GLT, I'm quite sure you are dead wrong.

http://en.wikipedia.org/wiki/Parable_of_the_broken_window#War

It is not possible to be a "winner". War is always and forever bad for an economy. Sometimes war can be necessary (Iraq was not, nor Afghanistan) but it can never be 'economically' necessary.

Actually, wars are not really that good for the economy. Unlike the mythology that World War II spending got us out of the Great Depression, It was actually the spending after the war that did that. The manufacturing capacity was turned to building durable goods and infrastructure, the GI bill educated an entire generation that was able to then move into an enormous amount of new housing that was built to accommodate the new families and what do you know, we had a middle class that was creating and consuming wealth.

The current recession may not be entirely caused by the war spending, but it is entirely related to the neoclassic economic policies of the Republicans who have decimated the middle class and are deporting our economic capacity for the sake of profits that are being moved out of our economy instead of being kept in it in the form of durable wealth and a vital middle class.

As for the recession being caused by too many houses, that's plain bull puckey. If you build a house, when you're done there is something left that is persistent wealth. When you build a bomb, all it does is blow up and usually take a house with it and you're left with a pile of rubble and some dead people, not wealth. With a growing domestic economy and a growing rather than shrinking middle class, we could afford all the houses we've been building. With off-shoring our manufacturing capacity and our middle class wages and potential, we are left a debtor nation with a decreasing wealth.

It is in fact accurate, appropriate and demonstrable to attach the current economic problems to both the occupation of Iraq and the misbegotten Republican policies. Stiglitz is right. You are not.

Make a concerted effort to reduce spending across-the-board as California has done, consult with Schwarzenegger to find out what effect his cuts have had. Tweak it 'til it works.

“Nobel Prize-winning economist Joseph Stiglitz has blamed the Iraq war for sending the United States into a recession”
This just shows that a Nobel prize is an inadequate replacement for common sense.
Didn’t we used to hear that wars were GOOD for our economy?
Now I will only say this once and at a brisk, college lecture pace, for the non-Trolls in attendance:
Our economy is suffering from the long-term effects of financial “inbreeding”.
In particular, the budget deficit (the second ‘mother’ of all “evils” according to Ronald Rogain in 1980 campaign), has disempowered the independent and medium sized companies, from which all sustainable growth and decent jobs flow. It has also sparked off inflation (The first ‘mother’ of all “evils” according to the former President.)
Larger, wall street companies and chain banks favor a budget deficit because in theory, it supports their profits. But it does so by burning the proverbial cigarette past the filter.
When the government needs to borrow, it raises the yield on the Treasury notes. The banks no longer need to lend money to people or small companies. They take the depositor’s money and (though a novel pseudo-laundering system), lend it back to the government. I say “lend it back” because the banks are also borrowing from the Federal Reserve. That money goes to finance the large, Wall Street borrowers, who, BTW: have a totally different set of auditing criteria then do the non-publicly traded companies. The FDIC has one rating system for loans to public companies and a different, much stricter set of auditing requirements for loans to people and independent companies. Thus, a perfectly good and solid loan to a “Main Street” restaurant can be deemed risky when money borrowed by Enron (for example) might well have a lower risk rating.
The larger companies use their financial leverage to:
1. Buy out the competition and thus raise prices and/or lower quality.
2. Discharge large portions of their workforces in the process.
3. Send manufacturing overseas.
The Banks also have the advantage of using the money shortage to raise their interest rates on things like credit cards. This in turn causes the credit worthiness of the general public to plummet, as few people can support the 32.99 percent interest rates and begin to fall behind. Essentially, if every person’s credit rating dropped 50 points overnight, the profit realized by the banks would increase exponentially. And that is essentially what has been occurring, except not overnight. Over the past 7+ years of George-o-nomics.
However, just as a milk-cow on bovine growth hormone can only produce milk for 5 years, rather then the traditional 20, the system of intentional budget deficits has (pre-maturely) sent our economy to the day of inevitable “judgment”. The economically powerful have lifted so much (unnecessary) wealth from the general population that now, their cash is beginning to devalue because it has become a tool for a machine which can no longer function.
Allowing 10 years to pass without any increase in the minimum wage also did not help our economy.
Lastly, wars turn out to be bad for the economy in the long term and good in the short run. We are now well past the short-run and into the long-term effects.
Vote for Obama, as he has the brains and independence to deduce these events without the need for a troll lecture.

