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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: T L Comiskey who wrote (1931)	7/12/2002 1:54:33 AM
From: stockman_scott	Respond to of 89467

The Boomerang Economy By David Ignatius Washington Post Columnist Friday, July 12, 2002 PARIS -- An investment banker who has probably moved trillions of dollars in and out of financial markets in his lifetime confided recently that he was waiting for a "real" blowout, with the Dow collapsing to 6000 and the dollar evaporating to $1.15 for a measly euro. Then, he said, he was going to put every penny he could raise into the U.S. stock market. It's no wonder, given the behavior of people like my investment banker friend, that financial markets always seem to overshoot realistic price levels, on the downside as well as on the upside. Driven by the volatile expectations of investors, markets move in stampedes rather than the orderly flows described in economic texts. Let's call this the "boomerang economy," whose operating principle is that what goes around comes around. So perhaps it's inevitable that the "irrational exuberance" of the late 1990s has given way to what I find an equally irrational pessimism today. What's ailing Uncle Sam? The economic fundamentals for America look solid enough. The U.S. economy grew at a gee-whiz 5.8 percent rate during the first quarter, and at a respectable 2.5 percent or so clip during the second quarter. Inflation is low, consumer spending has remained strong and productivity keeps growing. A Wall Street Journal survey this month of 55 economists found a consensus forecast that the U.S. economy will grow at a 3.5 percent rate in the second half of 2002 and a 3.6 percent rate during the first half of 2003. So what is Wall Street's take on all this good news from Main Street? Head for the hills! The Dow closed yesterday at 8802, down from Monday's 9275. Yes, yes, there's the steady beat of stories about financial scandals, which begin to make you wonder whether the whole of the U.S. economy is one big Enron scam. But a sensible person shouldn't wonder about that for very long. The fact that greedy executives at go-go companies were playing games with their numbers during the recent Gilded Age cannot be surprising to students of human nature. And it certainly shouldn't overrule the evidence in front of our noses of the strength and durability of the real U.S. economy. And yet daily the financial panic spreads, as if this is some sort of general crisis of capitalism. Perhaps now Americans have a better sense of what it feels like to be an Argentine, or a Thai, or a Turk -- and feel that your economic livelihood is at the mercy of capricious financial markets and mendacious crony capitalists. What's confounding is how far and fast the pessimism is spreading. At a gathering of prominent European investors here yesterday, the bad vibes were positively contagious, as speakers warned that Enronitis could easily spread to Europe. Indeed, you could argue that it already has: So far this year the CAC 40 index of French stocks is down 23 percent; the German DAX index is down 20 percent; the British FTSE 100 is down nearly 18 percent; and the Stockholm OMX is off 32 percent. The Dow, by comparison, is down "only" about 13 percent this year. What's going on? Has Osama bin Laden become a short seller? When economists can't identify the variable that is causing a change in economic conditions, they sometimes refer to an "X factor." It seems increasingly likely to me that the X factor in the global economy is the performance of George W. Bush and his administration. For some reason, the administration has behaved as if its purpose was to cause investors to lose faith in the dollar and the U.S. economy. What would you say about an administration that issued near-daily warnings about mega-terrorist attacks; abandoned free trade for short-term political reasons; maintained a daily drumbeat of stories about its vague plans for toppling Saddam Hussein in Iraq; had a president who was touched by the same sort of financial legerdemain he so portentously criticized in others; let the budget deficit swell back toward its 1980s levels; and tried to stanch the financial crisis of confidence with a limp speech that made even members of Congress look visionary by comparison. You'd say that such an administration would have difficulty maintaining the confidence of investors. And so it has come to pass. In the end, financial markets are about trust. When it's there, they prosper; when it disappears, they begin to wither and die. That essential trustworthiness built the first banking fortunes. Extended families such as the Rothschilds and the Lazards could move money around the world because they trusted each other. Their word was their bond. Trust and the confidence that flows from it remain the bedrock of economic growth. And the problem with trust is: It's so hard to accumulate, and so easy to fritter away. © 2002 The Washington Post Company washingtonpost.com

