Global Paradigms

Business Times - 10 Nov 2009 Obama's Asia trip sign of US role uncertainty It's part of effort to counter impression from Bush days that US is retreating from region By LEON HADAR WASHINGTON CORRESPONDENT ONE of the complaints made by officials and pundits across the Pacific, and especially in South-east Asia, during the eight years that ex-president George W Bush was in charge of US foreign policy was that Washington wasn't paying enough attention to the strategic and economic changes that were taking place in East Asia - in particular, to the dramatic rise in Chinese influence in the region. Indeed, American diplomatic and military energy since the attacks of 9/11 were directed at winning the campaign against terrorism pursued in the so-called Greater Middle East that included the two long and costly wars in Iraq and Afghanistan. The perception among many East Asians has been that the US was 'underinvolved' in their region during the Bush administration, according...

Business Times - 05 Nov 2009 GOP wins a referendum on Obama? The recent elections for governor in Virginia and New Jersey expose a deep political divide inside the Republican Party By LEON HADAR WASHINGTON CORRESPONDENT IT'S been a year since Barack Obama and the Democrats took control of the White House and Congress and the Republican Party was kicked out of power in the 2008 election. Many of the pundits celebrated those elections as 'historic' and 'transformative'. They argued that its political significance went beyond the obvious - for the first time American voters decided to send an African-American to the White House, a choice that reflected a revolutionary change in American attitudes on race, an issue that has plagued the nation's political history, with the civil war between the Northern and slave-owning Southern states being the most dramatic example. But against the backdrop of the worst economic downturn since the Great Depression of the 1930s and ...

Business Times - 03 Nov 2009 Tackling the 'too big to fail' firms Bill grants Washington sweeping new powers to police giants, but would regulators be able to regulate themselves? By LEON HADAR WASHINGTON CORRESPONDENT IT'S official! The recession is over. The American economy grew at a 3.5 per cent annual rate in the third quarter, bringing to an end a series of declines over four quarters that produced the Great Recession that started in December 2007 and is considered to be the most devastating downturn since the Great Depression of the 1930s. But as officials and lawmakers in Washington study the latest better-than-expected gross domestic product numbers released last Thursday, they are focusing their attention on finding ways to prevent another economic crisis by dealing with some of the fundamental problems that led to the financial meltdown and the ensuing severe recession. Hence, the head of a key House committee unveiled legislation last Wednesday that would grant ...

Business Times - 27 Oct 2009 Curbing pay will not eliminate roots of crisis By LEON HADAR WASHINGTON CORRESPONDENT PROPONENTS of the free market were quick to express their disdain over the sight of American bureaucrats imposing restrictions on the pay of executives on Wall Street. The 'socialists' in the Obama administration were taking the first step in having the government dictate salaries in the private sector, they contended. You know the story. First, they came for the executives in companies that received government bailout money, and I didn't speak out - because I didn't receive government support. Then, they came for everyone else . . . Yep! It's the slippery slope on the road of turning the USA into the USSR, starting with enforcing the level of pay on top executives at 'too big to fail' firms under TARP. Well, comrade, the Obama administration does have something called a Pay Czar - 'Czar' being a pre-Soviet term - who last week unveiled ...

Business Times - 24 Oct 2009 The real Cassandra of the crisis Lawyer Brooksley Born had warned that the completely unregulated and unobserved trade in derivatives could bring down the entire financial system By LEON HADAR WASHINGTON CORRESPONDENT MOST of those who follow economic news are familiar by now with the name of Nouriel Roubini, an economics professor at New York University's Stern School of Business, who was one of the few economists who had predicted the financial crisis more than three years ago. In a speech at the International Monetary Fund (IMF), he warned of an impending collapse of the global financial system and a deep recession. But there was apparently another Cassandra, who unlike Roubini hasn't been transformed into an instant celebrity, but who more than 10 years ago had not only warned that the completely unregulated and unobserved trade in financial derivatives could bring down the entire financial system, but who also had the guts to stand up to then F...

