Who Recently Called Bush and Blair "Hitler and Mussolini"?

"Must we allow these men, the two unholy men of our millennium, who, in the same way as Hitler and Mussolini formed [an] unholy alliance, formed an alliance to attack an innocent country?" he asked rhetorically.

"The voice of Mr. Bush and the voice of Mr. Blair can't decide who shall rule…in Africa, who shall rule in Asia, who shall rule in Venezuela, who shall rule in Iran, who shall rule in Iraq," he said.

The answer, courtesy of reader Fred Nolan, may surprise you.

Follow-up poll: If Bush is Hitler and Blair Mussolini, who plays Tojo in this latter day Axis of Evil?

Comments

[AC]

So Mugabe, Chavez, and are Stalin, Churchill, and Roosevelt?

[Smart Torontonian]

"Follow-up poll: If Bush is Hitler and Blair Mussolini, who plays Tojo in this latter day Axis of Evil?"

Howard? Berlusconi? However heads Poland?

[chthus]

I'm not sure why anyone would be surprised that he'd make the comparison.

As for the poll question: Koizumi and Howard could be used simply for ethnicity and geography, but I'll pick Chalabi.

[Ruthless]

The guy confirms the value of H&R in that we here lack credibility, even though Reasonoids are more likely to speak the truth than preachers!
Amen!
The real question is, "Who the flip can handle the truth?"

[Phil]

Expect to see the "OMFG Mugabe said 'Bushitler!'" posts trickle down through Instapundit, Powerline, NRO, etc., in the next day or two, along with convenient (but false) rationalizations about how Mugabe = the UN = Democrats. But it will be a superb distraction from, you know, upcoming Fitzgerald indictments and whatnot.

[Eric II]

Funny. I guessed Ken Livingstone.

Tojo would obviously be Sharon, although those who think he's pulling the White House's strings would probably find fault in that analogy.

[Hakluyt]

It didn't surprise me. I mean, its not someone I would guess off-hand, but its not surprising this thug would say such things.

Lord, Mugabe put me in the position of actually defending Bush!

Eric II,

Tojo would be Canada. There have been sharp exchanges between both countries over the past couple of years.

[gaius marius]

Chalabi

i think chalabi is more like marshal petain in this case. as for tojo, i don't think there really is a good analogue.

[Phil]

The Tojo Analogue would be a good band name. Not great, but good.

[gaius marius]

"The voice of Mr. Bush and the voice of Mr. Blair can't decide who shall rule...in Africa, who shall rule in Asia, who shall rule in Venezuela, who shall rule in Iran, who shall rule in Iraq," he said.

you know, mugabe is a lawless tyrant -- but that doesn't mean he's absolutely wrong about everything automatically. isn't this essentially the developing anglophone global imperial management system at work, post-UN? "you're with us or against us", "outlaw regimes" and all that tripe?

[mediageek]

pot...kettle...

[Edward Lunny]

Tojo ?....Sharon's most obvious. I suppose it would be to obvious to point out that it's Mr Mugabe"s subjects who are starving and not U.S. or British citizens ?

[Smalls]

mediageek....absolutely perfect.
Someone should tell Mugabe that having less power than Bush doesn't make him less of a tyrant.

[JD]

Darn, I would have guessed Chavez. Probably too obvious for him, though.

[Eryk Boston]

Sorry Nick, that didn't suprise me in the least.

[rafuzo]

Me neither. Generally I have a list of two-bit dictators who are stupid enough to say this, powerful enough to be listened to by *someone*, yet irrelevant enough on the world stage that someone would actually take them seriously enough to publish. Mugabe, Chavez, bin Laden, Al Qaeda propaganda associate #375,191 and whoevers running Iran these days top that list.

[Herman]

The only thing surprising about this is that Mugabe remembers WW2 history after all his dictatoring.

I'm with the proconsul, Chalabi isn't in charge of much in Iraq and makes a poor Tojo. Actually, he's not even Marshal Petain, he's just the most prominent expat with big friends in Washington.

A proper Tojo would have to be carving out a colonial sphere far away from his Western counterparts areas of interest and with little material help. Sharon needs loan guarantees from the U.S. Maybe Howard. Musharaf doesn't have enough control of his country, Singh doesn't seem very threatening and tweaks the U.S. and U.K. occsaionally. The best I can come up with is Paul Kagame of Rwanda, but that's a big fish controlling a small cove in an ocean.

[thoreau]

Mugabe, you might want to start with the man in the mirror. Just saying.

[R C Dean]

The voice of Mr. Bush and the voice of Mr. Blair can't decide who shall rule...in Africa, who shall rule in Asia, who shall rule in Venezuela, who shall rule in Iran, who shall rule in Iraq

Did I miss something? Have we done any regime change in Africa, or Asia, or Iran, or Venezuela?

Not that they couldn't use it, but WTF? We knock off a dictator we've been at war with for over ten years (technically and in actual fact, exchange-of-munitions-wise), and now we're trying to micro-manage politics in Africa?

I mean, sure, at one level he's right, gaius, in that we shouldn't try to name every government on the freakin' planet. At the level of reality, though, I think we basically have nothing to do with who governs over 90% of the countries in the world, and no designs that I know of to engineer regime change in over 90% of the countries in the world, so WTF?

[Mark Borok]

"Did I miss something? Have we done any regime change in Africa, or Asia, or Iran, or Venezuela?"

Africa, yes (Charles Taylor). Venezuela - supported the coup against Chavez, either actively or passively, depending on whom you believe. Asia - I'm pretty sure Afghanistan is part of that continent. Iran - not yet.

[independent worm]

The answer doesn't surprise me, not even considering the level of audacity its speaker must have possessed while making it. Get Mugabe coked up enough and he'll issue a decree that 2+2=5 and anybody who says otherwise shall have their throats ripped out.

Anyway, why was Mugabe invited to a U.N. meeting about... anything?

