26 August 2008

No change yet

My poor neglected blog. I know it has been almost a year since my last entry and guess what… nothing has changed since the drama unfolded last August. And guess what? This remains constant that if nothing is done concerning the consumer the economy will go no where. So where do I begin? Well I have been watching daily as this drama is unfolding and even though this blog is mainly geared to towards how important and effective engaged diplomacy is rather than chest pounding diplomacy, the economic crisis that we face is tied to diplomacy.

I mentioned earlier in one of my postings about how we need to use diplomacy instead of chest pounding to achieve goals because if a situation arises that may put us in a bad spot and you have used chest pounding tactics instead of engaged diplomacy then your friends may be few when you need them. And it looks like we may be close to that scenario. Now we find ourselves in an economic situation of a lifetime that could easily turn catastrophic on a dime on any given geopolitical event.

We find that certain credit markets we no longer have access to and it was through those markets flowed the lifeline of our economy. The well is dry because investors are not willing to put up the money to purchase bonds. We find our different officials scrambling to put things back on course but it appears to me they are rearranging the chairs on the deck because all the Federal Reserve Bank is doing is replacing those who were buying securities and funding our spending via printing excess money to purchase those securities in order to stimulate lending, which ultimately may drive down the value of our currency I guess unless they can, as you say, beat the clock and things can get back to normal before another shoe drops it may work. In my opinion, a country’s currency is synonymous with country sovereignty and and its place in the world.

Now to tie this into the main theme of this blog which is diplomacy; IRAQ!!!!! should have never happened and it is costing us dearly. The money that has been spent on that venture was an opportunity cost to our country. The housing market is on thin ice and needs to be bailed out (Fannie and Freddie). The banks need to be bailed out. The consumer needs to be bailed out. The bail out is in need to be bailed out. And sending jobs overseas leads to low wages leads to no credit leads to no profit leads to no business And that is playing itself out with the latest news that businesses filing for bankruptcy is on the rise and bank failures.

With that in mind if the administration had chosen instead to go after the masterminds of 9-11-2001 and made it short, concise, and done with, and if there had been more oversight of our financial marktes and less tax cuts, we probably would have avoided what were experiencing now economically. But the abnormal obsession with Iraq and lack of market regulation has caught up with the administration and I am willing to bet they did not see this economic crisis coming even though they should have been aware.


It had been said all along when you go to war you do not cut taxes which may have been a red flag that this was more of an adventure than a war which is at the expense others. So how did they expect to pay for the adventure? Auctioning treasury notes to other countries namely China. So you have the convergence of those billions of dollars in treasury notes auctioned off to pay for the Iraq adventure and the printing of money to bail out banks and what do you get? Suck up diplomacy. The president could not afford to not go to China for the Olympics at the request of human rights organizations. He is indebted to them and must walk a fine line to keep the egg from falling.