Geopolitical thread

[SwamyG]

Prem, Was it Rajiv Batra? He wasderided quite severely when he published his book predicting the coming fall.

I think it is one Ravi Batra.

[SK Mody]

Ravi_Batra

[amdavadi]

Alan greenspan is as much to blame for comming collapse. I dont remember the name of the author, someone who wrote a book on alan greenspan, and his handling of Fereral reserve will screw us in future.

sorry for being off the topic...Any Bayarea BR meet is being plan?

[SK Mody]

Alan greenspan is as much to blame for comming collapse. I dont remember the name of the author, someone who wrote a book on alan greenspan, and his handling of Fereral reserve will screw us in future.

Greenspan's Fraud, by Ravi Batra
Interview with Ravi Batra

[rsingh]

It means he fed the world with fedtalk.........

[harbans]

Land of Gandhi exerts itself as Global Power

http://www.nytimes.com/2008/09/22/world ... ref=slogin

Good read.

[renukb]

Next president must put bullying Russia in its place

By JOHN H. KELLY

Wednesday, September 24, 2008

Russia’s motivation in its August invasion of Georgia was deadly serious. The developing contest between Russia and the West may well be the defining challenge for the next president, just as terrorism was for George W. Bush.

Why would Russia invade Georgia, a small nation in the Caucasus region in a key location between Russia, Central Asia and the Middle East? Energy supplies have much to do with it, but so does the desire of Russia to teach the West a lesson.

Russia has listened for years to Western plans for getting the Central Asian oil and gas bonanza (from Kazakhstan, Turkmenistan, and Azerbaijan) to the West without passing through Russia or Iran, denying both nations the political influence and revenue which control of the pipelines renders.

Georgia is the key to this. One pipeline from the Caspian seaport of Azerbaijan’s capital in Baku to a Turkish port on the Mediterranean carries oil. A second line carries natural gas to Eastern Turkey. Both pipelines pass next to the town of Gori in Georgia. Russian troops now sit near the pumping stations there, which they have not interfered with, but can at will. No one now will invest in new lines through Georgia. This cements Russia’s stranglehold on the Central Asian economies. Russia also wants to punish Georgia’s President Mikheil Saakashvili and cause his downfall. Saakashvili made the mistake of shelling a pro-Russian area, providing the spark for the Russian invasion.

Russia intends to show the United States and the Europeans once and for all that NATO can expand no further to the east. Last spring, President Bush and some European leaders moved to extend NATO membership to Georgia and another larger Russian neighbor, Ukraine. Russian Prime Minister Vladimir Putin told Bush in May that there will be no Georgia or Ukraine in NATO. After the August invasion, the Russians will have scared enough Europeans out of a positive vote to admit Ukraine or Georgia.

Russia may also re-seize the Crimean Peninsula and the Black Sea Russian naval fleet bases from Ukraine, a major geo-political move, which would further intimidate the Europeans.

Russia hopes also to intimidate Poland and the Czech Republic for the U.S. missile defense system they have agreed to install. The Czechs are to host the radar and the Poles 10 interceptor missiles, to protect against an Iranian threat. The next U.S. president will review this system, which some in the Pentagon are arguing is technically not feasible even if deployed. Following the Russian attack on Georgia, NATO decided to suspend its next partnership meeting with Russia. Russia replied that it is cutting all contacts with NATO. All these Russian moves add up to a policy, not isolated moves. In response we sent humanitarian relief supplies, Vice President Dick Cheney, and a Coast Guard cutter to Georgia. That is not a policy.

The Russians are not afraid of appearing tough. They know the G-8 leaders of the world’s largest economies do not listen to Russia anyway, so what does it matter if Russia is expelled? And if the World Trade Organization (WTO) rebuffs Russian membership, so be it. Russia makes its money on oil, gas, and commodities exports anyway, a strong market that will continue without the WTO.

The Russian policy is a real challenge. The art of responding will be to unite the West and firmly resist without drifting into a war. Russia is important for other reasons — to control the so-called “loose nukes” and keep them from terrorists, to cooperate on limiting Iran’s nuclear ambitions, and to work on Sudan and terrorism. Right now Russia is in the driver’s seat. This contest will be the defining challenge for the next president. Getting the policy right and implementing it successfully will be extraordinarily difficult — and important to Americans and our friends around the world.


John Kelly, a former assistant secretary of state, is ambassador-in-residence at the Sam Nunn School of International Affairs at Georgia Tech.

[renukb]

Enlarge G-8 to settle world problems: France

http://economictimes.indiatimes.com/New ... 520946.cms

The G-8 in particular could become the G-14, with new members like China, India, Mexico, South Africa and Brazil, the emerging economic powers among developing countries. The group currently comprises of the United States, Germany, Italy, France, Canada, Japan, Britain and Russia.

[renukb]

Chavez to sign political, financial agreements in Russia
http://en.rian.ru/world/20080924/117067736.html

Turkey says states should be aware of Russia's power
Babacan said that what Turkey was doing was to eliminate misunderstandings or gaps stemming from cultural differences between Iran and West.

http://www.worldbulletin.net/news_detail.php?id=28689

[vsudhir]

silly question onlee but whats the big deal about the G-7/8 membership anyway? What is it these worthies do as a group? The way some of the smaller countries in the G8 such as UK and Canada dangle the membership carrot to the bigger of the emerging countries join the club, one would think its the next best thing since sliced bread. So what does a PRC lose by not being in the G8 that a Russia gains by being in it?

/
Just wondering onlee.

[renukb]

France backs expansion of UNSC, India's inclusion in G-8
http://www.ptinews.com/pti%5Cptisite.ns ... enDocument

United Nations, Sep 24 (PTI) France has made a strong case for expansion of the UN Security Council and Group of eight industrialised nations, saying "we cannot wait any longer" to bring in countries like India and China into G-8.

"The 21st century world cannot be governed with the institutions of the 20th century," French President Nicolas Sarkozy told the United Nations General Assembly.

"Let today's major powers and the powers of tomorrow unite to shoulder together the responsibilities their influence give them in world affairs," Sarkozy, who is the current president of the EU, said yesterday.

He favoured expansion of the powerful 15-member Council and G-8, saying that it is not just "a matter fairness" but a necessary condition for "being able to act effectively".

"We cannot wait any longer to enlarge the Security Council. We cannot wait any longer to turn the G8 into the G13 or G14 and to bring in China, India, South Africa, Mexico and Brazil," said Sarkozy, who will host Prime Minister Manmohan Singh on September 30.

India is among the countries which are strong favourites for becoming a permanent member in an expanded Council. Currently, the permanent members are the United States, Britain, France, Russia and China.

Brazilian President Luiz Inacio Lula da Silva said "only legitimate and effective instruments can assure collective security." "The United Nations has spent 15 years discussing the reform of the Security Council. Today's structure has been frozen for six decades and does not relate to the challenges of today's world," he said. PTI

[Prem]

Prem, Was it Rajiv Batra? He wasderided quite severely when he published his book predicting the coming fall.

I think it is one Ravi Batra.

Thanks, it was him, the wise man.

[Johann]

silly question onlee but whats the big deal about the G-7/8 membership anyway? What is it these worthies do as a group? The way some of the smaller countries in the G8 such as UK and Canada dangle the membership carrot to the bigger of the emerging countries join the club, one would think its the next best thing since sliced bread. So what does a PRC lose by not being in the G8 that a Russia gains by being in it?

/
Just wondering onlee.

Policy coordination. Many together are stronger than one alone.

The key however is shared interests.

Russia for example is a net exporter of energy, and one for whom energy exports far outweigh the exports of services and manufactured goods. In that sense it really doesnt belong in the group.