[John]

RC Dean,

I think that is why people like Mugabe are so afraid of Bush. They know what they would do if they had the power that the U.S. has and they assume that Americans are just like them. If we were half as bad as they say we are, no doubt Mugabe and Chavez would both be laying in ditches somewhere with bullets in their heads. Fortuneately for them, we are nothing like that and they get to bloviate to their adoring Westerm Media.

[Shem]

A proper Tojo would have to be carving out a colonial sphere far away from his Western counterparts areas of interest and with little material help.

Hu Jintao? Nobody in the west is terribly interested in Nigeria these days.

[gaius marius]

Asia - I'm pretty sure Afghanistan is part of that continent

ll -- aren't vietnam and korea over there somewhere as well? and more recently kyrgyzstan (though that one didn't work out as well as the administration had hoped)?

[gaius marius]

I think that is why people like Mugabe are so afraid of Bush. They know what they would do if they had the power that the U.S. has and they assume that Americans are just like them.

if freudian projection is a valid means of assessing how governments perceive themselves -- and i would suggest is often is -- what does this dandy of an address say about the united states, mr john?

samples:

In this new century, freedom is once again assaulted by enemies determined to roll back generations of democratic progress ...

This form of radicalism exploits Islam to serve a violent, political vision: the establishment, by terrorism and subversion and insurgency, of a totalitarian empire that denies all political and religious freedom. ...

the militant network wants to use the vacuum created by an American retreat to gain control of a country, a base from which to launch attacks and conduct their war against non-radical Muslim governments. Over the past few decades, radicals have specifically targeted Egypt, and Saudi Arabia, and Pakistan, and Jordan for potential takeover. They achieved their goal, for a time, in Afghanistan. Now they've set their sights on Iraq. ...

the militants believe that controlling one country will rally the Muslim masses, enabling them to overthrow all moderate governments in the region, and establish a radical Islamic empire that spans from Spain to Indonesia. With greater economic and military and political power, the terrorists would be able to advance their stated agenda: to develop weapons of mass destruction, to destroy Israel, to intimidate Europe, to assault the American people, and to blackmail our government into isolation. ...

Over the years these extremists have used a litany of excuses for violence ...

In fact, we're not facing a set of grievances that can be soothed and addressed. We're facing a radical ideology with inalterable objectives: to enslave whole nations and intimidate the world. No act of ours invited the rage of the killers -- and no concession, bribe, or act of appeasement would change or limit their plans for murder.

[gaius marius]

At the level of reality, though, I think we basically have nothing to do with who governs over 90% of the countries in the world, and no designs that I know of to engineer regime change in over 90% of the countries in the world, so WTF?

i think, mr dean, at the level of reality, that american economic policy, trade agreements and foreign aid are weapons of indirect imperial management par excellence, and have determined the course of nations and governments around the globe on all continents far in excess of what you have, by this post and others made here in the past, seemed to be able to come to terms with.

[John]

Gaius,

It says that we are a force for good in the world and mean to stand against the murdurous thugs who would undo civilization. I guess we should just wait around let them kill us, because afterall we wouldn't want to look imperial or anything. You may not believe that Bush means what he says, but the fact that you find the text of that speech so objectionable, is a little bit disturbing.

[rich]

"Follow-up poll: If Bush is Hitler and Blair Mussolini, who plays Tojo in this latter day Axis of Evil?" - Nick Gillespie

"What about Poland? Don't forget Poland!" - George W. Bush

[Herman]

Hu Jintao? Nobody in the west is terribly interested in Nigeria these days.
Shem-
The larger, redder China is more of a U.S. rival than an ally like Japan was to Germany. I'm not keeping up on Nigeria. They still using ECOWAS/WAU as a way to give multilateral cover to their projects?

[gaius marius]

I guess we should just wait around let them kill us

ah, this is more like the mr john i've come to know.

You may not believe that Bush means what he says

indeed, i think bush does means it -- and that is what i find frightening in it. he clearly isn't talking about defending civility -- the defense of civility is not, will never be and cannot be the the product of organized state mass murdering. as many a towering historian has noted, civilizations do not die from without but from within. the notion that we protect our morals by murdering people is exactly the kind of rudderless paradoxical amorality that one finds common in dying societies.

what he's talking about is us -- inferring onto an enemy that which we find so difficult, discomfiting and undesirable in our own impulses -- just as with mugabe, a classic freudian projection.

[John]

Gaius,

We are inferring all of our bad qualities on our enemies. I guess that is why suicidal Americans are bombing trains in Pakastan, blowing temselves up in crowded markets in Aman and flying airliners into skyscappers in Medina.

[kwais]

Tojo as Sharon seems apt. No?

[SR]

I'm glad that the news account expressly noted that Mugabe asked the question "rhetorically", because I never would've guessed otherwise. As for Tojo, Howard is the best. Sharon is most analogous to Carl Gustaf Mannerheim of Finland.

[dhex]

"the defense of civility is not, will never be and cannot be the the product of organized state mass murdering."

yeah.

"as many a towering historian has noted, civilizations do not die from without but from within."

there are, ahem, more than a few exceptions to this. it sounds very nice, however.

unless you're speaking metaphysically, that is.

[gaius marius]

I guess that is why suicidal Americans are bombing trains in Pakastan, blowing temselves up in crowded markets in Aman and flying airliners into skyscappers in Medina.

are you seriously suggesting, mr john, that the united states -- in expending some tens of billions of dollars in munitions every year in iraq, afghanistan and elsewhere around the world -- has killed fewer innocent people and destroyed less property in this world than "the terrorists" who cobble together backpack bombs and boxcutters?

[gaius marius]

ah, scratch that -- just let me say that no terrorist groups stands even the remotest chance of building an empire or intimidating europe, as bush speciously claims -- but those are things the united states is uniquely qualified to specialize in. bush by his words shows that he understands his country to aspire to such things in the darker recesses of our national psyche.

[Shelby]

Who Recently Called Bush and Blair "Hitler and Mussolini"?

Here I was hoping it would be joe...

