Nicolas Sarkozy has a very big tank
We have noted Nicolas Sarkozy’s attraction to large domestic appliances (first his TV, then his telephone table…). So we are not surprised to see him, third from the left, atop a very large tank in Lebanon:
The Bush administration finally finds a treaty it likes
From the State Department (with some explanatory notes added by GD):
Statement by Secretary Condoleezza Rice
Washington, DC
January 9, 2009January 11 marks the 100th anniversary of the Boundary Waters Treaty of 1909. We note with pride the century of cooperation with Canada in managing water quality, quantity, and environmental health along our 5,525-mile border. The Treaty also established the International Joint Commission, which has played a vital role as an independent steward of these shared resources. Comprised of Commissioners from both countries, the Commission has been an outstanding example of collaborative governance and stewardship *, facilitating cooperation, preventing and resolving water-related disputes, and approving and overseeing operation of several major dams and hydropower stations along the border.
Millions of Americans and Canadians depend on the Great Lakes-St. Lawrence River system for drinking water, trade, jobs, recreation, and more. Through the Great Lakes Water Quality Agreement and the International Joint Commission, our two nations are working diligently to restore and maintain the chemical, physical, and biological integrity of the Great Lakes Basin ecosystem.**
The Boundary Waters Treaty remains vibrant as it enters its second century. Recent International Joint Commission initiatives such as International Watershed Boards provide opportunities for local stakeholders to build networks that can prevent or resolve problems at the community level. The Treaty continues to be a model for managing shared resources***and a tribute to the enduring friendship between the United States and Canada.****
* The reference to “governance and stewardship” may signify a career State drafter trying out a few liberal, internationalist phrases so as to be ready for the next administration. Had this been drafted in 2003, it’d probably have referred to “the joint commitment of freedom-loving nations to God’s aquatic gift to mankind”.
** I’ve read this a number of times, but it does indeed appear to be a positive reference to international environmental regulation by the Bush administration. I assume they think Dick’s too busy burning stuff to get pissed about this one.
*** Well yes, it’d be easier to resolve resource conflicts if the opponent was always Canada.
**** This is most likely a coded reference to the fact that the Canadian Conservative government is one of the few regimes on earth that may actually be sorry to see the Republicans go…
Bretton Woods II – let’s remember the last time
[youtube]http://www.youtube.com/watch?v=iRzr1QU6K1o[/youtube]
In last month’s New Atlantic, James Fallows had a fascinating interview with Gao Xiqing, Chief Investment Officer at China’s sovereign investment fund, and the man responsible for a significant chunk of China’s huge holdings of American dollars.
Gao – who Fallows dubs one of the US’s new banking overlords – thinks Americans need to learn some humility and fast.
“The simple truth today is that your economy is built on the global economy,” he says, “and it’s built on the support, the gratuitous support, of a lot of countries. So why don’t you come over and … I won’t say kowtow [with a laugh], but at least, be nice to the countries that lend you money.”
The US should disentangle itself from expensive overseas conflicts, Gao believes, raise its diplomatic game, and – above all – tell its citizens to get saving as part of a “long-term, sustainable financial policy.”
It’s all well and good, but maybe Fallows should have pushed Gao a little harder on whether China’s own financial policy is sustainable. After all, despite recent appreciation, the yuan remains substantially under-valued against both the dollar and the euro – the main reason why the Chinese has ended up holding so much Western debt.
Gao’s comments on the dollar are somewhat contradictory (and reflect all the ambiguity of China’s own dollar position). On the one hand, it defends its status as a reserve currency. The US is still the most viable and predictable market, he says. But on the other, Chinese investment in the dollar is widely unpopular at home. According to Gao, China’s citizens ‘hate’ its support of rich Americans (“people eating shark fins”) at the expense of “poor [Chinese] people eating porridge.”
More significant than public pressure, perhaps, is Gao’s belief that the dollar is highly likely to lose value over the short to medium term (with a corresponding appreciation for the yuan). This will wipe billions of Chinese reserves (reserves that have only been built up through consumption foregone) – while challenging China’s export-led growth model:
We are not quite at the bottom yet. Because we don’t really know what’s going to happen next. Everyone is saying, “Oh, look, the dollar is getting stronger!” [As it was at the time of the interview.] I say, that’s really temporary. It’s simply because a lot of people need to cash in, they need U.S. dollars in order to pay back their creditors.
