BigMo’s Blog

Politics and Economics in Israel

American Weakness

The number of unemployed Americans has doubled since 2007 to 15 million.  About 9.5 million people are collecting unemployment benefits, up from about 2.5 million two years ago.  Spending on benefits is expected to reach nearly $100 billion this year; about triple what it was two years ago.  Of course, this is all paid for by communist China’s purchase of billions of dollars worth of  Treasury securities each month.  Explaining President Obama’s reluctance to get tough with North Korea over nuclear proliferation and ballistic missiles: China is North Korea’s primary trading partner.

The recovery act passed in February provided states an additional $500 million for administration, a drop in the bucket.  It also suspended interest payments through 2011 for states paying benefits with federal loans.  This is likewise cold comfort; when the recession “ends” and state tax revenues start to increase, states will immediately be called upon to pay the piper.  This will in effect mute any economic recovery by diverting revenues to debt payments, instead of allowing states to re-invest in civic projects or rebuild their Rainy Day funds.

Sixteen states, with exhausted funds, are now paying benefits with borrowed cash, and their number could double by the year’s end.  While the strained program still makes more than 80 percent of initial payments within three weeks, cases that require individual review are especially prone to delay.  Thirty-eight states are failing to make those decisions within the federal deadline.  Of the 12.8 million eligibility reviews that have occurred during the recession, 4.6 million took more than three weeks.  That is 2.1 million more than federal rules allow.  Appeals take even longer, with 28 states violating timeliness rules, many of them severely.

For workers who survive a paycheck at a time, even a week’s delay can mean a missed rent or mortgage payment (further imperiling banks) or foregone meals (impacting everyone from farmers to restaurateurs).  Meanwhile, adjectives to describe the increasing US federal debt have all but been exhausted. The phrase “full faith and credit” is stretched to incredulity when program after program costing hundreds of billions of dollars are paid for with promises.

This dire economic situation also explains President Obama’s near-frantic efforts to initiate some sort of peace process in the Middle East, and his fears regarding a confrontation with Iran.  Any large-scale conflict between Israel and its immediate neighbors (none of which actually have any significant oil reserves) will create a temporary spike in oil prices that American consumers will have to pay.

Machiavellian analysts suggest that creating a stable dialogue between Israel on the one hand, and Lebanese, Palestinians and Syrians on the other hand, would allow the US to act more forcefully vis-à-vis Iran.  Thus, any conflict with the radical Islamist regime in Teheran would have minimal impact on oil prices.  However, President Obama’s oratorical brilliance does not translate and his lack of intestinal fortitude –along with American economic weakness – is an evident weak spot.  American economic weakness is exacerbating existing conflicts around the globe and creating new sources of destabilization.  Obama needs to get his own house in order first!

July 24, 2009 Posted by | Middle East | , , , , , , | Leave a comment