The current economic crisis has claimed many victims, but what has changed most is the way that the United States is viewed, perhaps permanently. That isn’t ideology; it isn’t declinism; it’s a fact. For all the talk in past year about the shifting balance of power globally, until now it has been just that — talk. Saying that the emerging world of China, India, Brazil and the rest have assumed a new place is like saying that a new army is well-equipped with sharp uniforms and cutting-edge weapons. That doesn’t mean it can fight. Until tested in battle, it’s just a guess. The economic crisis of the past two months has been such a test, and the results are clear: talk of the emerging world as the wave of the future isn’t just speculation; it’s a permanent reality.
Read moreThere’s Only One End of the World... and This Isn’t It
So here we are once again on the precipice, at least in terms of global stock markets and credit markets. Another bout of nail-biting panic is hardly unexpected, though it’s always surprising when otherwise sane people veer sharply into hysteria. It’s a good, albeit painful, reminder that the bonds of what we call civilization are always more tenuous than we would like to believe, that things like “value” and “worth” and “the economy” are ultimately the products of human beings simply agreeing on a set of rules. Stocks, bonds, gold, silver, none have any intrinsic value, nor do Gucci handbags, Deere lawnmowers, and GM trucks (in case anyone was wondering about that one). We act as if they do, because it gives us some sense of an orderly world, and because the alternative is just too unsettling to live with on a daily basis.
Read moreThe New World Economy
So the G20 met over the weekend, and if there was any doubt before, there should be none now: the financial balance of power is shifting. China, Brazil, even Japan can all claim more sound economies than the United States, and they collectively let it be known that they would no longer take marching orders from the Washington consensus. They expect a voice, and they are not asking permission.
Nobody Knows Nothing
Everyday, my mailbox gets inundated with reports from strategists and economists. Two years ago, most were predicting a fairly rosy scenario for the global economy - and to be fair, so was I. Today, most are predicting a dire future of negative growth and economies mired in a deep and intractable recession. The predictions of the past were mostly wrong; there is little reason to believe that today’s forecasts will be much better.
Read moreGreenspan, Bubbles, and Responsibility
We are now in the season of scapegoats. The brays for justice and villains grow daily, and this week has seen a walk of shame as various participants in the credit debacle sit in front of Congress to be scolded and upbraided for their sins. Many of the goats today, and none more than former Chairman of the Federal Reserve Alan Greenspan, were heroes only a short while ago - yet another vivid illustration of the ancient words of the mythical king Croesus: “Count no man happy till he’s dead,” or to put it another way, “it ain’t over till it’s over.”
Read moreFear Itself
As of today, the global financial system is gripped by panic. In the past two weeks since the bankruptcy of Lehman Brothers, the fear and chaos have accelerated dramatically, and the failure of Congress to pass its proposed $700 bailout bill on Monday unleashed a new wave of panic. That is the situation we find ourselves in now, with safe havens almost non-existent save for those betting against the market completely, or who have retreated to cash. Relief rallies notwithstanding, this is a market in the grip of animal spirits, and the stampede is heading for the exits.
Read moreIf “The Economy” Is So Bad, Why Isn’t Obama Doing Better?
The near-miss of Gustav and the laughable (but effective) spin of the Republicans to foreswear politics and put on their “American hats” means that we can now resume watching our regularly scheduled show of politics. Obama’s acceptance speech last week was long on pocketbook issues, and short on foreign policy, and McCain will need to do the same. Indeed, his pick of Palin — who has zero foreign policy experience — highlights that this election is revolving around economic issues.
Read moreObama’s Convention Danger
A rousing speech from Michelle Obama and we’re off. With the conventions in full-bloom, we will be treated to two weeks of constant coverage. In fact, with 4,000 delegates at the Democratic Convention and 15,000 members of the media, the convention in Denver is as much a media event as a political one — and that may be an understatement. The same will be true when the Republicans gather next week in Minneapolis-St. Paul. With every aspect of the agenda meticulously scripted in advance, the only drama will be scripted and produced, not spontaneous, and there will be as many surprises as there were at the opening and closing ceremonies of the Olympics in Beijing: none
Read morePolls Say It’s the Economy — Now What?
The recent polls showing a dead-heat race between Obama and McCain also indicate that economic issues are the single most important concern for voters, by far. And few people seem to feel that either candidate is doing much to address the underlying problems.
Read moreWall Street isn’t Main Street
The purchase of Merrill Lynch by Bank of America and the bankruptcy and collapse of Lehman Brothers are the latest — albeit most dramatic - installments of the ongoing credit crisis that began last August 2007. The bailout of Fannie Mae and Freddie Mac, as well as the fire-sale purchase of Bear Stearns by JP Morgan Chase in March were also greeted with fear and dread, and if the past is any guide (which, by the by, it may not be), today will not be the final chapter.
