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Tuesday, February 08, 2005

Paul Craig Roberts on the Bush Economy

If you've read this blog for awhile, you know that I like to quote columnist Paul Craig Roberts. Not only does he write good, passionate articles about the evils of the Bush administration, he also has impeccable conservative credentials--worked in the Reagan administration, and wrote for the Wall Street Journal, the Washington Times, and the National Review. Most of his columns that I have quoted have been about the insane war in Iraq, but his latest concerns the economy. Some excerpts:
One likely result of this realization is that foreigners will cease to use their trade surpluses to mop up American red ink. It makes no sense to purchase dollar assets such as Treasury bonds when they are falling in value. As foreigners continue to move out of dollars, US interest rates will rise, terminating the housing boom and wrecking family finances.

America's growing dependence on imports reflects the outsourcing of manufacturing jobs and knowledge services. Every time a US firm outsources goods or services, it turns domestic production into imports. Half of the US trade deficit with China represents US offshore production for US markets.
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Average weekly pay in the US is declining in real terms. Obviously, if outsourcing is creating jobs, they are less good jobs than the ones being outsourced. Trading better jobs for worse ones is the road to poverty, not the road to wealth.

The dismal US performance in job and pay growth is despite the most stimulative monetary and fiscal policy in my lifetime. If the lowest US interest rates in memory, tax cuts and the biggest budget deficits in US history cannot create jobs and boost pay, what can?

Charles McMillion of MBG Information Services notes that normally a 38-month old economic recovery would have raised hours paid by 11% to 14%. The 38-month old Bush recovery has raised hours paid by less than one percent!

The clowns in Washington DC imagine that they sit astride a Superpower. Absorbed in fantasies of invading countries and remaking the world in America's image, little do our deluded leaders realize that America is in the hands of our Chinese and Japanese creditors. Should either of these Asian powerhouses decide to stop mopping up America's red ink, the dollar would collapse to such an extent that it would lose its reserve currency status.

When the dollar ceases to be the reserve currency, America will cease to be a superpower.
Which, in my opinion, wouldn't be a bad thing. Superpower governments think they can do no wrong. A government which knew it could do wrong would probably do less of it.