The people who say the Iraq war isn't a major drag use the past 4 years of growth to justify their claim. To me, this is the typical short sighted analysis that make macroeconomics so confusing to the layman.

The US has been running huge current account deficit, and it's well known that inflation initially provides a growth surge and increases employment. The keyword here is initially, because there's no such thing as a free lunch, and printing massive amounts of money inevitably leads to the type of financial crisis we're beginning to see now. This phenomenon is called the inflation/unemployment trade-off (in a global scale), and is taught in every single economics freshman course out there.

Of course there are other factors that permitted the US to print so much money for so long before any measurable side-effects. It only happened because the USD is the world currency, and that Asian markets bought an enormous quantity of US treasury issues (bills, notes, bonds) during this period. No one in the world in their right mind would bet against the US dollar, so every international banker played along.

While the US analysts are playing this short sighted game and placing the blame on subprime loans and rising food prices (not a joke -- this was published on Yahoo News today), the Chinese have secured 25 year contracts with all major suppliers. The US totally lost track of the big picture, and is going to pay for it.

can't wait for that super-fat check, though eh?...

delicious crumbs from the table. and just in time to give back to them, as tax. heh.

oh well. at least i know 10 bucks of it, that's going to a worthy cause!

*requeue

Re-queueing this video for one more try; last queued Monday, January 21st, 2008 9:12am PST - requeue requested by submitter Grimm.

Excellent comment there by flavioribeiro.

I just want to add that both sides of the governement have also passed bills that favoured the corporate world over protecting the economy and the welfare of the middle class (by far the most important part of the economy). The incessent tax cuts have overwhelmingly favoured those who are already finiancially stable and well off over those struggling to make ends meet. At the same time the dismantling of many of the safeguards of the economy back in Reagen era have lend to the current subprime markets mess specifically because they sidelined regulations in favour of free markets that only lead to more problems being created.

But of course no one will blame them, the blame will fall on illegal aliens.

the two biggest factors in the US economy tanking are: credit companies being allowed free-rein and the Iraq war

How can they sit there and admit that we are basically sending US money to the arab world and then try to say that the money will be spent back to us?! How in the world do they really think all the money we spend in Iraq will make it back to the US? Iraqi people are gonna start ordering stuff off of US ebay?!
Allowing the credit companies to fleece America STILL is killing the middle class; rates keep getting cut (so the credit companies have lower interest) but notice credit companies are not cutting rates for the end user - the middle class. Thus they credit companies (who admittedly made some serious mistakes by their rampant predatory lending practices) are doing everything they can to retain all profits rather than extend the falling interest to the consumer.

Is there anyone else that can't take listening to the pundits shout over each other? By the end I couldn't take the screeching any more.

*money

Adding video to channels (Money) - requested by MycroftHomlz.