More complex Iraqi electoral process is a victory

OP-ED: For Iraqi Voters, a Dizzying Democracy, By BARTLE BREESE BULL, New York Times, March 8, 2010

A neat argument that says the growing complexity of Iraq's electoral process is a good sign.

Neat section:

Five years ago, in January 2005, when a free Iraq had its first elections, it was not like this. The politics was simpler. The Sunnis boycotted, and the 2005 election posters -- many of them remain, faded and tattered, on those spots of wall in Baghdad not blanketed by the current posters -- referred mostly to a handful of big parties and emphasized the religious figures who forged them, as opposed to today's myriad individual candidates.

The streets were different, too, in 2005. There were no traffic lights, and no solar panels on the lampposts. Drivers did not hurry to put on their seatbelts when slowing for a checkpoint. A police uniform was something to run from, not to, in a crisis. The Iraqi Army then had none of today's organized, fit, self-confident air. The Americans, invisible today, seemed everywhere. A foreign visitor to Baghdad, always in fear at the time of the 2005 elections, now waves at the little boys selling Kleenex in the traffic jams. (However, the city was less thoroughly wrecked back then.)

As I revisited old haunts in Baghdad in recent days, it became clear to me that the increasing order on Iraq's streets and the bewildering scramble in its politics are of a piece. In Sadr City, my old acquaintance Fattah al-Sheikh, who was elected to Parliament in 2005 as part of the bloc loyal to the extremist Shiite cleric Moktada al-Sadr, is now with the Baath-tinted, mostly Sunni party of Ayad Allawi. In Iraqi politics there is no more extreme conversion than that from Sadrist to Baathist.

"I'm a patriot above all else," he told me. "And the Iranians have more or less kidnapped Moktada al-Sadr, so I stand against them." Opportunistic as this claim may appear, Fattah's stand, and his ability to survive in Sadr City as a vocally anti-Iranian candidate, exemplify the post-sectarian flexibility that is the hallmark of these elections.

Salaam Smeasim is another Iraqi I have known for years. She's now 55, and a candidate for the largest Shiite opposition party, the Iraqi National Alliance. Salaam wears a veil, and her coalition, which includes many Sadrists, has relations with Iran.

"Would you agree with something like the Iranian system here in Iraq?" I asked her the day before the vote.

"Of course not," she said, giving me the only angry look I have received in recent weeks while talking to Iraqis about politics. "As a Shiite I do feel something for Iran. But between Iran and America, only America is interested in freedom and human rights in Iraq. There is nowhere like America for freedom."

You can certainly argue over the cost, but how do you not describe this as more "victory" than "defeat"?

In some ways, Leviathan ops are the easy part

ARTICLE: McChrystal, others visit Marja, Afghanistan, as offensive enters governing phase, By Joshua Partlow, Washington Post, March 2, 2010

The shift from Leviathan operations to SysAdmin operations begins:

The initial phase of the military offensive in southern Afghanistan to wrest Marja from insurgent control has largely ended, but the more daunting task of building a credible government in the place of Taliban rule has just begun, according to senior U.S. and Afghan officials.

Marja today, Kandahar tomorrow

ARTICLE: In Afghanistan, U.S. plans major push into Kandahar, By Anne E. Kornblut and Greg Jaffe, Washington Post, February 27, 2010

Jaffe on the ambition being unveiled in the continuing push in southern Afghanistan: Marja is a preview of a bigger and more complex offensive targeting Kandahar later this year.

Less hyperbolic talk about the coming "clash" with China

LEADERS: "Facing up to China: Making room for a new superpower should not be confused with giving way to it," The Economist, 6 February 2010.

BRIEFING: "America and China: By fits and starts; As China and America square off in the latest round of recriminations, how bad are relations really?" The Economist, 6 February 2010.

CHINA | NATIONALISM: "U.S. of Who? Why China Is No Longer Interested in Following America's Lead," by Melinda Liu, Newsweek, 15 February 2010.

