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	September 14, 2003

THE U.S. ECONOMY: DANGER -- TRAIN WRECK AHEAD Even more troubling than Bush's political blinkers in Iraq is the stunning recklessness of his economic program, which has in less than three years turned a $280 billion surplus in the last year of Clinton's reign into a record $650 billion deficit forecast for 2004, and a forecast $5.6 trillion surplus for 2011 in Bush's inaugural speech into a forecast debt that Newsweek's economist conservatively estimates to be $7.4 trillion by 2013. This is a staggering reversal, five times larger than any such reversal in history, and it was caused by an unpropitious mix of unforseeable events and utterly irresponsible spending -- notably massive tax cuts for the rich and rash war adventures in the Mid-East. What is most distressing is that Bush's team continues to cling to the discredited (by virtually every mainstream economist in the country) Reaganomic belief that a huge tax gift to a tiny handful of billionaires will somehow 'trickle down' to the average American and reverse the economy's precipitous slide. It's even worse than that. There is every indication that the metrics used to measure economic health and danger are now obsolete and horribly flawed: While these old measures suggest the recession is over, poverty and layoffs are skyrocketing and it is increasingly clear that the 'recovery' is not only not 'trickling down' to mainstream Americans, it is being made on the backs of those Americans. Productivity is 'improved' by the charade of laying off millions of American workers, exporting millions more jobs to third world countries (more on this in my blog tomorrow), and hence recording increased profits and pushing the already wildly overpriced stock market to levels of sheer delusion. There is inevitably going to be a train wreck, and it's going to hurt everyone. Expect to see interest rates start to soar, and to see foreign countries abandon the US dollar in favour of currencies with much stronger fundamentals. Only the fact that so much of the US's debt is held by foreigners in US currency (who therefore have a vested interest in keeping the US dollar strong) has delayed the inevitable precipitous decline in the dollar. Then the dominos will start to fall -- the US stock market, the housing market, followed by further massive layoffs and the kind of inflation that third world countries with wildly inflated currency and unsustainable debt levels are used to seeing. Since we're all connected, the rest of the world's economies will also slip back into deep recession. There is some ironic good news in all of this. The tax cuts will have to be cancelled early, since they are simply unaffordable. MidEastern wars and invasions will also be unaffordable, so expect to see the troops come home quickly and unceremoniously. The vacuum there will be probably be filled by warlords and fundamentalists, but that's inevitable anyway the way Bush is operating, so at least no more American lives and dollars will be wasted on a naive effort to force democracy on countries that won't be ready for it for generations, if ever. And best of all, the untenable and ridiculous economics of Reagan will finally be put to rest forever, and Bush will be acknowledged, in time for the 2004 election, to be the most irresponsible -- and the worst -- president in American history, a lesson that will hit home so hard that we should be spared another neocon, and another Republican con game, for at least a couple of decades. 11:05:57 AM  trackback []  comment []

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