There is actually a very clear connection between the war which has been a disaster, and our economy, which has been a disaster. The most clear link is the fact that the war 2003 led to an increase in the price of oil. The price of oil was $25 a barrel in 2003.
Futures market, if you look at the demands and supplies going forward, saw that there is going to be an increase in the demand for oil from China, India, even in the United States. But they thought that there was going to be an increase in supply that would just concomitant with that increase in the demand. Particularly for the Middle East, which is the low-cost provider, and so they forecast that the price of oil would remain around $25 a barrel for the next ten years.
Well, the war upset that equation, it was very difficult to produce oil out of the Middle East, and there were other things that went on, but clearly it was a very important factor, and the soaring of the price of oil from $25 to $50, then a $100, and $140, now it's back to a $100.
Now, why is that important? Well, the United States was spending hundreds of billions of dollars in Saudi Arabia, Kuwait, other places that are producing oil. In the past, when prices of oil went up like that, as in the 1970's, it caused that economic downturns. You are spending that much money abroad; you don't have that much money at home.
Some people looked at what was going on in American economy, and said, we repeal the world laws of economics. Whenever anybody says that to me, I always say, you are not seeing something going on. And here it was very clear what was going on.
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