ASIA: "Tibet: Pilgrims and progress; It is still repression, not development, that keeps Tibet stable," The Economist, 6 February 2010.

ASIA: "Asia's never-closer union: Regional economic integration has a long, long way to go," by Banyan, The Economist, 6 February 2010.

The usual sensible stuff from the Brits: the editorial starts by exploring the Taiwan issue. The ritualistic sales of U.S. arms to Taiwan triggers the equally ritualistic fit from the Chinese. Hopefully, this all blows over as usual . . . :

But the squalls are increasing in number, and the world's most important bilateral relationship is getting stormy. If it goes wrong, historians will no doubt heap much of the blame on China's aggression; but they will also measure Barack Obama on this issue, perhaps more than any other.

In a nutshell, why I felt the need to write my 2/15 WPR column along these lines.

The editorial then veers off into some questionable analysis, claiming that China's Taiwan policy is "failing" because the two sides are no closer to true political reunification, despite the looming FTA negotiations. How getting to the brink of an FTA is considered a "failure" escapes me. The Chinese have always demonstrated supreme patience on the larger score of political reunification, so how could Beijing be unhappy with Ma?

Yes, the usual fuss will also follow any Obama visit with the Dalai Lama--another useless ritual full of hypocrisy.

Then we get the usual clap-trap about China failing to become magically Western by now--a truly goofy argument from a journal as sophisticated as the Economist. The tired bit about the emerging "Beijing consensus" is also unwelcome--yet another "Chimerica"-like intellectual concoction that's dead in the water almost the minute some clever Western academic coins it.

Enough of the backward-looking concepts.

Then the editorial gets to the heart of the matter: self-doubt in the West, which it does not suitably chastise, could lead to either absurd placating or stupid confrontation.

Obama, it is noted, seems game for the supremely stupid second path.

Killer final line:

Nobody will prosper if disagreements become conflicts.

Duh-like in its simplicity, yet it needs to be said.

The follow-on briefing says all the same, just with more detail--as usual. It includes the judgment I offered in Great Powers and reiterated in the 2/15 column:

... relations with China are, by common consent, one of the few things George Bush junior got mostly right.

Later the briefing makes a spurious argument: if Obama was so pissed about being treated rudely at Copenhagen, why didn't his QDR lambaste the Chinese? No president intervenes like that with the QDR, which reflects the visions of the Chairman and SECDEF primarily, and Gates is not somebody who leans differently every time a new wind blows--thank God.

What the QDR noted is that China is covering all bets: continuing to beef up asymmetrical capacities to mess with us and growing much-needed SysAdmin capabilities that would allow it to play "a more substantial and constructive role in international affairs."

Good point offered by Douglas Paal, a serious China watcher who attended one of my Cantor Fitzgerald events at the World Trade Center way back when: the rise of the net generation forces Beijing to pay more heed to rising nationalism among the young. As I have argued in all of my books, "rising" and development and joining the Core tend to go hand-in-hand with rising nationalism, meaning it's natural and inevitable and, as I pointed out in Great Powers, it tends to spawn a lot of positive social and political trends as citizens who take more pride in their nation also tend to be more ambitious in their reform agendas and more demanding of government movement down this path.

But yeah, it also means they get more uppity when they feel provoked by outsiders.

And yeah, that means we too will have to be more sensitive on this score: seeking to teach, much less boss around, China will more and more elicit a nasty popular response.

This is the one truly masterful sequence from Liu regarding Beijing's greater assertiveness:

That kind of talk may suggest to Westerners that China's new global stature has gone to its head. But what's really driving the country's leaders is a very different emotion: profound insecurity. It's not that Chinese leaders no longer care what the Americans think. They're just so much more worried about what the ordinary Chinese think. Growing prosperity and greater communication with the outside world have made the country's more than 1.3 billion people much harder to manage that they used to be. Now it's a matter of basic survival for party bosses to keep a close eye on public opinion.

Overall, a fabulous piece by Liu, but that sequence was diamond hard and clear.

