That's not the Glow of the Sunrise. Your House is on Fire!

skunk

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http://www.iht.com/articles/2005/01/26/business/economy.html
At Davos, skepticism over U.S. economic policy

By Mark Landler The New York Times

Thursday, January 27, 2005


DAVOS, Switzerland As the world's most rarefied talk shop opened for business here Wednesday, two things were as clear as the Alpine air: The sinking dollar and soaring deficits in the United States are topic A at this year's conference of the World Economic Forum.
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Anyone hoping for an answer to when either will stabilize is likely to come away disappointed.
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Economists, politicians and executives voiced deep unease about the imbalances in the global financial system, as reflected in the dollar's steep fall against the euro and other currencies.
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But most expressed skepticism that the Bush administration would reduce the trade and budget deficits, which have fed those imbalances. Some said they doubted that China, which is financing much of the American debt, would bow to pressure to allow its currency to rise against the dollar this year.
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"The U.S. current-account deficit is a problem for the whole world," Jacob Frenkel, an economist and former governor of the Bank of Israel, said. "I don't see the budget deficit being taken seriously."
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The Bush administration, which dispatched Vice President Dick Cheney and Colin Powell, then the secretary of state, to past Davos meetings to defend foreign-policy initiatives, has not sent a senior economic policy maker this time. That absence has lent the proceedings themselves an unbalanced tone.
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"In fairness, it's a transition period in Washington," said Representative Barney Frank, Democrat of Massachusetts, who supplied the American voice on a panel about American leadership. But he added, "The administration doesn't really have anyone they trust enough to send here."
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Frank, the ranking Democrat on the House Financial Services Committee, said he worried that the United States was not paying enough attention to the risks of its growing indebtedness. The repercussions of a weak dollar, he said, had barely registered with the White House.
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Other critics were more blunt. "There's nobody home on economic policy in America right now," said Stephen Roach, the chief economist at Morgan Stanley and a reliable doomsayer at these gatherings.
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The twin burdens of household and public debt in the United States, he said, are unsustainable. He described American consumers as "an accident waiting to happen."
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With the dollar trading above $1.30 to the euro, near its economically tenable limit for Europe, Roach said the United States could not rely on currency markets to right the imbalance with the Asian countries that finance American deficits by buying Treasury bills.
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The answer, he said, was in the hands of the Federal Reserve, which he said would have to raise rates aggressively to curb the spending binge. Whether it could do that without triggering a recession is an open question, especially given the impending retirement of its chairman, Alan Greenspan.
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Few here held out much hope for international coordination of the kind that stabilized the dollar in the 1980s, when the Reagan administration helped negotiate the Louvre and Plaza accords.
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"The Bush administration doesn't listen to people," Laura Tyson, a former chairwoman of the Council of Economic Advisors in the Clinton White House, said.
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Tyson, who is dean of the London Business School, said European leaders needed to stop worrying about the actions of other countries and set about streamlining their own economies. She pointed to recent wage negotiations in Germany, in which the unions agreed to longer hours and more flexible work rules, as a hopeful sign of change.
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Europe cannot rely on Asia to take the pressure off the euro. While people here said they were guardedly optimistic that China would eventually allow its currency, the yuan, to rise against the dollar, few were willing to hazard a guess as to when - or to what extent.
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"That will need a political commitment and a political will, and I don't see that happening this year," said Takatoshi Ito, an expert in international economics at the University of Tokyo.
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Some economists warned that the burgeoning trade deficit and weak dollar could cast a shadow over negotiations to liberalize world trade, which have been dragging for various reasons in the past year.
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China's record trade surplus with the United States could fuel protectionist forces in the United States, said C. Fred Bergsten, the director of the Institute for International Economics in Washington. He said he could foresee moves to slap import barriers on Chinese wood and shrimp.
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"This is a poisonous environment for trade policy and for domestic politics in the United States," Bergsten said.
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In the past couple of years, with the White House's march to war in Iraq, Davos itself has been a rather poisonous environment for Americans. Those tensions have ebbed, although some non-Americans here were talking about the emergence of new alliances - such as one between China and the European Union - that leave the United States on the sidelines.
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"In recent years, our leaders have felt more comfortable talking to European leaders," said Yuan Ming, the director of the Institute for American Studies at Peking University. "The United States could be our biggest partner, but it could also be our biggest troublemaker."
Food for thought, eh?
 

zimv20

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the article said:
"In fairness, it's a transition period in Washington," said Representative Barney Frank, Democrat of Massachusetts, who supplied the American voice on a panel about American leadership. But he added, "The administration doesn't really have anyone they trust enough to send here."
what a crock of ****!
 

