Joseph Stiglitz says the Iraq war is a central cause of the sub-prime mortgage crisis. From which we can conclude that the Iraq war is not a central cause of the sub-prime mortgage crisis.

The press never tires of describing Stiglitz as a Nobel Prize winner. This is true. He shared a prize in economics in 2001 with George Akerlof and Michael Spence, for work on the asymmetric availability of information in markets. One application, on which Stiglitz in particular focused, involved credit markets, in which lenders know less about the likely repayment of a loan than borrowers.

So one would think he knows something about the credit crunch. And perhaps he does. But if so, he’s not telling. He’s got a war to fight, and a book to flog to the economically illiterate antiwar left. The former economic adviser to US president Bill Clinton teamed up with Linda Bilmes, another Clinton-era economist (not that I’d for a moment suggest partisan bias, you understand), to publish The Three Trillion Dollar War.

Stiglitz’s explanation for the credit crunch? When in doubt, blame Bush. According to him, the Iraq war is a primary cause:

The spending on Iraq was a hidden cause of the current credit crunch because the US central bank responded to the massive financial drain of the war by flooding the American economy with cheap credit.

“The regulators were looking the other way and money was being lent to anybody this side of a life-support system,” he said.

That led to a housing bubble and a consumption boom, and the fallout was plunging the US economy into recession and saddling the next US president with the biggest budget deficit in history, he said.

He’s partly right: inflationary monetary policy was a central cause of the housing bubble. Low interest rates made money cheaper, which not only boosted investment in fixed assets such as houses, but also led to great offers on home loans at rates that could never last, squeezing those who bought houses they couldn’t really afford.

He’s also right to note that expanding the money supply by keeping interest rates low is a favourite technique of governments to “inflate away” debt. In essence, monetary inflation debases a currency, imposing an invisible tax on income earners that has the effect of reducing public debt: your dollar becomes worth less, and you can buy less with it, but the government’s dollar-denominated debt is also worth less as a result.

But here’s the rub: the US debt has not been inflated away. It may be lower as a percentage of GDP than it was during the height of the Clinton years, but despite the economic growth of the Bush years, it isn’t exactly heading down.

That’s not Stiglitz’s biggest error, however. He attributes this inflation in money supply to the Iraq war. So I got some data from the Federal Reserve, and drew a chart of the monthly federal funds rate since 2000, with the Iraq war period highlighted.

You’ll notice that for most of the duration of the war, the fed rate has risen sharply. It hasn’t been kept low, or been lowered, as Stiglitz’s theory would have it. The cause of the credit crunch predates the Iraq war, and contrary to Stiglitz’s claim, the fed’s policy during the war was to make credit more expensive.

I cannot imagine that a Nobel Prize-winning economist didn’t spot this, so I can only conclude that Stiglitz is simply lying when he attributes the Federal Reserve’s low interest rates to the Iraq war. Must be something he learnt from Bill Clinton.

A year ago, when presenting his paper, “The True Costs of the Iraq War,” he estimated that the war would cost between $1 trillion and $2 trillion, depending on how much longer troops stay.

Just a year later, he says the war will cost $3 trillion, and that’s a conservative estimate. Then his margin of error, at a conservative estimate, is between 100% and 200%. This seems rather higher than an economist should be comfortable with. Granted, such an estimate does indeed depend on how long the troops stay. Just like the price of an acid trip depends on how much acid you take.

Another way he arrives at this staggering figure is that Stiglitz uses a terrifically broad definition of war costs, including, for example, welfare costs for veterans. This leads to rather interesting conclusions.

One of the greatest discrepancies is that the official figures do not include the long-term healthcare and social benefits for injured servicemen, who are surviving previously fatal attacks because of improved body armour.

So let me get this straight: It’s a bad thing when soldiers don’t die, because then you have to keep paying them? Nice sentiments, Mr Stiglitz. At least we know now why you didn’t win the Peace Prize.

An infamous report was issued in October 2006, just before the US mid-term election that returned Congress to Democratic control. Though the election had been the Republicans’ to lose, by virtue of their disregard for Gingrich Revolution-era promises of small government and spending restraint, the Iraq war played a not inconsiderable part in the electorate’s dissatisfaction with their government.

