You get no-news days, and you get the rarer too-much news days, but the United States seems to be working on a rare combination of the two – a moment when so much of importance is happening that the news feeds simply give up and revert back to the minutiae they would fill the wires with in any case.

One big story – or at least moment for stories – is the Iraq war, which turns five this week. Like most five-year-olds it can no longer comfortably be held, but nor can it be left unattended for a second, lest it pour the fishbowl into the toaster.

It has outpaced every war America has been involved in – including the revolution and Civil conflict – save for Vietnam, which, by this stage, was on the verge of the Tet offensive, which would pitch the US into a position of unwinnability.

It has long since outdistanced previous spending by an order of magnitude, and even the most rapid extraction plan will nevertheless drain it of billions dollars more. The country is now a Shia-dominated Balkanised fiction, with its sovereignty disregarded by its northern Kurdish de facto independent area – whose sovereignty is in turn disregarded by Turkey, essentially creating war conditions between two US allies.

Oil revenues are being siphoned off by the stooges who have elected themselves to the Iraqi parliament, which drags its feet so as to extend the US protection of its Zaire-level corruption. Baghdad, a thriving city, even under Saddam, even under the sanctions, is in perpetual neighbourhood lockdown, whole streets of businesses and shops vanished in the four million tide of refugees. Even so, violence continues on a scale that is reasonable only by the charnel house levels of 2004-2007, and peace has been bought by paying and arming Sunni gangs, who will simply generate the next cycle of mayhem.

The green zone pseudo-government’s closest developing ties are with Iran, and about its only initiative – and one of its first – was to reintroduce sharia law, and drive women out of the professions and the public life they had enjoyed for decades previous. And still, with the collapsed health system, power outages and remnant violence, chances of premature death are higher than they were under Saddam at anytime in the last decade of his rule.

This is what US soldiers are now dying for – four thousand of them any day now, especially if, as seems likely, the “surge” is starting to fray at the edges. And that hides a bigger figure – the 20,000 wounded, many of them amputees and/or head-injured, and the hundreds of thousands of troops kept on two, three, four tours in direct contravention of the purpose of the “tour-of-duty” concept (i.e. to minimise permanent psychological damage) in the first place.

Essentially they are suffering and dying for the Iraqi elite to carve up the country and divert the oil funds into the treasure-chests they’re building up for the next round of conflicts. Yet no-one can bear too much reality, and Americans, who can’t even bear to forgo the cheesesteak fries with an order of chicken-fried chicken, are doubly unwilling to face the awful truth – that its soldiers died in vain, in a war based on lies and extending misery.

So has come the weirdest justification yet for staying in the conflict – that the war has to be won to make those previous losses meaningful. This is freakin’ mad, especially in a country founded on a revolution whose instigators thought was meaningful in the fighting of, not in the winning – and whose chances of success they estimated as 50:50 at best. If victory alone can make a conflict meaningful, then it never meant anything in the first place. Conversely, if the cause was right and just, no amount of bad luck or botched strategy can retrospectively render it futile.

While McCain and the remnant best and brightest advance strategic arguments for the war – the “defeat them over there” line, as if continued occupation was not sand around which the pearl of a renewed Al-Qaeda is forming – it is the sentimental “honour the dead with fresh dead” line that is most prevalent among the pro-war people you talk to in bars, in taxis, on the street.

Such an idea is more often than not entirely disconnected from any idea of who is being fought, or for what – the reconstruction of Iraq, the multiple decentred franchise/meme of Al-Qaeda, etc. The troops are simply fighting “over there” and we have to win the struggle to honour those who were there already – in other words, the complex, abstract process of war reduced to the atavistic morality and logic of a gang brawl.

There’s no real point in reproducing these conversations because by and large there is no insight, or even phrasing in them, that does not closely follow the outlines supplied by Fox News or MSNBC in their endless berating shout-shows. Quite aside from the evil doctrine that the lives of more young men and women should be sacrificed only for the honour of those who have already died, the reasoning is simply an example of losers’ logic.

Winners cut their losses, and let their profits run. They cut their losses even if they’ve failed to cut them earlier – in other words, they don’t let the embarrassment or feelings of foolishness or reproach tempt them into hoping for a turnaround when a good result is no longer possible. They suck it up, and take the loss. Losers’ logic by contrast is narcissistic – letting your losses run relies on a delusion of some sort of specialness which absolves you from the laws applying to everyone else.

