Tuesday, March 30, 2010

A Detour in Behalf of Public Safety

Occasionally, I feel compelled to speak out on a subject for which I did not intend this site, The Vigil, to address. Rather than risk confusing The Vigil's message, I resort to publishing on an auxiliary location.

Maybe, I should call this a detour in behalf of public service.

Saturday, March 27, 2010

Tale of Two Cities: Marja, Afghanistan & Hemet, California

I was overcome with a sense of irony of dramatic proportions today as I was reading two items from my limited print media at hand. I'll try to tie these two dots together.

The first came from a Newsweek cover story by Christian Miller, Mark Hosenball, and Ron Moreau Scandal in Afghanistan

It is an account of how America has spent more than $6 billion since 2002 in an effort to create an effective Afghan police force, buying weapons, building police academies, and hiring defense contractors to train the recruits. But the program has been a disaster. Fewer than 12 percent of the country's police units are capable of operating on their own. Ambassador Richard Holbrooke, the State Department's top representative in the region, has publicly called the Afghan police "an inadequate organization, riddled with corruption."

The worst of it is that the police are central to Washington's plans for getting out of Afghanistan. The success of America's counter insurgency strategy depends on the cops, who have greater contact with local communities than the Army does. The Afghan National Army (ANA) takes the turf, but it is the Afghan National Police (ANP) that has to hold the turf.


The U.S.-backed government in Kabul will never have popular support if it can't keep people safe in their own homes and streets. Yet in a United Nations poll last fall, more than half the Afghan respondents said the police are corrupt. Police commanders have been implicated in drug trafficking, and when U.S. Marines moved into the town of Aynak last summer, villagers accused the local police force of extortion, assault, and rape.

..... The public's distrust of the cops is palpable in the former insurgent stronghold of Marja. Village elders welcomed the U.S. Marines who recently drove out the Taliban, but told the Americans flatly they don't want the ANP to return. Lt. Gen. William Caldwell, who took over in November as chief of the U.S. program to expand and improve Afghanistan's security forces, says,
The people of Marja will tell you that one of their greatest fears was the police coming back. You constantly hear these stories about who was worse: the Afghan police that were there or the Taliban. This is not about seizing land or holding terrain; it's about the people. You have to have a police force that the people accept, believe in, and trust.
More than a year after Barack Obama took office, the president is still discovering how bad things are.

Okay, that's Marja, Afghanistan. What's the story in Hemet, California?

Well, it turns out that we have a case of counter insurgency (COIN) warfare going on right in my back yard, where a close relative is living. The Los Angeles Times reports on Hemet's Shadow War to the effect that,

For decades, Hemet was best known as a sleepy retirement community where dairy cows lolled in green fields and sprawling mobile home parks lined the streets. Elderly folks piloting oversized cars at 20 mph were considered more of a problem than gangsters and thugs.

Over the last few months, police have been stalked and attacked by what investigators believe is a gang eager to avenge the department's aggressive efforts to crack down on it.

Roadblocks have gone up behind the Hemet Police Department. Sidewalks outside have closed, blast-proof glass is going in, and $155,000 in barricades and fences are being installed.

Such is the new reality for police here, where life has increasingly taken on the feel of a war zone. Police Chief Richard Dana during an interview in his office Thursday,
We have a gang that is focused on doing violence to the Police Department, and it has to end here or it will spread to Nebraska, Kansas and beyond. We are going to make this ground zero for stopping this kind of violence."
Local police have fought back aggressively, identifying about 2,000 gang members and 100 gangs in Hemet and the San Jacinto Valley and working hard to deny them sanctuary.

.... at least one gang appears to be turning the tables on them, engaging police in a shadow war of potentially deadly booby traps, vandalism and harassment.

Since December, police have been targeted in at least four attacks.

