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Fiddling While the Dollar Drops

Discussion in 'BBS Hangout: Debate & Discussion' started by Zion, Dec 6, 2003.

  1. bnb

    bnb Member

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    I have no idea of the context.

    And there are sound positions on why a weaker dollar is good. (wholesale pay cuts for everybody.:D )

    But, please, Texx, tell me you find the quote at least a little bit funny.
     
  2. rimrocker

    rimrocker Member

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    A weak dollar is good for some and bad for others. I think what folks are troubled about is the instability of the dollar and the fact that the Administration doesn't seem to care. As the article points out, there doesn't appear to be a lot of faith out there that the policies of this administration will stabilize the value. That and the prospect of interest rates going up.
     
  3. SamFisher

    SamFisher Member

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    I see, so this is a slick game of international doublespeak by smooth talking GWB.

    Thanks for the explanation, for a moment there I was beginning to think maybe he was a bit unsophisticated in certain areas.
     
  4. B-Bob

    B-Bob "94-year-old self-described dreamer"
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    That's what is so funny to me. bigtexxx, does it really not bother you when our president says things like:

    "My answer to that question about the dollar is that this government is for a strong dollar, and that the dollar's value ought to be set by the market and by the conditions inherent in our respective economies. And our economy is very strong and is getting stronger. But the policy, the stated policy--and not only the stated policy, but the strong belief of this administration is that we have a strong dollar."

    That makes no sense. Either the stated policy is to enforce a strong dollar, or the stated policy is that the value should be set by the market. Which is it? And before you say that's just a (long) quotation taken out of context, you surely have to admit that he always rambles in a semi-coherent fashion if he doesn't have a script. I'm not trying to bash him; I just really want to know if this kind of diction disturbs you.
     
  5. pippendagimp

    pippendagimp Member

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    I'm afraid you are mistaken. A further weakening dollar would be disastrous for the US economy. Because as foreigners start getting pissed with the diminishing value of their US dollar holdings, they will jump ship towards Euros/Yen/Sterling Pound/Australian Dollar/Yuan/precious metals or what have you. In short, you will hear a giant sucking sound.

    This scenario would end the US dollar's 30 year run as the world's reserve currency, a title that has thus far allowed the US federal reserve to print money out of thin air on a regular basis and finance the greatest debt economy and budget deficits in the history of civilization.

    You do not want the US dollar to keep falling.
     
  6. Woofer

    Woofer Member

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    Op-Ed/Analysis

    http://www.washingtonpost.com/wp-dyn/articles/A57440-2004Jan5.html



    washingtonpost.com > Opinion > Columnists > David Ignatius



    The Asian Dollar Mystery

    By David Ignatius
    Tuesday, January 6, 2004; Page A17


    The new year begins with a financial mystery: Why have China and Japan continued to accumulate large dollar surpluses -- financing the U.S. trade deficit in the process -- even as the value of those dollars has continued to plummet?



    The Asian dollar hoard certainly looks like a stupid investment. The dollar, after all, fell about 20 percent against the euro last year because of worries about U.S. trade and fiscal imbalances. And many analysts (me included) have warned that a further sharp slide is likely this year as China and Japan begin to dump their surplus greenbacks.

    Among the leading worriers is the International Monetary Fund, which warned in its latest "World Economic Outlook" in September that a further decline in the U.S. currency is likely and that "a disorderly adjustment -- or overshooting -- remains an important risk."

    But let's consider a contrarian answer to our New Year's financial puzzle: Perhaps the Asian nations are pursuing an entirely rational strategy -- one that seeks to maximize domestic employment rather than financial return. If that's so, then financial traders can stop fretting so much and applaud a dollar that's playing much the same stabilizing role it did 50 years ago, during the golden days of Bretton Woods.

    This counterargument was presented to an IMF forum two months ago by Deutsche Bank economist Peter Garber. If an abstruse economic theory can be said to be generating "buzz," that has happened with Garber's work.

    Garber argues that Asia's seemingly irrational accumulation of surplus dollars is the inevitable consequence of its export-led development strategy. To increase domestic employment, the Asians keep their exchange rates artificially low and sell cheap goods to the United States -- in the process accumulating those ever-larger surpluses of dollars.

    "The fundamental global imbalance is not in the exchange rate," Garber told the IMF forum in November. "The fundamental global imbalance is in the enormous excess supply of labor in Asia now waiting to enter the modern global economy."

