Tuesday, January 29, 2008

America's economic barometer


America's Economic Barometer
The Current Discussion: If countries around the world are doing so well economically, why are they still catching a cold when the United States sneezes?

In a more interdependent world, we simply can’t ignore the economic wellbeing of the world’s largest economy. A further slide in the U.S. cannot remain an isolated event. The U.S. dollar remains the major reserve currency, with all the major commodities being priced in U.S. dollars – so it is hardly surprising that the weakness of the U.S. financial system will have international ramifications.

A major fall of the U.S. dollar or its stock market will more than likely affect other economies as their financial assets in U.S. markets contract. That spells trouble for economies, as their asset base is mostly denominated in U.S. dollars. However, one has to admit that the economic landscape is changing in large measure as other economies are expanding, and while they would be affected by a U.S. slowdown it does not mean a compete breakdown will occur. The emergence of China and India as two major economic players, not far from becoming major economic powers, implies that the economic balance is changing. However, these markets are more likely to attract capital investments into their manufacturing and service sector and not their stock markets, mainly because it is hard for them to compete with the efficiency of the U.S. market.

However, the immediate impact of U.S. stock market changes is more a barometer to which other markets react, as is the case today. However, in the GCC (Gulf Cooperation Council, i.e. the rich oil producers) generally the economic performance is relatively immune to a U.S. recession, even though their stock markets do have knee-jerk reactions. The question remains: in a world where globalization seems to be the direction of economic progress, will the woes of the U.S. dominate economic performance? Perhaps for some time to come the financial impact will be there, as the U.S. dollar remains a major reserve currency and perhaps the largest financial market. However, as other markets mature the direct impact will be minimized (though never really absent) as the impact of globalization will also mean that other economies like Europe, China and India will also be able to impact global economic performance.

Saturday, January 5, 2008

Dear Candidates

My contribution to Washington Posts Postglobal site


Dear Candidates: Equal Attention to the World’s Problems
The Question: The U.S. starts to choose a president this week. If you could send the candidates one message, what would it be?

What the world today needs, more than ever, is a world statesman: someone who can guide the world with empathy and compassion, not guns and missiles. The world has been brought to the brink of massive destruction, and while one cannot blame American leadership for all of the problems, America must take responsibility for what it has done wrong.

The demands on your attention will be many, some born out of a moral prerogative, others born from the pressures of the commercial world and leading the world’s largest military power. While I do not expect leaders to be perfect, I do expect them to be fair on the issues of world politics.

We wish to see an American president who is willing to be brave and balanced on the issue of Palestine and Israel, to condemn the Israeli aggression with the same tone as Palestinian suicide bombers are condemned. We wish for someone who will act on world affairs based on reason and fact, not emotion and conjecture, to bring to the forefront the values of fairness that are expected within American societies. There is no doubt that America is a great nation, with some of the finest values of freedom of speech and the rule of law, but its leadership seems to have forgotten these values and these need to be rekindled into the body politic of the nation. It is this that will win the hearts and minds of the people around the world. Asking for democracy in Iraq and and Pakistan is indeed a bold statement, but to ignore China's violations of human rights especially with respect to Tibet, or to take the pressure off of Burma, all show that its current leadership seeks selective democracy.

The world ahead of us needs understanding, not an ‘us and them’ approach. American leaders need to become the 'we', with a true worldly view. At the start of this long road to the White House, which of you will embrace this vision, and more importantly which will carry it into your term of office? The world is watching.