I toss in the other two Economist bits because they flesh out the fear/challenge features of China's current trajectory: Beijing's current leaders really obsess, in particular, over pissed-off minorities within the nation like the Tibetans, while externally, the region's slow pace toward economic integration means China could easily face serious backpressure locally.

Point: as much as we believe China-rules-the-world is the operative dynamic right now in Beijing, from their perspective, they sit between plenty of external "rocks" and numerous "hard places" internally. Their wiggle room is not what we think it is.

Lighten up! The Israelis handle it just fine

OPINION: "Gays in the militaries," by Bret Stephens, Wall Street Journal, 9 February 2010.

MY TURN: "Asking and Telling In Israel," by Yoni Schoenfeld, Newsweek, 15 February 2010.

Stephens at his most incisive and intelligent--meaning he largely agrees with me here.

His typical Q&A approach:

First he says gay rights in the U.S. military can't compare to gay rights in Iran or the abuse of women in the Middle East.

Then he says Mullen took too long to find his conscience.

Then he says gay rights in the military is likewise nothing compared to civil rights inside the military, because skin color is non-behavior while sexual orientation is. This is a useless distinction, in my mind, because the orientation itself is non-behavior--it's simply who somebody is. Acting upon is merely being who you are, and if heterosexual relations are considered the height of personal freedom, then why should it be any different for gays? I would never stand for the government ever telling me what I could or could not do in privacy (with the obvious restrictions on underage and physical harm--duh!), and if I happened to be gay, I'd sure as hell want the same rights.

Then, after signaling his conservative credentials, Stephens gets serious.

The notion that lifting the ban would lead to out-of-control escapades is weak, because the military already allows women to serve and allows marriages within the military.

He then moves onto the "best" reason why the ban should be kept: the military "effectiveness" argument that says the military exists to defend the nation and not reflect it, claiming the core values of the military are "nearly the opposite" of civilian values in our society (a bit much, in my mind).

Better bit: the don't ask, don't tell doesn't really contribute to effectiveness. Why?

Then we get the old hoary bit about secret gays being subject to blackmail. This is a long-term canard thoroughly disproven by a definitive study of the entire Cold War that showed not a single person in the entire national security establishment was ever so blackmailed--despite the constant stream of Allan Drury novels to the contrary.

Better argument: all the good soldiers dismissed on this basis.

Finally, he gets to the empirical truth: gays have been openly serving in all sorts of Western armies for decades and these forces have suffered no loss in effectiveness.

Stephens ends by citing the Israeli military experience, which, for him as former editor of an Israeli newspaper, is the height of evidence.

Bit of a tortuous journey to get there, but the point is well-made.

The second article simply lays out the Israeli reality without hyperbole.

Please, Obama, don't bomb Iran

OP-ED: Iran in Its Intricacy, By ROGER COHEN, New York Times, March 4, 2010

This piece should be read as a counter to Bret Stephens' similar list in the WSJ a while back. I agree with just about everything and am appalled that experts have begun arguing that bombing Iran will "save" the Obama presidency.

That sounds like the worst possible reason for a war that I've ever heard.

(Thanks: Our man in Kabul)

Taiwan continues to choose integration--and profits

COMPANIES | INTERNATIONAL: "Taiwan eases law on China investments," by Robin Kwong, Financial Times, 11 February 2010.

COMPANIES | INTERNATIONAL: "Taiwan tunes into China's demand for flat-screen TVs," by Robin Kwong and Paul Betts, Financial Times, 12 February 2010.

Bunch of new rules to "relax investment" into China by Taiwan companies.

The truest target? Flat-panel and semi-conductor industries. Taiwan chipmakers are now okayed to take a stake or acquire in whole Chinese companies, so long as the factories are judged to be two generations behind those in Taiwan. Point? Okay to downshift simpler stuff to China, but the best production must remain home.

South Korea has similar restrictions.

Tighter hold on flat-panels: no M&A allowed but three factories in China okayed, and these must be one generation behind--also like the Koreans on this score.

The new rules allow some deals long in the making to go through.

