Story Assignment: Stagflation -- The Military Drain

Institute for Public Accuracy

Wednesday, July 16, 2008

* Stagflation * The Military Drain

Interviews Available

DOUG HENWOOD, dhenwood@panix.com,
Henwood is author of the book "Wall Street" and editor of Left
Business Observer. He said today: "The U.S. economy continues to be
dominated by the contradictory forces of stagnation and inflation -- a
reincarnation of that 1970s monster, stagflation. This morning we
learned that inflation is running at a 5 percent annual rate. But just
yesterday, the president took the unusual step of reminding the public
that bank deposits are insured up to $100,000, a bit of reassurance made necessary by the sight of depositors lining up to withdraw money from a failing bank, IndyMac. All this is the culmination of some very serious long-term problems -- the chronic trade deficit, the polarization of rich and poor, the use of debt to compensate for falling incomes. It always looked unsustainable, but somehow we managed to get by with a
short-term fix or a new bubble. But now it's looking like the Bank for
International Settlements, the central bankers' club, had it right when
they said recently that 'the unsustainable has run its course.'"

ERIK LEAVER, erik@ips-dc.org,
Leaver is a research fellow at the Institute for Policy Studies. He
said today: "Too little attention is being paid to one of the largest
drains on the economy. The Iraq war is costing $12 billion a month.
These funds could be put to use back here at home.
"Part of McCain�s plan to balance the budget includes a military
draw-down in Iraq. But he's planning on increasing the size of the
military, as is Obama. Both candidates are also discussing plans to
send tens of thousands more troops to Afghanistan. So neither candidate is
talking about relieving the largest drain on the economy -- the
enormous military costs."