Opinion

Chrystia Freeland

The lessons of Richard Holbrooke

Chrystia Freeland
Dec 17, 2010 14:24 UTC

No man is a hero to his valet. That caution seems more true today than ever. Indeed, in the age of WikiLeaks, the stubborn indelibility of e-mail, and a democratized, 24/7 cybermedia that are avid to feed what turns out to be our insatiable appetite for details of the private behavior of public figures, you could take that proverb further and say all of us now know what the valet did, and that’s why there aren’t any heroes any more.

And yet Richard Holbrooke, who died so tragically and so abruptly this week, was a great man even in this WikiLeaks age. As I have been reading the public and private tributes to him, and talking about him with his many, many other friends, I have realized that he turned the old aphorism on its head: Described by the U.S. President as “a giant” and remembered in a front-page obituary in The New York Times Mr. Holbrooke was even more beloved and admired by those closer to him. If he had had a valet, I suspect he would have mourned and respected Mr. Holbrooke the most of all.

If I hadn’t known him, I’m sure that assertion would have surprised me because, as you can divine even from the glowing public tributes, he was no pussycat and he wasn’t Mother Teresa either. He was a bully, and not only when negotiating with Bosnian and Afghan warlords, but also in his dealings with less exotic (though in the view of some people, equally noxious) creatures such as journalists. In a beautiful appreciation of him this week, veteran diplomatic writer Carla Anne Robbins captured this quality with her recollection of Mr. Holbrooke as “one of the most unapologetic spinners” she had ever known. He had a powerful sense of his own importance and a theatrical view of the world—with himself, of course, usually cast in a central role.

In today’s pasteurized and homogenized professional world, we are suspicious of the larger-than-life character he so easily inhabited. If he had been sent to a “leadership coach” or to a PR adviser, I am sure he would have been urged to tone it down, to be less intense, less aggressive, less vivid. That is not just a suspicion. Barack Obama was unstinting in his posthumous praise, but before Mr. Holbrooke’s aorta tore, his lion-sized approach to life was creating strains with the “no drama Obama” White House: He didn’t get a seat on Air Force One on the President’s last two trips to Afghanistan, and struggled to make his voice heard in Mr. Obama’s inner circle.

But Mr. Holbrooke’s unapologetic pugnacity was central to his effectiveness in the world. In this age of milquetoast leadership in business, as in public life, he offers a powerful counter-example. As a tribute to a man I am honored to have called my friend, I’d like to suggest three lessons in leadership from one of the most accomplished statesmen, and finest men, of our time:

Canadian FinMin tells Europe to follow U.S. example

Chrystia Freeland
Dec 10, 2010 19:01 UTC

Canadian Finance Minister Jim Flaherty stopped by the Reuters studio this morning to chat with Chrystia about the impact of Europe’s debt crisis on Canada. He said the situation in Europe “poses a danger” and that if it gets out of control, the crisis could lead to a repeat of what happened to the financial markets in 2008. He urged the Europeans to follow the course America took in 2008 and substantially increase the amount of capital in the stabilization fund:

Jim Flaherty: They should imitate what the Americans did quite frankly in 2008 and create a situation where the markets regain confidence in sovereign debt and banking situations. And that means a substantial fund put together or they could do it with bonds and that’s been another suggestion, but a substantial pool that would make it clear that they would be able to defend and protect sovereigns and banking systems in Europe.

Chrystia Freeland: And that pool should be bigger than the one they have now?

Jim Flaherty: Yes

Chrystia Freeland: How much?

Jim Flaherty: Well, I’ll leave that, you know, for them to decide but it needs to be such that the markets would have full confidence, so substantially more than it is right now.

A consequence of globalization is polarization

Chrystia Freeland
Dec 10, 2010 15:19 UTC

Chuck Schumer, the senior Democratic senator from New York, already has one of his talking points for 2012 — he plans to lambaste the Republicans for their “tax cuts for millionaires,” a reference to the right’s refusal to end the Bush tax breaks at the upper-end of the income distribution.