But do not consider these moves simply to be about labor:

While Taiwan's semiconductor and flat-panel industries remain far ahead of China's in spite of Beijing's decade-long efforts to establish a domestic high-tech industry, China has become one of the most important markets for Taiwanese technology companies since the financial crisis.

In short, every crisis brings them closer.

Remember the great quake of 99 in Taiwan: lotsa factories never rebuilt but simply moved to China. This is why, last time I heard, Taiwanese companies control about two-thirds of China's electronic exports.

Second article says it even more baldly WRT flat-panels:

Chinese workers will once again be the main reason for the move [shifting production to China], only now the allure is in their powers of consumption rather than production.

A Chinse national company just committed to buy $5.3b worth of flat panels.

This is how American industry should start thinking about China more and more.

A vastly underestimated weakness: China's financial system

FINANCE AND ECONOMICS: "China's financial system: Red mist; Who matters in the world's second-largest financial system is barely understood," The Economist, 6 February 2010.

Scary article.

First line sets the context:

From being a rounding error a decade ago, the financial clout of China now trails only that of America.

Three of the largest four banks in the world, by market capitalization, are Chinese. So too are the two biggest insurance companies in the world and the second biggest stock market.

Problems?

The Communist Party leadership is entwined with all, so figuring out who's really in charge is hard.

Scarier to me is the competence of the people. Sure, plenty may be educated just fine, but the experience is lacking, as are the controls.

But the article focuses on the general lack of transparency, which suggests at least that investors are voting cluelessly and, at worst, there is mucho corruption below the surface.

Proof? Anybody who knows better and does biz there keeps their mouths shut, so as to avoid losing biz opportunities:

Many China-watchers will only speak face to face, concerned about using e-mails or phone calls to discuss what, in the West, would be standard chatter about the status of bankers and their supervisors.

The guys who run the banks have programmed careers, and little wiggle room.

A point of inefficiency:

Big credit decisions in China are not advanced by any one bank, nor any one banker. Credit is infused and withdrawn by central diktat. That process has extraordinary appeal to state planners but is horribly inefficient for individual institutions.

Treating banks like utilities, the article argues, is bad business.

Top bankers all have big party ties, and brainlessly rotated:

Some China-watchers reckon that those bankers who stay in their posts have more chance of developing their institutions into world-class businesses.

Every bank considers its biggest asset to be its gov ties, thus:

... big decisions are funneled upwards to a very small group of people.

BOGSAT (bunch of guys sitting around a table) does not work for something as complex as the investment market for a country as large as China.

Bottom line: expect the bad bets to pile up and expect few outsiders to see them coming.

The answer to the question I constantly get from audiences is the same: What do I fear most in the system? China's financial markets.

We pretend they are sophisticated and experienced, when they are not. They are also not particularly tied to underlying economic reality, meaning truly 1920s-style America.

And you know what that got us.

'Senator's Son' a Good Window into COIN

National security types have long noted -- and complained about -- the relative lack of military veterans in Congress, which results in too few experienced votes being cast when the prospect of overseas interventions is raised. I have long noted -- and complained about -- the fact that Congress' most prominent military vets hail from the Vietnam era, which has led many to instinctively reject the necessity and utility of conducting nation-building and counterinsurgency. Clearly, our lengthy interventions in Iraq and Afghanistan will alter this generational equation, but how will the experiences of today's veterans impact their votes in tomorrow's Congress?

Continue reading this week's New Rules column at WPR.

Bail-out Greece or make an example?

OP-ED: "The Making of a Euromess," by Paul Krugman, New York Times, 14 February 2010.

COMMENT: "A Greek bail-out would be a disaster for Europe," by Otmar Issing, Financial Times, 16 February 2010.

COMMENT & ANALYSIS: "Trust is wearing thin in Europe's union of opposites," by Tony Barber, Financial Times, 13-14 February 2010.

MARKET NEWS & COMMENT: "Euro project tested by Greek crisis: The single currency has fallen hostage to flaws in the eurozone," by Peter Garnham, Financial Times, 13-14 February 2010.

