George W Bush has left quite a legacy for the new President and for the nation he leaves behind. A curious blend of arrogance and stupidity have marked out this administration for singular contempt. What few successes it has had, in Africa for example are dwarfed by fiascoes on every major field of endeavor. The Republican party - formerly the party of hard headed business interests and practicality has been turned into a minor religious fringe party that resembles more the know-nothings of the 1850s. The United States is even more in dire financial trouble than ever before, in hock to the Chinese and other powers and dependent for just about everything except agricultural products. This marks one more way station on the way to oblivion for the United States. How did it all happen?The initial military victory in Afghanistan apparently went to the heads of the leaders of the self-styled hyper power who felt that they had no need for world opinion or for that matter any form of political accommodation with the rest of the world. While the Bush administration's adventure into Iraq have siphoned off relatively few lives and a great deal of American treasure, the diversion of the nations attention to the barren fields of Mesopotamia instead of the greater need of concentrating on its core economic problems is by far the larger problem. Instead the focus has been on causalities in Iraq, the reconstruction in Iraq, the insurgency in Iraq, the elections in Iraq, the new government in Iraq, etc. etc. Meanwhile, the other countries of the world have been moving forward, at breakneck speed - particularly in Asia.
Historically, George W is not the first westerner to run aground on the sands of Mesopotamia. Fittingly, Bush joins the ancient Romans by following closely the footsteps of Crassus and Emperor Julian into the barren wastes of Mesopotamia and to their eventual doom. Barren since the destruction of the irrigation systems by Tamerlane, the desert sands of Iraq do hold a substantial aquifer of petroleum and with it the promise of a cheap victory, paid for at no expense to ourselves by using the oil revenues. Anticipating things would follow along the lines of the first Gulf War which was paid at the Saudis expense, this painless vision of warfare with low casualties and small costs was the model they followed. The allure of a cheap victory followed by the vision of adoring crowds of 1944 Paris certainly helped motivate the Bush people to their doom. George W joined a renowned list of suckers going back to Roman times.
The first sucker was Crassus, who lead his legions into Mesopotamia, trusting his Iraqi guides that led him to the middle of the desert, where he was surrounded by enemy forces. Soon afterwards his severed head was held up high on a pike. The Emperor Julian was next to follow the same sorry path when he trusted in an Iraqi deserter the intelligence that he should quit his own strongly fortified base of operations and move out into the countryside in expectation that the population would come out to support him. Unfortunately, once his base of operations was gone so were his prospects. Soon his legions were in retreat and his death soon followed.
George Bush followed a similar path, trusting Ahmed Chalabi and his visions of easy victory into the hell hole of Iraq. In time, perhaps Iraq may become a strong democracy in the middle east and afford the supporters of the intervention some comfort. However, weighed against the costs in a time of declining American influence and strength this adventure has certainly cost the United States a great deal of time and treasure when the country is running out of both. The action in Iraq has also had the unfortunate outcome of empowering Iran and other forces that are hostile to US interests. In effect the USA got the blood sweat and tears only for Iran to reap the rewards.
At least the Emperor Julian reined in wasteful spending in a desperate attempt to save the empire, throwing out the hangers on and the other leaches that were sucking the empire dry. George Bush merely encouraged them to take more and more. The mantra of "deficits do not matter" took hold as the country was being propped up for foreign creditors to the tune of $2 billion a day.
The economic collapse that reveled itself in the autumn of 2008 can not be laid purely on Bush's incompetency as the Democrats would like. Secular forces have been at work for years (see earlier posts) that have converted the United States from a self sufficient nation to one dependant on others and on the dole of foreigners. Years of reliance on foreign credit with no ready means to repay except the blood sweat and tears of our children has been the hallmark of the United States for last twenty years.
Once the economic collapse was made painfully obvious to him, Bush at least had the sense to finally throw his ideology to the wind as it became clear that as he was in line to become the next Herbert Hoover. The massive injections of liquidity followed by his Treasury secretary, Hank Paulson were the opposite of the liquidate, liquidate, liquidate method followed by Secretary Mellon in the 30s. This brought some stability to the system but at the cost of adding to the ruinous debt and allowing the Democrats to throw all financial prudence to the wind and embark on a massive Keynesian economic stimulus. The Democrats can claim to be merely following the Republican example.
This type of stimulus has been tried before like in Japan in the 90s or the USA in the 70s. It did not work well in either situation. At present these new debts will find willing buyers as everyone has fled equities and bonds and is satisfied to merely hold US Treasury Bills to preserve capital. In effect we are in a Treasury bubble.
Later as the rest of the world recovers, these flows will reverse and the trick will be keep finding buyers to turn over more and more debt as it matures. With the Chinese, Saudis and everyone else anxious to find alternatives to US debt and the shaky future prospects for the dollar the situation is parlous indeed. Inevitably the demand for Treasuries will wane and they will have to attract new buyers by offering higher interest rates. Higher rates will depress the US economy for years to come. As a last resort the government will have no choice to resort to the printing press to inflate its way out of its debts. This ultra-stealthy tax on all money balances will be the final ruin of investors that have already trusted their future to their 401Ks and other investments.
Inevitably Bush will get tarred for all these things as the Democrats and their allies in academia and the media attempt to foist the whole mess on him, while ignoring their own complicity. Two hundred years of the Roman "debasement of the currency" has been accomplished in under 60 years of the Pax Americana and the abuse of the public credit. Alas, for that we can blame only ourselves.
