Global Paradigms

Business Times - 07 Apr 2009 New US brand name, new policies? Obama's revamp of the American image abroad has won approval; now he must follow through with appropriate action By LEON HADAR WASHINGTON CORRESPONDENT THE first and probably most important thing that was going for US President Barack Obama during his meetings with world leaders in Europe was that he was not George W Bush. Indeed, many observers have contrasted the former and current US presidents in terms of their personalities - the gauche and clumsy Mr Bush versus the charming, and urbane Mr Obama, and proposed that the new White House occupant has captivated the world with his charisma while his predecessor had repulsed them with his crudeness. But that kind of explanation for Mr Obama's rock-star performance in London, Strasbourg, Prague and Ankara, and the perception that he handled the many economic and geopolitical policy issues on the agendas of the Group of 20 (G-20) and Nato summits like an international s...

Business Times - 02 Apr 2009 Obama, transformative president in the making By LEON HADAR WASHINGTON CORRESPONDENT IF you were listening to some of the criticism directed against Democratic presidential candidate Barack Obama last year, you might have concluded that his detractors were confusing the African-American senator from Illinois who was raised by a young single mother of modest means and who had to study and work hard before being accepted by Columbia University and Harvard Law School with the scion of a wealthy WASP (White Anglo-Saxon Protestant) family from New England, who had studied in a prestigious preparatory school before his well-connected dad helped him get into an Ivy League university. Indeed, Mr Obama was depicted by some of his rivals as a salad-eating, Chardonnay sipping, over-educated and snobbish intellectual, who was out-of-touch with the concerns and values of hard-working 'regular folks' in the small towns and rural communities of America. Republican...

Business Times - 31 Mar 2009 Suffering 'hegemonic fatigue', Washington seems unwilling to pay the economic and political costs of promoting free trade By LEON HADAR WASHINGTON CORRESPONDENT THE leaders of the 20 economies who met in Washington last November made a commitment to resist taking protectionist measures that could end up devastating an already ailing global economy. But according to the recent World Bank report, most of these governments, including the US and China, have violated that promise by imposing direct and indirect restrictions on imports, raising the spectre of a costly trade war. As it is, global trade has suffered the sharpest decline in 80 years. Indeed, not a day goes by without new reports about governments around the world making subtle moves (subsidies and bailouts for failing industries) and taking not-so-subtle steps (direct tariffs and taxes on imports) to 'protect' their frail domestic industries from foreign competition. Hence, the US an...

Business Times - 27 Mar 2009 NEWS ANALYSIS The buck stops here - or does it? By LEON HADAR IN WASHINGTON AGAINST the backdrop of next week's G-20 summit in London, several emerging economies led by China and Russia have been promoting the idea of halting the use of the US dollar as the main global reserve currency and replacing it with a new one. This could pose huge economic problems for the Obama administration which is planing to continue paying for the financial bailout and the economic stimulus by printing more dollars and by selling more Treasury bills to foreign private investors and central banks. In China which is the largest holder of US dollar assets, with American greenbacks making up more than half of its US$2 trillion in foreign reserves, including US Treasury bonds worth about US$750 billion, there is concern over US deficits that could erode the greenback and the value of China's foreign reserves. China's central bank governor, Zhou Xiaochuan raised the poss...

Business Times - 25 Mar 2009 NEWS ANALYSIS Is the plan enough to save his job? Treasury chief under pressure; his future rests on new plan's success By LEON HADAR IN WASHINGTON AMERICAN and global markets have responded positively to US Treasury Secretary Tim Geithner's much anticipated programme aimed at buying up hundreds of billions of dollars worth of 'toxic' assets currently on the books of US banks. But will it be enough to save Mr Geithner's own neck? When he first mooted the plan, his wooden delivery and the lack of specifics caused the Dow to fall about 300 points on Feb 10. The Obama administration's leading economic policymaker has come under more pressure since then over the bonuses that were granted to American International Group (AIG) executives. There have been calls for him to step down. And although President Barack Obama has reiterated his confidence in Mr Geithner, the threat of a rising populist fury undermining his efforts to resuscitate Wa...