But after a short while, the dollar may be going down again. I’d like to bet on that! The overall financial situation in the U.S. is changing, and that’s what we don’t know about. It’s going to be changed fundamentally in many ways.
Unravelling these imbalances seems certain to be ugly. Reading George Cooper’s book, The Origin of Financial Crises, on a plane the other day, I was struck by strong parallels between today’s economic woes, and a crisis we have heard little about recently – the ‘Nixon Shock’ that led to the end of the Bretton Woods system. (more…)
Israel’s war crimes
“Israel’s current assault on the Gaza Strip cannot be justified by self-defense. Rather, it involves serious violations of international law, including war crimes. Senior Israeli political and military leaders may bear personal liability for their offenses, and they could be prosecuted by an international tribunal, or by nations practicing universal jurisdiction over grave international crimes. Hamas fighters have also violated the laws of warfare, but their misdeeds do not justify Israel’s acts.”
The Guardian? The Independent? No, actually – it’s from an op-ed by a law professor in the Wall Street Journal. When the WSJ of all papers starts running opinion pieces accusing Israel of war crimes, you start to think that Israel’s bleeding international legitimacy has started outright haemorrhaging.
Then you see even the Bush Administration declining to veto Security Council Resolutions against Israel – and you know for sure.
The genius of Larry Kudlow
Optimism is in short supply at the moment, so I was psyched to read that Larry Kudlow – the National Review’s economics editor and (in his owns words) “a renowned free market, supply-side economist armed with knowledge, vision, and integrity acquired over a storied career spanning three decades” – has read the tea leaves and seen clear signs that the US economy is now bottoming out from a recession that hasn’t been “that big a deal”.
Phew. We can all stop worrying then. After all Kudlow’s stunning track record proves he really has his finger on the pulse of US economic performance. Let’s review some of the highlights from his analysis over the past couple of years:
Feb 2007: Praises Ben Bernanke for “laying the groundwork for what is virtually a runaway bull market” – one he assures us a few months’ later has guaranteed the US’s role at the epicentre of a “a global boom, marked by a spread of free-market capitalism like we’ve never seen before.”
Sept 2007: Warns us that “it’s very easy to be totally pessimistic and bearish right now, but that’s precisely why I will avoid falling into that trap. Optimists are winners. Pessimists are losers.”
Sticks to this creed throughout the quarter in which the recession got underway… October (“if things are so bad, why are they so good?”), when he says growth is accelerating…November (subprime is “just not that big a deal”)…and December (“the prophets of recessionary doom…have been proven wrong once again”)
In Feb and March 2008, admits that a mild recession is possible, but assures us that “Bernanke’s emergency machinations to fight the recession in housing and housing-related credit are starting to show very positive effects.” There is no “genuine, across-the-board credit crunch,” he tell us in April. As a result, any slump “could be over by late summer.”
In September (with summer a memory and the economic clouds darkening), swoons for Henry Paulson who has embraced the gales of creative destruction and promised “no more federal bailouts. Not for Lehman Brothers. Not for global insurer AIG.”
Three days later, however, swoons for Paulson again, this time for preventing what would have been an “unfathomable” – an AIG collapse. Bailouts, it turns out, are a simply wonderful idea – not only will they save capitalism from doom; for taxpayers they’re a “win-win-win-win.” The government is sure to get its money back – even better it’s highly likely to make “a handsome profit” – enough to “pay down the national debt.”
October 2008: Is appalled by the “fear and panic” that have gripped the economy. “It is one of those moments in history when people feel helpless, frustrated, and bewildered about what’s going on and why it’s happening.” But still assures us that “much good may ultimately come of this terrifying correction.”
November 2008: Is cock-a-hoop at the “economic-primer” George Bush has left for his successor-elect Barack Obama, who apparently now has “an outsized responsibility [eh?] to mend and revive the economy.” Obama needs to access Bush’s wisdom and follow his economic-growth model, one “that has worked so well and so long for this country.”
Yes – that’s right. Bush (“the top economic forecaster in the country”) and his administration have left the US poised for recovery. If it all goes wrong, we’ll all know who to blame – that “extremely liberal-left” guy who is just about to take over. But as long as the new President tries to do what Bush would have done, then everything – my friends – will be alright.