If its the biggest net exporters of goods/services, then the PRC would be included for certain.

If its the biggest exporters who happen to be democracies, then the PRC would be out, but at some point India and South Korea would have to be in.

If its to represent the economic big guns within US security alliances, the RoK would still have to be a member, and India's position would depending on the nature of the security relationship with the US.

[SwamyG]

I think it is one Ravi Batra.

Thanks, it was him, the wise man.

Somebody on the news was saying that Ravi predicted a very big change or blow to Capitalism or the US way of life in 10 days or so, as I did not hear any direct quote of him, so I will take the prediction with some salt.

[svinayak]

The Downfall of Capitalism and Communism: Can Capitalism Be Saved?
by Ravi Batra (Author)

Ravi Batra is still at it, almost three decades since he penned the classic "The Downfall of Capitalism and Communism: A New Study of History". We have come a long way with this author since then and never been bored. Batra's thesis is that we have entered the era of financial capitalism, the last stage of the Age of Acquisitors, where an increasingly uneven distribution of wealth feeds into increasing financial leverage and speculation, until the system can't handle it anymore and collapses. Following the collapse is financial destitution of many and social chaos. Such an outcome is still the most potent form of criticism of Capitalism. If Batra is at some point proved right that
a) the Great Depression of the 1930s was no fluke and
b) that innovations and safeguards to our financial system adopted since then cannot prevent another meltdown,
then that is a major an indictment of our form of social organization and, ultimately, our way of life.

At the heart of Batra's writings are the ideas of his mentor P.R. Sarkar. Batra has done more than anyone to publicize the message of this giant of modern day Indian thought in the West. This book is yet another installation into that body of work. While the message may no longer be as novel or fresh as it was in the 1980s, his work now builds on three decades of experience, including a multitude of accurate predictions (although the most important one has so far been a spectacular failure - the Great Depression of 1990!). He is now more circumspect about such things, including the adoption of a fiat monetary system in the 1970s and how monetary policy has been successfully used to forestall a major crash. In one sense he is quite correct, our monetary and financial system is an ongoing social experiment. Batra's work is, if anything, a reminder that we take a lot of things for granted. It is healthy to consider the alternatives, such as if the systemic stability were to give way to catastrophe. Central banks all over the world now devote considerable resources into researching this question and government surveillance of the financial market is now commonplace with stock markets all over the world soaring. Interestingly, all of that, albeit important, is not really the key focus of his work. As the name of his new book suggests, it is the glorious new dawn of a world based on the sentient philosophy of his mentor that is his main message.

Time will tell if Batra and the ideas he promotes are the real deal. So far, he has yet to prove the worth of these ideas with his major prediction. However, he has offered many novel insights into how modern capitalism works. For instance, in the 1980s he was one of the first to talk about how the financial sector was becoming the key to social developments in the West. Today, we take such insights for granted. Overall, the ideas he is describing are more than worthy of our careful consideration. Let us also not forget that he made a prediction in the book mentioned above in 1978 that Communism would fall. It did. As is the norm for him, the book is exceedingly well written and the message as fascinating as ever. Batra tends to be a few steps ahead of the rest of us, even if it sometimes looks as if he going down the wrong path. Even if he has made a big misstep, in my opinion, he is still headed in the right direction. The ideas are serious and profound and also filled with hope. The book is highly recommended for the intellectually curious or those scoping about for a more meaningful approach to life than what the real world has on offer in the early 21th century.

[Prem]

Acharya Ji ,
Batra's warning about crony capitalism has come true. Currently market policies have failed to correct themselves and governemtal intervention has saved the total meltdown. Now we kow the rotton state of some major finnancial institutions but still the manipulation in commodity market is being deliberately over looked.Batra dont need to be correct 400% , onlee 50% correct prediction will have detrimental effect on US influence worldwide.
Question is will US market system failure/ shortcomings automatically get traslated as success of Chinese economic model. escpecially in Asia. This will have some serious ,long term implications for current global economic/ trade set up. WTO talks are stalled and now this crisis has come out of blue.

[Philip]

Capitalism ,or at least the American king of "crony capitalism" is dead.It might have some stirrings oof life in some "banana,coconout or pineapple republics",where dictators hold sway,but the head of global capitalism,the US has fallen with a mighty fall,even more spectacularly than the "twin-Towers".This fall has also been self-inflicted,thanks to the insatiable greed of US CEOs,who feathered their nests with unimaginable wealth and bonuses.As one eminent US economist put it,"profits were booked by Wall St. and losses sent to Main St.".Right now,$700 billion is being loaned to bail out these crony capitalists,who can then "show a profit" at the loss of the Taxpayer!

Along with this financial obscenity,another obscenity has also been parpetrated,that of the "age of persistent conflict",which has been deliberately thrust upon us by the American "neo-con" movement in alliance with the so-called. "Christain Coalition".A prophetically Biblical era of "wars and rumours of wars" afflict the globe,thanks to pro-active US intervention and "tit-for-tat" policies and actions that has created a global conflict where Islamist fundamentalism and Christian fundamentalism are locked into a never ending spiral of conflict.Along the way,allies are being sought by both sides to assist in th struggle.Nedless to say,this is making the smiles of the arms manufacturers even broader.Here is an excellent piece on the subject,where foreign sales are expected to make up for any US budgetary cutbacks.

Middle East Sep 24, 2008

Business as usual for US arms sales
By Frida Berrigan

The chief executive officer of a weapons manufacturer has plenty of chances to rub elbows with deputy secretaries of defense, officials from Homeland Security, retired military personnel, and the best and brightest of the defense establishment almost any week of the year.

One such opportunity occurred at the ComDef 2008 conference, which wrapped up at the National Press Club in Washington on September 3. Sponsored by weapons giants like Boeing, Raytheon and BAE Systems, the day-long conference was organized around the theme of "Defense Priorities in an Age of Persistent Conflict".

It featured presentations from a US Navy under secretary, a
deputy director at the Pentagon, several weapons manufacturers and defense representatives from France, the Netherlands, Canada and elsewhere. With this high-powered lineup, the conference probably delivered on the promise of its catch line: "Where the international defense cooperation community gets down to business."

Next on the calendar in mid-October will be the Women in Defense National Conference at the Crystal Gateway Marriott near the Pentagon. Sponsored by consulting giant Booz Allen Hamilton, the conference includes a panel on the "National Security Priorities in the Next Administration", moderated by a Lockheed Martin vice president.

Foreign policy advisers from the Senator John McCain and Senator Barack Obama campaigns will be on hand and - in a nod towards inclusiveness - representatives from Bob Barr's and Ralph Nader's campaigns have been invited. The closing reception is sponsored by Lockheed Martin, and Booz Allen Hamilton is picking up the tab for the "Breaking a Glass Ceiling" dinner featuring retired US Air Force Major General Jeanne Holm.

And then, who would want to miss flying south for the winter? The Defense Manufacturing Conference at Disney's Coronado Springs Resort in Florida in early December offers military industry executives the chance to soak up the rays and address the question: "Are we ready to provide affordable warfighting capabilities?"

One of the persistent themes of these and many other weapons industry conferences is the looming concern that the military budget - which increased by two-thirds between 2001 and 2008 - can't keep spiraling upwards forever. ComDef 2008 frames it like this, "Persistent warfare is eroding the capability of our armed forces and hard choices will need to be made ... It is increasingly unlikely that more money will be found for defense."

Last year, the Women in Defense conference addressed this issue with a panel titled "Shaking the Money Tree: Funding National Defense", moderated by a vice president for programs and budget at Lockheed Martin.

