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Monday, January 15, 2007

Paul Krugman: The Texas Strategy

Paul Krugman says the war in Iraq has characteristics similar to the savings and loan scandal of the 1980s:

The Texas Strategy, The Urge to Surge, by Paul Krugman, Commentary, NY Times: Hundreds of news articles and opinion pieces have described President Bush’s decision to escalate the Iraq war as a “Hail Mary pass.” But that’s the wrong metaphor.

Mr. Bush isn’t Roger Staubach, trying to pull out a win for the Dallas Cowboys. He’s Charles Keating, using other people’s money to keep Lincoln Savings going long after it should have been shut down — and squandering the life savings of thousands of investors, not to mention billions in taxpayer dollars, along the way.

The parallel is actually quite exact. During the savings and loan scandal..., people like Mr. Keating kept failed banks going by faking financial success. Mr. Bush has kept a failed war going by faking military success. ...

Oh, and one of the favorite techniques used by the owners of savings and loan associations to generate phony profits ... came to be known as the “Texas strategy.” What was the point of the Texas strategy? Bank owners were certainly gambling ... with other people’s money... in the hope of a miraculous recovery...

But the real point ... was a form of looting: as long as they could keep reporting high paper profits, S.&L. owners could keep rewarding themselves with salaries [and] dividends ... Mr. Keating paid himself a million dollars just weeks before his holding company collapsed.

Which brings us to Iraq. The administration has spent the last three years pretending that its splendid little war isn’t a big disaster. ... Now Mr. Bush has grudgingly sort- of admitted that things aren’t going well — but he says his “new way forward” will fix everything.

So it’s still the Texas strategy: ... keep their failed venture going as long as possible. The Hail Mary aspect — ... that somehow, things really will turn out all right — is the least of their motivations. The real intent is a form of looting. I’m not talking mainly about old-fashioned war profiteering... No, I’m saying that the hawks want to keep this war going because it’s to their personal and political benefit. ...

[E]scalation buys [Mr. Bush] another year or two to claim that we’re making progress — and it gives him another chance to prove that he’s the Decider, beyond accountability. And as for pundits who promoted the war and are now trying to sell the surge: for a little while longer they can be Very Important People who have the president’s ear.

Meanwhile, the nation pays the price. The heaviest burden — in death, shattered bodies, broken families and ruined careers — falls on those who serve. ... The rest of us will pay a financial price for the hundreds of billions squandered in Iraq and, more important, a price in reduced security. Escalation won’t bring victory in Iraq, but it might bring defeat in Afghanistan... And it has pushed the military to the breaking point.

Mr. Bush calls his critics “irresponsible,” saying that they don’t have an alternative to his strategy. But they do: setting a timetable for withdrawal, so that we can cut our losses, and trying to save what can be saved. It isn’t a strategy for victory because that’s no longer an option. It’s a strategy for acknowledging reality.

The lesson of the savings and loan scandal was that when a bank has failed, you shouldn’t let the owner string you along with promises — you should shut the thing down. We should do the same with Mr. Bush’s failed war.

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Previous (1/12) column: Paul Krugman: Golden State Gamble
Next (1/19) column: Paul Krugman: Surging and Purging

    Posted by on Monday, January 15, 2007 at 12:15 AM in Economics, Iraq and Afghanistan, Politics | Permalink  TrackBack (0)  Comments (100)

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