Barack Obama on Bush Economy

Barack Obama talks about the Bush economy at the Mansfield-Metcalf Dinner in Montana.

While I believe the most important issue in the general election will still be the Iraq War and the "war on terrorism," the economy will obviously be very important. Decades of debt spending by governments, businesses and consumers is catching up with the country.

Bill Clinton forestalled this a bit but only at the federal level. Republicans continued to be big spenders despite their rhetoric, only borrowing rather than raising money through taxes. Democrats triangulated and borrowed the "no new taxes" slogan of the Republicans but also without cutting back on spending. So state and local governments continued to pile up debt.

Also, businesses used debt even more during the Clinton administration as best illustrated by the dotcom boom and bust. Financing in most cases is just a fancy business term for borrowing.

The real estate boom of the Bush years again is just more debt as most people had to borrow to purchase a home, and many got well over their heads in liability.

Depending on consumerism to drive the economy has made the country much more dependent on foreign oil. The U.S. dollar is pegged on oil sales and as the "oil peak," the point at which world oil supplies start declining, approaches, there will be downward pressure on the dollar's value. Nations are making major steps to reduce dependency on oil in the future and turning toward green technology.

Those countries that do not make an adequate switch to green energy will end up paying big bucks for high-priced petroleum.

The tough part about the current economic crisis is that unlike other recessions (or even depression?) when prices go down, inflation is rising today as the economy shrinks. Again that's the consumerism-driven economy at work as manufactured goods prices fluctuate with oil prices. Oil is needed to transport these goods and in many cases to make them as with plastics, for example. And there is a cycle now that as oil prices go up, the world's nations are making more efforts toward alternative power and fuel sources. This drives down the dollar as there is less demand for the greenback for use in buying petroleum. And the falling dollar encourages oil producers to cut supply and raise oil prices more to compensate for the falling dollar.

Obama's policy of moving swiftly toward green energy and reducing dependency on foreign oil, and moving away from excessive consumerism are the right steps to take. Also we need someone realistic and non-triangulating to deal realistically with taxes and wean us off the debt-driven economy model.