Original Link: http://krugman.blogs.nytimes.com/2008/01/29/an-iraq-recession/
By Paul Krugman
One thing I get asked fairly often is whether the Iraq war is responsible for our economic difficulties. The answer (with slight qualifications) is no.
Just to be clear: I yield to nobody in my outrage over the way we were lied into a disastrous, unnecessary war. But economics isn’t a morality play, in which evil deeds are always punished and good deeds rewarded.
The fact is that war is, in general, expansionary for the economy, at least in the short run. World War II, remember, ended the Great Depression. The $10 billion or so we’re spending each month in Iraq mainly goes to US-produced goods and services, which means that the war is actually supporting demand. Yes, there would be infinitely better ways to spend the money. But at a time when a shortfall of demand is the problem, the Iraq war nonetheless acts as a sort of WPA, supporting employment directly and indirectly.
There is one caveat: high oil prices are a drag on the economy, and the war has some — but probably not too much — responsibility for pricey oil. Mainly high-priced oil is the result of rising demand from China and other emerging economies, colliding with sluggish supply as the world gradually runs out of the stuff. But Iraq would be exporting more oil now if we hadn’t invaded — a million barrels a day? — and that would have kept prices down somewhat.
Overall, though, the story of America’s economic difficulties is about the bursting housing bubble, not the war
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Wow. An amazingly lazy look at the war and ecomonics, right out of the NPR pablum. Do they give Co-op dollars to promote their agenda? I know a number of soldiers that are in Iraq right now, including my best friend and a cousin. The latter helped uncover one of the mass graves containing close to 1,000 Iraqi citizens-- dumped there after one of Saddam's genocidal decrees. That has stopped since we went there. As far as the ecomonics of the country, write up a thorough review of the news this week that no one is reporting: Second quarter Gross Domestic Product (GDP) doubled to 1.9 percent, up from 0.9 percent in the first quarter. "iraq-recession"? For a recession, there has to be multiple sequential quarters of economic loss. There is no housing crisis; there is a stupidity crisis: people that should not have been given loans were given financing, and now they can't pay their mortgage. It is not complicated. Thank you for being one of the only people explaining that CHINA is using, and hoarding, mass amounts of oil. Along with being the highest polluters, they're keeping oil prices high with their insane consumption but, unlike the US, aren't investing much in alternative sources of fuel.
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