According to a recent survey, Atlantis is about to overtake Europe on the list of the most desirable continents on which to do business. The survey was conducted among leading astrologers, Trekkies, economists, central bankers and other groups who wear tinfoil hats to keep aliens and the CIA from stealing their brain waves.
The survey cited the conclusions of a Greek analyst named Plato who suggested that the merits of Atlantis included the fact that it was "larger than Libya and Asia together," in "the fullest and truest sense a continent" led by a "confederation of kings," and a "great and marvelous power." Plato noted that a colleague of his named Critias had once attacked Atlantis as being the antithesis of the "perfect society" found in Greece ... but suggested that given recent events in Greece this might actually be seen as a good thing.
Unlike Spain, for example, which is currently experiencing a real estate bubble, Atlantis was wholly owned by the God Poseidon and therefore didn't run the risks associated with the bubble bursting. Indeed, residents of Atlantis have had over 11,000 years to get used to their landholdings ... and their economy ... being underwater, whereas Europeans were just having to learn how to cope with such conditions.
Poseidon's family, led by his son Atlas to whom he bequeathed the island and after whom the big ocean around it was named, did a good job developing the place ... building canals, bridges, carved tunnels, moats, and walls of red, white, and black rock that were covered with precious metals. What's more, they developed all this infrastructure without the benefit of any loan packages from major European banks (who have been secretly coming to Atlanteans for advice about how to operate while submerged for several years now).
The Atlanteans even conquered Libya more swiftly and effectively than did the recent European effort to do so.
Those surveyed noted that while Plato's account was viewed suspiciously given his Greek roots and the possibility that he was simply a tool of anti-Papandreou agitators, others had similarly cited the virtues of Atlantis. These ranged from Hellanicus of Lesbos to Cantor, Proclus, Philo, Cosmas Indicopleustes, Francis Bacon, and even several Germans, which was comforting to markets although one of them was Heinrich Himmler (who once tried to organize a search for the place, apparently drawn to it for its sound monetary policy and rumors that its inhabitants were of Nordic origin).
Anti-Atlantis skeptics from Standard & Poor's and Moody's have argued that since they haven't rated the continent's credit, it shouldn't be compared with other continents whose existence they have confirmed. But given the fact that they have been so wrong about so much recently, this critique has also, as it happened, worked in Atlantis' favor. Madame Blavatsky has also argued that the Atlanteans were cultural leaders, thus giving them an edge even in an area in which Europe has asserted its leadership -- mostly at gunpoint -- for centuries.
Finally, of course, the recent groundswell of support for Atlantis (and no place appreciates a groundswell more than them according to reliable sources) has been accompanied by deepening concerns about Europe linked to the paralysis of its leaders, the failure of the ECB to act, the inability of the international community to do more than put together actions like yesterday's feeble pumping of liquidity (the Five Hour Energy of markets), and the failure of anyone to accept the obvious: that, in the end, the ECB mandate needs to change, the central bank will need to print money, Europe will have to accept fiscal union in some form, and governments in Italy, Greece, Spain, Portugal, and France will need to simultaneously get their acts together while China and the U.S. manage to keep growing fast enough to help pull these European countries out of their crisis.
Which is why, according to those surveyed, the prospects for Atlantis' further elevation above Europe are so good ... even if recent events have demonstrated that most European leaders and economists are so completely and utterly all wet that they may as well actually be from the now-submerged (but comparatively attractive) continent of Plato's imagination.
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So let me see if I understand this latest round of eurozone mania. The crack dealers and the police have gotten two junkies onto methadone and we are supposed to celebrate? The junkies are still hooked. The dealers are still peddling their poison. The cops are still unable to address the core issues that are key to solving the long-term bigger drug problem. There's no political leadership to speak of the question. And therefore, no real progress has actually been made. Yet, down at Delancey's bar and stock exchange it's drinks all around.
What the heck, folks? Do we need to shove markets into a cold shower of perspective every day now? They veer from irrational fear to irrational exuberance with such regularity that I am starting to think that the solution to Europe's financial problems -- for which the above was an ever so subtle metaphor -- may actually be drugs. Like lithium maybe.
Today, the markets swing back to hope because Italy has taken steps to embrace austerity, Don Bunga Bunga is headed his next career as a professional defendant, and the Greeks and Italians both seem to be opting for technocrats to right their capsized economies. That these same technocrats bought into the mainstream delusions and misrepresentations and miscalculations that led to these problems in the first place is no matter. All that markets care about is that it seems like they will follow the banks' prescriptions for preserving bank cash flows at the expense of the people of their home countries. Or as it was put in my favorite tweet of the morning, from Dave Johnson retweeted by Markos Moulitsas, founder of the Daily Kos, "Greek PM says let PEOPLE vote, immediately booted, replaced by a BANKER."
(It's remarkable that the "moral" obligation of countries to repay debt that never should have been made available to them in the first place is actually so immoral -- both because it rewards enabling malefactors and because it penalizes innocents. The banks again make money coming and going as they did playing both sides on the volatile trading in between. Wouldn't the world be a better place if those who underwrote government debt couldn't also engage in trading it -- which creates the opportunity to profit from deals they might not otherwise do? I'm just saying...)
Meanwhile there is still no progress on the eurozone's larger structural issues. There is still no consensus about how to restore growth to the damaged economies of the south and those nearby who they are dragging down. There has really been no change ... except for the worse ... with regard to the financial soundness of many of Europe's big banks. There is still no orderly path by which a country can opt out of the eurozone ... even though the existence of such a path would have helped nip this problem in the bud even before it began. There is still no clarity about whether or not the countries of Europe want the ECB to have the resources and regulatory tools needed to actually effectively play the role of lender of last resort. And frankly, it seems ever less likely that the IMF will actually get the additional capital it needs to play the role for which it was envisioned.
Look, I've dated people who were more or less bipolar. I learned a few things from the experience. One was that while you were in the relationship it made sense to try make the most of the highs. They could be great. But I also learned that the lows were when you had moments of real clarity about the unsustainability of it all. The highs would always be a lie until you fixed the core problem. I also learned that took time and patience and often a radical restructuring of the relationship...by which I mean I discovered how healthy an exit can be for all interested parties. (On this point, see Paul Krugman's very good piece today entitled: "Legends of the Fail.")
I also discovered that you can't live on the roller coaster forever. It's just too damn exhausting. That's how I'm starting to feel about this problem in the Eurozone. And I am inclined to think that's how the world is starting to feel too. Patience with authorities who don't deal with the big issues and seek to frame every minor triumph as something larger than it is will wear thin. It won't just be the Papandreous and Berlusconis who won't survive all this. Absent real progress on the bigger issues, Eurocrisis fatigue will soon start doing in the Merkels, Sarkozys, and Camerons. That's the one thing that is clear. One way or another, as far as this crisis goes, it's probably best to stand clear of the door marked "Exit."
Europe is a generalization. As recent events have demonstrated yet again, sharing a continent with someone doesn't necessarily make you their countryman … or even capable of cooperating with them when it is in your mutual self-interest. Yet, despite all evidence to the contrary, when we talk about the crisis in Europe, we talk about it as if it were a Europe-wide crisis. Worse, recently, political opportunists on the right have begun to argue that the problems in Greece, Italy, and Spain are an indictment of Europe as a whole and of "European" ideas like the welfare state.
But of course, the economic mess in which the Greeks, the Italians and others find themselves has nothing to do with their being European. It has to do with them being financially irresponsible. It has to do with them being baited into reckless practices by bankers with whom they were too cozy … and who themselves were so eager to lend that they suspended sensible risk assessment practices. Admittedly, the problems within these states have pan-European consequences and they have revealed serious shortcomings both within European Union institutions and among EU leaders. But it would not only be misleading to lump all the countries of Europe into one basket in terms of the issues that have been raised, it would also obscure the fact that within Europe itself exist superb examples of what these floundering countries might aspire to. (And the contrast between the success stories and the failures needs to be understood to begin to grapple with the real problems of economic and political integration that have not been sufficiently addressed to date in the context of the European Union.)
What's more, Europe's success stories not only quash absurd assertions that having a state with a strong social safety net is the problem, they offer examples that might be well followed outside Europe; say, in the United States, home to another broken, corrupted version of capitalism.
It is a point that Jeffrey Sachs absolutely correctly noted on "Morning Joe" this morning and that needs to be better understood. Not only is the "European model" or "Eurocapitalism" not dead -- it, to the extent it is defined by Europe's best performing countries, may well be the solution to balancing every state's desire for growth, their need for fiscal responsibility and the obligations of a moral, equitable, empowering social contract.
So, to begin where much of today's discussion stops, there are a group of high-performing northern European countries that rate higher than the United States or Southern Europe on the "Sovereign Fiscal Responsibility Index." Estonia ranks number 3 after Australia and New Zealand. Sweden is 4. Luxembourg is 6. Denmark and Britain are 8 and 9. Poland, the Netherlands, Norway and Slovakia are 13, 14, 15, and 16. Austria is 21, Finland is 22, Germany is 25, Italy is 27, and the United States is 28. Iceland, Greece, and Portugal are 32, 33, and 34. The SFRI report notes that in terms of "fiscal space" the amount of additional debt a country could add before getting into trouble "Scandinavian countries as well former British colonies appear well positioned with fiscal space in excess of 100 percent of GDP." They add that "Central and Northern European powers are currently in decent shape" but that "the PIIIGS" are already close to their debt limits and that the United States in the space just above that but at risk of deteriorating.