Taft

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zimv20 said:
what a crock of ****!
No kidding! Did Bush fire ALL of his economic advisors? Is his cabinet empty? Did Powell or Cheny refuse this year? They went last year.

I hate these kind of excuses.

Taft
 

miloblithe

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How soon before we stop referring to the US as the world's only superpower? I'd say the second Bush administration ought to just about do it.
 

Thanatoast

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miloblithe said:
How soon before we stop referring to the US as the world's only superpower? I'd say the second Bush administration ought to just about do it.
That will depend on if the Bush administration unites the world against us. Not militarily, obviously, but economically and idealogically we will be isolated and pushed aside by the up-and-comers.
 

mactastic

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Thanatoast said:
That will depend on if the Bush administration unites the world against us. Not militarily, obviously, but economically and idealogically we will be isolated and pushed aside by the up-and-comers.
As it happens I ran across this Financial Times article yesterday. I'll post it since it requires subscription.
In a second inaugural address tinged with evangelical zeal, George W. Bush declared: "Today, America speaks anew to the peoples of the world." The peoples of the world, however, do not seem to be listening. A new world order is indeed emerging - but its architecture is being drafted in Asia and Europe, at meetings to which Americans have not been invited.
Consider Asean Plus Three (APT), which unites the member countries of the Association of Southeast Asia Nations with China, Japan and South Korea. This group has the potential to be the world's largest trade bloc, dwarfing the European Union and North American Free Trade Association. The deepening ties of the APT member states represent a major diplomatic defeat for the US, which hoped to use the Asia-Pacific Economic Co-operation forum to limit the growth of Asian economic regionalism at American expense. In the same way, recent moves by South American countries to bolster an economic community represent a clear rejection of US aims to dominate a western-hemisphere free trade zone.

Consider, as well, the EU's rapid progress toward military independence. American protests failed to prevent the EU establishing its own military planning agency, independent of the Nato alliance (and thus of Washington). Europe is building up its own rapid reaction force. And despite US resistance, the EU is developing Galileo, its own satellite network, which will break the monopoly of the US global positioning satellite system.

The participation of China in Europe's Galileo project has alarmed the US military. But China shares an interest with other aspiring space powers in preventing American control of space for military and commercial uses. Even while collaborating with Europe on Galileo, China is partnering Brazil to launch satellites. And in an unprecedented move, China recently agreed to host Russian forces for joint Russo-Chinese military exercises.

The US is being sidelined even in the area that Mr Bush identified in last week's address as America's mission: the promotion of democracy and human rights. The EU has devoted far more resources to consolidating democracy in post-communist Europe than has the US. By contrast, under Mr Bush, the US hypocritically uses the promotion of democracy as the rationale for campaigns against states it opposes for strategic reasons. Washington denounces tyranny in Iran but tolerates it in Pakistan. In Iraq, the goal of democratisation was invoked only after the invasion, which was justified earlier by claims that Saddam Hussein had weapons of mass destruction and was collaborating with al-Qaeda.

Nor is American democracy a shining example to mankind. The present one-party rule in the US has been produced in part by the artificial redrawing of political districts to favour Republicans, reinforcing the domination of money in American politics. America's judges -- many of whom will be appointed by Mr Bush -- increasingly behave as partisan political activists in black robes. America's antiquated winner-take-all electoral system has been abandoned by most other democracies for more inclusive versions of proportional representation.

In other areas of global moral and institutional reform, the US today is a follower rather than a leader. Human rights? Europe has banned the death penalty and torture, while the US is a leading practitioner of execution. Under Mr Bush, the US has constructed an international military gulag in which the torture of suspects has frequently occurred. The international rule of law? For generations, promoting international law in collaboration with other nations was a US goal. But the neoconservatives who dominate Washington today mock the very idea of international law. The next US attorney general will be the White House counsel who scorned the Geneva Conventions as obsolete.

