Bushs legacy??any credability with this Buchanan chap

[Sean Pa]

Sinking Currency, Sinking CountryFri Nov 2, 3:00 AM ET


The euro, worth 83 cents in the early George W. Bush years, is at $1.45
The British pound is back up over $2, the highest level since the Carter era. The Canadian dollar, which used to be worth 65 cents, is worth more than the U.S. dollar for the first time in half a century.

Oil is over $90 a barrel. Gold, down to $260 an ounce not so long ago, has hit $800.

Have gold, silver, oil, the euro, the pound and the Canadian dollar all suddenly soared in value in just a few years?

Nope. The dollar has plummeted in value, more so in Bush's term than during any comparable period of U.S. history. Indeed, Bush is presiding over a worldwide abandonment of the American dollar.

Is it all Bush's fault? Nope.

The dollar is plunging because America has been living beyond her means, borrowing $2 billion a day from foreign nations to maintain her standard of living and to sustain the American Imperium.

The prime suspect in the death of the dollar is the massive trade deficits America has run up, some $5 trillion in total since the passage of NAFTA and the creation of the World Trade Organization in 1994.

In 2006, that U.S. trade deficit hit $764 billion. The current account deficit, which includes the trade deficit, plus the net outflow of interest, dividends, capital gains and foreign aid, hit $857 billion, 6.5 percent of GDP. As some of us have been writing for years, such deficits are unsustainable and must lead to a decline of the dollar.

A sinking dollar means a poorer nation, and a sinking currency has historically been the mark of a sinking country. And a superpower with a sinking currency is a contradiction in terms.

What does this mean for America and Americans?

As nations realize that the dollars they are being paid for their products cannot buy in the world markets what they once did, they will demand more dollars for those goods. This will mean rising prices for the imports on which America has become more dependent than we have been since before the Civil War.

U.S. tourists traveling to the countries whence their ancestors came will find that the money they saved up does not go as far as they thought.

U.S. soldiers stationed overseas will find the cost of rent, gasoline, food, clothing and dining out takes larger and larger bites out of their paychecks. The people those U.S. soldiers defend will be demanding more and more of their money.

U.S. diplomats stationed overseas, students and businessmen are already facing tougher times.

U.S. foreign aid does not go as far as it did. And there is an element of comedy in seeing the United States going to Beijing to borrow dollars, thus putting our children deeper in debt, to send still more foreign aid to African despots who routinely vote the Chinese line at the United Nations.

The Chinese, whose currency is tied to the dollar, and Japan will continue, as long as they can, to keep their currencies low against the dollar. For the Asians think long term, and their goals are strategic.

China ? growing at 10 percent a year for two decades and now growing at close to 12 percent ? is willing to take losses in the value of the dollars it holds to keep the U.S. technology, factories and jobs pouring in, as their exports capture America's markets from U.S. producers.

The Japanese will take some loss in the value of their dollar hoard to take down Chrysler, Ford and GM, and capture the U.S. auto market as they captured our TV, camera and computer chip markets.

Asians understand that what is important is not who consumes the apples, but who owns the orchard.

Other nations that have kept cash reserves in U.S. Treasury bonds and T-bills are watching the value of these assets sink. Not fools, they will begin, as many already have, to divest and diversify, taking in fewer dollars and more euros and yen. As more nations abandon the dollar, its decline will continue.

The oil-producing and exporting nations, with trade surpluses, like China, have also begun to take the stash of dollars they have and stuff them into sovereign wealth funds, and use these immense and growing funds to buy up real assets in the United States ? investment banks and American companies.

Nor is there any end in sight to the sinking of the dollar. For, as foreigners demand more dollars for the oil and goods they sell us, the trade deficit will not fall. And as the U.S. government prints more and more dollars to cover the budget deficits that stretch out ? with the coming retirement of the baby boomers ? all the way to the horizon, the value of the dollar will fall. And as Ben Bernanke at the Fed tries to keep interest rates low, to keep the U.S. economy from sputtering out in the credit crunch, the value of the dollar will fall.

The chickens of free trade are coming home to roost.

To find out more about Patrick Buchanan, and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate web page at www.creators.com.

COPYRIGHT 2007 CREATORS SYNDICATE INC.

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[Beachcomber]

Not sure how strong Buchanan's credentials are, being a politician himself. I think the country is in a much worse place than it was say 10 yrs ago. I think it's in part due to circumstances President Bush had thrust upon him (9/11 and the subsequent war in Afghanistan) and partly folly of his own making (invading Iraq). I have tried to give him the benefit of the doubt that he felt Iraq posed a grave threat with possible WMDs. Would it have been worse to not invade and it turned out he did indeed have WMDs in a post 9/11 world? I didn't have his decision making responsibilities, so I won't accuse him personally of "wrong doing" but clearly the Iraq War was a mistake and has cost us dearly. What I do admire about President Bush is the fact that he stands his ground, regardless of what opinion polls say about his policies. He is no coward and that's admirable. But let's face it, things are a mess. It may take a decade or longer to make a fair and balanced assessment of his administration.

[Sean Pa]

Thats an excellent point, not mentioned in the article.
Do you think any future President will suffer economic hardship so readily,will the voters allow it.?

[Beachcomber]

I think a lot of presidents get credit for trends that took root in their predecessor's administration, good and bad. Economic trends tend to work in 5 yr cycles. President Carter inherited the mess in Iran from years of US support of a corrupt Shah. How he handled it was his own fault, but the situation itself he inherited. Hoover inherited the free wheeling, free for all, irresponsibility of Harding and Coolidge, all to come crashing down on his watch. JFK inherited the Cuban mess from Eisenhower and in fact the Bay of Pigs invasion was already planned and ready to go before he ever slept in the White House and he allowed it to proceed, but without essential US air cover. Bush inherited a strong economy that boomed in the 2nd Clinton administration, then 9/11 came and turned everything upside down. So those are just a few examples to illustrate my point. A president has to commit really serious crimes to be removed from office before his term ends. The next POTUS, regardless of his/her political views has quite a challenge to face. I wish we still had Ronald Reagan at the helm.