Shaking the money tree
Lockheed Martin stands head and shoulders above its competitors as a professional tree-shaker. Between 2001 and 2008, the company saw its contracts from the Department of Defense jump nearly 130%, from $14 billion to $32 billion. In a stagflation economy, their profit margin is more than healthy. The Bethesda-based company reported a 13% increase in profitability for its second quarter - from $778 million last year to $882 million this year.

The weapons industry's concern about belt-tightening notwithstanding, the military budget is likely to continue its dramatic growth. The Defense Department's base budget, which does not include funds for nuclear weapons or the $12-billion-a-month "war on terror" has grown by nearly 70% - from $316 billion in 2001 to a request for more than $515 billion for 2009's fiscal year (which begins in October).

Despite the fact that these figures represent close to what the rest of the world combined devotes to the military, neither Obama nor McCain has adopted reducing military spending as part of his national security plan. In fact, as both of them talk about modernizing the military for the 21st century and expanding the size of the armed forces, the billions add up.

So the weapons industry's alarm bells are ringing prematurely and the future - particularly in foreign weapons sales - looks very bright. Take Lockheed Martin, for example: the company, which is springing for the floral arrangements at the Women in Defense conference next month, has more than $10 billion in proposed or recent weapons deals with foreign nations. The biggest deal could be worth $7 billion (that's a lot of gladiolas and irises for Women in Defense) to Lockheed Martin.

The United Arab Emirates is interested in the company's THAAD (Terminal High Altitude Area Defense) system. The mobile truck-mounted system is designed to intercept incoming missiles targeted at sites such as airfields or populations centers.

Another potentially huge sale would be to Iraq, where the combination of regime change, occupation and oil revenue has created loyal new customer. Even as US fighter planes bomb Iraqi cities, the Nuri al-Maliki government has indicated it would like to order 36 of the company's advanced F-16s.

Recent sales of these $100 million planes to countries like Morocco, Pakistan and Romania have all contributed to a bumper year for the Bethesda-based company. But Lockheed Martin isn't the only company reaping rewards in the age of persistent conflict. War and instability are good for business across the board. Jeanne Farmer of the Defense Security Cooperation Agency, which processes requests for foreign military sales, noted at the ComDef meeting, "In the current environment, everybody needs everything right now. We do expect to continue to have large, large sales."

"Our program," she continued, "is growing by leaps and bounds," describing how her agency is dealing with more than 12,000 open cases (in some instances the weapons have been transferred, but not all options have been exercised or the licenses have not expired) totaling upwards of $270 billion.

US weapons sales to foreign countries in 2008 are on track to be 45% higher than in 2007. This year, the US will offer about $34 billion in weapons to Iraq, Pakistan, Saudi Arabia and other countries. In 2007 that figure was $23.3 billion, just a small bump from the $21 billion of 2006. So far in 2008, Farmer's agency has processed more than $12.5 billion in possible foreign military sales to Iraq - not including the F-16 fighter plane request, which has not yet been formalized.

On Baghdad's wish-list are systems like the Abrams tanks, attack helicopters, Hellfire missiles, heavy transport aircraft, and other weaponry. Proponents of billion-plus weapons sales argue that these sales will reduce Iraq's reliance on the United States military, but we need only look at Pakistan to see evidence that these policies create well-armed short fuses.

Since the beginning of the "war on terror", the US has transferred billions of dollars in weaponry and more in military aid to Pakistan. Recently, the US military has mounted attacks in Pakistani territory aimed at Taliban and other restive elements without even informing Islamabad in advance. The response from the Pakistani parliament? A forcefully worded statement that the Pakistani military - armed, trained and outfitted by the United States - be prepared to "repel such attacks in the future with full force". It wouldn't be the first time US forces clashed with US-armed adversaries.

Bad news for them: Good news for us?
A multi-billion-dollar trade, a world bristling with weapons, and a well-organized and powerful industry committed to keeping it that way: these factors make the arms trade big news. Whoever assumes the presidency in January will have to choose between continuing President George W Bush's policy of arming the world or setting a new course against strenuous objections from the military-industrial complex.

But neither of the presidential hopefuls has devoted even a few lines of major addresses to weapons-sales policy. Even so, the industry seems worried about Obama's vice presidential pick, Joe Biden. Loren Thompson, a pro-industry analyst with the conservative Lexington Institute, told Defense Daily International, "Biden's record on weapons-related issues is that of a doctrinarian ... he always comes down on the liberal side. So this is not good news for the defense industry."

As executives, retired generals and Pentagon officials flit from one industry-underwritten conference to another, bemoaning imagined cutbacks and belt-tightening, the real bad news for their business would be good news for everyone else - namely peace, diplomacy, democracy and human rights.

Foreign Policy In Focus columnist Frida Berrigan is a senior program associate at the Arms and Security Project of the New America Foundation.

[Philip]

Save the world? Hank just didn't have a clue

Excerpt:
“The Republicans are a party that says government doesn't work - and then get elected and prove it.” This should be the epitaph for the Bush Administration - and Mr Paulson.
(.and our good "Doctor of spin","Man Mohan Sin" is Bush administration's greatest fan!

http://www.timesonline.co.uk/tol/commen ... 820549.ece

The staggering incompetence of the US Treasury Secretary is now acknowledged - and is a disaster for George BushAnatole Kaletsky
The Emperor has no clothes. If you want to know why American capitalism is on the brink of disaster, but also want to understand what will save it, then log on to the C-Span congressional website and watch the interrogations of Henry Paulson, the US Treasury Secretary, by the Senate and House banking committees.

Until last week, I was in a minority of one in arguing that Mr Paulson was personally responsible for suddenly turning the painful but manageable credit crunch that had been grinding away 18 months in the background of the US economy into a global catastrophe. Mr Paulson's appearances on Capitol Hill, marked by the characteristic Bush-era combination of arrogance and incompetence, are turning my once-outlandish view into conventional wisdom: Henry Paulson is to finance what Donald Rumsfeld was to military strategy, Dick Cheney to geopolitics and Michael Chertoff to flood defence.

Mr Paulson may be a former chairman of Goldman Sachs, but as US Treasury Secretary he does not know what he is doing. His recent blunders, starting with the “rescue” of Fannie Mae, have triggered unintended consequences around the world, resulting in the death-spiral of financial values. But last Friday Mr Paulson outdid even these Rumsfeldian achievements, when he demanded $700 billion from Congress for a “comprehensive and fundamental” solution to the global financial crisis, without apparently having any idea of what he would actually do.

The good news - before I return to the perils of Mr Paulson - is that his blunders no longer matter very much. There will still be a huge US government bank bailout, which will probably avert a disastrous slump in the US and global economies. But because Mr Paulson has lost the political initiative, this bailout will now be led by the Democratic leadership in Congress and will be structured around its priorities - relief from mortgage foreclosures, restrictions on bankers' pay and big government shareholdings in US banks. For President Bush it is a disaster, dashing his last faint hope of having a tangible achievement to his name before he leaves office.

Paulson and Bernanke in bailout fight
Moral high ground can be hazardous
Dollar down as Paulson faces demands
Paulson paints Congress into a corner

How did things come to such a pass? When Mr Paulson announced his $700 billion “plan” last Friday, everybody in the financial world (myself included) heaved a sigh of relief. Finally, it seemed, the US Government was going to do whatever it takes to stabilise the world financial system. The universal assumption was that Mr Paulson would present a detailed plan of action over the weekend, putting a safety net under the value of homes, mortgages and related assets. Yet all that appeared by Saturday evening was a three-page legislative outline, with no hint of the mechanisms to be used. The only substantive clause in the draft was a swaggering demand for untrammelled power: “Decisions by the Secretary pursuant to this Act are non-reviewable and may not be reviewed by any court of law or any administrative agency.”

