Iraq war 'caused slowdown in the US'

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FLASHBACK: Iraq war 'caused slowdown in the US'
Peter Wilson

Posted February 28, 2008

THE Iraq war has cost the US 50-60 times more than the Bush administration predicted and was a central cause of the sub-prime banking crisis threatening the world economy, according to Nobel Prize-winning economist Joseph Stiglitz.

The former World Bank vice-president yesterday said the war had, so far, cost the US something like $US3trillion ($3.3 trillion) compared with the $US50-$US60-billion predicted in 2003.

Australia also faced a real bill much greater than the $2.2billion in military spending reported last week by Australian Defence Force chief Angus Houston, Professor Stiglitz said, pointing to higher oil prices and other indirect costs of the wars.

Professor Stiglitz told the Chatham House think tank in London that the Bush White House was currently estimating the cost of the war at about $US500 billion, but that figure massively understated things such as the medical and welfare costs of US military servicemen.

The war was now the second-most expensive in US history after World War II and the second-longest after Vietnam, he said.

The spending on Iraq was a hidden cause of the current credit crunch because the US central bank responded to the massive financial drain of the war by flooding the American economy with cheap credit.

"The regulators were looking the other way and money was being lent to anybody this side of a life-support system," he said.

That led to a housing bubble and a consumption boom, and the fallout was plunging the US economy into recession and saddling the next US president with the biggest budget deficit in history, he said.

Professor Stiglitz, an academic at the Columbia Business School and a former economic adviser to president Bill Clinton, said a further $US500 billion was going to be spent on the fighting in the next two years and that could have been used more effectively to improve the security and quality of life of Americans and the rest of the world.

The money being spent on the war each week would be enough to wipe out illiteracy around the world, he said.

Just a few days' funding would be enough to provide health insurance for US children who were not covered, he said.

The public had been encouraged by the White House to ignore the costs of the war because of the belief that the war would somehow pay for itself or be paid for by Iraqi oil or US allies.

"When the Bush administration went to war in Iraq it obviously didn't focus very much on the cost. Larry Lindsey, the chief economic adviser, said the cost was going to be between $US100billion and $US200 billion - and for that slight moment of quasi-honesty he was fired.

"(Then defence secretary Donald) Rumsfeld responded and said 'baloney', and the number the administration came up with was $US50 to $US60 billion. We have calculated that the cost was more like $US3 trillion.

"Three trillion is a very conservative number, the true costs are likely to be much larger than that."

Five years after the war, the US was still spending about $US50billion every three months on direct military costs, he said.

Professor Stiglitz and another Clinton administration economist, Linda Bilmes, have produced a book, The Three Trillion Dollar War, pulling together their research on the true cost of the war, which does not include the cost to Iraq.

One of the greatest discrepancies is that the official figures do not include the long-term healthcare and social benefits for injured servicemen, who are surviving previously fatal attacks because of improved body armour.

"The ratio of injuries to fatalities in a normal war is 2:1. In this war they admitted to 7:1 but a true number is (something) like 15:1."

Some 100,000 servicemen have been diagnosed with serious psychological problems and the soldiers doing the most tours of duty have not yet returned.

Professor Stiglitz attributed to the Iraq war $US5-$US10 of the almost $US80-a-barrel increase in oil prices since the start of the war, adding that it would have been reasonable to attribute more than $US35 of that rise to the war.

He said the British bill for its role in the war was about 20 times the pound stg. 1billion ($2.1 billion) that former prime minister Tony Blair estimated before the war.

The British Government was yesterday ordered to release details of its planning for the war, when the country's Information Commissioner backed a Freedom of Information request for the minutes of two cabinet meetings in the days before the war.

Commissioner Richard Thomas said that because of the importance of the decision to go to war, the public interest in disclosing the minutes outweighed the public interest in withholding the information.

FLASHBACK: Iraq war 'caused slowdown in the US'
Peter Wilson

Posted February 28, 2008

THE Iraq war has cost the US 50-60 times more than the Bush administration predicted and was a central cause of the sub-prime banking crisis threatening the world economy, according to Nobel Prize-winning economist Joseph Stiglitz.

The former World Bank vice-president yesterday said the war had, so far, cost the US something like $US3trillion ($3.3 trillion) compared with the $US50-$US60-billion predicted in 2003.

Australia also faced a real bill much greater than the $2.2billion in military spending reported last week by Australian Defence Force chief Angus Houston, Professor Stiglitz said, pointing to higher oil prices and other indirect costs of the wars.

Professor Stiglitz told the Chatham House think tank in London that the Bush White House was currently estimating the cost of the war at about $US500 billion, but that figure massively understated things such as the medical and welfare costs of US military servicemen.

The war was now the second-most expensive in US history after World War II and the second-longest after Vietnam, he said.

The spending on Iraq was a hidden cause of the current credit crunch because the US central bank responded to the massive financial drain of the war by flooding the American economy with cheap credit.

"The regulators were looking the other way and money was being lent to anybody this side of a life-support system," he said.

That led to a housing bubble and a consumption boom, and the fallout was plunging the US economy into recession and saddling the next US president with the biggest budget deficit in history, he said.

Professor Stiglitz, an academic at the Columbia Business School and a former economic adviser to president Bill Clinton, said a further $US500 billion was going to be spent on the fighting in the next two years and that could have been used more effectively to improve the security and quality of life of Americans and the rest of the world.

The money being spent on the war each week would be enough to wipe out illiteracy around the world, he said.

Just a few days' funding would be enough to provide health insurance for US children who were not covered, he said.

The public had been encouraged by the White House to ignore the costs of the war because of the belief that the war would somehow pay for itself or be paid for by Iraqi oil or US allies.