In a media culture losers’ logic attaches itself easily to the idea of American exceptionalism – all this “last best hope of man” bullsh-t, as if history stopped in 1776. To maintain it, history must be fictionalised. John McCain’s ads have him ranting “we won’t surrender they’ll surrender. We’re Americans and we never surrender!” This man is a VIETNAM WAR VETERAN. He was released from a POW camp only because the US had surrendered, and prisoners were allowed to return home. How does this line – akin to Sarkozy saying “Us? We never get invaded!” — even work? Because losers’ logic is dominating the debate.

So as with the war, goes the economy. The collapse of Bear Stearns – for that is what it is – has, in a flash, taken the economic crisis from the moral sphere into the operational. Before this, there were vague floating worries and general disquiet, quibbling about whether the country was in a recession or not, anecdotal reports of downturns in key harbingers of a future crash – moderate priced-restaurant takings for example – and the identification of the sub-prime mortgage crash as the result of unscrupulous lenders praying on the poor – and often functionally illiterate – lacking the means to understand what exactly they were getting into.

But when a slide is on, it’s on, and the Bear Stearns crash is a reminder that the sub-prime crisis was not simply an anomaly in an otherwise healthy system – it was a deformation made necessary to keep the anaemic American financial system going a little longer, the equivalent of an adrenalin shot.

Colleagues above and below me will no doubt give a neoclassical account of the crisis which is pretty much like going to a second Chinese herbalist to work out what to do about all these weird herbs making you feel like crap. The very process of accounting for an economy inherent in the neoclassical vision is the problem – it masks all distinction between investment in plant v luxury production, between investment in concrete (not necessarily physical) investments and highly abstract phenomena (such as the ever more ethereal layers of derivatives, instruments, debt bundles) or public infrastructure versus the private property that feeds off the roads and bridges that currently go unbuilt.

The US economy is utterly deformed, and has been for decades. Indeed, in terms of “social plant” – infrastructure and education – it has been running down, relative to its own growth – since the New Deal and WW2 left it with the sole undamaged industrial and infrastructural system in the world. But here the cognitive dissonance thang hits once again.

When in February, Congress gave the economy the “sugar hit” of a cash rebate to spend on Chinese imports, your average punter recognised that this was not a good use of money, when highways were potholed, bridges were falling down and school roofs were caving in. Yet what could be articulated at the public level could not be said at the political level because it would immediately be labelled “socialism” – and the very people who think it’s a good idea would turn against it once it acquired the label.

Of course the government now has no choice but to engage in socialism for the rich – a transfer of public funds to Bear Stearns to keep the private system ticking over a little loner, without of course any government equity in the brand (which would be socialism). Rewarding moral hazard and thus making the system shakier in the long run by letting every shonk know that the government can’t afford to let you fail, but will let you keep whatever profits you make (and cut taxes on it) – so why not really let rip? And when you make your pile, transfer it to a stable currency like the euro, before the dollar falls against it further.

These very concepts are nowhere in the debate on any side. McCain – who, riding into the storm, has dropped in on Iraq to skulk in the Green Zone, or stroll a market with 200 bodyguards and four tanks, and hope nothing big happens – is talking about structural problems of post-industrial economies without really being able to spell out how bad it’s gotten (because who made it so?).

Hillary has taken up John Edwards’s populist rhetoric, talking about a whole range of schemes – foreclosure moratoriums, rate ceilings etc – which, whatever their economic justice, may actually make the big picture worse, and Obama is talking about hope and change. The media as a whole is talking mostly about Obama’s problem with his firebreathing pastor, whose taped rhetoric has a lot of dislikeable playing-the-victim discourse mixed up in its rousing rhetoric, and his increasingly inept distancing from the latter, with the “I wasn’t there when he said that stuff” line, a sort of “I didn’t inhere” (theology gag). And this is against the wider backdrop of the Democrats looking incapable of running their own party in the basic primary process.

The Bear Stearns reports run in parallel to this, third or fourth in the news line-up – like it was a major story, happening to someone else.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey