The last seven years have had much in common with the period of 1893 to 1900. But the turmoil this country experienced during the first few years of the 20th century also seems to be mirrored in the events of today.
Certainly the nation once witnessed the rise of the more radical elements, whether they were far-left anarchist movements or center-left progressives. Those movements attested to a very real battle being waged for the heart and soul of what the American Century would become. Its apex was marked by one president’s assassination and by the dreams of an inventor who wanted to revolutionize our mobility.
Given what has transpired over the last two years, it is haunting to read Teddy Roosevelt’s letter to Congress and his personal thoughts on companies whose sole reason for existence is to make their owners wealthy without regard to the damage they were doing to society. One wonders what would have happened if today’s Wall Street Masters of the Universe had been confronted in a White House with the same resolve that Roosevelt showed to J.P. Morgan.
Currency Wars
If the world is on the brink of an out-and-out currency war, a variety of battalions has been out on manoeuvres in the past few weeks. The Bank of Japan, after six years off the battlefield, has launched a fusillade of intervention to hold down the yen in foreign exchange markets. Brazil used the guerrilla tactic of doubling taxes on capital inflows to stop the real surging. India and Thailand warned that they too might bring heavy ordnance into play.
The main combatants, the US and China, continued to exchange rhetorical salvos. Washington (and Brussels) identified undervalued currencies such as the renminbi as a prime cause of global macroeconomic imbalances. Beijing retorted that such aggression risked bringing mutual destruction upon the great economic powers.
On Monday Dominique Strauss-Kahn, managing director of the International Monetary Fund, voiced his concern. “There is clearly the idea beginning to circulate that currencies can be used as a policy weapon,” he said. “Translated into action, such an idea would represent a very serious risk to the global recovery.”
Computers & Cars: MyFord Touch
Instead of the usual array of knobs, dials and passive screens, MyFord Touch is dominated by a giant 8-inch touch screen, with large function icons in the center and color-coded corners that you touch to switch the screen among four main functions: multisource audio entertainment, navigation, phone and climate control. There is also a “home” view, combining common functions that can be personalized.
The system also has several other elements. There are twin 4-inch screens on either side of the speedometer. The one on the left presents vehicle information, such as miles traveled, and allows you to customize some of the gauges so that, for instance, you can finally banish that tachometer you never use in favor of, say, a digital readout on gas-mileage efficiency. The one on the right replicates, in simpler form, the main functions of the center screen, so you can select and check things like audio and climate control without looking at, or touching, the main screen.
These smaller screens are controlled by five-way arrow clusters on the steering wheel, like controllers on iPods and other devices usable by touch alone. There also are some large, touch-sensitive buttons below the main center screen for things like setting volume and fan speed.
Plugging into the age of uncertainty
For most of the past century, the big global narrative has been the clash of rival paradigms: Nazism versus liberal democracy, communism versus free market democracy, and, more recently, fundamentalist Islamic states versus the secular, democratic west. When the cold war ended, Francis Fukuyama predicted that this clash of paradigms would end. He was right, but not for the reason he thought.
The battle of rival ideologies has ended not because, as Fukuyama foresaw, the triumph of capitalist democracy has been universally acclaimed. Instead, it is because all of us have realized we face a new challenge — how to thrive in the high tech, global economy — and no one country or single ideology is yet certain of getting this exactly right.
Condoleezza Rice on German Reunification
In a SPIEGEL interview, former United States Secretary of State Condoleezza Rice discusses America’s fight for German reunification, Soviet leader Mikhail Gorbachev’s woes at the time, Chancellor Helmut Kohl’s merits and the later mistakes of his successor, Gerhard Schröder.
SPIEGEL: Madame Secretary, when the Berlin Wall fell in 1989, European nations like Great Britain and France were very worried about the prospect of German unification. America was the only country that didn’t appear to be concerned. Why not?
Condoleezza Rice: The United States — and President George H.W. Bush — recognized that Germany had gone through a long democratic transition. It had been a good friend, it was a member of NATO. Any issues that had existed in 1945, it seemed perfectly reasonable to lay them to rest. For us, the question wasn’t should Germany unify? It was how and under what circumstances? We had no concern about a resurgent Germany, unlike the British or French.
SPIEGEL: Because a unified German was in America’s strategic interest?
Rice: If you were going to have a Europe that was whole and free, you couldn’t have a Germany that was divided. So, with the possibility that Soviet power was going to be receding from Europe, it made perfectly good sense to try to achieve reunification on terms that nobody would have thought thinkable, even four or five years before.
Special Report: The ties that bind at the Federal Reserve
Kristina Cooke, Pedro da Costa and Emily Flitte:
NEW YORK/WASHINGTON (Reuters) – To the outside world, the Federal Reserve is an impenetrable fortress. But former employees and big investors are privy to some of its secrets — and that access can be lucrative.
