Crisis in the U.S.

U.S. political and economic systems are in serious crisis—a
crisis affecting its biggest multinational corporations and therefore
the economy, a political crisis affecting the state in its relationship
to internal security and external belligerancy and a crisis of the
political system that not only fails to represent the electorate
but is also incapable of responding to the crisis. 

economic crisis, referred to in the financial press as the “crisis
of corporate governance,” involves multi-billion dollar fraud
by many of the biggest energy, oil, media companies, investment
banks, accounting firms, and mega-conglomerates in the U.S. and
in the world. The number of pensioners, employees, and investors
who have lost their savings number in the tens of millions. 

chief executive of Goldman Sachs, Henry Paul- son, a financial leader
on Wall Street declared that U.S. corporations are in a “position
of low repute not seen in my lifetime.” According to the Financial
and the Wall Street Journal, the problem is “corporate
greed” and “loss of investor trust.” 

real problem is not just individual greed, but the entire deregulation
of the banking and corporate sectors and the speculative nature
of the U.S. economy. The problem is systemic: the concentration
of economic power and corporate control over the political system
means that CEO’s design the legislation and write the rules
that allow them to commit large-scale fraud and take huge short-term
profits—before their companies collapse. The case of Enron
and El Paso Oil and their dominant role in shaping the Bush-Cheney
energy policy is emblematic of the symbiotic relationship, just
as Clinton’s ties to Wall Street led to the deregulation of
financial and banking sectors. 

systemic consequences of large-scale and all-pervasive fraud has
been the de-legitimation of big investment banks among investors
and a massive decline in foreign investment in the U.S. From January
to February 2001, $78 billion flowed into the U.S. During the same
two months in 2002 only $14.6 billion of foreign funds were invested
in U.S. stocks and bonds. The decline of foreign flows has substantially
weakened the dollar. It threatens to push the U.S. external accounts
deficit to crisis levels, forcing a major retrenchment in imports
and living standards. The precipitous decline in foreign investment
in the U.S. is because investors no longer trust corporate reports
on profits and, particularly, no longer trust U.S. auditors’
reports and U.S. CEO’s. The result is that the stock market
has declined, stock losses in 2002 continue for the third straight
year, big corporate bankruptcies are on the rise, while profits

political crisis is deeply embedded in the larger political context
of the events preceding and following 9/11. The revelations of Washington’s
prior know- ledge of a terrorist plot to hijack airplanes in the
U.S.—including warnings of an attack on public and private
buildings—has raised fundamental questions. The official version
of the Bush admin- istration, State Department, CIA/ FBI, and the
Congressional Democrats is that there was a “failure of intelligence”—individual
bureaucrats failed to act, the bureaucracy was not “efficient”
or was “understaffed.” Among most critical intellectuals,
journalists, and experts on intelligence, the official explanations
fail to deal with several important discrepancies. First of all,
Condaleeza Rice, the National Security Adviser, publicly stated
that during the summer of 2001 the Bush administration believed,
“al Qaeda might hijack an aircraft and use it to bargain for
the release of prisoners…. I don’t think anyone could
have predicted that these people would take an airplane and slam
it into the World Trade Center” (Financial Times, May
18-19, 2002). 

admitted, “We only expected a traditional hijacking.”
The Bush administration ignored warnings from France, Egypt, Israel,
and England that a terrorist action was imminent; it ignored warnings
from FBI agents in Arizona and Minnesota of possible airplane hijackings
by terrorists training as airline pilots, and it ignored a CIA briefing
to President Bush on August 6, 2001 stating that al Qaeda was planning
a hijacking. 

observers believe that with so many warnings converging from so
many responsible sources to high level Bush officials (according
to Condoleeza Rice), there is another explanation: the Bush/ Cheney/Rumsfeld
regime was prepared to allow a “traditional” hijacking
to take place—in order to exploit it for both narrow and global
political interests. They did not suspect that the terrorists would
attack the WTC and the Pentagon. 

