Saturday, January 26, 2008

Really, it sounds much cooler in German

Nine months ago a German think tank commissioned your humble blogger to sketch out the contours of U.S. foreign policy beginning in 2009.

The result is that I have an English-language article in the latest issue of Internationale Politik und Gesellschaft ("International Politics and Society") modestly entitled "The Future of U.S. Foreign Policy."

The article is a wee bit out of date (it was submitted in October), as it starts off with John McCain's tumble from frontrunner status. Nevertheless, I think the rest of it holds up reasonably well. The closing paragraph:

For Europe, American foreign policy in 2009 will clearly be an improvement on its current incarnation. Regardless of who wins the presidential election, there will likely be a reaching out to Europe as a means of demonstrating a decisive shift from the Bush administration’s diplomatic style. This does not mean, however, that the major irritants to the transatlantic relationship will disappear. On several issues, such as GMOs or the Boeing–Airbus dispute, the status quo will persist. On deeper questions, such as the use of force and the use of multilateralism, American foreign policy will shift, but not as far as Europeans would like. When George W. Bush leaves office, neo-conservatism will go with him. This does not mean, however, that Europeans will altogether agree with the foreign policy that replaces it.
Go check it out.

posted by Dan at 04:26 PM | Comments (4) | Trackbacks (0)

Friday, January 25, 2008

How about some reciprocal gratitude?

A follow-upon my last post on sovereign wealth funds (SWFs).

I quoted the head of the Norway's fund saying, ""It seems you don't like us, but you need our money." It strikes me that one could flip that around. Not for norway, but for most of the countries now sprouting SWFs, the line should read: ""It seems you don't like us, but you need to invest your money with us."

Countries are developing sovereign wealth funds for a number of reasons:

1) They're accruing massive current account surpluses because of commodity booms or misaligned currencies

2) They can't reinvest most of these surpluses domestically, because of concerns about sterilization, inflation, the Dutch disease, etc.

3) Holding these assets simply as reserves is not terribly profitable.

4) Therefore, they need to find a place to invest. Places with capital markets large and deep enough to absorb the gargantuan levels of investment without distortion. In other words, the United States and the European Union.

There is no question that, right now, western financial markets could use the money. However, it's also worth pointing out that there are not a lot of non-OECD markets receptive to large-scale SWF investments. Indeed, the very countries ginning up sovereign wealth funds at the moment are the most protectionist when it comes to foreign direct investment. A Russian SWF is not going to find a receptive audience in China -- and vice versa.

Am I missing anything?

posted by Dan at 08:47 AM | Comments (3) | Trackbacks (0)

Thursday, January 24, 2008

Summers on sovereign wealth funds

Like the rest of the known universe, I've been reading up on sovereign wealth funds as of late. And, to be blunt, I have yet to find much to get exercised about in terms of economic vulnerability to the United States or the west more generally. Basically, in order for a sovereign wealth fund to play politics, they have to shoot themselves in the foot financially.

Reporting from Davos, however, Daniel Gross relays Larry Summers' areas of concern. Summers is pretty smart, so let's review his objections:

1. Corporate governance. SWFs may protect the management of poorly run companies: "SWFs are some people's model investors, and other people's version of 1-800-ENTRENCH. What could be better for not entirely secure management than a long-term, nonvoting shareholder?"

2. Multiple-motive issues. "It's the premise of capitalism that people own shares to maximize value. But if you think of an investment made by a state fund, there could be multiple motives. Perhaps we want the airline to fly to our country, perhaps we want the bank to do extensive business in the country, suppose we want suppliers in our country to be sourced, perhaps we want some disablement of a competitor for our country's national champion. When there's no assurance that value maximization is not being pursued, there is a potential question."

3. General politicization. He provided two examples. "First, suppose that a country ran an active trading operation, and say it was a very inspired one, and found itself in an investment much like George Soros' short position in the pound. Would we be comfortable with the concept that the nation of X had decided that nation of Y's currency was overvalued and launched an attack? There should be some kind of understanding that that won't happen. Also, the SWF of country A makes an investment in a major bank in country B. The bank gets in big trouble. Is there any control in the world that can assert, that with billions of dollars on the line, their head of state and foreign minister are not going to get involved in the negotiations?"

