Thanks for the information on what your media is reporting, Keith, and your
keen observations. I’ll keep my eyes open to see if our mainstream media
show those convoy images or not.

As for the Gates hearing today, his candor is portrayed as both stark and
refreshingly honest. One blogger I read listed the times that the White
House as declared that we are winning in Iraq in recent months, opposed to
Gates’ “grown up” concession. What Gates has to do is establish credibility
as a tabula rasa and hope the alternate media and activists don’t succeed in
showcasing his less than savory past or his business ties since leaving
public service. Even Sen. Kerry said in a forceful interview on Meet the
Press Sunday, designed to improve his image after failing as a joke teller,
that he will vote for Gates this time despite opposing him in the past,
because the dire situation calls for a new replacement, quickly.

Unfortunately, I fear Iraq is going to get much, much worse very quickly
before things get at all better. It’s a rude awakening for many that we find
ourselves in another Vietnam, and that they believed the singsong. But at
least there is some balance returning to the public voice.

The Program on International Policy Attitudes (PIPA) at the Univ. of
Maryland conducted a survey in late October finding that respondents
overwhelming advocated a “good neighbor” policy that would reflect the good
neighbor principles of mutual respect and cooperation:
*      79% of the respondents believed that “the United States should think
in terms of being a good neighbor with other countries because cooperative
relationships are ultimately in the best interests of the United States.”
That same broad majority said that the “United States should coordinate its
power together with other countries according to shared ideas of what is
best for the world as a whole.”
*      65% agreed with the statement: “When the U.S. government justifies
its foreign policies to the American people, it plays on people's fears too
much.” http://ggn.irc-online.org/neighbor/3654
<http://ggn.irc-online.org/neighbor/3654>

There is plenty to worry about as we wade through what could be a very glum
holiday season, and I am not referring to retail sales. In addition to the
esteemed JKG, below, Paul Krugman adds his voice to the “R” worries,
available without the NYT ‘select’ subscription here:
Is GDP growth below stalling speed?
http://economistsview.typepad.com/economistsview/2006/12/is_gdp_growth_b.htm
l
<http://economistsview.typepad.com/economistsview/2006/12/is_gdp_growth_b.ht
ml>

The Dollar Melts as Iraq Burn
by James K. Galbraith, Guardian UK, Dec. 04, 2006
The melting away of the dollar is like global warming: you can't say that
any one heat wave proves the trend, and there might be a cold snap next
week. Still, over time, evidence builds up. And so, as the greenback
approaches two to the pound, old-timers will remember the fall of sterling,
under similar conditions of deficits and imperial retreat, a generation
back. We have to ask: is the American financial empire on the brink? Let's
take stock.
It's clear that Ben Bernanke got buffaloed, early on, by the tripe about his
need to "establish credibility with the markets." There never was an
inflation threat, apart from an oil-price bubble that popped last summer.
Long-term interest rates would have reflected the threat if it existed, but
they never did. So the Fed overshot, and raised rates too much. Now long
rates are falling; Bernanke faces an inverting yield curve and even bank
economists
<http://today.reuters.com/news/articleinvesting.aspx?type=hotStocksNews&stor
yID=2006-12-01T182400Z_01_NYA000057_RTRUKOC_0_US-MARKETS-FOREX.xml&WTmodLoc=
Home-C3-Investing1-hotStocksNews-6>  are starting to call his next move.
That will be to start cutting rates, after a decent interval, sometime next
year.
Once again, all you monetary policy buffs, in unison please:
The grand old Duke of York, he had ten thousand men.
He marched them up to the top of the hill. And marched them down again.
This is not good news for the dollar.

The US economy is going soft faster than the inflation hawks and growth
optimists thought. Housing has been in free-fall for months. With the new
Congress anxious to display "fiscal responsibility" - cue Robert Rubin
<http://www.thenation.com/blogs/notion?bid=15>  who has moved in very fast
on Nancy Pelosi - there won't be any help next year from them. If business
investment falls off, recession could hit in 2007 or 2008. With that fear in
mind, gloomy profit expectations are setting in, and that's not good for the
dollar.

The US trade deficit is near all-time records. By itself, this proves
nothing: the US supplies reserves to the world system, and it can run any
deficit that the world is prepared to finance. But, sooner or later the
world may start to get other ideas.

So here's the big question: is the age of the dollar economy lurching toward
an end? Are China, Japan, Saudi Arabia and other big holders of T-bonds
about to start a rush, or even a stately promenade, toward the exits? Let's
hope not, because the world is unprepared to replace the dollar with
anything else. The euro is not suited for the job, and a joint dollar-euro
system would need better central bankers than either America or Europe has
got. An end to the dollar system would therefore be chaotic, inflationary,
and very tough on world trade. The best argument for the dollar has always
been: it's not in anyone's interest to bring it down.

Could it happen, though? Yes, it could. And it could be connected to that
other unfolding disaster. As the "Pax Americana" goes to hell in Iraq -
producing a nervous breakdown among the pro-war elites - let's remember that
security and finance are linked. Typically, the country that provides global
economic security enjoys the use of its financial assets in world trade. And
when the security situation changes, that privilege can be revoked. The
consequences are unpleasant. Ask the British: after the sterling area
folded, it took a generation for the UK to come all the way back.

That is partly why Economists for Peace and Security
http://www.epsusa.org>  - a group I chair - opposed the Iraq war from the
beginning. As far back as 2002, we understood
<http://www.prospect.org/web/page.ww?section=root&name=ViewPrint&articleId=6
619>  - as the economically illiterate neo-imperialists
<http://www.latimes.com/news/opinion/sunday/la-oe-ferguson20nov20,0,5449044.
column?coll=la-util-opinion-sunday>  did not - that a world system very
favourable to America was on the line. And it was not, as they seemed to
think, just a matter of military might. We knew that if the war undermined
confidence in the power, good faith and common sense of the United States,
that could lead toward disastrous changes on the financial front.

Four years in and with no end in sight, that risk may finally be catching up
to the almighty dollar.

http://www.commondreams.org/cgi-bin/print.cgi?file=/views06/1204-33.htm
<http://www.commondreams.org/cgi-bin/print.cgi?file=/views06/1204-33.htm>


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