[TJIT]

You folks missed the real irony in the article which is quoted below

"Mr. Mugabe departed from his text at a ceremony marking the 60th anniversary of the U.N. Food and Agriculture Organization (FAO)"

Mugabe, who has caused famine in his nation and used food as a political weapon was invited to speak as a dignitary at a UN meeting on hunger.

This is almost as funny as Libya and Sudan sitting on the UN Human Rights commission. It provides another illustration why the UN is little more then a fig leaf for various freedom hating regimes around the world and can't be taken seriously as an international human rights institution.

[Happy Jack]

The voice of Mr. Bush and the voice of Mr. Blair can't decide who shall rule

I've heard a rumor that Musharraf, Mubarak,and Abdullah are riding with us on the Love Train, but I can't confirm this, as I'm in coach class.

[Rimfax]

It provides another illustration why the UN is little more then a fig leaf for various freedom hating regimes around the world and can't be taken seriously as an international human rights institution.

Wasn't there a lot of pundit press a year or so ago about organizations that only included constitutional democracies? Presumably, they were gaining momentum and were predicted to take away much of the relevancy of the UN.

Whatever happened to them?

[Rimfax]

Lord, Mugabe put me in the position of actually defending Bush!

I hate it when people do that!

[Rimfax]

i think, mr dean, at the level of reality, that american economic policy, trade agreements and foreign aid are weapons of indirect imperial management par excellence, and have determined the course of nations and governments around the globe on all continents far in excess of what you have, by this post and others made here in the past, seemed to be able to come to terms with.

mister gaius cummings, it sure is a good thing that no other countries mess around like that. Golly, imagine if Mugabe did such a thing, there might be some unstable nations in Africa.

In all seriousness, just because the US is one of the more effective nations at foreign interference, does not justify the rhetorical-branding of imperial management. Bush (and Mugabe) may dream that Bush has that kind of power, but it is fantasy.

[TallDave]

Too.. much... irony...

Can't... breathe...

[TallDave]

Wow, is gaius still saying things like "anglophone global imperial management system?"

The empire meme is so ridiculous. When do I start getting some tribute from our imperial subject states? Cause right now, they're running some hefty trade surpluses with us. Also, someone forgot to tell our subject governments in France and Germany to obey our every whim instead of castigating everything we do.

Hell, we didn't even get any free oil from Iraq. And it's not like we couldn't seize all that Saudi oil in a matter of hours.

Pretty crappy empire.

[TallDave]

Wasn't there a lot of pundit press a year or so ago about organizations that only included constitutional democracies? Presumably, they were gaining momentum and were predicted to take away much of the relevancy of the UN.

Whatever happened to them?

Damn good question. Nonconsensual governments can't legitimately claim to represent the people they repress. We should be encouraging free democracies with better trade deals, freer access, etc.

[gaius marius]

The empire meme is so ridiculous.

you should take that up with people who are actually educated and relatively objective on the question of american power projection in global politics and history, mr talldave, instead of relying on your lilliputian assessments. i'd recommend niall ferguson or deepak lal for starters.

Pretty crappy empire.

in many respects, i agree, as would lal and ferguson and many others. but that doesn't mean it isn't an empire and a growing one.

[Deus ex Machina]

The final word on stupid WW2 analogies:

Bush = Hitler
Blair = Mussolini
Sharon = Tojo (ie: interested in removing a common foe, but also has his own agenda)
Howard = Miklos Horthy of Hungary
Chalabi = Petain (unreliable collaborator with his own plans)
Emir of Kuwait = Carl Mannerheim (attacked by a much stronger country which has historic claims your territory)
Karzai = Ustase regime of Croatia

[celtlion]

Awww..screw him and the Giraffe he rode in on..

[Shem]

The larger, redder China is more of a U.S. rival than an ally like Japan was to Germany.

I think the posters here are vastly overstimating the level of connection between Tokyo and Berlin. A reasonable working relationship slipping it's way into a thin veneer of civility is hardly analogous to the levels of collusion between Israel and the US. Around WWII there was a lot of friction over the shielding of Jews in Shanghai, and after Japan refused to open up a front against Russia the two were barely on speaking terms. That's why China fits better; they're our buddies now, but it's not like we have any responsibilities to each other.

I'm not keeping up on Nigeria. They still using ECOWAS/WAU as a way to give multilateral cover to their projects?

Sort of. They're keeping the option of playing up the relationship open, but since nobody in the West is calling them on their actions they've relaxed quite a bit.

[TallDave]

gaius,

you should take that up with people who are actually educated and relatively objective on the question of american power projection in global politics and history, mr talldave, instead of relying on your lilliputian assessments. i'd recommend niall ferguson or deepak lal for starters.

So your counter-argument is: neener neener, you're dumb and we're smart. Lilliputian, indeed.

I've read Niall. Not impressed with his analogy. He misses some basic points that contradict the empire idea, like no territorial gains, no tribute, allies that tell us to go to hell, unfavorable trade agreements, we pay for military bases, all military arrangements are voluntary... it's a ridiculous, hyperbolic, wrong characterization.

AS Lileks put it: Worst. Empire. Ever.

[TallDave]

Here's a perfect example of where Niall is dead wrong, and clearly trying to make the facts fit his thesis:

p 262, Colossus: "...the main reason why America's fiscal crisis remains latent is precisely that people refuse to believe in its existence."

Or precisely because it doesn't exist. Niall offers the tired old "America has a lot of debt" arguments for his alleged crisis, ignoring the fact that Germany, Japan, and France all have comparable levels of indebtedness, with lower growth rates to boot. He notes America can borrow "unprecedented sums" without the obvious context that since we're the larget economy in the world, we have concomitant "unprecedented sums" of wealth to borrow against. Like most people making this point, he also misses the fact that Japan and China are not loaning America money because they like us or want to do us a favor. They're doing it mostly because exchanging native currencies for US-denominated bonds devalues their currencies so they can sell us things more cheaply (Japan spent $187B on currency intervention "loans" last year): they're economically dependent on U.S. consumption. We're their golden goose.