Business Times - 20 Mar 2009 NEWS ANALYSIS Populist backlash may wreck Wall St rescue By LEON HADAR IN WASHINGTON TRADITIONALLY, Americans have admired the rich too much to resent them. But public anger at the way that Washington has handled the bailout of insurance giant American International Group (AIG) now threatens to smash the ambitious and expensive strategy of the Obama administration to revitalise the ailing financial system. Bonuses of about US$165 million paid out to executives of AIG, which already received more than US$170 billion in emergency federal aid, have seen lawmakers lining up to score populist points. 'We will take this money back by taxing virtually all of it,' said New York Democratic Senator Charles Schumer who took to the floor on Tuesday. 'So let the recipients of these large and unseemly bonuses be warned: If you don't return it on your own, we'll do it for you.' And Iowa Republican Senator Charles Grassley who proposed on Monday tha...

Business Times - 17 Mar 2009 The great free-trade debate A consensus is unravelling in Washington amid a Democratic clash over policy By LEON HADAR WASHINGTON CORRESPONDENT PUNDITS tend to describe the debate over trade policy in the Democratic Party of the United States as an ideological clash between the left-oriented protectionist wing of the party (labour unions; environmentalists; anti-globalisation activists) and its more centrist and reformist pro-free trade forces. But, in fact, whether a Democrat politician is in favour or against an activist global trade liberalisation agenda has less to do with ideology and more to do with class. It is a classic contest between the party's yuppies and its blue collars. The yuppies represent the economically mobile and college-educated members of the party: Professionals from the large cities, especially in the East and West Coasts, who in addition to being more liberal on socio-cultural issues, such as abortion and gay rights, were also ...

Business Times - 11 Mar 2009 When will Obama's political bubble burst? New US leader unable to mobilise the Congressional support he needs to bail out Wall St By LEON HADAR WASHINGTON CORRESPONDENT ON the same day that the US government announced the February unemployment rate of 8.1 per cent - the highest in more than 25 years - President Barack Obama was insisting that his US$787 billion economic stimulus plan would help reverse the depressing economic downturn. On Friday, a few hours after the Labor Department released figures showing the economy shedding 651,000 jobs last month, Mr Obama was addressing a graduation ceremony in Columbus, Ohio for 25 police recruits who had their jobs saved with the help of US$1.2 million from the stimulus package. 'For those who still doubt the wisdom of our recovery plan, I ask them to talk to the teachers who are still able to teach our children because we passed this plan,' Mr Obama said, challenging those on Capitol Hill and Wall Str...

Business Times - 05 Mar 2009 Not all economists are Keynesians Many economists, including Nobel laureates, disagree with the Obama administration's economic recovery strategy By LEON HADAR WASHINGTON CORRESPONDENT PRESIDENT Barack Obama has insisted that the majority of mainstream American economists support the general premises underlying his economic policy and, in particular, the notion that the federal government should have a central role in stimulating the economy and helping end the recession. 'There is not disagreement that we need action by our government, a recovery plan that will help to jumpstart the economy,' Mr Obama said on the eve of his inauguration in January. Indeed, the conventional wisdom these days is that, frightened by the recession and the credit crunch that produced it, 'most economists' are now embracing public spending to repair the damage, including many of those economists who have long resisted a significant government role in a market...

Business Times - 05 Mar 2009 NEWS ANALYSIS Is Obama alienating Wall Street? And is Wall Street sabotaging the president's policies? By LEON HADAR IN WASHINGTON WALL Street has not given a welcome shout to US President Barack Obama. The Dow Jones Average has dropped almost 1,500 points since Mr Obama's inauguration a little more than a month ago, and nearly 3,000 points since his election on Nov 4. But Mr Obama seemed to be shrugging off the bearish mood in the markets on Tuesday, urging Americans to look past the decline on Wall Street. 'The stock market is sort of like a tracking poll in politics,' he said. 'You know, it bobs up and down day to day,' he insisted. 'And if you spend all your time worrying about that, then you're probably going to get the long-term strategy wrong.' Playing the role of the nation's chief investment analyst, the president suggested that Americans should consider buying some bargain stocks. 'Profit-and-earning rat...

