Global Paradigms

Business Times - 18 Nov 2008 The capital tends to grow and prosper during times of economic and international troubles By LEON HADAR WASHINGTON CORRESPONDENT WHETHER you examine economic indicators or study anecdotal evidence - rising unemployment, home foreclosures, business bankruptcies, falling consumer confidence, deserted shopping malls - they all seem to point to one conclusion: the American economy is in a recession and may be sliding into a depression. Unless, that is, you happen to live and work in Washington, DC, the capital city of this nation that is supposed to be in the midst of economic distress. In my neighbourhood, they have just completed the construction of a tall luxury apartment that overlooks the new and the always packed Bloomingdale's department store. And guess what? The manager tells me that the very expensive apartments are selling 'like hot cakes' and that his company is planning to put up one or two more buildings in the area. 'There is alre...

Business Times - 17 Nov 2008 NEWS ANALYSIS Summit drags its feet on major issues as it waits for Bush to leave the stage By LEON HADAR IN WASHINGTON THE meeting of leaders representing the world's 20 largest economies that took place in Washington over the weekend should be described as an 'historic' event for two main reasons: First, it was a dramatic response to one of the most devastating global economic crisis since the Great Depression of the 1930. And it marked the shift of economic power from the 'old' club of the seven industrialised nations of North America, Western Europe and Japan to the 'new' emerging economies in Asia, Latin America and Africa. But in practical terms, the presidents and prime ministers who attended the two-day summit of the Group of 20 have refrained from launching a major collaborative effort to deal with the continuing instability in the financial markets. Instead, they reiterated calls for greater oversight of the financial m...

Business Times - 14 Nov 2008 By LEON HADAR WASHINGTON CORRESPONDENT TWO dramatic developments would serve as backdrops for the gathering of the leaders of the world's 20 major economic powers in Washington over the weekend. Hovering over the meetings of the Group of 20 (G-20) would, of course, be the ongoing global financial crisis that has overwhelmed economies around the world, raising the spectre of a worldwide global depression. At the same time, the summit will also be dominated by a sense of hope that has swept America and the international community in the aftermath of the historic election of Barack Obama as the leader of the world's most powerful economy. But the charismatic and relatively young Mr Obama, who has committed his incoming administration to reform and revive the American economy and work with US partners to do the same in the global arena, will not be in the room during the meetings this weekend. The leaders of G-20 economies, who were hoping to meet the U...

Business Times - 12 Nov 2008 By LEON HADAR WASHINGTON CORRESPONDENT THE meeting between US President-elect Barack Obama and President George W Bush at the White House on Monday during which they talked about the economic and national-security problems is part of the ritual of the transition of power that takes place every four years. But at a time when America is confronting one of the most devastating economic crisis in recent memory and its military forces are engaged in two major wars, in Iraq and Afghanistan - three wars if you add the war on terrorism to the list - the handing of the nation's top leadership position from a failed and controversial president to a one who promises to mount dramatic changes in US domestic and foreign policies acquires a historic significance. Indeed, historians compare the passing of the presidential torch from Mr Bush to Mr Obama to another important change that took place when Republican president Herbert Hoover lost the election to Democratic ...

Business Times - 11 Nov 2008 The Obama Meme? By LEON HADAR WASHINGTON CORRESPONDENT HERE is a prediction on which I'm willing to bet my (401) K retirement plan (or what's left of it): In the next year or two we're going to see the rise of new movements for political change around the world whose common theme will go something like this: 'Why can't an Obama-like political leader be elected in ?' In short, whether you're in, say, Russia, Argentina, Egypt or Britain, watch out for that 'Obama Meme'. A 'meme', a term coined by the evolution theorist Richard Dawkins, is an idea, theory or fashion that propagates itself and can spread around the world similar to the contagious behaviour of a virus. The notion that such memes would evolve through a process of competition became very popular during the 1990s when globalisation and the development of the Internet led many thinkers to suggest that memes that evolve in America's free-market of ideas...

Business Times - 07 Nov 2008 Paradigm change, Clintonomics redux, or just muddling through? By LEON HADAR WASHINGTON CORRESPONDENT WALL Street may have suffered some sense of anxiety in the aftermath of Barack Obama's presidential victory with the Dow Jones falling more than 300 points. That nervousness seems to fit with the conventional wisdom that Wall Street has traditionally preferred Republicans in dealing with the economy. But interestingly enough, the Democrat Obama has been more successful than candidate John McCain, the representative of the pro-business Republican Party, in collecting election campaign contributions from leading members of the American financial industry. Mr Obama also performed better than Mr McCain in New York, New Jersey and Connecticut where Wall Street investors make their home. In fact, most investors were rooting for Mr Obama. According to renowned financial commentator Jim Cramer: 'Obama is a recession. McCain is a depression.' Mr Obama ha...

