Win.

It would only be a loss in the war if the economic downturn was a result of the war.  The housing crisis would beg to differ with that assumption.

don't think it can ever be won. but at least it's not lost yet.

> [TI] Primo wrote:

> don't think it can ever be won. but at least it's not lost yet.

+1

probably when us soldiers stop dying in those shitholes?

But... both of those are just definitions of a war ending, not necessarily victory or defeat.  So again, what's the definition of winning?

Wasn't it Osama bin laden's / Al-Qaida's plan all along to draw the West into a long, drawn out war that would sap the West's economies and thus orchestrate a play on global economic and military power dynamics?  From this perspective, the terrorists have won.

> Zarf BeebleBrix wrote:

> > xeno syndicated wrote:

> The economic downturn is not a result of the war?

Definitely not. 

Economists have long mapped out the cause of the downturn.  I may not be describing the chain of events perfectly here, but I'm pretty sure I've got the general idea:

The US banking sector was engaging in extensive sub-prime lending, giving home loans to people which weren't normally qualified for said loans and constructing new loan structures made to basically allow banks to lend much more money than normal to lower income borrowers.  In the early to mid 2000's, the easier credit expanded the number of home buyers, which created a high demand for homes, driving up those property prices and further encouraging home ownership in the region, while creating a bubble in housing prices.  Leading up to 2008, the housing markets in question were reaching a plateau price, and eventually starting a fall.  With the fall in housing prices, a number of factors encouraged people to let their homes go into foreclosure (perhaps a home became worth less than what would be paid for it, or a particular loan model would adjust payment requirements).  Either way, the banking sector suddenly had billions of dollars in foreclosed homes to deal with, each one eating at their profits.  The banking sector is such an integral part of the US and world economy, providing loans and employment to so many, that when they experience a relapse, consumer confidence, business confidence, investment, and discretionary spending all take a big hit.
>

Zarf, the housing bubble was a result of speculation on future real-estate prices, people betting on being able to sell their homes at a profit.  However, people were caught off-guard when prices fell.  Why did they fall? It was, fundamentally, because of a beleaguered economy: people couldn't afford to pay their mortgage payments, couldn't qualify for loans because of poor employment prospects.  Moreover, those people were at the point where they had to foreclose. 

We have to ask why the poor employment and thus credit prospects?  Because of the war.  How exactly?  It's like this: When the resources of a nation are devoted to waging war, the economy of that nation suffers negative prosperity: inflation and cost of living increase, consumer confidence wanes, and dysfunctional unemployment and a contracting economy is the end result.   It's all about the resources. When resources which would otherwise be used to create economic value and prosperity at home are during wartime used to destroy economic value abroad, the cost of those resources skyrockets, causing inflation.  Making matters worse, during reconstruction efforts even further resources are required simply to return to pre-war levels of economic prosperity.  War itself creates economic value deficit through systematic inflation, a burden shared by the whole society.  It was this burden that finally caught up to people in 2008.

The following article has some good points in this regard:

http://english.aljazeera.net/indepth/opinion/2011/09/20119572556433850.html

"Even if Bush could be forgiven for taking the United States, and much of the rest of the world, to war on false pretenses, and for misrepresenting the cost of the venture, there is no excuse for how he chose to finance it. His was the first war in history paid for entirely on credit. As the US went into battle, with deficits already soaring from his 2001 tax cut, Bush decided to plunge ahead with yet another round of tax

""Even if Bush could be forgiven for taking the United States, and much of the rest of the world, to war on false pretenses, and for misrepresenting the cost of the venture, there is no excuse for how he chose to finance it. His was the first war in history paid for entirely on credit. As the US went into battle, with deficits already soaring from his 2001 tax cut, Bush decided to plunge ahead with yet another round of tax

http://www.youtube.com/watch?v=Itc54N6gGkE

crash planes into kabul?

There will always be terror, so any "war" was an inevitable loss from the beginning.

Unless you define specific goals and agendas, which is not the case.

> xeno syndicated wrote:

> "Long story short, we don't need the war to explain the collapse in the market.  The market itself provides a much clearer story than the abstract war link."

Believing something doesn't exist doesn't negate its existence. 

You don't seem to want to analyze the effects the war has had on the economy.  I think, however, we have to consider the effects to determine whether or not we are winning or losing and whether or not we should keep fighting it, no?

