Global Paradigms

North Korea is in China's Strategic Backyard: It Should Deal with It

Business Times - 24 Nov 2010 Bad omens for Obama - and America Washington may experience a legislative and policy gridlock if Republicans decide to take the uncooperative route By LEON HADAR WASHINGTON CORRESPONDENT IF YOU want to understand the direction US domestic and foreign policies will go in the last two years of the first - or only - term of President Barack Obama, keep the following things in mind. In less than a year - just after Labor Day 2011 - American policymakers, lawmakers, the media and the rest of Washington's power elites will be getting ready for the presidential and Congressional elections of 2012. Winning in 2012 is going to become the top - and perhaps the only - priority, setting the agenda of almost everyone here, from the White House occupant and the Republican and Democratic Congressional leaders to the lowly government bureaucrats and Capitol Hill staff. No one is probably going to challenge Mr Obama for the Democratic Party's presidential nomination...

Business Times - 18 Nov 2010 Bruised both at home and abroad President Barack Obama has his work cut out to devise a strategy that would deal with global economic challenges By LEON HADAR WASHINGTON CORRESPONDENT US PRESIDENT Barack Obama returned this week to Washington from a 10-day trip to Asia, an excursion that involved several geo-strategic and geo-economic juggling acts. He set out to strengthen relations with India; hoped to conclude a free trade agreement with South Korea; stabilise the Sino-American balance of power by expanding security ties with allies; improve America's standing with Muslims during the visit in Indonesia; win support of other economic powers for the rebalancing of the global financial system. And framing the Asia tour - including participation in the G-20 meeting in Seoul and the Asia-Pacific Economic Cooperation (Apec) summit in Yokohama - has been an effort to win the support of an economically distressed and wary, if not hostile, American public. At...

Please read my new article on The Huffington Post

Business Times - 13 Nov 2010 Being practical about trade Most Americans have no ideological commitment in the debate over trade. They want working policies that help create new and well-paying jobs. By LEON HADAR WASHINGTON CORRESPONDENT IF YOU insist on challenging the notion that the vote in the recent US mid-term elections was not driven by any ideological fervour, reflecting the non-ideological and pragmatic disposition of most Americans, just consider the two politicians - a Democrat and a Republican - who represent the State of Ohio. The Democrat Sherrod Brown was elected to the Senate in the 2006 mid-term election, when the Democrats regained control of the House of Representatives in what was described as a 'wave election' in which the Democrats were supposedly on their way to establishing a dominant position over the American political system. President Barack Obama's historic victory in the 2008 presidential election seemed to underscore that New-Democratic-Majori...

Business Times - 12 Nov 2010 The dangers of dragging the Fed into politics By LEON HADAR WASHINGTON CORRESPONDENT THE US Federal Reserve's decision to inject more money into the financial markets is being blasted by a prominent political figure - and I'm not referring here to the leaders of China, Germany or Brazil. The former governor of Alaska and republican presidential candidate John McCain's 2008 running mate - and quite possibly a 2012 presidential candidate - may not be a leading economic policy wonk but Sarah Palin is now bashing the policies being pursued by Ben Bernanke, the Fed's chairman. She argued that the new round of quantitative easing (QE2) through the buying of US$600 billion in long-term US Treasury bonds - purchases that will total up to US$900 billion and be completed by the end of the third quarter of 2011 - posed a major threat to American and global economic recovery and could ignite inflation and devalue the US dollar. Welcome to the Palin and ...

Business Times - 05 Nov 2010 PERPESTIVE Policies set to clash in Washington A potentially gridlocked legislative process could retard the economic recovery and hurt business By LEON HADAR WASHINGTON CORRESPONDENT ON THE same day that the US Federal Reserve launched a new round of quantitative easing, as it announced its plan to buy US$600 billion worth of government securities through the middle of next year, President Barack Obama and Congressional leaders were facing their first post-midterms economic-policy challenge: Should they extend the tax cuts that were passed under president George W Bush and that are set to expire at the end of the year? The newly elected Congress where Republicans will control the House of Representatives and increase their numbers in the Senate will not convene until January next year. This timeline is forcing the current Democratic-controlled Congress and the White House to make a difficult choice and demonstrate the way that a potentially gridlocked legi...