A decade ago, American triumphalists mocked those who argued that the world was becoming multipolar, rather than unipolar. Where was the evidence of balancing against the US, they asked. Today the evidence of foreign co-operation to reduce American primacy is everywhere -- from the increasing importance of regional trade blocs that exclude the US to international space projects and military exercises in which the US is conspicuous by its absence.

It is true that the US remains the only country capable of projecting military power throughout the world. But unipolarity in the military sphere, narrowly defined, is not preventing the rapid development of multipolarity in the geopolitical and economic arenas -- far from it. And the other great powers are content to let the US waste blood and treasure on its doomed attempt to recreate the post-first world war British imperium in the Middle East.

That the rest of the world is building institutions and alliances that shut out the US should come as no surprise. The view that American leaders can be trusted to use a monopoly of military and economic power for the good of humanity has never been widely shared outside of the US. The trend toward multipolarity has probably been accelerated by the truculent unilateralism of the Bush administration, whose motto seems to be that of the Hollywood mogul: "Include me out."

In recent memory, nothing could be done without the US. Today, however, practically all new international institution-building of any long-term importance in global diplomacy and trade occurs without American participation.

In 1998 Madeleine Albright, then US secretary of state, said of the U.S.: "We are the indispensable nation." By backfiring, the unilateralism of Mr Bush has proven her wrong. The US, it turns out, is a dispensable nation.

Europe, China, Russia, Latin America and other regions and nations are quietly taking measures whose effect if not sole purpose will be to cut America down to size.

Ironically, the US, having won the cold war, is adopting the strategy that led the Soviet Union to lose it: hoping that raw military power will be sufficient to intimidate other great powers alienated by its belligerence. To compound the irony, these other great powers are drafting the blueprints for new international institutions and alliances. That is what the US did during and after the second world war.

But that was a different America, led by wise and constructive statesmen like Dean Acheson, the secretary of state who wrote of being "present at the creation." The bullying approach of the Bush administration has ensured that the US will not be invited to take part in designing the international architecture of Europe and Asia in the 21st century. This time, the US is absent at the creation.
 

miloblithe

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Great article. I've also read that South American countries are strengthening ties to Asia, which could only reduce US influence in both those regions.

I wonder how the other aspiring powers will fit into the emerging three-part world (US-NAFTA, EU, Asean+3). Russia, India ... Brazil. Relations with the world of Islam will also be a key factor in the world of the 21st century. The US is at a clear disadvantage there too.
 

skunk

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miloblithe said:
Great article.
Agreed, and good posts following it.

I wonder how the other aspiring powers will fit into the emerging three-part world (US-NAFTA, EU, Asean+3). Russia, India ... Brazil. Relations with the world of Islam will also be a key factor in the world of the 21st century. The US is at a clear disadvantage there too.
How long will NAFTA survive, I wonder. It doesn't do the Mexicans many favours.

America is increasingly becoming an irrelevance, an anachronistic geopolitical dinosaur. You are merely suffered, not admired, as you lumber around, crushing millions while completely unaware. How are the mighty falling! And how many of us will you take with you?
 

blackfox

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skunk said:
Agreed, and good posts following it.
I second that. On both counts.


How long will NAFTA survive, I wonder. It doesn't do the Mexicans many favours.

America is increasingly becoming an irrelevance, an anachronistic geopolitical dinosaur. You are merely suffered, not admired, as you lumber around, crushing millions while completely unaware. How are the mighty falling! And how many of us will you take with you?
Do I detect a hint of self-satisfaction or even glee in your last paragraph?

At any rate, the "lumbering and crushing of millions..." as you so put it, is a common thread of all superpowers, whether they be English, French, Spanish, Soviet or American in nature. The US's behavior, comparatively speaking, has been fairly good I would venture.

America does find itself at the end of an era (the past sixty years or so), and it's mettle willbe tested in navigating the transition from sole-superpower status, to a powerful Nation among equals.

