Asbytec

The Irony of Defense Economics

President Bush is dyslexic, some folks confuse that with stupid. And the war in Iraq would prove them right. President Bush did nothing more or less than any other president during the housing bubble. They all turned the other cheek while Americans enjoyed he wealth affect.

Bush probably should have mulled over the economy when Greenspan retired. In retrospect, that was a clue something was afoot. He missed it, I missed it, we all missed it. It just happened to crash on his watch, not Obama's.

But, most importantly, congress missed it. They even missed it when Bernanke told them a year ago to shore up mortgages and the GSE's. I suspect they're still missing it.

Yes, the US dollar is being printed in mass, but that's offset somewhat, if not entirely, by the frozen credit markets and the winding down of derivative money. I assert this and demand on risk aversion is propping up the dollar, and will for some time to come.

I agree we are entering a new era, but Russia? No way. Russia is a paper tiger. It's currency is near worthless and it has no real industry outside of energy.

The era I envision is still US dominated, but with slower more sustainable global growth. US consumers will be less indebted and China will settle into single digit growth and be happy to have it.

I also see a stronger dollar resulting....don't everyone throw vegetables at once...that is if the twin deficits can be brought under control. besides, the Fed is likely to tighten on clear signs of a recovery in an attempt to regain control over the money supply. If not, congress better...they're constitutionally charged with it.

I suspect it will be a long time before risk appetite can chew on MSB's or the like, again. One would hope a fresh set of regulations will see to that. And money will be tighter in the decades following a recovery from this current mess.

Any takers?