"[Bush's] inarticulateness has become .. a national securitythreat for theUS"

Brian Atkins brian@posthuman.com
Mon, 24 Mar 2003 16:15:56 -0600

Eugen Leitl wrote:
> Wall Street say this war
> has cost the market 1.3 T$ allready, and direct and followup costs could
> run up to 1.9 T$
> These are high estimates, but "no lasting effects", my ass. If the current
> administration has been drinking their own <http://newamericancentury.org>
> koolaid, and this is just the beginning, we're all fucked, honestly.

I think if you study economic history and theory, you will come to the 
conclusions I have:

1. The current economic and market problems are at least 90% due to the 
continuing aftereffects of the gigantic economic/market bubble that was 
allowed to develop (as to why it was allowed to continue developing, 
even after it was spotted early on is a whole other subject) in the 90s. 
Other issues like China exporting deflation to us, the war, etc. have a 
relatively tiny impact compared to the massive malinvestments that 
occurred through the second half of the 90s.

2. The aftereffects of such bubbles generally lead to roughly a decade, 
at a minimum, of bearish markets/recession-prone economies. There can be 
brief positive periods, but generally it will be a rough ride as all the 
overcapacities are used up or written off, all the bad investments are 
cleaned up, and the various markets (including the housing market) 
gradually seek historic norms which are still far below where we are 

3. There is actually fairly little Bush/the government can do to improve 
the situation. When he took office the country was already heading into 
this recessionary environment... think about all the high tech workers 
that have lost their jobs- is this due to a) the bust of the bubble or 
b) the Iraq war? If you agree with me that the answer is A, what exactly 
do you want the government to do about it that will actually solve the 
problem? They did pass a tax cut which does help the economy, but only 
very slightly. It may have helped avoid the recession we are currently 
skirting very closely.

4. Although the government can conceivably do things to seriously hurt 
the economy, this current war does not qualify IMO. It has caused 
relatively slight increases in oil prices, and relatively slight 
decreases in consumer spending (which arguably would have occurred even 
without a war). So far it hasn't even triggered a mild recession, which 
surprises me and tells me the economy is still quite resilient. There 
have also been some positives like the continuing flight to safety in 
the treasury bond market which has helped push mortgage rates for house 
loans/refis down to record lows which has in turn allowed consumers to 
go through yet another round of propping up their spending habits.

5. Finally an interesting thing I'd like to point out is the chart link 
below that compares the performance of the US S&P 500 vs. the German DAX 
over the past 6 months:


As you can see, for some reason the German market has begun to 
underperform the US market lately. If the hypothesis is that it was 
economically unwise for the USA to go to war and wise for the Germans to 
stay out of it, then this chart is perhaps throwing a wrench into 
things. Perhaps instead we should consider an alternate hypothesis: a 
country (or even a small set of countries) will find that there is one 
certain way it can economically sabotage itself- do something to hurt 
its relationship with the USA.

Is the world just too dependent on the USA's consumers at this point to 
be able to withdraw from us without massive economic damage to itself? 
Any "first-world" country which attempted to seriously disengage and 
become self-supporting would likely fall so far behind so quickly that 
their country would become more or less a third world country compared 
to where the USA would be at that point. Sad fact of 
Singularity/globalization economics I guess for those who loath the 
current USA government.
Brian Atkins
Singularity Institute for Artificial Intelligence