Read moreBush’s Chickens Come Home to Roost
The Russian invasion of Georgia and the inability of the United States, NATO, the United Nations — not to mention Georgia itself — to do anything about it has cast into sharp relief one of the most disturbing consequences of recent American policy in the world. Having focused obsessively on the threat of terrorism — and not simply on terrorism, but terrorism conducted by radical Islamic fundamentalist groups such as al-Qaeda, the United States and the administration of George Bush have de facto ignored a series of other pressing global issues. It’s been said that governments and countries fight the last war; in the case of the Bush administration, we’ve fought the last war several times over, with strategic incompetence. As a result, our future security has been seriously jeopardized.
Read moreJumping Off the Anti-China Bandwagon
A cursory glance at the coverage this week of the Beijing Olympics shows an increasing crescendo of negative commentary. That is evident everywhere from the Huffington Post to the mainstream media, and even sports journalists have been jumping on the anti-China bandwagon. The recent decision of the Chinese government to deny former medalist Joey Cheek entry into the country because of his stated plan to rally athletes to pressure Sudan on its Darfur policy is just the latest issue to inflame opinion.
Read moreHow Many People are Unemployed? No One Knows
Today, the Bureau of Labor Statistics did what it does every month and released its employment figures. These showed that 51,000 people lost their jobs this month, and that the unemployment rate ticked up to 5.7%, which is a full percentage point higher than it was a year ago. Unsurprisingly, there were losses in both housing-related construction jobs and financial service industry jobs, as well as another 35,000 jobs eliminated in manufacturing. There was also a spike in unemployment for teenagers, now at 20%, whereas the unemployment rate for the general population is actually a not-so-dramatically bad 5.0%.
Read moreIt’s the Economy, Stupid — Part Deux
More than 75% of Americans now say that the economy is their number one concern heading into the general election in the fall. Those poll numbers are more than confirmed by consumer sentiment surveys which, despite a recent bounce care of the slight retreat of gas prices, have been at multi-decade nadirs. With incomes stagnant and spending squeezed by higher food and energy prices on the one hand and tighter credit on the other, hundreds of millions of Americans are feeling unable to meet their needs and/or desires with the money available to them.
Read moreThe Arabs Are Coming, the Arabs Are Coming
This just in: General Electric and the government of Abu Dhabi announced an $8 billion joint venture for commercial finance in the Middle East. Through Abu Dhabi’s investment arm Mubadala, the emirate will contribute $4 billion and GE the other $4 billion, growing to $40 billion in the coming years, with the aim of supporting various energy and infrastructure projects in the region, including an aggressive plan to sponsor green, clean and sustainable water and energy plants. As part of that, the fund will support several projects in Abu Dhabi’s Masdar City, a utopian project to build a carbon-neutral city in the desert.
Read moreGovernment Bailouts: What’s it All About?
Global stock markets are in summer free-fall; the stocks and bonds of financial institutions are sinking more quickly than the Titanic; and sentiment is veering into panic territory. We have, of course, been here before, not necessarily exactly here, but close enough. In 1990-1991, banks also went into a tailspin, and before that there was the S&L crisis, and before that, the massive failures of the early 1930s, and then back into the regular bank panics and financial collapses that were endemic to the U.S. financial system for much of our history.
Read moreChina Opens Up — Sort Of
After months of uncertainty, the Chinese government finally relented and announced that it would allow camera crews and foreign reporters during the Olympics to roam around Beijing and do street shots. They were also given permission to do live feeds from the highly symbolic, picturesque, and because of the events of 1989, rather laden Tiananmen Square. The lifting of these restrictions came as a deep relief to NBC and its parent GE, which has spent hundreds of millions of dollars to secure the television rights to the games.
Read moreMade in China?
Right now, the markets are focused on two stories: the continuing unwinding of the sub-prime mess and the increasing number of recalls of products made in China. At this point, the roiling of the financial markets is the bigger of these two stories. However, the drum beat of negative press about China may have equally significant consequences going forward. With stories such as “More Ripples From Chinese Product Troubles,” (New York Times, August 15), and “Tainted Imports: Are You Next?” (BusinessWeek SmallBiz, Aug/Sept 2007), and even recent posts on the HuffingtonPost (gasp!), the chorus has been growing that China, in more ways than one, represents a threat to the United States. If it’s not currency “manipulation” then it’s unsafe products, from tires to pet food to toys. Already, there is legislation being prepared that would take a harder line against China and the twin effects of currency and the trade deficit. Whatever version of the bill actually gets passed is likely to be more muted than the rhetoric, but the very fact of it demonstrates the growing anti-Chinese sentiment that is almost certain to get worse before it gets better.
Read moreEnough Already with “The Trouble with Islam”
In a recent Wall Street Journal editorial titled “The Trouble with Islam,” the author regurgitated all of the familiar canards about the inherent backwardness of Islam: that the religion at core promotes violence toward unbelievers and toward women, that the Quran calls for death to the Jews, that all attempts of interfaith dialogue in the West are based on a hopeless naivete and that the violence in Iraq proves that Muslims are prone to violence.
Read moreThe Greening of America?
When the zeitgeist shifts, it really shifts.
The beginning of 2007 saw one of the warmest Januaries on record, and instead of snow, we were treated to a flurry of articles, announcements, conferences, and high level public speeches that demanded action on the part of countries, individuals and companies to begin to address the issue of global warming.
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