The True Cost of Hegemony: Huge Debt

Can a global hyperpower also be a global hyperdebtor?

Debates about the cost of occupying Iraq and reconstructing its burnt-out economy tend to duck this question. It is as if such costs were simply an item on the federal government's military budget. In reality, direct government spending on aid and reconstruction is unlikely to amount to much. Having won the war on a shoestring ($79 billion is less than 1 percent of the annual output of the American economy), the Bush administration apparently hopes that the reconstruction of Iraq will soon be paying for itself. A trifling $2.4 billion has been allocated to the postwar Office for Reconstruction and Humanitarian Assistance.

Yet history strongly suggests that Iraq's reconstruction will require a kick-start of substantial foreign capital, particularly to modernize the antiquated oil industry.

Can the United States provide the necessary cash, even in the form of private-sector money? The answer is yes — so long as foreign countries are willing to lend it to the United States. For the fact is that America is not only the world's biggest economy. It is also the world's biggest borrower. Its muscular military power is underwritten by foreign capital.
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  thanks to DANGEROUSMETA!

Wampum is starting up a new weblog on economics. Check it out.

It's Still The Economy, Stupid

And with that newsworthy tidbit, I guess it's time to unveil a side project I've been putting together in my limited free time, It's Still the Economy, Stupid, an attempt to collect weblog and traditional media articles in one place. I've just begun to put together the blogroll; any suggestions as to other center-to-left weblogs which regularly post on economic news would be welcome.
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