Freedom Revolves: The Prophet from Texas: How Ron Paul predicted 9/11, Bush's failure in Iraq, Middle East uprisings, the dot-com bubble & 2008's financial collapse

November 30, 2011 10:20 AM ~  
Freedom Revolves: The Prophet from Texas: How Ron Paul predicted 9/11, Bush's failure in Iraq, Middle East uprisings, the dot-com bubble & 2008's financial collapse.

“Everyone makes mistakes,” the aphorism goes. Of course, but some more than others. Unfortunately, in the cable news age, it is often difficult to identify who’s winning the political prognostication game. Conjecture lobbed from the anonymity of online blogs and round-the-clock punditry is forgotten with time, but sadly, so are the accurate predictions of thoughtful commentators. While most of our nation’s leaders would rather forget their casual, daily speculations, time has consistently vindicated one independent voice on the Hill: Texas Congressman Ron Paul.

The good doctor hasn’t just proved right in some general “freedom works” sense. His predictions have been repeatedly, even eerily, reliable. For example in 2000 during at a time when terrorism failed to receive a single mention in Bush’s inaugural address, Paul seems to have foreseen the terrorist attacks that would occur just 17 months later on 9/11. “We are placed in greater danger because of our arrogant policy of bombing nations that do not submit to our wishes,” he said referring to the bombing in Iraq and Serbia.

"This generates the hatred directed towardAmerica, even if at times it seems suppressed," he continued, "and exposes us to a greater threat of terrorism, since this is the only vehicle our victims can use to retaliate against a powerful military state… The cost in terms of liberties lost and the unnecessary exposure to terrorism are difficult to determine, but in time it will become apparent to all of us that foreign interventionism is of no benefit to American citizens." While 9/11 left most Americans confused, Paul remained steady. “Though many Americans have just become aware of how deeply we are involved in this war,”he wrote, “it has been going on for decades. We are obviously seen by the terrorists as an enemy.”

His prediction long-forgotten, the president ignored the congressman’s diagnosis of the causes of the conflict—namely, U.S. Middle East interventions—and instead embarked on epic quest to remake the Middle East. Paul predicted not only Bush’s global war on terror, but also his domestic anti-terrorism laws like the PATRIOT Act, the Military Commissions Act, a rejection ofhabeas corpusand the legalization of torture that quickly followed. As far back as 1999,he foresawthat “whena foreign war comes to our shores in the form of terrorism, we can be sure that our government will explain the need for further sacrifice of personal liberties to win this war against terrorism as well.” After9/11,he repeatedthis prediction to no avail.

“When we retaliate for this horror we have suffered, we must be certain that only the guilty be punished,”he cautionedon September 12, 2001. “More killing of innocent civilians will only serve to flame the fires of war and further jeopardize our security.” While theU.S.has not suffered a terrorist attack since September 11, this is certainly not the result of our nation building effort inAfghanistan. As Paul describedin 2001,Middle East nation building “ironically enough, could serve to further Osama bin Laden's twisted plans for a clash of civilizations between Islam and the West,” forwarding “his hateful plan.”

After our invasion ofIraq,bin Laden confirmedPaul’s view. “DespiteAmericabeing the greatest economic power and possessing the most powerful and up-to-date military arsenal,” he gleefully pointed out, “19 young men were able, by the grace of Allah, the Most High, to change the direction of its compass.”In 2010, Rolling Stone Magazine asked Bin Laden’s son Omar if there would be more attacks.“I don't think so,” he replied. “He doesn't need to. As soon as America went to Afghanistan, his plan worked. He has already won." In other words, we fell right into the trap of which Paul had warned.

In part because Paul realized it was a trap, he also foresaw the devastating consequences of an Iraqi invasion. He warnedof “massive Iraqi civilian casualties" that would result in "more worldwide condemnation.” Boththe civilian casualties(at least 100,000) and condemnation quickly came to fruition with even theUN Secretary callingthe war “illegal” in 2004. In 2002, he also predicted the war would costtwice as muchas the White Houseestimateof a pathetic $50-$60 billion. In 2008,he revisitedhis predictions. “My ‘radical’ predictions were in fact, not ‘radical’ enough,” he explained. “I warned of a draining 30-year occupation. Now, politicians glibly talk about a 100-year occupationas if it is no big deal. On cost…we have already burned through around $550 billion inIraq, at a rate of about $2 billion per week.” Today,the totalstands at over $800 billion.

Furthermore, it came as no surprise to Paul that our invasion failed to turn up any WMD’s as even President Bush has admitted.Addressing the House in 2002,Paul asked,"Is it not true that the reason we did not bomb theSoviet Unionat the height of the Cold War was because we knew they could retaliate? Is it not also true that we are willing to bombIraqnow because we know it cannot retaliate—which just confirms that there isno real threat?"

Paul even discerned the political consequences of the war in 2002, seemingly prescient of the 2006 elections when Democrats retook the House largely on an anti-war message.“There are even good political reasons for not initiating this conflict,”he said. “War is not popular. It may seem popular in the short run, when there appears to be an immediate victory and everyone is gloating, but war is not popular. People get killed, and body bags end up coming back. War is very unpopular, and it is not the politically smart thing to do.

