The resignations of Romer and Orszag are the first ramifications of a failed economic policy. The more tangible result will be the upcoming midterm congressional elections in the U.S., which will almost certainly witness the Democrats losing control of the House of Representatives. From there, things will get worse, as America enters a double-dip recession, while Congress is mired in gridlock and imposes paralysis on the remaining two years of Obama’s presidential term.

As the economic clouds darken in America, it is likely that the resignations of Orszag and Romer are the crest of a wave.

More disturbing than this explosion in federal outlays has been the projected record deficit that is being projected, following on the heels of previous record deficits. The red ink being forecast for FY 2011 is an eye-popping  $1.56 trillion. Yet, President Barack Obama claims that this is a first step towards deficit reduction.
 
I beg to differ with the president. Far from being a move towards fiscal responsibility, this massive spending fest, with a projected deficit that is the equivalent of more than three quarters of total federal government spending a mere ten years ago, is the clearest indication yet that U.S. government spending is out of control, and has entered the fiscal twilight zone. As I project in my new book, “Global Economic Forecast 2010-2015: Recession Into Depression,” this dangerous path is unsustainable. The ultimate consequences will be frightful

The ultimate tragedy is that Barack Obama is fully aware of the inevitable comparison his critics will offer with the disastrous Vietnam enterprise. He gave expression to his awareness with a lame rebuttal of the arguments advanced by those who are deeply concerned about another Vietnam. The essence of Obama’s case for why Afghanistan is not Vietnam is based on three points, which he articulated as follows:

“Unlike Vietnam, we are joined by a broad coalition of 43 nations that recognizes the legitimacy of our action. Unlike Vietnam, we are not facing a broad-based popular insurgency. And most importantly, unlike Vietnam, the American people were viciously attacked from Afghanistan and remain a target for those same extremists who are plotting along its border.”

Obama presents as his leading argument for deploying an additional 30,000 troops the claim that a “broad coalition” of 43 countries supports the U.S. war in Afghanistan. For a politician who opposed the Bush administration’s invasion of Iraq, I am surprised that Barack Obama must scrape from the bottom of the barrel of intellectual credulity and present one of the leading reassurances of the Bush administration for going to war with Iraq. I am certain that I am not the only observer who recalls Donald Rumsfeld, Defence Secretary under President Bush, who boasted to the American people that when America invaded Iraq, it would be joined by one of the largest international coalitions in history, the so-called “coalition of the willing.” Ironically, it is now Obama who must resurrect Rumsfeld’s unique verbal contortions to justify his policies.

So what about those 43 nations that President Obama heralds as partners in a grand military coalition? As with the Rumsfeld “grand coalition” in Iraq, it is largely smoke and mirrors. Very few of those nations have deployed more than a battalion of soldiers to Iraq. More commonly, these coalition members have provided a microscopic military presence, with rules of engagement that often preclude their forces from combat. For example, in early 2009 Singapore had 9 soldiers in Afghanistan, Ireland 7 and Iceland 2.  Yet these three nations are included in Obama’s “grand coalition” of 43 nations.

All told, there are fewer than 40,000 foreign troops deployed in Afghanistan, alongside approximately 70,000 American soldiers.  During the Vietnam war, by comparison, South Korea sent 300,000 combat troops and Australia 50,000 in support of the U.S. war effort. So while Obama can claim more countries are assisting the United States in Afghanistan than occurred during the Vietnam war, if one counts actual soldiers as opposed to using Rumsfeld-style bookkeeping, Lyndon Johnson was far more successful in enlisting foreign support in terms of actual troop deployments to the operational theatre.

President Obama also claims that the U.S. is not facing a popular insurgency in Afghanistan, as it was during the Vietnam conflict. This statement betrays a level of historical ignorance that is truly inexplicable, especially coming from a man with an impressive level of intellectual acumen. The Soviet Union also claimed it was not confronting a popular insurgency when it invaded and occupied  Afghanistan. One almost senses that Obama lifted this rationalization from a Kremlin talking-points document. If nothing else, President Obama`s characterization of the insurgency in Afghanistan as lacking popular support is contradicted not only by current events on the ground, but by the essential continuity of Afghan history. This is a land that is genetically hostile to foreign occupiers, irrespective of the justification the external power employed for its military intervention in Afghanistan.

The final point offered by President Obama in defence of military escalation in Afghanistan  is linkage with 9/11; this was the base where Al-Qaeda initiated the attacks on America. In the wake of September 11, 2001 the United States had complete justification to destroy Al-Qaeda, including its infrastructure in Afghanistan. However, for many years a previous administration decided that America’s military priorities lay elsewhere, specifically Iraq. It was also the U.S. that installed an utterly corrupt and inept government in Afghanistan, an act which in itself has proven to be the greatest enabler for the resurgence of the Taliban. Due to American mistakes and strategic miscalculations, the current situation in Afghanistan is far different than what existed  in September 2001.

