Showing posts from October, 2008

How mighty Greenspan's world has changed

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

Learning lessons from history

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

my article in the new World Policy Journal

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

US presidential race could be tighter than polls show

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

The irony of saving capitalism from itself?

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

Washington awaits Wall St response

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

Washington plays blame game as Wall St panics

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

What lessened impact of bailout and Palin

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

On the election

Please read my new commentaries on the foreign policy debate between Obama and McCain and on the way the relationship between politics and media impact on Obama and Palin.