America an opportunity society.

If the wars are not immediately stopped and the jobs brought back to America, the US is relegated to the trash bin of history.

Obviously, the corporations and Wall Street would use their financial power and campaign contributions to block any legislation that would reduce short-term earnings and bonuses by bringing jobs back to Americans. Americans have no greater enemies than Wall Street and the corporations and their prostitutes in Congress and the White House.

The neocons allied with Israel, who control both parties and much of the media, are strung out on the ecstasy of Empire.

The United States and the welfare of its 300 million people cannot be restored unless the neocons, Wall Street, the corporations, and their servile slaves in Congress and the White House can be defeated.

Without a revolution, Americans are history.

Via a friend, from Asia Times Onlinehttp://www.atimes.com/atimes/Middle_East/LF17Ak02.html

DISPATCHES FROM AMERICA

Call the politburo, we’re in trouble
By Tom Engelhardt

Mark it on your calendar. It seems we’ve finally entered the Soviet era in America.

You remember the Soviet Union, now almost 20 years in its grave. But who gives it a second thought today? Even in its glory years that “evil empire” was sometimes referred to as “the second superpower.” In 1991, after seven decades, it suddenly disintegrated and disappeared, leaving the United States – the “sole superpower,” even the “hyperpower,” on planet Earth – surprised but triumphant.

The USSR had been heading for the exits for quite a while, not that official Washington had a clue. At the moment it happened, Soviet “experts” like Secretary of Defense Robert Gates (then director of the Central Intelligence Agency) still expected the Cold War to go on and on.

In Washington, eyes were trained on the might of the Soviet military, which the Soviet leadership had never stopped feeding, even as its sclerotic bureaucracy was rotting, its economy (which had ceased to grow in the late 1970s) was tanking, budget deficits were soaring, indebtedness to other countries was growing, and social welfare payments were eating into what funds remained. Not even a vigorous, reformist leader like Mikhail Gorbachev could staunch the rot, especially when, in the late 1980s, the price of Russian oil fell drastically.
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