Thursday, December 23, 2004


Bush Economic Policies Versus Reality (Pt. 4)

Mr. Bush may believe in a strong dollar - but the currency markets apparently favor reality. Battered dollar hits another low reports the BBC:
The dollar has fallen to a new record low against the euro after data fuelled fresh concerns about the US economy.

The greenback hit $1.3516 in thin New York trade, before rallying to $1.3509.

The dollar has weakened sharply since September when it traded about $1.20, amid continuing worries over the levels of the US trade and budget deficits.

Meanwhile, France's finance minister has said the world faced "economic catastrophe" unless the US worked with Europe and Asia on currency controls.
To date, the only actions Mr. Bush and Treasury Secretary Snow have taken to shore up the declining dollar is to repeatedly state that "a strong dollar is in America's interest."

It is of course true that in the short term the US benefits from this trend. However, the world economy currently relies upon the US importing lots of goods from places like Europe, China, and Japan. The US Government's economic policies rely upon massive deficits far into the future, especially Social Security rip-off (oops, I mean "reform.") These massive deficits can only be funded by borrowing from foreign countries like Europe, China, and Japan - who can't keep lending us money if their economies go flat.

Were Mr. Bush a "reality-based" kind of guy, we'd see a slow, controlled drop in the dollar's value over time coupled with deficit cutting measures so that the world economy could adapt to reality. We certainly wouldn't see the US add another trillion dollars in deficits to boost Wall Streets' bottom line under the marketing phrase "Social Security Reform." (Question: do you think putting your worst-case scenario retirement savings into the care of the folks that brought us the savings and loan scandal, dot-com bubbles, Enron, Global Crossing and all the other recent financial disasters is a good idea? That is the Bush "reform" "plan."

Instead, we're likely to see a "market-based" solution, like we did in 1929. It's spelled C-R-A-S-H.

The self-proclaimed "Greatest Generation" came out of the Great Depression. Maybe Mr. Bush figures we'll get an even greater generation from an even greater depression?


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