But these countries are not fiscally responsible at the extent of promoting either growth or providing social services. For example, Finland, Luxembourg, Germany, and Sweden all grew substantially faster than the United States in 2010. The United States ranks worse than Norway, Belgium, the Netherlands, and Finland in the OECD education rankings with countries like Germany, Estonia, Switzerland, Poland, and others finishing ahead of the United States in math scores. Virtually all northern European countries, plus Germany and Britain, have lower unemployment than the United States. Further, Europe's composite GINI (inequality) score is better than the United States with both northern and southern countries finishing well ahead of the United States, which ranks between Jamaica and Cameroon. And whereas the U.S. only invests 2.4 percent of GDP in infrastructure, Europe on the whole invests 5 percent.
And as I pointed out in the New York Times piece I did a couple weeks ago "Redefining the Meaning of Number 1" most of these countries in the northern and central parts of Europe finish well ahead of their struggling neighbors and the United States in terms of quality of life rankings. They achieve success and a balance between growth and fulfilling the terms of a robust social contract by performing neat tricks like guaranteeing health care to all and still spending a smaller percentage of their GDP on health than the U.S. and by relying on collective security to allow them to spend less on defense.
The point is that some parts of Europe are not only working well, but can be examples worth emulating -- both by the continent's more reckless debtors and the United States itself.
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Please don't tell anyone. I'm not a spoilsport. I don't want to ruin anyone's weekend.
I know we are all celebrating. The European Union has a deal! This could be the biggest month in almost 80 years at the New York Stock Exchange. The U.S. economy grew at a sizzling 2.5 percent last quarter. Pop a cork! Time to order your Maserati from the same place the broke Italian government seems to be buying theirs.
Happy Days are....
Ok, enough snark. Our little secret is that there is actually not much to celebrate in all this. Yes, the European Union struck a deal to deal with some of its immediate problems. Of course, when you look at the deal, you see that there are plenty of loose ends. And that the deal doesn't address the fundamental structural problems the EU face. And that the deal doesn't address the impact austerity programs and tightening capital flows will have on countries like Spain and Italy ... or what they may mean for their debt problems and how it may make future problems more likely. Nor does the deal reduce many of the fault lines in the foundations of European banking ... under-reported risk, faux-stress tests, debts soon to go bad. Nor does it address the problems in global derivative markets that have existed since well before the crisis of 2008-2009 and about which serious measures have yet to be taken.
While the deal does have the advantage of finally getting the banks to recognize they have to pay a price for their lending recklessness ... for being the pushers that helped get these crack-addict countries hooked on easy debt and look-the-other-way terms, it simply is the latest last-ditch halfway measure to be cooked up by the financial wizards of Europe. Remember when some among their numbers they were called the Gnomes of Zurich? Garden gnomes would do a better job.
As for the good month on the stock market, we all know better than reading too much into that, don't we? Don't we? There are schools of fish that are more rational than the stock market. Further, while they look all beady-eyed and serious, Wall Street players are as deeply biased toward childish optimism as they are toward over-reaching greed. We all need regular reminding of this. That's why I keep on my desk, as I have said before, a little cartoon given to me by a very smart Wall Street guy that shows Peter Pan flying out the window with Wendy and her brothers and Peter says "We're going someplace where everything is wonderful and nothing has anything to do with reality" and the littlest boy whispers to his brother, "You mean we're going to Wall Street?"
Finally as for that caffeine jolt of 2.5 percent growth last quarter let's remember the following: First, we have a recent track record of over-estimating our quarterly growth and then adjusting the numbers downward when no one is looking. Second, I was just kidding about that being a caffeine jolt. It will have precisely the same stimulative effect on job-creation as the average episode of "Two and a Half Men" will have on your cerebral cortex. It's a big dubious nothing burger ... or to be fair, a not-so-much burger ... like one of those black bean things you get a health food restaurant, you know, the kind that looks and tastes as if its last owner was a dyspeptic cat.
Which is not to say that you shouldn't enjoy the little economic sugar rush if you want. Go for it. There's no reason to dwell on the fact that on other fronts, the economy is sclerotic, leaders in Europe, the United States, and Japan don't know how to play well together, the banking system is still the same old casino full of hucksters, egomaniacs and some folks who just plain belong in the slammer. Why ruin your weekend thinking about how we still aren't dealing meaningfully with the big problems on the either side of the Atlantic? Or in Japan. Or in the emerging world.
Go on folks, let a smile be your umbrella. You know just how dry that will keep you, right?
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I'm feeling curiously optimistic this morning which has me thinking it may be time for a CAT scan.
But I can actually see a way that things don't turn out so bad for the world.
First, to deal with the wolf closest to the sled, the Europeans will have to get their act in order. While they have thus far resisted this tooth and nail, I've heard some modestly encouraging rumblings from folks in the center of the negotiations. I want to point out the people with whom I have been speaking are not terribly optimistic themselves. But they have offered a few crumbs of optimism for those of us who starved for it to scarf up.
First, in the words of one participant, European leaders have begun to work themselves through "the stages of grief associated with the crisis. First, even just a few weeks ago, they were purely in denial. Then, they entered a phase of denial in which it was clear they didn't even believe their own denials. Finally, last week we entered what might be called the ‘silly ideas' phase. And I am hopeful that means now we can get down to serious ideas."
What kind of ideas? Coming up with a program that takes a big chunk, perhaps $250 billion, of ESFS money and uses it as "equity" in funding a "firewall" that might then include a trillion or so capital available to the ECB in the event a big economy -- Italy or Spain -- stumbles. The plan would also need other elements such as Europe dealing with the structural issues associated with achieving something like monetary union and a recognition that no firewall can protect against all threats, especially those that could be associated with a fixation on austerity. Governments in Europe need to focus on getting growth restarted in places like Spain or Italy or bigger problems are inevitable. A final element of an effective plan would then include a significant recapitalization of the IMF which currently is not funded properly to deal with the new forms of risk and contagion which confront global markets.
At some point, banks will need to pay for the insurance policies they are expecting their governments to provide for them and whether that is done by a Tobin tax or some levy on non-deposit liabilities, grappling with that issue will be key to winning political support for further government involvement. And while countries and the IMF are at it, they ought to start to tally what sovereign exposures are to those "implied liabilities", their unwritten but real "obligation" to bail out the too big to fail institutions that are the nuclear charges set at the fault lines of the global economy.
That might in turn trigger a recognition that we will not be well and truly out of the woods of this crisis until we demand more transparency from these banks in terms of their liabilities (including counter-party risks in all manner of derivative transactions), regulations that enforce responsible provisions for dealing with those risks, and perhaps even globally agreed upon limits on the size and activities of such institutions.
But one step at a time. While the insiders with whom I spoke were only cautiously optimistic that progress might be made on putting together an interim solution-firewall for Europe -- or to be more accurate, while they did not outright dismiss the possibility -- they did emphasize that there was a long way to go, the Germans and the French were not playing nicely with each other, and there were deep cultural barriers to even having an intellectually honest conversation among the players about what ails them.
Still, since the focus is optimism, another encouraging sign were the glowing reports I have been hearing of the work that both new IMF Managing Director Christine Lagarde and U.S. Treasury Secretary Tim Geithner having been doing trying to hammer some sense into Europe's fiscal policy pygmies. No, not pygmies ... lemmings. Well, blundering action-phobic bureaucrats. (The problem, according to a friend, is "lots of leaders, not enough leadership.") By one account, about a third of the progress made during the last few weeks is due to circumstance, the growing direness of the situation, and the rest is due to the compelling arguments and forceful interventions of Lagarde and Geithner.
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While America sleeps, I awake early this morning on the banks of the Isis River, here in Oxford, England. Outside my window are the dreaming spires of the university has been here for the last 12 centuries or so dominated, from where I sit, by the weatherworn dome of the Radcliffe Camera. The Rad Cam, as it is known, is a massive, round library built by John Radcliffe, physician to William & Mary, and a man known as much for his fondness for good drink as he was for his medical accomplishments.
Another thing for which old Radcliffe was known was his apparent allergy to reading which led him to actually keep an alarmingly small library for a doctor thus creating some considerable amusement among his friends and colleagues when he endowed the library that ultimately became the russet-colored landmark I can see outside my window at the moment.
This phenomenon of making a bold gesture in the opposite direction of your fundamental impulses is known in the psychological line as reaction formation. It is what causes people who hate to fly to get their pilot's licenses and people with a fear of big cats to become lion tamers. It may also be to the old "there's no zealot like a convert" phenomenon or the fact that many people who were once fat become the most intolerant sort of fattists.
I can check at least two of those boxes and, although I haven't piloted a plane for years, I still have more than the usual intolerance for fatsos. This is due to the fact that up until two years ago I weighed 75 pounds more than I do today and if I didn't allow myself the privilege of being critical of those who are unable to push away from the table at the proper moment, than I fear I will be sucked back into the gravitational pull of my old midsection -- which, as it happens, bore a remarkable resemblance to Radcliffe's monument to himself over there in the shadows of the Bodleian. (In terms of roundness and prominence ... not orangeness.)
As a consequence of this particular one of my many defects ... and six years spent on the advisory board of the Johns Hopkins Bloomberg School of Public Health ... I am acutely aware of the threat posed to America's health, finances, and general appearance by the obesity epidemic that has swept the country. Today the obesity rate in the United States is ten times that what it is in say, Japan. Fully a third of Americans are obesity and the costs to the country of caring for these self-indulgent loads is breaking us as surely as would giving them all piggy-back rides. In fact, that's what we are doing ... because they will require more doctor's care, medication, time in hospital, treatment for diabetes, for heart disease, cancer and countless other maladies brought on by over-eating ... we're all going forced to carry them on our fiscal backs for the next few decades.
