The current economic crisis has claimed many victims, but what has changed most is the way that the United States is viewed, perhaps permanently. That isn’t ideology; it isn’t declinism; it’s a fact. For all the talk in past year about the shifting balance of power globally, until now it has been just that — talk. Saying that the emerging world of China, India, Brazil and the rest have assumed a new place is like saying that a new army is well-equipped with sharp uniforms and cutting-edge weapons. That doesn’t mean it can fight. Until tested in battle, it’s just a guess. The economic crisis of the past two months has been such a test, and the results are clear: talk of the emerging world as the wave of the future isn’t just speculation; it’s a permanent reality.
Read moreThe Economic News Isn't All Bleak
The recent economic news has been dismal, and it's now almost universally assumed things will get worse before they get better. Conventional wisdom also dictates that this recession will be longer, deeper and cause more long-term pain than any financial crisis since the Great Depression.
Read moreThere’s Only One End of the World... and This Isn’t It
So here we are once again on the precipice, at least in terms of global stock markets and credit markets. Another bout of nail-biting panic is hardly unexpected, though it’s always surprising when otherwise sane people veer sharply into hysteria. It’s a good, albeit painful, reminder that the bonds of what we call civilization are always more tenuous than we would like to believe, that things like “value” and “worth” and “the economy” are ultimately the products of human beings simply agreeing on a set of rules. Stocks, bonds, gold, silver, none have any intrinsic value, nor do Gucci handbags, Deere lawnmowers, and GM trucks (in case anyone was wondering about that one). We act as if they do, because it gives us some sense of an orderly world, and because the alternative is just too unsettling to live with on a daily basis.
Read moreThe New World Economy
So the G20 met over the weekend, and if there was any doubt before, there should be none now: the financial balance of power is shifting. China, Brazil, even Japan can all claim more sound economies than the United States, and they collectively let it be known that they would no longer take marching orders from the Washington consensus. They expect a voice, and they are not asking permission.
Nobody Knows Nothing
Everyday, my mailbox gets inundated with reports from strategists and economists. Two years ago, most were predicting a fairly rosy scenario for the global economy - and to be fair, so was I. Today, most are predicting a dire future of negative growth and economies mired in a deep and intractable recession. The predictions of the past were mostly wrong; there is little reason to believe that today’s forecasts will be much better.
Read moreDUBAI: TOO BIG TO FAIL
The recent gala opening of the Atlantis hotel on Dubai's Palm island gave one a strong sense the emirate's elite were fiddling while Rome burned. The sheets had hardly been stripped from the beds of the departing guests when the hotel's developer, the government-owned Nakheel Properties,
Read moreGreenspan, Bubbles, and Responsibility
We are now in the season of scapegoats. The brays for justice and villains grow daily, and this week has seen a walk of shame as various participants in the credit debacle sit in front of Congress to be scolded and upbraided for their sins. Many of the goats today, and none more than former Chairman of the Federal Reserve Alan Greenspan, were heroes only a short while ago - yet another vivid illustration of the ancient words of the mythical king Croesus: “Count no man happy till he’s dead,” or to put it another way, “it ain’t over till it’s over.”
Read moreChina Will Be a Winner in the New Economy
The incoming Obama administration will face formidable challenges, but global economic collapse is no longer imminent. That may be small short-term comfort to the markets and Main Street. But having stared down the abyss, governments around the world appear determined to address root issues. The G-20 gathering of the world's major powers in Washington on Nov. 15 was only the beginning of a long and constructive process of revising the global system.
Read moreFear Itself
As of today, the global financial system is gripped by panic. In the past two weeks since the bankruptcy of Lehman Brothers, the fear and chaos have accelerated dramatically, and the failure of Congress to pass its proposed $700 bailout bill on Monday unleashed a new wave of panic. That is the situation we find ourselves in now, with safe havens almost non-existent save for those betting against the market completely, or who have retreated to cash. Relief rallies notwithstanding, this is a market in the grip of animal spirits, and the stampede is heading for the exits.