other issues raise suspicion that high officials in the Bush administration
were involved in facilitating the hijackings: the terrorist leaders
had multiple entry visas—not easy to obtain for ordinary tourists.
The terrorists functioned openly—entering flight schools and
seeking U.S. Department of Agriculture loans to buy “crop-duster”
airplanes. Thirdly, many received their visas from Saudi Arabia,
where a former U.S. Consul official has stated that many visas were
issued under pressure from the CIA—probably to recruits for
U.S.-sponsored Islamist wars in Bosnia, Kosova, Chechnya, and Central
Asia. There is a good possibility that at least some of the terrorists
were “double agents”—one reason for the so-called
“intelligence failures” and the refusal after 9/11 to
reveal prior knowledge. 

is a large body of historical study on U.S. foreign policy, which
demonstrates that Washington “manufactures crises” to
justify war. The examples range from the “bombing of the Maine”
as a prelude to the U.S.-Spanish-Cuban War to Roosevelt’s foreknowledge
of Pearl Harbor to President Johnson’s infamous “Tonkin
Incident” during the Vietnam War to Bush’s father’s
invention of the Iraqi destruction of infant incubators in Kuwait.
In each case, the president declared an “unprovoked attack”
and mobilized the public for large-scale warfare of conquest and
colonization. In the case of the U.S. war in Afghanistan, it is
public record that on September 10, 2001, the Bush administration
had a plan to attack the Taliban and al Qaeda, which it fully implemented
after September 11. 

has been an essential instrument of empire building for the last
four U.S. presidents. President Reagan’s successful wars against
Grenada and Panama contributed to his popularity, weakened the “Vietnam
Syndrome,” and allowed his regime to reverse progressive social

pattern was repeated and extended by Bush (father) in the U.S. war
against Iraq—the military victory led to the proclamation of
a “new world order” based on Washington’s supremacy.
Clinton’s war against Yugoslavia and the continuation of the
bombing of Iraq was accompanied by the total deregulation of the
economy, the savaging of the remnants of the welfare program, and
the information technology, bio-tech, fiber optics speculative bubble. 

(son) as a minority president, elected through voter fraud in Florida,
used the Afghan war to increase public backing, vastly expand military
and secret police budgets and powers, and to subsidize big business
and vastly increase U.S. political and military empire throughout
Asia, Latin America, and the former Soviet Union. The initial terrorist
act, and the cover-up of U.S. involvement, has led to serious decline
in democratic freedoms and the constant threat of new terrorist
plots to increase police state intervention in all aspects of civil

the admissions of “mistakes” by the Bush administration
and the Congressional critics’ charges of “incompetence”
have served the police-military apparatus well. “Home defense”—extended
police powers and personnel—received an additional $37 billion
dollars, on top of the original $29 billion dollars. The newly created
Department of Homeland Security will have 170,000 agents and staff. 

state spending on the police and military skyrockets, private investors
are pushed aside, budget deficits soar, foreign investors turn to
more lucrative sites, and the U.S. economy destabilizes. 

are no corrective mechanisms in sight. Unlike previous epochs when
large-scale corporate-banking scandals occurred, major reforms were
implemented. Today there is neither a popular reform movement nor
congress- ional opposition. The reason for the lack of a corporate
reform movement is that the same corrupt banks and corporations—like
Enron, Merril Lynch, etc.—contribute to and finance both political

cover-up of its linkages leading to 9/11 is related to their cover-up
in the anthrax attacks. Leading journalists and micro-biologists
have identified the U.S. military research laboratory at Fort Detrick,
Maryland as the source and have identified two U.S. micro-biologists
as likely suspects. The FBI has refused to act. The reason is that
the scientists were engaged in weaponizing anthrax and other chemical
and biological agents—work that violates the Chemical and Biological
Treaty of 1991. No Congressional investigation. No mass media expose.
No public outcry. The crisis deepens and apologists for the empire
brush off systemic critics as “conspiracy theorists.”
But critical intellectuals and activists continue to prod the public
conscience, hoping for more democratic politics to emerge.                      Z 

Petras teaches sociology at SUNY Binghamton. He is the author of
numerous articles.