Concern #1 is interesting, but strikes me as ephemeral. If a sovereign wealth fund is interested in maximizing its value, then it's not going to want to keep around incompetent management.

Concern #2 is a possibility, but the more pernicious possibilities seem like straight anti-trust issues rather than problems unique to sovereign wealth funds.

Concern #3 is a massive rationalization. It boils down to, "we're not saying sovereign wealth funds are evil, but other, less cosmopolitan folks are saying that, and they have pitchforks."

There are some foreign policy reasons to be concerned about some sovereign wealth funds -- but I don't see any economic motivation to get all riled up about them. This holds with particular force at the present moment. As the head of Norway's fund put it at the panel: "It seems you don't like us, but you need our money."

Question to readers -- can anyone add an additional reason to believe sovereign wealth funds are bad for the U.S. economy?

UPDATE: For those curious about the official U.S.position on sovereign wealth funds, go read Deputy Treasury Secretary Robert Kimmitt's Foreign Affairs essay:

posted by Dan at 03:10 PM | Comments (6) | Trackbacks (0)

Everybody hates someone

Let's see if we can briefly summarize who irrationally dislikes who:

1) According to the New York Times' Michael Luo, all the other Republicans personally dislike Romney;

2) Paul Krugman's dislike of Barack Obama is a matter of public record;

3) Matthew Yglesias dislikes McCain;

4) Andrew Sullivan really loathes Bill and Hillary Clinton -- and clearly, he's not alone

5) Stephen Bainbridge dislikes everyone except Fred Thompson.

This was just off the top of my head.

posted by Dan at 10:18 AM | Comments (5) | Trackbacks (0)

Wednesday, January 23, 2008

Your political quiz of the day

Who wrote the following?

The Clintons play dirty when they feel threatened. But we knew that, didn't we?

....High-minded and self-important on the surface, smarmily duplicitous underneath, meanwhile jabbing hard to the groin area. They are a slippery pair and come as a package. The nation is at fair risk of getting them back in the White House for four more years. The thought makes me queasy.

It's a multiple choice:
A) Jonah Goldberg

B) William Greider

C) Maureen Dowd

D) Bob Novak

For the answer, cick here.

posted by Dan at 11:29 PM | Comments (3) | Trackbacks (0)

A small memo to the Center for Public Integrity

Dear CPI staffer,

So I hear you have this brand-new website that, "documents 935 false statements by top administration officials to justify Iraq War." This is a great public good, and you have reason to feel happy about it.

On the other hand:

1) Sending me approximately 935 e-mail notifications about the new website will not put you in my good graces [C'mon, it was really close to 935?--ed. OK, it was closer to five, but I can confirm that these e-mails actually existed, and they clearly have the capability to send me 931 more. I had to act preemptively.]

2) Just to nitpick a little more, you aver that:

Bush and the top officials of his administration have so far largely avoided the harsh, sustained glare of formal scrutiny about their personal responsibility for the litany of repeated, false statements in the run-up to the war in Iraq. There has been no congressional investigation, for example, into what exactly was going on inside the Bush White House in that period. Congressional oversight has focused almost entirely on the quality of the U.S. government's pre-war intelligence — not the judgment, public statements, or public accountability of its highest officials. And, of course, only four of the officials — Powell, Rice, Rumsfeld, and Wolfowitz — have testified before Congress about Iraq.
OK, except that the other four officials that you highlight in the report are "White House press secretaries Ari Fleischer and Scott McClellan," President Bush, and Vice President Cheney. The latter two ain't testifying, and do you really think that the first two would provide any value-added?
Warm regards,

Daniel Drezner

posted by Dan at 08:57 AM | Comments (11) | Trackbacks (0)

Tuesday, January 22, 2008

The Fed ain't f&%$ing around.... and neither are the markets

From the Federal Reserve this morning:

The Federal Open Market Committee has decided to lower its target for the federal funds rate 75 basis points to 3-1/2 percent.

The Committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth. While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households. Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets.

The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully.

Appreciable downside risks to growth remain. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks.

