The Great Debate UK

from The Great Debate:

Obama’s radical environmental strategy

Photo

John Kemp Great Debate-- John Kemp is a Reuters columnist. The opinions expressed are his own --

Most successful elected leaders must disappoint their most ardent supporters at some point, as the bright hopes of an election campaign give way to the complex realities and constraints of governing, and need to occupy and retain the political center-ground to win re-election.

The trick of really successful leaders is to let supporters down gently to avoid turning disappointment into frustration and anger, retaining allegiance and support even when the maximum agenda goes unfulfilled and compromises must be made. Political supporters have to be given enough policy gains to be kept loyal, even as some cherished objectives fall by the wayside.

Despite the enormous outpouring of goodwill to the incoming president, or perhaps because of it, President-elect Barack Obama will be no exception to this iron rule.

The high hopes for the administration (cultural reconciliation between left and right, poverty alleviation, fairer distribution of economic rewards, renewed growth, financial reform, decisive action on climate change and "peace in our time", to name but a few) have run far ahead of even the most successful president's ability to deliver them in four or even eight years.

from The Great Debate:

NYMEX oil benchmark again in question

Photo

John Kemp Great Debate-- John Kemp is a Reuters columnist.  The views expressed are his own --

The record differential between the front-month and more liquid second-month contracts at expiry last week once again raised pointed questions about whether the NYMEX light sweet contract is serving as a good benchmark for the global oil market, or sending misleading signals about the state of supply and demand.

The expiring January 2009 contract ended down $2.35 on Friday at $33.87, while the more liquid February contract actually rose 69 cents to settle at $42.36 - an unprecedented contango from one month to the next of $8.49.

from The Great Debate:

Great U.S debt engine slips into reverse

Photo

John Kemp Great Debate-- John Kemp is a Reuters columnist. The views expressed are his own --

After six decades of uninterrupted credit creation and an unprecedented era of consumption and prosperity, the credit process has come to an abrupt halt. If credit has been the locomotive of the modern economy, the third quarter of 2008 marked the point when the engine stalled and the economy began to roll back down the hill.

For decades, financial activities have grown much faster than the real economy. Between 1952 and 2007, U.S. nominal GDP grew by a factor of 39 times, while total credit market debt outstanding surged 101 times.

from The Great Debate:

In China, OPEC’s nightmare comes true

Photo

John Kemp Great Debate-- John Kemp is a Reuters columnist. The opinions expressed are his own --

China's decision to link domestic fuel prices indirectly to the international crude oil market, subject to a price cap, while hiking the consumption tax on gasoline and diesel and phasing out a variety of road tolls and other fees shows Saudi Arabia's worst fears about high prices and demand destruction are starting to come true.

It seems likely to confirm the kingdom's determination to see prices stabilize around $75 per barrel, well below recent price peaks, and far below the level sought by some other OPEC members, as well as international oil companies and advocates of alternative energy.

from The Great Debate:

Dollar demise much exaggerated

Photo

John Kemp Great Debate-- John Kemp is a Reuters columnist. The opinions expressed are his own --

Perhaps the most surprising development over the last three months has been the surging value of the currency at the heart of the crisis. It is almost as if investors have responded to a fire alarm by running towards the source of the fire.

From a recent low on July 15, the U.S. dollar's trade-weighted value has risen 19 percent. The dollar has been broadly stable against China's yuan (+1 percent) while posting massive gains against the Swiss franc (+20 percent), the euro (+26 percent), the British pound (+35 percent) and the Australian dollar (+52 percent). Only against Japan's yen has the currency slipped marginally (-6 percent).

from The Great Debate:

Light at the end of the tunnel

Photo

John Kemp Great Debate-- John Kemp is a Reuters columnist.  The opinions expressed are his own --

After more than a year of denial, misdirected policies and a steadily worsening outlook, the past fortnight has witnessed a marked improvement. For the first time, there are reasons to be cautiously optimistic that the economy faces a recession rather than a prolonged slump, and recovery could get underway in H2 2009.

Markets share some of that optimism. The Dow Jones Industrial Index has risen 15.5 percent over four consecutive sessions, the most sustained rally since April 2008. It is not yet time to break out the champagne. But there are reasons to start looking through short-term weakness to focus on an eventual, albeit modest, recovery by the end of next year.

  •