"When the Bush administration went to war in Iraq it obviously didn't focus very much on the cost. Larry Lindsey, the chief economic adviser, said the cost was going to be between $US100billion and $US200 billion - and for that slight moment of quasi-honesty he was fired.

"(Then defence secretary Donald) Rumsfeld responded and said 'baloney', and the number the administration came up with was $US50 to $US60 billion. We have calculated that the cost was more like $US3 trillion.

"Three trillion is a very conservative number, the true costs are likely to be much larger than that."

Five years after the war, the US was still spending about $US50billion every three months on direct military costs, he said.

Professor Stiglitz and another Clinton administration economist, Linda Bilmes, have produced a book, The Three Trillion Dollar War, pulling together their research on the true cost of the war, which does not include the cost to Iraq.

One of the greatest discrepancies is that the official figures do not include the long-term healthcare and social benefits for injured servicemen, who are surviving previously fatal attacks because of improved body armour.

"The ratio of injuries to fatalities in a normal war is 2:1. In this war they admitted to 7:1 but a true number is (something) like 15:1."

Some 100,000 servicemen have been diagnosed with serious psychological problems and the soldiers doing the most tours of duty have not yet returned.

Professor Stiglitz attributed to the Iraq war $US5-$US10 of the almost $US80-a-barrel increase in oil prices since the start of the war, adding that it would have been reasonable to attribute more than $US35 of that rise to the war.

He said the British bill for its role in the war was about 20 times the pound stg. 1billion ($2.1 billion) that former prime minister Tony Blair estimated before the war.

The British Government was yesterday ordered to release details of its planning for the war, when the country's Information Commissioner backed a Freedom of Information request for the minutes of two cabinet meetings in the days before the war.

Commissioner Richard Thomas said that because of the importance of the decision to go to war, the public interest in disclosing the minutes outweighed the public interest in withholding the information.

Short-term the war might have been bad economically for the US, but long term I feel it will be good. Siting WW2 is interesting, because that war spurred American into the super power that it is today.

Do you reckon that the US will be able to plunder the oil long term then? Thats a mighty lot of oil to steal to recoup a $3 trilian investment.

It's actually 1 trillion when talking about the money spent over in Iraq. The US doesn't have to "steal" anything I can assure you. Technology advances in the next decade and beyond will further propel the US as the "world leader". Everyone knows in business that the US is one of the best places to invest due to our current capitalistic market (minus the bank bailout) and we have acre upon acre of empty land to develop on.

Bush's war, and his collusion to reward Fannie Mae for ruining the economy, are both are sure to make ANY improvement in the economy look like a godsend.

Fannie Mae started it all by lowering its credit standards back in 1999, ostensibly to provide more opportunities for high-risk, low-income people (such as illegal immigrants and other sources of cheap labor) to buy houses.

Now we're all screwed.

Last edited by Fnord on 02 Oct 2008, 2:58 pm, edited 1 time in total.

I think america will be contracting not expanding. Have you got water aplenty to grow some more crops?

lol Like I said before technology will exponentially grow so fast in the next few years it will far outpace any demand from "overpopulation" and the possible problems growing debt will cause. We live in a global economy and any problems the US faces I can assure you the rest of the world will dependently face alongside the US.

Do you have any thoughts of your own or do you want to cut and paste me another "the sky is falling" article?

lol my poor fellow, where is the financing to pay for this exponential growth in technology research to come from during the present economic implosion?

How did inventions like the car radio, analog computer, jet engine, stop-action photography, electron microscope, nylon, tape recorder, radar, and the helicopter get created during the Great Depression? Society, technology, science, and people's motivation will just not come to a stand still if the banks can't lend money, just like they couldn't lend money in the Great Depression. The only different is that the technology we have today and are working on will greatly increase efficiency of everything in our daily lives exponentially much faster than in the 1939s.

Last edited by CentralFLM on 02 Oct 2008, 3:24 pm, edited 1 time in total.

Modern science is exponentially expensive and if you cant come up with any new tricks during boom years then you dont have a hope. All the cash will be going into bagging and tagging you.

Any hope? Oh ok, so basically you are saying that the economy will come to a stand still and all 300 million people in one of the most advanced society will starve to death? We have learned new tricks during the "boom years", they just forgot to send YOU the memo when it was discovered. Modern science is more expensive these days, but no more than it was in the 1930s when you consider inflation. You are just making that up on the top of your head that it is "exponentially" more expensive, because that is not true.

Most of the devices you mention can and were developed on shoestring budgets in garden sheds. The kind of life saving patents you imply such as free energy would cost countless billions. Billions you just dont have. So solly.

If you wish you can make believe that George Bush or his succesor will make it all better then who am i to puncture your dream?

Learn to grow vegetables young man and get yourself a shooter.

I guess this is where you and I mostly differ. I realize that the "president", comparable to the Queen of England, is nothing but a puppet. The shots are not called by him, but really by big business and the Federal Reserve, a private entity. It's about money and what is profitable. For years large companies have been selling us automobiles that use gas because it is profitable for them even though they have the technology to make cars several times more fuel efficient. If the economy struggles people will not have money to buy cars or to buy the fuel to put in the cars. Thus they then rapidly start producing more efficient cars, which is what they are doing now.

You should study http://en.wikipedia.org/wiki/Accelerating_change and Raymond Kurzweil, a brilliant inventor futurist who has a much more positive outlook. Do I think the US will remain a super power forever or even in the next 20 years? I guarantee we won't, but it doesn't mean we'll be in the bread lines again either. Nothing will stop the rapid advancement of technology.

America is bankrupt. The whole economy is a stack of cards propping each other up.