Well, to all the young players of the World .....it's all about moving money. Yeap! that gold standard forces them to balance their budget went out the window back in 1913 and up until 1999 all them ther "my sh!! don't stink" nincompoops on Wall Street wus doing just fine. But all them foreigners got wind on what Thomas D. Schauf had written about back in 1992 and the sh!! it the fan. Foreigners will, firstly, consider how far the dollar will depreciate against their home currency over the next 12 months. Could it be a 5%, 10%, 15%, drop? Then the question is: "Can USA assets rise by 15% to compensate for the currency loss and leave the investor in a level, no win, no loss situation?" The answer seems to be a clear "No". Foreigners/Americans with large sums of money at risk are quietly taking profits out of the US market, US unbacked dollars is being used to bolster the market indices so the average investor (US and foreign alike) are kept blind to what is about to hit them. This disaster-to-come has been created artificially by (a) politicians' selfish desires to portray a financially healthy US economy for the advancement of their own political careers, (b) to benefit small, united groups of unscrupulous, rich, and over-speculative investors that make significant (and often wrong) investment decisions but also make significant campaign contributions, (c) refusing to warn the populous regarding the outcome of consistently over printing US unbacked dollars. Inflation, has become your new tax. The people in D. C. spend $1 billion dollars every 8 hours of the day and this great Union is $48 trillion in debt and over 70% of that has been since 1990.......now! if the largest company in the United States of America is a dang 5 & 10 cent store and the people in D. C. are in second place the young people of these 50 states need to do a little math. With the American people being so broke that they ain't got a pot to "p" in are a window to throw it out leave it to Uncle Sam to get that dang private bank to print more money out of thin air thinking the American consumer is gonna spend it on a "made in America item"......well! duh! There ain't not one up on that big hill that has the ba!!s to tell "we the people" for a mere $450 million dollars Congress can buy back the Federal Reserve (per constitutional record)and have the Treasury print "we the people" money interest free and pay off the debt without any inflation. The consumer is spending 1.5% every month more than they make but people in D. C. want to send them more money to spend......duh! this is only because of the corportrate dipsticks that shipped all the jobs overseas and left our economy driven by the consumer. Dang! 70% of the GDP is the dang consumer....people in D. C. don't say squat in telling the consumer to save money cause if they did....our economy would fall like a rock. The people get up on that big hill learn first hand from the nincompoops that have been there the past 40 just how "we the people" money is siphoned from trust funds. Everyone, young and old, should read Michael Hodges "Grandfather Economic Report" series on the internet and they would see first hand how a bunch of jackass and elephant's show their a!!. For the past 50 years I have watch more and more fruits and turnips go to D. C. to try to out do someone else on a dang "spending" bill and to this day I ain't seen anyone come up with a "savings bill"....don't D. C. know that it don't have to do a dang thing to make "we the people" money. Just take the time and look at the records of how many spending Bills from 1779 until 1900 ......and from 1900 to today.....it's like our government ran debt free with no one at the wheel plus no income tax but after 1913 some 13 year old so call race car driver took that wheel racing down a one-way street for a finish line that ain't there. Quit telling America that everything is fine cause it ain't....just kick the FED (private bank) out of "we the people" life's and than just sit on your a!! and watch that American dream come back in view that the few fat farmers with the penmanship of a poet wrote about back in 1776. Put the name "Washington" back in D. C...... Washington had been reelected unanimously in 1792. His decision not to seek a third term established a tradition that is now embedded in the 22d Amendment of the Constitution. In his Farewell Address of Sept. 17, 1796, he drew on the results of his varied experience, offering a guide for both present and future. He urged his compatriots to cherish the Union, support the public credit, be alert to the "insidious wiles of foreign influence," respect the Constitution and the nation's laws, abide by the results of elections, and eschew political parties of a sectional cast. Asserting that the United States and Europe had different interests, he declared that it "is our true policy to steer clear of permanent alliances with any portion of the foreign world," trusting to temporary alliances for emergencies. He also warned against indulging in either habitual favoritism or habitual hostility toward particular nations, lest such attitudes should provoke or involve the country in needless wars. And to all them ther foreigners with all them ther US dollars that think they got the American people like a gnat stretched over a six inch fence post.....think again! The American consumer can get so tight with a George Washington that their breath can smell like sh!! and they squeak when they walk and all them ther items popping out of those foreign factorys that have to be sprayed down with formaldehyde for the two week journey to America will only set on a shelf drawing dust. Made in America.............priceless!

