Our Economy Ends If Iraq War Continues

Up to now, we have not connected the dots from the War in Iraq to our Economy, but reality is now teaching us a lesson, the hard way.
Inflation is growing due to loans to pay for the Iraq War, but OPEC Countries continue increases in oil price ($122.73 a barrel May 5th). We now have a new form of Inflation: Compounding Inflation.
Single Factor or Linear Inflation is due to, for example, a shortage of rice which leads to a higher price of rice, and rice hoarding increases the shortage of rice which leads to even higher prices of rice, which leads to more hoarding and higher prices, etc. But, this is limited to the Rice Market, alone.
A compounding money inflation is not only due to excessive borrowing but to the higher cost of Energy and transportation of goods,all goods.

Inflation is compounded by higher fuel costs and both compound together to bring higher price, for example, of wood because the woodcutter has to pay more for food. The factory has to pay more for the higher price wood AND for the higher cost of energy AND for the transportation of the wood. The price of a chair has to go up to pay for higher worker salaries, the higher cost of energy and the higher cost of transporting the chairs to the wholesaler.
The wholesaler charges more for chairs because it paid more for chairs (inflation) and paid more for the fuel to transport chairs, all of which depends on the buyer having enough money to pay for the higher price for the chair that sat in a show room with higher price lights, for ever longer times.

In time, price inflation drives salary inflation with a time lag, which means the goods accumulate somewhere and the down spiral, eventually, starts, no orders for chairs, chair construction lay offs and, finally, the woodcutter is out of work, so he joins the city homeless. All that because of the money inflation due to (1) borrowing for the War In Iraq and (2) the higher cost of energy and transportation due to higher oil prices.
This is UNPRECEDENTED, up to now Inflation has been linear now, this time, it is a compounding process that ACCELERATES inflation exponentially.

Another example: The Port of Oakland depends on trucks to move containers out but the fuel price is so high that truckers lose more money, the more they work and will go broke, when they do the containers will stop coming and the economy of Northern California will fail, followed by Southern California and the West Coast economies. What remains to be determined is when will local governments include this in their plans for their future, for example, when will they build a rail-tunnel to get containers out to Nevada or Bakersfield.

But, nobody has noticed, as soon as they notice, and they will notice, the crash begins until the volume of oil sales drops so much that the oil price drops. We are not there yet, but in 10 days in March four small airlines went broke and two major ones announced a loss of $10 Billion in three months. The Real estate market in Hawaii is flooded with houses; Las Vegas has over a thousand Million dollar homes for sale.

The price of goods and real estate will continue to go down until salaries and prices find a new balance such that future buyers make enough money to buy enough goods to keep enough workers working. When too much wealth accumulates, less goods are bought and less goods are made and less workers are needed to make them. To illustrate: In Japan the highest salary in a company is only about 40 times the lowest, in the U.S. the range is over 400. The high salary manager lives in one house, drives one car and eats three meals, somewhat like the lowest salary worker.

Evidently we are not there yet; locally, homes that sold for over $500K are auctioned for $265K. But, banks lend to people with "sure" income.

The failure of the "Stimulous Borrowing" will be obvious right around Election Time in October and Republicans will be blamed; Democrats will inherit a huge debt and the enmity of many, but, they might lend us money, they cannot eat oil, you know.

Maybe we can change the law and sell them Lockheed F-22s at $150 Million ea, with a little extra for the aggravation and more Boeing 787 and 747-8. Since oil is cheap in the Middle East, passangers will find it cheaper to go to Europe, the "wrong" and cheaper way, with a visit to the Far East first, OK a little longer too.

The End of the End is Near

Mission Off-Target, Says Iraq Report
By ANNE FLAHERTY and ANNE GEARAN,AP
Posted: 2007-07-09 21:56:33

WASHINGTON (July 9) - A progress report on Iraq will conclude that the U.S.-backed government in Baghdad has not met any of its targets for political, economic and other reform, speeding up the Bush administration's reckoning on what to do next, a U.S. official said Monday.

One likely result of the report will be a vastly accelerated debate among President Bush's top aides on withdrawing troops and scaling back the U.S. presence in Iraq.

To see a review of the major planning mistakes at the start of thw Iraq War, see
http://www.noendinsightmovie.com/

Part I

Force and fear was used by Saddam, and many others before him, to control all the contending factions in the entire country.

Saddam was doing what Stalin, Hitler, Ghangis Khan and others, including Kings and Czar had done. Their "model" of humanity is that we are driven like sheep, through pain and fear.