Saturday, 29 March 2008

Counting The Cost of Iraq

Whatever it was that George W. Bush must have been thinking when he decided to sponsor the invasion of Iraq, at the recent passing of its fifth anniversary, all those thoughts would have long been part of his distant memory. For never perhaps in his most pessimistic estimates would Bush have envisioned that Iraq would turn out the way it has—the killing fields not only of American soldiers, but the burial ground of its economy as well.

As far as casualties go, it is not quite on the scale of America’s previous engagements, such as the Great World War, the Second World War or even the more confined Vietnam conflict just yet. Those campaigns cost the United States whole generations of men and women—killed or wounded, with the latter both in physical and psychological terms. The Iraqi war has so far eluded the high body counts of Vietnam, but the impact it has had on the country cannot be underestimated.

They called Vietnam “a war made for television,” and unlike any other before it. It was responsible for exposing the horrors of armed conflict to the average family in middle America. It coincided, of course, with the rise of television as the medium of choice for news and information, and TV made sure that every twist and turn of that conflict made their way to America’s living rooms every evening, without fail.

The result was a generation of politicized Americans so horrified by the images of war that played out before their eyes, it took the US many years to even consider intervening in other countries’ troubles ever again.

History, however, has a way of glossing over the horrors of the past, especially once the generation that saw those horrors firsthand are no longer as traumatized with the experience. This was especially true with the administration of the current President Bush.

Unlike his father—who was a World War II fighter pilot—and even latter-day political stalwarts like John Kerry and John McCain, Bush did not fight in any conflict America was involved in, preferring instead to serve his country through the relatively safer duties of the Texas Air National Guard. Without demeaning the service, nor the patriotism of those who serve in the Guard, Bush was able to avoid actual conflict, and as a result, was probably less horrified by the prospect of waging war, and its deadly consequences.

He was thus able to rationalize his intentions as being purely motivated by America’s national security interests, and divorce himself from the emotions that the likes of Kerry and McCain would have, by definition, brought into the decision. In a manner of speaking, it was easier for him to send young Americans “in harm’s way,” because he himself had no idea what “in harm’s way” really meant to those soldiers on the ground.

Today, however, his memory vividly aided by the seemingly endless chain of flights ferrying back the dead and wounded from the battlefields of Iraq, George Bush must be one well-informed man indeed—well informed that is on the true horrors of war.

As it is, the scene of grieving widows and orphans must be enough to give any president sleepless nights over the propriety of his actions. But that is just one aspect of the cost of this terrible war—the other dimensions are just as damaging, and perhaps, even more damning for the legacy of this two-term president about to end his turn in power.

More next week.

Published in the Sun Star Daily, Saturday, March 29, 2008

Saturday, 15 March 2008

Economic Diet (Part 2)

America, certainly, is a land of the obese and overweight.

Despite the obsession with Size Zero among the anorexic Hollywood crowd, the average American is a great deal many sizes more than your waif-like A-lister. Years of supersizing on burgers, fries and shakes tell their toll on a population that is probably, pound for pound, among the most overweight in the world.

What is going on in their physical state is exactly mirrored in their economic affairs as well.

Maxed-out credit cards—the financial equivalent of obesity—seems to be the norm among most Americans these days. The availability of cheap credit to people who are not used to financial prudence has given rise to this phenomenon, and fuelled what could yet be a time-bomb waiting to explode on the world.

One of the problems with our modern eco-nomy is that it has become too complicated for most of our consumers to understand. And one of the most misunderstood elements is personal credit—manifested by the now ubiquitous plastic credit card.

As they were conceived, credit cards were meant to replace cash in financial transactions. Convenience was its key feature, in that consumers no longer had to carry and count cash and change whenever and wherever they shopped. The operative word here, however, is “replace.”

The assumption is that the card holder still has the “cash” to purchase something with, just that payment is not actually made with the physical cash during the actual transaction.

Herein lies the big problem.