Business Times - 20 Oct 2009 The small problem of the biggest deficit ever America's huge deficit is likely to remain since any efforts to curb it may be unpalatable By LEON HADAR WASHINGTON CORRESPONDENT OBAMA administration officials are trying to spin the terrible economic news - that the United States registered its largest annual budget deficit in history - by urging everyone to look on the bright side. Yes, the US posted a US$46.6 billion deficit for September and a historic record US$1.42 trillion deficit for the 2009 fiscal year (ended Sept 30). But, hey, there was some good news. The budget deficit was actually lower than expected. Indeed, the size of the deficit this year wasn't as bad as government economists had originally thought it would be. In August, federal budget analysts calculated that the government would end the year US$1.58 trillion in the red. And in May, they had predicted a deficit of US$1.84 trillion. 'This year's budget deficit is lower than ...

Business Times - 16 Oct 2009 Federal Reserve in Capitol Hill crosshairs But it's hoping that signs of rebound would ease political momentum of 'audit the Fed' By LEON HADAR WASHINGTON CORRESPONDENT IT'S not surprising perhaps that the US Federal Reserve system has traditionally been the target for bashing by America's populist movements on the political left and right. It has also become an obsession for many conspiracy theorists everywhere, who depict it as the central headquarters of a mighty yet shady cabal of financiers who control the global economy and promote the interests of the Ruling Class. After all, the Fed - a set of 12 regional banks under the direction of a seven-member board of governors appointed by the president and approved by the Senate - is one of the most powerful public institutions in Washington if not in the world; its decisions could determine whether national economies, private business or your average consumer would be poor(er) or rich(er...

Business Times - 13 Oct 2009 Weak dollar conspiracy theories are moot There may be very good reasons why the Arabs, Chinese and Russians should meet By LEON HADAR WASHINGTON CORRESPONDENT NEWS reports about the ups and down and the US dollar tend to be buried in the business sections of American daily newspapers and heated discussion about this somewhat technical and esoteric subject are usually confined to a relatively small circle of investors and financial analysts. Last week, however, the greenback ignited excitement - and not only among currency traders - after The Independent, a London daily, came out with an explosive scoop on Monday suggesting that officials from the Arab oil sheikdoms, Russia and China were working together to find ways to stop using the US currency in order to set the value of oil deals. The report by veteran Middle East correspondent Robert Fisk had all the making of a espionage thriller in which shadowy conspirators - Arab sheiks, ex-KGB agents, communist C...

Business Times - 08 Oct 2009 Whose recovery is it anyway? Most Americans view the current recovery to be more statistical or technical than real By LEON HADAR WASHINGTON CORRESPONDENT ECONOMISTS have yet to embrace a universal term for the downturn that the American and global economies have been experiencing since December 2007. At the early stages of the slump when it looked as though the world as we had known it was coming to an end, some pundits were naming it the Great Depression II. The less apocalyptic-sounding names included the Credit Crunch and the Financial Crisis. Now that things seem to be under control - or so everyone hopes - the more common term used by the experts is the Great Recession. Indeed, a depression usually describes any economic downturn where real gross domestic product declines by more than 10 per cent, while a recession is an economic downturn that is less severe. And given that this has been the worst American economic recession since the end of World War...

Business Times - 06 Oct 2009 US jobs data show situation could worsen Unemployment at its highest in 26 years means confidence could take a hit By LEON HADAR WASHINGTON CORRESPONDENT THE report coming out of Copenhagen about US President Barack Obama's high-profile failure to win the Olympics games for Chicago made for a less than auspicious backdrop for the other depressing news last week. The latest jobs report that was issued by the US Labour Department on Friday seemed to be worse than the economists had predicted. The consensus among economists had been that the American economy would lose 190,000 jobs in September. Instead 260,000 were lost, with the unemployment rate rising to 9.8 per cent, the highest it's been in 26 years or - to make it sound even worst - in a quarter century. If the decision by the International Olympic Committee (IOC) to reject Chicago's bid to host the 2016 Olympic Games came as blow to the perceived international star power of President Obama ...

Business Times - 29 Sep 2009 Changing the global economic leadership G-20 will provide an important arena for US, China and others to coordinate their policies By LEON HADAR WASHINGTON CORRESPONDENT FOR close to 25 years, the United States and the other six largest economies, aka the G-7, were considered to be the board of directors of the global economy. In many instances, the governments of these seven industrialised powers were not able to agree on joint action; but when they could find a way to cooperate, their collective decision-making would send shock waves through stock markets worldwide and pull up or push down global exchange and interest rates. This exclusive club of rich economies was formed in France in 1975 (with six members). Canada joined a year later. The group expanded to eight members when Russia was invited to join in 1997. The decision to add the emerging economy of Russia to the grouping was driven mostly by geopolitical and not economic considerations, at a time ...