For this reason, it was with great admiration and delight that I read of Europe's latest innovation that America should immediately and unhesitatingly adopt. As usual, it comes from the smarter half of Europe (the cooler, northern portions) which, while not necessarily the half where I would prefer to spend my summer vacations, does regularly come up with good ideas that are worth adopting (the Magna Carta, the location of the ignition on the Saab, many kinds of herring, that kind of thing). In this case, it is the Danes who have made the latest breakthrough. It is described in an article in the Guardian entitled "Body blow for butter-loving Danes as fat tax kicks in."
As of today, "Danes who go shopping today will pay an extra 25p on a pack of butter and 8 p on a packet of crisps, as the new tax on foods which contain more than 2.3% saturated fats comes into effect. Everything from milk to oils, meats and pre-cooked foods such as pizzas will be targeted. The additional revenue raised will fund obesity fighting measures." Apparently ... and without a hint of irony ... the country that led the way on this was Hungary, land of my grandmother's matzoh balls, which "recently imposed a tax on all foods with unhealthy levels of sugar, salt and carbohydrates, as well as goods with high levels of caffeine."
This resonates here in Britain, which is the tubbiest country in Europe with, according to estimates cited in the article, 70 percent of the country destined to be obese or overweight by mid-century, which does not bode well in the looks department for a country that is already known for bad teeth and fly-away hair. And it should resonate in America, land of the Fat Burger and KFC's double down sandwich consisting of two pieces of fried chicken on either side of a bacon cheeseburger.
We love you Chris Christie. We feel your pain. And we have to help you. The United States needs new taxes like it needs about an hour a day in the gym. This is a place to start. It is good public health policy. It is good fiscal policy. And it resonates with the words of one of England's great thinkers, worth recalling as I look out over dawn at the world's greatest university. It was Kate Moss, I believe who said, "nothing tastes as good as being thin feels."
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A voice of reason and leadership has emerged in recent days among those addressing the economic crisis in Europe, currently the most urgent and dire challenge facing the international community.
Unlike in the past, that voice is not however, the president of the United States, who has remained strangely quiet on this subject despite its direct implications for virtually all of the core U.S. economic issues that are his stated top priorities. Nor is it that of his secretary of the treasury who, though more visible on this issue recently, has not instilled confidence with statements that have, for example, asserting that under no circumstances would European leaders let their institutions fail, even though that has been precisely what they have been doing for years now.
Instead, the new voice comes from rather unlikely roots -- a scandal-rocked organization whose future value to the international community had, in the not-so-distant past, been questioned and a prior post that can only be seen as a potential drag on her credibility.
That voice however, belongs to IMF chief Christine Lagarde, and it has been so direct and crystal clear, so unafraid and so thoughtful, that within mere weeks of assuming office she has quickly gained recognition as one of the most important of the world's leaders.
Take her most recent remarks on the euro crisis and its international implications. In the first instance, she has crisply and accurately warned that a "vicious circle is gaining momentum" that could not only upset european efforts at bailing out its weakest economies but that also poses a threat to the world's financial system and to many of its so-called strongest economies, such as those that are the engines of european growth and that of the United States. At the center of that vicious circle she placed "political dysfunction" that had produced what has amounted to policy paralysis and may have us on the verge of a "dangerous new phase" of this on-going economic calamity.
Further, even as Central Banks agreed to pump in more money to prop up faltering banks, she suggested more might be needed. "Balance sheet uncertainty" was the immediate culprit, she observed, noting it existed at the government, bank and household levels. She accurately cited this as the core risk we face but then, with wisdom greater than most European and American political leaders, noted that debt solutions should not be so severe that they undermine the equally crucial issue of growth in Western economies.
She specifically and directly assailed "fiscal austerity that chips away at social protections; perceptions of unfairness in Wall Street being given priority over Main Street; and legacies of growth in many countries that predominantly benefited the top echelons of society." One can only hope her remarks resonated with all her new neighbors in Washington.
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We are not living at a moment of particularly glittering leadership on the international stage. Mediocrity, timidity, and poor performance are found from continent to continent. Even setting aside those leaders of the developing world who face the special challenges associated with poverty, failed or struggling states and related social and political tensions, we find the world's larger and more prosperous countries rudderless and with plenty of room for improvement at the top.
There is a leadership void at a moment when strength, vision, and executive deftness could not be needed more.
But among the lackluster crop at the helm of the world's major economies -- the G20 countries for example -- there are several classes of mediocrities. There are the leaders of promise for whom we still may have high hopes but who have yet to find their footing on a regular basis. The best example here is Barack Obama. There are leaders who are too new in their jobs to judge, such as Japan's brand new Prime Minister Yoshihiko Noda and Brazil's Dilma Rousseff. There are the mixed bags who have had flashes of strength but who have revealed themselves as too flawed in character or ideology to be likely to ever ultimately ascend to a higher level -- France's Nicolas Sarkozy and Britain's David Cameron are good examples here. Angela Merkel might also be seen to be in this group, compromised by her indecisiveness. There are even those who have done well by many important measures but who have been compromised by lingering problems at home or who have not assumed a highly effective leadership role on the international stage. Manmohan Singh, among the most distinguished of the bunch, might fall into this category. Hu Jintao's China has performed well ... but no man whose government must resort to oppression and censorship, that still gives in to police state impulses, can be considered a first class leader.
There are also those who are just mediocre, not great, or worse. You can fill in the names. You can designate who might fall into each category or make up other categories of short-comings and reasons for frustrations with their performance. But I suspect very few people will step up with a vigorous defense for any of the current class of top dogs.
And then, among this group there are those at the bottom of the barrel: The ones who have actively been bad for their countries or their regions or the world at large (which is not to say the shortcomings of even the better leaders have not produced bad consequences for some on the planet). For my money Saudi Arabia's King Abdullah certainly falls in this group, an autocrat who has exploited his people, resisted needed reforms, presided over the systematic mistreatment of women, and offered wink and a nod (and more direct) support for dangerous extremists. It is still not clear to what degree Dmitri Medvedev is his own man, but certainly the Russian government has been no champion of democracy or due process.
Now Silvio Berlusconi has not sought to crush the people of Italy to his will nor has he, despite an impressive rap sheet, underwritten terrorists. That said, he has, over the years really made a good case that among the world's most important leaders he is perhaps the biggest embarrassment to his country.
It is not enough that the business empire he built has been demonstrated to have engaged in a wide range of unsavory practices. It is not enough that he has been at the center of a steady string of sleazy scandals. It is not enough that he has regularly made public statements that were racist, undiplomatic or just plain inappropriate to the office with which he has been entrusted. It is not even enough that he has run Italy into the ground, to the brink of an economic calamity that literally threatens not just the futures of his people but the fate of the Eurozone and indeed, of the entire international economy. (Although, you'll have to admit, all that constitutes a pretty compelling case for including him at or near the bottom of our list.)
But now comes word of Berlusconi being overheard during a conversation which was taped by police involved in a blackmail investigation. That investigation, into one Giampaolo Tarantini, a man who has said he supplied 30 women for some of the Prime Minister's famous parties, is focused on payments he reportedly received from the Prime Minister. While the arrest of Tarantini and his wife in one of Rome's poshest neighborhoods was dramatic enough, it turns out that in the course of the investigation the Prime Minister, was taped venting his frustration over his perceived mistreatment by the country that enabled him to become a billionaire and the head of its government.
According to press reports, Berlusconi was overheard to say in mid-July, "They can say about me that I screw. It's the only thing they can say about me. Is that clear? They can put listening devices where they like. They can tap my telephone calls. I don't give a fuck. I ... In a few months, I'm getting out to mind my own fucking business, from somewhere else, and so I'm leaving this shitty country of which I am sickened."
Imagine how long a president of the United States would last in office after referring to the U.S. as a "shitty country." Of course, it's hard to imagine how a leader with Berlusconi's personal and professional track record could remain in office long in most countries. But, all that aside, the comments add yet another crowning turd on top of the steaming pile of Italy's Prime Minister's political career. And they make us wonder: Could it be, that among the current class of compromised, faltering, average, unproven, undistinguished and sometimes much worse leaders of the planet's major powers, Berlusconi is actually the least of them?
Here at Les Recontres Economiques d'Aix-en-Provence we are ostensibly discussing "The States of the World" but in reality the buzz around the event is about the global economic ugly pageant. Although much of the conversation among delegates --whether at the venerable conference sites like the law school of the Universite Paul Cezanne or the local outpost of Sciences Po -- focuses on the harrowing state of the Eurozone, one can regularly hear concern expressed for the other contestants in the current perverse competition among the world's economies.
To understand the competition, you just have to understand the old joke about the group of friends whose picnic is disturbed by a hungry grizzly bear. As the friends bolt from their campsite, one stops to put on his sneakers. The others ask what he is doing, worried that he will never be able to outrun the bear if he stops. The one in the sneakers observes as he starts sprinting away, "I don't have to outrun the bear, I just have to outrun the rest of you."
So it is now with the global economic ugly pageant. While most of the major economies of the world are spluttering and the possibility of an unprecedented geoeconomic disaster remains palpably real, what money there is does have to go somewhere. That place is likely to be the least ugly of the world's economies. In other words, absent a true safe haven, capital will seek the safest haven of those available. It's one reason the dollar has done fairly well recently, for example. While the U.S. government seems to do everything in its power to screw things up economically, investors buy dollars because the managers of the world's other big currencies, the Europeans and the Japanese, are screwing things up worse.
