Thursday, February 03, 2005

SOTU Post; Bush Lies-No Crisis; Falling Dollar, Now That's a Crisis

I didn't watch Bush' SOTU because he is an inveterate liar. The level of the dishonesty and disregard for truth and nobility truly boggles the mind. Again, he tried to push his lies about social security, but that part of the speech was DOA, dead on arrival. He will get not one Democratic Senator and the OH Republican Senators have backed away as have Maine's. Lindsey "Republican by Day, Democrat by Night" Graham, has called the president's plan horrible and I think there are a few more Senators here and there who understand that there will be hell to pay if they dance with Bush. No plan is getting through the US Senate.

There is no crisis with social security. George Bush is lying.

If you all remember, John Kerry pointed out that Bush had a social security "January surprise" and Republicans were all up in arms saying not so. Well, where are these guy's priorities. Social Security was not a campaign issue, all of a sudden, we're being beat over the head like this is the most important thing in the world. i suppose it is for Wall Street bankers who will make a killing managing those accounts. It's called bait and switch. Bush fooled me once in 2000, . . .

Besides, to point out how disingenous the Republican Party is: the pro-life issue is solely about vote getting and Catholics are like pavlov dogs in their view, mention "culture of life" or "pro-life" and the salivating starts. Works like a charm everytime. Andrew Sullivan makes an excellent point. Gay marriage haters are pushing an ammendment that they know will fail the Supreme Court test, nonetheless, it hasn't stopped them from pushing it to make a political point. Now we have to ask, if they really cared about the pro-life issue, why not push a Right to Life ammendment? We know it would fail at the courts but it still makes the point, right? They won't because they like things the way they are. As long as Catholics remain pavlovian, they'll keep ringing that bell.

Steven Clemons, who I read daily, great stuff, talks about the falling dollar and how the next Fed gov will allowing the dollar to keep falling. The whole dollar business with this administration is so idiotic it defies reason. The Bush people want the dollar to fall so that it makes our goods cheaper and more competitive on the international stage.

The problem is that by letting the dollar drop the way it has, we have negatively impacted other nations and hurt their economies and they can't buy our goods. Secondly, to provide any meaningful upward shift in exports requires a structure change in American manufacturing, not just that we sell one more of each good, but new plants, and infrastructure have to be created and that takes years. You can't just say let's make the dollar fall and our exports go up. It doesn't work that way. Thirdly, our dollar drop is causing inflation in other countries. The problem is that we are a nation dependent on imports. We can't simply turn of imports. And so when we import, we import their inflation! and that increases domestic prices. So if a call center in India cost 2 cents per call, if there's inflation in India it increases the cost of importing those services to 2+x cents a call. Or if a car manufacturer imports parts from wherever, if wherever is undergoing an inflationary spell, then said manufacturer imports that inflation and causes domestic inflation. It is all so crazy.

The issue of the Dollar is important because at some point something has to give. Investors have lost trememndous value because of their dollar holdings. This is one of the things that the Bush administration is gambling on. The fact that the Chinas and Japans of the world have billions in dollar denominated assets, they have no choice but to hold on to those assets so that they may recoupe those losses someday. Fair enough. But if it becomes clear that the dollar is in no position to rise far enough to even come close to making up the gap, then what happens? These investors cut their losses and look elsewhere. That is a nightmare scenario. The world is awash in dollars and no one needs dollars anymore. The US deficit position is horrific, the dollar is simply not an attractive investment any longer.

All that has to happen is for OPEC of even just Iran to begin to denominate their oil contracts in Euros and bingo, game over. in fact, there are rumors that Saddam considered switching to Euros which was supposedly a reason we attacked.

Make no mistake, if Iran switched to Euros, the US will attack Iran to "protect it's interests." You don't think so. Well the US had planned military attacks on Saudi Arabia in 1973 to take control of Saudi oil fields if they pulled a fast one, which the Saudi kingdow was considering at the time. If Iran switches to Euros, we are in trouble. There is a reason for all the sabre rattling at Iran.

Anyway, I suppose it doesn't matter that George Bu$h has made a mess of things, he is pro-life after all.


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