D2
Thursday, December 9, 2010
THE HEIGHTS
MARKET REPORT
China or the US? AMEET PADTE Exactly a year ago, I completed an internship at the London office of DDB Worldwide Communications Group, Inc. advertising agency. The tremendously rewarding opportunity has left me with a burning desire to return to the cobbled maze of streets, inclement weather, and bad teeth. Living in England would also facilitate inter-European travel, a fascinating experience that anyone who has studied abroad there can appreciate. Unfortunately, a cursory glance at the news indicates that Europe is in dire straits. Let’s investigate. The leading states of the European Union are afflicted with a growing sense of decline, corroborated by international politics. For instance, the war in Iraq confined European leaders to the sidelines, helplessly watching as their soldiers were injured and killed in a war they neither wanted nor understood. They are also required to account for a significant share of the continued costs incurred by the war. In March 2000, EU leaders committed to making it “the most competitive and dynamic knowledge-driven economy by 2010.” This sounds like a joke today. European leaders are fully aware of their rapid international weakening. They feel that establishing and strengthening collaboration with other European countries will ensure future success. The adoption of the euro is a prime example of this. What benefits have the euro brought forth? Despite its apparent strength, it has failed to compete as an international tender and continues to be influenced by the U.S. dollar. Furthermore, a unified currency prevents individual countries from manipulating interest rates
to facilitate trade. The European Central Bank has been consistently lowering the already incredibly low base interest rate, following the example of Japan. Japan then proceeded to endure an extremely protracted period of economic stagnation. Michael Bear, the Lord Mayor of London, told reporters that a country’s ability to compete internationally depends on the “Three Cs”: commodities, (which the United Kingdom does not have), cash (which they also don’t have), and creativity. He then proceeded to expound the virtues of London’s intellectual community. Really? He’s going to bet Europe’s ability to recover on ingenuity? Just think: How many high-growth companies have emerged from Europe in your lifetime? The only European companies I can think of that have “recently” exploded onto the international scene are Red Bull and Vodafone. While these are powerful and admirable organizations, they are not leading innovators and paradigm shifters like Facebook, Google, or even Netflix. One can parallel the economic decline of the Eurozone with its technological inferiority to the rest of the developed world, particularly the United States. After a tremendous national tumult in May of this year, Greece reached a public budget deficit of 20 percent, forcing the EU to provide a bailout of $40 billion. Very recently, Ireland received an $89 billion loan. The fear is that these are just the first dominoes to fall. Portugal’s Prime Minister Jose Socrates recently stated that Portugal will not need a bailout, indicating that they will in fact need one. With Spain highly exposed to Portugal (and an unemployment rate of 20 percent) they could be next. After that, who knows? Belgium? Italy? Remember how interlinked these economies are. They have no easy recovery. Unfortunately, the United States may soon enter a period of stagnation. We embarked on a 30-year binge of massive debt
DANNY MARTINEZ
MATT PALAZZOLO
Will Democrats support President Barack Obama’s tax cut compromise?
Reluctantly so. It’s the first substantive disagreement between the Dems and Obama.
Not unless they grow a spine anytime soon.
I feel a collective desire on the left to move as far away as possible from the commander-in-chief.
I think they’ll support it if it works. If it doesn’t, he’ll get thrown under the bus.
Have the Wikileaks cables damaged America’s diplomacy with foreign countries?
Yes, but the more crippling damage might be to the waning faith of the intelligence community in other agencies.
Of course, President Ahmadinejad was about to scrap Iran’s nuclear program until the unfortunate leak.
I refuse to believe anything done by Julian Assange will have a lasting impact.
Most countries that don’t like the U.S. have made those feelings clear already.
Will the Korean military crisis escalate into full fledged war?
No, definitely not. They’d lose. Badly. And they know it.
Hopefully. Then CBS can film a M.A.S.H. remake.
Kim Jong Il probably just wants to get his kicks one last time before croaking.
If North Korea was looking for an excuse to go to war, it found one.
Can Congress eliminate Don’t Ask Don’t Tell during the lame duck session?
I don’t think they will, although it will most definitely not happen after January.
Sure, right after they balance the budget and secure the Mexican border.
Since they were so effective at passing legislation during their normal term... no, no they can’t.
Probably not. That would require the parties to work together. We all know that won’t happen.