  • The first happened when someone redirected a natural gas pipeline at the headquarters of the Hemet-San Jacinto Gang Task Force, filling the office with fumes. Police said a single spark could have leveled the entire building.
  • In February, a homemade gun was planted on the gate outside the task force office. When an officer tried to open it, the weapon fired a single shot that missed his head only because the gate didn't open correctly.
  • On March 5, a suspicious device was found attached to the unmarked car of a gang task force member. Police declined to give specifics, but said the device was deadly.
  • And Tuesday night, in an attack police believe is related to the others, someone torched four code-enforcement pickup trucks in the City Hall parking lot two blocks from police headquarters. 
There have also been threats to blow up a police car. Chief Dana's residential mail box has a fresh bullet hole. Dana says,
We have caught people watching the station from the library parking lot. We have had officers followed by known bad guys. We can question them, but it's not illegal to sit in a parking lot.

You are walking around trying to protect people and the whole time you have a target on your back. You can call us about an emergency and then shoot us when we show up. They want to kill a police officer, but they don't want to take any risks, so they are using booby traps.
Dana said he rewards officers who track gang members. Such efforts, he said, have denied the gangs territory and kept a lid on violence. But it's been difficult. The department has been hit hard by budget cuts and is down from 91 to 68 officers. Dana says,
The morale is about as bad as it's been. How much of that is due to the assaults and how much is due to force reduction is hard to say. You are getting paid less, you work more, and now someone is trying to kill you.

What do I conclude from this dichotomous tale of these two 'sister cities', Marja and Hemet?

Thanks to President Obama's decision to appease the Military Industrial Complex and jump with both boots back into Bush's failed mission in Afghanistan, we are squandering our limited national resources in a place where they have no effect and are not appreciated. 

I've said this before, haven't I?

Apologists for America's latest and lamest military mission half a world away will argue we can do both: rebuild our own infrastructure and Afghanistan's infrastructure simultaneously. 

Well this is nothing new. I remember back when the ancestors of our contemporary jingoists argued the same thing during the Vietnam clusterfuck a generation ago: 

We can have both guns and butter.

Well, the point is we couldn't then and we can't now. It's just cant to say that we can.

We're not getting it done at home. Unemployment is over 10% in my county. There is no 'upswing' in sight. People in my city are being foreclosed. People in my company are getting their pink slips. People in my neighborhood are getting robbed. Locksmiths are making their rounds beefing up residents' doors. Will we be calling on gunsmiths next?

Earth to Obama! Call'em home.

Tuesday, March 23, 2010

Musings ....

In the middle of February - Valentine's Day to be exact - I decided to go on a three-month sabbatical. That turned out to be just a suspension on posting threads. Comments? I couldn't refrain from commenting completely. (I'm not a potted plant.) Even so, I am breaking the sabbatical on posting threads long enough to register my experience of vacating to this point.

It has been salutary. Taking substantial leave from defending Progressive ramparts agrees with me. Personally, I like standing down. It's a relief, coming in out of the cold rain.

I still feel "liberal", but not at the moment "Progressive". I no longer rise in the morning infused with a belief in Progress for my America. Mainly that's because I feel that my fellow Americans - most of them - are too fickle and too afflicted with short-term memories. Americans are altogether too susceptible to being seduced into betraying their common community good in favor of buying into a corporate secular religion which sanctifies unfettered private property. Americans are too stupid to deserve progress. Ignorance can be corrected; stupid is incorrigible, uneducatable.

So why bother with politics? Life is too short.

This is to say I sense myself drifting back into that good ol' Clintonesque WTF liberalism. That was where I was in 1999, after all, when George Bush's presidential candidacy rudely awakened me from streaming my good dreams and pursuing my competitive recreations de jour. I am beginning to recover that hedonistic balance in my life. National League Baseball resumes as the English Premier League finishes up. The World Cup is right around the corner. And, I am busy composing my growing perennial bucket list of racing yachts on which I'm still seeking a sail. Perchance to own? (No - that's why I chuck two bucks a week at the Lotto - my personal IRA-plus.)

