Salon: Recession May Be On The Way

Well, something's on the way. This article is pretty mealy mouthed about what. Where, oh where have all the audacious economists gone?

Chances are however, in light of the body blows Bush has given the economy with his unnecessary war, tax cuts and out-of-control spending, we are going to have a recession and a bad one.

Furthermore, many of the economic factors that would contribute to recession can, indeed, be laid right at the doorstep of Dubya and his Republican enablers in Congress.

"The Federal Reserve is also unwilling to stop increasing interest rates because it is afraid of recession risk factor No. 2: a rise in oil and import prices. Those fears are justified. Remember how the invasion of Iraq, besides bringing a golden age of democracy to the Middle East, was also supposed to produce $15-dollar-per-barrel oil? Oil is now at $75 a barrel, and this rise in oil prices is putting upward pressure on prices in general. As for import prices, they are vulnerable to a U.S. dollar that has been weakened by the Bush budget deficit and massive borrowing from China. Suppose the dollar declines suddenly, which is not a far-fetched possibility. Should the dollar fall by, say, 30 percent, and should importers raise their dollar prices in proportion, then the one-sixth of U.S. spending that is spending on imports will see prices rise by 30 percent. Because 30 percent times one-sixth equals 5 percent, that would boost U.S. consumer prices by 5 percent nearly overnight. "

I'd also point out that it is the fact that our "amazing" economy has really only benefited the wealthy that has pushed so many middle-class people to, as the writer says in the article, use "their houses as gigantic ATMs." Economists always seem to blame working people for the amount of debt they have, but when the cost of living is going up and your income, relatively speaking, is going down, you have to make up the difference somehow.

The only thing that would help at this point would be if Congress were to repeal the tax cuts and businesses were to voluntarily sacrifice a significant chunk of their profits to wage increases (for regular employees, not CEOs) and job creation.

Oh well. I trust the voters will know exactly who to blame when the economy goes straight to hell just in time for the 2008 campaign.