November 23, 2004

Another sunny view of Dubya's second term.

From a Reuters interview with US economist Paul Krugman:

The most immediate worry for Krugman is that Bush will simultaneously push through more tax cuts and try to privatize social security, ignoring a chorus of economic thinkers who caution against such measures.

"If you go back and you look at the sources of the blow-up of Argentine debt during the 1990s, one little-appreciated thing is that social security privatization was a important source of that expansion of debt," said Krugman.

In 2001, Argentina finally defaulted on an estimated $100 billion in debt, the largest such event in modern economic history.

"So if you ask the question do we look like Argentina, the answer is a whole lot more than anyone is quite willing to admit at this point. We've become a banana republic."

Crisis might take many forms, he said, but one key concern is the prospect that Asian central banks may lose their appetite for U.S. government debt, which has so far allowed the United States to finance its twin deficits.

A deeper plunge in the already battered U.S. dollar is another possible route to crisis, the professor said. [...]

The only bright spot in having Bush in power for another four years, said Krugman, is that further economic mismanagement might trigger some sort of popular outcry.

These warnings are nothing new from Krugman, who's been exposing the risks of Dubya's economic policies for years. Now, however, at least some of Krugman's worries are shared by that rabid communist, US Federal Reserve chair Alan Greenspan, who warned about a potential dollar slide earlier this week.

Via Salon.

Posted by Magpie at November 23, 2004 10:48 AM | Economy | Technorati links |