When further details of the Paulson plan failed to appear on Sunday it was assumed that the details were being untangled in late-night political negotiations. When there was still no plan on Monday, the view was that Mr Paulson must be holding back the details for his testimony to the Senate Banking Committee the following day. But then, to everyone's astonishment, Mr Paulson turned up to the committee on Tuesday morning with only the briefest opening statement, which simply repeated what he had already said the week before: the sky was falling and the only way to stop it was to give him authority over $700 billion in public money, to be spent in unspecified ways.

And suddenly the sky did fall down - not on the world economy, but on Mr Paulson. Consider the reactions from American politicians, including Republicans: “Stunning and unprecedented in its lack of detail”... “a $700 billion blank cheque to Wall Street”... “neither workable nor comprehensive”... “foolish waste of massive taxpayer funds”... “eerily similar to the rush to war in Iraq”. Best of all was John McCain's comment: “When we're talking about a trillion dollars of taxpayer money, ‘trust me' just isn't good enough.”

At first, nobody could quite believe Mr Paulson was incompetent. Was it really possible that the Treasury Secretary had no idea of what to do with this unprecedented financial firepower? Perhaps his silence on crucial issues such as what he would pay for the banks' “troubled assets” was just a tactical ruse.

But as the cross-examination rolled on, and Mr Paulson just waffled - “we will ask experts to advise us”, “we will get the best and brightest financiers to suggest ideas” - the terrible truth dawned. There was no such thing as a Paulson plan. Not only did Mr Paulson not know what he was doing. He did not know what he was talking about. When pressed to offer at least some basic principles for his rescue, Mr Paulson had no answers. When challenged about limits to executive remuneration and taxpayer stakes in future profits of participating banks, he brusquely rejected all such proposals - on the amazing ground that they might discourage some of the stronger banks from taking advantage of government support!

Could he really be so clueless? Surely not. Why, then, has Mr Paulson failed? His inability to think seriously about solutions to the present financial crisis probably has deep ideological roots. Just as Mr Rumsfeld could simply not believe that US foreign policy might be misguided, Mr Paulson simply cannot believe that markets can be fundamentally wrong. He therefore cannot imagine, for example, that government judgments about the value of bank securities may, in some circumstances, reflect economic realities more accurately than market prices. Since some such recognition of market failure is fundamental to any understanding of banking crises, it is not surprising that Mr Paulson finds it difficult to come up with a credible solution.

The ideological pendulum is now swinging but what is needed to avoid future crises is not necessarily more regulation. It is better-quality regulation, managed by people who understand and respect markets but do not worship them. Markets are usually right, but sometimes they are dangerously wrong - and they need to be managed with decisive and competent government intervention.

The people who do not understand the role of government should not be regulating markets any more than they should be fighting wars or managing flood defences. P.J.O'Rourke, the conservative writer, once remarked: “The Republicans are a party that says government doesn't work - and then get elected and prove it.” This should be the epitaph for the Bush Administration - and Mr Paulson.

[Gerard]

The trouble with India

It may be better for the EU to base a partnership with the world's largest democracy not on values, but on a joint effort to deal with the crisis in Afghanistan.

[Rye]

But Western analysts fear that any Indian military presence of this type would destroy relations with Pakistan, which looks to Afghanistan for “strategic depth” in its conflicts with India. With Pakistani forces firing on US troops conducting cross-border raids, those relations are ragged enough already, even without stoking fears of encirclement.

There is no reason for India to cooperate with countries or entertain any notion of cooperation if the EU nations are more worried about their relationship to Pakistan.

[Paul]

Niall Ferguson is the first prescient analyst off the block in examining the effect of the wall street on US China relations (read his article in Standpoint mag). He contends China will be a prime beneficiary as a result of collapsing credibility of wall street institutions and it’s debilitating effect on the dollar.

Consequently the year when PRC is anticipated to overtake the US in GDP count has been moved up to 2027 from 2040. This will have grave implications for India PRC relations as PRC will seek to leverage it’s advantage in economic power into geopolitical gains. India will do well to relook at it’s defence five year plans and accelerate the induction of new weapon systems. For instance 400 aircraft for the Navy by 2022 will not be enough to hold the PLAN from bullying it’s way into the Indian ocean.

This article and the subject it is trying to address needs to be thought upon seriously by Indian analysts and leaders.

Another salient point made by Ferguson is the comment on the striking similarities between the break construction of buildings and roads in Chongking (which he says is even more grand in scale than Shanghai) and the great leap forward in the USSR in the 1930s. However be that may, the demise of PRC due to it’s own follies is quite some time away.

India needs to watch out make sure it is not shafted by the changing trends in global economy as happened to Japan in the 1930s.

[svinayak]

My hunch is that China's economic and political fate will be decided by two key institutions. Both are networks. The first is the country's financial system - the credit network that links the country's vast private savings to its equally vast investment boom. The second is the global information network known as the internet.

Let's take the credit network first. This is the shadow side of the Chinese economic miracle. Sure, the People's Republic has acquired a forest of high rises, endless miles of new highways and umpteen industrial estates the size of Wales. But its banks, stock market and other financial institutions are a joke. The banks are relics of the old planned economy, owed unquantifiably large bad debts by the defunct state enterprises of Mao's time. The relatively new stock market, meanwhile, is tiny in relation to the scale of the manufacturing sector. The result is that the allocation of funds for investment and credit is not done on the basis of meaningful competition and relevant information, but through personal connections that maximise returns to a powerful few, rather than general economic efficiency.

Will all the countless new tower blocks in Shanghai's Pudong district be making money five years from now? I rather doubt it. What about the bizarre office building I saw in Shenyang that is actually the shape of a Chinese coin? Even less likely. Could the real estate bubble that currently dominates conversation in Shanghai and Beijing go pop? You bet. And what would the effects of such a property crash be on the economy as a whole? No one has the foggiest idea.

It may be that the familiar laws of economic development have been abolished by the Chinese Communist Party. It may be that China will be able to sustain this runaway growth without ever suffering a financial crisis of the sort that has periodically interrupted the miracles in other Asian economies. But I am doubtful.

The experts insist that there can't be a Chinese financial crisis because the People's Bank of China has accumulated such vast quantities of dollars in the past few years. But that is to exaggerate the importance of central bank reserves. China is certainly not going to suffer a currency crisis of the sort that hit Thailand and Malaysia in 1997; the pressure on the renminbi is upward not downward, as speculators anticipate a further revaluation of the currency after July's tiny move.

There are other kinds of financial crisis, however. The United States had ample gold reserves in 1929 - the biggest in the world. That did not prevent the banking panics that were the key drivers of the Great Depression. And let's not forget the protectionist pressures building as China's exporters erode ever more sectors of US and EU manufacturing.

What would the political effect be of a recession in China? Again, nobody knows. But if there were any kind of public protest, I cannot believe it would be stamped out as easily as the democracy movement in the summer of 1989. One crucial change is that 100 million Chinese now have access to the internet. It may be possible for the authorities to block the BBC's websites, but so what? With the help of Google I was able to call up numerous articles on "corruption in China" from sources all over the world. There are simply too many Western news agencies - to say nothing of the countless personal weblogs now out there - for censorship to be effective.

http://www.telegraph.co.uk/opinion/main ... inion.html

[svinayak]

Niall Ferguson, "A World Without Power," Foreign Policy, July/August 2004
Critics of U.S. global dominance should pause and consider the alternative. If the United States retreats from its hegemonic role, who would supplant it? Not Europe, not China, not the Muslim world—and certainly not the United Nations. Unfortunately, the alternative to a single superpower is not a multilateral utopia, but the anarchic nightmare of a new Dark Age.