The question now is will our "luck" remain the same going forward? How will the world's economies fare in the next round of this contest? Here's the current betting line based on my scientific eavesdropping on conversations here in Provence, appropriate discounting for self-interest and biases of the speakers and my own reading of the tea leaves that get floated as economic news in the world's newspapers. (Note: I am focusing only on national and regional economies here. Suffice it to say that almost certainly the big losers of the coming months -- whether policymakers accidentally blow up the world economy or they dodge disaster through a judicious combination of austerity and stimulus -- will be the poor. They have no voices advocating for them (as do, for example, the makers of private jets currently lobbying to keep the corporate tax breaks their purchasers receive under present U.S. law). Austerity programs will squeeze them further. Disaster will crush them. And almost certainly the biggest winners will be big corporations and the super-rich who will venue-shop and use their access to cash to buy up devalued assets including fire-sales among privatizing formerly state-owned bric a brac like roads, ports, powerplants and water rights.)
Do you think somewhere in the mind of Christine Lagarde, the newly appointed head of the International Monetary Fund, there is a voice that recognizes the truth?
Lagarde is, as noted here before, a good if not optimal choice for the job, and it is certainly about time that a woman held the post. She also understands the players and the stakes and will no doubt work tirelessly to avoid the potential new global financial crisis that is the first item of business awaiting her at her new desk. Indeed, she has already started to do so.
But do you think that, despite a career that has seen her excel in the centers of orthodoxy and the established financial system, she is aware that there are other legitimate options besides those currently being proffered to Athens? Other ways to go that deviate from the conventional wisdom about what the system will and will not tolerate?
Do you think she recognizes that there are some perfectly credible reasons that Greece should consider defaulting and taking its chances as the first state to vote itself off the euro-island?
The pressure on the Greek leadership is enormous. From the other leaders within the eurozone and from the financial community, the relentless refrain is to tighten the national belt, to take the pain, to accept 40 lashes for their profligacy. From the people of Greece, the pressure is to protect their lifestyles, the services they count on, their jobs, their futures.
The formula being offered by the rest of the eurozone is to restructure, forcing Greece to borrow more to meet obligations and then using the new funds to pay lenders. There will no doubt be some restructuring and postponing of some debt. But the real question is this: Should the borrowers be the only ones on the hook here? Should the lenders bear any responsibility for the situation? Should they also accept a burden of pain?
And that then leads to another question: What is the best path for the people of Greece? Do what the lenders want, and the result will be years of recession and deprivation. Is that the only possibility? Can Greece dare default and not pay the debt and break away from the eurozone and not feel as much pain? Can they do it and recover faster?
The conventional "wisdom" is no. Default is too costly. But very often in the past, the warnings about default have proved to be much like the warnings of parents who threaten their children by counting to three. The approach is effective. The threat of what might come after three is too great to contemplate. The children usually give in before discovering that the vast majority of parents have little plan for what happens after three and would never do anything too grievous to their children under any circumstances.
Ask the people of Argentina. They ignored warnings and told the financial community to stuff it when they were too deeply underwater to breathe anymore. The warnings were dire. And the country faced tough times … before recovering far more rapidly than was considered possible.
So long as the lenders do not agree to take a haircut, there are very good reasons that many among the Greeks will argue that they should do nothing. Borrowers bear liability in lending. That is, of course, standard. But they do not bear exclusive liability, especially in cases where lending to those borrowers is clearly and obviously excessive and the lenders should know better. That is the case not only with Greece but with many other nations right now. The borrowers counted on the "nations do not go bankrupt" principle to pile on. And the eurozone financial gurus watched as excess put the entire euro experiment at risk, often in violation of underlying terms of the European agreements -- and they did nothing. Greece bears huge responsibility for its waste and excess. But so too do its enablers, whether from the financial community or the policy community.
Greece could default and might possibly be able to eke out a recovery somewhat more rapidly and without the domestic political costs were it to do so. And because it is a real possibility (unlike the insanity of America not lifting its debt ceiling), the new IMF chief needs to consider the forces that might bring it to pass carefully: to think beyond the numbers to the politics and the human costs and the reasons that perhaps a growing number in Greece will feel abused by the system.
Not because that's the right way to go for anyone. But because it is a set of concerns she is likely to face again and again in her new post as she seeks to help stabilize an international system in which the very system that produced her is far more responsible for the excesses and abuses that are currently troubling it than most among its leaders are willing to acknowledge.
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On Friday, Richard Haass, president of the Council on Foreign Relations, wrote an article in the Washington Post titled, "Why Europe No Longer Matters." Today, Monday, the headline in the Wall Street Journal was "Europe Wrangles Over Greece," the top two headlines in the Financial Times were "Medvedev rules out poll tussle with Putin" and "Greek PM's plea for unity to tackle crisis," the top headline in the Washington Post was a story about NATO entitled "Misfire in Libya kills civilians" and the lead story in the New York Times was entitled "Companies Push for a Tax Break on Foreign Cash" which dealt with a key challenge in the age of global companies.
Haass, one of the canniest and most thoughtful U.S. foreign policy analysts around, was responding to Secretary of Defense Bob Gates's valedictory jabs at Europe concerning pulling their weight within NATO. The point of the Haass article was that Gates's comments were not just a coda on his time in office, but the end of a "time-honored tradition" which involves Americans tweaking our allies for shirking their global responsibilities. The piece made all the usual points: Europe's influence beyond its borders will decline, Asia is rising, the threats NATO was established to address have vanished to be replaced by new ones it is not very well-suited to meeting, etc.
The problem with the piece is that while Haass is right in terms of each of these points, I think he comes to the wrong conclusion.
The headlines in this morning's papers attest to the fact that Europe still very much matters today. In a tightly integrated global economy, Europe's economic fate impacts ours dramatically. An economic meltdown there around Greece or Spain could easily create a global economic crisis and send the United States into a precipitous and uncomfortable double dip.
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Thomas Straubhaar, a top economist from Germany, attacked U.S. credit agencies after they lowered Greece's credit rating to junk status, down there with the Pakistans of this world. In fact, in the spirit of Greek street protesters, Straubhaar called for the "violent overthrow" of the credit rating companies like Moody's or Standard & Poor's, arguing that these companies actually undermine stability in markets.
Come on, Thomas, don't shoot the messenger. The problem isn't the credit rating agencies -- although one does wonder if they don't have itchy trigger fingers after having been late with their warnings during the 2008-2009 phase of the current protracted economic crisis.
The problem isn't the Greek finance ministry. The problem isn't the Greek legislature. The problem isn't the Europeans who are being dragged kicking and screaming toward helping Greece. The problem isn't even Goldman Sachs and the other banks who lent Greece more money than they could afford and even helped them hide a bunch of the financings off the books.
Nope, the problem is Greek nuclear scientists and radical terror groups affiliated with the Greek intelligence services -- or rather, the lack thereof.
Because if Greece had nuclear weapons and crazed terrorists hiding in every luxury housing development, you can bet we wouldn't be going through this long drawn-out process of figuring out whether the country was going to default or not.
We know this because of Pakistan. Pakistan is an absolute financial basket case. It is in many respects in as bad a shape as Greece -- and in some it is even much worse off. But do you hear anyone talking about Pakistan's financial problems? Heck no.
Of course, talking about Pakistan's financial problems is like talking about whether Anthony Weiner's socks match. It's not exactly the first issue that comes to mind. Having said that, the reason we are not sweating the meltdown of Pakistan's financial markets is that there is no way the United States or the world would let it happen. Because a financial collapse could trigger the kind of unrest that would put Pakistani nukes at risk, and that's just not tolerable. So the United States pumps billions into Pakistan knowing full well that it is this aid that helps keep the ship of state afloat. (And, money being fungible, if it also pays for expanding Pakistan's nuclear arsenal … well, apparently we're willing to look the other way. Again.)
Once again, one of the main messages of modern international affairs comes through loud and clear: Nukes pay. From Pyongyang to Tehran, enterprising leaders know that the easiest way to boost your country's profile, gain political leverage, and win cash and prizes is to toss a little enriched uranium in the old Cuisinart, let the satellites take a few snaps, and start rattling your radioactive saber.
The problem with Greece is that if the economy collapsed, if the government collapsed, if the country descended into chaos, no one is worried that a nuclear catastrophe would follow. An ouzo-induced hangover maybe -- which can be a pretty horrific thing -- but it's the specter of a mushroom cloud that really is the attention grabber.
Admittedly, if Greece goes down and takes a few big French banks with it (as the ratings agencies warned this week) and markets get jittery and the firewall around Spain gives way and then a bunch more French and maybe German banks fail and a new global banking crisis and maybe a depression ensues -- well, that would be bad. And would produce instability in many corners of the world, including, possibly, in Pakistan. And if the downturn is bad enough it might force the U.S. and others to give less the next time Club Nuke comes to extort. So, well, yeah, that would be worse.
But, that's all speculation. What we know for sure is this: If there were a centrifuge or a hundred under the Parthenon, the Greek government would right now be sitting on piles of cash and not squirming, knowing that their fate depends on the famously warm hearts and generosity of the German people (among others).
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It sounds like an insider joke: the Revenge of the Obamanauts. Hillary Clinton has been dispatched on an urgent mission … to Greenland. Goodbye, Hillary. Hope you can find a nice walrus-hide pantsuit.
But Secretary Clinton's trip to Greenland's capital city of Nuuk on Thursday to attend a meeting of the Arctic Council is far from an effort to lower the secretary of state's profile. What is being discussed by the United States, Canada, Russia, Norway, Finland, Iceland, Sweden, and Denmark at the round-table discussion are issues that may be among the most important and least well understood of the decades ahead.
It is currently estimated that perhaps a quarter of the world's untapped oil and gas reserves lie within the Arctic Circle. In a world of scarce resources, growing demand, and an increasing capability to actually tap into those hitherto unreachable fields, that would be enough to make the Nuuk meetings and the Arctic Council process increasingly important.
