… Joseph Stiglitz is one of America’s leading economists and one of the most pessimistic. He recently predicted that the subprime mortgage crisis which has burst the US housing bubble and fiercely shaken the debt ridden domestic economy would result in the worst downturn since the great depression. On top of that, he says future administrations will struggle to pay off the massive burden of debt used to fund the war in Iraq. In his latest book ‘The Three Trillion Dollar War’ Stiglitz sets out the hidden costs of George Bush’s Middle East adventure. Stiglitz won the Noble Prize in economics in 2001. Before that he was the chief economist at the World Bank and before that, the chairman of President Clinton’s council of economic advisers. He’s a Professor of economics at the Columbia School of Business and we caught up with him in Rome earlier this evening. … this is now the second longest war in America’s history and the second most costly. One of the reasons it’s so costly is the cost per troops have gone up, soared. Previous wars, $50,000 per troop, this war is for $400,000. There are a number of factors. One is this is the first war that has been privatised to the extent that it has. We use private contractors rather than military. Private contractors are very costly. … Modern medicine has meant that more people are surviving, but the cost of keeping them alive is very high. And the ratios are again unbelievable. Previous wars, the ratio of survivals to fatalities is 2.5 to 1. This war it’s 15 to 1. …
TONY JONES: What you’re saying suggests this is without a doubt, the greatest foreign policy folly and it now is sounding like the greatest economic folly that an American administration has got itself into?
JOE STIGLITZ: I think that’s right. It’s an order of magnitude worse than the Vietnam War. But here we’re talking about a region that was already very volatile in the Middle East. A region with one of the world’s most important resources, oil. And what we did is we converted a region that was, you might say, unstable into a region that was just highly volatile, where groups that had lived together perhaps not totally in peace but lived together, the Shi’ites and the Sunnis are now fighting each other. We’ve let forth a set of problems the full nature of which will take I think decades to resolve. – abc
You can’t pull $3 trillion out of the economy and not have an effect.
For years I’ve assumed they knew about the coming oil shortage and went into Iraq to prolong the magic. Someone I spoke to who understands Washington much better than I do, however, said there just isn’t that much forward planning. According to him, our political leaders pretty much only really plan up to the next election. Frightening, but it rings true. Shouldn’t we have 20, 50, 100 and 1000 year plans? PNAC seems to me to (somewhat) contradict the view that there is no long term planning.
Dangerous economic territory: At a certain point the declining dollar will cause oil pricing to switch away from the dollar and to start using the Euro. When that happens, when the dollar is no longer the world’s reserve currency, its value can drop like a stone and foreign investors to whom we owe money could then demand re-payment. My guess is that we owe around 3 trillion of the 9.5 trillion dollar national debt to foreign investors.
When we can’t pay, what happens? All Americans will all have to go work off the debt in Japan or China by washing dishes or by being sex slaves ( depending on how straight your teeth are. )? Each American citizen currently owes about $31,301.22 which is about one year’s work. So after a year you could come back home and your debt would be paid off, I guess.