Chrystia Freeland

Rise of the rest

Chrystia Freeland
Sep 30, 2010 21:01 UTC

Get ready for the next wave of globalization. The emergence of the emerging markets is old news, of course: after all, Tom Friedman discovered that the world was flat back in 2005. But even as much of the developed world is struggling with weak consumer demand and stubbornly high levels of unemployment, the emerging market countries are writing a new chapter in the story of the global economy.

We are accustomed to thinking of our economic relationship with the countries Fareed Zakaria describes as “the rest” as a two-way exchange between west and east or north and south: western companies setting up call centers in India or manufacturing their goods in China, for instance; and, more recently, savings-rich emerging market economies, especially China, investing in US treasuries, or Russian oligarchs buying London mansions.

That was Globalisation 1.0. In the next stage, some of the biggest deals and some of the most important capital flows will be between emerging markets, with no need to stop-over at Heathrow or JFK. Forget the last decade’s race-to-the-bottom rivalry between Wall Street and the City of London to be the world’s financial capital; the new motto of the moneymen, as one Manhattan banker put it to me this week, is “Mumbai, Dubai, Shanghai or goodbye.”

One place you can watch Globalisation 2.0 gathering pace is on the 49th floor of the ‘C’ tower in the high-tech high-rise complex the locals call Moskva City, on the banks of the Moskva river, half a mile downstream from Russia’s White House, where Prime Minister Vladimir Putin is currently installed. The fancy modern furniture (the “Ziricote veneer,” a sign informs visitors, is “sourced in Chile”) and contemporary art are standard New York hedge fund decor. But Stephen Jennings, the 50 year-old New Zealander who receives visitors here, is betting on a world that by-passes the west altogether.

Jennings is a founder and CEO of the Renaissance Group, a Moscow-based financial company with ambitions to be the premier investment bank for intra-emerging market capital flows. As Jennings put it, he wants Renaissance “to provide the plumbing”.

Video: Off to Brazil with JetBlue’s founder

Chrystia Freeland
Sep 22, 2010 20:17 UTC

“The U.S… is kind of tapped out,” JetBlue founder and former CEO David Neeleman told Chrystia at this past week’s Google Zeitgeist conference. That’s why the serial entrepreneur decided to start his latest venture, Azul Airlines, in his native Brazil. Neeleman said air traffic in Brazil is expanding at three times the rate of GDP, nearly 27% a year, and that his airline is flying to cities that haven’t seen air service in years. Hear what he has to say about this and the JetBlue flight attendant who flew off the rails:

Whenever he visits Brazil, Neeleman is struck by the country’s optimism and enthusiasm, what he calls “that emerging markets buzz.” He does concede that Brazil faces some bottlenecks with infrastructure — Azul had to buy a field next to one Brazilian airport and use it as parking lot in order to keep pace with its growth — and bureaucracy — he’s pushing to reform the government agency that oversees airports — but Neeleman thinks Brazil is a safe haven for investors.

Exclusive: Google CEO unleashed

Chrystia Freeland
Sep 17, 2010 13:42 UTC

Earlier this week at the Google Zeitgeist conference, the company’s chairman and CEO Eric Schmidt said there was a divergence between his sector and the rest of the economy. While high-tech firms are currently receiving new investments, rolling out new products, and hiring new workers, the broader economy is at a standstill. “The damage that was done by the recession was much more severe than people acknowledge,” Schmidt said.

As the head of one of Silicon Valley’s most profitable companies and an ally of President Obama, Schmidt defended the White House from the charge that it is anti-business. He said recent events like the financial crisis and the BP oil spill showcased the need for government regulation of the private sector.

That said, the Google chief argued his own industry “should be as unregulated as possible,” given the pace of change and the plurality of options available to consumers.

Around the world with George Soros

Chrystia Freeland
Sep 15, 2010 22:58 UTC

On Wednesday, Chrystia sat down with legendary hedge-fund manager George Soros to ask him about his views on nearly every major economy.

They started with Asia. Soros said Japan was right to intervene in the foreign-exchange market to try to drive down the value of the yen, saying the country suffers from a grim combination of deflation and political paralysis. Here’s the video:

Soros pointed out that it took Japan twenty years to get past a crisis similar to the one facing the U.S., i.e. a real-estate bust followed by a banking crisis. It “will take a long time to work off the excess consumption” in the states, he said.

Obama should call a truce with Wall Street

Chrystia Freeland
Sep 13, 2010 13:36 UTC

The pre-election economic treats that President Barack Obama handed out this week included several intended specifically for business: research and development tax credits, for instance, and the small-business tax breaks he is pushing to introduce in the face of Republican congressional opposition.

But these familiar sweeteners won’t be nearly enough to reverse one of the most significant estrangements of the first two years of the Obama administration — the rift between the White House and business.

