Sunday, March 16, 2008

Bush’s Parting Shot – Recession of 2008

There are legitimate questions raised in American Media about the competence of American Policy Makers and Politicians when it comes to manage once mighty American Economy. Here is the list of failures:

1. Colossal mismanagement of Iraq war has landed America paying trillions of dollars of tax payer money. Those who argued that it was all about Oil, by now should know the total aimlessness of Bush’s war by looking at Oil over $110 per barrel. (It used to be around $10 to $20 per barrel in Bill Clinton’s time, one simple reason why those were good times.) Further, all these trillions have neither reduced the danger to American national security nor have achieved any political goals in Middle East. On the contrary America’s national interests have suffered lot at the cost of Trillions of dollars. Talk about the bargain for American voters.

2. When high oil prices are extracting ransom from Americans, Congress thinks about an alternative energy policy. The smart minds of Congress can not go past the lobby efforts of Agriculture industry (or is it Iowa’s preeminence in political primaries?) and succumb to ethanol ‘fairy tale’. Bright lights of Congress want America to use more corn to produce ethanol. However the problems of ethanol are well known:
- in the first place core energy intake in corn production is more than energy produced by ethanol;
- burning and producing ethanol adds to green house gases and
- finally, the most important, diverting corn to lucrative ethanol increases food prices. It is like igniting food inflation in vengeance when one understands corn’s position in the food chain of agriculture industry.

3. While America needs to shell out humongous amount of wealth for wars in Iraq and Afghanistan, Bush and GOP ideologues refuse to increase the Federal taxes for wealthy. They continue to give tax benefits to rich Americans and as a result increasing America’s debt and making American dollar worthless.

4. While contours of mortgage crisis were unfolding, Fed Chief Bernanke drew cold feet and refused to reduce the rate early on. That missed the opportunity to save American financial system.

5. Not only timely reductions in Fed interest rates, many other possible solutions are missed on purpose. For example, instead of allowing Friedi Mac and Fanny Mai to take on more mortgages by Congress by higher borrowing limits; Bush Administration prefers under writing of private banks to take on more CDOs. Ideological blindness is making Bush and GOP to throw good money at private banks rather than to public sector banks.

6. Finally, what do American politicians think to do when recession looms? The solution seems standard – ‘bribe’ Americans by taking tax write downs of the tune of $150 Billions dollars. At Fed level the cost may be high, but for an individual family, the rebate is paltry and it hardly addresses the root cause of falling home prices. Instead it would have been better to use that money in ‘beefing’ up insurance companies which underwrite CDOs. But no, it is politically convenient to waste $150 Billion dollars instead of using tax payer money to alleviate the root causes.

So what can American people expect when almost another great depression may be on the way? Who will come to rescue when the ‘fence is eating the farm’ – these politicians are refusing to face reality and execute right solutions instead of some misguided measures? Removing Fed Chief Bernanke sometime next year is one step, but hardly it is a comprehensive resolution.

What about Presidential Campaigns of Obama, Hillary and McCain? The case with McCain Campaign is hopeless – Obama is right to characterize McCain presidency as nothing other than Bush Third Term. But why not Obama and Hillary Campaign come up with right solutions and keep on using their stump speeches to high light these issues? Or is it the case like many in rest of the world says – American presidential campaigns are nothing but political beauty contexts. What a waste of opportunity if that is true.

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