And don't think that goes both ways. As a rule new customers are harder to come by than new producers, and interest rates are at historic lows in the U.S. because it is so easy for us to find people that want to invest here. They could stop loaning us money or stop supplying us cheap goods and we'd say "Sure, whatever." Then we'd have a little short-term inflation during the transition to different producers while their economies cratered, because there is no replacement consumer market.

[Eddy]

I for one am shocked, SHOCKED that a nice, warm, gentle, loving and caring person like Bobby Mugabe would say such a thing. When you put it beside all of his other hope filled and unbiased sound bites, I can only conclude that this is a misquote and would caution against smearing his name in such a way. This is a man who knows that government by its very nature is evil and does his best to illustrate that fact by example.

For the Tojo character, I'll go with Robert Crandall.

[gaius marius]

Or precisely because it doesn't exist.

the naive hubris in your comments, mr talldave, is, to me, STAGGERING. people like you are the ones who will disavow ever having said anything so foolish in ten years, i promise you.

[Rimfax]

ee marius,

Why don't you just insult TallDave directly? Why do you dance around it and use inane phrases like "naive hubris" and cast predictions on him like you were some sort of offended oracle meanwhile pretending that you're not actually insulting him? Just because he made you look like a jackass by exposing your obscure demigods as egos with turd-colored glasses is no reason to disrespect him with such a half-hearted insult.

Also, it's "TallDave", NOT "mr talldave", get his name right, you disrespectful dipshit.

[TallDave]

So, again, gaius, your counter-argument is: neener neener, you're hubristic and we're right.

We heard this same defeatism in the 1970s, 1980s, and 1990s. The "sky is falling" crowd has yet to be right in any meaningful way.

[TallDave]

Eddy,

This is a man who knows that government by its very nature is evil and does his best to illustrate that fact by example.

LOL!

Thanks for sharing, that was inspired.

[gaius marius]

did you manage to call me "disrespectful" at the end of that, mr rimfax? lol -- i'll let that stand on its merits.

as to insult, i make no assessment of mr talldave's character -- difficulties of the scope and scale we now face in the economic arena all but invite rote denial, and many people educated and working in the field have great difficulty understanding the depths in which we find ourselves -- much less those who have succumbed to the religion of the infallible state, as mr talldave so clearly has. it's almost impossible for the layperson to gather, in reading partisan political hogwash every day, what a truly frightening precipice the western global economic system -- not just the united states, but the entire system -- has teetered on for the last several years as it grows steadily worse in response to our mismanagement.

[SR]

"Chalabi = Petain (unreliable collaborator with his own plans)"

Would that lead to Musharraf = Vidkun Quisling (more reliable collaborator with his own plans) or Musharraf = Francisco Franco (ostensible ally who sits on his hands and makes only token contributions)? And does Reza Pahlavi II = Subhas Chandra Bose (globetrotting wannabe collaborator who isn't as popular as he thinks he is)?

[Rimfax]

gm,

I'm so proud of you, you actually caught the intentional hyposcrisy while still failing to understand a word I said. You insulted him with sophistry which is far more disrespectful in its dishonesty than a direct insult.

i make no assessment of mr talldave's character

Actually, that's exactly what you did. It would show some respect to your adversary if you would actually admit it. That's most of what the "disrespectful dipshit" punchline was all about, not about my disrespecting you with a direct and honest insult about your horrendous manners and your broken Caps Lock and Shift keys.

many people educated and working in the field have great difficulty understanding the depths in which we find ourselves

...But you do? Thanks, Svengali, for trying to enlighten us poor unwashed masses with your arcane and unknowable wisdom.

succumbed to the religion of the infallible state

Do you read what you write? You certainly don't read what anyone else writes here. Talk about "rote denial".

it's almost impossible for the layperson to gather, in reading partisan political hogwash every day, what a truly frightening precipice the western global economic system....

So, since you understand it, you must be the economic clergy, eh? Interesting, because other folks have been making the same predictions as you for over a hundred years and they have been consistently wrong over the long term.

Do you have anything else to back up your assertions except your delusions of divine knowledge and the writings of insular ideologues?

[gaius marius]

defeatism

who would we lose to? and who is 'we'? the holy nation? this isn't a contest, mr talldave -- some sort of pissing match. do you see everything in such insecure, combative terms?

my counterargument is difficult to post because it's quite long -- and presuming you won't learn from it, i see little reason to do so. but, in short, it is a question of leverage.

american total debt obligations now stands north of $40tn -- some 400% of gdp, a level comparable only to japan in the history of western economics. (the fact that japan is simultaneously so indebted is of utterly no relief to the global economic system, merely compounding the problem.) moreover, because of the size of the american economy vis-a-vis the world, it amounts to a staggering 140% of global product, truly uncharted waters.

yet more importantly, personal savings are now actually negative in the us for the first time in any industrial economy since the depths of the great depression -- indicating an ever-more rapid leveraging of the consumer -- which, compounded by government and corporate indebtedness that is mind-boggling in its own right, forces america to rely on external capital to finance its addiction to leverage. foreign dollar-demoninated holdings now amount to well over $11tn, growing by over $500bn annually.

this is an essential point. it is not merely borrowing in a foreign currency that sparked debt disasters in places like thailand, mexico and argentina -- that is merely a possible trigger to reverse the flow of capital -- for the actual problem in all those cases was a high level of dependency on foreign capital which *could* take flight, given an excuse (like a falling dollar). this is the difference between the us and places like the eurozone and japan, which are net international creditors -- and why we are in vastly more troubling circumstances.

you rightly note, mr talldave, that se asian economies have a vested interest in buying us debt to manage their currencies. but you are mistaken to presume that this situation can and will blissfully maintain itself. lawrence sumners recently called it "the financial balance of terror" -- and no such situation is long tenable.