COMMENT: "Greek light on an over-hasty project," by Samuel Brittan, Financial Times, 19-20 February 2010.

I wade in . . . gingerly, because the subject of the EU and its Eurozone is dense enough so as to defy easy analogies, so not easy to blog unless you want to regurgitate--a lot.

The Greek bailout question has become a mini-boom for analysis on whether or not the EU should stick to its integration schemes or settle for something less, which, at first glance, sounds more on the scale and tone of the U.S. federal system, where states can go bankrupt and serve an a lesson to the rest. But the problem is, the EU isn't far enough along in its political integration to allow such tough-love dynamics to work on their own, meaning, if Greece isn't bailed, the risk of spreading contagion on sovereign debt to would be substantial.

I may not be saying that particularly artfully (or even accurately), but what interests me is that the Great Recession of 2008 (by definition, really) catches all of the major players too early: China's not ready on the currency floating question, the EU's not ready on the political integration issue, and the US simply isn't yet past the do-nothing-but-take-no-prisoners partisanship of the Boomers (and yes, too many of the next generation of pols seem equally clueless on this score). In sum, then, the Core's three great poles all struggle at the same time, leading many experts to delve into their usual bag of tricks and predict all manner of future conflict, when, in truth, having the system's three great poles all inwardly focused is far more likely to result in a burn-baby-burn philosophy regarding the Gap's many woes. This, in turn, makes the East's economic integration/penetration of Gap regions all the more crucial. It will be, in most instances, the only game in town for developing economies for quite some time.

The only-way-out-is-to-go-forward argument WRT the EU is a bit chicken-v-egg, as Krugman points out: If the EU was more a political union, states like Spain and Greece never would have gotten into so much trouble, because money and labor, etc., would have flowed more responsively and thus corrected the out-of-whack situations earlier. But the euro, in many people's minds, was introduced too early in this process of political convergence, so the only way out of the mess now is to go forward, meaning push for even more political union amidst this crisis--not easy. Why is it the only route forward? Admitting "defeat" (however defined) on the euro would be too painful at this point.

Note that America only got its first true national paper currency during the Civil War, so we were only able to summon the political will when the Union itself was at its greatest peril (1862).

As for the short-term question of transferring funds from fellow members to Greece, there seems to be such strong popular feeling against it that I would be surprised if anything happened.

So we get this stilted outcome where the EU learns what it means to have currency union without political union (too bad for Greece) but doesn't come out of the crisis with any great impetus to change that reality.

Barber's point is that the current state of affairs basically locks in a sort of mini-global economy imbalance within the Eurozone, with Germany playing the part of China and damn near everybody else playing the U.S. Blame-wise, Barber speaks of the growing divide between the "virtuous over-achievers such as Germany, France, the Netherlands and Finland" (on the subject of public administration) and the "dysfunctional under-achievers" like Greece.

Another comparison to the U.S. from Barber:

In a conversation this week, one high-ranking European Union policymaker who has lived in the US told me not to make such a big deal of this. New England was the equivalent of northern Europe and Louisiana was the equivalent of Greece, but the dollar worked just fine for both ends of the country, he suggested. True for America, but not true for Europe. It cannot be repeated often enough that the US is a nation-state, with all the collective responsibility that entails, and Europe is not.

The EU remains an "association of sovereign states," as Germany's top court recently opined, so all expectations are that Germany will lead the effort to force fiscal discipline on Greece--the EU acting like a nastier IMF, but will oppose any bailout.

Others, like Garnham, say Germany is likely to bow to pressure and lead some sort of effort because of the wider fears of contagion and the euro's decline (bizarrely, the dollar and British pound are now rising against the Euro primarily because everybody knows these two states can print their way out of debt--i.e., devaluing their own currency [something Greece cannot do]). In this argument, the Greek crisis is a good thing, because it forces tough fiscal choices within the Eurozone earlier than in places like the US and UK (EU member but not part of Eurozone).

