Economics

While we here at FP don't recommend eating disorders as an effective weight control technique, sometimes it's hard to pass up the canapés at those fancy Washington parties -- like GQ's "50 Most Powerful People in DC" cocktail blast at 701 last night. 

Of course, GQ's party had its own built-in trigger of the gag reflex for most Washingtonians: their names weren't on the list. (I talked with one of GQ's writers as she was working on the list, a conversation I enjoyed right up until the moment it was clear they didn't think I was list-worthy. As for the final product's, um, curiosities see FP's earlier take. But, Leon Panetta ahead of Hillary Clinton? Tom Donilon on the list, but his boss Jim Jones off it? Various worthy but random journalists and bloggers and not Tom Friedman or David Sanger? The Sidwell admissions director ahead of the GDS admissions director? Insiders know the truth ... even as they all hungrily pour over the list looking for their own names and those of their allies, enemies and worst of all, their friends.)

But when a glossy, man-perfume scented equivalent of a long hairy finger down your throat isn't readily available, then knowledgeable Washingtonians know there is always another place they can turn, the Capital's naturally produced form of Serum of Ipecac. Just follow the news until you develop the acute reaction to hypocrisy that is certain to launch away your own indiscretions in one or two turbulent but satisfying moments.

For example, here's a recipe for Capitulimia drawn from just what's going on around town today:

Take just one dose of insurance companies trying to suggest in print and broadcast advertisements that after years of making indefensible profits from literally killing people and destroying families with their policies (the one's they didn't actually deny to those who needed them), it is they who are actually looking out for the interests of Americans in need of health care.

Add one 30 second American Petroleum Institute commercial in which they actually argue that the pending climate bill might hurt consumers by producing more highly priced gasoline? After their record? While they should actually all be hovering in their basements waiting for the class action suit from the planet for selling a product they have known for years was destroying it?

Then sit down and take a listen to say, Rush Limbaugh complaining the media is making spurious, emotional, and uninformed attacks against him ... and that "the media" has too much power. The media? Who is he? Where does his power and obscene wealth come from? Appearances to the contrary, he is not a manatee sunning on a rock. 

If that hasn't done it, listen to one-time supporters of the havoc wreaked by the Great Decider's impulsive and catastrophic policies in Iraq or his ineffective blundering in Afghanistan as they criticize President Obama for actually taking some time to work out a sensible adjustment to tackling the mind-boggling challenges posed in the AfPak region ... challenges that were altered by the recent elections embarrassment in Afghanistan.

Or listen to Republican legislators responsible for the biggest deficits in American history and the collapse of the American economy, attack President Obama for doing what had to be done to clean up their mess.

Not there yet, go to Amazon.com and pre-order not only the Sarah Palin book but the upcoming books from President Bush, Vice President Cheney, Don Rumsfeld, Hank Paulson, and Karl Rove. Then think about the millions that will be generated by these books. (In New York State, I seem to recall once upon a time in the days of "The Son of Sam" they passed a law blocking criminals from writing books allowing them to profit from retelling the tales of their wrong-doing. These aren't criminals, of course ... well, not all of them ... but what are we to make of millionaires who gutted the American economy making millions from telling us all how they did it?)

Still on the verge of relief but not quite cleansed? Well, pick up a paper and read about the fact that roughly $140 billion in compensation will be paid out on Wall Street this year, a record beating out the last peak year of 2007. (And while you're at it, flip back to the FT from a day or two ago and read Goldman CEO Lloyd Blankfein's call for more industry reform and ask yourself: was placing this oped at the time the bonuses were going to be announced just a little cynical? Do they really think we're going to fall for that kind of grade-school spinning -- even if he did make a number of good points.)

There, that ought to do it. Feeling better now? Lighter on your feet? Angry but empty? No need to thank me. Just another public service from your virtual friends here on the Internet who will always do what we can to ensure our Washington readers are ready for another day of making the rounds from the Four Seasons to the Palm to the usual receptions sponsored by the likes of the American Foot Odor Institute and the National Alliance for Getting Children to Make Their Beds. And for the rest of you outside the beltway, with America's health care system unlikely to be high functioning any time soon, it's probably a good idea to drop a few pounds and get into better shape. 

And here's our hint for turning what could be an eating disorder into a sustainable diet: just keep watching those headlines -- they're the world's most effective non-addictive appetite suppressant. If you follow Washington without losing your appetite, you're not paying attention.

TIM SLOAN/AFP/Getty Images

Today, it's all good news in the world...