asian economies reap dollars with the american trade deficit. they then currently decide to reinvest those dollars in us debt because the alternative is to allow their home currencies to strengthen -- the market force that should restore a balance of trade by making their exports unaffordable to american consumers.

they don't have to do that. they can allow their currencies to strengthen, kill the dollar and spark runaway inflation and radical interest rate increases in the us (with devastating consequences). they CHOOSE not to now because they'd be sitting on ruinous forex losses and a crushed export sector if they did. but it would hurt us here FAR more than them.

while this has worked for years now, circumstances will not always allow them to be able to choose so. this imbalance grows and grows thanks to this growing terror in realization, which is so massive as to be really paralyzing -- no one on either side can so much as breathe at the regime, for fear of upsetting it -- but it cannot go on indefinitely. sooner or later, an accident or incident (i'll guess hedge fund along the lines of ltcm) will upset it, break confidence in the united states and the imbalances will correct with devastating force and speed.

and have no faith in the fed to save us. what china does is beyond their purview, and they will be stuck under such circumstances with fighting a persistent hyperinflation as trillions in dollar instruments are liquidated and sunk into non-dollar assets. very little a central bank can do to alleviate that kind of suffering.

how to contextualize this debt and its consequences for the layperson is a difficult problem. even if things go perfectly, bill gross commented in april of this year, america can now hope for decades of 2% real growth -- and that only barring government fiscal and monetary mismanagement, which could precipitate what he calls a "Big Bang". he previously (dec 2004) noted that american government debt no longer deserves to be triple-a rated -- being so large as to be unmanagable and a major financial market risk. it is indeed unpayable, as kent smetters' study basically demonstrated -- all our future revenues cannot come even remotely close to covering all our future expenses including debt service.

the most palatable way out, in the end, is to start printing money like crazy, destroying the dollar in an effort to default on the debt by reducing its real obligation -- that is, engage in a hyperinflation. we've been doing so for a long time incrementally, but the growing weight of the real debt load -- debt service costs now amount to more than $2tn annually, ~20% of gdp and growing -- is forcing an acceleration of the process. when we begin to contemplate doing this in earnest -- and it's only a matter of time now -- foreign creditors will dump dollar assets like a hot rock and domestic banks will refuse to lend, knowing that any loan in an hyperinflation is a certain loss.

these are problems so massive as to threaten, as ferguson noted, the order of nations. i think it's quite safe to say now that america is well on its way to joining the french, british and russian empires, but in vastly more spectacular style and with significantly greater global effects.

is that 'defeatism'? i think instead it's a cold confirmation of the shopworn hazards of fiat currency management, a venture which has destroyed every economy that ever undertook it. it isn't defeatist to look the facts in the face and deal with them -- that's character, something sorely lacking in the postmodern western makeup.

[gaius marius]

that's exactly what you did

i can't control how you choose to interpret my words. i think mr talldave is misguided. is that an insult? you decide.

...But you do?

fwiw, i actually administrate a hedge fund. we here are a few of the wall street insiders/entrepeneurs that so many here so wrongly deify -- the "economic clergy", as you so colorfully put it, mr rimfax. and i can tell you from years of experience that most of the best heads on the street -- regardless even of how they pander to the cameras on cnbc to get idiots to take the other side of their trades -- understand fully what i'm saying here. it's why net outflows of capital from the us markets are running $10bn a month despite foreign investment while capital floods into places like china, india and the asian rim.

it's perhaps unfortunate that so many americans have judgments so clouded by the religion of the nation so as to be unable to comprehend that their beloved united states is a rapidly dessicating economic and military power, despite its incredible hubris. but wall street (and washington) relies on such misjudgments among the public, and they aren't about to say anything that is an obvious "get panicky". even relatively conscientious advisers like stephen roach and bill gross (much less alan greenspan) couch their cassandraisms in enough jargon to deprive the layperson of a real understanding. it's something we laugh about at cocktail parties and shake our heads.

[TallDave]

Gaius, you wrote a lot of words, but I can sum them all all up in just eight: The sky is falling! The sky is falling!

yet more importantly, personal savings are now actually negative in the us for the first time in any industrial economy since the depths of the great depression

Wrong, this is only true if you ignore the effect of equity gains.

bbut you are mistaken to presume that this situation can and will blissfully maintain itself.

I didn't say it would. I said they have to keep their economies going, so it's a much bigger problem for them than for us.

even if things go perfectly, bill gross commented in april of this year, america can now hope for decades of 2% real growth

He's wrong. Productivity gains alone may exceed that.

the most palatable way out, in the end, is to start printing money like crazy, destroying the dollar in an effort to default on the debt by reducing its real obligation

See, this is a perfect example of how much misinformation there is out there among doomsayers. Unlike other countries, US debt is dollar-denominated; the hyperinflation scenario makes no sense. If the dollar suddenly becomes weaker, the big losers are the people holding the debt. We just go on paying in our weaker dollars.

what a truly frightening precipice the western global economic system -- not just the united states, but the entire system -- has teetered on for the last several years

Again, we've heard about the "frightening precipice" for decades. First it was oil inflation, then Japan, then deflation, and it's always been debt.

fwiw, i actually administrate a hedge fund
What's your capitalization?

[TallDave]

so clouded by the religion of the nation so as to be unable to comprehend that their beloved united states is a rapidly dessicating economic and military power

It's a shame you're so clouded by misinformation that you actually believe this. We remain the richest, strongest country in the world. Nearly every other major country has similar debt situations with less growth forecast and greater structural problems.

[TallDave]

There's even a name for people like you, gaius - the "debt doomsayers." One of the first prominent debt doomsayers of the modern era was R. Buckminster Fuller, the inventor of the geodesic dome. He was a brilliant man, and like all brilliant men said many things that turned out to be utterly wrong. He too predicted the inevitable failure of the debt-based system -- only that failure was supposed to inevitably happen about ten years ago now.

[gaius marius]

effect of equity gains

which is not savings at all, but the effect of leverage.