Business Times - 23 Sep 2009 Stage is set, but don't expect much from G-20 By LEON HADAR WASHINGTON CORRESPONDENT AFTER attending the United Nations (UN) General Assembly meeting in New York, the leaders of the world's 19 largest economies and the European Union (EU) will be travelling to Pittsburgh, Pennsylvania, to take part in the third economic summit since the start of the current global recession. In the last two G-20 summits, the assembled leaders had embraced fiscal and monetary stimulus policies that were supposed to help their economies get out of the greatest economic recession since the Great Depression of the 1930s. The main goal of US President Barack Obama, the host of the G-20 summit, and the rest of the leaders who will be convening in Pittsburgh this week will be to examine policies that could allow them to start bringing an end to those costly monetary and fiscal policies - the so-called 'exit strategy' - without hurting the prospects for an economic ...

Business Times - 17 Sep 2009 US financial reforms far removed from political reality By LEON HADAR WASHINGTON CORRESPONDENT EXACTLY a year after the collapse of Lehman Brothers and the ensuing financial crisis, US President Barack Obama has urged Congress to move on stalled regulatory reforms of the nation's financial system. Mr Obama, who was speaking to Wall Street business leaders, also stressed that the 'the old ways that led to this crisis cannot stand', stating 'the need for change and change now'. 'We will not go back to the days of reckless behaviour and unchecked excess that was at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses,' the president insisted, as he drew attention to the way American taxpayers had 'shouldered the burden of the bailout' and were 'still bearing the burden of the fallout - in lost jobs, lost homes, and lost opportunities'. Indeed, Main Street ha...

Business Times - 16 Sep 2009 Why Obama had to impose those Chinese tyre tariffs By LEON HADAR WASHINGTON CORRESPONDENT LATE last Friday night as everyone in Washington was asleep, the White House imposed 35 per cent tariffs on tyres from China. President Barack Obama and his top aides may have hoped that issuing a press release at the onset of a lazy autumn weekend would reduce the overall political impact of the decision to impose trade sanctions on the Chinese. But the late-night announcement in Washington, which was driven by the political pressure from trade unions and other protectionist forces, ended up puncturing the image of Mr Obama as a free-trader. It also increases the prospects for a new Sino-American trade battle at a time when the president and the Federal Reserve have been implementing expansionary fiscal and monetary policies whose costs in the form of rising deficits are being financed by the Chinese. Indeed, after the news from the White House, officials in Beijing p...

Business Times - 15 Sep 2009 Time has come for Obama to walk the walk His ability to make hard choices on issues will have major impact on US' position globally By LEON HADAR WASHINGTON CORRESPONDENT US PRESIDENT Barack Obama's dramatic address to a joint session of Congress last week, during which he implored lawmakers to back his sweeping healthcare overhaul, was clearly an attempt to seize control of healthcare debate. He wants it to create a political momentum that could drive forward one of the most important changes in America's social-economic policy since the Great Society legislation of the 1960s. Indeed, if Mr Obama's speech helps him win over a sceptical public and persuade wavering Democratic and Republican lawmakers to come up with far-reaching healthcare legislation which would cut health costs and expand coverage to million of non-insured Americans, he would be following in the footsteps of presidents such as Franklin Roosevelt and Lyndon Johnson who had ...

Business Times - 10 Sep 2009 Obama faces backlash from middle classes left behind By LEON HADAR WASHINGTON CORRESPONDENT AS Americans were preparing to start their long Labor Day weekend last Friday, they might have been cheered by new data showing that job losses had slowed down in August. But slowing job losses is not recovery: unemployment surged higher than expected in August to 9.7 per cent, the worst in 26 years. Overall, there are 14.9 million Americans out of work. The US economy has lost a net total of nearly seven million jobs since the recession began in late 2007, with some of those losses coming in August, as employers shed 216,000 jobs. So the only good news was that America experienced the smallest total loss since August last year. Clearly, notwithstanding the less bearish mood in Wall Street, no one will be popping the champagne corks in Washington this week, as President Barack Obama and lawmakers return after a summer recess that was dominated by the nasty political ...