Global Paradigms

Business Times - 27 Nov 2009 Will unemployment be Obama's Katrina? After 22 months of job losses, Geithner has become a convenient target for populist rage By LEON HADAR WASHINGTON CORRESPONDENT THERE have been some encouraging signs of recovery in parts of the American economy recently. Hence, the National Association of Realtors reported this week that sales of existing homes were up by more than 10 per cent in October, hitting the highest levels in two-and-a-half years. At the same time, the Dow Jones Industrial Average has been hovering above 10,000 for a while and retailers are hoping that more confident American consumers will spend more time - and money - in the shopping malls during the coming holiday season. Indeed, most economists seem to agree that the Great Recession is over. But then, the same economists are also predicting several quarters of substandard growth and rising unemployment. Currently, the unemployment rate stands at 10.2 per cent, the highest level in 26 y...

Business Times - 19 Nov 2009 Forget about a climate change deal anytime soon By LEON HADAR WASHINGTON CORRESPONDENT AS someone who has been following the political and legislative debate over climate change in the US Congress, I was a bit startled that so many pundits seemed so very surprised when President Barack Obama was forced to acknowledge in Singapore over the weekend that a comprehensive climate deal was beyond reach this year. Instead, he and other world leaders agreed that they would work towards a more 'modest' interim agreement with a promise to renew work towards a binding treaty next year. Good luck with that! And here is a bold prediction: There would probably be no support in Congress during the rest of Mr Obama's term for any binding accord to address global warming, making it very difficult to negotiate any global accord to replace the Kyoto Protocol that expires in 2012. The election of a charismatic Democratic US President who pledged during his campaign...

Business Times - 17 Nov 2009 Tough going for bid to pare Fed By LEON HADAR WASHINGTON CORRESPONDENT US LAWMAKERS have been drawing plans on how to reform financial regulations and prevent another deadly meltdown, more than a year after the economic crisis started. At the centre of the debate on Capitol Hill has been the role that the US central bank should (or shouldn't) play in regulating financial institutions. Federal Reserve chairman Ben Bernanke, who is backed by President Barack Obama and his top economic aides, wants the Fed to take upon itself the responsibility of a top regulator. Both Republican and Democratic critics argue that the Fed has not had a very strong record as a regulator and want to deny the Fed any new regulatory powers. Hence, while legislation offered by Democratic Representative Barney Frank of Massachussetts, the chairman of the House of Representatives' Financial Services Committee, posits a powerful bank regulatory role for the Fed, a bill proposed...

Business Times - 10 Nov 2009 From Seattle to Singapore America's free market model has, since 1993, been challenged by major geo-strategic setbacks and the global financial crisis. By LEON HADAR WHEN then US President Bill Clinton convened the first APEC Economic Leaders Meeting in Blake Island near Seattle, Washington, on Nov 19-20, 1993, America and the world seemed to be going through very dramatic political changes - not unlike today, when the 17th annual APEC Economic Leaders Meeting opens in Singapore. In 1993, the end of the Cold War, coupled with the ushering of the era of globalisation, had driven Washington to assert its leadership role in promoting free markets around the world and in liberalising global trade and investment. And the Pacific region was becoming a central arena for promoting this ambitious American geo-economic agenda. Sixteen years later, in the aftermath of major geo-strategic setbacks and against the backdrop of the global financial crisis, America...

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 ...