I said they have to keep their economies going, so it's a much bigger problem for them than for us.

and we don't? too complacent, mr talldave -- the debtor is subservient. we are vastly more dependent on them than they are on us. they, after all, have rapidly growing middle classes and intensely positive demographics of their own to rely upon for internal market growth. we don't.

Productivity gains alone may exceed that.

take it up with mr gross, but productivity gains are a bit of a phatasm of our investment boom (the end of which is precisely what we're discussing) and inflation statistic manipulation. when the borrowing boom ends and we're forced to reckon with inflation as it really is, our vaunted productivity advantage will be shown to have been something of a late-90s con job.

Unlike other countries, US debt is dollar-denominated; the hyperinflation scenario makes no sense.

sad. this is exactly what i addressed when i said:

yet more importantly, personal savings are now actually negative in the us for the first time in any industrial economy since the depths of the great depression -- indicating an ever-more rapid leveraging of the consumer -- which, compounded by government and corporate indebtedness that is mind-boggling in its own right, forces america to rely on external capital to finance its addiction to leverage. foreign dollar-demoninated holdings now amount to well over $11tn, growing by over $500bn annually.

this is an essential point. it is not merely borrowing in a foreign currency that sparked debt disasters in places like thailand, mexico and argentina -- that is merely a possible trigger to reverse the flow of capital -- for the actual problem in all those cases was a high level of dependency on foreign capital which *could* take flight, given an excuse (like a falling dollar). this is the difference between the us and places like the eurozone and japan, which are net international creditors -- and why we are in vastly more troubling circumstances.

in other words, borrowing in your own currency merely removed a potential trigger to the crisis; the crisis itself is the unwinding of a massive net foreign debt. there are many possible triggers to such an unwinding.

If the dollar suddenly becomes weaker, the big losers are the people holding the debt. We just go on paying in our weaker dollars.

they are losers, but we will be vastly greater losers. such a de facto default will force us to balance our international books rapidly under very high interest rates as access to foreign capital shuts off. under such circumstances, banks stop lending almost altogether (many failing outright or being bailed out/nationalized by the federal government) and the savings of millions of americans will be, in real terms, wiped out.

inflation is not the consequence-free panacea it might seem to desperate eyes.

What's your capitalization?

no thanks.

We remain the richest, strongest country in the world.

mr talldave -- we the largest debtor nation on the planet, with truly monstrous net foreign liabilities. we only seem rich because we're living on extended credit.

the difference is similar to that between a man who has $10mm in the bank and spends his $600k in interest (ie, wealthy) and a man who has $100k in the bank and has used it as collateral to borrow $600k to spend (ie indebted).

there was a time when america was the richest, strongest nation on the planet. but that time has passed. we live now on the spoils of an empire which you deny exists -- as gross said re: american debt ratings, "take away our military might, and a lower rating would be a near-unanimous opinion." i'd go further. take away the weaponry, and few would even bother with the credit risk.

[gaius marius]

only that failure was supposed to inevitably happen about ten years ago now.

i'd submit to you, mr talldave, that it nearly failed in the 1970s following nixon's closing of the gold window, and began to fail in 2000 in a much more catastrophic way. only dedicated money supply expansion and interest rate manipulation have deferred the failure this long -- at the terrible price of expanding the credit bubble to yet more awful proportions.

but it's important to note that the salient point is something that wasn't true until quite recently -- i agree with you that debt itself, in moderation, is a good thing. i'm not talking about austerity measures and going back to living in caves. what's bad is 1) how monstrous it's become at 400% of gdp -- an unprecedented number -- and more importantly 2) how much of it we now owe to people on the other side of our currency wall.

[TallDave]

and we don't? too complacent, mr talldave -- the debtor is subservient. we are vastly more dependent on them than they are on us.

Wrong! The producer is subservient to the customer, especially when he loans him the money to buy the producer's products. They are much more dependent on us. Notice we aren't desperately intervening in currency markets to keep that ship afloat.

effect of equity gains
which is not savings at all, but the effect of leverage

Six of one, half dozen of the other. And Hernando de Soto showed convincingly that economic growth is dependent on proper use of leverage.

take it up with mr gross, but productivity gains are a bit of a phatasm of our investment boom

Take it up with Mr. Kurzweil, who has shown steadily accelerating productivity gains going back over 100 years.

What's your capitalization? no thanks.

Then your fwiw is worthless.

we the largest debtor nation on the planet, with truly monstrous net foreign liabilities, with truly monstrous net foreign liabilities.

We also have truly monstrous assets to offset them.

for the actual problem in all those cases was a high level of dependency on foreign capital which *could* take flight,

That's true of all capital everywhere. Your point is meaningless.

[TallDave]

what's bad is 1) how monstrous it's become at 400% of gdp -- an unprecedented number -- and more importantly 2) how much of it we now owe to people on the other side of our currency wall.

The debt markets don't agree; we have historically low interest rates. The world believes America will continue to grow and pay them back. In fact, they're lining up to lend us more.

the difference is similar to that between a man who has $10mm in the bank and spends his $600k in interest (ie, wealthy) and a man who has $100k in the bank and has used it as collateral to borrow $600k to spend (ie indebted).

A better analogy would be a man with a $10M house who borrows $9M to start a business that returns 20% while he pays 6% on his loan.

take away our military might, and a lower rating would be a near-unanimous opinion

Yeah, because our military generates so much money. Laughable.

[TallDave]

See, gaius, the big thing that you're missing here is that the U.S. consumer keeps the global economy going. That's the primary concern of all the big economic powers -- except us. We don't particularly care if China and Japan and Europe are able to keep their economies humming by selling us stuff we could make here instead if it weren't cheaper to import due to artificial exchange rates -- but you can bet your ass they care.