Maybe I'm also learning not to take myself too seriously. Reintegration is another thing. I still miss blogging. Maybe I'll have to reinvent myself, on-line. WTF knows?

To show how far I have slithered out of my political foxholes, this past weekend I begged Trophy Wife to allow me to escort her to the symphony. That's the first time in this young century.

I did not doze off during Barber's Adagio for Strings!

Obama Will Triumph -- So Will America

By Frank Schaeffer

Before he'd been in office one year President Obama lost the support of the easily distracted left and engendered the white hot rage of the hate-filled right. But some of us, from all walks of life and ideological backgrounds -- including this white, straight, 57-year-old, former religious right wing agitator, now progressive writer and (given my background as the son of a famous evangelical leader) this unlikely Obama supporter -- are sticking with our President. Why? Because he's shown he will succeed by slow, calm and steady...staying the course.

We faithful Obama supporters still trust our initial impression of him as a great, good and uniquely qualified leader.

Obama's loyal supporters will be proven right. Obama's critics will be remembered as easily panicked and prematurely discouraged at best and shriveled hate mongers at worst.

The Context of the Obama Presidency:

Not since the rise of fascism in Europe, the Second World War and the Depression has any president faced more adversity. Not since the Civil War has any president led a more bitterly divided country. Not since the introduction of racial integration has any president faced a more consistently short-sighted and willfully ignorant opposition -- from both the right and left

As the President's poll numbers have fallen so has his support from some on the left who hailed him as a Messiah not long ago; those lefty web sites and commentators that were falling over themselves on behalf of our first black president during the 2008 election.

The left's lack of faith has become a self-fulfilling "prophecy"--snipe at the President and then watch the poll numbers fall and then pretend you didn't have anything to do with it

Here is what Obama faced when he took office-- none of which was his fault:
  • An ideologically divided country, to the point America is really two countries
  • Two wars; one mishandled from the start, the other unnecessary and immoral
  • The worst economic crisis since the depression
  • America's standing in the world at its lowest point in history
  • A country misled into accepting the use of torture on prisoners of war
  • A health care system in free fall
  • An educational system in free fall
  • A global environmental crisis of history-altering proportions (about which the Bush/Cheney administration and Republicans had done nothing)
  • An impasse between culture warriors from the right and left
  • A huge financial deficit inherited from the terminally irresponsible Bush administration
And these were just some of the problems left for Obama to deal with when he came into office!

"Help" from the Right?

What did Republicans and the religious right, libertarians and half-baked conspiracy theorists (what Republicans were reduced to by the time Obama took office) do to "help" our new president (and our country) succeed? They claimed he wasn't a real American, didn't have an American birth certificate, wasn't born here, was secretly a Muslim, was white-hating "racist", was a secret communist, was the Anti-Christ, was the reincarnation of Hitler and wanted "death panels" to kill the elderly!

They called for his assassination through the not-so-subtle use of signs held up at rallies and even a bumper sticker quoting Psalm 109:8. They organized "tea parties" to sound off against imagined insults and government in general. They gathered to howl at the moon. They were led by insurance industry lobbyists and deranged (but well-financed) "commentators" from Glenn Beck to Rush Limbaugh.

Utterly discredited Roman Catholic bishops teamed up with utterly discredited evangelical leaders to denounce a president who was trying to improve conditions for the poor, the environment, to diminish the number of abortions through compassionate programs to help women and to care for the sick! But in Congress the Republican leadership knew only one word: "No!"

In other words the reactionary white, uneducated, crazy far right, combined with educated neoconservative war mongers, religious right big business shills, libertarian Fed Reserve-hating gold bugs, gun-toting crazies, child-molesting acquiescent "bishops", frontier loons and evangelical gay-hating flakes...they all found one thing to agree on and rally around: their desire to stop a Black man from succeeding at all costs!

"Help" from the Left?

