War in Iraq is lost - Housing Bubble about to break

James Wolcott quotes Immanuel Wallerstein from Yale:

"It's over. For the U.S. to win the Iraq war requires three things:
defeating the Iraqi resistance;
establishing a stable government in Iraq that is friendly to the U.S.;
maintaining the support of the American people while the first two are being done.

None of these three seem any longer possible. First, the U.S. military itself no longer believes it can defeat the resistance. Secondly, the likelihood that the Iraqi politicians can agree on a constitution is almost nil, and therefore the likelihood of a minimally stable central government is almost nil. Thirdly, the U.S. public is turning against the war because it sees no "light at the end of the tunnel."

"As a result, the Bush regime is in an impossible position. It would like to withdraw in a dignified manner, asserting some semblance of victory. But, if it tries to do this, it will face ferocious anger and deception on the part of the war party at home. And if it does not, it will face ferocious anger on the part of the withdrawal party. It will end up satisfying neither, lose face precipitously, and be remembered in ignominy."

Bush's predicament is mirrored by the standoff at the Crawford Ranch, Wallerstein perceptively notes.

"But, for the Bush regime, the worst picture of all is on the home front. Approval rating of Bush for the conduct of the Iraqi war has gone down to 36 percent. The figures have been going steadily down for some time and should continue to do so. For poor George Bush is now faced with the vigil of Cindy Sheehan. She is a 48-year-old mother of a soldier who was killed in Iraq a year ago. Incensed by Bush's statement that the U.S. soldiers died in a "noble cause," she decided to go to Crawford, Texas, and ask to see the president so that he could explain to her for what "noble cause" her son died.

"Of course, George W. Bush hasn't had the courage to see her. He sent out emissaries. She said this wasn't enough, that she wanted to see Bush personally. She has now said that she will maintain a vigil outside Bush's home until either he sees her or she is arrested...

"Bush won't see her because he knows there is nothing that he can say to her. Seeing her is a losing proposition. But so is not seeing her. The pressure to withdraw from Iraq is now becoming mainstream. It is not because the U.S. public shares the view that the U.S. is an imperialist power in Iraq. It is because there seems to be no light at the end of the tunnel... They want out. Bush is caught in an insoluble dilemma. The war is lost."

The invasion of Iraq was a stupid act of Weltpolitik in the first place, with little chance of turniing out well. Then, once decided on, it has been handled incompetently, so that the theme song for the Bush administration should be "Send in the Clowns."

I frankly had long thought that the Iraqis themselves might have, purely out of self-interest, pulled off something the Busies could claim as a victory before they turn tail and remove our troops from the war. The Consitutional negotions seem to hold little hope for that now.

On the home thought, the economy has been held together by low interest rates, leading to easy to obtain mortgages and second mortgages, and little else. The low interest rates have kept the homebuilding industry operating while the second mortgages, feeding off the bubble in housing has provided a source of funds that kept the retail economy above water. Dave Johnson of Seeing the Forest has been warning of the collapse of the housing bubble for at least a year now. The only question has been when.

Now "the when" seems to be very soon. Dave refers to a story by Calculated Risk.

The "Rising tide of abandoned residential properties"
Real estate investors are just walking away from residential property and lenders are getting stuck. Some lenders do not want to take title to the worthless property and the city has started a campaign called the "shaming sign" - placing signs on abandoned property with the names of the lenders' executives. This has induced some lenders to take title and either fix up or demolish the abandoned homes.

This is a story from the Great Depression ... except it is happening right now in Dayton, Ohio.

The economy has been stumbling along on a wing, a prayer and the effect of Keynsian support to the economy caused by massive deficit spending. The collapse of the housing bubble will remove the wing, and there may be noone listening to the prayer.

Is there any good news? Well, G. W. Bush is in the best physical shape of any President, ever.