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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: kumar who wrote (43440)	11/9/2002 8:31:10 AM
From: IQBAL LATIF	Read Replies (1) \| Respond to of 50167

The Economic Impact of an attack on Iraq Apparently this article wants to establish that attack on Iraq will in most likelihood have a devastating short term effect on the American economy. The writers of the article are promoting their leftist green agenda and draping it in economics in order to obscure the real issues. I wonder how inflation can be a significant concern when the growth in US productivity has hit a three decade high. The hyperbole concerning rising oil prices will dissipate when dissenters are confronted with the successful outcome of the war on Iraq. Last year many were assertively stating that American efforts in Afghanistan would wane in the face of rising Muslim and Afghan opposition come the month of fasting. That forecast was at variance with the reality where Afghans overwhelmingly welcomed their new liberators. In the same vein Iraq will not destroy its own oil production facilities in last acts of desperation. America's invasion of Iraq will be two-pronged, one towards Baghdad and the other geared towards securing the critical outlying production facilities, pipelines and ports scattered throughout Iraq. I predict that within a few weeks (perhaps even in a week) of an invasion, Saddam's central nexus in Baghdad will fall. Rather than mire itself in urban warfare a calculated precision strike attacking Saddam’s stronghold will effectively shorn the Iraqi army of any will to resist. Without an effective government there will be no prolonged resistance by the Iraqi army and offers of amnesty will ensure their compliance. Any attempt by Iraqi armies to torch their own facilities (considering the bifurcated nature of today's Iraq between the 33rd and 36th parallel, the mobility of the Iraqi army would be severely constricted) would meet with failure since the Americans in their invasion would secure the oil fields instantaneously. In the highly unlikely scenario of America's invasion of Iraqi regressing the latter’s oil productivity a few years behind (which in any case will not be a long term trend since the oil companies even now are beginning to scour for lucrative fields in a post-Saddam Iraq thus that nation's productivity level is going to significantly increase over in the long term because of massive Western investment), then Saudi Arabia will let forth the flood and ensure the stability of the oil prices. Indeed the Saudi's are contemplating an increase in production levels in order to bring about a reduction in the price per oil barrel, which would force out the high-cost Russian producers. A global economy mired in recession because of high oil prices is anathema to Saudi strategic planners since their economy is correlated with the world at large. An embargo by oil producing nations over the invasion of Iraq will surely fail when members begin “cheating” and selling their surfeit oil surreptitiously. The economies of the oil producing nations are in such a state that without the liquidity and revenue they will surely collapse. Any embargo will only be upheld by the Islamic nations and America in its invasion of Iraq could easily secure Saudi’s eastern provinces in order to assure a global oil supply. The inflation caused by rising oil prices from an embargo would in any case fail to avert the more pressing concerns about the “death of inflation”. In the minutes of the Federal Reserve’s meeting the fear of deflation was paramount and indeed for the deflationary Japanese economy any inflation would be welcome. The authors have not satisfactorily answered why short-term capital would flow out of the US and into Japan & the Euro zone following a deepening of the global recession. The structural deficiencies in the latter regions imply that they are not alternatives to America as magnets for foreign investment. The US dollar will not depreciate (I will devote a future weblog post entirely to this topic) nevertheless suffice to say the global economy cannot allow a weakened dollar. If the macro economic conditions in the United States worsens than there will be a furtherance of the already strong shift amongst foreign investors from equity to fixed income securities. Zachary Latif 19:57 latif.blogspot.com