Remember back a couple weeks ago when the G-20 leaders agreed to get rid of subsidies on fossil fuels? Well, guess what? So far not much has happened here on that front ... not surprising perhaps since the "commitment" by the G-20 leaders did not include a timeline. But one bold, shining light has emerged that is leading the way for us all. Who should Barack Obama and his fellow statesmen call for advice? Why their old pal Mahmoud Ahmadinejad. Because just this past Sunday the Iranians moved to cut back on their subsidies for fuel (and food) in the interest of trying to trim their budget. Admittedly, the money they save will be used to attempt to make a big hole in the ground where Israel is, but since this is Good News Tuesday, let's focus on the upside. Today, Tehran is our good governance pick of the week.

Have you seen those promos for the latest movie by catastrophe specialist Roland Emmerich, 2012? They'd be pretty horrifying even if they did not, as pointed out in Entertainment Weekly, use collapsing twin towers as one of their money effects. But fortunately, it turns out that we don't have to go see the movie in order to help prepare for the doomsday it suggests was predicted by ancient Mayan calendars. According to an AP story yesterday, the Mayans that are still with us say this end of days frenzy is just an over-wrought misinterpretation of the calendars which do note that late in 2012 some unusual astronomical developments will take place. This may, they imply, be worth a visit to the backyard with a telescope but it doesn't warrant hiding in the basement with a year's supply of franks and beans. Or going to see 2012, which according to early reviews is itself such a disaster, it'll have audiences wishing for the real thing before they've finished their popcorn.

What's better than good governance in Iran and the fact that the world's not going to end in three years? How about something that seemed impossible just a few months back: economic recovery? Yup, according to Larry Summers, the president's top economic advisor, in a letter to Republican House Minority Leader John Boehner, happy days are near again. Consumer confidence is coming back and the housing market is stabilizing. But, for most Americans, an even more credible source than a senior government official who happens to be one of the world's leading economists has emerged: TV ads. Yep. According to a front-page story in today's New York Times, "While economists and investors study housing starts and gross domestic product predictions to measure economic vibrancy, General Electric, Bank of America and other companies are using commercials to proclaim America's future is bright." And if they say it in a TV ad, you know it's true. Otherwise how do you explain all the ShamWows and that Popeil Pocket Fisherman in your basement?

Russian Foreign Minister Sergei Lavrov has reported following talks with Secretary of State Clinton that there is a "good chance" of cutting a deal with Iran on its nukes. He also called the threat of sanctions "counterproductive," revealing a resolute and moving faith in the fundamental decency of mankind ... and especially in the Iranians despite a track record that would and has made lesser nations doubters. State Department spokespeople said that they didn't seek anything from the Russians during the trip, which provides us with more good news since nothing is precisely what they got.

In today's Washington Post, Anne Applebaum, almost certainly their best regular commentator, finally digs deep enough to find the positive spin on our favorite prime minister, Silvio Berlusconi. This is important because without Berlusconi, newspapers would be dull grey things ... er, even duller, greyer things. We need a buffo world leader and I suspect we can all agree he's the perfect guy in the perfect place given his special breed of apparently corrupt ludicrousness and the not unimportant fact that Italy is probably the largest country we could trust to such a clown without really dire consequences to the planet. Writes Applebaum, seeking to explain his popularity, "Besides, with Berlusconi as your prime minister, you don't have to take yourself too seriously. You don't have to trouble yourself with geopolitics or the state of the planet, or poverty and failed states. You can stay at home, remain unserious and argue about the latest legal scandal. And maybe that too, is part of the prime minister's appeal."

And in other good news: The five short-range missiles tested by North Korea yesterday were only short-range missiles, while the recent spate of bombings in Pakistan have been tragic they do serve as a useful reminder that our real problems in that neck of the world are not in Afghanistan, despite the fact that the Baucus health-care bill doesn't actually fix a single one of the problems it sets out to address according to members of the House of Representatives it may actually get a helpful makeover in conference, Nicolas Sarkozy loves his 23-year-old son enough to advance him for a job running a good chunk of Paris's financial district, and perhaps most upliftingly the founder of Cirque du Soleil returned safely from a trip to outer space today thus guaranteeing the world more of his trailblazing work creating the theatrical equivalent of Muzak. Next up: why not an evening of bad jokes, young scantily clad women, acrobats, plastic surgeons and opera music called "Berlusconi!"

OMAR TORRES/AFP/Getty Images

This may have been the best month for Brazil since about June 1494. That's when the Treaty of Tordesillas was signed granting Portugal everything in the new world east of an imaginary line that was declared to exist 370 leagues west of the Cape Verde islands. This ensured that what was to become Brazil would be Portuguese and thus develop a culture and identity very different from the rest of Spanish Latin America. This guaranteed the world would have samba, churrasco, "The Girl from Ipanema," and through some incredibly fortuitous if twisted chain of events, Gisele Bundchen. 