As with Vietnam, and not distinct from that Southeast Asian catastrophe of so long ago, the U.S. is left with the sole recognizable goal of propping up an unpopular and corrupt government, in this case the Karzai regime and its coterie of drug-trafficking warlords. And inevitably, as with Vietnam, a growing segment of the population in Afghanistan  will increasingly resent the foreign military presence on their soil, and join the insurgency.

A final point which should be raised was unfortunately ignored in Obama`s speech. If Al-Qaeda is the central enemy in this conflict, what is their strategy?  Osama bin Laden has been very clear in stating his objective, which is to reduce America to a shadow of itself. He knows this cannot be achieved on the battlefield, witnessed by the estimate offered by America’s own intelligence agencies, which calculates Al-Qaeda’s contingent in Afghanistan at not more than 100 fighters, an insignificant fraction of the insurgent forces confronting the U.S. and its “grand coalition.”  However, Al-Qaeda leaders have in the past suggested that their core strategy is to compel the U.S. to wage wars in the depth of the Islamic world, in the process economically and financially bankrupting America while arousing hostility towards the U.S. among Muslims worldwide.

With the  U.S. economy in tatters, and the continuation of America’s military project costing $100 billion per year, President Obama has chosen a  path that can only lead to the creation of a new quagmire. In that outcome, it is sadly President Barack Obama, and not his critics, who has engaged in a false reading of history.

President Barack Obama made a critical strategic error, in my opinion, when he selected Clinton administration retreads and Bush administration continuity to frame his economic agenda during his first year in office. Larry Summers, Timothy  Geithner and Ben Bernanke are the hand maidens of Clinton and Bush administration deregulation that crippled America’s financial system. Yet, it is precisely these minions of economic disarray that Obama selected as the saviours of the U.S. economy. It is as though  the ex-CEO of Enron was pulled out of prison to head the salvation of General Motors.

The clique picked by Obama to head economic policymaking has done what would be expected of them. They have sacrificed the real economy to backstop Wall Street, socialize its losses incurred through its unique brand of casino capitalism, and inflate a new equities asset bubble. Grow the bubble big enough, they must  think, and eventually the unemployment  numbers will recede.

Economic mythology is now being confronted by political reality. The so-called jobs summit has an air of desperation about it, as the Democrats begin to contemplate the loss of Congress in the 2010 mid-term elections. The next step will probably be a second Obama economic stimulus program, which may temporarily bring about a slight improvement in employment numbers, but at the cost of a further deterioration of America’s already bleak public fiscal posture. This will further weaken the dollar, which undoubtedly will bear political consequences in the 2010 mid-term elections. Obama may be in for a bitter surprise in the second half of his presidential term.

In his reaction to receiving the Nobel Peace Prize, President Obama indicated that he would accept the award as a call to action. Obama is the third sitting American president to receive the prestigious Nobel Peace Prize.

Even before the historic election that placed Barack Obama in the White House, crowds at several of John McCain’s rallies openly called for Barack Obama to be “killed.” Since Obama’s inauguration, the rhetoric has far from dissipated. If anything, the vitriolic contempt stemming from rightwing extremists in America has grown more strident. There are the “bithers,” who are convinced that Barack Obama is not a native-born American citizen, and therefore his presidency is inherently illegitimate. Far more ominously, there are those who are not content with just denouncing the “foreign occupier,” as some extremists refer to Obama; at rallies and on talk radio, a noisy contingent has talked about Obama representing tyranny, and have engaged in language that approaches the level of incitement towards violence.

President Barack Obama is not above criticism, as is the case with any politician. However, those who are pouring out hate and contempt towards Barack Obama, on a scale that approaches irrationality, actually drown out and delegitimize those who have genuine, thoughtful criticism of the policies of the Obama administration, especially with regards to the economic crisis and America’s exploding national debt and rampaging deficits.  While wrapping their vituperation in the American flag, these extremists masquerading  as patriots are actually damaging the heart and soul of the conservative movement in the United States, while stoking the flames of violence within America that can prove more destructive to the national interest than the threat posed by any external foe.

While listening to the joyous celebrations that erupted among many forums connected with the Republican Party when Chicago lost its bid to host the 2016 Olympic games, despite the personal intervention of President Obama, I had a feeling of déjà vu. Imagine, supporters of a U.S. political party that claims to be patriotic erupting in paroxysms of ecstasy over the defeat of an American Olympic bid, only because this somehow denigrates Obama. Where have I seen this before?