To: T L Comiskey who wrote (1931)	7/12/2002 2:02:54 AM
From: stockman_scott	Respond to of 89467

Who Wants This War? By Michael Kinsley Washington Post Columnist Friday, July 12, 2002 It was amazing to read the Pentagon's detailed plans for an invasion of Iraq in the New York Times last week. The general reaction of Americans to this news was even more amazing: Basically, there was no reaction. We seem to be distant observers of our own nation's preparation for war, watching with horror or approval or indifference a process we have nothing to do with and cannot affect. Which is just about the case. Who really wants this war? Polls show that a modest and shrinking majority of Americans will choose military action to remove Saddam Hussein when someone holding a clipboard confronts them with a list of options. But does anything like a majority of the citizenry hold this view with the informed intensity that a decision for war deserves? I doubt it. And how many of that pro-"military action" majority imagine that it will be nearly blood-free on our side, based on the experience of the Gulf War, which turned out that way precisely because President Bush's father decided not to try to topple Hussein? Abroad, nearly all of America's major allies are against it. The Arab states surely dream about being rid of Saddam Hussein. But they won't give public support or permission to use their land and airspace, which is not too much to ask if we're going to save them from a threat as great as Hussein is said to be. Even the Kurdish opposition within Iraq apparently thinks that being liberated by Superpower America, while nice, would be more trouble than it's worth. That's trouble to them, not to us! Ask around at work, or among your family: Is anyone truly gung-ho? It seems as if true enthusiasm for all-out war against Iraq is limited to the Bush administration and a subset of the Washington policy establishment. The Democratic leadership in Congress feigns enthusiasm, which amounts to the same thing in terms of responsibility for the consequences. You are what you pretend to be. The Democrats feign out of fear of seeming weak-kneed. Bush's enthusiasm seems genuine and is therefore more mysterious. Crude Oedipal theories (triumphing where Dad failed) are tempting but not as plausible as the possibility that he sincerely believes Saddam poses a danger big enough to justify risking bloodshed and his own political ruin. Maybe he's right. Or Bush may be bluffing. At his news conference on Monday, he blamed the leak of those war plans on "somebody down there at level five flexing some 'know-how' muscle." He may be right about that, too -- depending on what on earth he means. Or he may be lying, and the leak may be part of an official strategy of threatening all-out war in the hope of avoiding it, by encouraging a coup or persuading Hussein to take early retirement or in some other way getting him gone without a massive invasion. Trouble is, it is -- or ought to be -- very hard for a democracy to make a credible threat that it isn't prepared to carry out. You can't have a vigorous public debate over whether it's worth going to war that reaches the conclusion: Let's pretend we're willing to go to war if necessary and see what happens. But on the issue of war and peace, the United States is no longer a democracy. The eerie non-debate we're having as vast preparations for battle are made before our eyes is a consequence of a long-running constitutional scandal: the withering away of the requirement of a congressional declaration of war. Oh, the words are still there, of course, but presidents of both parties flagrantly ignore them -- sometimes with fancy arguments that are remarkably unpersuasive, but mainly by now with shrugging indifference. The result is not just a power shift between the branches of government but a general smothering of debate about, or even interest in, the decision to go to war among citizens in general. It's often said that modern warfare has no place for an 18th century conceit like the declaration of war. (This is said, in fact, by people who usually insist that the original intent of the Constitution's Framers requires no concessions to modernity.) But despite the modern issues of terrorism and "weapons of mass destruction," there is an old-fashioned quality to our confrontation with Iraq. It is about an imperial power demanding acquiescence from a rogue state. That doesn't make the United States the bad guy. It does mean that events are proceeding in a deliberate, slow-motion way that leaves plenty of time for citizens to debate and decide -- if that's the way we want to do it. © 2002 The Washington Post Company washingtonpost.com