While it took Brazil sometime to live up to the backhanded maxim that it was "the country of tomorrow and always would be," there is little doubt that tomorrow has arrived for the country even if much work remains to be done to overcome its serious social challenges and tap its extraordinary economic potential.

The evidence that something new and important was happening in Brazil began to build years ago, when then President Cardoso engineered a shift to economic orthodoxy that stabilized a country racked by cycles of boom and bust and mind-blowing inflation. It has gained momentum however, throughout the extraordinary term of the country's current President Luiz Inácio Lula da Silva.

Some of that momentum is due to Lula's commitment to preserving the economic foundations laid by Cardoso, a courageous political move for a lifelong labor leader from the opposition Workers Party. Some of it is due to luck, a changing global energy paradigm that helped make Brazil's 30 years of investment in biofuels start to pay off in important new ways, massive discoveries of oil off Brazil's coast and growing demand from Asia that has enabled Brazil to become a world agricultural export leader and assume the role of "breadbasket of Asia." But much of it is due to great skill on the part of Brazil's leaders in seizing a moment that many of their predecessors likely would have fumbled.

Of those leaders, much of the credit goes to President Lula who has become a bit of a rock star on the international scene, harnessing energy, drive, charisma, uncanny intuition, and common sense so effectively that his lack of formal education has hardly been an impediment. Some goes to other members of his team, such as his chief of staff Dilma Rousseff, a former energy minister who has become a very tough chief of staff and a possible successor to Lula. But I believe a large amount of it ought to go to Celso Amorim, who has masterminded a transformation of Brazil's role in the world that is almost unprecedented in modern history. He has been Lula's foreign minister since 2003 (he also served in the same role in the 1990s) but I think there is a fair case to be made that he is currently the world's most successful foreign minister.

It is impossible to pinpoint just one turning point in Amorim's efforts to transform Brazil from a lumbering regional power of dubious international clout into one of the most important players on the world stage, acknowledged by global consensus to play an unprecedented leading role. It may have come when he played a central role helping to engineer a pushback by emerging countries against a business-as-usual power play by the U.S. and Europe during the Cancun trade talks in 2003. It might have been the canny way the Brazilians have used issues such as their biofuels leadership to forge new dialogues and influence either with the United States or with other emerging powers. It certainly involved his embrace of the idea of transforming the BRICs from acronym to important geopolitical collaboration, working with his counterparts in Russia, India and China to institutionalize the dialogue between the countries and to coordinate their messages. (Arguably the BRIC helped most by this alliance is Brazil. Russia, China and India all earn places at the table due to military capabilities, population size, economic clout or resources. Brazil has all these things...but less than the others.) It also involved countless other things from the Brazil's deepened and tightened ties with countries like China, it's promotion of both investment flows and a reputation for being comparatively secure in the face of global economic reversals, the comfort level America's new President has with his Brazilian counterpart -- even extending to encouraging them to play a role as a conduit to, for example, the Iranians. Agree or not with their every move in places like Honduras or in the OAS on Cuba, Brazil has also continued to play an important regional role even as it is clear its focus has shifted to the global stage.

Nothing illustrates how far Brazil has come or how effective the Lula-Amorim team has been than the events of the past few weeks. First, the countries of the world cashier the G8 and embrace the G20, guaranteeing Brazil a permanent place at the most important table in the world. Next, Brazil becomes the first country in South America to be awarded the right to host the Olympics. Yesterday's FT carried news that "Asia and Brazil lead rise in consumer confidence", a reflection on the reputation that the government has effectively sold (with the bulk of the credit going to a resurgent Brazilian private sector.) And this week's stories out of the IMF-World Bank meeting in Istanbul show a further institutionalization of Brazil's new role with agreement to change the structure of the International Monetary Fund. According to today's Washington Post: "The nations also preliminarily agreed to reshape the fund's voting structure, promising a blueprint for giving more clout to emerging giants like Brazil and China by January 2011."

Not a bad few days work. And while it's Brazil's Finance Ministry you'll find at IMF-World Bank Meetings, the undisputed architect of this remarkable transformation of Brazil's role in Amorim.

Much work remains to be done, of course. Part of it has to do with the new role that has been shaped. Brazil wants a permanent place on the U.N. Security Council and more of a leadership role in other international institutions. It may well earn these, but it will have to maintain its growth and stability to get there. Further, Brazil seems inclined to minimize regional threats such as those posed by Venezuela (Brazilians tend to look down their nose at their neighbors to the north almost as much as they do toward their Argentine friends to the south ... and thus they under-estimate the ability of men like Hugo Chavez to do too much damage.) And they have an election coming up that may change the cast of players and of course, that can alter the current trajectory in any number of ways -- good and bad.