In France, just before World War II. For a brief period, a left-wing coalition government came to power in France, and for the first time a French Jew, Leon Blum, was that nation’s Premier. The rightwing went ballistic. Under no circumstances would they cooperate with Blum and his government. When Blum’s coalition, known as the Popular Front, reached out to conservative circles in France, they were rebuffed at every opportunity. Extremists attacked the Jewish Premier with violent verbosity, even when Leon Blum went against his own party’s agenda, and actually supported conservative policies on foreign affairs and military expenditures. The rightwing in France chanted in response, “better Adolf Hitler than Leon Blum.” In 1940, thanks in large part to the disunity and political polarization they had sowed, they got their wish, when the nation they claimed to love collapsed in a humiliating defeat.

Before the anti-Obama pathology that has gripped America’s rightwing has gone past the point of no return, are there any conservatives of conscience and civic courage willing to speak out? If not, their collective silence may prove more destructive to the United States than any plot being hatched by Al-Qaeda.

The carefully worded statement by the president telegraphs an unambiguous message to the international community, and especially to those nations most concerned with the dangers of nuclear proliferation. The configuration of the Iranian nuclear facility, apparently built in violation of Tehran’s commitments to the International Atomic Energy Agency, makes it unsuited for any possible civilian purposes. However, once in operation, it would be ideally suitable for constructing at least one fission nuclear warhead per year.

Once the Iranian ruling elite realized that their secret facility was about to be unveiled, they hurriedly informed the IAEA that, apparently, they had regrettably forgot to inform the UN’s nuclear watchdog that a second uranium processing plant was being built. The fact that it was being constructed underground, below a mountain, was in no way indicative that this was anything other than a peaceful nuclear project, so claim the Iranian authorities.

No serious government believes the Iranian rationalizations, not even the Russians, who up till recently were opposed to imposing severe economic sanctions on Tehran. However, the apparently unassailable intelligence data on the nature of the nuclear facility near Qom has convinced even Moscow that sanctions may be warranted. That apparently is the hope of Washington, with the momentum now in place for a deadline that would place Iran under a sanctions regime by December, unless it is in compliance with all UN resolutions regarding her uranium enrichment program.

As laudable as President Obama’s intentions are on resolving the Iranian nuclear issue through diplomacy, I believe recent history does not leave grounds for optimism. Economic sanctions are only effective if they are imposed on a regime that is susceptible to domestic public pressure. In the case of  a Iran, the fixing of the recent presidential election and brutal suppression of public protest at having their votes disregarded  is clear evidence that the theocratic elite in Tehran does not factor in public opinion when formulating policy. Furthermore, the scope and immense financial investment being made on the Iranian nuclear project, at a time when that nation’s economy is experiencing high unemployment and rampant inflation, is incontrovertible proof that acquiring nuclear weapons, and the missile technology to deliver atomic warheads to distant targets, is that regime’s top priority.

For more than a decade, the international community has imposed draconian  economic sanctions on North Korea in an effort to contain Pyongyang’s nuclear weapons program. The North Korean economy is a basket case, yet that reality has in no way restrained the nuclear ambitions of a regime that sees nuclear weapons as its best insurance policy for survival. The North Korean example would seem to suggest that when a dictatorial regime, immune to internal public opinion, is determined to develop nuclear weapons, economic sanctions are an ineffective policy response. There is every likelihood that Iran’s theocratic leadership is similarly immune to economic pressure, and sees diplomacy as merely a delaying tactic, to buy time while Tehran rushes forward with its covert uranium enrichment activity.

If in fact sanctions do not  impede Iran’s nuclear goals, what is likely to happen? Based on Israel’s aggressive non-proliferation policy  in the Middle East, and how they perceive the Iranian nuclear threat, it is unlikely they will remain passive if it appears that Tehran is on the verge of becoming a nuclear power. If the only alternative to an Iranian nuclear weapon is an Israeli attack on Iran, there should be no illusions about the Iranian reaction. They are likely to strike back not only at Israel, but at every Western country, most probably by mining the straits of Hormuz and attacking oil tankers in the Persian Gulf. The economic crisis the world is currently enduring will be massively exacerbated, with oil prices rising through the stratosphere. It is not inconceivable that a long-term regional war will erupt, while the global economy enters a tailspin.

It is not pleasant to contemplate the strong possibility that economic sanctions will fail to thwart Iran’s nuclear weapons program. However, the real world of geopolitics is often unpleasant, and frequently ugly. As painful  as it is, I hope that Washington is contemplating other options besides economic sanctions.  Otherwise, the Obama administration and the international community will, in effect, make a decision that the Israelis should handle the Iranian nuclear problem, and allow all the horrific yet predictable consequences to ensue.