Two years ago, candidate Obama was the darling of the CEO class: Hedge fund titans, Silicon Valley entrepreneurs and even registered Republican chief executives from the Midwest flocked to his banner. Today, America’s business leaders — even those who raised millions for him in 2008 — have turned on their president: “Socialist” is among the nicer epithets some use when describing Obama.

China’s economic model isn’t the answer for the U.S.

Chrystia Freeland
Aug 30, 2010 17:03 UTC

This piece first appeared in The Washington Post.

Forget the “Ground Zero mosque,” Michelle Obama’s Spanish holiday and even the oil spill in the Gulf of Mexico. When future historians look back to the summer of 2010, the event they are most likely to focus on is China’s emergence as the world’s second-largest economy.

Mostly, this is a very good thing. The rise of China, and the related, albeit slightly slower, emergence of India, is the story of hundreds of millions of very poor people joining the global economy and getting a little richer. Gross domestic product per capita in those two countries was basically stagnant from 1820 to 1950. Then, it increased 68 percent from 1950 to 1973, and a whopping 245 percent from 1973 to 2002.

But we need to be careful not to draw the wrong lessons from China’s resurrection. The most dangerous one is that authoritarianism works.

Business journalism’s image problem

Chrystia Freeland
Aug 23, 2010 19:28 UTC

In this past weekend’s New York Times, Chrystia channels Mikael Blomkvist, the muckracking protagonist in Steig Larsson’s Millenium trilogy, and argues that he would be horrified that the best writing on the financial crisis — Michael Lewis’ The Big Short and Andrew Ross Sorkin’s Too Big to Fail — has come from insiders with access:

Lewis is “eternally grateful” to his subjects for their cooperation. Sorkin, a reporter and columnist for The New York Times, is “truly grateful” to his. One can imagine Blomkvist sputtering with rage, but you don’t have to be a fictional Scandinavian social democrat to wish that business journalism in the United States was more about afflicting the comfortable and less about cozying up to them. In the spring, the high priests of American journalism at the Columbia Journalism Review published a tough critique of Sorkin by Dean Starkman, who argued that “Too Big to Fail” was on one side — the wrong side — in the “mini-struggle” between “deal journalism and the work of accountability-oriented reporters.”

Chrystia goes on to say that the most worrisome divide is not between “access” and “investigative” business journalists, as Blomkvist would have us believe. Rather, in an interconnected, global economy, what differentiates the best reporters from the rest is the ability to make sense of data and complex systems:

Booming businesses, weakened workers

Chrystia Freeland
Aug 20, 2010 16:34 UTC

I appeared on PBS’s Nightly Business Report yesterday to talk about a serious fault line that’s running through the U.S. economy: businesses have figured out how to thrive in a global economy while workers have been left behind. Unless American businesses can find a way to include the sagging middle class in their success, they will soon face a populist backlash which will make Barack Obama look like Milton Friedman. Below is the video and my full remarks:

Watch the full episode. See more Nightly Business Report.

My full remarks:

Here’s the good news about China’s emergence as the world’s second largest economy — U.S. business has figured it out. And here’s the bad news– while U.S. companies can go global, most U.S. citizens can’t. The result in this age of globalization, is a growing tension between the interests of America’s business leaders and the interests of much of its middle class. Indeed, the most important fault line in American politics today may not be between Democrats and Republicans. It is between those businesses and business people who are succeeding in the global economy and those who aren’t.

This clash of values and interests upends our usual ideas of left and right. Consider immigrants. It’s no accident that Mike Bloomberg and Silicon Valley bosses are squarely on the side of diversity and liberal immigration laws. But CEO’s are less thrilled about the Democrat-driven imposition of more regulation and the promise of higher taxes.

Mosque madness and midterms

Chrystia Freeland
Aug 16, 2010 15:52 UTC

On “This Week” with Christiane Amanpour, Chrystia says President Obama’s speech in support of the Cordoba House mosque that would occupy a building two blocks from Ground Zero in downtown Manhattan displays leadership and conviction.

Later on “This Week” during a roundtable discussion on mid-term elections, Chrystia says the real question is, can an American political party or political movement come up with a powerful economic plan?

Chrystia asks, doesn’t this all come down to the economy? She picks up on what former governor of New Jersey Jon Corzine said earlier about this recession. It is not only following a financial crisis, but also is the final act of America’s structural adjustment to globalization and the technology revolution.

Richard Holbrooke: don’t repeat the mistake

Chrystia Freeland
Aug 11, 2010 16:31 UTC

Richard Holbrooke, U.S. Special Envoy to Afghanistan and Pakistan, and Fred Kempe, president & CEO of Atlantic Council, emphasize that securing Afghanistan is impossible without the help of Pakistan.