What did the left do to help their newly elected president? Some of them blasted the President because they disagreed with the bad choices he was being forced to make regarding a war in Afghanistan. Choices he'd inherited from the worst president in U.S. history!

Others stood up to proclaim the President's economic policies "failed" before the President even instituted them! Others said since not all gay rights battles had not been won, they'd been "betrayed"! (Never mind Obama's support of the gay community is stronger than any American President in history. Never mind that he signed new laws against hate crimes!)

Those who stood weeping with beatific emotion on election night 2008 turned into an angry mob, declaring their "disappointment" the world didn't change the moment Obama took the oath of office!

And the legion of young new voters was too busy texting to pay attention to how the media was making President Obama look like Hitler or Evil incarnate.

The President's critics, left and right, had one thing in common: impatience laced with no sense of history (let alone reality). Then of course there were the snide, white, know-it-all commentators and talking heads who just can't imagine that maybe, just maybe they aren't as smart as they thought they were and certainly not as smart as a Black President. He hadn't consulted them so he must be wrong!

The ideological ideas of Obama critics' defined their idea of reality rather than reality defining their ideas. Meanwhile back in the reality-based community - in just 12 short months -- President Obama scored victories that went unreported on the evening news:

#Continued to wind down the misbegotten war in Iraq (But that wasn't good enough for his critics)

#Thoughtfully and decisively picked the best of several bad choices regarding the war in Afghanistan (But that wasn't good enough for his critics)

#Gave a major precedent-setting speech supporting gay rights (But that wasn't good enough for his critics)

#Restored America's image around the globe (But that wasn't good enough for his critics)

#Banned torture of American prisoners (But that wasn't good enough for his critics)

#Stopped the free fall of the American economy (But that wasn't good enough for his critics)

#Put the USA squarely back in the bilateral international community (But that wasn't good enough for his critics

#Put the USA squarely into the middle of the international effort to halt global warming (But that wasn't good enough for his critics)

#Stood up for educational reform (No, that wasn't good enough for his critics)

#Won a Nobel Peace Prize (Not even that was good enough for his critics, who lambasted him for the honor)

#Moved the trial of terrorists back into the American judicial system of checks and balances (But that wasn't good enough for his critics)

#Did what he'd promised to do to start the slow, torturous and almost impossible process of health care reform that 7 presidents had failed to even touch (But that wasn't good enough for his critics)

#Responded to hatred from the right and left with measured good humor and patience (not good enough for his critics)+

#Stopped the free fall of job losses (Not even that was good enough for his critics)

#Showed immense personal courage in the face of an armed, dangerous far right opposition that included people who showed up at public meetings carrying loaded weapons and carrying Timothy McVeigh-inspired signs about the "blood of tyrants" needing to "water the tree of liberty". (That got no praise from his critics)

#Showed that he could not only make tough military choices but explain and defend them brilliantly (Not even that was good enough for his critics)

Are these what you would call "disappointing" accomplishments -- IN ONE YEAR! I think not.

Who has actually failed are Americans who can't see the beginning of a miracle, right under their noses. Who failed are the ideologues of the left and right who began hoping this President would fail so they could be proven correct in their dire and morbid predictions. Who failed are the movers and shakers behind our obscenely dumb news cycles who have turned "news" into more stupid entertainment for an entertainment-besotted, gossip crazed society

But here's the good news: President Obama is succeeding without the help of his "supporters" on the left and despite his hate-filled Republican detractors on the right!

The Future Looks Good

After Obama has served two full terms (and he will), after his wisdom in moving deliberately and cautiously with great subtlety on all fronts -- with a uncanny and calculating eye to achieving success (and he will), after the economy is booming and new industries are burgeoning (and they will), after the naysayers are proved wrong: let the record show that not all Americans panicked and jumped ship at the first sign of a storm.

Just because we didn't get everything we wanted in the health care bill, and his first year in office...not all of us are giving up! Some of us are staying the course. And we will be proved right.

