Posted inPolitics: National

Let’s look at the fundamentals of the American economy

Republican John Sidney McCain III is trying desperately to back away from his "fundamentals of the economy are strong" line, even going so far as to say he meant American workers. But not so fast. In fact, it is the fundamentals of the American economy that are in dangerous trouble. Let us count the ways. I’m going to have to give you some straight talk, my friends:

1. Debt. The nation is deeply in hock to creditors worldwide. We used this line of credit to finance the housing bubble, wars in Iraq and Afghanistan, tax cuts to the richest Americans, rebate checks that went into the ether and the privatization of hundreds of billions of dollars in government services. It’s paying for the bailout of Bear, Sterns and it stands to take a devastating shock from Freddie and Fannie. From government to business to consumers, Americans are debtors, and most of the debt has been pissed away on war, sprawl, speculation and corruption, as opposed to building something for the future.

As the economist Nouriel Roubini has pointed out, the current account deficit in the ’90s came back as investment in private innovation, but for the past eight years it has been used to finance deficit spending and debt. Moreover, now much of this debt is held by nations that do not necessarily wish us well, including China and the petro-states such as Saudi Arabia.

This situation dangerously limits our options in foreign policy. It makes it a near certainty that living standards will take a big hit as we have to pay it back. Remember, when the Soviet Union collapsed, the first people in the door were the bankers, wanting to be repaid for the debt the Bolsheviks defaulted on after the 1917 revolution.

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Posted inPhoenix Politics: National

The Republic looks at a tale of three cities

The Arizona Republic’s Chad Graham traveled to Austin and Seattle to report on some lessons recession-slammed Phoenix might learn. Numerous Rogue Columnist readers have asked for my reactions. Chad is a fine journalist and a friend. His story fits into a continuum of sometime efforts by the newspaper to educate the public and policy makers about the real world — this goes back at least to the 1980s. These efforts are ignored as population growth resumes and the nation’s last big factory town returns to churning out suburban tract houses.

The editors tip their hands by, I would assume, inserting this sentence to make defensive "Valley residents" feel better: "Phoenix will never have a gateway seaport to Asia that hums with
activity. Seattle will never have the potential solar power of Phoenix." The sad reality is that the center of solar research, entrepreneurship and use is cloudy Germany. Phoenix literally started the solar power movement in the 1950s and let it get away — therein lies the tale of the town.

Graham’s important point is that Seattle and Austin "have learned the lesson that Phoenix is now being taught: Economic
downturns hit harder when you are overly reliant on one industry."

Rather than go through the story, or even rehash my years of "controversial" efforts to raise these issues, I’d rather make a few key points among dozens that could be discussed. My perspective is as a Phoenician who has lived in Seattle for nearly a year and has seen both close up.

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