Edwards: Economy and War Aren't Separable

This is good news for Obama, both because it may suggest an Edwards endorsement is coming soon, and because it tosses a great new meme into the Obama/Clinton fight, especially in Ohio (update: now Pennsylvania). Here's why: Obama has opposed the Iraq War from the start; Clinton voted for it and has never reneged. (She didn't even start talking about withdrawing troops until halfway into the primaries, when she realized how important it was to Democratic voters.) So Obama is winning the votes of folks who consider the war their most important issue. (And, incidentally, his position on the war is why he's more likely to win against McCain in November -- 2/3 of Americans now are against the war, and even when he's trying to sound more dovish, McCain still admits seeing American troops in Iraq "for decades.")

Meanwhile, though, the economy is starting to tank, and Hillary has been pretending that she somehow played a role in the good economy of the Bill Clinton presidency -- which isn't true, but hey. The economy is an especially important issue in the two states critical to Clinton's chances, Ohio Pennsylvania (with an uncertain industrial base) and Texas (with one of the highest home foreclosure rates in the nation). So Clinton's been winning (barely) the votes of people who think the economy's the most important issue, and has been banking on that to help her win Texas and Ohio.

Now Edwards comes along and points out the obvious fact that a war that's cost $3 trillion (all funded by debt) is having a tremendously deleterious effect on the economy and is hampering our ability to buffer any recession. (If we don't have the money to give lower- and middle-class tax breaks, start new government projects that create jobs, etc., because we've blown it all in Iraq, we're in trouble.)

And if people in Ohio and Texas Pennsylvania catch on to this truth, Hillary is toast -- and it will be her own hubris and lack of integrity, for supporting the war solely in the triangulationist belief that doing so would help her win the Presidency in the general election, that will have done her in. Classic Shakespearian tragedy, when the powerful fall due to their own fatal flaw. Good for Edwards for making himself meaningful again.
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"You Are Not Free, And You Are Not Safe"

In 1900, the United States was a creditor nation: we loaned money to others, and invested both at home and overseas. We exported far more than we imported, in both raw and finished commodities. And we were on our way to becoming the most powerful nation on earth -- economically, militarily, and morally.

Fast forward 100 years. We are the world's largest debtor nation. We import far more than we export, with China being our largest source of overseas imports. And our entire economy is based on borrowing from other nations, with China being our second largest foreign creditor.

If you'd like to lie awake tonight, ask yourself: what would happen if China declined to buy any U.S. bonds whatsoever at the next bond auction, effectively declining to continue refinancing the national debt? Answer: our economy would collapse, Great Depression-style.

Or, for a less extreme example, ask yourself: what would happen if China unilaterally decided to discourage investment in its own stock market, depressing Chinese stock prices? It would be pretty to think that a slide in the internal stock market of a nominally insular, Communist country would be largely irrelevant to the capitalist West. But the truth is harsher, as demonstrated by today's worldwide slide in stock prices. China's government makes a decision about its own stock market, and our stock market takes a slide. Tomorrow, things will either continue to deteriorate, or China will take steps to reassure Western investors -- but which way things go will mainly be up to China, not to us.

Essayist and poet Wendell Berry, in his excellent collection of essays Sex, Economy, Freedom and Community, wrote this: "If you are dependent on people who do not know you, who control the value of your necessities, you are not free, and you are not safe." Until we can become self-reliant again -- not isolationist, but self-reliant, capable of controlling our own destiny as a nation -- we will remain unfree, and we will remain fundamentally unsafe, no matter how many nukes we possess. And that, in large part, is why free-trade, DLC Democrats are nearly as dangerous to America's well-being as the free-trade, corporatist Republicans they are copying.

UPDATE, MARCH 3: Next-day rise in US indexes notwithstanding, it's not over yet....

UPDATE, MARCH 4: Still not over... Others are acknowledging that China's woes are the world's woes (so is it "protectionist" to want to loosen that connection?)... And as Treasury yields decline, there'll be less incentive for people to buy them (i.e. to finance the continual expansion of the national debt), which means the face yield of G-bonds will need to increase, which will increase the national debt even more (just like your credit card balance will go up if the interest rate rises but you keep just paying minimums), and pressure will increase on our policymakers to eventually allow higher inflation to artificially reduce our debt load in real dollars. You can't take away just one card from a house of cards...
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