| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

Home 
 
 News
 Irish
 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 International
 Property
 Innovation
 
 Analysis/Comment
 
 Asia Economy

RSS FEED


How to use our RSS feed

 
Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.

Welcome

Finfacts is Ireland's leading business information site and you are in its business news section.

Links

Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Irish Economy

Global Income Per Capita

Global Cost of Living

Irish Tax - Income/Corporate

Global News

Bloomberg News

CNN Money

Cnet Tech News

Newspapers

Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News

 

Feedback

 

Content Management by interactivetools.com.

Analysis/Comment Last Updated: Aug 23, 2010 - 8:24:15 PM


Dr. Peter Morici: Challenges for the New US President - - Voters are focusing too much on personalities and not enough on issues
By Professor Peter Morici
Feb 11, 2008 - 9:46:21 AM

Email this article
 Printer friendly page

Peter Morici is an economist and professor at the Robert H. Smith School of Business at the University of Maryland. He is a recognized expert on international economics, industrial policy and macroeconomics. Prior to joining the university, he served as director of the Office of Economics at the US International Trade Commission.

US voters are focusing too much on personalities and not enough on issues. This is unfortunate. Americans need a president to address tough problems and implement solutions.

On Iraq and terrorism, it’s time to rehinge policies to reality. US troops cannot simply be withdrawn. Standing down would take many months, and without antagonists more firmly pacified, a shrinking security perimeter would put thousands of troops at grave peril as their numbers were cut to even just half.

The war on terrorism should never have been cast in terms of regime change. Islamic terrorism, cultivated and supported by circumstances within oil exporting countries, ultimately is a religious movement and parastatal threat.

Ardent internationalists may pretend otherwise, but terrorism cannot be addressed simply through diplomacy, national building and democratization. Terrorism is rooted in great Middle East wealth, created by US payments for oil and the ruthless poverty imposed by the decadent, privileged families that control this wealth.

Tactics that defanged the Mafia are better suited to combating terrorism than those offered by global governance and transparent military force. This is distasteful but we have to address the world as we find it.

Domestically, the economy is in a funk, because growth has been powered by the federal government and consumers borrowing too much. Imports exceed exports by $700 billion each year, thanks mostly to oil and lopsided commerce with China. To pay the difference, Americans sell bonds and assets to private investors abroad and foreigner sovereigns, notably China and Middle East royals.

Now, too few Americans can get mortgages, home equity loans and cheap credit card debt. Home prices and retail sales are tanking, and the economy swoons.

The stimulus package and Federal Reserve interest rate cuts won’t stave off recession, because Wall Street banks have proven dysfunctional, obsessed with generating bonuses in the millions for MBAs in their thirties. Consequently, these big banks can no longer raise cash in the bond market, and thereby recycle Chinese and Saudi money into the hands of consumers.

Democrats and Republicans are too hooked on campaign money raised on Wall Street to require banking reforms. And neither party seems to have the courage to fix energy and trade problems that finance terrorism, create huge trade deficits and make all this borrowing necessary.

We have the capacity, now, to build 50 mile-per-gallon automobiles, but the 2007 Energy Policy Act mandates too little in fuel efficiency and pretends we can feed cars corn instead. Ethanol will help but not enough. Oil imports will continue to grow.

We can do better.

The new president must read us the truth about automobiles and ethanol, shift gears and require somewhat more expensive vehicles that unyoke Americans from the House of Saud.

China subsidizes exports to the United States by printing and selling billions of yuan for dollars in foreign exchange markets, and recirculating those dollars into the hands of American consumers by purchasing US bonds. This keeps China’s yuan undervalued, its products cheap at Wal-Mart, and the Americans borrowing to maintain their reckless prosperity.

The stimulus package and Federal Reserve interest rate cuts are all about boosting further the budget deficit and consumer borrowing to keep this folly going.

We could end this madness by imposing a tax on US purchases of yuan in proportion to China’s subsidy on the sale of yuan, and use the proceeds to reduce the federal budget. If China stopped buying dollars, the tax could end.


