I am very worried about the economy. I see an enormous number of negatives.
OK, go for it.
There's the price of oil. Insurance costs have skyrocketed.
What kind of insurance are you referring to?
Insurance in general. Then there are mortgage rates. We are on the verge of very big increases in mortgage rates for those people who bought adjustable-rate mortgages. Couple that with the fact that for 16 months we've had a negative savings rate. People, in order to sustain their standard of living, have had to invade their capital.
When you take those four factors into consideration and you realize that employment, although growing, is growing very slowly and wages are not going up, why, it is a very bleak picture into the future, particularly when you couple it with the housing market on the verge of decline in both price and activity, and auto sales also on the verge of a decline.
...one reason for my grim outlook is federal spending. Federal spending is so dismally distorted toward the military that it is unbelievable.
It isn't only that we're spending money for Iraq and Afghanistan, but the peacetime budget is an absurdity. We are spending $65 billion for an F22 fighter plane, for example, which is way over cost estimates. The paradox is that the plane cannot be used in combat -- because the ratio of the engine, the amount of fuel consumed is so great, that a pilot will only have five minutes in combat zones before he has to get back to the base.
If you look at the overall federal budget and see the huge percentage going to the military and what is left for medical research, education, the environment and housing, you can't believe it. They talk of reducing the federal deficit, but it is an absurdity.
What if the Democrats win back Congress in the fall?
They will rectify the deficit to a minor degree, but they also are great military spenders. [New York] Senators Clinton and Schumer voted for the Iraq war.
What is your sense of what will happen in the elections and what it means for the economy?
I think the public is completely fed up with George W. Bush and the Republicans and their incredible mismanagement of the country, and there'll be a sweep by the Democrats. That's a positive. At least the Democrats have some heart. They are sympathetic to the downtrodden. The huge disparity of income that has occurred in this country is one of the great negatives and one of the reasons that I'm pessimistic about the economy.
Are you worried about inflation?
No, I'm more worried about the possibility of deflation than of inflation.
We don't believe what we read in the papers. The price of homes is going to come down and auto competition is tremendous, and they are giving all types of incentives that lower prices further.
There is tremendous public sentiment against the Iraqi war, and while there is a feeling we will be pulling the troops out sooner rather than later or at least reducing them, it is wise to remember we still have troops in Germany and we have troops in Japan. We'll never give up completely in Iraq. They'll be there for 50 years. The military doesn't give up and they control this country, because they get the following of the Congress and the president.
The military-industrial complex?
Eisenhower warned us, and it has happened. Don't forget, the nature of warfare has changed. There is not going to be a war like World War I or II again. The Third World War has begun. It is a war in Haiti, where they are fighting the government. It is a war in Colombia, where there are three groups fighting, and Sri Lanka, where you have the Tamil Tigers. In Nepal, the Maoists are fighting the king. It is all over the world. In Africa, there are five different countries fighting in the Congo. Not to mention Iraq, Iran or Israel or the Palestinians.
It is a war of terrorism. And you might be interested to know, there is no defense against the terrorists. There is no defense militarily. That is the big unpublished secret of modern warfare: The offensive weapons have no defense. You say, why do you have so much to say about war? War has a negative affect because the spending involved takes monies away from more constructive parts in the market.
What's your opinion of the Israel-Lebanon war?
We created it. We pushed Israel into doing what they did. Israel would never have gone on without the consent of the United States. They would never have attacked Lebanon as they did. They don't go to the john without Bush's consent.
Thanks, Seth. It's refreshing to see some actual intelligence among the monied class. We don't believe what we read in the papers either.
Previous posts about Glickenhaus were written in June 2004 (Q: If Bush gets re-elected, what happens? A: If Bush gets re-elected, he will see it as a total affirmation of all his policies, and the deficits will grow. Perhaps we will have another war in addition to the two that exist, however preposterous this seems.) and June 2003.