If you agree that Obama is shaping up to be a great president, please pass this on and hang in there! Pass it on anyway to ensure that his "report card" gets the attention it deserves.

Saturday, March 20, 2010

Invasion & Occupation Iraq: The GOP's Seven-Year Regrets

Featuring The Honorable Tom McClintock (R-CA); The Honorable Dana Rohrabacher (R-CA); The Honorable John J. Duncan, Jr. (R-TN); moderated by Grover Norquist, Americans for Tax Reform.

Tuesday, March 16, 2010

Death of the Two-State Plan

The Netanyahu government had announced a settlement freeze in much of the West Bank for 8 months, but does not include the areas it unilaterally annexed to the district of Jerusalem as West Bank territory. Nor is the 'settlement freeze' really any such thing, since there are plans to expand housing in existing colonies on the West Bank.

This controversy comes on the heels of demonstrations in al-Khalil/ Hebron and Jerusalem by Palestinians outraged by the unilateral Israeli designation of the Tombs of the Patriarchs and the tomb of Rachel, in Palestinian West Bank territory, as Israeli heritage sites. In Palestinian experience, such Israeli claims often precede Israeli annexation. While US mass media did not cover the demonstrations in any detail (much reporting from Israel in US media is by dual citizens or by reporters who have served or have children serving in the Israeli army), they are a big story in the Middle East, and the creeping Israeli expulsion of Palestinians from East Jerusalem is guaranteed to enrage the world's 1.5 billion Muslims and result in violence.

The Obama administration came into office determined to restart the negotiations between Abbas and the Israelis, with the aim of achieving a two-state solution. After over a year of meetings and carrying messages and cajoling, the patient-as-Job special envoy George Mitchell finally convinced Mahmoud Abbas to agree to indirect negotiations with Israel. For the past year, Abbas had refused to talk, on the grounds that the Israelis were actively colonizing the West Bank and so taking away the very territory that was subject to negotiation. How do you parlay with someone who is stealing from you at that very moment?

The Oslo process of the 1990s, initiated by Israeli Prime Minister Yitzhak Rabin, had aimed at establishing two states side by side, Israel and Palestine. Neither the Likud Party of Netanyahu nor Hamas among the Palestinians wanted to see that process succeed. Likud wanted all of the former British Mandate of Palestine to be permanently under Israeli control, including the Gaza Strip and the West Bank, which Israel occupied in 1967 and which have a stateless, rights-less Palestinian population of over 4 million persons. The Israelis have steadily and determinedly usurped Palestinian territory throughout the last nearly a century, and by now it is highly unlikely that what is left of the Palestinian West Bank and the besieged, half-starving Gaza Strip can plausibly be cobbled together into a 'state.'

It doesn't really matter if Netanyahu's slap in the face to Biden derails the proposed indirect talks. The Likud-led government has no intention of allowing a Palestinian state, and there is now no place to put one. Israel-Palestine has unalterably entered the era of Apartheid (actually something worse), and it will spell both the end of dreams of peace in our generation, and probably over time the end of Israel as Netanyahu's generation knew it.

The Palestinians cannot be left stateless (the legal estate of slaves as well as of Jews under Nazi rule, i.e. people with no legal rights) forever. If they can't have Palestinian citizenship, then they'll have to have Israeli citizenship. The future of Israel-Palestine is likely to become a multi-ethnic, multi-religious state like Lebanon. Ironically, it is Netanyahu who is in no small measure responsible for this likely outcome, the opposite of the one he aspires to.

