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Tehran, Iran -- Election promises in Mexico are a reminder that democratic debate has given way to the marketing of fear. In turn, empty one-liners have replaced doctrines, platforms and serious business plans. However, there is no ideological alternative to stand against sound market economies and an interconnected world.
Tehran, Iran -- The G8 must show that it is in touch and relevant. The group has risen above two world wars and has been ideologically united against conflict over the last 100 years. Such unity is now necessary to engage festering issues. Transparency, an even hand and (financial) muscle, are needed.
Tehran, Iran - For the last 25 years, international trade with Iran has been subject to an unfair, albeit failed political agenda to isolate Iran with sanctions. Blocking Iran's WTO application was a cheap political tool. But alas, Iran's natural gas and oil reserves remain in demand.
Tehran, Iran - The United States' excessive spending in the Mideast and fiscal recklessness has led to a massive debt. This worries Asian countries that supply the U.S. goods. Like Bashir says, China might escape the consequences of this shifting U.S. demand for goods, but the impact on more fragile economies in the region will be significant.
Tehran, Iran - It's too easy to carve the world into blocks like the American media often does. It contrasts the West, the Muslim world, the former USSR, and "others". It then injects its simplistic religious analyses into complex events to explain the plight of women abroad. Despite what American media claim, it is not religion or culture that affects women most, but education.
Tehran, Iran - World financial markets will dilute the effects of inflationary pressure, all caused by a mix of a devaluation of the U.S. Dollar and higher demand driven by a sharp increase in the price of raw materials. The second wave of this inflationary tsunami will rise from the steady pressure on labor costs and demands for wage increases, especially in the United States were asset price inflation has leaped forward but nominal and real inflation has been kept under the cover of a massive trade deficit. It's all picking up speed in a modern way, but still retains its retro, 1970s character.
Tehran, Iran - I write from a tough neighborhood at the hub of it all. It seems that all political forces have ganged up to stop the local economy in Iran.
China is an emerging economic power, likely to power the world economy for the foreseeable future. Between its domestic growth and international investments, China is an expanding market for commodities and industrial materials.
Ah, nostalgic analysis. Are we searching for the modern day Salvador Allende or the new Juan Perón? The terms “left” and “right” are badly in need of redefinition, especially in the Anglo-American world. For the last ten years, the traditional leftist party in Britain has engaged in a confusing act of political cross-dressing while the extreme right in American politics has uncharacteristically challenged the Constitution.
The political progress of European nations after World War II has been simply remarkable. Within a few decades, centuries of hostilities were set side. A rich and diverse assortment of countries – some with colonial pasts and others historically influenced by outside powers – made the fundamental decision to shed arms and forego conflict. They voted for a convergence of values, despite retaining different languages and customs.
The twins of Bretton Woods were born after the Second World War. They were designed to maintain and promote the principles of capitalist economies and to develop stable markets, protecting them against socialist and communist methods of management.
The so-called subprime loan crisis has led to a crisis of confidence among financial institutions. Some investors have confessed to being unable to value their portfolios, which in turn has frozen trade of some securities. This has stopped lending operations by banks. As of Friday, August 10, the Federal Reserve and foreign central banks had injected $260 billion of additional liquidity into financial markets -- a massive sum equal to 2% of U.S. GDP -- in a single step and all prior to forthcoming aftershocks. As such, this concerted effort ranks among jumbo IMF rescues of emerging markets.
America and its economy are at a significant crossroads: uncontrolled asset inflation, massive consumer debt and a large budget deficit have converged on a structural fault line (not to mention the impact of its military endeavors and political isolation.) Baby boomer consumption is slower, a new generation is taking over and American demographics are moving toward a Hispanic majority within the next two decades.
The U.S. economy is also making up an ever-smaller proportion of world GDP, and that’s a trend we should get used to. The euro zone is now the world’s top economic producer (with a GDP of about $16.3 trillion), while China, India and the returning Russia are all enjoying fundamental growth.
Has any of this gone unnoticed by the rest of the world? No. But Americans carefully and intentionally avoid these fundamental issues as topics of conversation. American politicians and presidential candidates divert the debate to 9/11 (now six years ago), foreign policy, Iraq and the armed forces.
I do not see a worldwide recession. The economies of heartland Europe and other parts of the world have decoupled from the American economy over the last decade. Emerging giants (China, India and Russia) and other economies appear to have a fundamental growth scenario. I tend to believe that the American economy is set to lose the froth on top and the U.K.’s economy might follow. Therefore, we ought to examine the question from a distinctly American point of view.