On August 19, just nine days after the U.S. central bank surprised financial markets by deciding to buy more bonds to support a flagging economy, former Fed governor Larry Meyer sent a note to clients of his consulting firm with a breakdown of the policy-setting meeting.
The minutes from that same gathering of the powerful Federal Open Market Committee, or FOMC, are made available to the public — but only after a three-week lag. So Meyer’s clients were provided with a glimpse into what the Fed was thinking well ahead of other investors.
His note cited the views of “most members” and “many members” as he detailed increasingly sharp divisions among the officials who determine the nation’s monetary policy.
The inside scoop, which explained how rising mortgage prepayments had prompted renewed central bank action, was simply too detailed to have come from anywhere but the Fed.
A Proposed Itinerary For Candidate Emanuel
“Waiting for Superman” is a hot documentary about our schools, not Rahm Emanuel’s run for mayor of Chicago. It’s why his “listening tour” is a good idea if it is partly fueled by humility about his steep learning curve.
A very smart political mechanic and tactician, Mr. Emanuel has been characteristically focused during his campaign preamble. He has dined with potential donors, like Sam Zell, the real estate broker. He has talked to sharp folks about issues. He has taken the temperature of potential rivals.
That’s all predictable. But the challenges he would face as mayor are ample and necessitate thinking beyond what has been his frequent professional reflex: getting 50 percent plus one vote in political and legislative campaigns.
Rise of the Online Autocrats
The tweets started arriving in August, and they did not mince words. One of the first accused the South Korean government of being “a prostitute of the United States.” The Twitter account, under the name “uriminzok,” or “our nation,” seemed to be part of a sprawling North Korean digital operation that included a Facebook account (registered as a man interested in “meeting other men,” but solely for “networking purposes”) and a series of YouTube videos meant to celebrate the might of the North Korean military.
A spokesman for the North Korean government quickly denied any involvement with the Facebook and Twitter accounts, but he acknowledged that they were the work of government supporters living in China and Japan. The owner of the Facebook page (which the Palo Alto, Calif., company eventually deleted, citing violation of its terms of service) told a South Korean news agency that it was run by a Pyongyang-based publishing outlet affiliated with the government. Apparently, even the notoriously isolated rulers of North Korea know how to practice what the U.S. State Department calls “21st-century statecraft.”
Trains in America, and Elsewhere
Fundamentally, without major government commitments to high-speed rail, America simply will not have a high-speed passenger rail network. This should probably be discomfiting, since every other economic superpower (the EU, Japan and China) does have a high-speed rail network. That makes America look a bit backward. The time horizon for building such a network is several decades, and it’s interesting to think about what will happen in the middle decades of this century if air transport becomes unaffordable due to high fuel costs and America doesn’t have an electric alternative for high-speed intercity transit.
Politically, I would describe what’s going on here as a loss of confidence in the principle of government investment and planning, in the face of the demonstrated incapacity of the contemporary American government to do an adequate job of investment and planning. That incapacity is largely due to conservative political opposition to government intervention in the economy, either for ideological reasons or because it entails higher taxes or because it treads on the toes of vested business interests. But the fact that the American government can’t get its act together to create a decent modern passenger rail network doesn’t mean that governments in general are incapable of doing so, or that it isn’t a good idea. Europe, Japan, and China seem perfectly capable of doing this job. A more narrow response to the rail problem, specifically, would be to encourage a BOT deal in which the government uses eminent domain to create the rail corridor and turns to the private sector to raise the capital, build it and perhaps run it. But, again, this doesn’t question the need for the government to plan national infrastructure, which seems to me to be pretty hard to gainsay.
Currencies clash in new age of beggar-my-neighbour
“We’re in the midst of an international currency war, a general weakening of currency. This threatens us because it takes away our competitiveness.” This complaint by Guido Mantega, Brazil’s finance minister, is entirely understandable. In an era of deficient demand, issuers of reserve currencies adopt monetary expansion and non-issuers respond with currency intervention. Those, like Brazil, who are not among the former and prefer not to copy the latter, find their currencies soaring. They fear the results.
This is not the first time for such currency conflicts.?In September 1985, now 25 years ago, the governments of France, West Germany, Japan, the US and the UK met at the Plaza Hotel in New York and agreed to push for depreciation of the US dollar. Earlier still, in August 1971, the US president Richard Nixon imposed the “Nixon shock”, levying a 10 per cent import surcharge and ending dollar convertibility into gold. Both events reflected the US desire to depreciate the dollar. It has the same desire today. But this time is different: the focus of attention is not a compliant ally, such as Japan, but the world’s next superpower: China. When such elephants fight, bystanders are likely to be trampled.
Here there are three facts, relevant to today’s currency wars.