But it is hard to think of another foreign minister who has so effectively orchestrated such a meaningful transformation of his country's international role. And that's why if I were asked today to cast a ballot, my vote for world's best foreign minister would likely go to Santos' native son, Celso Amorim.

One note on yesterday's post: I received a note late yesterday from a spokesperson for the British Embassy taking issue with my assertion that the British Ambassador had joked that he wasn't getting much attention from the Obama administration. The thrust of their point was that "the Embassy denies categorically that the Ambassador made these remarks, even in jest, and that in our view the relationship between the UK and USA remains as close as ever -- whatever the noises off by febrile commentators in the media." While I stand by my story, their email to me on this was so civil and well-argued that I felt it only fair to pass on their views. I would take the "febrile commentators" point personally, but I had a flu shot only yesterday so they can't possibly mean me.

AFP PHOTO/JUAN MABROMATA

World Bank President Bob Zoellick has done an important service with remarks he delivered Monday in which he said, "The United States would be mistaken to take for granted the dollar's place as the world's predominant reserve currency. Looking forward, there will increasingly be other options." In fact, the only issue I take with his statement, delivered at the Johns Hopkins School of Advanced International Studies, is that it does not go far enough.

It has thus far been easy for most Americans to shrug off discussions of coming competition for the dollar as a reserve currency. First, of course, most Americans aren't even aware that the discussion is taking place and of those that are aware, most haven't the slightest clue how the international monetary system works -- which at least gives them something in common with most members of Congress and central bankers everywhere. (Zoellick is rightly pretty tough on the central banking community in his remarks, as well.)

Also, when Europeans or Russians starting talking about needing another currency so there is an alternative to the greenback, Americans tend to shrug it off as dollar-envy. It was not, of course, so easy to dismiss such suggestions when it came from the Chinese given their role as our principal creditor and the fact that they had more reserves than any other country in the history of mankind. But we put our hands over our ears and made "la, la" noises to drown out the discussion anyway.

Thus, whenever the issue arose, as it did again in discussions last week at the G-20 meeting, it has not had much resonance even among most members of the policy community in Washington. Many view the dollar as an immutable, unchanging fixture of the financial world ... even though recent experience has demonstrated that other than greed, there are few immutable, unchanging features of the financial world. This made it easy for the U.S. Treasury to simply mouth reassurances -- as Tim Geithner did last week -- that the dollar should remain the reserve currency without getting much questioning here at home. 

But Bob Zoellick is not a whacky, Gitane-smoking, eurocommunist with an anti-American agenda.    

He is a Republican, a Bush appointee, one of only a couple of dozen senior current or former U.S. government officials who can say they worked at Goldman Sachs, the true power center of international finance. So when he says don't take the dollar's place for granted, perhaps others in Washington will listen and start to focus more on the increasing likelihood that the growing chorus of those seeking change may well gain traction and as may the alternative currencies themselves -- be they Special Drawing Rights, the simulated money produced by the IMF for use with its members, or Chinese yuan.

Of course, Zoellick, whose remarks (which I read in "prepared for delivery" form) are typically thoughtful and also address the importance of the ascension of the G-20 and how this newly central group should take into consideration the broader rise of emerging economies, stops short of actually joining those calling for an alternative currency. It's easy to understand why, given his position.

But since none of the rest of us are president of the World Bank, we should not feel so constrained. There are plenty of good reasons why there should be one or more better alternatives to the dollar as a reserve currency than currently exist. Further, by not taking the discussion seriously we are less likely to play an effective role in the discussion about the future architecture of the system, consigning ourselves to a more reactive, sideline role.

First, there is no reason why one country should be given the responsibility or the right to play such a central role in determining international economic policies and outcomes. This is unlikely to be very persuasive here at home where most Americans first reaction is going to be, "Why the heck not? If not us, who? Don't we deserve it as the world's number one economy?" 

Given that the call for equity is not likely to be persuasive, what about basic American values like our belief in the benefits of competition. Look what has happened during this era in which we have not believed there was a real alternative to the dollar: We have behaved extraordinarily recklessly, piling on debt and practically taunting the world to find other options. It is clear, we don't have the discipline to manage the dollar properly as it is. We need the competition as much as anyone else.

Would a rapid selloff of dollars be potentially disastrous for America?  Absolutely. But, we are deluding ourselves if we don't think such alternatives already exist. Why is gold at such absurd heights and going higher? Further, there is plenty of evidence to suggest that oil and other commodities are regularly used as alternatives to currencies in what amount to forex trading strategies. In other words, markets demand such alternatives already. And any movement toward acceptance of new alternatives is likely to take a long time as investors cautiously adjust. So, we have to ask ourselves is the greater downside in embracing change or in clinging to a viewpoint that is both out of touch with emerging realities and promoting bad behaviors on our own part?