But the Arctic is also the likely site of significant new sources of many vital minerals, of fisheries, and, as importantly, it is ground zero for a potential climatic transformation that could have profound consequences for the planet. Someday historians might look back at the period in which we live and laugh a sad laugh about how we were obsessed with contained temporal threats like terror while flashing brightly on the computers of scientists everywhere were bright warnings that the global environment was undergoing the most profound changes it has experienced since the dawn of human history -- changes that would literally erase countries, transform the global economy, create famines, force hundreds of millions from their homes, and send like numbers into poverty. The study announced a week ago by the Arctic Monitoring and Assessment Program makes warnings like those of the Intergovernmental Panel on Climate Change look positively giddy by comparison. It suggests that average global sea level could rise by as much as five feet during the remainder of this century.
Much of that increase in sea-level rise over prior studies' is due to past underestimating of the speed and scope of Arctic ice melting. The AMAP study concluded that within just over a generation, the Arctic Ocean will be almost ice-free during the summertime. That means easier energy and mineral exploration, the creation of important new shipping lanes, and very different climates creating a variety of new opportunities for countries in Arctic regions.
All this means greater competition for the Arctic with real pushing and shoving and potential for growing tensions among key players including the Russians, Northern Europeans, and even the Chinese who want to be involved despite their lack of clear claims on the region. It also means that the once seemingly arcane decisions about things like shipping lanes and search-and-rescue protocols (which are being addressed in a treaty to be signed in Nuuk) are becoming much more fraught and central to the strategic interests of many of the world's major powers.
That is why sending Secretary Clinton to Greenland to be the first U.S. secretary of state to attend an Arctic Council meeting is anything but a punishment. In fact, given the issues involved and their growing centrality to global affairs … plus the presence of other key players from Russian Foreign Minister Sergei Lavrov to U.S. Interior Secretary Ken Salazar … in symbolic terms alone the gathering in Nuuk could end up being the most important visit to Greenland made since a Viking named Gunnbjörn was blown off course and arrived there in the year 930.
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I will be happy to tell you how a host of the world's current problems will work out if you answer one question for me: How far will Germany go to solve other countries' problems?
From the European debt crisis to its knock-on consequences for Japan, the United States, and the World Economy, from stabilizing the Middle East to promoting lasting reform in that part of the world, from the future of environmental policy to the future of multilateralism, a very substantial factor in the outcome of each will be whether or not an overburdened, increasingly introspective Germany is willing to play the role of global leader.
Recently, the hints from the German electorate and from that country's political leadership have been that after the stresses and strains associated with recent problems from Greece to Libya, Berlin is once again divided. This time, however, it is not a wall but an idea that divides the German people. As the most important country in the world's largest market, just what are the limits of Germany's responsibilities to preserve the European experiment.
I sat today at lunch with a renowned economist and we discussed the fate of Spain. "That is the $64 billion question," he mused. If Spain falters a la Portugal, Greece, and Ireland, then the issue will be will Germany help foot the bill to bail them out? His sense was that they would ... reluctantly. However, he also felt that Spain would be the last straw and a bitter pill for the Germany people to swallow. Therefore, he felt, should a financial quake in Spain rattle Italy, which he did not feel Germany would or could dig down deep enough to help, that global debt markets would be in deep trouble. Japan and the U.S. would all of sudden look much riskier and while certainly the IMF and the G20 would circle the troops to try to solve the problem ... the damage done to global confidence would be huge and the consequences potentially far reaching.
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Recently, there have been perturbations in the wonkosphere. While the trembles are so slight that they wouldn't show up on the Richter Scale of a real human being, they have generated blog headlines and conversations at conferences full of people with advanced degrees and too much time on their hands. The stir has been caused by the assertion that we now live in something that big idea branding experts are trying to characterize as a "G-Zero" world.
In the words of one of the term's proponents, Ian Bremmer, the term refers to the assertion that we now live in a world in which "no country or bloc of countries has the political and economic leverage to drive an international agenda." Bremmer, and another supporter of the idea, NYU's Nouriel Roubini, have been explaining the notion and have done so compellingly enough that after it came up at this year's World Economic Forum gabfest in the Swiss Alps, the New York Times called it the event's "buzziest buzzword."
Buzz words are important in the wonkosphere because people are very busy going from conference to conference, periodically stopping to Tweet about who they bumped into and how they influenced them, and they have very little time to really think about anything. So if you can take an idea, reduce it to a couple of key, easily digestible, tasty ingredients, and wrap into a piece of shiny gold foil you have ... a Reese's Pieces Mini. Well, actually, you have something just like it, but not quite as tasty; you have a candidate for buzz-term of the moment.
Sometimes, it must be said, that even the fizziest of the buzziest actually contain a core idea of real value. Take a stroll down foreign policy nerd memory lane and savor past hits like "illiberal democracy" or "the world is flat" or "clash of civilizations" or "the end of history." Agree with the core notion of the idea or not (the delicious peanut butter center), you have to admit these ideas performed a useful purpose, captured a zeitgeist, and got the conversation going. Some, like "the end of history," were both widely misunderstood and, when understood correctly, wrong. But it was a compelling idea thoughtfully arrived at.
This G-Zero thing, not so much. The idea, of course, plays on all the discussion that has swirled around recent international summits as the attendance lists changed and the labels were altered accordingly. We went from the G-8 to the G-20 and then, keen observers, eager to build their own bit of buzz in the pundit-hive, pondered whether we weren't really seeing a case of a G-18 wrapped around a G-2 (the United States and China.) The Chinese didn't much like this and wished pundits would leave their g-darned labels off of them.
Bremmer and Roubini and company make the case that the United States and the Europeans and the Japanese are too deeply under economic water, and the emerging powers like China and India are too busy developing all the time for anybody to be able to step up and drive the international agenda. And while I know and like Ian and think both he and Roubini are smart guys, this is as an idea that looks like what it is: not much built around a big zero.
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While it is too early to assess the long-term outcomes of the uprising in Egypt, there are nonetheless a number of important conclusions to which we can reasonably come.
First, something profound has changed. It did not change because of the uprising in Tahrir Square. It changed and the uprising was the result; the power has shifted in the region. We have passed a generational and technological tipping point. While the dinosaurs cling to the levers of power in virtually every country in the greater Middle East, the under 30 majority is now the great force to be reckoned with. While the establishment has done almost everything conceivable to keep them down from denying them education to curtailing the spread of information technologies to gutting the economies, nonetheless, new information sources and technologies and ways of connecting and collaborating seeped in to these societies through every one of the cracks spreading across the Ozymandian edifices of the elite.
These changes are irreversible. They are seen in the cell phones that even the poorest carry with them, in the broadcasts of Al Jazeera, in the burgeoning Twitter feeds, the apps young Arabs create to provide work-arounds every time a government tries to curtail Internet access, and even in the technological use of some of the region's worst players.
These changes have remade the social and political fabric of the region. What they have yet to do is what they have done everywhere else in the world and that is to fuel economic change.
That is the second inescapable conclusion we need to consider. The great challenges before this under-30 majority are economic, they are about opportunity. They are not about Israel or battles between Shiites and Sunnis or tribal divisions. Those problems still fester, but the unifying challenge for this generation is even more basic: They need jobs. They crave opportunity. And the failure of their leaders to provide them with these basic sources of sustenance and dignity is what has fueled the revolutions of 2011.
A corollary to this conclusion is that we in the United States have been sending the wrong people with the wrong approaches to solve the wrong problems in this region for decades. The problems of this region will not be solved by negotiators or generals. They require investors and entrepreneurs and educators. To the extent that we can contribute, we must do so by supporting the creation of economic opportunity. It is a massive undertaking but it is the only true peacemaker.
A third conclusion is related to the second, however. The role for the U.S. government in all this is very, very limited. We would do well to redirect what aid we provide to address this core challenge of creating jobs for the under-30s. We would do well to put our best economic minds in charge, perhaps even appointing a special economic envoy of real stature. But the only people who can ultimately solve this problem are in the Middle East. In fact, in the hierarchy of those who can help, if the people of the Middle East are first and by far foremost, it is the people of Europe, not the United States who must be second. They are the natural economic neighbors of the region and they must answer the question whether they want those under-30s employed in the Middle East or seeking employment in Europe. After the Europeans, it may even be the Chinese or Indians and others dependent on oil in the region and closer to its problems who should take more prominent roles in helping to solve the problem than the United States, which is a lightening rod and has problems of our own at home.
A fourth conclusion is that the hardest part is clearly still ahead of us. Egypt must make the transition to democracy and that means the military must really step aside after six months. Friends of mine who have met with them believe they understand the implications of the political earthquake that has taken place during the past month and that they will do so. But there are dinosaurs among their leaders so it is by no means a sure thing. Even beyond establishing a democracy is actually keeping one, and beyond that is addressing successfully the economic challenges alluded to above. Further, there are the problems of all the other countries of the region. They will be difficult to handle but we in the United States need to be confident enough in our core beliefs to let them work them out among themselves. There will be fights and setbacks and people we don't like will periodically gain the upper hand. But give me a duel between two guys armed with the Internet, Facebook, and Twitter feeds and let one offer the people the 11th Century and another offer the 21th and I know who I will bet on.
Finally, my fifth conclusion is that of all the big challenges ahead for U.S. foreign policy associated with this period of upheaval, the greatest by far lies with Israel and the Palestinians. Personally, I am not sure why the Palestinians have not yet unilaterally declared independence. The world would surely support them. But imagine what would happen if, perhaps on the road to such a declaration perhaps following it, a hundred thousand Palestinians took to the streets peacefully demanding real self-determination. With memories of Tahrir Square fresh in the minds of the world, how could the Israelis respond as they might have in the past? On what side of history would they appear to be as President Obama might put it? And in that vein, on what side of that history would President Obama and the United States want to be?
