The Doha round of trade talks collapsed and the US press put the blame on China and India. An article in Sunday's New York Times has the following words. 'So how does one explain the fact that when the latest round of global trade negotiations blew up for good last week, ending seven years of talks to lower tariffs and free up trade around the world, it was China with a hand on the detonator?' As I have said before, if you shout lies loudly and often, there will be enough stupid gullible idiots who will believe you and swear that those lies are the only unvarnished truth. The real truth is that the WTO like other Trojan horses of the developed world (IMF and World Bank) have been crowbars used to forcibly pry open the vaults of the remaining treasures left in the developing world after the prior plunder by colonialism under the camouflage of bringing civilization and religion to the still idiotic heathens.

Since downright dictatorial rule, alignment of foreign policy, neutering of independent deterrence is only possible for a few countries with ignorant puppet prime ministers (like India) who praise the benefits of British rule, the rest of the world has to be ensnared with more finesse. The earlier ploy was the Washington Consensus, the previous bestseller, 'Confessions of an Economic Hit Man' has detailed. First you make large loans to countries ruled by corrupt despots, then convince them to build mega projects at inflated prices. Then you entice them to open up their financial markets and eliminate capital flow restrictions.

Their stock markets soar as the Western financial institutions' hot money pours in. Close to the peak the foreign investors sell out, take profits and go short the market. The countries cannot pay their debts and the stock market collapses. The foreign investors make a second killing by covering their shorts. The country is in bad trouble and its currency falls. The IMF and World Bank step in with loans on the condition that food and fuel subsidies to the poor must be eliminated, trade barriers and tariffs removed and various sectors opened up to foreign participation and control. The banks, insurance companies and manufacturers selling at a discount are bought up by the rich foreigners who make their third and final killing. This was done to Thailand, Malaysia, South Korea. Russia in the late nineties and Latin America a few decades earlier. That is why the foolish Asians accumulated large dollar reserves to avoid the prior debacle in future. Now they are going to find that the fiat paper currency reserves are fool's gold.

It has happened partially to India recently. India was earlier coerced due to the ignorance and idiocy of its WTO negotiators to eliminate all restrictions on imports, reduce tariffs, privatize its state owned companies and liberalize investment in the financial and telecom sectors without the West opening its heavily subsidized agriculture sector. India resisted opening its agriculture sector initially but foolishly consented to severely reduce its buffer stocks of grains. Mexico fell for the free trade trap and opened its agriculture for free trade. Subsidized US corn flooded the Mexican market driving Mexican farmers to destitution and joining drug gangs or illegally migrating to the US to survive. Subsidized US cotton led to suicides by farmers in Andhra and Maharashtra.

Soon thereafter the US passed a mandatory ethanol addition to gasoline with government subsidy. Speculators, hedge fund managers and savvy traders bought grain, metals and oil and drove up their prices sky high to light the raging fires of inflation all over the world. The US government knew it would happen and also knew that as a food exporter it would benefit. What came as a surprise to the US is that its former kleptocrat tyrant prot'g's in the oil rich Middle East refused to open the oil spigots. Thus was the US hoisted by its own petard.

This time the devious EU and US tried to totally pry open the agriculture markets of India and China while reducing their heavy agriculture subsidies slightly each year for several years. China refused to be bullied as it is the moneylender to the US and the spineless doormat UPA government of India desperately hoping to avoid decimation in the coming national elections also protested while skulking behind the protective towering girth of China. Yet one rarely will hear the real truth about why the Doha round failed. The duplicity and chicanery of the EU and US will not even be mentioned while China and India are portrayed as saboteurs, practitioners of self-destructive policies or just plain ornery and stupid. The media will lie, exaggerate, distort and obfuscate, as they do by crowing the atrocities of Darfur and Srebernica, while sweeping the same atrocities in Iraq and Abu Ghraib under the rug.

The unintended consequences of bailing out banks, investment banks, Fannie and Freddie are that the national debt limit is now over ten trillion dollars and if the GSE debt is taken over it will go to fifteen trillion dollars with other unfunded liabilities of 100 trillion dollars and the annual deficits will additionally rise over a trillion dollars each year. The supply shortage, increased demand, speculators, savvy investors and for once rational thieving despots of the oil rich Middle East, who have skyrocketed the oil price to over a hundred and twenty dollars inadvertently ballooned the US trade, current account and budget deficits and sank the dollar. Soon no one will want to accept the fiat money to fund the deficit and interest rates will have to rise sharply to keep the dollar from sinking further.

The US now funds its deficit with short term debt and this is why the Fed keeps the interest rates low. Another reason is to salvage the financial institutions and keep the consumer spending dependent economy afloat. If other countries stop lending it money at interest rates less than inflation, the rates will have to shoot up. If the rates remain low inflation will rise sharply, consumer spending will collapse just like housing, credit card debt, home equity and car loans. At 7% the fifteen trillion dollar debt will need annual interest payments of one trillion dollars, leaving little or nothing for anything besides entitlements and defense. Federal income tax receipts will fall due to reduced employment income and capital gains due to falling markets. State tax revenues will fall due to reduced income sales and real estate tax receipts as is happening in California, New York etc.

It is only a matter of weeks or months, if not sooner, before the US stock market tanks and gold and silver rise sharply. Oil may or may not go up as usage falls due to a severe recession. The other currencies may or may not rise as they can be manipulated by their central banks. Home prices will keep falling due to lack of mortgage finance, ability to afford them and higher interest rates and add fuel to the fire. The rising cost of transportation will hamper global outsourcing. The era of importing components from distant places for assembly in another country with cheap wages will wither away. Smart China is already abandoning the manufacture of cheap goods like toys, Christmas decorations etc. and quickly moving up the value chain to specialized engineering exports. Poor countries enticed to plant flowers instead of grain will find transportation costs prohibitive and their expensive flowers will find no buyers, while their citizens starve for lack of home grown food. Manufacturing will return to the US as is already happening in furniture and will happen in appliances and other low profit margin, bulky goods.