Read moreTHE GLOBAL FINANCIAL CRISIS
You've heard the story. On the heels of tumbling shares and dire warnings from the U.S. president, as well as business and government officials across the globe, the British prime minister says, "The world economy is facing its greatest risk in decades." To halt the slide, he calls for a global response to prevent the crisis from spiraling out of control.
Read moreThe End of The Ownership Society
Remember the ownership society? It was a vision woven by President George W. Bush when he was running for re-election in 2004, which saw every American family in a home, and a government that stayed out of the way of the American Dream. The families were, of course, conservative, or at a minimum traditional and nuclear, consisting of a heterosexual married couple and at least two kids living in a stand-alone home with a yard,
Read moreSecurity Blanket
As the post-bailout economy takes hold, everyday spending choices are being questioned, but so are the fundamental precepts of American-style capitalism. Plus, the ins and outs of Obama and McCain's Social Security plans. This Friday's Wiki-produced 30 Issues in 30 Days segment is on Oil and Alternative Energy.
Read moreThe End of Capitalism?
Zachary Karabell, president of independent consulting firm River Twice Research, discusses whether the current fiscal crisis is a sign of the end of capitalism as we know it.
Read moreAmerica and the New Financial World
Soon enough, America's financial crisis will wind down -- maybe in a month, maybe in a year. Yet regardless of when, this crisis marks the beginning of a new era for the U.S. For more than six decades, from the end of World War II in 1945 until now, the U.S. was the hub of global capital and capitalism. In the years to come, it will remain a vital center, but not the center.
Read moreIf “The Economy” Is So Bad, Why Isn’t Obama Doing Better?
The near-miss of Gustav and the laughable (but effective) spin of the Republicans to foreswear politics and put on their “American hats” means that we can now resume watching our regularly scheduled show of politics. Obama’s acceptance speech last week was long on pocketbook issues, and short on foreign policy, and McCain will need to do the same. Indeed, his pick of Palin — who has zero foreign policy experience — highlights that this election is revolving around economic issues.
Read moreObama’s Convention Danger
A rousing speech from Michelle Obama and we’re off. With the conventions in full-bloom, we will be treated to two weeks of constant coverage. In fact, with 4,000 delegates at the Democratic Convention and 15,000 members of the media, the convention in Denver is as much a media event as a political one — and that may be an understatement. The same will be true when the Republicans gather next week in Minneapolis-St. Paul. With every aspect of the agenda meticulously scripted in advance, the only drama will be scripted and produced, not spontaneous, and there will be as many surprises as there were at the opening and closing ceremonies of the Olympics in Beijing: none
Read morePolls Say It’s the Economy — Now What?
The recent polls showing a dead-heat race between Obama and McCain also indicate that economic issues are the single most important concern for voters, by far. And few people seem to feel that either candidate is doing much to address the underlying problems.
Read moreWall Street Chaos Won't Tank Main Street
In the space of ten days, the U.S. government took over two mortgage-bond behemoths, Fannie Mae and Freddie Mac, and assumed de facto control of one of the world's largest insurance companies, AIG. But is this worthy of all the panic?
Read moreBad Accounting Rules Helped Sink AIG
The decision by the Federal Reserve to loan insurance giant AIG $85 billion in return for as much as 80% ownership of the company is by any measure dramatic. The takeover early last week of Fannie Mae and Freddie Mac represented the culmination of years of intermingling of public and private interests. Even if the intervention was imperative, its scope is startling.
Read moreWall Street isn’t Main Street
The purchase of Merrill Lynch by Bank of America and the bankruptcy and collapse of Lehman Brothers are the latest — albeit most dramatic - installments of the ongoing credit crisis that began last August 2007. The bailout of Fannie Mae and Freddie Mac, as well as the fire-sale purchase of Bear Stearns by JP Morgan Chase in March were also greeted with fear and dread, and if the past is any guide (which, by the by, it may not be), today will not be the final chapter.
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