I could say the same thing, arguing you are simply using the recession as justification to oppose the war.  The only difference between your personal attack and my personal attack would be that, between the two of us, I have a much better justification for my argument, actually analyzing the domestic economic markets involved in the crisis, whereas your argument is little more than blip talking points.  In fact, the very act of accusing me of doing something (not engaging an argument) when you blatantly sidestep an entire post with a 3-sentence reply that has absolutely no economic analysis is a pretty strong indictment of a claim that you simply don't want to analyze the real causes of economic crisis, only using it as a justification for an anti-war stance.

But what the hell, let's analyze your argument.

1: Inflation?  Okay, let's look at that!

http://www.miseryindex.us/irbyyear.asp

The statistics cover inflation rates for the past 60 years... and if you notice, the US inflation rate during the Bush years is actually quite consistent with historical inflation rates.  On average, the post-9/11 inflation rate (up to 2008) was 3.04%, compared with the Clinton-era 2.6% inflation rate (remember, this was a uniquely favorable economic period, driven largely by combined forces of trade liberalization and the .com boom... which would bust just shortly before Bush Jr. came to office).  Even if you remove the 2002 number (since that stagflation period was started by the 9/11 attacks, not the US response), the average is still a relatively healthy 3.3% (Compare this to Bush Sr. years or the giant Nixon-Ford-Carter-Reagan period).  Cause for some concern?  Yeah, probably, but it's still within the average inflation range for stable economies.

2: Okay, what about the oil price increase?

My argument is that oil prices are largely driven by demand increases from developing nations, specifically China and India.  The War on Terror will have some influence on the oil market, but it's limited to short term supply shocks.

First, let's get the statistics up.

http://inflationdata.com/inflation/inflation_rate/historical_oil_prices_table.asp

Pay attention to the inflation-adjusted oil prices.  Also, I want to throw this one out here:

http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&met_y=ny_gdp_mktp_kd_zg&idim=country:USA&dl=en&hl=en&q=real+gdp+growth#ctype=l&strail=false&nselm=h&met_y=ny_gdp_mktp_kd_zg&scale_y=lin&ind_y=false&rdim=country&idim=country:USA&ifdim=country&hl=en&dl=en

Annual US GDP growth rates.

Anyway, what do we see here?

First of all, looking at the average oil prices, the 2000 average price (running in the $30's) was met with 3 years of dropped prices, not recovering the 2000 price again until 2003.  Now, the 2000-2002 period had an economic slowdown triggered by the .com bubble, followed by the 9/11/Enron slowdown.  The US economy starts to get out of the slowdown in 2003, just as oil prices rebound.

Here's another link, a graph of oil prices which better models short-term price changes:

http://www.worldculturepictorial.com/images/content/oil_chart_1996-2008.jpg

What do you notice about 2003?  There's a large oil shock in April 2003 (Iraq war buildup).  However, the oil pipelines would be secured in time (there was a short period after the invasion when the US didn't secure the oil pipelines in Iraq, creating obvious supply disruptions).  Once the Iraq war transforms into a general guerrilla war against towns, rather than a war against the Iraqi oil infrastructure, the price stabilizes... for the most part (there's still, on average, a slight increase from average post-"Mission Accomplished" prices to 2002 prices).

What happens from there?  We see a steady price increase, with large irregularities.  The question I would ask at this point?  What events actually brought on these specific increases?

http://www.google.com/imgres?q=world+oil+production+graph&num=10&um=1&hl=en&biw=1366&bih=608&tbm=isch&tbnid=fSey-qLCOIxUkM:&imgrefurl=http://dlb8685.wordpress.com/2010/06/02/kill-the-gulf-oil-drilling-moratorium/&docid=F6rJb06pJpe3-M&w=908&h=621&ei=e5tnTtKtNJOhsQKcqKymDg&zoom=1&iact=hc&vpx=1053&vpy=101&dur=867&hovh=186&hovw=272&tx=152&ty=121&sqi=2&page=1&tbnh=145&tbnw=210&start=0&ndsp=15&ved=1t:429,r:4,s:0

Another graph: World oil production.  Compare this to the oil price graph.  Oil production reaches its peak at the same time that prices start to skyrocket.  Meanwhile, China and India have expanding economies, demanding more oil.  This is an economics 101 scenario: As oil reaches its peak and demand increases, the supply can't meet demand, so the price will increase to balance the increased demand until a new equilibrium is established.

Note, in addition to this trend, that the 2008 recession debunks a good portion of this war theory.  If the growing oil prices were a War on Terror premium, the recession wouldn't have seen oil prices drop because the US was continuing the War on Terror.  However, we saw a drop.  The explanation?  US, European, and even Asian markets were using less oil during the recession, reducing the demand for oil... the result being a drop.