The international economic system will evolve with our cooperation or without it. Currently the biggest threat to the dollar is not those who seek alternatives but the U.S. policies that are pushing them in that direction.   It's time we engaged in this debate in a serious way, and Zoellick's remarks are a very constructive first step in that direction.

Win McNamee/Getty Images

Oh sure, if you're married to Carla Bruni then it's easy to argue that happiness matters.  

"I'm a short guy in a low-paying profession in a country that was last considered a dynamo at the time of Montgolfier brothers first balloon flight," you think, "but my wife is chaud, chaud, chaud and in my country everybody gets five weeks off and all the pain chocolat they can eat. Bien sur we need a new way to keep score."

So, if you're Nicolas Sarkozy, president of a country that knows something about little men who want to change the world, of course you embrace a new report from a group of economists led by Nobel Prize winner Joseph Stiglitz that argues that we ought to be measuring the progress of countries by how happy their people are. 

But what about the rest of us? What are we supposed to make of this crazy idea that there is a better way to measure the economic success of a country than GDP growth? Something more important than a tally that primarily measures the value created by a country's businesses? Something more important than a measure that can be strongly positive while inequality grows and the few are cashing in on the labors of the many?

How very French. But come to think of it when we live in an age when China's is flashing nearly double digit growth in the middle of a recession while we're busy trying to convince all the girls that 2 percent is the new 4 percent, maybe Sarkozy is on to something. (Certainly the new approach would make the concept of a global depression that much more accurate.)

Oh, that what Stiglitz and company are recommending is a metric that is more aligned with the interests of people than businesses and would offer governments a measurement of success that actually reflects the aspirations of their citizens ... well, that's easy to dismiss because happiness doesn't seem that serious, does it? I mean, after all, didn't our founders specify that the purpose of our country was to guarantee the right of all of us (well, white men anyway) to life, liberty, and the pursuit of constant growth in "the total market values of goods and services produced by workers and capital within a nation's borders during a given period (usually 1 year)."

Even better than any redirecting of our priorities that might come of shooting for a different set of goals is the fact that totally extraneous things might conspire to raise our national level of happiness even while other economic measures are faltering, thus making us feel better at the times we most need to feel better (like now). Thus, while it might take a while for Barack Obama's economic reforms to restore growth to America his mere arrival on the scene would almost certainly have accounted for a net rise in terms of our gross national happiness (to use the accepted Bhutanese metric.) Heck, just mentioning the Bhutanese metric does it for me because it reminds me of a post this site had over the summer on Bhutan which was written by my very happy-making eldest daughter. (Both my daughters would make me a huge contributor to America's well-being by these new measures. Although come to think of it, they are making a not insubstantial contribution to GDP growth as it is.)

Or you could pick up a paper and read the right kind of story and bing-bing-bing, our collective score rises. Like it did today while reading Obama was on Wall Street pushing for long-overdue financial reforms. Or better yet, because he called Kanye West a "jackass." Or -- because sometimes all it takes is a goofy story about nutty officials -- when I read about Evo Morales's plan to nationalize the Bolivian national soccer team because it didn't make the cut for the World Cup. Or when I read about Venezuela's announcement of its new nuclear program. (I know, that doesn't sound so great. But I've been predicting this problem for so long that it gives me a little lift even if it is a potential calamity for millions of others. Take note: that's what narcissism makes possible.) 

On the other hand, the happiness pendulum could swing in the direction of the usual litany of disasters and indefensible policy moves. We could say, extend the Cuba embargo for one more year -- as Obama just did -- and trigger a near-depression (recession?). It's a good example of the kind of pathetic failure of imagination that passes for an excuse to keep repeating our mistakes. But I guess that was the point Sarkozy and Stiglitz were trying to make ... and why their effort, even if it is utterly unrealistic, makes me so dang happy.

JACK GUEZ/AFP/Getty Images

There was for a long time been a widespread belief that the guys who were cashing in on Wall Street were the best and the brightest. Now, as we mark the anniversary of the collapse of Lehman Brothers we have yet another form of proof it just ain't so. 

But the deus ex machina arrival of new U.S. ambassador to Germany Philip D. Murphy really is in a class by itself -- stupid, thoughtless and arrogant on so many levels it deserves some kind of an award. 

Perhaps State ought to consider some kinds of guidelines for the fat cats who are being plunked down in important embassies around the world. Like: "Don't be a pig with your money." Or: "Try to remember you represent the United States of America and not the sovereign principality of Goldman Sachs anymore."

But you do have to give the White House credit. Getting someone from Goldman to serve in the government is a real coup. Who thought of that? They also deserve a medal.   

