The Dogs of War, the Bears of Wall Street
The higher Bush tries to loft himself with war talk, the darker grow the economy’s dire responses.
On Tuesday the Dow Jones industrials dropped nearly 190 points to hit a four-year low. The broader market also finished down. The Nasdaq composite index, homeport for the New Economy, set a new six-year low. The Standard & Poor’s 500 index was down 14.45, or 1.7 percent, at 819.25.
The Fed’s Open Market Committee chose to leave rates at 40-year lows at its meeting Tuesday, saying bravely that consumer and business demand is “growing at a moderate pace.” But it also noted that considerable uncertainty remains about the timing and strength of an economic recovery,
Meanwhile, leading economic indicators and housing starts have fallen for three months in a row. Oil prices are up 40 per cent since the start of the year.
Last week we wrote here that we’ve now seen seven straight quarters of declining investment on plant and equipment and a sharp drop of the growth of consumer spending over the past four or five months. Suppose, we asked, there’s another drop in equity prices, reflecting dawning awareness that the performance of many of America’s mightiest corporate names has been based entirely on fraudulent numbers.
So now equity prices have dropped again and federal prosecutors have announced they’re opening a criminal probe into Xerox’s accounting practices. Xerox stock promptly fell 71 cents to $5.96 after the company said federal prosecutors were opening a criminal inquiry into the company’s accounting practices. WorldCom revealed that it probably misreported $9 billion in revenue, not $7 billion.
The official rate of profit on capital stock in the non-financial corporate sector as a whole is now) at its lowest level of the postwar period (except for 1980 and 1982).
If this was Bill Clinton, the commentators would be flaying him alive for Wag-the-Dog attempts to use war talk as a way to distract attention from economic bad news. Thus far Bush has remained aloft on his magic carpet, but he’s losing altitude steadily while Wall Street chews its lip, foreign denunciations pour in, and the German Social Democrats and Greens exult in the way Bush handed them an entirely unexpected victory last weekend.
America no longer has Senior Reps of the Ruling Class like John McCoy or “Wise Old Men” like the infinitely tacky Clark Clifford. At moments like this, such Senior Reps would step forth with measured warnings to Bush about his reckless path. These days we’re left with Henry Kissinger.
Probably the nearest thing we have to a senior statesman is that brilliant Democratic politician, Senator Bobby Byrd, whose monuments strew West Virginia.
The only opponent Senator Bobby Byrd of West Virginia has to fear is death itself so in Congress he speaks with a frankness rivaled only by the Texan libertarian, Rep Ron Paul. In the last week Byrd has excelled himself in speeches on the senate floor.
Byrd denounced Bush’s proposed Homeland Security Agency as a ramshackle, hastily conceived outrage to constitutional protections, a way of undercutting the hard rights of federal workers, all in a mission thus far entirely undefined. Byrd made particular reference to Bush’s contemptuous dismissal of criticism of the proposed Agency as Lilliputian. The venerable, but frisky senator riposted by deriding Bush as a Caesarist Gulliver impatient with the restraints of democratic constitutional government.
In another speech Byrd gave Bush some derisive whacks on the topic of his warmongering against Iraq: “The president was dropping in the polls and the domestic situation was such that the administration was appearing to be much like the emperor who had no clothes.” Byrd described the coming of “the war fervor, the drums of war, the bugles of war, the clouds of war.”
“I sat in on some of the secret briefings,”, Byrd said, “and nobody from the administration has been able to answer the question: Why now?”
A few days later in San Francisco another prominent Democrat, Al Gore, lacked Byrd’s fizz but still wagged an admonitory finger at Bush. Gore’s weekend speech to the Commonwealth Club was widely billed as anti-war. Gore did issue some strong language denouncing Bush’s onslaught on the freedoms guaranteed by the Constitution. Beyond that the speech was in fact a measured, fairly well-written advisory on the pretenses and postures appropriate to the world’s premier imperial power.
Gore echoed Henry Kissinger in saying that an attack on Iraq had to be properly justified, not by bluster about a “regime change”, and by hot talk about America’s right to wage “preemptive war”, but by traditional rhetorical escalation within the grand tradition of such rationales, stretching back to the dawn of the Cold War.
There’s probably not been a president since the Second World War held in such low international esteem as Bush. Mark how Gore felt it safe to play on this theme in his San Francisco speech. Six, even three months again, Gore would never have taken such a risk: “In just one year,” he said, “the President has somehow squandered the international outpouring of sympathy, goodwill and solidarity that followed the attacks of September 11th and converted it into anger and apprehension aimed much more at the United States than at the terrorist network.”
If the economy continues to slide, Bush and his circle will face a truly desperate gamble, trying to figure whether a $200 billion war on Iraq will save them, or just plunge them into the mother of all messes.