Will Anti-Interventionist Congressional Republicans Please Stand Up

Business Times - 04 Nov 2010 A blunt message to Obama, allies By turning to Republicans, voters say Obama will need to do more to fix the economy if he wants to get re-elected in 2012 By LEON HADAR WASHINGTON CORRESPONDENT SOME political analysts had predicted that the 2010 midterm elections would turn into a Republican tsunami that could drown the Obama administration and the Democrats who could end up losing their majority in the House of Representatives as well as the Senate. According to this worst-case scenario for the Democrats, the Republicans would have picked up more than 70 seats in the House and win even the Senate races in California and other Democratic-leaning 'blue' states. Well, the 2010 midterms are probably not going to become a Republican tsunami, with the Democrats expected to lose less than 70 seats in the House and to retain a slim majority in the Senate. But even the most enthusiastic Democratic cheerleader and Obama supporters will have to agree that a p...

Business Times - 02 Nov 2010 Fed set to fire up monetary engine By LEON HADAR WASHINGTON CORRESPONDENT IT IS appropriate that the decision to launch another round of monetary stimulus by the US central bank is going to be made the day after the midterm congressional elections. At a time when the majority of Republican lawmakers as well as many Democrats are opposed to the introduction of even the most modest fiscal stimulus programme, it is Ben Bernanke, the chairman of the Federal Reserve, and his colleagues on the institution's policy-making body who are being forced to 'do something' to re-energise the sluggish economic recovery. If anything, with the Republicans increasing their strength in the newly elected Congress - thanks in large measure to the support of the fiscally ultra-conservative members of the Tea Party - the chances that US lawmakers would back even a short-term stimulus package are close to zero. Most opinion polls suggest that a majority of Americans hav...

Business Times - 29 Oct 2010 Business the real winner in US polls? Midterm election's expected outcome should be seen as ideal from the perspective of Wall St, Corporate America By LEON HADAR WASHINGTON CORRESPONDENT THIS could be another example of dialectical thinking running amok: Political and social change moving in one direction ends up moving the system towards the exact opposite direction. Like when the current US election season dominated by the populist rage of angry voters protesting against Washington and Wall Street - you know, those ruling political and financial elites who were responsible for the financial mess - is ending with members of these very same elites poised to gain even more power on Capitol Hill. As a result, American business elites are actually in a stronger position to hold back any major challenge to despised status quo. Sounds bizarre? Welcome to the 2010 midterm election that even the more optimistic Democrat and enthusiastic Obamaniac agrees is go...

Business Times - 27 Oct 2010 Tea Party's political brew an explosive mix for US By LEON HADAR WASHINGTON CORRESPONDENT HERE is a prediction: If as expected, the Republicans make big electoral gains in next week's mid-terms - taking control of the House of Representatives and perhaps even the Senate - these victories are going to be hailed by the Republican leaders and their allies in the Tea Party as a clear sign that the American people have turned against President Barack Obama's 'socialist' agenda. These winners will then proclaim that the voters want Republicans to overturn the series of policy changes that Democrats have enacted in the last two years. And Republican Congressional leaders will be pressed by the Tea Party candidates to repeal the healthcare reforms, to extend the entire set of Bush era tax cuts, to slash foreign aid and to increase defence spending. Some of the more radical members of the new Republican majority will urge the new Congress to thre...