That’s a big deal, because for much of the post-war era, class has been a forbidden subject in U.S. politics. Americans were sold on the idea of living in the land of opportunity — their country, after all, was the one huddled masses fled to for the chance to build a better life. That self-image was so appealing and so powerful that politicians ran against it at their peril—Morning in America played better on the campaign trail than class war.

Schumer is a centrist whose constituency includes many of America’s plutocrats —he has sometimes been called the Senator from Wall Street. He is also one of the country’s savviest politicians. So his judgment that “millionaires tax break” will make a good bludgeon for Republicans says a lot about how deep the chasm has become between America’s super-elite and everyone else, and how worried middle-class Americans are that the old promise of social mobility is no longer delivering.

Nouriel Roubini sees ‘the roots of the next crisis in the current one’

Chrystia Freeland
Dec 8, 2010 18:03 UTC

Nouriel Roubini is #12 on on Foreign Policy’s list of the 100 Top Global Thinkers of 2010. Over the past few years, the economist at New York University says he’s been thinking most about why financial crises occur and whey they are occurring more frequently than we have expected.

Contrary to the conventional notion that crises are random and infrequent events, Roubini has been arguing for the better part of a decade that financial crises can be predicted based on macroeconomic and policy mistakes. In fact, they occur every few years in some country around the world, he says. Roubini characterizes these financial crises as a “white swan” event. He emphasizes their regularity in his recent book Crisis Economics. Roubini says the pattern of crises is always the same: initially there is an economic boom, which drives up asset prices, leading to an excessive build-up of debt and leverage, which eventually leads to a downturn and then a market crash and bust.

The co-founder of Roubini Global Economics, Roubini credits his 20 years of experience studying financial crises in emerging markets — he published a book about their causes and consequences in 2004 — for enabling him to spot the risks for a crash. He also notes that others who foresaw the crisis, such as Morgan Stanley Asia’s Steve Roach and then-Merrill Lynch economist David Rosenberg, share a global view of economic dynamics, intellectual courage and a certain outsider status, a characteristic that fellow FP Global Thinker Mohamed El-Erian said was vital for his own success.

Raghuram Rajan on what makes a successful capitalist society

Chrystia Freeland
Dec 7, 2010 20:27 UTC

Raghuram Rajan of the University of Chicago Booth School of Business is #26 on Foreign Policy’s list of the 100 Top Global Thinkers of 2010. His big idea is: “capitalist economies work well when everybody has access to the basic conditions they need to compete: access to education, access to health care, and access to finance.” In the absence of these conditions, Rajan argues that a capitalist society will be beset by income inequality, political frictions, and rent-seeking behaviors that subvert healthy competition. Capitalism is at its best when it creates equal opportunity:

If we all started off at age 21, 22, somewhere there, with all the education we needed, all the access to finance we wanted, and reasonable health, and we were told, ‘Here’s a level playing field. Go out and compete.’ And 25 years later some did very well, some did not so well, I think we would all be reasonably satisfied with that outcome. And that’s really the ideal of capitalism. But we’re very far from that ideal. Where you’re  born matters a lot. Of course, what you make of it also matters, but to the extent that you can reduce the impact of where you’re born, what conditions you’re born under, and what kind of impediments that creates, I think capitalism is better for it.

Rajan’s recent book, Fault Lines — the most recommended book on FP’s survey of the Global Thinkers — looks at the recent financial crisis through this lens. In the lead-up to the crisis, many citizens of the United Stated lacked access to higher education, a prerequisite for many of today’s jobs. Median wages stagnated as a result, and the government faced pressure to do something about it. Washington responded with the short-term fix of expanding cheap credit, notably through Fannie Mae and Freddie Mac, which temporarily masked the rise in income inequality but ultimately did nothing to address the structural issues of the U.S. economy.

Video: Jim Rogers, CEO Rogers Holdings

Reuters Staff
Dec 7, 2010 20:23 UTC

Reuters editor-at-large Chrystia Freeland interviews international investor Jim Rogers, as part of the 2011 Reuters Investment Outlook Summit.

Part 1

Part 2

Part 3

Part 4

Part 5

A tour of world currency markets with John Taylor

Chrystia Freeland
Dec 6, 2010 19:00 UTC

Chrystia interviewed currency maven John Taylor this morning to kick off the Reuters 2011 Investment Outlook Summit. Taylor is the chairman and CIO of FX Concepts, the largest currency hedge fund in the world, with around $8.5 billion in assets under management.