Today, credit cards are not looked at as replacements for cash transactions anymore, but as “supplements” to one’s actual cash funds. In other words, with an income of $2,000 per month, and a credit card with a $10,000 limit, most would assume that they could spend more than their monthly cash income.

But how could this be sustainable. If one consistently spent $2,000 plus per month on credit card purchases, and yet earned only $2,000 per month in income, how could one possibly hope to pay for all of his or her debt?

The answer is—one cannot.

Many Americans carry perpetual credit card balances, which they just transfer from credit card to credit card, without any prospect of ever paying for it in full. In good times, this practice is OK for a while, but when credit tightens in the event of an economic slowdown, all hell breaks loose.

What America, and indeed most of the West, now need is a re-education in personal financial prudence. People need to get back to basics and understand what personal financial responsibility is all about.

Before the invention of credit cards, this huge debt problem that now plagues America did not exist in this magnitude. With the plastic economy that we have today, somehow the issue seems to be spiraling well out of control.

I certainly would not advocate banning all personal credit altogether, because it has its important place in a functioning modern economy. What I would suggest, however, is moderation from consumers in spending with credit, as well as from financial institutions in extending that credit.

With a little bit more responsibility from both sides, whilst we still will not be able to avoid economic cycles altogether, it will be one hell of a smoother ride, I can guarantee you.

Published in the Sun Star Daily, Saturday, March 15, 2008

Saturday, 1 March 2008

Economic Diet

Watching the Academy Awards ceremony last week, one would be forgiven for thinking that all is well in the United States of America. The endless parade of the Hollywood glitterati through the red carpet—in their designer frocks and million-dollar blings—would never give away the fact that storm clouds are a-brewing in the American economy.

And dark storm clouds they seem to be as well too.

Yes, for ordinary Americans, 2008 would seem to be a very difficult year indeed. The housing market is in the doldrums, unemployment is on the rise, and business confidence is at an all-time low. To compound the situation further, fuel prices show no sign of coming down, just as the war in Iraq seems to go on forever and ever.

One need not be an economist to tell that all is not well indeed!

It is amazing how today we know so much more about our health and well being. It used to be that in the past, dieting and exercise was the preserve of either the idle rich, or movie stars who need it to continue earning a living. Today, the general population is quite aware of their lifestyle habits, and most people know what they need to be doing to stay physically healthy.

Funny enough, we are being told now that the best diet is a no-diet. In other words, if one ate sensibly, exercised regularly and stayed away from excessive drinking and smoking, this lifestyle would benefit our health much better than indulging in excess, and then going on starvation diets to burn off the excess poundage afterwards. The latter not only stresses the heart but harms other vital organs as well, such as our liver.

In other words, for our health, the key is moderation.

A bit amazing therefore that what we know to be good for our physical health, we still haven’t quite figured out would be good for our economic health as well. One only needs to look back a few years ago at the American economy to understand what we mean.

During the good years, money, it seemed, was no object to the American consumer. Fuelled by the availability of cheap credit, everyone went on spending sprees, buying everything in sight—from fancy houses, expensive cars, flashy jewelry, designer clothes and grand vacations.

This orgy of spending, in turn, benefited a lot of businesses while it lasted. Companies expanded to meet the demand, employing more people to support their growing businesses. The newly employed, in turn, took it upon themselves to fuel the spending spree even more, creating still more demand and feeding a growing cycle of prosperity that seemed to go on and on.

But as the unhealthy soon find out about their condition, so does the economy realize that all is not well.

Like a chronic disease slowly manifesting itself over time, certain triggers eventually lead to a correction. High fuel prices tell their toll first. Rising business costs compel some to save money elsewhere, often by reducing their workforce. Sometimes they outsource a number of their processes overseas, for the same financial benefits, and also with similar consequences to their employees.

Of course, people without jobs lose the capacity to buy, and also the ability to pay for their past purchases.

More next week.

Published in the Sun Star Daily, Saturday, March 01, 2008