FLASHBACK: Economists Predicted That A Prolonged U.S. Presence In Iraq Could Lead To A Recession

[bemildred]

In yesterday’s press briefing, a reporter asked White House Press Secretary Dana Perino about the tie between the current U.S. economy and the Iraq war. Perino quickly dismissed the reporter’s question, insisting that the U.S. economy has been “very strong” and adding that the money was necessary to “take the fight to the enemy” after 9/11.

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Oil prices are at approximately $88 a barrel, although they have dropped from the record high of $100 earlier this month. As Nobel laureate Joseph Stiglitz recently noted in Vanity Fair, “The soaring price of oil is clearly related to the Iraq war. The issue is not whether to blame the war for this but simply how much to blame it.”

Before the war, economists were predicting that oil prices at just $75 a barrel could potentially send the U.S. economy into a recession. Therefore, the current economic situation should not come as a complete shock to the Bush administration. A look at economists’ pre-war predictions:

“A war against Iraq could cost the United States hundreds of billions of dollars, play havoc with an already depressed domestic economy and tip the world into recession because of the adverse effect on oil prices, inflation and interest rates, an academic study has warned.”

“If war with Iraq drags on longer than the few weeks or months most are predicting, corporate revenues will be flat for the coming year and will put the U.S. economy at risk of recession, according to a poll of chief financial officers.”

“If the conflict wears on or, worse, spreads, the economic consequences become very serious. Late last year, George Perry at the Brookings Institution ran some simulations and found that after taking into account a reasonable use of oil reserves, a cut in world oil production of just 6.5 percent a year would send the United States and the world into recession.”

“Gerd Häusler, the IMF’s director of international capital markets, said that ‘purely from a financial markets perspective, a serious conflict with Iraq would not be a very healthy development.’ … Häusler said there could be a repeat of what happened in 1990 following the Iraqi invasion of Kuwait, when there was a sharp rise in oil prices.”

http://thinkprogress.org/2008/01/23/iraq-recession

[ixion]

1. To put this in perspective: Gas prices were around $1.75 in 2003... and rising

USA Today - Mar 21, 2003
Gasoline prices rose a sharp 9.9% last month, biggest increase since June 2000. Gasoline prices climbed this week to a national average $1.73 a gallon, ...


http://news.google.com/archivesearch/url?sa=t&ct=res&cd=9-0&url=http%3A%2F%2Fwww.usatoday.com%2Fmoney%2Feconomy%2Finflation%2F2003-03-21-cpi_x.htm&ei=OQ6aR5rIOpzoqwPBttmbCQ&usg=AFQjCNEJKGV9exu-f9lf-2obEhFD4UyoJQ

[fencesitter]

5. $1.73

aahh, those were the good old days.

[ixion]

6. yeah, right?

I remember being pissed then that they'd gotten so high. Gee, I hadn't seen anything yet, at that point.

[mwb970]

2. Everything about the current nightmare was predictable, and predicted.

I knew we were doomed when we elected Gore president and the Supremes installed bush. For me, that was the end of America as I had known it all my life. It's heartbreaking to see how much damage this one "man" has done.

It's down to Americans vs. Republicans now. Let's stop them.

[Demeter]

3. Only It Wasn't One Man--It Was a GOP Conspiracy

and it ran from the local school boards up to the Supreme Court.

[mwb970]

4. Well, that's true.

But he's the one on top of the steaming pile. The school board couldn't have invaded Iraq (etc.), although they did contribute to making it possible.