The Lancet, a hitherto respected British scientific journal, published an estimate by Johns Hopkins researchers (PDF) by means of a cross-sectional cluster sample survey, that between the invasion in March 2003 and July 2006, “there have been 654 965 (392 979–942 636) excess Iraqi deaths as a consequence of the war, which corresponds to 2.5% of the population in the study area.”

That is carnage. It exploded arguments that modern wars, though always awful, have become progressively less awful because of better targeting, more accurate munitions, and greater care among Western soldiers to avoid “collateral damage” — the unfairly maligned hold-all phrase used to describe death and injury to civilians and damage to non-military buildings and infrastructure. They understand that collateral damage wastes effort, munitions and lives on inconsequential targets. They understand that collateral damage isn’t exactly the best way to win hearts and minds. They understand that collateral damage makes for bad PR back home, which undermines political support for their efforts. They understand that collateral damage serves nobody and harms everybody, and they have the means to avoid it.

Or so we thought. Until we discovered that around 650 000 people died unnecessarily. This was a much higher death toll than even the most vocal opponents of the war had yet claimed. It was at least 13 times more than the worst estimates of the US military, the Iraqi health ministry, or the independent Iraq Body Count organisation. Not to say that their estimates of 50 000 deaths was good news, but given that some combatants deliberately targeted civilians, it was better than half a million or more. In fact, it wouldn’t compare unfavourably with the death toll during the five years of South Africa’s “peaceful” transition to democracy. In short, tragic though it remains, 50 000 or 100 000 deaths are expected, but 650 000 are not.

The study was met with skepticism in some quarters, and the error margin of 550 000, or over 40% either way, doesn’t inspire confidence. President Bush dismissed the credibility of the report, and his political opponents in turn dismissed his credibility.

Meanwhile, the result was trumpeted across newspapers the world over. The National Journal, which stuck to an arcane debate clouded too often by splits along political lines, rather than substantive arguments about research accuracy and statistical methodology, noted:

CBS News called the report a “new and stunning measure of the havoc the American invasion unleashed in Iraq.” CNN began its report this way: “War has wiped out about 655,000 Iraqis, or more than 500 people a day, since the U.S.-led invasion, a new study reports.” Within a week, the study had been featured in 25 news shows and 188 articles in U.S. newspapers and magazines, including The New York Times, The Washington Post, and the Los Angeles Times.

Turns out Bush was right, though. Earlier this month, the National Journal published a comprehensive set of conclusions in an article entitled Data Bomb, in which it interrogates every aspect of the study.

Days later, the New Scientists publishes an article entitled “Iraqi war death toll slashed by three quarters”, in which it reports that according to Iraqi health officials, the death toll for March 2003 to June 2006 was in fact between one sixth and one third of those published in The Lancet.

As the American Digest observes, if 600 000 Iraqis had really died, where are all the funerals? Were they held in secret? Were reporters just not interested in the heartfelt drama of corpses swaddled in white, borne by crying men and women?

The Iraq issue may turn out to be the most curious aspect of the 2008 presidential election campaign. Though dramatic mistakes were made, at political level, at intelligence level, and in strategic and tactical decisions on the ground, one gets the impression that most voters now recognise one might expect such missteps in a difficult war. Too many prophecies were made before the fact, rather than after the fact, the way Churchill preferred them, and a political price was paid. It is time, to turn an Angry Left slogan against it, to move on.

The carnage and failures and pessimism appears to have been exaggerated for too long. General David Petraeus is overseeing a strategy that is demonstrably working. Would it surprise anyone to learn that MoveOn.org, the pressure group that slandered him as “General Betray Us” in the New York Times, is funded by the same George Soros who partly funded the Lancet study?

The danger of exaggeration is that people stop believing you. That they recognise you’ll have difficulty making a case on the facts of the matter. The result, in the case of the Iraq-war-as-willful-carnage myth, is that few of the current presidential candidates even mention the war, beyond promising its responsible conduct to a hopeful conclusion. Even some of the Democratic candidates are, implicitly, endorsing the Bush Doctrine now. They know that they can’t objectively call Iraq a disaster, and that it’s no longer politically advisable either. Now, it seems voters, who opposed the war when it was (or sometimes merely appeared to be) going badly, have resolved that competently bringing it to a satisfactory conclusion is a more reasonable political desire than high-tailing it and leaving carnage behind. How far we’ve come, in just one short year.