The question is whether this move will forestall further panic in global and domestic markets or merely exacerbate them.

UPDATE: Uh-oh.

posted by Dan at 08:55 AM | Comments (4) | Trackbacks (0)

An assignment to the mediasphere and blogosphere

Well, that South Carolina debate sure was pleasant, wasn't it?

I'm intrigued by Obama deciding to bring up the "Bill issue," as it were:
Mrs. Clinton’s campaign this week in South Carolina is essentially running Mr. Clinton against Mr. Obama. The two have been engaged in a war of words, with Mr. Clinton accusing the Obama campaign of voter coercion in the Nevada caucuses, and Mr. Obama saying on Monday that Mr. Clinton had made comments that were “not factually accurate” and that his advocacy for his wife had grown “pretty troubling.”....

Mr. Clinton has drawn particular criticism for saying, just before Mrs. Clinton’s victory in the New Hampshire primary, that Mr. Obama’s depiction of his steady opposition to the Iraq war was “a fairy tale,” given that Mr. Obama voted for a time for Iraq war financing and once indicated that he was not sure how he would have voted on authorizing military action in Iraq.

At the Ebenezer congregation on Monday, an Obama supporter, Mayor Shirley Franklin of Atlanta, appeared to take a shot at Mr. Clinton over that comment as he sat a few feet away.

“In this beautiful, all-American morning,” Ms. Franklin said, “we are at the cusp of turning the impossible into reality. Yes, this is reality, no fantasy or fairy tale.”

Pundits are also chatting up Bill Clinton's advocacy.

Which leads to my question to readers and reporters: it would seem that the obvious comparison to Bill Clinton's conduct in the 2008 campaign is George H.W. Bush's conduct during the 2000 campaign. To what extent has President Clinton's advocacy for his wife exceeded Bush's advocacy for his son?

Combing through Google news archives during the primary phase of the campaign, it's tough to find much at all on Bush pere. There are a few mentions of Bush's father campaigning for his son, but frankly, there was less than I expected. I could not find anything about Bush attacking McCain, Forbes, or other primary candidates (which does not mean anything can't be found). Even more surprisingly, I can't find a story this month that has made this comparison (again, that does not mean anything can't be found).

Question to readers: has Bill Clinton crossed the line in campaigning for his wife? Is there a line to cross?

posted by Dan at 08:51 AM | Comments (11) | Trackbacks (0)

Sunday, January 20, 2008

Hoisted from the archives: The students strike back!!

UPDATE: This contest was posted two weeks ago.... and frankly, I've been disappointed with the student response. My crack intelligence network at Fletcher tell me that some of the student body was rankled by my "Bad Student Writing contest" from last month -- yet I see no attempt by the Fletcher student body to step up to the plate.

So, I'm reposting this comment, and triple-dog-daring the students of the American academy to "Post, in the comments, the most confusing, badly-written or long-winded sentence a professor of yours has written in a published article."

Just to make things interesting, I add two additional qualifiers:

1) Judith Butler entries will not be accepted. Booooring. And it's been done to death.

2) Extra-special bonus points if you can find a God-awful sentence written by the author of this blog. C'mon, students of mine -- I've assigned a fair amount of my own crap work. If you can't find a bad sentence in my published oeuvre, you ain't trying hard enough.

Get to it, students -- or the professors of the world will be able to claim that students can't even procrastinate as efficiently as the professoriate!

The Bad Student Writing Contest was a great success -- but it came at the expense of students. Already, commenters are concluding that this is emblematic of the sorry state of American education, which suffers from a wee bit of the ol' selection bias.

So, students, your time for revenge has come. Why procrastinate during the spring semester when you can procrastinate today? Here is your opportunity to (anonymously) thumb your nose at the guardians of your grades.

I give you.... The Bad Professor Writing Contest:

Post, in the comments, the most confusing, badly-written or long-winded sentence a professor of yours has written in a published article.
Bonus points if you can provide an active hyperlink to the article.

Winners will receive a prize of unspecified but clearly inestimable value.

Good luck!!

posted by Dan at 01:09 PM | Comments (20) | Trackbacks (0)