Brittan's piece adds some understanding on scenarios: unlike Ohio, Greece can bail from the Eurozone--the great bluff. The great counter-bluff, one assumes, is that the Eurozone would eject the Greeks. A compromise would be to let the Greeks exit and come back in devalued. But once that happens, the floodgates could open on other profligate states demanding similar rights.

So then you're back to the seemingly inescapable position: the Eurozone is forced to crack down on Greece, maybe offering some aid, and the Greeks, unless they really want out, are forced to take the tough medicine (pay freezes, spending freezes, and the like).

I don't feel like I've offered any useful additional analysis here. Then again, I almost never feel like I do whenever I discuss the complexities of European integration. I just get this headache feeling.

I welcome any comments that can make me smarter on the subject.

The continued unease about the role of quants in ever-connected global markets

ANALYSIS: "Ghost in the machine: Markets; With so many trades now driven by software, concern surrounds the threat of devastating errors--and how much the playing field has become skewed," by Jeremy Grant and Michael Mackenzie, Financial Times, 18 February 2010.

Solid piece. Worth reading.

More interesting is the attached sidebar on the Amsterdam Stock Exchange, where a level playing field is being created by one broker-dealer firm amidst the race for ever-increasing speed in transactions.

[Ed. I do not see the sidebar online.]

The percent of federal debt as % of GDP: reaching WWII-era levels

BUSINESS OUTLOOK: "U.S. Debt: It's Not Dark Yet, But It's Getting There; While there are still buyers for Treasury obligations, new research suggests the U.S. may cross a line in 2010 that kills investor confidence--and long-term growth," by Peter Coy, Bloomberg BusinessWeek, 15 February 2010.

The numbers we're heading toward haven't been seen since the mid 1940s, when we were coming off our roughly 100%-of-GDP debt. Of course, we grew substantially over the rest of that decade, meaning the ratio was down to about 70% by Ike, then a steady decline through Carter to about 30%. Reagan-Bush manage to jack it up dramatically, back to approximately 65% by 1993. Clinton's two terms witness a decent decline back down to the mid-50s, then Bush 43 takes it back up to Reagan's heights.

Obama's fate/decision is to send it back up sharply to roughly 94-95% this year, and then it levels some to grow to about 107-08% by 2020--according to the estimates. That puts up on the upper side of the scale for advanced economies but nowhere near a Japan.

Fire drills save lives

NEW BUSINESS: "Lessons from the Pandemic That Wasn't: Swine flu is waning. Now scientists and health officials should be better prepared for a more serious epidemic," by Arlene Weintraub and Andrea Gerlin, Bloomberg BusinessWeek, 15 February 2010.

As I penned in a column a long while back, it was perfectly fine for swine flu to be more bust than undue burden, because the wide reach of the virus would be a good test run for the system, with not much of a penalty thanks to the light symptoms faced by most people (i.e., four in my family of six were stricken in a single week and all of us really only faced one down-and-somewhat-out day).

That's the essential argument of this piece: plenty of bottlenecks observed and hopefully all are targeted for some reasonable improvement.

When we were all stricken, we had the seasonal flu vaccine in us, but not the swine flu vaccine. Despite catching it too early, we still recently sought out the swine flu vaccine.

Why? You can get more than once, and when the strain returns up here after mutating itself yet again through a South American winter, it will most assuredly pack a worse punch.

As for its spread? I've seen no predictions on that and suspect we'll just have to wait and see.

But the bigger point remains: biologically-based System Perturbations will be the norm across this century, whether malicious or accidental or just due to Mother Nature.

So practice is always welcome.

One thing to note, though, is that a lot of underreporting did occur. When my youngest got it, we took her in and they diagnosed her (too early for the seasonal version, and all the symptoms fit). Did our pediatrician report that one case? Not sure. But when three others in the family got it, we only followed up with my eldest in terms of getting Tamiflu (she has special vulnerabilities), so, at best, maybe half of our cases were reported.

The latest I read, the estimate was 57 million Americans contracted, or about one-in-six. Say only 1 of our families' four cases were truly reported. Does it matter if the symptoms were so light?