Laurence, a student of international politics of Commentary South Africa fame, has had an interesting article published by the Mid East Web for Coexistence. It summarises the state of play in Iraq, and notes, with caveats, some reasons for optimism. Not everyone agrees with him, sadly.

I’m a little perplexed by what the recent US National Intelligence Estimate (NIE) has to say about Iran.

If Iran stopped its nuclear weapons programme in 2003, why did the NIE of 2005 say it was actively pursuing one? Which was right? Who is the contradictor in chief (to quote Eric over at Classical Values, who has plenty more good questions and links on the subject)?

If Iran is not actively pursuing a weapons programme, why has it been so stubbornly secretive? Why is it acting just about as guilty as Saddam Hussein did about WMDs? And if Bush is so adamant on going to war with Iran, why did this NIE get declassified? Surely the evil genius has learnt to plot a little more elegantly than that? Or is this another example of the intelligence covering its backside after its previous failures? Are they saying, “Next time we’re wrong, we’re damn well going to err on the side of underestimating enemy capabilities”?

Why are the Israelis, who’d be first on the “let’s test our little toys” list, not breathing a sigh of relief?

Why, when the media has surely learnt to distrust everything the intelligence community ever said about Iraq’s weapons, suddenly turn around and splash this across the front pages as vindication of Iran and indictment of the warmonger in chief?

Herbert E. Meyer asks the really pertinent question: how do we know that the 2005 NIE was wrong and this one is right, rather than vice versa?

I, for one, am not so easily convinced. We’ve seen Mahmoud Ahmademocrat’s comedy show at Columbia University, in which he said there were no gays in Iran, and whether the Holocaust was really that bad remains a matter for further historical research. He doesn’t exactly inspire trust.

We’ve heard how he defied the UN’s International Atomic Energy inspectors, breaking seals and barring entry to Natanz. These aren’t the only ways in which Iran is failing to comply with the obligations the Nuclear Non-Proliferation Treaty places on signatories who wish to pursue a peaceful, civilian nuclear power programme.

That same watchdog body, which can hardly be accused of warmongering or a pro-US stance, just last month said Iran is within a year of producing nuclear weapons.

So who’s right? And what’s the prize for being wrong?

There’s an interesting clause in the South African Constitution, in the Bill of Rights section dealing with freedom of speech:

16. Freedom of expression

1. Everyone has the right to freedom of expression, which includes ­
   1. freedom of the press and other media;
   2. freedom to receive or impart information or ideas;
   3. freedom of artistic creativity; and
   4. academic freedom and freedom of scientific research.

2. The right in subsection (1) does not extend to
   1. propaganda for war;
   2. incitement of imminent violence; or
   3. advocacy of hatred that is based on race, ethnicity, gender or religion, and that constitutes incitement to cause harm.

Which raises the question:

I have, for example, defended Operation Iraqi Freedom, both in print and online. (The arguments and caveats are beside the point for present purposes.) Was doing so unconstitutional? Does that constitute “propaganda for war”?

If you were to argue, for argument’s sake, in favour of military action to topple the economic illiterate Robert Mugabe, the brutal tyrant of Zimbabwe, would you have the constitutional right to do so, in South Africa? How about advocating intervention in Darfur, or a foreign civil war, on humanitarian or regional stability grounds? Is that propaganda for war? Is that illegal?

How about suggesting that South Africa can’t afford the costs of fighting AIDS because it must stand ready to defend itself from invasion by the United States? (I kid you not.)

I’m taking the question ad absurdum, perhaps. Surely advocating self-defence (of the sensible variety) isn’t covered. But what exactly does constitute “propaganda for war”? Any constitutional law experts willing to venture an opinion? Is such a clause not deplorably broad and vague?

Perhaps this is why our border guards didn’t give our allies from Botswana free passage, in time for the invasion of Lesotho. The constitution prohibited us from telling the officers we’re going to war, so if a party of heavily-armed troops turns up at the border post, please let them through. Perhaps that’s why our troops were so surprised when the Lesotho Defence Force actually had the temerity to shoot at them. They never got any of this “we will fight them on the beaches” stuff, because Lesotho doesn’t have beaches to fight on, and besides, it would have constituted unconstitunional “propaganda for war”.

