The Great Debate

First 100 Days: Obama’s foreign policy challenges

Willis Sparks– Willis Sparks is a Global Macro analyst at the political risk consulting firm Eurasia Group. The views expressed are his own. –

Few things in life amused my dad more than a good karate movie. I once asked what he found so funny about Bruce Lee’s jaw-dropping display of poise and power. “Nice of the bad guys to attack him one at a time,” he said. In the real world, threats don’t arrive single-file, like jets lining up for takeoff.

President Barack Obama’s toughest foreign-policy challenge will be in managing the sheer number of complex problems he’s inherited and their refusal to arrive in orderly fashion. In addition, the still-metastasizing global financial crisis will exacerbate several of these problems, by depriving a number of governments of the funding they need to maintain social stability and to meet internal and external threats to their security.


There is clearly a risk of collision at the intersection of Afghanistan and Pakistan, both of them plagued with floundering elected governments and deteriorating security environments. In Afghanistan, once Obama keeps his promise to provide thousands more U.S. troops, he must decide whether his team can afford to work around President Hamid Karzai (who may win reelection in August) and more directly engage tribal leaders and willing members of the Taliban to restore stability.

But Afghanistan’s security continues to depend on the ability of U.S. forces to stem the flow of militants and supplies into the country from tribal areas in Pakistan. Aware that Pakistan’s armed forces are neither reliably willing nor able to help, the Obama team must find a way to neutralize Pakistani militants without arousing broad public anger across the country and destabilizing its cash-strapped government.

Financial strains show first sign of easing

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

The volume of excess reserves commercial banks are holding with the Federal Reserve System has declined by $275 billion (31 percent) over the last five weeks, in what could be the first sign of stabilization within the core of the banking system (https://customers.reuters.com/d/graphics/RESBAL.pdf).

Reserve holdings are still at exceptionally high levels, but a clear downtrend has emerged since the start of the year.

First 100 Days: The next steps in the Middle East

President Barack Obama, Secretary of State Hillary Clinton and George Mitchell in the Oval Office of the White House.

President Barack Obama inherits a distinctly gloomy outlook for progress in settling the Israeli-Palestinian conflict. Is change really possible?

Reuters asked Oliver McTernan, the director a UK charity called Forward Thinking and two experts from the Brookings Institution in Washington — former Ambassador to Israel Martin S. Indyk and Kenneth Pollack — what steps the Obama administration should take next in the Middle East.

Clean up Washington: mission impossible?

Bernd Debusmann - Great Debate– Bernd Debusmann is a Reuters columnist. The opinions expressed are his own. –

Can any U.S. administration avoid the fate spelled out in the following 12 words? “We were elected to change Washington and we let Washington change us.”

Thus spoke John McCain when he formally accepted the Republican party’s nomination for president last September. He then listed a number of reasons why the party had lost the trust of the American people, including that “some Republicans gave in to the temptations of corruption”.

Bankers can’t kick the sporting habit

Alex Smith– Alexander Smith is a Reuters columnist. The opinions expressed are his own –

People are up in arms about bankers receiving bonuses when the banks they worked for have gone down the pan. But isn’t it just as shocking that so many state-backed financial firms still subsidize the eye-popping wages of sporting superstars through rich sponsorship deals?

It’s the same story on both sides of the Atlantic. Citigroup, which received $45 billion from the U.S. government, is sticking with a $400 million marketing deal from 2006 which includes the naming rights for the new home of the New York Mets baseball team, which will be called Citi Field.

Goodbye bonuses, hello hedge funds

James Saft Great Debate – James Saft is a Reuters columnist. The opinions expressed are his own –

The argument about bank bonus payments is as sterile as it is backward looking; compensation at government insured institutions is going nowhere but down.

The real action will be at those places like hedge funds, private equity houses and boutiques, which will try and trade less insurance for more autonomy and which will capture more market share, take on more risk and offer more reward. The question is how will they be regulated, how will they fund themselves and how will the rest of us be protected from the systemic risk they could easily represent.

First 100 days: Turn down the rhetoric on Russia

Peter SchechterPeter Schechter is an author and an international political and communications consultant. A founder of one of Washington’s strategic communications consulting firms, he has spent twenty years advising Presidents, writing advertising for political parties, ghost-writing columns for CEO’s, and counseling international organizations out of crises. “Pipeline” is his second novel. The views expressed are his own. –

After an eighteen year sabbatical, we fiction writers have recently put Russia back foursquare into its role as a novelist’s favorite fierce antagonist.  For decades, thrillers were dominated by the threatening Soviet imagery spun by John Le Carré, Tom Clancy and Frederick Forsythe.  Now, recent offerings like Daniel Silva’s “Moscow Rules”, Ted Bell’s “Tsar”, and my own “Pipeline” again reassign Russia its place of concern for political leaders, intelligence agencies and military planners.

That Russia provides good material is no surprise. The non-fiction Russia uses natural resources for coercion.  It militarily overwhelms a small neighbor. It crushes domestic dissension through physical or psychological intimidation. It suffers from near-obsessive mistrust of foreigners’ intentions.  Oligarchs and Kremlin bureaucrats are locked in a maze of corruption, mafia and violence.

First 100 days: Tackle traffic of weapons into Mexico

ambassadorsarukhan– Arturo Sarukhan, a career diplomat, has been Mexican ambassador to the United States since 2007. Ambassador Sarukhan was President Calderon’s chief foreign policy adviser and international spokesperson during the 2006 presidential campaign and headed his foreign policy transition team. The views expressed are his own. —

On January 12th, President Felipe Calderón and then President Elect Barack Obama held their first working meeting in Washington, DC, reflecting their commitment to strengthen the bilateral relationship. The conversation between the two leaders made it abundantly clearly that designing a framework that will simultaneously ensure the common prosperity and the common security of both our peoples remains the central conundrum our two nations face in a post 9-11 world.

Mexico is fully aware that a threat to the security of the United States will profoundly affect the bilateral relationship, and therefore common border security has been and will continue to be a top-priority. In this regard, a clear and present threat we both face is transnational organized crime.

Sway and irrational VCs

Jeffrey Bussgan– Jeff Bussgang is a General Partner at Flybridge Capital Partners, an early-stage venture capital firm in Boston. This post originally appeared in the Vox Populi section of www.peHUB.com. The views expressed are his own. –

I recently read Malcolm Gladwell’s new book, “Outliers”, with great interest and delight. Gladwell is a fantastic author: always thought-provoking on human behavior and a quick, entertaining read. But I confess this book did not resonate with me or strike me as relevant for the VC-entrepreneur dance in the same way his previous book, “Blink”, did (see: VCs Blink). It was intellectually interesting, but not professionally illuminating.

Instead, I have been even more taken by another book, which also analyzes human behavior in a thought-provoking way called “Sway”. Written by Ori and Rom Brafman, “Sway” was recommended to me by my friend and co-investor Howard Morgan at First Round Capital. It is a fascinating analysis of why human beings naturally fall into irrational behavior. The book has very relevant implications for venture capitalists and entrepreneurs, particularly in today’s environment, as VCs are likely to allow irrational behavior to seep into their portfolio management decisions in the coming years.

No alternative to inflation

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

Every budding economist is taught the distinction between nominal variables (expressed in terms of contemporary cash values) and real variables (adjusted for inflation and expressed in constant-dollars).

An oil price of $50 per barrel in 1980 is not the same as an oil price of $50 a barrel in 2009 because inflation has steadily eroded the purchasing power of the currency in the intervening years. Moreover, economists are taught that real values are more important than nominal ones — because “money is a veil” (to use the phrase of the Austrian economist Joseph Schumpeter).