    Garber estimates that there are 200 million underemployed Chinese who must be integrated into the global economy over the next 20 years. "This is an entire continent worth of people, a new labor force equivalent to the labor force of the EU or North America," he explains. "The speed of employment of this group is what will in the end determine the real exchange rate."

    Garber likens the global labor imbalance to the collision of two previously independent planets -- one capitalist and one socialist. "Suddenly they were pushed together to form one large market," he says. The best way to restore equilibrium is for the former socialist economies to pursue export-led growth -- and for the United States to act as a buffer and absorb the world's exports.

    If this all sounds a bit like the world after 1945, that's the point. What's really going on is a revival of the Bretton Woods financial system that created the IMF, Garber and two other economists noted in a paper that was published in September by the National Bureau of Economic Research.

    "In the Bretton Woods system of the 1950s, the U.S. was the center region with essentially uncontrolled capital and goods markets," they write. That, in effect, is the sort of world that has now returned, contend Garber and his fellow authors, Michael P. Dooley and David Folkerts-Landau.

    Without realizing it, the authors argue, we have returned to a fixed-exchange-rate world, with China and other Asian developing countries keeping their currencies artificially low by pegging them to a falling dollar. The Asians today are like the Europeans after World War II -- using cheap exports to the United States to power their economic revival. And the wonder of it is that this neo-Bretton Woods system works as well as the old one did.

    "In spite of the growing U.S. deficits, this system has been stable and sustainable," Garber and his co-authors argue. They cite the 1965 comment of French analyst Jacques Rueff about why the United States prospered under the old Bretton Woods regime despite its big trade deficits: "If I had an agreement with my tailor that whatever money I pay him returns to me the very same day as a loan, I would have no objection at all to ordering more suits from him."

    To be sure, this perpetual motion machine can't continue forever. At some point, those 200 million Chinese will find jobs, and China will graduate to parity with the United States. At that point, we'll have a real dollar crisis.

    Along the way, we're sure to have more political protests from American workers who fear their jobs are being sacrificed in this neo-Bretton Woods world. But for now, perhaps Wall Street should be less gloomy about the dollar.

    davidignatius@washpost.com
     
  7. pippendagimp

    pippendagimp Member

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    Woofer, that is an excellent article and it echoes what many have been saying for a few months now - that old Communist party bosses in China are simply buying time right now by building up their domestic economy and reducing unemployment. In essence, they are willing to accept phony US dollars in exchange for Chinese manufactured goods in order to build confidence in their leadership and transition to a somewhat capitalistic economy. The problem for us is, our jobs are being exported there by the thousands and at the same time we basically owe them a ton in promisary notes. IMO, this makes for a very shaky position on our part. They can pull the rug out from under us at any time. Gotta give it up to the Chinese government though. They have shown up as a very wise and patience economic adversary.
     
  8. Deckard

    Deckard Blade Runner
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    You appear to have missed the "sticky" at the top of the D&D forum. I suggest you read it. Then, after you've done that, you might consider a course in manners... my daughter has learned a great deal during her academic career. She's starting her second semester in second grade. You could learn a lot from her. Not that I would ever allow you to meet, but perhaps you could "sit in" at a local school.

    Good luck.
     
  9. DaDakota

    DaDakota Balance wins
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    I heard that the drop was happening primarily because China was dropping it's level of dollars and replacing it with the Euro, and they will be done doing this sometime this year and the dollar will rebound.

    DD
     
  10. rimrocker

    rimrocker Member

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    Oil Hits New Post-Iraq War High

    Tuesday, January 06, 2004



    LONDON — World oil prices rose sharply again on Tuesday, trading at a post-Iraq war peak on worries that a cold snap in the United States will further bite into U.S. crude inventories that are already near five-year lows.

    Also sustaining oil prices was further weakness of the dollar against other leading currencies, encouraging speculators to push cash into oil and other commodities.

    U.S. crude price by 9:30 a.m. EST was up 57 cents at $34.35 a barrel, its highest since just before the invasion of Iraq, sustaining the strength that last year pushed prices to the highest annual average in more than two decades. London Brent crude rose 50 cents to $31.39 a barrel.

    "We are seeing prices now that we would normally see only during wars or in times of extreme political unrest," said Frederic Lasserre, energy analyst at Societe Generale (search) in Paris.

    "The driver clearly has been U.S. heating oil, which has outperformed the rest of the complex because of low inventories and the forecasts for colder weather."