Let me get this straight. The spending on the war (along with the Bush tax cuts) has nothing to do with the weakening of the dollar. The weakening of the dollar has nothing to do with the increase in oil prices and in inflation generally. Increased inflation has nothing to do with a weakened US economy. Now I've got it. For a minute I was confused, but now I see Bush's firm leadership abroad did not affect things at home at all. Thanks for the illumination.

The question of a war being good for the economy depends on many factors. The first Gulf War actually gave a recipe for how war could be financed so that it did not ruin the economy because of winning the consent of UN meant there were so many countries participating that the costs get distributed through many nations and this minimizes its negative effects in economic terms, while in the present war the costs are mostly born by Americans─the price of unilateralism, but since the American economy is central to the global economy the cost of the war effects the globe--in essence the Americans are spending the entire savings of the world to finance an unjustified and criminal war of unprovoked aggression--which adds to the general enmity towards the US in general. Still it seems to me that what is important to consider is the type of currency exchange regime that is in effect. How the Vietnam War effected the US and the World in economic terms is different than in Iraq.

If the currency exchange regime is a fixed rate system, then the effect of waging war is Keynesian in nature. Here the government spends, which will result in an increase in activity in the economy. So the problems coming from this spending comes later in the form of increased interest rates, which means the pressure on the dollar is upwards, but since the exchange rates are fixed the government is forced to maintain the fixed rates or loose credibility. If they have to adjust the exchange rates due to the increased interest rate then the increased value in the currency means foreign goods are cheaper in the US but American goods sold abroad are more expensive--thus exports will slow and eventually companies will have to slow down meaning a rise in unemployment. This is what happened during the Vietnam War but it took longer to effect the entire economy because the system of exchange was based on the Gold Standard which was slow to change. The costs of Vietnam War in fact destroyed that exchange system, so in this sense a war is a short term boom and then comes the hell, in particular stagflation which we see hitting us now but it happened in considerably less time than in the Vietnam era--most likely this is due to the exchange system but also because of where the war is being fought. The global economy was not effected by goods produced in Vietnam but in the Middle East it is--hence the inherent danger to national and global security.

When the system of exchange rates is floating (which is our present system) then the effect is the opposite since it makes its pronouncement in a more immediate fashion because as the government goes into debt the currency exchange is automatically devalued by the market mechanism--this is what floating means. That means that the dollar goes down not up. If the dollar goes down then it ought to mean exports should go up and imports go down which should benefit the economy. But this did not occur in the degree necessary to benefit from waging war in the short run because our major trading partners absorbed a great deal of the shock in the currency market by buying dollars in a quantity just large enough to keep the dollar in relation to their currencies more or less constant (by doing this they help finance our debt but they weaken themselves--China and Japan in particular are now feeling the crunch and will because of their own domestic issues be forced to let the dollar fall). Still the effect of government spending when exchange rates are floating is that the economy contracts.

For the US where its currency has been the world's currency of choice since the end of WWII, the consequence of the Iraq War points in the direction of the end of American Hegemony. Like the 1970's oil has tripled but today it is the shear magnitude of the tripling and now the quadrupling in price since 2001--it is not possible to compare in the sense of scaling because going from 3 dollars a barrel to 12 dollars a barrel is not like going from 25 dollars a barrel to 100 dollars a barrel because of the magnitude in costs in terms of the whole economy is far greater today than it was then. The dollar today is weak but the reason for its weakness is directly due to the instability of a region in the world where the major determination of all economic activity is directly linked to the dollar--oil is priced in dollars--one speaks of petrodollars not petro-euros or petro-yen or petro-pounds. If the dollar goes down then all goods that are directly attached to dollar will have to go up in price. So the most stupid place on earth to wage a war is in the Middle East. If one looks at the real meaning of this in terms of "national security" it is obvious that Bush and the newest Republican presidential candidate, John McCain, represent major threats to national security--while the media presents them as being "strong on national security". The real threat is that all countries that sell goods the world over that are priced solely in the American dollar, find that it is necessary to drop the dollar (because it isn't a stable form of exchange) and adopt a bundle of currencies to have their products priced in. This means that "national security" is directly linked to the fiscal responsibility of American leadership and that it is impossible to speak of being strong on national security when a military action directly threatens the currency advantage of having the dollar as the primary measure of all value in goods and services. Loose the dollar as world's choice of exchange and American Hegemony ends as well--if that happens then we have been truly defeated and ironically by a mere 19 men armed with sophisticated weapons like knives and ballpoint pens and the knowledge to pilot an a few airplane into some buildings.