Smart energy policies and dealing effectively with China would create much new demand for US made products and new industries, and permit the economy to grow more with less borrowing from foreign sources.

Still Americans would be left with their biggest worry—health care.

Americans pay 50 percent more for health care than the Germans or French, and 46 million Americans have no insurance.

What the Europeans have that we don’t are price controls and rationing, because markets can’t adequately provide drugs and doctors visits. Without those compromises to free market principles, we simply cannot afford to assure health care for everyone, and increasingly Americans want that security.

One way or another we have to recognize the basic nature of our adversaries to accomplish a reasonable threshold of security from terrorism, and apply our free market principles pragmatically in a less than perfect word to enjoy a sustainable economic growth.

We need a president that tells Americans to recognize facts, not cling to fairy tales.

Peter Morici,

Professor,Robert H. Smith School of Business, University of Maryland,

College Park, MD 20742-1815,

703 549 4338 Phone

703 618 4338 Cell Phone

pmorici@rhsmith.umd.edu

http://www.smith.umd.edu/lbpp/faculty/morici.html

http://www.smith.umd.edu/faculty/pmorici/cv_pmorici.htm

Related Articles
finfacts.ie


© Copyright 2010 by Finfacts.com

Top of Page

Analysis/Comment
Latest Headlines
Disastrous 44-year War on Drugs and ignoring the evidence
HSBC & Tax Evasion: France/ Belgium issued criminal charges; UK/ Ireland nothing
Analysis: Germany world's top surplus economy; UK tops deficit ranks
Facts do not always change minds - can even entrench misinformed
Finfacts changes from 2015
Facts of 2014: Guinness not Irish; 110 people own 35% of Russia's wealth
In defence of dissent and Ireland's nattering nabobs of negativism
Dreams of European Growth: France and Italy facing pre-euro economic problems
Globalization's new normal needs permanent underclass - Part 1
MH17 and Gaza: who is responsible?
Israel vs Palestine: Colonization set for major expansion
Aviva Ireland's 'fund' runs dry and life cover to die for
We wish Martin Shanahan - new IDA Ireland chief - well but...
Ireland as an Organised Hypocrisy is in lots of company
Dr Peter Morici: Friday’s US jobs report won’t alter Fed plans to raise interest rates
Own Goal: Could FIFA have picked worse World Cup hosts?
Ireland: Spin and spending will not save bewildered Coalition
Irish Government parties set for 2-year vote buying spending spree
European Parliament: Vote No. 1 for Diarmuid O'Flynn in Ireland South
Dr Peter Morici: US April jobs report may show 215,000 added in April
Dr Peter Morici: Hardly time to call Obamacare a success
Celtic Tiger RIP: Change in conservative Ireland six years after crash
Dr Peter Morici: Five things to know about the Fed’s obsession with inflation
In age of acronym/ Google, Trinity to rebrand as 'Trinity College, the University of Dublin’
Hoeness case part of ‘painful’ change for Swiss bankers
Dr Peter Morici: The Cold War was only on vacation
Dr Peter Morici: US economy drags on Obama's approval ratings; Don’t look for changes in Washington
Dr Peter Morici: Bitcoin debacle shatters the myth of virtual money
Dr Peter Morici: US Tax Reform: Eliminate the income tax and IRS altogether
Wealth threatens the simple life in Gstaad, Switzerland
Irish journalists get cash payouts over 'homophobic' defamation claim
Irish academics get lavish pension top-ups as private pensions struggle
Dr Peter Morici: Inequality is President Obama’s highest priority, but solutions are naive
The Finfacts Troika: Better times ahead and a hangover to forget?
Dr Peter Morici: Volcker Rule arrives with the hidden jewel in Dodd-Frank financial reforms
Ireland's toothless fiscal watchdog threatens to bark
Analysis: Germany's current account surplus - - Part 2
The end of western affluence?
Bono's hypocrisy on Africa, corporate tax avoidance in Ireland
France like Ireland is run for the benefit of the old