View Single Post
Old 01-11-2006, 07:06 PM   #1 (permalink)
Elphaba
Deja Moo
 
Elphaba's Avatar
 
Location: Olympic Peninsula, WA
The State of Our Economy

I have been seeing references to the Stiglitz and Bilmes economic report for the last few weeks. Couple their report with China's intention to reevaluate their investment in the dollar, and I believe our continued deficit spending will bring us to an economic meltdown.

I don't care for the hyperbolic expression in this article, but I believe there are valid concerns to be found.


Link

Quote:
Bush's Con Jobs: Will the US Need an IMF Bail Out?
By Paul Craig Roberts
Counterpunch.org

Tuesday 10 January 2006

President George W. Bush has destroyed America's economy along with America's reputation as a truthful, compassionate, peace-loving nation that values civil liberties and human rights.

Nobel prize-winning economist Joseph Stiglitz and Harvard University budget expert Linda Bilmes have calculated the cost to Americans of Bush's Iraq war to be between one and two trillion dollars. This figure is 5 to 10 times higher than the $200 billion that Bush's economic adviser, Larry Lindsey, estimated. Lindsey was fired by Bush, because Lindsey's estimate was three times higher than the $70 billion figure that the Bush administration used to mislead Congress and the American voters about the burden of the war. You can't work in the Bush administration unless you are willing to lie for dub-ya.

Americans need to ask themselves if the White House is in competent hands when a $70 billion war becomes a $2 trillion war. Bush sold his war by understating its cost by a factor of 28.57. Any financial officer any where in the world whose project was 2,857 percent over budget would instantly be fired for utter incompetence.

Bush's war cost almost 30 times more than he said it would because the moronic neoconservatives that he stupidly appointed to policy positions told him the invasion would be a cakewalk. Neocons promised minimal US casualties. Iraq already has cost 2,200 dead Americans and 16,000 seriously wounded-and Bush's war is not over yet. The cost of lifetime care and disability payments for the thousands of US troops who have suffered brain and spinal damage was not part of the unrealistic rosy picture that Bush painted.

Dr. Stiglitz's $2 trillion estimate is OK as far as it goes. But it doesn't go far enough. My own estimate is a multiple of Stiglitz's.

Stiglitz correctly includes the cost of lifetime care of the wounded, the economic value of destroyed and lost lives, and the opportunity cost of the resources diverted to war destruction. What he leaves out is the war's diversion of the nation's attention away from the ongoing erosion of the US economy. War and the accompanying domestic police state have filled the attention span of Americans and their government. Meanwhile, the US economy has been rapidly deteriorating into third world status.

In 2005 for the first time on record consumer, business, and government spending exceeded the total income of the country. Net national savings actually fell.

America can consume more than it produces only if foreigners supply the difference. China recently announced that it intends to diversify its foreign exchange holdings away from the US dollar. If this is not merely a threat in order to extort even more concessions from Bush, Americans' ability to consume will be brought up short by a fall in the dollar's value as China ceases to be a sponge that is absorbing an excessive outpouring of dollars. Oil producing countries might follow China's lead.

Now that Americans are dependent on imports for their clothing, manufactured goods, and even high technology products, a decline in the dollar's value will make all these products much more expensive. American living standards, which have been treading water, will sink.

A decline in living standards is an enormous cost and will make existing debt burdens unbearable. Stiglitz did not include this cost in his estimate.

Even more serious is the war's diversion of attention from the disappearance of middle class jobs for university graduates. The ladders of upward mobility are being rapidly dismantled by offshore production for US markets, job outsourcing and importation of foreign professionals on work visas. In almost every US corporation, US employees are being dismissed and replaced by foreigners who work for lower pay. Even American public school teachers and hospital nurses are being replaced by foreigners imported on work visas.

The American Dream has become a nightmare for college graduates who cannot find meaningful work.

This fact is made abundantly clear from the payroll jobs data over the past five years. December's numbers, released on January 6, show the same pattern that I have reported each month for years. Under pressure from offshore outsourcing, the US economy only creates low productivity jobs in low-pay domestic services.

Only a paltry number of private sector jobs were created-94,000. Of these 94,000 jobs, 35,800 or 38% are for waitresses and bartenders. Health care and social assistance account for 28% of the new jobs and temporary workers account for 10%. These three categories of low tech, nontradable domestic services account for 76% of the new jobs. This is the jobs pattern of a poor third world economy that consumes more than it produces.

America's so-called first world superpower economy was only able to create in December a measly 12,000 jobs in goods producing industries, of which 77% are accounted for by wood products and fabricated metal products-the furniture and roofing metal of the housing boom that has now come to an end. US employment declined in machinery, electronic instruments, and motor vehicles and parts.

2,600 jobs were created in computer systems design and related services, depressing news for the several hundred thousand unemployed American computer and software engineers.

When manufacturing leaves a country, engineering, R&D, and innovation rapidly follow. Now that outsourcing has killed employment opportunities for US citizens and even General Motors and Ford are failing, US economic growth depends on how much longer the rest of the world will absorb our debt and finance our consumption.

How much longer will it be before "the world's only remaining superpower" is universally acknowledged as a debt-ridden, hollowed-out economy desperately in need of IMF bailout?

--------

Paul Craig Roberts has held a number of academic appointments and has contributed to numerous scholarly publications. He served as Assistant Secretary of the Treasury in the Reagan administration. His graduate economics education was at the University of Virginia, the University of California at Berkeley, and Oxford University. He is coauthor of The Tyranny of Good Intentions. He can be reached at: paulcraigroberts@yahoo.com.
I have little understanding about national and global economics, so it is my sincere wish that anyone with an economics background here at TFP will join in this discussion. As a fiscal conservative, I am greatly alarmed at the national debt that is accumulating and being bought up by foreign governments. The Stiglitz and Bilmes estimate of overall costs associated with the Iraq war will only bring us further into debt.
Elphaba is offline  
 

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185 186 187 188 189 190 191 192 193 194 195 196 197 198 199 200 201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 250 251 252 253 254 255 256 257 258 259 260 261 262 263 264 265 266 267 268 269 270 271 272 273 274 275 276 277 278 279 280 281 282 283 284 285 286 287 288 289 290 291 292 293 294 295 296 297 298 299 300 301 302 303 304 305 306 307 308 309 310 311 312 313 314 315 316 317 318 319 320 321 322 323 324 325 326 327 328 329 330 331 332 333 334 335 336 337 338 339 340 341 342 343 344 345 346 347 348 349 350 351 352 353 354 355 356 357 358 359 360