Business Times - 03 Mar 2009 Obama will face huge political and legislative obstacles in garnering support for his three dramatic policy proposals By LEON HADAR WASHINGTON CORRESPONDENT A FEW days after the historic 2008 presidential election and in the midst of the worst economic downturn in American history since the Great Depression of the 1930s, Rahm Emanuel was selected by then President-elect Barack Obama as his chief of staff. He explained what would turn out to be the guiding principle of the new Democratic administration: 'You never want a serious crisis to go to waste.' 'What I mean by that is that it's an opportunity to do things you could not do before,' he said. Mr Emanuel's advice may have sounded a bit Machiavellian. But Mr Obama's top White House aide demonstrated that he was a brilliant student of the history of the American presidency. Indeed, two of the great US presidents in the 20th century - Democrat Franklin Delano Roosevelt (FDR) and ...

Business Times - 27 Feb 2009 Time to leave US financial crisis to the foxes By LEON HADAR WASHINGTON CORRESPONDENT PUNDITS in Washington are obsessing over the intellectual odyssey of economist Lawrence Summers who has been transformed from an avid free marketer of the 1990s, when he served in the Clinton administration, into a supporter of massive government intervention in the current financial crisis as President Barack Obama's top economic advisor. '(British economist John Maynard) Keynes famously said of someone who accused him of inconsistency: 'When circumstances change, I change my opinion',' Mr Summers recounted recently in an interview with Newsweek magazine to explain why he had been a proponent of deregulating the financial markets during the height of the age of financial globalisation and why now in the era of 'de-globalisation' he has been promoting a more activist role for Washington in regulating Wall Street. It's not that Mr Summers was...

Business Times - 18 Feb 2009 Obama can't have his bipartisan cake and eat it too By LEON HADAR WASHINGTON CORRESPONDENT DURING the 2008 election campaign, Democratic presidential candidate Barack Obama pledged that as president he would usher in a new era of 'post-partisan' politics in Washington. This was seen as a commitment by the young and change-oriented Mr Obama to bridge the partisan divide between Democrats and Republicans by, not only bringing members of the opposition party into his cabinet, but also by fashioning a legislative and policy strategy that would be acceptable to the majority of Democratic and Republican lawmakers. Many Americans shared Mr Obama's revulsion over the partisan gridlock in Washington that makes it difficult to pass critical legislation on Capitol Hill, and as a result, constrains the ability of the White House and Congress to reach compromises on hard choices that are necessary to reform the American political and economic systems. Fo...

Business Times - 16 Feb 2009 COMMENTARY A stimulus victory for Obama Now, even a slight economic improvement in the coming months will raise his clout to ask for more help from Congress By LEON HADAR WASHINGTON CORRESPONDENT IF A WASHINGTON political or economic pundit had predicted a year or two ago that the US Congress would pass a package of spending and tax cuts totalling US$787 billion, he would have been seen as suffering from hallucination. Or perhaps that he was confusing 'billion' with 'million', or was thinking about US$7.87 billion and just forgot to put a dot in the right place? That Congress - including the Senate, where the ruling party did not have a filibuster-proof majority (61) - would consent to approve such a colossal spending and tax-cutting package proposed by a new president who had been in office only 24 days (and let's not forget that the president was an African-American whose middle name was 'Hussein') would be considered as part o...

Business Times - 13 Feb 2009 Here we go TARPing again to nowhere For markets, it may be safe to assume that Washington hasn't found a way to fix the mess By LEON HADAR WASHINGTON CORRESPONDENT I WOULD not be surprised if a new term, 'Geithnerism', is soon going to be used by lawmakers and investors. Named after US Treasury Secretary Tim Geithner, it could become shorthand for the response from an underwhelmed Capitol Hill and a jaded Wall Street to another of the many efforts by Washington to restore calm and generate confidence in the financial market: a sort of 'Here we go TARPing again to nowhere'. This sentiment would exactly characterise the reactions to the Obama administration's 'much anticipated' and 'long awaited' revamped Financial Stability Plan to tackle the still-unfolding financial crisis announced by Mr Geithner in the ornate Cash Room of the Treasury Department earlier this week. 'This is a dangerous dynamic, and we need to ar...