We tend to assume that power, like nature, abhors a vacuum. In the history of world politics, it seems, someone is always the hegemon, or bidding to become it. Today, it is the United States; a century ago, it was the United Kingdom. Before that, it was France, Spain, and so on. The famed 19th-century German historian Leopold von Ranke, doyen of the study of statecraft, portrayed modern European history as an incessant struggle for mastery, in which a balance of power was possible only through recurrent conflict.

The influence of economics on the study of diplomacy only seems to confirm the notion that history is a competition between rival powers. In his bestselling 1987 work, The Rise and Fall of the Great Powers: Economic Change and Military Conflict from 1500 to 2000, Yale University historian Paul Kennedy concluded that, like all past empires, the U.S. and Russian superpowers would inevitably succumb to overstretch. But their place would soon be usurped, Kennedy argued, by the rising powers of China and Japan, both still unencumbered by the dead weight of imperial military commitments.

In his 2001 book, The Tragedy of Great Power Politics, University of Chicago political scientist John J. Mearsheimer updates Kennedy's account. Having failed to succumb to overstretch, and after surviving the German and Japanese challenges, he argues, the United States must now brace for the ascent of new rivals. “[A] rising China is the most dangerous potential threat to the United States in the early twenty-first century,” contends Mearsheimer. “[T]he United States has a profound interest in seeing Chinese economic growth slow considerably in the years ahead.” China is not the only threat Mearsheimer foresees. The European Union (EU) too has the potential to become “a formidable rival.”

Power, in other words, is not a natural monopoly; the struggle for mastery is both perennial and universal. The “unipolarity” identified by some commentators following the Soviet collapse cannot last much longer, for the simple reason that history hates a hyperpower. Sooner or later, challengers will emerge, and back we must go to a multipolar, multipower world.

But what if these esteemed theorists are all wrong? What if the world is actually heading for a period when there is no hegemon? What if, instead of a balance of power, there is an absence of power?

Such a situation is not unknown in history. Although the chroniclers of the past have long been preoccupied with the achievements of great powers—whether civilizations, empires, or nation-states—they have not wholly overlooked eras when power receded.

Unfortunately, the world's experience with power vacuums (eras of “apolarity,” if you will) is hardly encouraging. Anyone who dislikes U.S. hegemony should bear in mind that, rather than a multipolar world of competing great powers, a world with no hegemon at all may be the real alternative to U.S. primacy. Apolarity could turn out to mean an anarchic new Dark Age: an era of waning empires and religious fanaticism; of endemic plunder and pillage in the world's forgotten regions; of economic stagnation and civilization's retreat into a few fortified enclaves.

http://www.mtholyoke.edu/acad/intrel/afp/vac.htm

[svinayak]

Sinking Globalization
http://www.foreignaffairs.org/20050301f ... ation.html

Niall Ferguson

From Foreign Affairs, March/April 2005
* Print Article

Summary: Could globalization collapse? It may seem unlikely today. Yet despite many warnings, people were shocked the last time globalization crumbled, with the onslaught of World War I. Like today, that period was marked by imperial overstretch, great-power rivalry, unstable alliances, rogue regimes, and terrorist organizations. And the world is no better prepared for calamity now.

Niall Ferguson is Professor of History at Harvard University, a Senior Fellow at the Hoover Institution, Stanford University, and a Senior Research Fellow of Jesus College, University of Oxford. Copyright (c)2005 by Niall Ferguson.
Of Related Interest

Ninety years ago this May, the German submarine U-20 sank the Cunard liner Lusitania off the southern coast of Ireland. Nearly 1,200 people, including 128 Americans, lost their lives. Usually remembered for the damage it did to the image of imperial Germany in the United States, the sinking of the Lusitania also symbolized the end of the first age of globalization.

From around 1870 until World War I, the world economy thrived in ways that look familiar today. The mobility of commodities, capital, and labor reached record levels; the sea-lanes and telegraphs across the Atlantic had never been busier, as capital and migrants traveled west and raw materials and manufactures traveled east. In relation to output, exports of both merchandise and capital reached volumes not seen again until the 1980s. Total emigration from Europe between 1880 and 1910 was in excess of 25 million. People spoke euphorically of "the annihilation of distance."

Then, between 1914 and 1918, a horrendous war stopped all of this, sinking globalization. Nearly 13 million tons of shipping were sent to the bottom of the ocean by German submarine attacks. International trade, investment, and migration all collapsed. Moreover, the attempt to resuscitate the world economy after the war's end failed. The global economy effectively disintegrated with the onset of the Great Depression and, after that, with an even bigger world war, in which astonishingly high proportions of production went toward perpetrating destruction.

It may seem excessively pessimistic to worry that this scenario could somehow repeat itself--that our age of globalization could collapse just as our grandparents' did. But it is worth bearing in mind that, despite numerous warnings issued in the early twentieth century about the catastrophic consequences of a war among the European great powers, many people--not least investors, a generally well-informed class--were taken completely by surprise by the outbreak of World War I. The possibility is as real today as it was in 1915 that globalization, like the Lusitania, could be sunk.

BACK TO THE FUTURE

The last age of globalization resembled the current one in numerous ways. It was characterized by relatively free trade, limited restrictions on migration, and hardly any regulation of capital flows. Inflation was low. A wave of technological innovation was revolutionizing the communications and energy sectors; the world first discovered the joys of the telephone, the radio, the internal combustion engine, and paved roads. The U.S. economy was the biggest in the world, and the development of its massive internal market had become the principal source of business innovation. China was opening up, raising all kinds of expectations in the West, and Russia was growing rapidly.

World War I wrecked all of this. Global markets were disrupted and disconnected, first by economic warfare, then by postwar protectionism. Prices went haywire: a number of major economies (Germany's among them) suffered from both hyperinflation and steep deflation in the space of a decade. The technological advances of the 1900s petered out: innovation hit a plateau, and stagnating consumption discouraged the development of even existing technologies such as the automobile. After faltering during the war, overheating in the 1920s, and languishing throughout the 1930s in the doldrums of depression, the U.S. economy ceased to be the most dynamic in the world. China succumbed to civil war and foreign invasion, defaulting on its debts and disappointing optimists in the West. Russia suffered revolution, civil war, tyranny, and foreign invasion. Both these giants responded to the crisis by donning the constricting armor of state socialism. They were not alone. By the end of the 1940s, most states in the world, including those that retained political freedoms, had imposed restrictions on trade, migration, and investment as a matter of course. Some achieved autarky, the ideal of a deglobalized society. Consciously or unconsciously, all governments applied in peacetime the economic restrictions that had first been imposed between 1914 and 1918.

The end of globalization after 1914 was not unforeseeable. There was no shortage of voices prophesying Armageddon in the prewar decades. Many popular writers earned a living by predicting a cataclysmic European war. Solemn Marxists had long foretold the collapse of capitalism and imperialism. And Social Darwinists had looked forward eagerly to a conflagration that would weed out the weak and fortify the strong.

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[SwamyG]

He contends China will be a prime beneficiary as a result of collapsing credibility of wall street institutions and it’s debilitating effect on the dollar.

Isn't China's economy very closely tied to USA's? If USA goes down, won't its trade with China also go down, thereby impacting Chinese exports and economy? In addition, if dollar loses value won't China be impacted by it?

thanks

[Paul]

SwamyG, you are right in saying the US and PRC economies are intertwined as PRC is the main supplier to US and buyer of US debt. However, I think if you look at the civilizational perspective and the sense of purpose the PRC leadership has displayed so far….they can be okay with incurring the loss of a few trillion dollars but will ensure they fill up the vacuum that the US may be forced to vacate. They can make up the money in a few years time but will ensure they will not let this opportunity pass by. US retreating back to the mainland and giving in to it’s isolationist tendencies will likely happen. The average American will have no interest in spending money to defend Taiwan at a time when his finances are in a mess.