    U.S. forecaster Meteorlogix (search) predicted that the U.S. Northeast, the world's biggest heating oil market, would see a blast of Arctic air sweeping in over the next few days. It forecast temperatures in the region eight to 15 degrees Fahrenheit below normal from Wednesday.

    Oil dealers fear this will spark fresh demand at a time when inventories of crude, heating oil and natural gas are already low. The U.S. Energy Information Administration (EIA) (search) said last week that crude inventories fell by 3.8 million barrels to stand 27 million barrels under the five-year average.

    In the EIA's next weekly report on Wednesday analysts polled by Reuters expected the data to show a 500,000-barrel fall in crude stocks — which if born out would be the eighth time in the past 10 weeks crude inventories have fallen.

    While oil and products supplies remain low, there is no sign that the Organization of the Petroleum Exporting Countries might consider providing more oil to world markets.

    Ministers have said high prices are justified by the slide in the value of the U.S. dollar, the currency of international oil trade, which has cut cartel member countries' purchasing power in other currencies.

    "Commodities as a whole are surging in price, fueled by the weak dollar, rising equities and funds playing the global recovery theme by rushing more assets into this sphere," said Edward Meir of brokers Man Financial.


    OPEC's (search) official target for a reference basket of seven crudes is a band from $22 to $28 a barrel but, because of dollar weakness, the group no longer appears concerned about prices rising above the range.

    A cartel official said on Monday no extra output as likely even though its reference price had been above $28 for more than 20 days, which under informal OPEC guidelines can trigger an increase in production.

    OPEC next meets on February 10 and ministers have warned that the seasonal second quarter downturn in demand could prompt the cartel to actually cut output.
     
  11. B-Bob

    B-Bob "94-year-old self-described dreamer"
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    bigtexxx(smalltaxxx), I don't know much about finance at all. I'm interested in your further thoughts, especially in light of pippendagimp's interesting comments. I'm serious.
     
  12. Woofer

    Woofer Member

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    On the other hand, hey we prop up our domestic industries cause stuff from overseas costs too much!


    http://www.christiansciencemonitor.com/2004/0109/p02s01-usec.html



    USA > Economy
    from the January 09, 2004 edition

    Weak dollar's impact on Wall Street, consumers

    It's helping US exports, but making travel abroad and imported goods more expensive.

    By Ron Scherer | Staff writer of The Christian Science Monitor

    NEW YORK – The United States has a strong military and its economy is growing faster than most of its trading partners. But, its currency, the greenback, is getting mauled.
    Over the past year, the dollar is down almost 22 percent compared to the euro and 12 percent versus the Japanese yen. Economists are most concerned about the rate of decline - the dollar started the New Year by dropping a full percent.


    Such a steep drop, rather than a gradual decline, could prompt global investors to lose their faith in US financial markets. This could make financing the nation's the budget deficit more costly, and short circuit the robust rally on Wall Street.

    It might also cause thousands of imports - from Dutch cheese to Japanese automobiles - to move out of many consumers' price range.

    "There is a concern the dollar could fall completely out of bed," says Jay Bryson, an international economist at Wachovia Corporation in Charlotte.

    There is no indication yet that the falling dollar is causing any serious problems. The stock market has risen nearly 25 percent over the past year and has started the new year off on an uptrend.

    Bond-market analysts don't see any signs that foreign investors are jettisoning US bonds. And big holders of US dollars, such as members of OPEC, are grumbling but not demanding payment in other currencies.

    US officials maintain there is no need for alarm. On Wednesday, US Treasury Secretary John Snow reiterated that the US policy was for a strong dollar. "A strong dollar is in US interest," he told a business group. Recently, Federal Reserve governor Ben Bernanke said he was not worried about the falling dollar since it was less severe against a wider basket of currencies, and the falling dollar had not rung any inflation alarm bells.

    But not everyone is as optimistic. On Wednesday, the International Monetary Fund (IMF) issued a report that predicted a further decline in the value of the dollar because of the large trade deficit.

    "Although the dollar's adjustment could occur gradually over an extended period, the possible global risks of a disorderly exchange rate adjustment, especially to financial markets, cannot be ignored," said the report.

    The IMF is not alone. Many in the exchange markets expect the dollar to continue to fall. In a survey released Wednesday, Reuters found that many currency strategists expect the euro to strengthen above the $1.30 level compared to about $1.27 today.

