Global Paradigms

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...

Business Times - 09 Oct 2010 Currency war looms? US and Beijing politicians will need a lot of political courage to take economic steps that could prevent a new currency and trade war By LEON HADAR WASHINGTON CORRESPONDENT AS finance ministers and central bankers from around the world gathered in Washington for the annual IMF and World Bank meetings, everyone was talking about the same topic - and it is not the weather. To paraphrase Karl Marx: a spectre is haunting the global economy - the spectre of brewing currency wars. Unlike the talk over weather, when it comes to the exchange rate problem, economic officials suggest that they actually know what to do about it. Unfortunately, they seem to want the other guys to walk the walk, while they continue talking the talk. The 'central existential challenge facing the world economy', is the way US Treasury Secretary Timothy Geithner described the currency issue last Wednesday. 'We believe it's very important to see more pro...

Dump All Those Paradigms: It's Nationalism, Stupid! Since the end of geostrategic competition between the U.S. and the (former) U.S.S.R and with the ideological struggle between Democratic Capitalism and Communism over, pundits have been proposing new conceptual frameworks for understanding the evolving global political and economic balance - or imbalance -- of power. Indeed, for close to two decades, scholars have been debating the direction that the "paradigm shift" in international relations would take. What would replace the obsolete bipolar international system and the strategic and ideological forces that had driven it? From Francis Fukuyama's "End of History" assuming a stable unipolar system under which the process of economic globalization and the spread of democratic and liberal values would widen to Samuel Huntington's "Clash of Civilizations" forecasting a challenge to American power and values from the Muslim World and other civil...

Business Times - 05 Oct 2010 US bill on China's yuan is just smoke and mirrors By LEON HADAR WASHINGTON CORRESPONDENT JUST as US lawmakers were getting ready to leave Washington and return to their districts where they would be bashing each other as part of the heated midterm election campaigns, they found the necessary political will to provide a rare display of, yes! bipartisan cooperation. Indeed, the members of one of the most polarised House of Representatives in American history - Democrats, Republicans and Independents, liberals and conservatives, progressives and tea partiers - seem to all come together last Wednesday evening. After all, it was China-Bashing time, which happens to be the most effective way to bring the nation together. By a vote of 348-79 and wide bipartisan margin, the House passed a bill aimed at penalising China for manipulating its currency, something that China has denied doing. If passed into law - a big 'if' indeed - the legislation would all...