One of the many comfortable but unreliable certainties now coming unglued is the idea that U.S. Treasury interest rates are the paramount benchmark, a measure of "risk free" investment, an idea at the heart of finance.
The Great Debate UK
There's been a lot of discussion over the past few months on this and other blogs about Barack Obama and religion. Looking back at it now that the campaign is over and he is starting to shape his administration, it's interesting to see how many of those discussions shed little light on what he would actually do. There were comments about him being a hidden Muslim, for example, or not a real Christian. That speculation seemed based on thin evidence and the assumption he was running for preacher and cleric-in-chief rather than president and commander-in-chief. As a journalist covering religion in public life, after learning whether a candidate professes a certain faith, I want to know how that faith will really influence his or her decisions in office. This is not necessarily the same as listing the soundbite positions used on the campaign trail.
from The Great Debate:
-- Paul Taylor is a Reuters columnist. The opinions expressed are his own --It's time to get Russia back into proportion.Moscow's resurgence as a major power, determined to be treated with respect and to stamp its influence on its neighborhood, has been one of the big stories of 2008.The sight of Russian tanks rolling into Georgia in August, coupled with a Kremlin drive to extend its control over energy supply routes to Europe, sent shivers through former Soviet satellite countries and drew loud condemnation from Washington.President Dmitry Medvedev's threat to site short-range missiles in Kaliningrad aimed at Poland if Warsaw deploys part of a planned U.S. missile shield raised the rhetorical stakes.Yet the global financial crisis, the collapse of oil prices, the aftermath of the Georgia war and U.S. President-elect Barack Obama's victory have all cast doubt on Russia's real weight.The credit crunch has hit Russia harder than other emerging economies, hammering confidence in its stocks, bonds and the rouble and forcing the central bank to spend some of its huge foreign currency reserves to stabilize the financial system.Foreign portfolio investors have fled and many Russian investors have parked more of their money in foreign currency abroad, at least partly due to heightened political risk since the military action in Georgia.State gas monopoly Gazprom (GAZP.MM: Quote, Profile, Research, Stock Buzz), feared in many parts of Europe as a predator seeking a stranglehold on the continent's gas supply, has lost more than two-thirds of its market capitalization since May.SHRINKING POPULATIONWith oil prices down from a peak of $147 a barrel in July to below $50 now, the heavily oil-and-gas-dependent economy looks more vulnerable, especially since Russia needs Western technology to boost its energy extraction.Alexander Shokhin, president of the Russian Union of Industrialists and Entrepreneurs, says that after a 10-year boom, growth will fall to between 0 and 3 percent next year.Russia remains a lucrative market for Western consumer goods, but concerns about state meddling in business, widespread corruption and shortcomings in the rule of law have contributed to its failure to diversify away from hydrocarbons and minerals.Compounding the weakness of its non-energy economy, Russia's demographics are among the worst in the world, with a life expectancy of just 67 (60 for men) and the combination of a low birth-rate, an aging population and a public health crisis.The Organization for Economic Cooperation and Development (OECD) projects the population could shrink by nearly one-third by 2050 to 100 million from 143 million.Diplomatically, Russia overreached itself after its lightning military victory in Georgia by recognizing the breakaway regions of South Ossetia and Abkhazia as independent.Only Nicaragua followed suit. Major allies such as China and India, fearing the precedent, pointedly declined.The European Union, the main customer for Russian gas, has responded by accelerating efforts to reduce its dependency, planning an alternative supply corridor through Turkey and seeking new suppliers in Africa, the Middle East and Central Asia.Other former Soviet republics, including Azerbaijan, Belarus and Turkmenistan, have sought closer ties with the West.True, the U.S.-led NATO alliance has gone no further toward giving Georgia and Ukraine a roadmap to membership -- the issue is off the agenda for now -- and it has now resumed some frozen contacts with Russia, as has the EU.But Moscow's efforts to reshape the security architecture of Europe, sidelining the role of the United States and of the Organization for Security and Cooperation in Europe, loathed by Moscow for its election monitoring, have gained little traction.STATUS QUO POWER?Russian analysts insist the Georgia war was a defensive action responding to pro-Western Georgian President Mikheil Saakashvili's bid to retake control of South Ossetia by force."Russia is a status quo power, not a recidivist aggressor on the prowl," says Dmitry Trenin, head of the Moscow office of Carnegie Endowment for International Peace.Moscow has taken a number of steps recently to suggest it wants peaceful solutions to other "frozen conflicts" in its neighborhood, brokering the first summit talks between Armenia and Azerbaijan over Nagorno-Karabakh, and seeking a deal between Moldova and its breakaway region of Transdniestria.In Ukraine, the biggest former Soviet republic where a democratic "Orange Revolution" in 2004 infuriated the Kremlin, Russia has other political and economic levers it can pull to maintain influence without having to use force.Getting Russia into proportion does not mean ignoring Moscow or its security interests. Its location and the fact it supplies 40 percent of Europe's gas imports mean it cannot be neglected.The United States and the EU have an interest in binding Moscow rapidly into rule-based international bodies such as the World Trade Organization and the OECD, although they put both processes on hold in reprisal for the Georgia war.Some Western analysts believe a weak Russia could be more dangerous, if mishandled, than a strong one.In NATO circles, some see a risk of the "Weimarisation" of Russia, comparing it to Germany's economically enfeebled Weimar Republic that was swept away by the rise of Hitler's Nazi party.Political humiliation and economic instability could lead to a surge of aggressive nationalism.After the collapse of the Soviet Union in 1991, wags branded Boris Yeltsin's rump Russian Federation "Upper Volta with nukes," capturing the paradox of a failed state with a ruined economy sitting on a huge arsenal of atomic weapons.When Vladimir Putin succeeded Yeltsin in 2000, he was determined to restore Russia's power and pride after a decade in which many Russians felt the West ignored their interests by expanding NATO in ex-communist eastern Europe.Today, it sometimes seems that Russophiles and Russophobes in Europe and the United States have become objective allies in exaggerating the importance of or the threat from Moscow.A more self-confident Europe and a less unilateralist America need to find a way of engaging with Russia according to its true weight, without treating it as a giant.
from The Great Debate:
LONDON, Dec 8 (Reuters) - China's decision on Friday to link domestic fuel prices to the international price of crude oil, but increase consumption taxes on gasoline and diesel sharply to spur more efficient use of energy in the medium term, raises the question whether the incoming Obama administration might be tempted to do the same.
from Pakistan: Now or Never?:
In the immediate aftermath of the Mumbai attacks, India's response has been to look to the United States to lean on Pakistan, which it blames for spawning Islamist militancy across the region, rather than launching any military retaliation of its own. So after U.S. Secretary of State Condoleeza Rice's trip to India and Pakistan last week, have the Americans done enough for now?
from The Great Debate:
Wow, Thomas Friedman writing in the New York Times let fly with a zinger with his opinion piece "Calling all Pakistanis", presumably aimed at stirring compassion in Pakistani hearts over last week's horrifying attack in Mumbai.
from The Great Debate:
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.
from The Great Debate:
Just as every society has a creation myth, banking is now busily writing a destruction myth that seeks to explain and soothe in a world torn to its foundations.