It used to be that the Chairman of the Fed was regularly referred to as the most powerful man in the world. This was back in the day of Alan Greenspan and, at the time, it seemed it was in spite of the fact that people seldom understood what he was saying. Subsequently, we learned it was precisely because of the fact that we didn't understand what he was saying. And then, subsequent to that, we also learned ... largely because he had the good grace to admit it ... that he himself didn't understand what he was talking about.

The downward spiral of Greenspan from philosopher king of the global economy to mere mortal caught his successor, Ben Bernanke, in its vortex. He was handed an economy in which the doors and wheels were coming off as we drove and nothing like the power he needed to deal with it. Indeed, as the current crisis unfolded we saw that the Fed chair was not the most powerful job in the world, that title was reserved for current or former ceos of Goldman Sachs. This must be so because for a while people wanted to fire Bernanke after one term in office primarily because he had inherited a mess whereas when you screw up the global economy as the current or former ceo of Goldman Sachs, people want to help bail you out or make you Treasury Secretary or both. 

I kid. It is highly unlikely any ceo of Goldman Sachs is Treasury Secretary again for quite some time. Possibly years. 

And Bernanke did earn some of the flack he got initially, largely because he was swept along in the groupthink of Washington economic honchos, buying into the "leave it to the markets" regulatory philosophy that got us into the mess we faced for far too long. But when it became clear that approach not only did not work but that real change was needed, the quiet academic stepped up and became perhaps the leading dependable voice of reasonable change. That's why there is a consensus emerging today that Bernanke, who against all odds seems to be restoring the notion of Fed Chairman as Washington's most trusted economic oracle, should be reappointed when his term in office ends. Steven Pearlstein, in a typically thoughtful piece in today's Washington Post, gets on this bandwagon and adds a few suggestions as to how to modify the Fed (as well as an absolutely justified endorsement of David Wessel's terrific new book on the economic crisis called, "In Fed We Trust.")

The growing momentum of this bandwagon has put in doubt the once conventional wisdom that Larry Summers had accepted the reins of the National Economic Council as an interim step on his way to the Fed chairmanship. But Summers has done such a good job elevating the National Economic Council to unprecedented prominence in the day-to-day operations of the White House and has so effectively earned the president's trust, that it is now almost certainly better for all concerned (including those of us out here in tax-payer land) that he stay right where he is. If there was ever a situation that called for the president to have a strong economic quarterback at his immediate side in the White House, it is this one and in Summers, Bernanke, and Geithner, Obama has got a first-rate team that has the number one criteria you need for success in each of their respective jobs -- the trust of the president.

Now, as readers of this blog know, I don't think every move they have made is perfect. I am disappointed by the speed of regulatory reform here in the United States and internationally. I think they have not done enough to address some of the underlying causes of the crisis such as the creation of massive pockets of risk in the global economy related to the development of opaque derivatives markets. I think they have cut deals with Wall Street that are too sweet for the bankers. I think they have spent too much, bought into ideas (like tax cuts) in the stimulus that amounted to political pandering and they sure haven't given the president the kind of clear guidance he needs on how to sell the health reforms that are perhaps the economic reforms we most urgently require.

That said, their job was first to stop the bleeding and to stabilize the patient. It was no easy task and what they did in terms of swift and sweeping intervention, while imperfect ... almost necessarily imperfect given the speed at which they were operating ... has seemed to work. I still fear a second dip of the recession ... the "W" rather than the "V" shaped recovery. But today's papers show Germany and France creeping out of recession. Japan may too. Economists (a group with limited credibility at the moment, I must admit) seem to think we are at least plateauing here in the United States too. So I think it is fair that this team get credit for their efforts. 

Frankly, I hope that the initial success they seem to have achieved emboldens them. If anything they have seemed too deferential to the Congress and to Wall Street and once stability seems assured aggressive measures to rein in the budget deficit, further strengthen regulatory oversight and strengthen international regulatory mechanisms will be called for with the same urgency that stimulus measures were called for earlier this year. 

We have seen the dangers of too much deference to the markets, of regulatory indifference, of not believing that government could or should play a significant role in protecting our national interests by identifying and mitigating market risks with broader macro or social consequences. I hope the president makes the early decision to keep everyone where they are so that they can focus on the next wave of reforms that are so urgently needed.

(And to be clear, does the above actually suggest that I want a bigger role for governments in market regulation, stronger global governance mechanisms, tax increases if we need them in addition to substantial spending cuts and that I am a fundamental believer that government also needs to play a much expanded role in ensuring sustainable health care...which optimally would be through a single-payer system that is not even on the table at the moment ... and preserving the environment ... ideally through a simple, straightforward and substantial carbon tax? Yes, it does. Start rolling out your labels if you would like, but if the recent crisis has taught us anything it is that we can't afford the reflexive rejection of government solutions where they are needed ... rather we need to rise to the challenge of figuring out how to make governments more effective in these critical roles that only they can play.)

