Winter/Spring 2008

The Declining Dollar – Symptom and Symbol of U.S. Financial Negligence

J. Paul HorneLooking beyond the current turmoil in global capital markets, that long-running subject – what outlook for the dollar? – seems likely to involve further decline in its value against the euro and other major currencies. There is scant evidence of willingness on the part of U.S. political and monetary leaders, today’s or tomorrow’s, to do what is necessary to make the dollar fundamentally stronger. Indeed, American policy-makers have powerful reasons to let the dollar depreciate over time, shifting the cost to the rest of the world of U.S. international borrowing to cover shortcomings in economic policies pursued by Washington.

Read more...
 

Sense and Nonsense About European Security Policy

Michael BrennerThe revived constitution for the European Union has renewed interest in prospects for its under-achieving Common Foreign and Security Policy (CFSP). Timely and welcome as this interest is, it is dismaying to see that it is being spurred by legal mandates and still-modest institutional reforms. It is the acute external pressures that menace Europeans’ wellbeing that ought to compel and inform moves to re-engage on the pressing issue of whether, and how, Europeans can act in concert to cope with an unruly world. The Middle East in particular presents a set of intersecting, combustible crises that pose clear and serious danger to the continent’s safety, stability and economic (energy) security. Iraq, Iran, Palestine/Israel, Lebanon – each is spinning further and further out of control. Each is aggravated by the serial failures of American policies that have dominated the action while queering the pitch for tentative European diplomacy (unilateral, trilateral or collective).

Read more...
 

The Real Questions About Sovereign Wealth Funds

A Roundtable Discussion

Already the buzz this year in financial circles, sovereign wealth funds have been initially welcomed in the United States (and to a lesser degree in Europe) as white knights whose capital investments have helped rescue troubled financial institutions and other companies stricken by the credit-market crisis. But these funds, even as they are currently sought after by financially-bleeding companies, could easily become controversial with public opinion and regulators in the United States and European countries because of their potential political dimensions. The very fact of their emergence is a symptom of profound new shifts in the global financial order. To head off potential jingoist reactions against the proposed buy-ins by these new investors, there is a need to probe a set of questions about how these funds work and about whether rules can be reached – by mutual agreement – to ensure that the funds prove compatible with global capital movements.

Read more...
 

“Shock Therapy” Worked for the Economies of the Post-Communist Countries

Anders ÅslundAnders Åslund, a leading specialist on the Soviet Union and its satellites, gave a talk last fall about the massive changes in Russia and the new post-communist countries in Eastern Europe and Central Asia in the 1990s after the collapse of communism. His conclusions were incontrovertible – and they were stark. Economically, the process provided successful transitions to capitalism because most countries understood how to move to free markets and did so quickly. Economists, both in these countries and the West, have mastered the principles for this transition and they worked in practice. In contrast, political transformation has been disappointing in these nations – a failure that Åslund blames on the lack of blueprints for action that should have been developed over the years by political scientists.

Read more...
 

A Flat Playing Field Can Spread Western Innovation

Michael C. MaibachGlobalization has made us more conscious of the successive technological revolutions that have driven the scale, scope and speed of change and modernization. “Globalization” itself in the modern era has been led by Western inventors and entrepreneurs. Wave upon wave of transformative technology has taken root on one or both sides of the Atlantic over the last several centuries. Globalization’s first cutting-edge technology was the Transportation Revolution, exemplified by the Italian Christopher Columbus’ voyages in wooden, wind-powered ships to America in the 1490s. Europeans, and later Americans, continued to lead the way in transportation technology through the 20th century, developing better and faster ways to travel by land, water, and air.

Read more...