PRC can jack up their price for supporting US debt – namely US withdrawal from western pacific, access to multilateral institutions etc. An arrangement like the one reached between England and the US in the 1920s where England had to cut down the size of the royal navy on US demand cannot be ruled out.

++++++++++++++++++

Added later, should the Chinese currency become a standard for global trade in the future along with Euro and dollar(which will likely lose ground in the future), the benefits for the PRC economy and heir prestiege will be mind bogling.

++++++++++++++++++++

Should an isolationist politician become president of US, they can wrangle covert approval to attack Taiwan and blame the resulting chaos on the ensuing war. But the man on the street will be satisfied with the results - PRC control over taiwan and western pacific. this will enhance their prestige and give them elbow room to expand into the Indian ocean and central asia.

This is just a scenario.

[ShauryaT]

Added later, should the Chinese currency become a standard for global trade in the future along with Euro and dollar(which will likely lose ground in the future), the benefits for the PRC economy and heir prestiege will be mind bogling.

Unlikely, with the CCP at the helm.

[satya]

Unlikely, with the CCP at the helm.

I think we are well passed the 'unlikely scenario'. Its a question of when . Recent surge in PRC's forex holdings were attributed more to the inflow of 'hot money' funds chasing higher returns and since not many options are available to do legally , they were shown under various export -import mechanisms .It does show a certain level of comfort tht big investors feel even when sending money into PRC with CCP at helm.

The present US financial crisis is a good media exercise for PRC with PRC going around trying to make sure tht USD is not dumped thereby filling in one of the essential criterias of US think-tanks of ' being a stake-holder in the current international system'.

Already Goldman ( made investment in a Chinese Bank but not in Indian bank , should wrap up this argument ) and Morgan Stanley have made investment/partnerships with Chinese Banks . These are all the steps in a direction of integrating US-Chinese financial circle .Once its complete and US is sure , PRC's currency may very well become one of the reserve currencies alongside exisiting ones .

[Philip]

Robert Fisk's World: Bush rescues Wall Street but leaves his soldiers to die in Iraq

http://www.independent.co.uk/opinion/co ... 44071.html

Until the elections, the people in the Middle East are yesterday’s men

Saturday, 27 September 2008

It was a weird week to be in the United States. On Tuesday, secretary of the treasury Henry Paulson told us that "this is all about the American taxpayer – that's all we care about". But when I flipped the page on my morning paper, I came across the latest gloomy statistic which Americans should care more about. "As of Wednesday evening, 4,162 US service members and 11 Defence Department civilians had been identified as having died in the Iraq war." By grotesque mischance, $700bn – the cost of George Bush's Wall Street rescue cash – is about the same figure as the same President has squandered on his preposterous war in Iraq, the war we have now apparently "won" thanks to the "surge" – for which, read "escalation" – in Baghdad. The fact that the fall in casualties coincides with the near-completion of the Shia ethnic cleansing of Sunni Muslims is not part of the story.


Indeed, a strange narrative is now being built into the daily history of America. First we won the war in Afghanistan by overthrowing the evil, terrorist-protecting misogynist Islamist crazies called the Taliban, setting up a democratic government under the exotically dressed Hamid Karzai. Then we rushed off to Iraq and overthrew the evil, terrorist-protecting, nuclear-weaponised, secular Baathist crazies under Saddam, setting up a democratic government under the pro-Iranian Shia Nouri al-Maliki. Mission accomplished. Then, after 250,000 Iraqi deaths – or half a million or a million, who cares? – we rushed back to Kabul and Kandahar to win the war all over again in Afghanistan. The conflict now embraces our old chums in Pakistan, the Saudi-financed, American-financed Interservices Intelligence Agency whose Taliban friends – now attacked by our brave troops inside Pakistani sovereign territory – again control half of Afghanistan.

We are, in fact, now fighting a war in what I call Irakistan. It's hopeless; it's a mess; it's shameful; it's unethical and it's unwinnable and no wonder the Wall Street meltdown was greeted with such relief by Messrs Obama and McCain. They couldn't suspend their campaigns to discuss the greatest military crisis in America's history since Vietnam – but for Wall Street, no problem. The American taxpayer – "that's all we care about". Mercifully for the presidential candidates, they don't have to debate the hell-disaster of Iraq any more, nor US-Israeli relations, nor Exxon or Chevron or BP-Mobil or Shell. George Bush's titanic if mythical battle between good and evil has transmogrified into the conflict between good taxpayers and evil bankers. Phew! No entanglement in the lives and deaths of the people of the Middle East. Until the elections – barring another 9/11 – they are yesterday's men and women.

But truth lurks in the strangest of airports. I'm chewing my way though a plate of spiced but heavy-boned chicken wings – final proof of why chickens can't fly – at John Wayne airport in Orange County (take a trip down the escalator and you can actually see a larger-than-life statue of the "Duke"), and up on the screen behind the bar pops Obama himself. The word "Change" flashes on the logo and the guy on my left shakes his head. "I got a brother who's just come back from Afghanistan," he says. "He's been fighting there but says there's no infrastructure so there can be no victory. There's nothing to build on. We're not wanted." At California's San Jose University, a guy comes up and asks me to sign my new book for him. "Write 'To Sergeant 'D'," he says with a sigh. "That's what they call me. Two tours in Iraq, just heading out to Afghanistan." And he rolls his eyes and I wish him safe home afterwards.

Of course, the Israeli-Palestinian conflict no longer gets a look into the debate. McCain's visit to the Middle East and Obama's visit to the Middle East – in which they outdid each other in fawning to the Israeli lobby (Obama's own contribution surely earning him membership of the Knesset if not entry to the White House) – are safely in the past. Without any discussion, Israeli and US officials held a three-day security-technology forum in Washington this month which coincided with an equally undebated decision by the dying Bush administration to give a further $330m in three separate arms deals for Israel, including 28,000 M72A7 66mm light anti-armour weapons and 1,000 GBU-9 small diameter bombs from Boeing. Twenty-five Lockheed Martin F-35 fighter jets are likely to be approved before the election. The Israeli-American talks were described as "the most senior bilateral high-technology dialogue ever between the two allies". Nothing to write home about, of course.

Almost equally unreported in major US papers – save by the good old Washington Report – was a potential scandal in good old Los Angeles to which Mayor Antonio Villaraigosa recently returned after a $225,000 junket to Israel with three council members and other city officials (along with families, kids, etc). The purpose? To launch new agreements for security at Los Angeles international airport. Council members waffled away on cellphones and walked out of the chamber when protesters claimed that the council was negotiating with a foreign power before seeking bids from American security services. One of the protesters asked if the idea of handing LAX's security to the Israelis was such a good idea when Israeli firms were operating security at Boston Logan and Newark on 9/11 when a rather sinister bunch of Arabs passed through en route to their international crimes against humanity.

But who cares? 9/11? Come again? What's that got to do with the American taxpayer?

[renukb]

UNITED NATIONS POWER BALANCE SHIFTING TO CHINA, INDIA, RUSSIA - EUROPEAN AND U.S. HUMAN RIGHTS, LIBERTIES, MULTILATERALISM EFFORTS DIMINISHED

The West’s efforts to use the United Nations to promote its values and shape the global agenda are failing, according to a detailed study published Wednesday.