It is a difficult era for the American economy. The EU is now the top economic producer in the world. High energy prices are exposing inefficiencies in American consumption, even though the overall energy bill of America is proportionally smaller than, say, thirty years ago. The issue is that other efficiencies are squeezed out of the American economy and there is little wiggle room in fiscal balances. The bitter truth is about the hyper-economy and how it is set to face the consequences of irresponsible borrowing. Assortments of public and private debt, one-way bets on income growth, and negative savings have converged with other factors such as an expensive war and anti-immigration policies.
The Current Discussion: In the future, global prosperity will present more of a threat than poverty, according to a recent Post op-ed. Is this just rich-American rhetoric, or is the world really getting too prosperous for its own good?
I am astonished to read the commentary of Michael Gerson, who is an analyst from Council on Foreign Relations, a group that presents itself as “nonpartisan”. Blaming other countries is not an excuse to avoid liability for one’s own inactions. Yet I am not surprised.
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?
The question is a very old and backward looking one. It might have been true about 20 years ago, but the question is not the focus of non-English speakers. The challenges and problems of today are different. It is not just about a search of patterns of the past 60 years and the presumptions of post-World War II markets.
The real economies and main streets of Europe, Russia, the Middle East, India and China are going about their usual business. They have accepted higher cost of fuel, energy and raw materials. A Chinese cement producer or an Indian steel mill, a food processor in Egypt, or car and biscuit makers in Iran and Turkey have enough business at home to be cheerful and all have passed on their cost increases to their customers. China welcomes the slowdown to cool its domestic economy as Chinese companies have turned to Vietnam, as a supplier of consumer goods and as a customer of machinery. Indian companies are expanding with record amounts of foreign direct investment flowing in joint ventures. Dubai is the second largest construction site in the world and nothing seems to slow the pace there. Real estate prices in Tehran and Sofia are leaping along with Moscow and Shanghai.
Yes....the Red Chinese are coming, the Indians have taken over world’s steel, and London real estate is now Russian and Arab occupied territory! Putting the wagons in a circle ought to fix the problem. Why not add pseudo-protectionism, brew a more confused cocktail, and satisfy the residual hype of the cold warriors? Does it make sense to go beyond the odd simplification that skews globalisation, capitalism and development in the same breath?
The Current Discussion:The global economy is quaking. Are we heading toward a global recession? Who's to blame?
The chain reaction in progress can be best described as a “deleveraging” of American finances. It is a uniquely Anglo-American development, not a global problem, and is likely to continue for two or three years before fundamental stability and realistic valuations fall in place. Alas, recession is a rusty description, originally coined for industrial economies. It is a misnomer for today’s American finances and post-industrial economy, isolated into a unique set of presumptions: rampant consumerism, service-based revenues, presumed constants in long-term forecasts (say, price of commodities or consumer demand), and herd behavior (mislabeled as competition); all glued together with liberal amounts of debt and stitched up with hype.
Inflation is another word for reduced purchasing power. Three elements can fuel a spiral. Increases in the cost of raw materials lead to higher prices of final products. Higher prices put pressure on wages to go up so workers can pay for what they buy -- which increases the costs of production and again leads to higher prices. Finally, as prices increase, more capital is needed to produce the same item, which also increases the cost of production and leads to higher prices -- particularly if interest rates go up at the same time.
Current imbalances ought not to be shocking or unexpected. Asset prices and raw materials have shot up, but wages and incomes remained stagnate, and we were told that all is rosy as growth is a one-way and upward trajectory with joy, and debt, for all. I raised this issue back in January, 2007 .
For the time being, there are low stocks, but not acute shortages of, food-- assuming the consumer can afford to pay. Cows are still producing the same amount of milk as two years ago, but it is more expensive to feed the cow and process, package and transport the milk. The excuse of increased demand from China and India is a tall tale. They both have vivid memories of food shortages in the 1950s and 1960s, which was overcome domestically by Chinese and Indians despite political isolation.
The easy days are behind us and the era of a tough climb up the proverbial hill of beans is ahead. Civil commotion about food prices are essentially about low incomes and reduced purchasing power. And these are not limited to developing countries. Soaring home foreclosures and depleted savings in US, a 25 percent jump in British use of credit cards for food purchases since December, and stagnate property prices in Japan are all telling signs of the same story. Blaming oil exporters for high oil prices is a worthless diversion too -- the governments of importing countries raise more cash from fuel and excise taxes (especially in Europe and Japan) than the sum paid to the original exporter of crude oil.
Iranian consumers are not different, as all juggle inflation and low incomes. Like Russians, Turks and others in Eastern Europe, pensioners and retired people here are especially squeezed by reduced purchasing power. Economic pains of transformation, from a state-planned system to a market-managed economy, are expected to repeat events seen elsewhere.
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