The other economic powers will do anything in their power to keep the U.S. consumer buying. They have to; we keep their workers working and their business profitable. If their scheme does unwind -- and I don't discount the possibility -- and there's a run on U.S. capital that that devalues the dollar, we'll develop domestic producers while the other economies rue the fact their massive U.S. investments are suddenly a huge loss and there's suddenly no one to buy their products. Factories will close there and open here. We'll have inflation but suddenly our exports will be vastly more competitive. The capital crunch will hurt those trying to borrow more, but businesses will boom here while they fail everywhere else as the playing field is abruptly levelled.

[gaius marius]

Notice we aren't desperately intervening in currency markets to keep that ship afloat.

no one intervenes with their currency more than we do, mr talldave -- it simply isn't through forex.

proper use of leverage.

again, i repeat that some debt is a good thing. it's how banks function. but proper use isn't our situation.

We also have truly monstrous assets to offset them

we do have assets, but not nearly enough to offset our debts. i repeat, mr talldave, we are the world's largest net debtor -- not just in absolute terms. american net foreign asset position is some -30% of gdp and expanding by -6% a year. this is approximately the level of nfa/gdp that brought down the house in argentina in 2002.

anyway, i can't make you understand the figures on a chatboard. you think you know that all is well -- fine. believe that. please trade on it, in fact. i can always use a counterparty.

[gaius marius]

The other economic powers will do anything in their power to keep the U.S. consumer buying.

this is the hubris that i refer to, mr talldave -- you assume the world exists essentially to serve the engine of the united states. these economies will NOT do "anything" -- there comes a point where their interests are no longer served by throwing wealth into dollar instruments that are going worthless.

stephen roach in 2003:

As I see it, the model of a sustained US-centric global growth dynamic rests critically on a very stylized depiction of the world economy. It implicitly presumes that ever-mounting current account deficits in the world?s growth engine do not trigger a depreciation in the value of the US dollar. This is basically the functional equivalent of a one-currency model in an increasingly borderless world. As such, it also presumes that the rest of the world has an insatiable appetite for dollar-denominated assets. There are also obvious geopolitical implications of this stylized depiction of the world as well: America?s gaping and ever-rising current account deficit is basically being judged as a small price to pay for US geopolitical hegemony. In other words, as long as America takes care of the world?s security, its imbalances can be freely financed.

I just don?t buy it. Despite upward revisions to our global forecast, the world economy is still a very sluggish place. And such a sluggish global climate, beset by ongoing labor market distress, remains very much a zero-sum game as politicians now take the upper hand in driving the battle over market share. That?s why the Japanese have been intervening massively to stem the appreciation of the yen. That?s why European leaders are now sending signals that they believe it is unfair for the euro to bear a disproportionate share of any downward adjustment in the dollar. That?s also why the US Congress has now singled out China as a scapegoat for America?s jobless recovery. And that?s why negotiations over world trade liberalization all but collapsed at the just-completed WTO meetings in Cancun. A still sluggish world is listing increasingly toward trade frictions and the pitfalls of competitive currency devaluation. In my view, that underscores the mounting tensions that another bout of US-centric global growth would most assuredly produce. For that reason, alone, I believe that the global economy is now nearing the end of an extraordinary seven and a half year period of unbalanced growth.

All in all, the world appears to remain as US-centric as ever. And that?s just the problem. Unlike earlier periods, another such burst of unbalanced global growth would occur in the context of a massive US current-account deficit. There?s another New Paradigm being put forth to rationalize why such an outcome may be possible, but it?s starting to smack of d?j? vu. As was the case during the Nasdaq-led mania of the late 1990s, this has all the trappings of a flow-driven argument being used to justify powerful momentum swings in world financial markets. Like the last time -- only a scant three and a half years ago -- I fear this bout of denial could also end in tears.

[gaius marius]

Factories will close there and open here.

and it is this economic manichaeism which is utterly false. this is not a competition, mr talldave -- we live in an integrated world economy where credit crosses borders. WE ALL LOSE when deleveraging starts; there is no "winner".

that's why i wonder about the future of globalization in the aftermath of what awaits us -- many will question its worth.

[JDM]

"take it up with mr gross, but productivity gains are a bit of a phatasm of our investment boom"

Here's a link to Mr. Gross, backing away from his comments about productivity being a "phantasm" of CPI manipulation.

http://www.pimco.com/LeftNav/HomePageAnnouncements/IO+Con+job+redux+04.htm

He's not very convincing even with the argument he leaves himself. He's also not very honest in answering his critics.

[JDM]

Here's Stephen Roach backing away from his pessimism (a little):

http://www.morganstanley.com/GEFdata/digests/20050701-fri.html

[gaius marius]

mr jdm, why would you trust any statistic so closely related to so many large government financial decisions that is issued by the government itself? the ridiculous mathematical journey of faith we take evey month to get to core cpi -- as though that reflected inflation -- is a travesty.

but, fwiw, cpi and the investment boom are two different things. one can't expect capital deepening to continue indefinitely.

[gaius marius]

lol -- mr jdm, you should read their commentaries on a more regular basis rather than look for spots of backtracking. if anything, both have gotten much more pessimistic re: the eventual resolution over the last few years.

roach, from the article you cite: I still believe such an endgame eventually awaits the United States -- leaving me an unrepentant bond bear. But I now expect something else to happen first -- namely, a China slowdown brought about by a marked deceleration of growth in its fixed investment and export sectors.

that's hardly backing away.

[JDM]

'mr jdm, why would you trust any statistic so closely related to so many large government financial decisions" that is issued by the government itself?'

I don't, and wouldn't. But Gross backs away completely from the position you quoted him for.(For which I quoted you.) He doesn't even contest it:

"The government?s hedonic adjustments may accurately reflect productivity increases but, etc."

Roach's slight backing away is of a different class and nature than Gross's. I read the article to mean he was less worried about inflation than he had been, and that this and the slowing of the Chinese economy would mitigate the rebalancing he's waiting for.

You don't have to be a genius to predict a recession, then come up with reasons why it didn't happen this year. Eventually, you'll be right, of course, and we'll have another recession.