A sea change in the balance of power in favor of China, India, Russia and other emerging states is wrecking European and U.S. efforts to entrench human rights, liberties and multilateralism. Western policies in crisis regions as diverse as Georgia, Zimbabwe, Burma or the Balkans are suffering serial defeats in what the study identifies as a protracted trend.

The hemorrhaging of western power, as reflected in longer-term voting patterns in key U.N. bodies, is mirrored by the increasing clout of China, Russia and the Islamic world, according to an audit of European influence at the U.N. by the European Council on Foreign Relations.

“The E.U. is suffering a slow-motion crisis at the U.N.,” says the report, noting that the west is now being regularly outwitted in global diplomatic poker by the Chinese and Russians.

“The problem is fading power to set the rules. The U.N. is increasingly being shaped by China, Russia and their allies … The west is in disarray. The E.U.’s rifts with the U.S. on many human rights issues at the U.N. in the Bush era have weakened both.”

U.S. and European failure to win the day at the U.N. Security Council in recent votes on Zimbabwe and Burma as well as defeats last year on Kosovo or Darfur and the constant struggle to muster support for global action against Iran because of its nuclear ambitions are traced as part of a broader decline over the past decade.

Using a program designed to analyze voting patterns and statistics, the thinktank found that European policies on human rights enjoyed the support of 72% of U.N. members a decade ago but only 48% by last year, while the U.S. suffered a steeper collapse from 77% to 30%.

“The pattern of votes in the general assembly shows that opposition to the E.U. is growing, spurred by a common resistance to European efforts at promoting human rights,” said the study.

The beneficiaries of this disaffection with the west have been China and Russia, which defend national sovereignty and non-intervention in sovereign countries no matter how grievous the atrocities and human rights violations blamed on national governments. Over the past decade support for Chinese and Russian stances on human rights issues has soared from less than 50% to 74% in the U.N. general assembly.

The assembly kicked off this week in New York with the west bracing itself for another debacle. Serbia is to use the session to demand a vote on the “illegality” of the secession last February of Kosovo, whose breakaway was strongly backed by the U.S. and most of the E.U., and to refer the dispute to the U.N.’s international court of justice. Despite strenuous lobbying by the Europeans to prevent the vote, they have conceded defeat. Only 46 of the 192 U.N. states have recognized Kosovo’s independence. And western attempts to rally support for Georgia in the Caucasus crisis will be rebuffed by the Russians.

“The E.U. has collectively failed to adapt to new power trends,” said Martti Ahtisaari, the former Finnish president and a chairman of the thinktank.

The setbacks for the west at the U.N. in New York are compounded by a worse record in winning the battles for rights and freedoms at the Geneva-based U.N. Human Rights Council. In March the Islamic bloc changed the mandate for the council’s rapporteur on freedom of expression, charging him, in the wake of the Danish cartoons crisis, with the obligation to record blasphemy. Critics said the post was supposed to function as an agent of liberty, but became an instrument of repression.

“The head of steam building up in the Islamic world for worldwide defamation legislation is huge,” said Keith Porteous-Wood, director of Britain’s National Secular Society. “The Human Rights Council can no longer serve a useful purpose.”

In the council’s two-year existence, the 19 European countries on the 47-strong body have been marginalized, mired in despair and a sense of futility after losing more than half the votes conducted.

The poor European record on winning the world’s hearts and minds contrasts with Brussels’ habit of talking up the merits of its “soft power” attractiveness, and indicates that the E.U.’s huge financial investment in being the world’s biggest aid donor and the U.N.’s biggest funder is not translating into political gains.

[Philip]

Happy days for Taipei? Subs at last?

http://www.etaiwannews.com/etn/news_con ... ?id=750654
Taiwan optimistic over approval of U.S. weapons deal Fonts Size:

ELawmaker says U.S. financial crisis may have contributed to slow advance of the arms deal

Taiwan News, Staff Writer
Kuomintang lawmaker Lin Yu-fang US govenment was in comlicated mood when Taiwan was good to China. (file photo)
Central News Agency

Taiwan is still optimistic that the United States will approve a US$11 billion weapons deal for the island despite missing an important deadline, media reported yesterday.
The Pentagon was expected to notify the U.S. Congress of its intention to sell the arms to Taiwan by the end of its current session last Friday. Taiwan has expressed worries that if the U.S. missed the deadline, the Legislative Yuan would have to start the process of approving a budget for the arms package from the start.

However, an unnamed presidential official noted in a Central News Agency report that the session of Congress had been extended to deal with the current financial crisis, and therefore the arms deal could still be approved.

The package includes Patriot missiles, Apache helicopters, diesel-powered submarines, anti-tank missiles, submarine-launched missiles and P-3C Orion anti-submarine aircraft, but not new F-16 fighter jets Taiwan was hoping to buy.

The U.S. State Department notified the Taiwanese media late on Friday that government departments were still reviewing the deal, and that once it was approved, Congress would be immediately notified.

Kuomintang lawmaker Lin Yu-fang (林郁方) said Washington had the duty to provide Taiwan with defensive weapons under the Taiwan Relations Act. The U.S. would not want to see the Taiwan Strait turn into a Chinese lake, he said, expressing optimism that Washington would soon approve the deal.

Lin suggested that U.S. preoccupation with its current financial crisis and its intention to gain support from China may have contributed to the slow advance of the Taiwan deal.

There have been doubts that the Bush administration wanted to leave a decision on the arms sale up to the next U.S. President. Critics of Taiwan's government have also blamed the delay on U.S. doubts about President Ma Ying-jeou's (馬英九) plans to improve relations with rival China. The arms deal was stalled for years at the Legislative Yuan when Ma's Kuomintang refused to discuss it because of its apparently high cost.

[renukb]

China and Russia have always been great powers
The Guardian (UK)

http://english.neftegaz.ru/english/info ... hp?id=1513

Discussions of another new world order are debating a pseudo-proposition, largely a western one. The events of August 8 that triggered this discussion, the Beijing Olympics and Russia-Georgia conflict, revealed nothing new about the international system. The two key actors, China and Russia, have always been great powers, a fact that has been gravely neglected and underestimated by the west.

A great power can be defined as a country that exerts great influence on regional or global systems. It cannot simply be measured by GDP, PPP or GDP per capita. Even when it is mired in destitution or isolation, its innate strengths, rooted in territory, population and culture, can still radiate its energy outside. Given the nature of great power politics, there are several principles that should be underlined. First, these powers deserve respectful treatment because they cannot be neglected: every move they make impacts on international order. Second, certain lines must not be crossed when dealing with them; one should not attempt to subvert their internal order, hope they crumble, nor push them into a corner, because it will inevitably cause chaotic or violent consequences and suffering for all involved. Finally, they must be urged to follow their obligations on the international stage – in an increasingly interconnected global village, great powers have even greater responsibilities.

At the opening ceremony of the Beijing Olympics, the world watched a "new" China, a powerful, civilised and modern China. Some in the west may have been shocked, even frightened. But such a reaction only reflects poor knowledge and deep prejudice. For thousands of years, China has been a great nation with a large territory, huge population and splendid culture. In the last century and a half, it has been trying to find its way towards modernisation. And during the past three decades, China has engaged with the international community and achieved great success. Yet until the Olympics, it was still unfairly portrayed as a closed, backward and totalitarian state by the western media, China-bashing on every issue from Darfur and the Dalai Lama to human rights.

At the same time, the conflict in South Ossetia showed the world the re-emergence of Russia as a military might. Many people were shocked too by Russia; western public opinion sympathised with Georgia, ignoring the fact it provoked the conflict. The deeper root was the longterm squeeze by Nato, with an enraged Russia responding to protect its strategic space and vital interests with military force. In the post cold war years, the US and the western world apparently underrated Russia's capability as a traditional great power – not to mention underestimating its national pride.

