Of New World Order, Fiscal vs. Stimulus, Government Spending, Historian's 2009, Take Aways, Bush was Right, Recession 2009, Drugs and War on Terror

Citizens of the World,

Item 1: "The Chance for a New World Order" by Henry Kissinger

Excerpts:

- During the period of economic exuberance, a gap had opened up between the economic and the political organization of the world
- Political and economic systems can be harmonized in only one of two ways - creating an international political regulatory system with the same reach as that of the economic world; or by shrinking the economic units to a size manageable by existing political structures
- (America) need(s) to modify the righteousness that has characterized too many American attitudes
- Extraordinary impact of the president-elect on the imagination of humanity is an important element in shaping a new world order - But it defines an opportunity, not a policy
- A frustrated China may take another look at an exclusive regional Asian structure, for which the nucleus already exists in the Asean-plus-three concept.


Item 2: "My Stimulus is Better than Yours" by Daniel Gross

Excerpts:

- Arguments against fiscal stimulus:
i. Ideological - Keynesian-style stimulus didn't work in the 1930s, so it won't work now.
ii. Aesthetic - question the efficiency - stimulus packages are the outcome of messy negotiations between Congress, the president, and, frequently, lobbyists - a result could be economic expansion as measured by standard statistics but little increase in economic well-being

- Arguments for monetary stimulus:
i. Christina Romer - in postwar recessions - monetary policy has been more influential than fiscal policy in the early stages of recoveries
ii. Changing structure of the U.S. economy has also led to a bias in favor of monetary stimulus - consumers and businesses have lots of debt and they buy a lot of goods and services made by foreigners

- The reality is that the situation calls for an "all of the above" approach


Item 3: "Is Government Spending too Easy an Answer?" by N. Gregory Mankiw

Excerpts:

- Valerie A. Ramey - estimates that each dollar of government spending increases the G.D.P. by only 1.4 dollars - when the G.D.P. expands, less than a third of the increase takes the form of private consumption and investment

- Christina D. Romer and David H. Romer - a dollar of tax cuts raises the G.D.P. by about $3


Item 4: "An Imaginary Retrospective of 2009" by Niall Ferguson

An historian's 2009.


Item 5: "10 Take Aways from the Bush Years" by Bob Woodward

Excerpts:

1. Presidents set the tone. Don't be passive or tolerate virulent divisions.
2. The president must insist that everyone speak out loud in front of the others, even -- or especially -- when there are vehement disagreements.
3. A president must do the homework to master the fundamental ideas and concepts behind his policies.
4. Presidents need to draw people out and make sure that bad news makes it to the Oval Office.
5. Presidents need to foster a culture of skepticism and doubt.
6. Presidents get contradictory data, and they need a rigorous way to sort it out.
7. Presidents must tell the public the hard truth, even if that means delivering very bad news.
8. Righteous motives are not enough for effective policy.
9. Presidents must insist on strategic thinking.
10. The president should embrace transparency. Some version of the behind-the-scenes story of what happened in his White House will always make it out to the public -- and everyone will be better off if that version is as accurate as possible.


Item 6: "History will Show that George W. Bush was Right" by Andrew Roberts

Excerpts:

- Measures he took to lock down America's borders, scrutinise travellers to and from the United States, eavesdrop upon terrorist suspects, work closely with international intelligence agencies and take the war to the enemy has foiled dozens, perhaps scores of would-be murderous attacks on America
- True reasons for invading Afghanistan in October 2001 and Iraq in April 2003 - 14 spurned UN resolutions, massive human rights abuses and unfinished business following the interrupted invasion of 1991 will be recalled
- Characteristic openness and at times almost self-defeating honesty, Mr Bush has been the first to acknowledge his mistakes – but there are some he made not because he was a ranting Right-winger, but because he was too keen to win bipartisan support


Item 7: "A Global Breakdown of the Recession in 2009" by Nouriel Roubini

Excerpts:

- United States economy is only halfway through a recession that started in December 2007 and will be the longest and most severe in the post-war period - the real GDP growth contraction playing out through the year as follows: first quarter 2009: -5%; second quarter 2009: -4%; third quarter 2009: -2.5%; fourth quarter 2009: -1%--adding up to a yearly real GDP growth of -3.4% for the U.S. in 2009.
- Latin American countries will face a significant slowdown in economic growth. A combination of negative external shocks will slow down regional GDP growth to 0.8% in 2009.
- latest cyclical upswing in the Eurozone was largely driven by a temporary but powerful boost to domestic investment from disappearing risk premia in the aftermath of the adoption of the single currency and by external demand from a buoyant world economy - expect a below-consensus contraction in real GDP of around -2.5%
- United Kingdom economy is poised to shrink in 2009. Our forecast of a -2.3% growth in real GDP is below consensus as we do not expect a recovery in the second half of the year
- Eastern Europe is set to slow abruptly in 2009 - Countries with the largest current-account deficits are the most exposed to sharp corrections.
- Reliance on exports and capital flows to fuel growth - Asia faces a gloomy 2009 amid a G-7 recession - Expect Asia's, excluding Japan, growth to slow down sharply to 3.8% in 2009 - Hong Kong, Singapore and Taiwan will remain in recession through the first half of 2009, which might extend into third quarter 2009 while the ASEAN economies will slow significantly from the 2004-07 growth trends.
- China will experience a hard landing in 2009, with growth unlikely to exceed 5%, a sharp slowdown from the 10% average of the last five years
- Reversal of capital flows and high credit cost will pull down India's growth significantly, to around 5% in 2009
- Japan's domestic demand continues to be an unreliable growth driver, and its export machine is stalling, given the global contraction and a stronger yen - foresee real GDP growth contracting 2.5% in 2009
- Australia's recession will likely end in 2009 after starting in fourth quarter 2008 - Average annual GDP growth in 2009 will be flat to sluggish (0% to 1%)
- global recession will reduce demand for Middle East and North Africa's resource and non-resource exports, and the global liquidity crunch will reduce capital inflows, growth is expected to slow to an average of 3% in 2009
- Commodity prices, which already fell sharply in the second half of 2008, will face further price pressure in 2009 - estimate an average West Texas Intermediate (WTI) oil price of $30 to $40 a barrel in 2009, as the fall in demand continues to outstrip supply cuts and production delays


Item 8: "Stimulating Our Way to Rock Bottom" by Ron Paul

Excerpts:

- Goal of the economy is not job creation
- Goal of a healthy economy is productivity - jobs are a positive outcome of that
- The truth is our economic problems are due to loose monetary policy, central economic planning, and the parasitic expenses of government


Item 9: "'War on Terror' was Wrong" by David Miliband

Excerpts:

- Notion of a "war on terror" has defined the terrain - phrase had some merit: it captured the gravity of the threats, the need for solidarity, and the need to respond urgently - where necessary, with force
- Idea of a "war on terror" gave the impression of a unified, transnational enemy, embodied in the figure of Osama bin Laden and al-Qaida - reality is that the motivations and identities of terrorist groups are disparate
- Best antidote to the terrorist threat in the long term is cooperation - championing the rule of law, not subordinating it, for it is the cornerstone of the democratic society - uphold our commitments to human rights and civil liberties at home and abroad
- Foundation for solidarity between peoples and nations should be based not on who we are against, but on the idea of who we are and the values we share