[gaius marius]

mr jdm, gross noted that cpi is a manipulated figure of artifice that has been abused to make it seem as if productivity is higher than it really is. hedonic adjustment is only a part of that.

moreover, to say, as gross says in the apologia you link, that there is such a thing as proper hedonic adjustment...

I did not dispute the fact that the quality of goods and even services can improve and that the government shouldn?t recognize that ?hedonically.?

... and then to say that the government isn't abusing hedonic adjustments -- sir, those are two vastly different statements. from gross' original article:

For instance, prices of desktop and notebook computers declined by 8% a year during the past decade, The WSJ reports but because the machines? computer power and memory have improved, their hedonically adjusted prices have dropped by 25% a year since 1997. No wonder the core is less than 2% with computers dropping by that much every year. But did your new model computer come with a 25% discount from last year?s price? Probably not. What is likely is that you paid about the same price for hedonically adjusted memory improvements you?ll never use. Similarly, government statisticians manipulate the price increases for cars and just about any durable good that comes off an assembly line but find it difficult to extend that theory to underwear or a pair of shoes. Perhaps that?s next. Talk about Uncle Sam getting into your shorts!

Actually, to make the case for a government con job, it?s important to point out that the bulk of these hedonic adjustments have come only in the past few years, when it became necessary to buttress Greenspan?s concept of our New Age Economy. Back in the 1990s the Clinton Administration blessed a start to quality adjust inflation statistics. But then in 1998, the methodology was adopted for computers ? surely the biggest step backward in realistic inflation calculations. Since then, the BLS has expanded the concept to include audio equipment, video equipment, washers/dryers, DVDs, refrigerators, and of all things, college textbooks! Today no less than 46% of the weight of the U.S. CPI comes from products subject to hedonic adjustments. PIMCO calculates that without them, and similarly disinflating substitution biases, Greenspan?s favorite inflation measure, the PCE, would be between 0.5% and 1.1% higher each year since 1987. This implies as well that since inflation was higher than actually reported, that conversely, real growth must have been lower by the same amount.

now, you can read gross a couple of ways here. i see that some of the most powerful men in government called him up and told him to soften his story -- and knowing him ot be no fool, he did. but he didn't exactly refute the evidence he just presneted above by simply saying

The government?s hedonic adjustments may accurately reflect productivity increases, but they should not be part of a CPI, which is intended to depict America?s cost to live. In effect, that allows the benefits of productivity to accrue to businesses (which don?t provide adequate raises) and government (which under-compensates Social Security recipients). Holders of TIPS who are hoping to keep up with the cost of living via their ?inflation protection? are disadvantaged as well.

you'll note that nowhere in there do you see him say that government isn't using hedonics to warp cpi -- which, as he first wrote at length, they clearly are. indeed, real growth is being overstated by understating actual inflation, in part through the (ab)use of hedonics in a way that no other government in the industrial world employs to hide real cost increases. (and this is a discrepency, i might add, which almost entirely explains our vaunted productivity advantage over the rest of the world -- if they employed the same hedonic methods, there would be no such gap.)

none of that is to say that some hedonic effect is real -- machines that pump out twice as many widgets are actually twice as productive, and if they cost the same as their lesser incarnation, a hedonic adjsutment is understandable.

but i ask you -- has your computer actually put out 25% more real work a year every year since 1997? clearly not -- it does somewhat more work with a lot more bells and whistles than it once did. and thus deflating computer equipment as the government has is in fact a fruad being perpetrated upon us.

[gaius marius]

and to what extent a fraud? to wit: because of the contortions of hedonics in the government inflation calculus, if you subtract from gdp the sales of computer equipment for years prior to 1997, gdp in those years actually rises. this is because the figures are rigged with certain hedonic assumptions which are not reflective of reality, but do serve to knock a bit of inflation out of the numbers.

[JDM]

"but i ask you -- has your computer actually put out 25% more real work a year every year since 1997?"

Without the miniturization of microprocessors that's occured in the last 5 years allowing handhelds to do more powerful things, and the commoditization of powerful servers to allow networks to direct traffic in ways that couldn't have been economically 5 years ago, the job I have now wouldn't exist at all. So you're asking the wrong guy.

If some retired senior wants a computer to send pictures to his grandkids, he can get one now for much less than he would have 3 years ago. And he wouldn't have been able to send pictures at all 15 years ago.

It's a little more complex than asking if everyone gets 25% more work out of their PCs.

By the way, I've seen studies that have shown that it is worth the investment for most office workers to have their PCs upgraded every 3-4 years or so(don't quote me on the exact number of years), which makes me believe 25% is not to far off.

[JDM]

"and this is a discrepency, i might add, which almost entirely explains our vaunted productivity advantage over the rest of the world"

You're going in circles here. You used Gross to back up this assertion in the first place. That's my whole point. He supports that contention in the first article, then his support for you is gone in the second, and it's just your assertion again. Maybe his support disappeared because the government scared him into withdrawing it, but there's no way to argue that either way, is there?

[JDM]

"couldn't have been economically"

"couldn't have been *done* economically" that should be.

[gaius marius]

He supports that contention in the first article, then his support for you is gone in the second, and it's just your assertion again

no no mr jdm -- not at all circular but a new point -- i'm saying here that only the united states uses hedonic adjustments in this aggressive manner. eurozone inflation statistics, for example, are not so adjusted.

the difference between the two accounting methods is in essence the difference in productivity growth that the united states claims to be the result of some sort of basically moral superiority in our structure.

[gaius marius]

It's a little more complex than asking if everyone gets 25% more work out of their PCs.

agreed -- but the absurdities in the data remain as testament to how overadjusted -- indeed, manipulated -- our economic calculations have become.

[gaius marius]

and all this only ancillary to the fact that much productivity growth as has honestly occurred is the product of capital deepening, a direct consequence of an investment boom that must inevitably end in a deleveraging event or period.

no, i'm afraid that mr talldave's specious claim that productivity growth alone must force economic growth over gross' intermediate- to long-term estimate of a real 2% is just that.