Marketplace Editor
creation both in the public and household sector. The Federal Reserve Bank has become very loose, printing out money like there is no tomorrow. We are currently sitting on an $8 trillion deficit with the rest of the world. The government’s optimistic budget projections are just not correct. The Federal Reserve Bank1, White House, and Congress project that across the next five years we will reach three to 4 percent growth rates, a decrease in the unemployment rate from 10 percent to around 5 percent, and an addition of 13 million jobs. This is while we’re currently only adding 50,000 jobs a month. Calculated accurately, our economy will grow by $50 billion a month while debt grows at a rate of $100 billion a month. A total stalemate in our government ensures no spending cuts from the Democratic side and no revenue increases (and in fact, tax cuts)
Asst. Marketplace Editor
from the Republican side. We’re stuck. The rest of the world knows this too. Last month, President Barack Obama went as a supplicant to Asia, seeking to establish stronger ties with emerging markets. He returned empty-handed, save for a positive reception in India. South Korea rejected a relatively standard and straightforward trade pact, Obama failed to get any of the G20 countries to set international trade standards, and nearly every important economic power criticized the Fed’s second round of quantitative easing (injecting money into the economy). What we really witnessed was the world’s emerging powers being forced into a decision between placing their bets with a stagnating United States or an ascendant China. They chose China. I spoke with Professor Tiey-
HILARY CHASSE
PAUL SULZER
Opinions Editor
ing Yu of the Carroll School of Management who said that she can name eight colleagues who are ensuring that their children learn Chinese. She also suggested that job seekers investigate Asian options, bearing in mind that a different system has unique norms and requisites and that while at one point Americans had an advantage in language, the Chinese are quickly catching up. I wonder whether the American system of government will allow us to compete with these centrally-controlled countries. When the Chinese government wants to build a dam, a power plant, or a factory, they eject whoever currently resides on the land they want and build it immediately. Whether such methods are ethical or not is an entirely different issue, but they allow China to complete infrastructure projects much faster than they could be in the United
Asst. Sports Editor
States. There’s a lot to be said for an economy where barriers like democracy do not hinder major real estate deals. For example, the enormous $5.7 billion Marina Bay Sands mega-resort in Singapore was built from start to finish in four-and-a-half years. The government recognized that such a venture would earn substantial revenue and that it was in the country’s best interests to build as quickly as possible. The facility will earn at least $1 billion in annual profit. Four-and-a-half years! In the United States, it would take a decade just to get permission to build a mega resort of the same dimensions. All of this has influenced me to question my career plans. New plan: stay in America, learn Chinese, and then, peace out. Ameet Padte is a staff columnist for The Heights. He welcomes comments at marketplace@bcheights.com.
US cables accuse Arab nations of allowing terrorist growth From Leaks, D1
GERALD HERBERT / AP PHOTO
President Barack Obama has worked with Middle Eastern nations in attempts to regulate money flow to terrorist organizations.
Modern Day Philosopher
By Gregory Kita
heightened money laundering regulations abroad highlight both presidents’ successful endeavors. Foreign leaders have done their best to counter such efforts by the U.S. According to many of the leaked cables, foreign officials have accused U.S. off icials of presenting weak evidence of fault by Arab charities, organizations, or individuals. In Kuwait, officials resisted what they referred to as “draconian” measures by the United States against a Kuwaiti charity. According to a cable, Kuwaiti officials dismissed accusations against the charity as “unconvincing.” The cables also address Al-Qaeda, and its capability to attain funds, an issue over which U.S. off icials appear to be divided. In a February cable, Richard C. Holbrooke,
U.S. special representative for Afghanistan and Pakistan, said that “sensitive reporting indicates that Al-Qaeda’s ability to raise funds has deteriorated substantially, and that it is now in its weakest state since 9/11.” Other cables contradict Holbrooke’s conclusion and indicate that the bin Laden group has the ability to generate money easily from wealthy individuals and sympathetic organizations throughout the Middle East while managing to stay a step ahead of counterterrorist measures. “Terrorists avoid money transfer controls by transferring amounts below reporting thresholds and using reliable cash couriers, hawala, and money grams,” a recent cable revealed. “Emerging trends include mobile banking, pre-paid cards, and Internet banking.” Hundreds of the cables
leaked reveal confidential government information regarding the issue of terrorist financing. The issue has acquired an unyielding elusiveness in the seeming ease with which terrorists are able to attain and transfer money, carry out deadly attacks, and avoid international legal intervention. Despite the efforts of U.S. diplomats, the casual approach some Middle Eastern allies of the United States are taking with respect to the problem is stalling progress. Prince Mohammed bin Nayef, leader of anti-terrorism activities in Saudi Arabia, insisted to Holbrooke in May 2009 that his country is “doing our best.” He warned that “if money wants to go” to terrorist groups, “it will go,” shadowing a dim future in the regulation of terrorist finances.