No wonder the issues in the US election campaign are turning towards economic concerns. Not only are there some (economic concerns, that is), but the core Bush-bashing issue of his presidency is starting to look rather limp. MoveOn.org had to turn to vicious slander in its effort to discredit the Congressional testimony of General Petreaus as propaganda for the White House. The media has, in general, been fairly reliably opposed to the Iraq war. Reporters have consistently hedged good news with bad, and are usually skeptical of any news of progress. Some outright suppress it, revelling in predictions of the inglorious defeat of the US-led coalition.

Yet the orthodox view of Iraq as a disaster is under threat. Even the BBC is pointing to statistics that — across the board, it says — show the situation in Iraq is improving:

Is Iraq getting better? The statistics say so, across the board.

Over the past three months, there has been a sharp and sustained drop in all forms of violence. The figures for dead and wounded, military and civilian, have also greatly improved.

All across Baghdad, which has seen the worst of the violence, streets are springing back to life. Shops and restaurants which closed down are back in business.

People walk in crowded streets in the evening, when just a few months ago they would have been huddled behind locked doors in their homes.

Everybody agrees that things are much better.

Except the BBC, of course:

But is the improvement only skin deep? And will it last once the American troops, whose “surge” has clearly made a difference, begin to scale down?

Several quotations in the article do support the view that security, progress and peace in Iraq remain dependent on coalition forces and reconstruction efforts. Which leads to only one conclusion: those calling for a rapid withdrawal (including presidential candidates that do) are willing to give up the gains made, condemn Iraq to rule by partisan or insurgent militias, and sacrifice the peace and prosperity of Iraqis on the altar of political expediency. Perversely, if that happens they’ll get to say, “I told you so,” instead of paying the price for their betrayal. I hope the American people won’t let that happen.

Michael Yon, on the gulf between media perceptions of Iraq and the reality he sees on the ground:

No thinking person would look at last year’s weather reports to judge whether it will rain today, yet we do something similar with Iraq news. The situation in Iraq has drastically changed, but the inertia of bad news leaves many convinced that the mission has failed beyond recovery, that all Iraqis are engaged in sectarian violence, or are waiting for us to leave so they can crush their neighbors. This view allows our soldiers two possible roles: either “victim caught in the crossfire” or “referee between warring parties.”Neither, rightly, is tolerable to the American or British public.

Today I am in Iraq, back in a war of such strategic consequence that it will affect generations yet unborn—whether or not they want it to. Hiding under the covers will not work, because whether it is good news or bad, whether it is true or untrue, once information is widely circulated, it has such formidable inertia that public opinion seems impervious to the corrective balm of simple and clear facts.

Forget the shocking images and sensational sound-bites we are fed between ad breaks on TV. As always, Yon’s first-hand reportage is comprehensive, honest and perceptive. It makes for riveting — and often heartening — reading. Especially if you view Iraq’s fate as rather more important than its use by lazy editors as a source of bleeding leads. Particularly if you view Iraq’s future as rather more important than its utility as a political billy-club.

Here’s a story: “U.S. fire scatters crowd after Afghan bomb: witness.” Sounds serious, doesn’t it? I mean, read the intro:

BATI KOT, Afghanistan (Reuters) - At least one U.S. soldier opened fire to scatter a crowd of civilians and police on Thursday after failed suicide bomb attacks on a U.S. military convoy, the U.S. military and witnesses said.

Them US thugs, there they goes again. Indiscriminately killing civilians, just because they panicked. It takes Noor Mohammad Sherzai, the self-serving idiot who wrote the piece, until the sixth paragraph to point out that they were actually two warning shots, not aimed at the crowd, designed to disperse them after one suicide bomber had already failed and a second was thought to be approaching.

Why use the pejorative term “idiot”, or describe said idiot as “self-serving”? Well, besides noting the misleading reporting that once again goes on at Reuters, guess who the “witness” of the headline is?

“I saw the fire brigade vehicle rushing to the area at top speed. Somehow its brakes failed and hit one police vehicle and coalition vehicles, then the Americans started firing,” said Reuters correspondent Noor Mohammad Sherzai.

In Best of the Web Today, James Taranto has a funny response, under the headline The Lone Reuter:
Read the rest of this entry »

Foreign Policy Passport blog has a quotation from George Perkovich, the nonproliferation expert at the Carnegie Endowment for International Peace, in which he says that “ElBaradei and Iran have won this round.”