Spencer Platt/Getty Images

As indicated late last week by the first half of my foreign policy report card, President Obama has put a first class team in place to manage his international agenda and so far they are working well together.   But what about the policies themselves?  It's early yet, of course, but it's worth asking-where have they made their mark and what kind of marks is that likely to get them.

Remaking the American Brand, Grade: A

Job one was slamming the door on the George Bush Era then locking it, boarding it up, doing a "Cask of Amontillado" brick wall on top of that, and then depositing the whole thing in Yucca Mountain for safe keeping.  Related to this was getting out there, introducing Michelle, and letting intelligence, charm and competence tell the story. My belief is most of the world wants to like America so this task was not quite as hard as some had made out (which makes Bush's alienation of the planet all that much more of an accomplishment), but Obama has shined as the new front man for the "new, improved" good old USA. 

North Korea, Grade: B

Oh, right. As if I am stupid enough to evaluate the North Korea policy in the wake of Bill Clinton's historic visit... Well, actually the outcome was easy enough to predict; Clinton wouldn't have gone if the release of the two journalists weren't a pretty sure thing. The North Koreans wouldn't have accepted him if they didn't think it was time to take a little breather (as we periodically do) from all the heavy breathing. But the long-term issues will remain. Clinton himself once said nuclear weapons were North Korea's only cash crop and so they will likely keep playing the game we're used to. Frankly, if Clinton hadn't gone, I think I would have given a D on this front because they have been toying with us on the nuclear issue and our multilateral efforts have been ineffective. Also our policy has been virtually identical to Bush's.  Or maybe I would have given the administration a "C" because I enjoyed Hillary's mudslinging with the Dear Leader a few weeks ago. It was lousy diplomacy but had a higher truth content and more comic content than such exchanges usually do. (Come to think of it, I wonder how our former president and Kim Jong Il handled the "funny lady" who looks like a "pensioner going shopping" comments at dinner tonight?  And however they handled it, if only we could have gotten a glimpse of the "Annie Hall" subtitles that would have revealed what they were really thinking.")

Iran, Grade: C+

The big plus in the current team's policy re: Iran is clearly the move toward engagement. The big negative is clearly the move toward engagement.  They cancel each other out which is why I give them a "C." Engaging with Iran is the right thing to do. This is a country with the greatest possibility of leading the Middle East toward democracy and integration with the west.  It is sophisticated, cosmopolitan and too diverse to pigeonhole just because the views of a few leaders are crazed. (We in the United States should have learned this lesson from how we wanted to be treated when W was at the helm.) But as has been said here before, engagement is a tactic -- not a policy objective. We were so eager to achieve it that we were late in condemning the unrest in the streets in Tehran. And I fear that the success or failure of engagement in Iran will be seen as so central to the President's ultimate foreign policy grade that we may be too accepting of the promises of a regime with almost two decades of history of breaking promises. I give the plus because I think Hillary Clinton leads a group of tough-minded policymakers in the administration on this issue and I think there is still a decent chance we may get the best of both worlds: engagement and the ability to respect ourselves the next morning. 

Israel and Palestinian Territories, Grade: B

As discussed here earlier, we may be on the verge of a historically bad patch in the U.S.-Israel relationship. The United States feels the need to get tough just as an Israeli administration comes in that is inclined to defend the indefensible (which is the expansion of settlements). But frankly, only through such toughness will the United States be able to be an effective intermediary in defusing this chronic crisis.

Also: the administration has been hugely more engaged on this front than their predecessors... which is a big plus. But we have to ask: when push comes to shove, will the administration be as tough with the Palestinians as will be necessary? Will a perhaps too soft stance on Iran create a deeper rift with an Israel with legitimate security concerns regarding a nuclear Iran? My guess is we will make some progress on this front in the next three years...more than at any time since the Clinton days. But now that we have established that we recognized what needed to be changed...we need to prove that we recognize what also needs to be preserved in our relationship with Israel. 

Afghanistan and Pakistan, Grade: D

This is the "Be Careful What You Wish For, War." The administration framed this as the good war during the campaign and now it has become theirs. This is where their military management skills will be tested. This is where their geopolitical mastery will be tested. And, I believe, this is where they will start to fail those tests ... not because they won't be working the issues as hard as possible or putting their best people on the problem. Rather it is because ancient ethnic divisions, geography, religious politics and history make victory ... victory of any sort ... almost impossible. The best we can hope for is to get some bad guys and get out, hand the problems over to locals and forge a partnership with the other great powers in the region, notably India and China to contain the spillage from a place that is likely to be an open wound on the world for decades to come.