Paul also thoughtthatRussiamight use the Iraq War as an excuse to invadeGeorgia, a forecast realized in 2008.He even predictedthe current uprisings in the Middle East writing in April, 2002 that “Peace, of sorts, will come to theMiddle East, but will be short-lived… Some of our moderate Arab allies will be overthrown by Islamic fundamentalists.” While we do not know who exactly has overthrown/is overthrowing Mubarak and Gaddafi, we do know that both of them were our “Arab allies.”

The doctor has not simply been on a recent hot streak, either.In 1983,he advocatedclosing our overseas embassies because they “helped to precipitate theIranhostage crisis and possibly even in Lebanon,” referring to the terrorist attack on our embassy there.While not a prediction exactly, it took less than a year for the prudence of his position to be demonstrated when terrorists struck the Kuwaiti embassy in December of 1983 and Lebanese Embassy again in 1984.Severalrecent embassy attacks continue to impress the importance of his position.

Nor have the congressman’s forecasts been limited to foreign policy.In the 1980s,he predictedthe savings and loan crisis andviolence from Ronald Reagan'sexpanding drug war, and although it may be fashionable in the GOP today to oppose bailouts, it was Ron Paul in 1979who sawthat the Chrysler bailout was “merelythe prototype, the harbinger, of crises to come.”It’s hard to disagree in light of the recent bailouts it and GM received in 2008 and 2009.

In the 1990s, he was alone in Congress prophesying the destruction of dot-com bubble.In the 10 years that Greenspan has headed the Fed, $2 trillion of new credit has been created. This generous dose of Fed credit has fueled the 5-year superboom on Wall Street,”he warned.“Government officials continue to try to reassure the American people that there is no inflation to worry about.Stock prices, though, are greatly inflated...and probably represent the greatest financial bubble known in history.”When the crash came two years later in 2000, Paul’s warnings were forgotten, and Greenspan was handed the reigns of the recovery.

Greenspan’s response to the dot-com crash—the creation of more credit—led directly to another even larger crash the following decade.As early as 2002, Paul and hisAustrian economist friendswere describing our distorted housing market with what turned out to be remarkable accuracy. “Like all artificially-created bubbles, the boom in housing prices cannot last forever,”he warned.“When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing.”

Even in 1998,Paul was warningthatthe “moral hazard created by federal deposit insurance” could create“systemic risk posed by any future episode that might involve the imprudent use of derivatives and excessive amounts of leverage,” a near dead on description of the 2008 crash. In 2003,Paul reiteratedhis concerns about the housing market, explaining the inevitable collapse of Fannie and Freddie. “The special privileges of Fannie, Freddie, and HLBB have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing… Perhaps the Federal Reserve can stave off the day of reckoning by purchasing GSE [Government Sponsored Enterprise] debt and pumping liquidity into the housing market, but this cannot hold off the inevitable drop in the housing market forever. In fact, postponing the necessary but painful market corrections will only deepen the inevitable fall. The more people invested in the market, the greater the effects across the economy when the bubble bursts.” He was right; he wassoright, but again, like with the war on terrorism, the ones most complicit in creating the problem were again in charge of finding the solution.

Paul knew that this would be the case, however, and also predicted the outcome: our current debt crisis. Writing in 2002,he expectedthat “a major economic downturn” “will decimate U.S. Federal Government finances, with exploding deficits and uncontrolled spending. Federal Reserve policy will continue at an expanding rate, with massive credit expansion... The Congress and the President will shift radically toward expanding the size and scope of the Federal Government. This will satisfy both the liberals and the conservatives. Military and police powers will grow, satisfying the conservatives. The welfare state, both domestic and international, will expand, satisfying the liberals. Both sides will endorse military adventurism overseas.” President Obama with missiles and bombs rather emphatically confirmed that last prediction in Libyalast week.

Part of his independence is Paul’s firm belief that both parties are corrupted and do not deliver on their promises.In 2009, for example, as the debate about health care reform heated up,he said, “Whether they are Republicans or Democrats, they are going to support the corporations.Even in medical care reform, who do you think is going to come out well on this?Corporations, drug companies, and insurance companies, they are being protected.Some conservatives accuse Obama of wanting socialized medicine.I don’t think so.I think he wants to perpetuate corporatism.”Not only was he right that Obama would strikea compromisewith both the health insurance and pharmaceutical industries later that year, but he was also right before the election when he saidthat Obama’s promise to remove troops fromIraqwould turn out to be “pure political talk.”

Ron Paul’s uncanny ability to predict the future has people calling him amodern day prophet.Paul, however, is no prophet. He just has the intelligence to look dispassionately at the facts and the courage to speak his mind, even when Federal Reserve economistscall hima “pinhead” and his fellow Republican presidential candidateslaugh at himon the debate stage. Paul saw the danger of our interventionist foreign policy, not by magic, but by simply looking at what Osama bin Laden has said about his motivations He foresaw the housing market collapse and savings and loan crisis through a basic understanding of economic laws. Both predictions relied on his belief that government cannot centrally plan the world. “Central planning makes promises it cannot possiblykeep,”he wrotein 2008. “Freedom empowers the individual. Central planning dehumanizes the masses. There may always be a struggle for power and government, but for this reason, freedom will always win out in the end.” Let’s hope so, Dr. Paul.