Twenty years after the collapse of the Berlin Wall, the world seemingly became used to the unipolar hegemonic order of the US. Under the banner of freedom, democracy and universal values, the neoconservatives' logic of benevolent hegemony and promoting democracy appeared perfectly justified. According to Francis Fukuyama's analysis, the essence of neoconservatism is two myths: that democracy is the nostrum for almost every problem in the world, from poverty to terrorism; and that military power can be used to hasten the pace of democratisation. This logic has been sternly criticised during the Iraq war; but few have questioned it when those same attitudes are applied to China and Russia.

The post-Olympics China has to confront a few economic and social obstacles, and continue to explore its way towards social transformation, political development and improved international relations. Russia, regardless of South Ossetia, remains a great power, with its military capability, huge energy resources and political leverage. The events of August have not transformed the international power structure: the existence of these two great powers has only been overshadowed by the myth of a unipolar world. But the events are a chance for the west to recognise the reality of the current world order. By according the status due to powers such as China, Russia, India, Brazil and others, it will encourage these countries to exert a constructive influence on the world.

[Paul]

Nobel literature chief: US writing too 'insular' 1 hour, 1 minute ago



STOCKHOLM, Sweden - The man who announces the Nobel Prize in literature says the United States is too "insular" and ignorant to compete with Europe when it comes to great writing.

ADVERTISEMENT

In an exclusive interview with The Associated Press, Horace Engdahl said Tuesday that "Europe still is the center of the literary world."

Engdahl is the permanent secretary of the Swedish Academy, which selects the literature prize winner. He is expected to announce the winner in the coming weeks.

Engdahl says the U.S. "is too isolated, too insular" and doesn't really "participate in the big dialogue of literature."

Since Japanese poet Kenzaburo Oe won in 1994, the selections have had a distinct European flavor. The last American winner was Toni Morrison in 1993.

WHat to make of this?? Back to UK again I suppose.

[shaardula]

i dunno where to post this. so posting it here.
fareed zakaria talks to Lee Kuan Yew.

part 1
part 2

[SwamyG]

++++++++++++++++++

Added later, should the Chinese currency become a standard for global trade in the future along with Euro and dollar(which will likely lose ground in the future), the benefits for the PRC economy and heir prestiege will be mind bogling.

++++++++++++++++++++

In the video that was posted, where M.R.Venkatesh gave a presentation, Venkatesh points out that Chinese currency has been raising.

[SwamyG]

i dunno where to post this. so posting it here.
fareed zakaria talks to Lee Kuan Yew.

part 1
part 2

It was was interesting to see how soon Fareed became attentive and fascinated when Lee started answering questions. Whatever be Fareed's motivation in asking the questions, Lee's legacy, presence and answers made Fareed look up to Lee. Respect? Nothing like Success to demand respect.

[ramana]

SwamyG, I am proud of how you have shaped up and your participation in threads! Good show!

[SwamyG]

Thank you for the kind words.

[shaardula]

swamy

FZ is attentive to LKY because LKY validates FZ's theory - that democracy is not a universal condition, not without necessary evolution atleast.

PS: I think FZ should blink his eye once in a while. he looks like this smiley only with a wider mouth and jaw.

[SwamyG]

Adjusting to a power shift

Adjusting to a power shift

By DAVID HOWELL

LONDON — Just as one picture can tell more than a thousand words, so also one event can tell more, and provide a bigger shock, than a thousand written messages.

The almost unprecedented events of recent days, with banks collapsing worldwide, financial markets in turmoil, share values plummeting and the American political grass roots in revolt against its administration and against the whole official Establishment, send a message more vivid than countless warnings, speeches, articles and lectures.

It has been pointed out for a decade or more that the true sources of power and influence in the world have shifted, both geographically and politically, thanks to the vast impact of the information and communications revolution, but this obvious message has until now strangely eluded political leaders in the West, and especially in America and Western Europe.

Both American and European politicians have continued to talk about world leadership, as though it was theirs by rights, and governments on both sides of the Atlantic have continued to assume that their powers to order and control global events were undiminished. In the real world, first economic and financial, and now political power, have been fast draining away from the elites on both sides of the Atlantic — in Washington as well as Brussels.

Two huge forces have been at work driving this process for some years now:

First, America and much of Europe, especially Britain, have become debtors, borrowers and spenders, trying to carry on living at yesterday's high standards in the face of today's reality — namely that they are ceasing to be either the richest or the most competitive parts of the globe.

Increasingly, it is the fast-growing and high-saving Asian nations and the cash-rich oil producers of the Middle East (plus Russia) who have had to come to the financial rescue of Western financial institutions, with the process accelerating in recent days. Massive Japanese stakes in American banks like Morgan Stanley, for example, and Chinese stakes in British banks (Barclays) are vivid demonstrations of this.

Second, power has not only slipped away from Western governments to the East and other capitals such as Delhi, Beijing, Moscow and Tokyo; it has trickled away from governments generally as the fantastic dispersal of information and knowledge has empowered billions of logged-on personal computers users and mobile telephone owners, thus creating a new worldwide network of influence and power outside any national government's control.

This is a centrifugal power that can be concerted, organized and directed for good or for evil, as the tragedy of 9/11 showed. It is not a question of new empires arising as old ones fall, as it would have been in 19th- or 20th-century terms.

There is no new "Rome" to displace Washington's dominion. Instead, the microchip has given birth to a complete asymmetry of force, command, authority and economic muscle. The smallest group or cell under control of no one state or government can now become coordinated, weaponized and empowered to challenge the mightiest traditional military force.

To its amazement, America's leadership has discovered that its titanic defense spending, missile arsenal and 13 carrier fleets cannot maintain its influence and ensure it gets its way. Although size and weight have increased, vulnerability has not diminished. Flabby international obesity has replaced giant global weight. Pax Britannica came and went, and now Pax Americana has truly gone as well.

That this has been happening for a while was obvious to many outside Western government and ruling circles. The piling up of public debt, the weakness of the dollar and the huge accumulation of gold and dollar reserves in Asian central banks were all clear signs that the world had changed radically.

Now the shock waves have truly broken the illusion and the situation is plain for all to see. Wall Street no longer rules. The very American technological knowhow and genius that gave the U.S. its predominance has been used to bring about its downfall, with endless computerized machinations turning prudent banking and money management into a toxic nightmare of complex uncertainty.

There is a school of optimistic thought that this means power has been handed to a new united Europe, with its more socialistic inclinations in contrast to raw American capitalism. But this vision, too, is flawed. To be sure there have been some strange role reversals within the European circle, with Spanish interests now taking over most of British home finance (did the Spanish Armada win after all?), and the East and Central European countries, once so backward, now show more spark and dynamism than struggling France or Britain.

But the big money, and the big influence, have moved eastward, away from the Atlantic sphere altogether. It is a measure of the upside-down state of affairs that the country best insulated against the financial contagion is Iraq — simply because it is still basically a cash economy and its banking sector remains unreconstructed and primitive.

Can the Western nations and their policymakers now adjust to this grand bouleversement? Can they trim their extravagance and indebtedness, restore financial prudence, and behave as humble and respectful partners rather than as haughty rulers within the global network?

To do so will require not a return to socialism, as some have called for, but an advance to realism — to the realization that the global financial system is no longer a Western monopoly to which the world must dance in obedience.

To understand that will be the beginning of wisdom, providing the best chance for the painful and slow return to balance and stability worldwide.
David Howell is a former British Cabinet minister and former chairman of the Commons Foreign Affairs Committee. He is now a member of the House of Lords (http://www.lordhowell.com).