Until now, the fact that Israel was the region's only democracy was its "get out of jail free" card. It was used to excuse ... or attempt to excuse ... a multitude of sins. For this reason, no Arab military offensive could be as effective in undermining Israel's strategic advantages as real democracy taking root elsewhere in the region. The Netanyahu administration would be flummoxed if people power came to the West Bank and Gaza. They would be cast involuntarily with the dinosaurs. They would have no pages in their playbook indicating how to handle this. They would have very few good choices.
Actually, they would have only one. They would have to get out of the way. They would have to do what Mubarak did. They would have to step within the 1967 borders and let the Palestinians begin the job of building Palestine. And they would have to hope that the United States, Europe, and the rest of the world helped the Palestinians do it because once that happens, it will be of the utmost importance for Israel that its new neighbor produce real opportunity for its people ... because we have seen the alternative and it, for this generation who have both nothing and nothing to lose will not be contained by the tactics or the rhetoric of the past.
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From its start, I have viewed the Iran sanctions regime the Obama administration has helped devise with great skepticism. However, if recent reports are to be believed, the sanctions may someday be seen in retrospect as a vital element of an effective strategy to curtail the Iranian nuclear program. In fact, the possibility is beginning to emerge that they could be seen as part of what may someday be seen as one of the signal triumphs of Obama-Clinton foreign policy.
My initial concerns about the sanctions program were several. First, it was my sense that such sanctions programs tend not to be terribly effective where authoritarian regimes are concerned. Next, sanctions tend not to be effective if they do not are not supported globally by all the economies interacting with the country facing sanctions. Third, in the case of these sanctions, the Russians and the Chinese carved out elements that protected important components of their own trade with Iran. Fourth, my sense is that the Iranians are engaged in a cat and mouse game with the international community in which they make a few seemingly constructive moves, even appear to make concessions, and then continue on with their nuclear development work behind the scenes.
My sense was also that international diplomatic and economic pressure would simply not be enough to really impede their program -- especially if the threat of the use of force to punish them if they did not back down was not credible. And the message from the administration was not tough enough on that last point.
However, when last week, the departing boss of Israel's intelligence service, Meir Dagan, stated that in his view the Iranian program had in fact been set back to the point that it would not be able to develop nuclear weapons until 2015 at the earliest, it suggested that whatever was being done was working. No one, for obvious reasons, takes the Iranian threat more seriously than the Israelis (although WikiLeaks confirmed for all how worried the Iranians make all their neighbors). If they who had been saying two years ago that the Iranian threat would reach a critical level within a matter of a year or so were now saying it has been pushed out several years, it was more than just an interesting sound bite.
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With the news this week that the Fed pumped money into European institutions during the darkest hours of the recent and continuing economic crisis without so much as a press release or a demand for better cheese prices, it is clear that even with all those big geopolitical shifts we have been hearing so much about, the United States remains the world's sole Schmuck Superpower.
Oh sure, whoever it was that was stamping "Approved" on all those requests at the Fed's "Foreign Banks Only" teller window no doubt thought it was in the self-interest of the United States to keep the global economy from imploding. But look at all the grumbling that Europeans do when asked to help preserve their own common currency and the economic health of their own neighborhood. Or, if you wish to look in the other direction, consider the not exactly Kumbaya spirit of the currency "wars" that define trans-Pacific monetary relations. In the end, you've got to wonder, what're we thinking? After all, if China is the country sitting on the biggest pile of cash and the EU is China's number one trading partner, shouldn't they have responsibility for footing the bill for all those overly cushy European pension plans that promised retirement seemingly within weeks of graduating from college?
Beijing appears to have enough money to commit $1.5 trillion dollars to prime the pumps for seven "strategic" industries (as they announced they were considering doing this week)… while we don't seem to have enough cash to pay for extending unemployment benefits for victims of the economic downturn. Mull that one over for a second: We have enough money to bail out big European financial institutions and their fat, happy shareholders, but not enough to help out struggling American families? We're paying for euro problems and unwinnable wars in the Middle East and China is saving its yuan for other activities -- like figuring out how to clean our clocks in the global marketplace of five minutes from now?
We are not just the uncontested Megapower of Schmuckdom, we are a deeply confused nation led by people with profoundly twisted priorities -- who clearly believe they report to higher powers than mere American citizens.
Today we discovered that U.S. unemployment is at 9.8 percent, that we have broken the 1980's record for most consecutive months of unemployment above 9 percent, and we are nonetheless forced to stomach the current charade on Capitol Hill in which the Republican party fights for tax cuts for millionaires while callously allowing Americans in need twist in the wind. All this, while it turns out that across town in the Fed's corner of Foggy Bottom it doesn't even take a vote to provide handouts for rich foreigners in want?
Where are the pitchforks and torches people? Where is the outrage? Don't tell me that's what the Tea Party was about. The Tea Party was clearly all tiny plastic tea cups and doilies when it comes to the real issues America faces. Otherwise, wouldn't all those champions of average Americans actually be championing the interests of average Americans right now?
On a separate point, what does it say about the idea of "European Union" that as soon as troubles bubbled to the surface in a couple countries, the discussion turns to a question of whether the Germans are likely to bail on the whole idea? Or see today's New York Times piece on the North-South divide in Europe. The reality is that the "European Union" might be a nice branding idea, but it's purely an aspirational one and seems to actually be getting farther away from a reality every day.
It took the United States 100 years and the bloodiest war in the history of mankind to finally buy into the idea that we were all in it together. The Europeans have had plenty of wars, but since around the time of Charlemagne, none of the battles were won by those fighting for the principle of unification. (Given the goals of the unifiers, from Napoleon to Hitler, that's not such a bad thing.) In fact, it was always those who wanted to unite Europe that were defeated. Ultimately, when they accepted the idea of knitting themselves closer together it was based primarily on the idea that finding shared economic interests might keep them from each others' throats and it came, even in its most advanced forms, with multiple caveats, exclusions, and protestations that real independence laid beneath the fragile superstructure of links.
So we are faced with the prospect that the wheels might come off the eurozone cart sometime soon and what do you think we'll see when that happens? Do you think we'll see the Chinese volunteer to come in and help clean up the mess? No? Not even as a way of thanking the Europeans for siding with them recently in Seoul when they decided to make the G-20 meeting about U.S. monetary policy mistakes rather than Beijing's manipulations? Or, alternatively, do you think we'll see a call for the United States to help out again, to dig into our own pockets to help solve European economic and social problems, while we fail to take even the minimum required steps to take care of our own?
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After a brief stop at an Asia-Pacific Economic Cooperation summit that will almost certainly be the anticlimax of a 10-day swing through Asia, President Barack Obama will briefly return to Washington to pick up a new change of socks before heading off to Europe. From unsatisfying discussions about the world economy he will move on to unsatisfying discussions about Afghanistan. From difficulties with the new powers of Asia he will move on to difficulties with the old powers of Europe. And through all this he must be thinking, "The heck with the birthers debating where I was born -- if this keeps up, I have to wonder, where am I going to live once I leave this job?"
Admittedly, many of the challenges he faces are not of his own making. He did not send the world economy into a tailspin, gut the U.S. manufacturing sector, recalibrate global labor markets, or introduce the first U.S. troops into Afghanistan. And on this trip to Asia and next week's to Europe he has taken many substantial steps to address these problems and to restore the United States' international footing. From a successful mission to India, the innovative and smart (if largely symbolic) move to endorse India for a permanent seat on the United Nations Security Council, a sensitively handled journey to an Indonesia where he spent time as a boy, and an effort to embrace the new world economic order by continuing to support the empowerment of the G-20, many of his efforts deserve praise.
Having said that, as is often the case with this administration, Obama giveth and Obama taketh away.
The frustrations and missteps of this trip, especially those encountered in Seoul, could have been easily avoided. First, the United States could be somewhat less disingenuous about our economic policies. I am a supporter and admirer of Treasury Secretary Tim Geithner in most things, but his line that "We will never seek to weaken our currency as a tool to gain competitive advantage or grow the economy…" has to go down as the howler of the month, and may qualify for howler of the year honors next month. In the wake of QE2 and longer-term easing, money-pumping policies -- which are clearly designed to offset what are seen as unfair Chinese currency practices -- the United States is guilty of promoting precisely the race to the bottom that earned such broad condemnation from Europeans, Asians, and other emerging powers in Seoul.
The failure of the Korea-U.S. Free Trade Agreement talks is also due to American misplays. Long ago in this space I warned about the mistake of giving too much authority to the office of Senator Max Baucus (D-Mont.) in appointing senior officials at the office of the U.S. Trade Representative. This week, Baucus' influence apparently triggered the breakdown of the Seoul talks. Sources suggest that the Montana senator pushed for greater beef market access beyond what the Koreans had repeatedly said were their limits. The result: A deal the president promised would be done this week floundered -- and its prospects do not look good.
Should the White House, then, have been as surprised and disgruntled as it was this morning by the two column New York Times lead headline "Obama's Economic View Rejected on the World Stage"? Heck no. Them's the facts. What's more, like the election results, perhaps it was a message the team needed to see written out in bold dark type.