    However, the falling dollar is not all bad, says economist Mickey Levy of Bank of America Securities. "It won't materially affect the rate of economic growth," he says, "but it will affect the composition - it will help exporters, but hurt consumers."

    Consumers are already starting to pay more. That's already starting to happen in the steel industry, where a combination of the currency and high ocean freight rates, are making it less profitable to ship to the US. This has given US producers some cover. Last week many of them announced price hikes of up to 20 percent on steel products.

    "We are hearing some say it has become prohibitively expensive to ship steel to the US," says David Phelps, president of the American Institute for International Steel, Inc.

    Yet other importers are absorbing the added costs in order to shield consumers. That's what's happening at New York's Fairway Markets, which imports from about 80 different small farmers in Europe. "We're losing a penny everyday," says Steven Jenkins, a senior manager at the store.

    So far, Mr. Jenkins says he hasn't seen any significant price increases from exporters. "There are rivers of sheep's milk in Greece, Bulgaria, France, and they have to move it so they don't dare raise prices," he says.

    But some importers are preparing to make adjustments. That's the case with Dan Slott, who imports and raises Icelandic horses, which already have a hefty price tag of $20,000 to $30,000 per animal.

    Now, Mr. Slott anticipates raising prices about 15 percent to make up for the weaker dollar.

    "Some will pay it, others won't," he says from Ancramdale, New York. "Basically, we are talking lower sales unless we get a really strong economy, which is possible."
     
  13. Zion

    Zion Member

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    A little humour and a somewhat related article.




    How Will Bush Deal With the Deficits? Connecting the Dots to Iraq
    by Robert Freeman

    Republican hearts are all aflutter over one quarter of strong GDP numbers. But the 8.2% third quarter growth was purchased on credit-the $374 billion budget deficit that was the largest in the country's history. All indications are that next year's deficit will be even larger, exceeding half a trillion dollars.

    There is simply no magic to "growth" under these conditions. Any idiot with a hand full of credit cards charged to the next generation's children can gin up the short term illusion of prosperity. Until, that is, the bills come due.

    George W. Bush inherited a $127 billion fiscal surplus but ran through all of that and more in his first year. He has turned a $5.6 trillion 10 year forecast surplus into a $3+ trillion forecast loss-an almost unimaginable reversal of $9 trillion in only three years. And this, in an economy that has grown for ten of the last twelve quarters.

    The result of this almost psychotic profligacy, according to the Congressional Budget Office, will be a national debt of $14 trillion in 10 years. Interest payments alone will approach a trillion dollars a year and will exceed spending for all discretionary federal programs combined. Even more surreal, a study commissioned by former Treasury Secretary Paul O'Neil indicated that the 50 year forecast U.S. deficit would reach $44 trillion. The study was suppressed. O'Neil was fired.

    How does a nation deal with debts that so greatly outrun its ability to pay? There are basically only five strategies. All are unappealing. Most are calamitous.

    The most difficult strategy is, not surprisingly, the honest one: raise taxes and pay your bills. This is what King George III did following the Seven Years War with France in 1763. England had quadrupled its national debt in fighting the War and needed money to pay it off. It turned to the richest people in the realm, the Colonists, and began taxing paper, glass, paint, lead, and, of course, tea. The result, as we know, was the American Revolution.

    It was the same strategy-raising taxes on the rich-that Louis XVI attempted in 1789. The French national debt had grown 10 fold under the pharoic opulence of Louis's grandfather, Louis XIV. Louis called the nobility and the clergy together and told them they would have to ante up. They, after all, had been exempted from taxes by Louis XIV in order to buy their complicity in his autocratic reign. Indignant, they refused to pay, precipitating the French Revolution, the most explosive upheaval to established government in the last thousand years.

    A second strategy to deal with excessive debts is simply to print money. This is what Weimar Germany did to address the crushing debt imposed by the vengeful Treaty of Versailles. Before it was over the government had inflated the money supply by over a trillion times, leading some to comment that it was a waste of ink to put it onto paper worth so much less than the ink itself. The German middle class, whose assets were held at fixed amounts in government pensions, was destroyed. The collapse gave direct rise to Adolph Hitler.

    A third strategy for dealing with onerous national debt is to sell off national assets. This is one of the first strategies the IMF imposes on third world countries that have gotten behind in their payments to western banks. Government-run industries, from telecommunications to water systems, are "privatized" and the country's natural resources are sold off to the highest foreign bidder. This is what Great Britain was forced to do in the aftermath of World War II.