Business Times - 06 Nov 2008 Obama sweeps to victory as markets, war, demographics produce an electoral earthquake By LEON HADAR WASHINGTON CORRESPONDENT RACIAL prejudices were swept aside as Barack Obama won the White House yesterday - an event whose historic magnitude recalls the landing of the first man on the moon. The Democrat defeated Republican John McCain and will be sworn in on Jan 20 next year as the 44th US president - and the first African-American one. His march became a rout as he captured not only battleground states like Ohio and Florida but also scooped up traditional Republican-leaning 'red' states like Virginia and Colorado. With 349 electoral votes against Senator McCain's 173, it wasn't even close. 'Even as we celebrate tonight, we know that the challenges that tomorrow will bring are the greatest in our lifetime,' said the president-elect. But the change he has repeatedly promised has already signalled itself. The election of the 47-year-ol...

Business Times - 04 Nov 2008 By LEON HADAR WASHINGTON CORRESPONDENT IN one of the famous scenes in the 1972 film The Candidate, Robert Redford who has just won a race for a Senate seat from California, surrounded by celebrating supporters during a victory party, pulls his press secretary into a room while throngs of journalists clamour outside, and then asks him: 'Marvin. . . What do we do now?' It's quite clear that whoever wins this year's US presidential race today is not going to pose that question to his aide. Instead, he is more likely to ask his adviser: 'What do we do first?' Indeed, after confronting what amounts to be an existential threat to US national interests - a devastating economic crisis and two long and costly wars - the next occupant of the White House might end up wondering whether his victory in the 2008 presidential race was such a good news. For all practical purposes, the winner, even before he is inaugurated as the next president on Jan...

Business Times - 29 Oct 2008 By LEON HADAR WASHINGTON CORRESPONDENT THERE was something pathetic about the testimony by Alan Greenspan, the former chairman of the Federal Reserve, before the House of Representative's Committee on Oversight and Government Reform last Thursday. Here was the man, who only a few years ago was treated as the Oracle of Delphi by his groupies when he deigned to visit Capitol Hill, was suddenly finding himself subject to harsh criticism and even mean ridicule by the same lawmakers who had worshipped at the feet as the High Priest of American capitalism during most of the roaring 1990s. The members of the Congressional forum who were cross-examining the 82-year-old ex-central banker sounded at times like inquisitors in a religious tribunal or in a Stalin-era show-trial, pressing a beaten-down witness to confess his sins and to repent. 'You had the authority to prevent irresponsible lending practices that led to the sub-prime mortgage crisis. You were ad...

Business Times - 24 Oct 2008 By LEON HADAR WASHINGTON CORRESPONDENT THOSE who cannot remember the past are condemned to repeat it, warned the American (Spanish-born) philosopher George Santayana. Does this mean that those who remember the lessons of history are not likely to repeat the mistakes of the past? In their response to the current financial crisis, American and European officials seem to want to show that, indeed, they have learned the lessons of the financial crash and the ensuing Great Depression of the 1930s, and that they are doing their best not to embrace the kind of disastrous policies that their predecessors in Washington, London and Berlin had adopted at that catastrophic time in history. Hence, Federal Reserve chairman Ben Bernanke, a student of the Great Depression, has made a special effort not to reproduce the blunders that were made by the US central bank in the 1930s when it tried to deflate the supply of money by, among other things, raising interest rates. And...

The new issue has just been released: WORLD POLICY JOURNAL•FALL 2008 © 2008 World Policy Institute Israel’s Not-So-Future Perfect By Leon Hadar Back 17 years ago, in the winter of 1991–92, when I was contemplating Israel’s future in World Policy Journal, it was supposed to be the dawn of a new age—and I was there. We were about to enter the Roaring globalization years of the 1990s and to be downloaded into a Borderless world in which the archaic nation-state would vanish. Arabs And Jews, Muslims and Hindus, would cease fighting each other over holy temples and olive trees and emerge in our new and brave world as the prime agents of global commerce, competing over market shares and investment flows, as Tom Friedman’s McDonalds Law (“no two countries that had McDonalds had gone to war with each other”) had forecasted. The “new cosmopolitans” and “global hybrids” would be the winners in this nascent universe where the prime determinant for business, political, and cultural success wou...