Personally, I see this as a good thing in the long run, as America yet again re-invents itself to suit a new purpose. This may happen with or without the Federal Government's actions, as here in the NW for example, we are already firmly focused on the Asian markets and the transfer of goods,services, people and information is accelerating between the two, despite of, or ignorant of, Federal policy.
 

skunk

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blackfox said:
Do I detect a hint of self-satisfaction or even glee in your last paragraph?
Not really. But the historian in me is quite smug, I suppose. The transient nature of absolute power is absolutely amazing.

The US's behavior, comparatively speaking, has been fairly good I would venture.
The word "moot" comes to mind.

America does find itself at the end of an era (the past sixty years or so), and it's mettle willbe tested in navigating the transition from sole-superpower status, to a powerful Nation among equals.
Yes, but. The lack of awareness among Americans of their own feet of clay portends a great deal of misery while that transition unfolds. A wounded America is a dangerous and unpredictable beast. QED.

Personally, I see this as a good thing in the long run, as America yet again re-invents itself to suit a new purpose.
Let's hope so. But let's face it, it could go either way.
 

IJ Reilly

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skunk said:
Not really. But the historian in me is quite smug, I suppose. The transient nature of absolute power is absolutely amazing.
As in, "The sun never sets on the British Empire"?

And since we're QED-ing here, I don't see much of evidence of nations which find themselves involuntarily reinventing their role in the world turning into rabid dogs.

In defense of the neo-cons (probably the only time you'll ever hear me do it), I believe they are fully aware of the fact that the US won't be the world's sole superpower for very long. They envision the US using this moment to alter the course of world history to the maximum extent possible. They feel that the US is better equipped to move human history in a productive direction than, say, the Chinese. I can see the point, even if I don't agree with the method.
 

skunk

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IJ Reilly said:
Maybe or maybe not, but I don't see the point of attacking this question with inverted logic.
I believe it is the Neo-Cons' logic which is inverted. They do their best to disguise that fact by inverting our very language.
 

IJ Reilly

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I do believe you're evading the issue. It is perfectly possible to pursue a worthy goal in an unworthy manner (hence, the expression).
 

Thanatoast

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IJ Reilly said:
I do believe you're evading the issue. It is perfectly possible to pursue a worthy goal in an unworthy manner (hence, the expression).
But that makes it neither right, nor a good idea. I may be the starry-eyed idealist here, but using the methods of a despot in order to remove despots seems -no- *is* counter-productive. All we've managed to do is become another despotic nation.

The issue is that the United States, through its own actions, is sidelining itself. Destroying its own credibility and good faith, and in the process, any chance of positive change, in an attempt to "do the right thing".

Some means are *never* justified, and sometimes good intentions aren't enough.
 

takao

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IJ Reilly said:
I do believe you're evading the issue. It is perfectly possible to pursue a worthy goal in an unworthy manner (hence, the expression).
the problem is that we don't know if the US government is persuing a 'worthy goal' ... except throwing in catch-phrases (which are rather old) the US government haven't done much to show what they really persue at the moment...
 

IJ Reilly

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Now all three of you are evading the issue! You all should know my opinion about this administration's means, so please don't force me to repeat it. I am simply making the fundamental point that we should not assume that all bad means automatically lead to unworthy goals. This statement is in no way equivalent to "the ends justifying the means." Logic and semantics experts are welcome to check me on this, but the inverse of a true statement is not necessarily a true statement.

To the more specific issue, what Bush is saying these days about the US standing for freedom, democracy and human rights in the world is very little different than what every US president in the 20th century has said. This is a worthy goal, which as an American I'd be proud to have my national government pursue. But this does not imply even remotely that I'd approve of any given path towards that goal. Understood?
 

takao

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IJ Reilly said:
To the more specific issue, what Bush is saying these days about the US standing for freedom, democracy and human rights in the world is very little different than what every US president in the 20th century has said. This is a worthy goal, which as an American I'd be proud to have my national government pursue. But this does not imply even remotely that I'd approve of any given path towards that goal. Understood?
well "freedom,democracy and human rights" were exactly the catch phrases i meant... the Bush government _says_ they are persuing these goals but that doesn't make it so... personally i don't think the bush lead us government is persuing any of those goals at it's core....

IJ Reilly said:
I am simply making the fundamental point that we should not assume that all bad means automatically lead to unworthy goals.
my point is that bad means don't automatically lead to a end ;)