War with Iraq may damage economy | TheUnion.com

War with Iraq may damage economy

A CNBC poll indicates 70 percent believe a war with Iraq would harm the U.S. economy. We’re in month 28 of a bear market (longest since the Great Depression). Recent economic indicators are dismal. Low interest rates helped inflate housing prices, but the declining dollar (and corporate fraud) encourages investor flight from U.S. markets.

Higher rates could torpedo a housing bubble – prices and home equity loans. Barron’s quotes Goldman Sachs: the last 12 months’ $540 billion of home equity loans will be followed by $240 billion the coming year. Weak consumer demand last year will be reduced. Our economy is 75 percent sustained by consumer demand.

Gen. Scrowcroft, in the Wall Street Journal, believes war with Iraq will undermine the war on terrorism as well as our economy. Saddam is a dictator-mobster who views Islamic religious terrorists as dangerous rivals for power. U.S. victory needs be followed by costly, large scale, long-time occupation. This would “stifle cooperation on terrorism … sell the ranks of the terrorists, and could destabilize friendly Arab regimes.” Saddam could attack Israel and Israel might use nuclear weapons, “unleashing an Armageddon in the Middle East.”

Israel’s Sharon has hundreds of weapons of mass destruction (nukes) and has informed Mr. Bush he won’t take orders from the U.S. and will fight. With Sharon ruthless and Saddam cornered and vicious, unpredictability is king.

Capital markets loathe unpredictability. Mr. Cheney seems determined to bomb, inspections or not. Hundreds of oil wells may be torched by Iraq. Thousands of innocent American troops and innocent citizens of Baghdad could be killed in carpet bombing or street fights where high-tech weapons don’t work well (in a simulated Pentagon study).

Civilians at home may watch their portfolio slaughtered along with common sense and human decency.

John Brady

Grass Valley

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