Israelis claim a 'birthright' to do things like colonize Palestinian territory, based on romantic-nationalist reworkings of biblical narratives. But Canaan was populated for millenia before some Canaanite tribes adopted the new religion of Judaism, and it was also ruled, as Palestine, for centuries by Romans and Greeks, and for 1400 years by Muslims. The Palestinian Jews converted to Christianity and then to Islam, so they are cousins of the European Jews. European Jews are about half European by parentage and all European by cultural heritage, and it is no more natural that they be in geographical Palestine than that they be in Europe (where nearly two-thirds of their mothers were from and about a third of their fathers). From a Middle Eastern point of view, European Jews planted in British Mandate Palestine by the British Empire were no different from the million colons or European colonists brought to Algeria while it was under French rule from 1830-1962. (Algeria had been ruled in antiquity by Rome, and the French considered themselves heirs of the Roman Empire, so it was natural that people from Marseilles should return to 'their' territory. Romantic nationalism, whether French or Zionist, always has the same shape). I don't predict the same fate for Jewish Israelis as befell the French colons. Rather, they are likely to more and more resemble in their position the Maronite Catholics of Lebanon-- i.e. powerful and formerly dominant population-wise, but increasingly challenged by other rising communities.

Maybe someday the US will take an objective look at the tiny nation we've nurtured and cultivated, and swear undying allegiance to any time given the podium. Do we share any values, other than the right to vote? Do we admire a nation that does nothing to get along with its neighbors, other than military intimidation? Do we think that its all right that a very militarily aggressive and domineering country has a nuclear arsenal? Do we admire sectarian states? Does it matter that this recipient of so much of our favor and treasure is nothing more than an oblivious ingrate?

Sunday, March 14, 2010

George Soros: Make It Harder For People Like Him To Make Billions

The man who famously "broke the Bank of England" in the early '90s by playing within the regulatory system of the time to make $1 billion as the pound sterling crumbled, continues to make the case for better regulations that would make it much harder for people like him to make so much money.

Soros has just published a new book, The Soros Lectures, which spells out his thinking on "finance, capitalism and open society." This video offers a taste of what those lectures were like:

Soros has been advocating for, as he wrote recently at TheMotleyFool, regulations that are "international in scope":
We have just passed through the worst financial crisis since the second World War. The only relevant comparisons are with ... and from which Japan has still not recovered, and with the Great Depression of the 1930s .... What differentiates it from the Great Depression is that this time the financial system was not allowed to collapse but was put on artificial life support.

In fact, the magnitude of the problem we face today is even greater. In 1929, total credit outstanding in the United States was 160 per cent of GDP and it rose to 250 per cent by 1932; in 2008 we started at 365 per cent – and this calculation does not take into account the pervasive use of derivatives which was absent in the 1930s. And yet, in spite of that, the artificial life support has been successful. Barely a year after the bankruptcy of Lehman Brothers, financial markets have stabilised, stock markets have rebounded and the economy is showing signs of recovery. People want to return to business as usual and think of the Crash of 2008 as a bad dream.

I regret to tell you that the recovery is liable to run out of steam and may even be followed by a “double dip” although I am not sure whether it will occur in 2010 or 2011.

My views are far from unique but they are at variance with the prevailing mood. The longer the turnaround lasts the more people will come to believe in it but, in my judgement, the prevailing mood is far removed from reality. This is characteristic of far-from-equilibrium situations when perceptions tend to lag behind reality. To complicate matters, the lag works in both directions. Most people have not yet realised that this crisis is different from previous ones – that we are at the end of an era. Others – including me – failed to anticipate the extent of the rebound. The turmoil is not confined to the financial sphere; it extends to the entire international arena. After the collapse of the Soviet empire, the US emerged as the sole superpower. No other power, or combination of powers, could challenge its supremacy.

But the uni-polar world order did not take root. When president Bush sought to assert America’s supremacy by invading Iraq on false pretences he achieved the exact opposite of what he intended. The US suffered a precipitous decline in its power and influence. So the disarray in the international financial system is matched by instability in international relations.

The efficient market hypothesis looks at financial markets in isolation and totally disregards politics. But that gives a distorted picture. Behind the invisible hand of markets there is the visible hand of politics which establishes the rules and conditions in which the market mechanism operates. My conceptual framework relates to the political economy, not the market economy as an abstract construct that is governed by timelessly valid laws ....