    Two world wars in only 30 years had ravaged the British economy and the pound sterling. Facing collapse at home (and revolution abroad), the government surrendered almost all of its colonies, from India and Pakistan to Nigeria, South Africa, Zambia and Zimbabwe. These had been among the greatest wealth-producing properties of modern times, the ones that had made the British Empire what it was. Their loss left Britain a second-rate power with only misty memories of its once imperial greatness.

    A fourth strategy for dealing with excessive debt is to just repudiate it. This was used for centuries in the early days of the modern world and was revived two years ago by Argentina which brazenly refused to pay some $110 billion in debts it had accumulated over prior decades. More ominously, it was this strategy that was used by the Bolsheviks after they took power in the Russian Revolution.

    The new communist government refused to be bound by the debts of the overthrown Romanovs. But the French had loaned heavily to the Russian government for decades before World War I and now were left in a lurch. A cascading series of defaults from one bank to another caused a liquidity crisis on the continent, ultimately setting off the Great Depression.

    Finally, there is plunder. When a nation's debt load becomes so huge it cannot plausibly reassure creditors regarding repayment, it must seek some source of wealth, any source, to keep the borrowed money flowing. This, naked predation, is what kept the Roman Empire alive for the last two hundred years of its existence. It is the strategy adopted by the Spanish Empire-silver and gold from America-and which eventually destroyed the vitality of its own merchant and civil servant classes.

    Government economists are not unawares of these imperatives. So, which of the five above strategies has the U.S. adopted to deal with its exploding debt problem?

    Clearly, the Bush administration will not adopt the first strategy, raising taxes. In fact, as a result of Bush's mammoth tax giveaways, federal receipts as a percentage of GDP are at 16%, their lowest level since the 1950s. Raising taxes, or even simply reversing prior tax cuts, would betray the very purpose for which the rich installed Bush in the first place. And just as clearly, Bush cannot cut back on his prodigious spending-at least not yet-for that is the basis on which he has bought the short-term illusion of prosperity mentioned above.

    Nor will the government resort to inflation, the second strategy. As we know from the German experience, inflation erodes the value of fixed income payments. The current U.S. debt, now in excess of $7 trillion, is held primarily by the very wealthiest of the world's citizens. They clip some $200 billion a year in coupons on this debt. If they were to see the U.S. government beginning to inflate, they would quickly sell off these instruments, precipitating a massive collapse. Alan Greenspan's quasi-religious stand against inflation can be understood first as his defense of the pecuniary prerogatives of this global investor class and second as the requisite fix to keep the funding flowing.

    What about selling off assets, the third strategy? Now the story starts to get more interesting. As the dollar declines in value relative to foreign currencies, U.S. assets, denominated in dollars, become relatively cheaper. It costs foreigners less and less to buy more and more of the U.S. economy at fire sale prices. Some purchases will go into U.S. treasuries. Some will find their way into the stock market. Some will go into passive assets such as real estate. And some will go to buy active ownership and management of U.S. companies.

    This is the dynamic that led the Japanese during the Supply Side-inspired dollar collapse of the 1980s to buy up Rockefeller Center, Firestone Tire, Pebble Beach, 7-Eleven, and countless other icons of America's commercial and cultural patrimony. It has the virtue (or vice, depending on your perspective) of appearing to be the result of "market forces". Government borrowing is settled by foreigners redeeming dollar-based IOUs in U.S. markets, denuding the private sphere of its productive assets and putting them into foreign hands. This is the reason Toyota is the biggest employer in Alabama and Honda is the second biggest employer in Indiana.

    The fourth strategy, repudiation of debts, is more immediate than most American citizens realize. A significant portion of those $44 trillion future shortfalls come from under-funding of Medicare and Social Security. The recent Medicare bill is the first step toward official privatization. This will be accomplished by turning the program and its recipients over to the renowned stewardship of the insurance, health care and pharmaceutical industries and getting the liabilities off the government's books. Similarly, if Bush is elected in 2004, one of his first priorities will be a comparable privatization of Social Security. Not only will it prove an incalculable boon to the securities industry, it will substantially decrease the government's obligations to the Baby Boomers.

    In terms of how a nation deals with excessive debt, the logic of these repudiation schemes is impeccable: it is far wiser for a country to repudiate the debts it holds to its own people-especially if they are not politically powerful-than it is to alienate its wealthy domestic and international underwriters. But asset sales and repudiation alone will not suffice to keep the funding flowing.