Iraq, Grade: B-

Look, Obama was elected to get us out of here and that's what he's doing.  Having said that, watch closely as to what happens as we leave. My sense is a combination of government incompetence and corruption and the intractability of local problems is likely to produce festering unrest that keeps 50,000 or so U.S. troops in this country for...well, maybe not John McCain's 100 years...but a long time. (Which was the point McCain was inartfully trying to make, I think.) And if you want to start a betting pool, I say the over-under on an independent Kurdistan is 2020 and I'll take the under. 

BRICs-Russia: C, China: A-, India: A-, Brazil: B-

The Obama team has made a great contribution by recognizing the rightful place of these emerging powers within whatever organization ultimately succeeds the G8. But the policies with each country have been a mixed bag. The most important of the relationships by far is with China...it's the most important bilateral relationship in the world by far.  Obama has put in place a terrific ambassador, early meetings have gone pretty well and most importantly, the clear message has been sent about the centrality of the relationship. If the Chinese are beating us up a bit on economics well, turn about is fair play...and an important dimension of a relationship among equals. While the Indians gave Hillary a hard time on climate, her trip and the up-coming meeting in Washington with PM Singh suggest this relationship too is entering a new era. The U.S.-India relationship has never been more vital to us or to them ... that's a good thing. So far the relationship with the Russians has left everyone a little uneasy. I happen to think that's roughly how we should feel about the Russians, but it is hard to say the relationship is in especially good shape and we are cutting them a little too much slack. (Did you notice the Russian-Iranian naval exercises a few days ago?)  Lula and Obama have a natural affinity and we are also sending a great ambassador to Brazil but the cave to Sen. Grassley on the ethanol tariff takes away something the Brazilians wanted a lot. So, the future of that relationship will really depend on what the U.S. does to help Brazil claim a larger role on the international stage.

Europe, Grade: B

The Euros started out loving Barack. But the administration dragged its feet on European proposals for major global regulatory reform in finance and the Euros dragged their feet on upgrading their help for the United States in AfPak. It's going to get worse if the "special relationship" we have with the U.K. ... which has been crucial in managing our other relationships in the region ... is damaged because, as seems likely, the next British PM is a guy, David Cameron, who the Obama team is going to have a tough time getting along with. It's going to get worse still if our budget constraints start having us cut back further on our international military activities and more pressure will be applied to Europe to step up. But so far so good on this front and it seems likely that given strong working relationships at the highest level with France and Germany, things should be fine. (Although it's quite a thought: the U.S. could be closer to Sarkozy's France than to Cameron's U.K.)

Latin America, Grade: C

Face it, the U.S. only cares about Latin America when it has to. So far, Obama and company have given Mexico good attention and although the security situation in that country remains unsettled and that could lead to a likely resurgence of a PRI that may be harder for Obama to deal with, it is hard to imagine any U.S. administration handling the relationship better.  There has been slight movement on Cuba. I mark the administration down a whole grade on this point since there should have been major movement on Cuba-the removal of a policy that is so bad I really hate to speak its name.  Sin embargo, even worse are likely to be the consequences of our hesitant policy toward Hugo Chavez. Read the recent NY Times article on what Venezuela has been doing with the FARC in Colombia. Chavez may be a tinpot crackpot but he is working to undermine democracies in the region like Colombia ... and of course, Venezuela ... even as he continues to proclaim his democratic legitimacy. This is a place where the clown show in Trinidad is going to look worse and worse as engagement with this truly bad actor is quickly ruled out.

Africa, Grade: B

So far the administration has made the case that it wants to do more for this relationship. Now, of course, it actually has to do more. Thus far, the issues of the region have gotten precious little bandwidth and the failure to put in place someone to run U.S. A.I.D. hasn't help. So...good message but the proof is in the pudding. (Also, the over-under on the next time we send U.S. troops to Africa is 2015. I'll take the under. In other words: a dangerous policy mistake to watch is under-estimating the geopolitical importance of Africa going forward.)

Multilateralism, Grade: C

High marks are earned for starting to mothball the G8 in favor of the G20.  Low marks for sluggish and limited trade policy, likelihood of a punt in Copenhagen, very limited results at most summits, failing NPT and no good successor in sight, and not very effective use of the UN to date.  (Though that could change I do have a lot of faith in Susan Rice to change it.)

So, there you are. Ruminate. Admire. Cast aspersions. I can take it. Where I am right now Washington seems far far away and I am finding new clarity. (Or possibly suffering from oxygen deprivation.)

Middle: Joe Raedle/Getty Images; Top Right, clockwise: Joe Raedle/Getty Images, Mark Wilson/Getty Images, JEWEL SAMAD/AFP/Getty Images, KNS/AFP/Getty Images, David Silverman/Getty Images, ALI AL-SAADI/AFP/Getty Images