Business Times - 22 Oct 2008 By LEON HADAR WASHINGTON CORRESPONDENT FIRST, it was the hockey mom from Alaska who was going to help Senator John McCain get his groove back as he was trying to slow the momentum of Democratic presidential candidate Barack Obama. Mr McCain and his aides had hoped that being an attractive and young female politician and a working mother, Sarah Palin would be able to draw support from Hillary Clinton Democrats, while her conservative social views would help energise the Republican political base. Ms Palin did deliver a great convention speech, helped rally the conservative Republican activists and ignited the interest of many voters. But then following her dreadful performance in several television interviews which helped turn her into the butt of jokes and late-night television comedians, Ms Palin's approval rating started plunging. So then came the 'washed out terrorist', which is the way that Mr McCain described Bill Ayers, a former political ...

Business Times - 16 Oct 2008 If economic crisis is not contained, next US govt may alter notions of free-market America By LEON HADAR WASHINGTON CORRESPONDENT LIKE most journalists, I like irony. We journalists insert 'ironically' into a sentence as a way of underscoring that things didn't work out as planned, such as in: 'Ironically, US Treasury Secretary Henry Paulson had initially been strongly opposed to the idea of federal government investing directly in private banks, which is exactly the policy that the Bush administration announced on Tuesday.' Or in: 'It's quite ironic that the pro-free market Republican administration of George W Bush that once upon a time was even promoting the idea of privatising the national pension scheme (Social Security) is now presiding over what President Bush described as an 'unprecedented and aggressive' plan to partly nationalise nine major American banks.' Yes. Some delicious ironies indeed. And there are s...

Business Times - 14 Oct 2008 The week-long sell-off suggests the moves taken by Washington had failed to build the necessary investor confidence By LEON HADAR WASHINGTON CORRESPONDENT AFTER a week of pandemonium in the financial markets that ended on Friday, Wall Street is taking a three-day weekend break. (Monday is Columbus Day public holiday.) That has provided an opportunity for finance officials from the world's top economic powers, who gathered in Washington, to look for ways to restore the confidence of the world's investors to bring an end to the financial turmoil and to prevent an economic recession from turning into a global depression. The financial leaders were in Washington for meetings of the World Bank and the International Monetary Fund (IMF). The week-long sell-off on Wall Street suggested that the dramatic moves that were taken by Washington over the week - giving credit markets a boost by buying short-term loans; the announcement by the Federal Reserve that i...

Business Times - 10 Oct 2008 As Americans despair, a distinct lack of confident leadership a la FDR is felt across the US By LEON HADAR WASHINGTON CORRESPONDENT I T'S not that officials and lawmakers in Washington aren't doing anything about the deepening economic crisis. On Wednesday, the Federal Reserve, in coordination with European central banks, announced a half-percentage point reduction in the key interest rate - reducing the target federal funds rate to 1.5 per cent from 2 per cent. And, indeed, the heads of the US central bank indicated that, unlike Republican presidential candidate John McCain, they believed that the fundamentals of the US economy were weak. 'Incoming economic data suggests that the pace of economic activity has slowed markedly in recent months,' the Fed said, and that the financial crisis was 'further reducing the ability of households and businesses to obtain credit'. These comments seemed to correspond with the conclusions by econom...

Business Times - 07 Oct 2008 Bill's passage, vice-presidential debate fail to affect economic and political realities By LEON HADAR WASHINGTON CORRESPONDENT AFTER defeating the first financial rescue bill on Sept 29 and sending the stock market into a sharp fall, the US House of Representatives approved a modified version of the US$700 billion bailout package last Friday by a 92-vote margin, following a 'yes' vote for the plan by the Senate on Wednesday. And yet Wall Street didn't rally. In fact, the Dow Jones Industrial Average ended down 157 points, or 1.5 per cent, to 10,325 at the end of the day, following the news that Congress had approved the bailout. And after Republican vice-presidential candidate Sarah Palin had become the butt of jokes following her disastrous performance on television news shows, the Alaska Governor didn't self-immolate during the televised vice-presidential debate on Thursday. Some pundits even argued that she was poised and charming du...