    Already international investors are beginning to bail out of dollars. In 2003, the dollar was down 19% against the Euro with the fall accelerating since November. The dollar is now at its lowest level since the Euro was created in 1991. Even more telling is that international capital inflows to the U.S. dropped to $5 billion in August, down from $96 billion the year before. Nobody wants to hold dollars. But if the money flow stops, the U.S. economy collapses.

    This is what happened in 1987. The massive Supply Side deficits of Ronald Reagan required the U.S. to borrow furiously from abroad. For a while the Japanese were our bankers, handily recycling their substantial trade surpluses into U.S. treasuries. But the Japanese soon realized they were being played for suckers. While they were making 5% returns on their treasuries, they were losing 15% on dollar depreciation. They stopped buying treasuries in October and the ensuing loss of liquidity caused the stock market to implode, the worst collapse since the Great Depression.

    So what to do?

    Finally, then, we come to the most sensitive and incendiary debt management strategy of all. Plunder. The purported rationale for the U.S. invasion of Iraq-that it possessed Weapons of Mass Destruction-is now known to have been a wholesale fiction. Not a single one of the administration's dozens of claims of WMD possession or imminent threat have borne the scrutiny of the most massive inspection regime in history. Of all the world's people, only the thuggishly propagandized American people ever believed (or still believe) this to have been the real purpose for the War. Not even Bush himself pretends otherwise anymore.

    And the ex post facto rationale-that we are bringing Democracy to Iraq-is equally fictive given Paul Bremer's statement that the U.S. will not allow a Shi'ite government to take control there. Shi'ites, as Bremer well knows, make up 60% of Iraq's population. And no, it's not links to terror. And no, it's not connections to 9-11. What then? A simple thought experiment demonstrates the real truth about the U.S. invasion: would the U.S. have carried it out if, instead of sitting on the world's second largest supply of oil, Iraq was the world's second largest producer of, say, pomegranates? Or figs? Only the most pathologically Republican of cynics can even pretend to give this question a thought.

    Control of oil gives the U.S. control of the industrial world and effective control of its own strategic competitors, Europe and China. This is the same strategy that made Alexander the Great so Great. As he entered new territories in pursuit of conquest, the first thing Alexander always did was capture and fortify the local water well. Within a day, two at the most, resistance collapsed. Oil is the water of today. It is the most widely traded commodity in the world. It is the one commodity without which modern civilization cannot function.

    Control of oil allows the U.S. to extract all of the surplus wealth created by its rivals, ensuring that they remain forever subservient. This explains why Europe and China were so vociferous in their denunciation of the War. It also ensures that the U.S. has a universally desired, fungible, liquid commodity to collateralize its massive debts. Iraqi oil is a magical two-fer: it solves the U.S.'s primary strategic and economic challenges in a single fell swoop. But its capture can only be justified by deceit and accomplished through plunder.

    The problem for most of Bush's Democratic challengers is that they know the above situation to be true. That is why-Howard Dean and Dennis Kucinich excepted-they went so sheepishly along with Bush's notoriously transparent casus belli in Iraq. They are left with petty quibbling about the adequacy of post-invasion planning. It is why they raised hardly a peep of protest over the ramming through of the Medicare package. It is why they bleat only procedural protests about the incivility of discourse as the three-quarters-of-a-century legacy of the New Deal is being peremptorily dismantled.

    There was a time in the late 1990s when it looked as if the U.S. might be able to regain control of its fiscal destiny. Bill Clinton reversed the suicidal predations of Reagan's Supply Side Economics and produced the longest sustained economic expansion in U.S. history. One of the byproducts of that expansion was a series of budgetary surpluses that allowed the government to begin paying down the crippling debts run up under Reagan and Bush I.

    But that halcyon era is already just a memory. Bush's massive debts are the nation's new fiscal master. And they have been run up solely to further enrich the already extremely wealthy the expense of the still desperately needy. The staggering costs of servicing these debts will drive interest rates into the stratosphere, destroying all possibilities of rebuilding a competitive economic infrastructure. The conservative British business magazine, The Economist, said it most presciently: "Long after Dubya is back on his ranch, Americans will be trying to recover from the mess he created."

    It is breathtaking to imagine it could have happened so quickly but all federal policy, indeed, decisions concerning war and the very character of the nation itself, will now be defined by the stark new fact of our collective indenture

    http://www.commondreams.org/views04/0105-08.htm
     

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