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Between the Lines

November 05, 2004

Siesta time

Today's posts will be the last for a while. I've been blogging away since before the war began and need a break. When I do come back in January, I expect to be writing once a week. Until then, thanks to those of you who have written, whether in support or opposition. I've learned something from all. Meanwhile, check out today's talkers below.

Posted by tbrown at 12:40 PM


Things to watch

There's a lot going on just below the headlines.

Fallujah: Can you say 'Tet?'

The number of dead and wounded from the expected battle to retake insurgent-controlled Fallujah probably will reach levels not seen since Vietnam, a senior surgeon at the Marine camp outside Fallujah said yesterday.

**

Navy Cmdr. Lach Noyes, a surgeon, said the hospital here is preparing to handle 25 severely injured soldiers a day, not counting walking wounded and the dead.

The worst month for the U.S. in Iraq, so far, was April, when 126 troops died—largely at Fullujah and Ramadi. The worst month in Vietnam was April 1969, when 543 Americans died.

Now President Bush appears intent on routing the perhaps 5,000 insurgents and jihadis in Fallujah as a necessary prelude to the promised Iraqi elections in January. It's easy to understand why he left this assault until after the election:

The new approach is fraught with risks, and it could take Bush a large part of his second term, billions more taxpayers’ dollars and more American lives to put Iraq on a path toward peace and begin a U.S. troop withdrawal.

“This is only the first stage of a very long process that will likely take years,” said Michael Eisenstadt, an analyst at the Washington Institute for Near East Policy. “We should lower our expectations for any rapid successes.”

Years. Is it OK now to compare this "catastrophic success" to Vietnam? Oh, I forgot. The worse things get, the better we're doing.

Electronic voting magic in Ohio

Here's the engaging story of how one Ohio precinct with 638 registered voters managed to cast 4,258 ballots for George Bush.

County officials did not return calls seeking details.

No doubt.

A software glitch? A plot? Stay tuned.

Moral values

Blogger Jeff Jarvis has some pertinent thoughts on the meaning of the "moral values" issues that supposedly decided the election:

We all have moral values. They're just different. That's the issue. That's why we fight over these things. It's not as if one side has moral values and the other side doesn't and that's why we fight. We fight because we all have conviction about what is morally right and different definitions of what that means.

**

Our government is not meant to be a church. That is the real intent of separating church and state. It's not just about keeping state away from interfering with church. It's about state not becoming church.

The Constitution is about not letting the state interfere unduly and uninvited in our lives -- in our bedrooms, our speech, our thoughts, our families, our beliefs.
That is a matter of both principle and also common sense. Even back then, the founding fathers certainly knew that power corrupts and that politicians should not be the people we turn to for moral guidance! They're politicians. They are on the front line of human corruption -- the wrong side of the line.

Gumming the dollar

George Bush's ambitious—and, it must be said, absurdly wrongheaded—fiscal plans are reminiscent of the Titanic. There's a real big iceberg out there and we're bearing down on it at flank speed.

After recovering briefly over the last few months, the U.S. dollar is slumping fast in world currency markets. It hit an all time low against the upstart Euro in today's trading. This may seem like an arcane concern, but only because we haven't had a true currency crisis in this country in living memory. But just because we haven't doesn't mean we can't. And they aren't pretty. Ask Argentina.

The backdrop, from today's Washington Post (free site registration may be required):

The dollar continued its decline in global currency markets yesterday, intensifying worries among some economists that mounting U.S. budget and trade deficits could send the U.S. currency into a tailspin.

**

It was the second straight day that the dollar has fallen despite a surge in the stock market, continuing a trend that began in early October when it started slipping against the currencies of major U.S. trading partners. The decline rekindled the fears of some analysts that the dollar could be headed for a severe sell-off unless the White House and Congress make a major effort to shrink the budget gap.

Currency traders, who employ complex trading strategies to make—or lose—dump-trucks full of money on modest changes in values of currencies, are a very hard-nosed bunch. They have taken a look at the Bush tax cuts, which have slashed government revenues, and his concurrent enormous increases in government spending. Combined, these resulted in a 30 percent increase in the national debt during his first term. The traders know that the fate of the dollar increasingly depends on the good will of the central banks of Japan and, especially, China. And those traders are now busily trashing the dollar. It's a fact that when you act like a banana republic your currency is treated appropriately.

Here's the administration reaction:

But John B. Taylor, the Treasury undersecretary for international affairs, defended the Bush administration view that the deficits pose no danger of a dollar collapse. He issued a detailed rebuttal of what he called "scare stories."

**

The large influx of foreign money shows that "sound, growth enhancing economic policies are continuing to make the U.S. an attractive place to invest," he said.

Taylor said administration policies already in place will help shrink the trade deficit. One is President Bush's pledge to cut the budget deficit in half, as a percentage of the U.S. gross domestic product, by 2009. That would decrease the trade deficit because lower government spending or higher taxes would reduce the amount of money consumers spend on imported goods.

Taylor pointed out that the Treasury is also prodding foreign governments to achieve faster economic growth, which should increase demand for U.S. exports, and it is trying to persuade China to change its fixed-exchange rate policy by allowing its currency, the yuan, to rise. A higher yuan would be likely to slow the flood of Chinese goods into the U.S. market because those products would become more expensive for U.S. consumers.

"Even if those policies take some time" to reduce the trade deficit, Taylor said, "there is no reason to think there will be problems in the meantime" in continuing to obtain enough money to cover the gap.

You can't even call this hodge-podge jawboning. It's too lame. Let's see: Spending ourselves into bankruptcy--or borrowing our way out of debt--makes us an attractive place to invest. A Bush "pledge" is not exactly a negotiable instrument. And what's that nonsense about "higher taxes." Bush has explicitly rejected those. You get the picture.

What's really happening is that our policies are giving China, the one country that actually is likely to become a rival superpower one day (unless Malthusian or environmental pressures intervene), increasing leverage over our financial well-being. This is a poor idea. Our relationship with China is on a decent footing right now, but that is always subject to change. China remains a political police state and it is determined, one way or another, to attempt to force a reunion with a now democratic and reluctant Taiwan. This could be a flash point for sour relations. If it happened, China might well exercise its fiscal leverage by slashing its purchase of U.S. treasury bonds, the main remaining prop under the tattered dollar. That would hurt China as well as us, because we'd no longer be buying every widget they make. But the Chinese leadership doesn't focus on next week's polls or next quarter's business results. Rather, its view is on the much longer run, and if it senses a permanent advantage to be gained at the expense of temporary pain it might well seek it.

Whatever happens, it most likely will take some time to play itself out. So it's not like we don't have radar. But instead of rearranging the deck chairs, will someone go wake up the skipper? Please?

Posted by tbrown at 12:38 PM


A rude awakening?

British PM Tony Blair when to bed thinking John Kerry would win the election. Then he woke up.

Posted by tbrown at 12:25 PM




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