This time, no. But next time?

End of the Kennedy Era

ARTICLE: Kennedy, Feeling Father's Absence, Steps Aside, By MARK LEIBOVICH, New York Times, February 12, 2010

Passing of an era: I voted for Teddy Kennedy in MA in the 1980s and then had his son as my congressman in RI.

He was hers was his

One ear, one shoulder
A perfect abstraction found
The sum of all dreams

Connect to yours--now

Tom around the web

+ Steve over at Enterprise Resilience Management Blog quoted GP on China's precursors in our own history.

+ Zenpundit linked Why I largely ignore the in-the-weeds COIN debate.

+ Pragmatic Political Economy did an extended treatment of the GP Brief at the Carnegie Council.

+ Global Strategies linked A Bad Time to Wreck Our Relationship with China.
+ And linked When you piss into the wind, be ready for wet socks.

+ Cousin Dampier's Blog linked Potential in Russia (as the economy worsens).
+ James Wood Forsyth Jr. and B. Chance Saltzman disagree with Tom that failed states are sources of danger.
+ Nick Ottens linked FT: The need for consistency on China.
+ Snuffysmith's Blog reprinted 'Winners and Losers in Iraq's Upcoming Election'.
+ Gregory Hilton quoted it.
+ Alexandria linked Life under Kim Jong Il.

The need for Core-wide financial reform

COMMENT: "Nations must think globally on finance reform," by Dominique Strauss-Kahn, Financial Times, 18 February 2010.

Key argument:

Until we come close to a global charter of the kind that applies to shipping accidents, countries will inevitably try to limit the potential liability of their own taxpayers by insisting on local prudential rules. Meanwhile, institutions approaching bankruptcy will inevitably rush to transfer assets home at the cost of a more efficient global solution--which, after all, is what current laws require.

Simply put, the complexity and reach of financial holding companies has dramatically outpaced global rules--rule-set gaps.

If my life's work can be summed up in one phrase, "rule-set gaps" is it.

America's current bout of self-doubt a bit much

COMMENT: "America is in need of a pep talk," by Robert Shiller, Financial Times, 18 February 2010.

Shiller's piece inspired me to write my last WPR column: the dangers of underconfidence can be much worse than the previous bout of overconfidence.

Lotsa FDR examples of managing public confidence.

So far Obama matches him in words only, even though, by appearance and sound, FDR was supremely inappropriate as a champion of the little man (the guy looked and sounded like a parody of the rich, East Coast swell). Does FDR succeed because it simply was a different political era, where people tended to trust government more? Then again, didn't he face much worse times and much more widespread populism?

The big difference, as I might see it? FDR had the luxury of the first cut at expanded government, while Obama must live with the government he inherited.

A mix of global and local succeeds in media content

MANAGEMENT & LEADERSHIP: "At Time Warner, Local Content, Global Profits: CEO Jeff Bewkes is doing production deals abroad to boost revenues. His rivals already have a head start," by Tom Lowry, Bloomberg BusinessWeek, 15 February 2010.

Time Warner learns how to localize content, so it's not just pushing big Hollywood blockbusters overseas. Case in point, TW finances a low-budget German movie ("Two Ear Chicken"), a romantic comedy that is the most popular German film of 2009.

So, as we hear so often in the content biz, it's a mix of stuff that transcends borders and material that's unique to the culture.

What Japan taught us about the "superiority" of authoritarian capitalism

WEEKEND JOURNAL: "A Crisis Made in Japan: Toyota's botched response to its escalating problems has deep roots in Japan's legal system and corporate tradition," by Jeff Kingston, Wall Street Journal, 6-7 February 2010.

Remember when Japan's single-party-state and its planned economy was going to rule the world?

I do.

I also remember George Friedman writing a provocative futuristic book predicting the inevitability of war between the U.S. and rising Japan.

Never forget such hyperbole as the predictions continue to roll in on China.

One thing to catch-up, another thing to lead.