Anyone that claims that war is good for the economy is missing the reality of what war does. War in terms of an investment is seldom one the brings a return--the cost is almost always greater than the return which as a rule means war is unwise. War is an unsound business concept unless you are a company that benefits from the American Corporate Social Welfare System. Still it is because of WWII that the US obtained such large stakes in the world as a whole in economic terms, and the first Gulf War was economically not a burden because the costs were absorbed by others.

Sorry, i havn't read all the comments yet. I still do not like to speak of war industry in such glowing terms as good for the economy. Yes, it will create jobs- but there are many ways to create jobs. Our economy seems to me to be dependant on LENDING practices- whether it is how the privatley owned Federal Reserve operates to how laywers and courts interpret the laws. LENDING could also include tax breaks and tax favoritism, also 'lending' resources to the military machine as opposed to the infastructure one. I have this feeling that much of the wealth created in this nation is being consolidated into a few finciers' circles and being moved out of the country. I'd have less of a problem with someone who has not earned wealth through creativity and work, but simply inherited it- if they were spending it in this country. Our princes are moving out of town. Those left holding the bag become "3rd world slaves".

Back to the article, Iraq war spending did not cause the reccesion (maybe general war spending for 70 years did) but we cannot address the SYMPTOMS if all discretionary spending goes to the war and national security machines.

Stiglitz is right on. Do not forget that in addition to the huge spending for the ivassion and the occupation costs their was the huge tax cut for the wealthy which brought on the deficit. The Bush administration and the republican enablers simply do not have the resources to provide more fiscal stimulus during this downturn.

The tax cuts were supposed to stimulate the economy, but it looks like that didn't work. That old "Trickle down" stuff doesn't seem to work very well. Good thing we got some dough from the Chinese so we can all go to Wal Mart and buy more Chinese products. Hopefully, that will work.

I have to admit, I was pretty worried that "The smoking gun could come in the form of a mushroom cloud." What a relief there actually wasn't any WMD after all. Now it's a War on Terror and that sounds good because I'd rather fight them over there than over here.

I thought the sub-prime thing was the cause of the housing crisis? And the housing crisis was the cause of the economic slow down? Too many realtors who couldn't make their Lexus payment. Bad for the economy.

People are probably saving too much again. We all need to spend more of our money and keep the economy going. Isn't that the patriotic thing to do?

WARNING: this comment was cut-and-pasted from somewhere else. Had it been a real comment you would have been told where to go and what to do when you got there.

Note that the war is likely a major factor in the fall of the dollar because it is generating enormous liabilities that we will eventually have to pay. The crash in the value of the dollar, in turn, is probably the major factor in the rising cost of oil. (If you don't believe this, look at a graph of the changing price of oil measured in dollars vs. euros over the past 7 years.) The rising price of energy, of course, is a significant factor in the decline in the economy, as is the fraud in the lending industry that led to the overconstruction of housing. So while it is clearly not true that the war is the sole cause of the recession, it clearly is true that the war is exacerbating the problem.

Wars used to be good for the economy but modern wars don't require troop #'s of the wars in the past. Its a push button war & with outsourcing & factory automation the production jobs like you had in the past are not here. The only ones making money are the ones invested in the arms market or a servicing company like halliburton & KBR..
I think the people evaluating the situation are not looking at the Big Modern picture.
Its not just the cost of the war but the longterm cleanup & treatment of our troops, replacement of wornout equipment, replacing the personal who call it done due to back to back deployments. & the most long term damage-the image of a aggresive,dominating,War mongering nation who will hold other to international law but refuse to abide by it ourselves.

Wow suppose this "WAR" money would have been spent on re-building bridges and the like. You are telling people that spending like we do in Iraque is good for our economy. Why not on Health care and re=morginging house which people are loosing right now.
We need somebode with some "critical thinking" WOW

Since war is good for the economy, we need to start more wars. How about Syria, Iran, Pakistan for starters. Then we could invade most of the countries in South America starting with Venzuela, Colombia, and Brazil. Now's our chance to jump on Cuba. By the time were into about 2 dozen wars, every American ouught to be a millionaire. Gee, I never thought being a millionaire would be so easy. Just sit back and let the army make me wealthy!

sadkljfsd gjvkg.kdszfghsfk.ughksfghxjlchv;lkxjdgh'xljfghxlkjhv