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Showing posts from December 17, 2008

Fed reaches end of its traditional road

Business Times - 18 Dec 2008

From now, it may resort to other tools such as printing new money

By LEON HADAR
IN WASHINGTON

PUNDITS have been using a variety of dramatic adjectives - 'rare', 'unprecedented', 'extraordinary', 'radical', 'historic' - to describe the Fed's decision on Tuesday to cut its target for the federal funds rate to a range of zero to 0.25 per cent - a record low - from one per cent.

But in a way, in a year that has seen so many 'rare', 'unprecedented', 'extraordinary', 'radical', and 'historic' moves by the US federal government, including the partial and complete nationalisation of several banks and investment houses and the bailing out of many financial institutions, not to mention the long list of fiscal and monetary policies, the decision by the central bank to slash its benchmark interest rate close to zero was not only expected but somewhat anti-climactic, especially when one…

Obama should take the other road to Jerusalem

Business Times - 17 Dec 2008

By LEON HADAR
WASHINGTON CORRESPONDENT

IN EARLY 2002, the then US secretary of state, Colin Powell, was exploring ways to restart negotiations between the Israelis and the Palestinians that had broken down in the aftermath of the second Palestinian Intifadah (uprising).

Mr Powell was arguing that a resolution of the conflict between Jews and Arabs in the Holy Land could help lessen anti-Americanism in the Arab world and restore US power in the Middle East which had been challenged on 9/11.

The notion that the road to a more stable and pro-Western Middle East leads through Jerusalem - the resolution of the Israeli-Palestinian conflict - was very much the accepted wisdom among members of the foreign policy establishment in Washington as well the view of most of US allies who called on President George W Bush to embrace a more activist US diplomatic approach in the Middle East.

But Vice-President Dick Cheney and Defense Secretary Donald Rumsfeld as well as the n…