by John M. Curtis
(310) 204-8700

Copyright June 26, 2008
All Rights Reserved.

ad news got ugly June 26 as the Dow Jones Industrial Average plummeted 360 points, finally settling at 11,453 or 300 points under its close Jan. 14, 2000, when Clinton's go-go ‘90s ground to a screeching halt. In the past meltdown, the DOW unraveled until hitting bottom in Dec. 2003 at 7,701, a whopping 40% drop from its prior high. Shedding nearly 80 points to 2,321, over 60% off the tech-rich Nasdaq's high hit March 8, 2000. Market analysts want to blame today's nosedive on the nation's mortgage mess and credit crunch, paralyzing the nation's top financial institutions. Spiraling oil prices, but more importantly the devalued U.S. dollar, add insult-to-injury to U.S. economic woes. GOP presumptive nominee John McCain believes there's no connection between the fiscal madness of financing the Iraq War and deteriorated health of the U.S. economy.

      McCain and the White House pretend the Iraq War has not broken the economy. European central bankers know that the U.S. economy cannot and will not recover until a new president gives the order to begin the withdrawal. Columbia University and Nobel-laureate economist Joseph E. Stiglitz told the truth in his recent book “The Three Trillion Dollar War: The True Cost of the Iraq Conflict [Norton, 2008] that the Iraq War has broken the U.S. economy. No economy—including the once mighty U.S.—can spend between $12-16 billion a month without disastrous consequences. Massive federal borrowing and budget deficits have driven the economy to recession. Reporting a one percent gain for the second quarter, the Commerce Department reminded the stock market that the economy is stagnant. It's not rocket science to know that the U.S. economy can't subsidize the Iraq War.

      Oil futures shot back up to $140 a barrel on the expectation that the U.S. dollar will continue to fall against the euro. Most reputable economists, including Algeria's Oil Minister Chakib Khelil and current president of the Organization of Petroleum-Exporting Countries, believe wild speculation and the devaluation of the U.S. dollar are responsible for the current oil price run-up. “The price is disconnected from fundamentals,” said Khelil, at an OPEC summit in Jeddah, Saudi Arabia, disputing White House smoke that the price is due to “supply-and-demand.” “Why would you have supply problem when demand is going down?” disputing the need for more production or the idea that the current spike is due to scarcity. Neither Bush nor McCain can admit that the cost of the Iraq War has broken the economy, driven down the dollar and spiked the price of oil.

      All U.S. industries, with the exception of oil and defense, have suffered under skyrocketing oil prices. What Bush and McCain won't admit is that the Iraq War has broken the economy. With Bush spending $168 billion on fiscal stimulus and anticipating another $300 billion to bailout distressed homeowners, there's no cash left to fund vital infrastructure projects needed to boost the economy. Dropping 360 points, the market mirrors the current recession driving down stock prices. When earnings growth suffers, stock prices drop to reflect the current slow business cycle. Until and unless the White House admits the problem and ends the war, little will change. Ending the war will send a loud message to domestic and global financial markets that the U.S. economy is on the mend. When that happens, the U.S. dollar will rally against he euro, pound sterling and other currencies.

      With so many economists talking about the relationship between the market speculation, the devalued dollar and the spiraling oil prices, the White House can no longer stay in denial. Blaming prices on supply-and-demand fails to account for the record profits of the nation's biggest oil companies. Bush and Vice President Dick Cheney have given the oil industry a green light to fleece the economy. If Bush is unwilling to change course in Iraq, the least he could do is to ask the oil industry to do their part in saving the economy. As long as they take advantage and break all profit records, the rest of the economy will suffer. Gaining some control in wholesale markets and at the pump will help consumers and the transportation industry recover. Airlines and truckers can no longer afford to pay exorbitant prices to assure the oil companies another round of record profits.

      Bush's failed economy stems from his stubbornness on continuing the Iraq War, despite the obvious costs in U.S. blood and treasure. Today's economy can't sustain the $12-16 billion a month price tag without causing more damage. Fed Chairman Ben S. Bernanke can't pull more rabbits out of his hat without getting cooperation with ending the fiscal insanity of funding the Iraq War. McCain's campaign will live or die with his insistence on funding the Iraq War, no matter what the costs in human lives or to the U.S. economy. Bush can blow all the smoke he wants about what's causing the current spike in oil prices and drag on the economy. Voters are beginning to wise up about how the Iraq War drags down the economy and drives oil prices through the roof. Judging by recent polls, McCain is going to have a tough time selling voters on maintaining the status quo.

About the Author

John M. Curtis writes politically neutral commentary analyzing spin in national and global news. He's editor of OnlineColumnist.com and author of Dodging The Bullet and Operation Charisma.

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