Obama embarked on this trip with a message from the American people: They were frustrated with the state of the U.S. economy, and something had to change in the way Washington was dealing with it. As it happens, that is the same message he got from the G-20 leaders in Seoul. While he was away there were two events that may present him with an opportunity to gain ground with both of his stakeholder constituencies, the voters who elected him and the creditors to whom the United States owes so much money. One was that by some sort of alchemy (which is to say the ability of Democrats to do basic arithmetic), the administration realized they would have to accept a deal to extend all the Bush tax cuts, probably for a couple of years. They leaked their inclination in this regard without clearly confirming it. The second was the leaking of the co-chairman's bullet-point summary of the Deficit Commission report. Whatever the problems with their recommendations, they represent the first recent, high-level effort to deal seriously with this problem on both the revenue and the cost side of the ledger.
My sense is that there is a potentially transformational deal here for the president: Agree to an extension of the Bush tax cuts for two years, if Congress agrees to an up or down vote on the National Commission on Fiscal Responsibility and Reform report -- provided it receives support from at least 14 members of the deficit commission. Link dealing with the poor economy to a commitment to getting our house in order -- as our creditors, allies, and most sensible citizens and neighbors are pleading with us to do. (If it is not "fast track" for the deficit report, perhaps it could be a commitment to linking a deficit reduction plan to the first budget of the new congress.)
The president has three big game changers that could restore his standing at home or abroad. One is a spontaneous recovery of the U.S. economy. Another is catching Osama bin Laden. Neither of these is likely, nor are they things that he has much control over. The last would be establishing himself as a president with the courage to manage us through first a market crisis and then a deficit crisis, who could do so in the face of criticism from both parties and who could engineer support from both parties. It is not that much more likely than the first two "brass ring" events, but it is the one outcome over which he has the most potential control.
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I am moderating a conference today here in Chicago for a group of large institutional investors. Needless to say, I will report back on what I learn unless it is really valuable information, in which case I will keep the information to myself, move my chips to the right number on the roulette table and cash out.
That said, I wanted to leave you with the answer to a burning question on your minds: Who emerged from Tuesday's elections as the most important political voice in the United States?
No, it's clearly not President Shellacking. He may re-emerge, but that will take new ideas. Speaker-to-be John Boehner (R-OH)? Nope, same reason. First of all, he is a workhorse and not a show horse. That's not a bad thing. But he's no limelight-hogging Newt, nor is he a creativity engine. Mama Grizzly? Ha -- although she will probably remain an energizing force for a large cross-section of Republican voters…
Might it be Mitt Romney, who just by happenstance had an op-ed in the Washington Post Wednesday almost as if to say, "Gentlemen, start your engines…"? Could be -- Republicans tend to pick the runner-up from the last election cycle, and he has many attributes that could make him a front runner in the current environment. Congressman Paul Ryan (R-WI)? One could only hope. New York Mayor Mike Bloomberg? I light a candle every night.
No, the most important political voice in U.S. politics today is … British Prime Minister David Cameron. Listen to the new Republican agenda or at least the new Republican rhetoric -- cut entitlements, be courageous, battle the deficit, and make the hard choices. While this language has been batted around before by the party of big deficits that the GOP became as far back as the Reagan era, you see a glint in the eyes of the new leadership when they speak these words (viz. Tim Pawlenty today on "Morning Joe"… in a pretty impressive performance).
Why the glint? They have seen the blueprint and they have seen it can work. At least that's the sense that's in the air. Cameron … and to some extent French President Nicolas Sarkozy … are the new heroes of courage, and of speaking truth to special interests. This is not to deny their flaws … it is to recognize their accomplishments to date and the resonance they have.
Having said that, I must acknowledge again, misreading Cameron ranks high atop the long list of blown calls I have made here in this space … and who knows, I could be wrong about him twice. I underestimated him. And every day I must live with that -- most recently watching with admiration the one-two punch of his bravely cutting defense budgets and then, just as bravely, compensating for it in a historic way through diplomacy with an ancient enemy via the recent and innovative defense cooperation agreement with France. But it would also be a serious mistake for Democrats in the United States to underestimate the power or appeal his budget-cutting, fiscally responsible, courageous approaches might have here in this country.
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As I was leaving Paris on Tuesday morning, the city was hunkering down preparing for another national strike. Transport workers were going to be expressing their dissatisfaction with adjustments in their pension schemes through making commutes to the city and travel across France very difficult. But it was only the latest in a series of such protests. The country that gave the world the word aplomb responded with plenty of it, some workers staying home, others finding others means of transportation, and one seasoned Parisian explaining to me that "we have to get used to this, there will be many more to come before all this is over."
What is "all this?" He was speaking of French political battles, but he could just as easily be addressing the current wave of coming to grip with fiscal realities that is buffeting Europe, causing protests from Greece to Britain. Indeed, as Europe seeks to address the underlying causes of the crisis that nearly sent world markets into an even deeper tailspin months ago, it is clear that so much belt-tightening needs to be done and so many programs that have been taken for granted will need to be cut, that for all Europe there will indeed be many more strikes and protests to come.
In Britain, which I visited before my stop in Paris, the news was dominated by headlines from the Conservative Party Conference and the backlash to the announcement by Chancellor George Osborne that child benefits for wealthier families would have to be cut back. Notably, and with considerable courage, equanimity, and grace, Prime Minister Cameron did not sidestep the issue and indeed pushed in his keynote address for more resolve to undertake even the painful reforms that would be necessary to restore British fiscal health. "I'm not saying this is going to be easy, as we've seen with child benefit this week. But it's fair that those with broadest shoulders should bear a greater load."
At the core of his deservedly well-received speech was the message that in order to cut a deficit of 155 billion pounds, sacrifices were required, regardless of their political costs. Furthermore, and importantly, he suggested this was a national challenge, not just one for the government, "The point I want to make is this, the state of the nation is not just determined by government and those who run it. It is determined by millions of individual actions, by what each of us do, and what we choose not to do."
In today's Washington Post, Ruth Marcus, has an excellent piece entitled "The True Conservatives: Britain's Realists vs. America's Wishful Thinkers" in which she wishes that she could summon up Christine O'Donnell-like witchcraft to transform American conservatives into British Tories. She makes a powerful point. But she does not go far enough. Because if we are conjuring here, let's transform the Democrats too, please.
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By a vote of 246 to 1 the French Senate voted Tuesday to excise the word's liberté, égalité, and fraternité from the country's soul. With the vote to ban the wearing of burqas in public, France took a step back into the Dark Ages. Furthermore, the country revealed a deep seated insecurity about the strength of its culture… while at the same time weakening that culture by reinforcing intolerance.
It is estimated that fewer than 2,000 Muslim women in France would be affected by this law. This only underscores the degree of fear driving French lawmakers. Do they really believe these 1,900 or so women can actually undermine thousands of years of national culture or threaten France's national identity? If so, the problem isn't burqas. It's paranoia. Or it's a sense that French culture is soufflé -- so fragile it will fall at the sound of the first whisper.
Combine this with the French government's recent treatment of Romas and you have a pattern of behavior that echoes many of the darkest motifs in European history. Forcing my father to wear a yellow star on the streets of Vienna when he was a boy is the flip side of this coin. Protecting social "purity" by identifying an ethnic minority or by denying that minority -- in this case members of France's second largest religious group -- the right of self-expression is the same appalling thing. (For this reason I would encourage every Jew or Jewish group to stand alongside Muslim leaders opposed to these actions, but I fear it would only further coalesce the supporters of the ban.)
If there is a place for intolerance in civilized society it must be limited to intolerance of intolerance itself. President Nicolas Sarkozy and the people of France should indeed be on their guard. There is a dire threat to France within their midsts, but it does not wear a burqa.
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This weekend the Pope took a hard stand on behalf of the power of faith to provide "the courage" to not allow "oneself to be intimidated by the petty gossip of dominant opinion." This revealed more about the Pontiff's misunderstanding of the current crisis in the Church than intended. Because, of course, the problem is not the petty gossip. The problem is the hard and awful fact of decades of abuse of thousands upon thousands of innocent children at the hands of priests in whom they and their families had placed the ultimate trust.
The problem is not petty gossip. The problem is what would be considered in any other organization to be a apparent conspiracy to cover up grievous crimes and to recklessly endanger innocents. The problem is a culture not of compassion but of one that placed the interests of a rich and powerful organization above those of the individuals it was supposed to be serving. The Church doesn't need to be protected. The children need to be protected.
No, the problem is not petty gossip. The problem is the Pope and the church hierarchy of which he is not only the head, but also a revealing symptom. He may well be a moral and deeply spiritual man. But over decades, while some in the church have succumbed to temptations of the flesh, the Pope and other leaders may have fallen just as damagingly to those associated with power. They have been corrupted by it and in turn they have corrupted an organization that exists only through the moral authority they systematically compromised. As a result, the Church faces one of its greatest crises of the modern era.
Yes, as his clueless and increasingly desperate sounding defenders have argued, the Pope may not have been aware of the final disposition of the case of Reverend Lawrence Murphy, abuser of 200 deaf boys in the United States, but surely in an organization that now appears to have been so rife with such cases, he could not possibly have been unaware of scores of cases like it. But he like other Popes, like Ireland's Cardinal Brady, like the two Irish bishops who have resigned, like countless others among their colleagues have at best shown indifference to what was happening to their parishioners or to the organization whose core values they were undercutting indirectly or otherwise.
New York's Archbishop Timothy Dolan even went so far as to compare the Pope to Jesus Christ in that both faced unjust accusations. It was a deeply flawed comparison on countless levels. But perhaps there is a useful if inadvertent message in it. Jesus is revered especially during this week of the year for his sacrifice on behalf of humanity. If the Pope emulates him and his message, perhaps he might consider the benefits that might come of some personal sacrifice of his own.