Business Times - 26 Oct 2010 Opening for US trade agenda soon? Obama's strategy to expand trade ties with Korea could get the support of even the most ardent Tea Partier By LEON HADAR WASHINGTON CORRESPONDENT HISTORIANS will probably be debating 50 years from now which of the two developments in the first year of the 21st century should be considered more historically significant: the terrorist attacks on New York's Twin Towers and the Pentagon on Sept 11, 2001 or China's accession into the World Trade Organization (WTO) on Dec 11, 2001. Personally, I would vote for 12/11. There is no doubt that 9/11 dramatised the reach and power of radical Muslim terrorism in the form of Al-Qaeda and its allies. And it also encouraged the Bush administration to embark on a misguided military adventure in Mesopotamia. But contrary to doomsday clash-of-civilisations scenarios advanced by neoconservatives as well by fans of Osama bin Laden, 9/11 would not mark the start of a century-long glo...

Post-Midterms Foreign Policy: Will They Make a Difference

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Business Times - 21 Oct 2010 Mid-term polls in US will be historic - or will they? By LEON HADAR WASHINGTON CORRESPONDENT TO hear it said in the US mass media, the coming US mid-term elections will produce a 'political earthquake', or least an 'electoral shake-up', and it is going to be a 'historic election' on Nov 2. One could be excused for concluding that the United States is on the eve of a major political upheaval that would transform American society and politics as we know it. The possibility that the Republicans, allied with the Tea Party insurgents, may regain control of the House of Representatives - and perhaps even the Senate - is being depicted by pundits as the first stage of a populist revolution. Angry Americans armed with pitchforks and torches are about to storm the fortress on Capitol Hill. And their next target is the White House. Fasten your seat-belts; it's going to be a bumpy ride! Well, not so fast. That the current occupant of the Wh...

Comments I made in last week's conference

Business Times - 19 Oct 2010 Will the Fed adopt new target for inflation? Another round of QE is likely, but selling it to the US public may not be easy By LEON HADAR WASHINGTON CORRESPONDENT A YEAR after the 9-11 terrorist attacks and as economists were warning of the threat of deflation, Ben Bernanke, then a Fed governor, delivered a speech, 'Deflation: Making Sure It Doesn't Happen Here', in which he proposed that the US government can always avoid deflation and its effects of 'recession, rising unemployment and financial stress' by cutting interest rates to zero and by printing more dollars. 'The US government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many US dollars as it wishes at essentially no cost,' Mr Bernanke said. And referring to a statement made by Milton Friedman, the Nobel Prize-winning economist, about using a helicopter drop of money to combat deflation, Mr Bernanke discus...

Business Times - 13 Oct 2010 Currency wars: No armistice before Seoul G-20 summit By LEON HADAR WASHINGTON CORRESPONDENT AFTER global financial leaders failed to diffuse a potential currency war over the weekend, the US dollar continued falling against some major world currencies on Monday. The decline in the US dollar reflected concerns over currency imbalances in the global economy, a problem that isn't expected to be resolved before the meeting of the world's 20 largest economies (G-20) in Seoul next month. So, never mind the rhetoric coming out of Washington about the need for multilateral cooperation. There isn't a lot of optimism that the United States and China, the two major players whose policies are responsible for the global currency imbalances, will be able to reach an agreement that could set the stage for a consensus over global strategy to handle the issue before the upcoming G-20 meeting. Such a strategy could take the form of the replay of the 1985 Plaza Ac...

Business Times - 12 Oct 2010 Fed to the rescue in US economic recovery? But if it does more QE, then the US could be accused of doing what it says China is doing By LEON HADAR WASHINGTON CORRESPONDENT EVEN the most cheerful forecaster looking to a speedy American economic recovery from the Great Recession would have been drowning in pessimism over the weekend in Washington. A US government report indicating that the high unemployment rate was holding steady as state and local governments were continuing to cut more jobs while the private sector was failing to create new ones suggested that the fiscal and monetary measures adopted by the federal government have not succeeded in accelerating the promised recovery. And while finance ministers and central bankers from around the world gathered in Washington for the annual meetings of the International Monetary Fund (IMF) and the World Bank last Saturday pledged to work together in trying to resolve the global economic tensions over exchang...