The international financial system ..... has been dominated by the US. Since then, we have gone from an almost completely regulated system to an almost completely deregulated one, but the changes were led by the US and the system has continued to be guided by what has become known as the Washington Consensus.
The financial crisis of 2008 was different because it originated at the centre and the periphery countries were drawn into it only after the bankruptcy of Lehman Brothers. The IMF was faced with a novel task: to protect the periphery from a storm that originated at the centre. It did not have enough capital but member countries banded together and raised a trillion dollars.

Overall, the international financial authorities have handled this crisis the same way as previous ones: they bailed out the failing institutions and applied monetary and fiscal stimulus. But this crisis was much bigger and the same techniques did not work. The rescue of Lehman Brothers failed. That was a game-changing event: financial markets actually ceased to function and had to be put on artificial life support. This meant that governments had to effectively guarantee that no other institution whose failure could endanger the system would be allowed to fail. That is when the crisis spread to the periphery because periphery countries could not provide equally credible guarantees. The countries at the centre used the balance sheets of their central banks to pump money into the system and to guarantee the liabilities of commercial banks, and governments engaged in deficit financing to stimulate the economy on an unprecedented scale. These measures have been successful and the global economy appears to be stabilising. There is a growing belief that the global financial system has once again escaped collapse and we are slowly returning to business as usual. This is a grave misinterpretation of the current situation. Humpty Dumpty cannot be put together again. Let me explain why.

The globalisation of financial markets that took place since the 1980s was a market fundamentalist project spearheaded by the US and the UK. Allowing financial capital to move around freely in the world made it difficult to tax it or to regulate it. This put financial capital into a privileged position. Governments had to pay more attention to the requirements of international capital than to the aspirations of their own people because financial capital could move around more freely. So as a market fundamentalist project, globalisation was highly successful; individual countries found it difficult to resist it. But the system that emerged was fundamentally unstable because it was built on the false premise that financial markets can be safely left to their own devices. That is why it broke down and that is why it cannot be put together again.

The point I am trying to make is that regulations must be international in scope. Without it, financial markets cannot remain global; they would be destroyed by regulatory arbitrage. Businesses would move to the countries where the regulatory climate is the most benign and this would expose other countries to risks they cannot afford to run. Globalisation was so successful because it forced all countries to remove regulations, but the process does not work in reverse. It will be difficult to get countries to agree on uniform regulations.

This can be seen in Europe. During the crisis, Europe could not reach a Europe-wide agreement on guaranteeing its financial system; each country had to guarantee its own. As things stand now, the euro is an incomplete currency. It has a common central bank but it does not have a common treasury .....

Germany used to be the driving force behind European integration but that was at a time when Germany was willing to pay practically any price for reunification. Today Germany is at odds with the rest of the world in fearing inflation rather than recession and, above all, it does not want to serve as the deep pocket for the rest of Europe. Without a driving force, European integration has ground to a halt.

Fortunately, Europe had the benefit of the social safety net. It was held responsible for holding down European growth rates in good times, but it served its purpose in the downturn and the recession in Euroland was less severe than expected. Now that the fears of an economic collapse have subsided, the EU is showing some signs of political revival. The ECB has effectively bailed out the Irish banking system and Ireland has resoundingly endorsed the Lisbon Treaty. So I may be too pessimistic about Europe.

The prospects for international co-operation may be more endangered by the different long-term impact the financial crisis is having on different countries. In the short term, all countries were negatively affected, but in the long term there will be winners and losers. Although the range of uncertainties for the actual course of events is very wide, shifts in relative positions can be predicted with greater certainty. To put it bluntly, the US stands to lose the most and China is poised to emerge as the greatest winner. The extent of the shift is likely to exceed most expectations.

Saturday, March 6, 2010