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FLASHBACK: Economists Predicted That
A Prolonged U.S. Presence In Iraq Could Lead To A Recession
Think
Progress
Thursday January 24, 2008
In yesterday’s press briefing, a reporter asked White
House Press Secretary Dana Perino about the tie between the current U.S.
economy and the Iraq war. Perino quickly dismissed the reporter’s
question, insisting that the U.S. economy has been “very strong”
and adding that the money was necessary to “take the fight to the
enemy” after 9/11. Watch it:
Oil prices are at approximately $88 a barrel, although they
have dropped from the record high of $100 earlier this month. As Nobel
laureate Joseph Stiglitz recently noted in Vanity Fair, “The soaring
price of oil is clearly related to the Iraq war. The issue is not whether
to blame the war for this but simply how much to blame it.”
Before the war, economists were predicting that oil prices at just $75
a barrel could potentially send the U.S. economy into a recession. Therefore,
the current economic situation should not come as a complete shock to
the Bush administration. A look at economists’ pre-war predictions:
“A war against Iraq could cost the United States hundreds of
billions of dollars, play havoc with an already depressed domestic economy
and tip the world into recession because of the adverse effect on oil
prices, inflation and interest rates, an academic study [by William
Nordhaus, Sterling professor of economics at Yale University] has warned.”
[Independent, 11/16/02]
“If war with Iraq drags on longer than the few weeks or months
most are predicting, corporate revenues will be flat for the coming
year and will put the U.S. economy at risk of recession, according to
a poll of chief financial officers.” [CBS MarketWatch, 3/20/03]
“If the conflict wears on or, worse, spreads, the economic consequences
become very serious. Late last year, George Perry at the Brookings Institution
ran some simulations and found that after taking into account a reasonable
use of oil reserves, a cut in world oil production of just 6.5 percent
a year would send the United States and the world into recession.”
[Robert Shapiro, former undersecretary of commerce in the Clinton administration,
10/2/02]
“Gerd Häusler, the IMF’s director of international
capital markets, said that ‘purely from a financial markets perspective,
a serious conflict with Iraq would not be a very healthy development.’
… Häusler said there could be a repeat of what happened in
1990 following the Iraqi invasion of Kuwait, when there was a sharp
rise in oil prices.” [World Bank, 9/02]
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