Taylor led Chrystia on a tour of world currency markets and offered his predictions for 2011, including:

–The euro will sink to parity with the dollar, thanks to a debt crisis in Spain.
–Switzerland, which is a “little Brazil,” will see the franc rise against the euro as capital leaves the eurozone.
–The Australian dollar will depreciate by 15 or 20% due to a fall-off in commodity and housing prices.
–The Canadian dollar will depreciate to C$1.15 vs. the dollar on lower commodity prices and lower growth in the U.S.
–Sterling will appreciate against the euro.
–The Brazilian real is attractive but its outlook is uncertain given the Brazilian’s government’s determination to tame appreciation. On the other hand, investors like Taylor who are bullish on Brazil may have more ammunition than the government, thanks to the Federal Reserve and the resurgence of the carry trade.

Shaping globalization with Joseph Stiglitz

Chrystia Freeland
Dec 6, 2010 17:08 UTC

Columbia University economist Joseph Stiglitz is #30 on Foreign Policy’s list of the 100 Top Global Thinkers of 2010. Stiglitz told Chrystia that his big idea is “globalization is something that has to be shaped.”

For much of recent history, special interests have driven the globalization agenda, he says. One of the primary obstacles to completing the Doha Round of free-trade negotiations is the billions of dollars of subsidies the U.S. showers on about 25,000 American cotton farmers, a policy that impoverishes more than 10 million cotton farmers in Africa and that has been judged as a violation of WTO rules.

Despite globalization’s shortcomings, Stiglitz does not believe it is to blame for the hollowing out of America’s middle-class. Increases in productivity and technological changes have reduced the demand for the unskilled labor. “The real failure of public policy,” Stiglitz says, is that “it hasn’t responded effectively to the driving forces of technology and globalization.”  Stiglitz argues that by lowering barriers to trade while failing to invest in health care and education, America has resigned itself to having a middle class that lacks the skills to compete in the global economy.

Mohamed El-Erian: A period of major global realignment

Chrystia Freeland
Dec 3, 2010 18:13 UTC

Mohamed El-Erian, PIMCO’s CEO, is #45 on Foreign Policy’s list of the 100 Top Global Thinkers of 2010. He tells Chrystia that his big idea is a “recognition that we are living in a period of major global realignment.”  This rapidly changing environment favors emerging markets, which are accustomed to periods of upheaval, as well as businesses, which have the metrics and flexibility required to make quick course corrections. The developed world has been hobbled by years of inertia, he says, and is at a disadvantage in responding to these global shifts.

In El-Erian’s eyes, being an outsider is fundamentally connected to being a top global thinker.  He credits his unconventional background — growing up in Egypt, studying four different schools of economics at Cambridge, and analyzing emerging markets for 15 year at the IMF — with his ability to spot the realignment in world economic growth towards the developing world.

El-Erian attributes PIMCO’s success to its heterodox culture — the investment giant’s motto is to be “constructively paranoid,” and once a year management invites a “shadow” investment committee to its Newport Beach offices to second-guess the portfolio managers’ investment decisions.

We need an economics-based foreign policy

Chrystia Freeland
Dec 3, 2010 14:39 UTC

It is impossible not to be fascinated by the WikiLeaks release of U.S. State Department cables this week. It is a story that has everything, ranging from insight into the U.S.-Russia relationship, to salacious tidbits like Ghaddafi’s predilection for buxom Ukrainian nurses, to raising the meaty issues of free speech, the internet and a government’s need for privacy.

But the most significant revelation isn’t what is in the documents—it is what is missing from them. The financial crisis of 2008, and its agonizing aftermath, changed the world profoundly. We now know it didn’t change the State Department. The most important take-away from the WikiLeaks data dump is that America needs a new foreign policy paradigm to deal with the post-crisis world.

The starting point for that paradigm must be to put the economy at the heart of foreign policy. Some of America’s savviest wise men are already making that point, most notably in the latest issue of Foreign Affairs, with two seminal essays on the importance of the economy for statecraft.

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