Link between war and credit crisis

This is a great article about the ongoing debate on a link between the war and the credit crisis.

Those price increases are self-perpetuating, Stiglitz argues. Oil-rich Persian Gulf states are so awash in money that they are not sure what to do with it all. By holding back oil production, they make more off what they do produce and keep their greatest asset -- oil -- in the ground as they search for ways to spend their cash.

That cash, through state-owned sovereign wealth funds, has flowed into stocks, bonds and other investments, creating incentives for lenders to offer low-interest loans, many of which have now gone sour.

But that is only one factor, by Stiglitz's accounting. The federal government has sunk deeply into debt, first with tax cuts, then with accelerating war expenditures that have easily topped half a trillion dollars. That limited the government's ability to keep the economy on track through tax cuts or domestic investments, so the Federal Reserve Board used low interest rates and the free flow of money to keep the economy growing. Cheap credit sparked rash loans, a housing bubble and the current crisis.

If you go into debt to allow yourself to spend more in hopes that your spending will fix your debt problems you are in for a tailspin. It just seems that our government has been printing more money for the past 30 years as a way to alleviate budget and economic crisis's. That doesn't seem like good policy to me.

I think investment and economic development is good policy, but that seems to have turned into giving your political friends money for development that doesn't always develop anything. I don't have a solution, but a little more honesty and openness at the top would lead to a lot more honesty and openness in the general population. Leadership through smoke and mirrors and divisiveness has lead to more and more of the same and that is 'waste'. We used to be a country where people cared about each other. That was what made us great. Now we just look for ways to own a fancy car no matter the cost to those around us.