In any other organization facing such a pervasive and long-standing cultural crisis, it would be almost reflexive to consider a management change. That said, in the case of an organization which is in the moral authority business, if a leader were actually seen as a symbol of a culture that threatened the very foundation on which the enterprise depended, there would be no choice but to replace him and demonstrate that core values and the interests of the community served was much larger than the interests of any individual or small group of leaders.
It is time for a house cleaning in the Vatican. Every dithering, defensive, inadequate apology, every fumble for an explanation, every attempt at minimization of the problem, every failure to act sweepingly and in the interests of victims rather than perpetrators, every such step makes that all the clearer. Pope Benedict may be a good man, but ironically the measure of his greatness may be whether he has the courage to set his own interests aside in favor of the much greater needs of the Church he has been chosen to lead.
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Washington is a city of oxymorons. It is a city of garden variety morons, as well. On the oxymoron side we have old favorites like "military intelligence," "compassionate conservative," and "government organization." On the moron side...well, in U.S. politics we have morons on both sides.
Now we have something new however, as in Washington the oxymorons and the morons are coming together in the form of America's latest reality television extravaganza (we really needed another): "Real World Washington." This is a unique double oxymoron in that it calls itself real but, like most reality TV, it is not...and because it is suggesting, fancifully, that there is somehow a connection between Washington and the real world. As for the morons, well you need only visit the bars around the DuPont Circle neighborhood location of the Real World set and you can view for yourself the cast in all their beer-soaked glory.
At first I wondered to myself how it was that a show like "The Real World" could have become MTV's longest-running hit, now in its 17th year. After all, it's pretty formulaic. Semi-attractive young adults including at least one or two with deep psychological problems are put together in a house in which they: drink, puke, appear to grope one another in grainy night-vision camera shots, and then fight about who groped whom.
Of course, thinking of it that way, I naturally started to wonder why it took so long for the show to come to the home of American politics which have been featuring all these activities for years. (For those of you who are more insensitive than I, insert Teddy Kennedy joke here. And for those of you who don't have the stomach for such humor but still want a laugh at the expense of all that Kennedy family groping, see this link about a new book on America's zany royal family.)
Once I started thinking about politicians and groping and the real world, however, my thoughts immediately drifted eastward, out over the Atlantic, and in the direction of the world's most famous aging libido, that of the host of this week's G8 Meeting, Silvio Berlusconi. This in turn led to a thunderbolt of inspiration akin to that which struck another famous Italian in the Berlusconi mold, Michael Corleone, when he first saw the ill-fated Apollonia Vitelli. What about the Real World Berlusconi-style? What about Real World L'Aquila? Once we get the G8 leaders to Italy, why don't we lock them in a room until they actually produce something productive? And let's put it all on video! Big Brother for Big Brother!
And to keep it interesting we can add elements of other reality shows. For example, how about a taste of Real Housewives Berlusconi-style, while we're at it. Just locking Silvio and his really (justifiably) angry, estranged wife Veronica Lario in a house for the enjoyment of tv audiences everywhere would be irresistible.But throw her in with a bunch of other world leaders? See what happens when Silvio shoots an ill-considered glance in the direction of Michelle Obama? Who's wailing on him first? Veronica, Barack or Michelle? (My money is on Michelle.) Sadly, of course, Veronica is passing on the G8 Summit, forcing the Italians to turn the wife of their president to be the hostess for the affair.
We still have plenty of fun cast to choose from, however, given that the meetings in Italy will actually be attended by more than 25 countries, including all the G20. Just think of the potential gang we could feature in the house that meet the Real World formula for diversity and mayhem.
Given the fact that Berlusconi will be joined in Italy by members of the G20, the cast can be expanded to included a diverse enough group of lively characters to make this one version of Real World actually look a lot more like the real world than its many predecessors. South Africa's Jacob Zuma is, for example, a party all by himself with four wives, three other fiancés, perhaps as many as 18 children, and a list of run-ins with the law that would allow him to play the bad boy role. China's Hu Jintao was reportedly fond of singing and dancing in his teen years and therefore might add a little lift to those party nights out. And although Brazil's President Lula and Zuma may only have achieved the fourth and fifth grade in school, respectively, this actually makes them educationally over-qualified by Real World standards.
Sadly for the Real World premise...and for the real world...not many of the visiting leaders are women so we will have to rely on host Berlusconi to add a few of his close personal friends to add a little sexual tension to the show. But what with party credentials of the crowd gathering in L'Aquila and the help of Il Cavaliere it's clear this could make for fine viewing. If we wanted to make it something more than that...and something more than the bland communiqué machine G8 meetings typically are...we could add a different reality show twist, à la say "Big Brother" or "Survivor," in which participants are voted out after each week. Except in this instance, what we could do is rely on the general odiousness of hanging out with pols around the clock to motivate the cast to want to leave the house, but then not let them out unless they actually get something done in their negotiations. Think how that system would change the nature of summits. Although my fear is that rather than producing more productive meetings of government leaders, the requirement that they get something done would actually lead to the end of summits altogether.
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In March, for the third month in a row, more cars were sold in China than in the United States. Admittedly, there are many more Chinese. But this is a sign of a permanent change in the structure of the global auto industry that even an army of car czars will not be able to reverse. Even if we had car czars that actually knew something about the industry. Even if the American auto industry did not think the height of innovation was the reintroduction of a 1960s muscle car for the Vin Diesel crowd like the new(ish) Camaro. (Although even tuners prefer to nitro boost foreign-made vehicles as well illustrated in this week's gearhead superhit, the subtle and heart-breakingly beautiful, Fast and Furious.)
Last week, in the lead story in the New York Times, we also saw that China was actually going to have something like twice as many electric cars as the United States in the next couple years and that the country was poised to lead in electric car technology. While we actually could be competitive on the technology front, the problem we have with electric cars runs deeper. American car owners want longer range, faster, more powerful vehicles than the Chinese (and consumers in many other countries). Sure, I'll take your damn green car, we say helpfully, but only if it is the same as the gas-guzzling, road-rocket I'm used to. Oh, and please be sure it has three rows of seats, a beer cooler in the glove compartment and twin flat panel screens so the kiddies don't have to watch the same episode of Sponge Bob Square Pants (because we don't want them fighting over which life lesson they will gather from their favorite gay underwater kitchen implement).
In other words, our consumers don't look like the consumers in the rest of the world. That's been a challenge to American car makers for some time (the appetite of international consumers for smaller cars led to the rise of the Japanese, European, and later Korean auto industries at the expense of American manufacturers). But with the rise of China and India and other emerging car markets and the more willing embrace of greener standards in everything by Europeans, our consumers are sending a market signal to car makers in the United States that is just completely out of whack with much of the rest of the planet.
Some of that is, of course, due to the success car manufacturers, oil companies and others have had in keeping U.S. mileage standards artificially low and in dragging their feet on efficiency. Some of it may be due to the same auto manufacturers' ability to persuade American men that cars are somehow direct extensions of their penises. (Oddly, I don't know that the reputation of French lovers or other Latin lovers has suffered because they drove Renaults or Fiats...even if it should have. In fact, I know for a fact that the very handsome and irresistible editor of Foreign Policy drives a Smart car that looks like a toaster on a roller skate and yet, still the legions of policy groupies gather each day outside the FP headquarters just to catch a glimpse of him.) But part of it is that American consumers are spoiled and have gigantic rear-ends that don't fit in little tiny car seats. The Obama administration can help to change this (the auto innovation and buying habits parts) with new standards and with incentives for car makers and car buyers to invest in more efficient cars going forward. U.S. consumers will also have a role to play in all this too, of course...they will have to respond to the incentives. (As for the rear ends, all of you now: clench...maintain...release...clench...maintain...release.) But the cultural shift we need can't just stop there. For one thing, it might be helpful if U.S. politicians stopped referring to the Big Three as "the U.S. auto industry," since there are hundreds of thousands of Americans employed by great companies that contribute to American growth like Toyota, Honda, Nissan, Hyundai, Mercedes, and BMW. And who knows, if we took that step, we might actually be a step closer to tuning out the idiot-populism currently clouding this issue such as that by people like noted auto industry economist John Rich (of country music's only economically titled duo Big and Rich). Writes Rich in his current hit "Shuttin' Detroit Down"...
Cause in the real world they're shuttin' Detroit down,
While the boss man takes his bonus paid jets on out of town.
DC's bailing out them bankers as the farmers auction ground.
Yeah while they're living up on Wall Street in that New York City town,
Here in the real world they're shuttin' Detroit down."
Admittedly, this is poetry. Neither Shakespeare nor later day innovators like Bukowski never dared
experiment with anything quite so incomprehensibly moving as "DC's bailing out
them bankers as the farmers auction ground." But the song does have so many flaws you couldn't have hid them all
Underwood's gigantic dress at last Sunday's Academy of Country Music
Awards. Not the least of them being that
a.) as noted earlier many of the auto companies in America are neither the "big
three" nor are they doing anywhere as badly as the big three and, oh yes, b.)
D.C. is actually bailing out Detroit, too. (Although it's still a horse race to see which bailout packages are
actually less successful. I'm splitting
my bet. We'll waste more money on Wall
Street but dollar for dollar we'll be less successful in Detroit.)
Because in the end, we also need to recognize, adjust to and respond with creativity and innovation to the fact that there are secular trends afoot that make it increasingly unlikely that so-called American brands will ever dominate worldwide as they once did. Even if we do reduce the size of those ginormous tushies.
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David Rothkopf is the CEO and Editor-at-Large of Foreign Policy. His new book, "Power, Inc.: The Epic Rivalry Between Big Business and Government and the Reckoning that Lies Ahead" is due out from Farrar, Straus & Giroux on March 1.