Actually, one note regarding Iraq.  Yes, I'm going to open up a giant hornet's nest with this argument.

http://www.fysast.uu.se/ges/files/images/Future%20Oil%20Production%20in%20Iraq.preview.jpg

Iraqi production.  Note that it hasn't met pre-war levels.  Okay, so there's some supply shock.
But wait... why the projected increase?

http://www.breitbart.com/article.php?id=080622113024.5rfe5v9s&show_article

In 2008, Iraq began awarding contracts to oil companies to increase oil production.  Iraq has largely untapped oil reserves, most likely a result of combined oil nationalization by the former Iraqi government and, more importantly, oil embargoes in existence until the 2000's (definitely another factor triggering the early 2000 price decrease).  With the successful occupation of Iraq, oil contracts have been awarded, meaning another 2-4 million barrels of oil per day to enter the market over the next few years.  With new oil contracts being entered, oil production in Iraq will increase, helping to reduce world oil prices.  In addition, Iraq's new resurgence in oil production and closer ties to the West than other OPEC nations will destabilize that cartel, undermining efforts at controlling oil supplies.  So if there's a war premium, it also means the pro-war crowd gets to write the new Iraqi production as an economic benefit of the war to counterbalance a war premium.  The result?  Future oil prices will be lower than they otherwise would be as a result of demand increases.  The increased supply of oil means increased spending on consumer goods throughout the purchaser economies (airline travel, plastics, reduced cost of shipping encouraging greater international trade, etc).  That's long term growth in the world economy... something very different from the supply shocks you're talking about.

3: Now that this is out of the way, what about the debt?  Okay, I'll concede this is a cost to the economy.  However, debt in itself has never been a justification to say no to a war.  The US became a huge debtor following WW2 and the Great Depression.  Was it worth it?  In that case, definitely so (I'd be willing to argue about whether the New Deal spending was effective, but that's a different story).  Why?  Because we compare the threat of Germany vs. the threat of debt.  In this case, it was really easy to say that Germany's a bigger threat, because the alternative to US intervention was allowing Germany to retain control of France, probably take down England (by Churchill's own admission, Britain was nearly bankrupt during the Battle of Britain, necessitating the Lend-Lease program).  I can't speculate far enough to determine how this would have influenced the USSR war (I'd actually guess Hitler would still make the critical screw-ups in the USSR, but the US couldn't possibly have known that at the time).

But what about today?  Well, the short answer is to ask what would have happened if the US hadn't engaged in the War on Terror?  A single terrorist attack involving 19 guys with box cutters was able to derail a US economic recovery coming out of 2000.  Nineteen... college... students... with... box cutters!

Remember, economic decline is just as bad as increased debt because government spending levels run opposite of economic growth: During a recession, the government doesn't generally cut spending, and actually increases spending to stimulate short-term growth.  So not only does debt increase, the debt/GDP ratio increases, which increases the cost of actually paying off the debt.

The question, then... is "how likely would the US have been to see a second terrorist attack on its economic infrastructure if it weren't for US intervention?"

This is something that makes Iraq particularly important.  From 2003-2006, Iraq was part of a veritable civil war with foreign fighters from all over the Middle East coming to the country to target US soldiers.

In the words of Admiral Akbar, IT'S A TRAP!  Military forces are much better equipped to deal with guerrilla wars than civilians in the US.  In addition, the market assumes that US forces in Iraq will be facing guerrilla warfare, minimizing market impact of each attack (the one exception is attacks upon oil supply, but the US did a better job of securing Iraqi pipelines later into the war).

In addition, this may have created a financing trap for Al Qaeda.  Look at it this way:
During the Iraq War period (not as a result of it, but around the same time period), Western banks froze over $140 million in Al Qaeda assets.  As given by the 9/11 Commission report, the 9/11 attacks cost Al Qaeda around $100,000 to conduct.  So if we assume 9/11 provides the baseline cost of a successful 9/11-scale terrorist attack, it means Al Qaeda could afford 1,400 9/11-style attacks (requiring about 280,000 martyrs).

Anyway, for the purpose of this model, let's assume there were 30,000 members of Al Qaeda, and total assets of $300 million before the Iraq war (the numbers chosen are arbitrary... not important for my overall model).  Anyway, post-Iraq, let's assume Al Qaeda doubles total recruitment to 56,000 members.  Sounds bad, right?  It would, except that with the loss of revenue for Al Qaeda as a result of US asset freezes and added recruitment means the per-terrorist assets are decreased... meaning Al Qaeda either has to make lots of terrorists idle (sleeper cells cost funding as well, albeit not nearly as much), or it has to focus on cheaper military operations (such as random IEDs placed in Iraq).