A really lousy week

The trajectory of an empire in decline is not always in one consistent direction downward.  There are fits and starts, peaks and valleys.  But for the U.S. Empire, this is shaping up to be one really lousy week.

Where shall we begin?  Well, how about in the country whose reconstruction, Paul Wolfowitz promised us, would be self-financing?

Saboteurs blew up one of Iraq’s two main oil export pipelines in
southern Iraq on Thursday, a Southern Oil Company official told Reuters.

morning saboteurs blew up the pipeline transporting crude from Zubair 1
by placing bombs beneath it. The pipeline was severely damaged,” the
official said, speaking on condition of anonymity.

”Crude exports will be greatly affected because this is one of two main
pipelines transporting crude to the southern terminals. We will lose
about a third of crude exported through Basra,” he said. Iraq exported
1.54 million barrels per day from Basra in February.

This is big.  The regular torching of pipelines in the north, and occasional border clashes between Turks and Kurds there, have little impact on worldwide oil flow.  But the south is another story.  And even before this attack, the intra-Shiite fighting that's broken out in recent days was threatening to affect oil production:

Oil production and exports from Iraq's southern oilfields could be
disrupted in three days if workers cannot reach their offices due to
fighting in Basra, a Southern Oil Company official told Reuters on

"If the military operations continue for three more days, the oil
workers will not be able to continue their work and this is going to
definitely affect oil production and exports"…

Not enough humiliation for the sole superpower?  How about the dressing down Team Bush is getting this week from the Islamic world's only nuclear power?  Two of Condi Rice's top deputies are learning first-hand in Pakistan that it might not have been such a great idea for Washington to put all its eggs in the basket of the military dictator Musharraf for so many years.

Benazir Bhutto's widower, leader of the largest party in Pakistan's new governing coalition, gave them the following message as described later to reporters by a party official: “If I can use an American expression, there is a new sheriff in town.  Americans have realized that they have perhaps
talked with one man for too long.”  And the leader of the other big party in the coalition, the former prime minister Nawaz Sharif, added insult to insult by saying Pakistan would no longer be America's "killing field."  U.S. forces are stepping up their air strikes in the mountains, fearing the new leaders will put the kibosh on such operations sooner or later.

Even the imperial news on the home front makes Washington look like the gang that can't shoot straight.  It's just emerged this week that the United States accidentally shipped electrical fuses for nuclear warheads to Taiwan.  Added to the revelation last year about the six live nuclear missiles that were flown from North Dakota to Louisiana, and the Pentagon's oops-I-did-it-again reaction, arms control expert Jeffrey Lewis puts it bluntly:   "These guys don’t get it. This is not an isolated incident. The organization has a problem. This is dangerous."

So as diplomacy and military power falter, and as the economy falls victim to the cumulative excesses of Bush-Greenspan-Bernanke bubbles, who stands to benefit?  The Peterson Institute's Anders Aslund says Russia is now the country perhaps best insulated from the U.S. credit crisis… and in fact it might be the destination of choice for foreign investors:  The ruble is undervalued, Russian stocks look cheap, and soaring commodity prices will bolster Russia's economy in general.  (He forgot to mention Russia's blessedly simple tax structure.)

And in a true picture of how the mighty are falling, Aslund says at the moment the United States exhibits haunting parallels to Russia in the runup to its big economic crisis of 1998.  Ouch.

The Daily Reckoning