Wednesday, November 24, 2004


How to Dismantle an Economic Bomb

The warning signs have been abundant, but now they're becoming even more widespread. The latest in the potential economic meltdown front is this, frankly, shocking article from the Boston Herald: Economic Armageddon Predicted.

According to the Herald, Stephen Roach, the chief economist at Morgan Stanley, predicts that we only have a 10% chance of averting economic armageddon. Not good.

This would be comforting if Mr. Roach was a lone nut in a sea of dewy-eyed economists, but no.
We also have warnings from The Guardian, US Risks a Downhill Dollar Disaster; Dr. Paul Craig Roberts, The Coming Currency Shock; and even the American Conservative, Goodbye, Dollar--And Empire. All this amidst ever-rising debt, the collapse of housing markets, price pressures, and rising oil costs.

It's tough to puzzle this out. I've seen my share of economic fearmongering that went nowhere. At best though, I can guess that we'll experience around the board price hikes in consumer goods and fuel. But....I'm not an economist either. I'll be really glad when Paul Krugman gets back from his vacation.

I wouldn't sound too surprised that Pat Buchanan is criticising the gw shrub's economic situation. A lot of conservatives spoke out against shrub because he isn't a fiscal conservative - he's a run away spend thrift, with no concept of fiscal balance.

To be fair, although he is an asshead, this particular piece of assheadishness can be traced back to Reagan and the monetarist years of the 80s, where overspendiong was rife whilst the party line was frugality and austerity in public spending. Reagan was the anti-conservative economist extraordinaire and yet when he died the media was so sychpohantic about what a great job he had done for America.

I sometimes wonder if it would make any difference at all if anyone in the US paid income tax or not. The trillions of overspend mean that the figures all seem meaningless.
I'm a fiscal conservative (lover of a free open market) and a social liberal. Bush drives me nuts because he's neither of these things. If we don't take control of the deficit, we will be in big trouble. If we've learned anything from the deficits of the Reagan Administration, it's that huge national deficits create unstable economies. Greenspan continually warns against the growing deficit.

However, I wouldn't go so far as to say that we're facing economic armageddon. I am extremely concerned about the overspending in government. I would venture to say that we are currently spending more than any other administration in the history of the US, even after historical adjustments are made. It's not good, but it's not Armageddon, not yet.

Bush is changing up his economic cabinet, hopefully for the better. I haven't read everything on his new wannabe Commerce Secretary, but being a former CEO of Kellogg and a Cuban political refugee is a good start. They're also going to focus on small business, which is really the way to go if you want to get the economy going.
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