Free Republic

Must everything be cast as false dichotomies? The US economy, in terms of GDP, consumer spending, etc. can be robust and weathering the blow from the hurricanes well at the same time that budget deficits represent a point of concern. You could perhaps say, the private sector economy is faring well, but government is walking somewhat treacherous ground with respect to the economy. There's still time for deficits to be dramatically cut before any serious effects are really felt, and in the meantime the economy looks reasonably healthy in other respects. That involves actually significantly slashing deficits however - the current situation is not a sustainable one, and certainly cannot continue indefinitely. When exactly will the chickens come home to roost and potentially serious economic problems result? That's almost impossible to say, there are simply far too many factors involved. Unless there are changes, however, it will most certainly happen eventually.

If I had to guess the intent here it is roughly as follows:

Fitzgerald feels he has enough to nail Libby for perjury, and is planning to use the indictments against Libby as leverage to try and get something stronger against whoever he feels is responsible for the leak.

The investigation is still ongoing, so I suspect Fitzgerald has decided to go after Rove for the leak, but doesn't feel he has enough yet to be confident of getting a conviction - hence the lack of indictment and ongoing investigation. He probably feels Libby is involved in covering for Rove and is planning to shake something loose by indicting Libby.

As long as the investigation is ongoing I think we can continue to expect an eventual indictment for the leak - that seems to be the plan. Expect the investigation to keep rolling along for a while yet though.

From what I've seen there are plenty of other people here saying the same things I am.

Currency speculation is a gamble, I'm just trying to point out what the losing side of the bet could be.

As to buying yuan - that would be rather foolish. The Chinese economy (at 8% growth) is seriosuly overheated and heavily reliant on the US (which accounts for 20% of their exports). If the US suffers, China will burst.

Greenspan is worried. The problem is the current account deficit, and the willingness of Asia to continue to buy US debt (it is by far the largest foreign holder of US debt). Read his recent speech on the matter.

I suggest you read this for a good explanation of why that occurred then, and an understanding of why the current account deficit is a potential problem now.

The Euro is not increasing in value. Check its rates against any other significant world currency - the pound, the yen, the Australian dollar - its pretty much steady. Compare the US dollar against all of those and you'll find an across the board drop for the dollar.

The US does run a trade surplus in services but not goods. A lot of US exports are services. The concern is that despite the slowly falling dollar over the last year, the services surplus has been falling instead of rising.

Yes the trade deficit is the problem pushing the dollar down, but a falling dollar really isn't the cure you want. Cutting the deficit as quickly as you possibly can, encouraging household savings as much as is manageable, and trying to reduce the rampant consumerism are your best options. Those all take a lot of time though.

If the dollar falls too far, it becomes a bad currency to be caught holding. You don't trade equities in currencies that you don't want to be caught holding - the risks are too high. So oil and gold could find themselves traded in Euros. The fact that the US is the de facto global currency is a very major prop holding up its value: there is high demand for US dollars because everyone trades in it. Lose that and the dollar could find itself in free fall rather than just a slide.

You really don't want to know what happens when you're currency goes into free fall, but Argentina provides a fairly good recent example.

Sounds like another, "Bush's fiscal irresponsibility is causing the crash of the dollar" article.

The Dollar is very possibly going to crash, and that has very little to do with Bush. It is a very serious and very real problem however. You shouldn't just dismiss such things quite so readily.

It's rare that a large group of people, forming independent decisions, all arrive at the same conclusion on the same day. This fact imposes intrinsic limits on the behavior of the markets, so an out and out catastrophe is rare.

I do agree that it will take a significant chain of events, and that disaster is actually unlikely - that doesn't mean we shouldn't at least be concerned with these issues.

As to synchronicity - it need not be a day, it can be a month, or six. And yes, the market is a mass of independent minds all moving in millions of different directions, but it does also have a herd mentality and is prone to occasional panic: Consider the collapse of the Asian tiger economies in late 1997, or the abysmal state Argentina found itself in.

Yes, the US is not Indonesia, nor Argentina, and certainly more significant factors would be required to actually get the herd to move. Once moving however, those examples show that investment can and will depart en masse in a matter of months, and currency depreciation can and will occur with dramatic speed should panic spread through the market.

As to your contention that the current state of affairs is not worthy of concern - I would point you to this speech by Alan Greenspan. He is typically cautious and measured (to be expected given how much the markets hang on his every word), but he quite clearly outlines that there is cause to be concerned with regard to the US current account deficit, and the US Dollar. I would think that if Alan Greenspan is ready to remark on cause for cautious concern, that one can reasonably say that we shouldn't dismiss the possibilities.

More democratic gloom and doom.

I am not a Democrat - I have no love for the Democrats at all in fact, and would be quite disappointed to see them in power. I don't think this is a Republican/Democrat issue - neither party are taking any time to address these concerns yet, and this is what I see as the problem. The need to cast everything into a Republican/Democrat dichotomy, whether it fits or not, doesn't help address the issues.

I can point you to an article in which the former chairman of the US Federal Reserve suggests that some of these issues are of concern. I can even you point to a very recent speech by the current chairman of the Federal Reserve (who is by no means a Democrat alarmist) stating that several of these issues are of concern.

Is the US economy doomed? No, far from it. Is there reason for concern? Yes, these issues deserve to be watched.

I do understand you point of view - in that there has been much in the way of sniping and bickering from Democrats and Democrat supporters. This is not one of those - this is an attempt to give an account and analysis of some important issues that have remained almost below the radar, but deserve to be addressed.

This analysis of doom is flawed, because it fails to look at other trends that are moving in the US favor. For example, the increase in home ownership, the successes against the the Islamist, increase of limits on lawsuits, economic growth rates, etc.

I agree that the article doesn't cover issues in the US favour, and there are many, but I don't view that as a flaw, in the sense that the article is merely an analysis of some of the problems. A full discussion would be considerably longer, and I felt that this was pushing the length limits already. The positives would best be addressed in a separate article.

Instead I simply tried to point out, in both the ontroduction and conclusion, that while the points discussed are problems, they are not portents of imminent doom. Disaster is not likely. They are, however, significant issues that do need to be considered, regardless of the positives.

In specific reply - the increase in home ownership is actually an increase in household mortgage debt (unless you mean an increase in people clearing their mortgages - which I haven't seen any figures on, but may well be true). While I appreciate the gains made against the radical Islamists, I would have to question how that strengthens the US economic position significantly (though certainly security is strengthened). The increase on limits on lawsuits is a very positive sign, I agree. As to economic growth rates - certainly the US is now moving ahead again after the recession - unfortunately this improvement has yet to have an effect in reversing the trends in the current account deficit and the US Dollar. It is still early in the recovery of course, so we may not see the effects for some time. In the meantime I would simply suggest that we keep a close eye on the Dollar, and tread a little carefully until the economic growth truly kicks in.

That was me (feel free to note the usernames) posting an initial version of the article to a left wing site to

(a) Get some free editing via Kuro5hin's edit queue.
(b) Gauge reaction, and get more ideas.

I am now posting the article (you'll note it has differences - mostly an extra paragraph regarding the US using home currency to service its debt) to a conservative site to present the ideas here, and again gauge reaction and get more ideas - please feel free to make suggestions to ways I could fix or expand the article.

I consider this a relatively non-partisan piece of interest to both sides, and want input and discussion from both sides if I can get it. I fully intend to post futher edited versions of the the same piece to other boards in the future.

I wrote it, so there are no links. I am new here, so a little sketchy on the topics: Should I _only_ include "Your Opinion/Questions" for "Vanity" articles? I included 2 others that seemed relevant, but if that is misplaced I apologise.