The conjunction of the director-general of the International Atomic Energy Agency with a regime that stands accused of seeking to develop nuclear weapons strikes me as curious, to say the least. Here’s the quotation in full:

ElBaradei and Iran have won this round. In August the IAEA Director General accepted what were essentially Iranian terms for answering the IAEA’s outstanding questions about Iran’s suspicious nuclear activities. This agreement seemed to surrender the IAEA’s rights and responsibilities to conduct follow-up investigations and pursue new leads. The agreement also neglected the U.N. Security Council’s legally binding demands that Iran suspend uranium enrichment and reprocessing activities as long as the IAEA is unable to satisfy itself that Iran’s nuclear activities have been entirely peaceful. Yet Iran and Mr. ElBaradei hailed it as a breakthrough. ElBaradei and others who are convinced the U.S. plans to go to war against Iran felt the agreement would spare the world another catastrophe.

The P5+2 statement reveals that the Iran/IAEA deal effectively neutralized the U.S., French, U.K. effort to tighten sanctions on Iran in response to Iran’s ongoing refusal to accede to U.N. Security Council resolutions. The statement basically says the world should wait and hope that Iran gives the IAEA full answers and that somehow all the outstanding issues are indeed resolved. (If this were so easy, why has Iran waited more than four years to provide such answers and suffered U.N. sanctions for failing to cooperate?) Then, in November the P5+2 will reconvene and, if Iran has not satisfied the IAEA, they will huff and puff some more.

When President Ahmadinejad said last week that the Iran case is closed in the Security Council and the matter is with the IAEA where it belongs, he was absolutely wrong from a legal standpoint. The U.N. Security Council Resolutions remain active and binding. But now some members of the Security Council, following the lead of Director General ElBaradei, are showing that President Ahmadinejad is having his way, at least for now.

This puts me in mind of another article, in which the main exiled Iranian opposition group reports that a new underground facility is being built for enriching weapons-grade uranium:

“Information we have from inside the regime indicates the site is destined for military nuclear activity, mainly for the further enrichment of uranium,” Mehdi Abrichamtchi, of the National Council of Resistance of Iran, said in Paris.

The new site in central Iran consists of a “vast underground area beneath the Karkass mountains linked to the surface by two tunnels and connecting with a third tunnel” to the Natanz nuclear complex 5km away, Mr Abrichamtchi said.

“The site is protected against aerial attack. If Natanz is bombed, it won’t be touched,” he said. “To maintain secrecy, the area has been declared a military zone, and the regime has bought up all the local land.”

All of which raises a serious question. Let’s assume such a facility did exist, and the regime denies it, and its location is secret, and its connection to the main Natanz facility is disguised, and the few Iranians who can confirm its existence or location are under orders, on pain of death, to keep silent. Let’s assume that ElBaradei’s inspectors were permitted unrestricted access to Iran, and they weren’t on side of the Iranian regime. How could they possibly know that it’s there?

There’s a fascinating article over at The American Thinker, by Ray Robison. He analyses and places in context some events that have barely made headlines, but which suggest significant progress in the hunt for Osama bin Laden and the fight against the Jihadists. Though the operations have been kept pretty quiet, the location will be familiar: Tora Bora.

Just one quotation from a long piece:

This cannot be overstated: it is the most crucial development since the capture of Khalid Sheik Mohammed. Cutting al Qaeda’s support in Pakistan has been a massive coup, of which our media has no clue of (sic) right now. It is the exact sort of thing that the Democrats and their media accomplices always complain that we are not doing and then completely ignore when we do it.

If what Robison writes is true, this has implications for the war in Iraq, in Afghanistan, and on terror in general, as well as for the hunt for Bin Laden himself. The outcome could be momentous.

“Gates war funding request increases by a third”, reads a CNN headline. The figure in question, for both Iraq and Afghanistan, is $190 billion. Another third, and Microsoft’s entire market capitalisation is on the line. Despite a huge private aircraft they keep at a federal airport near their office, Messrs. Page and Brin have a ways to go to match that kind of capital.

Who’d have expected a sense of humour at an anti-war protest?

Hat tip: The Thinking Blog