Trade Deals Donít Flourish in Hard Economic Times

ìWorld Economy Is Starting to Bloom, IMF Says, Projecting Strong Growth,î by Paul Blustein, Washington Post, 22 April, p. E1.

ìLower Expectations: Major Trade Deals Are Unlikely to Get Done This Year,î by Paul Blustein, WP, 23 April, p. E1.

This one just seems so intuitive. One day we hear that the IMF is predicting that the world is finally pulling out of the recession itís been stuck in for the last 2-to-3 years, then the next day we read that the Bush Administration has had a hard time closing trade deals over the past 2-to-3 years, but that now things are looking up a bit.

Is it just me, or does this make perfect sense? In hard economic times itís harder to get agreements on lowering trade barriers, but as things get better, those compromises get easier to make.

No wonder they call economics such a dismal science . . ..

Is it just me? Or things Iíve noticed in the news lately?

Dateline: above the garage in Portsmouth, RI, 2 May 2004

Quick round-up, because this is my one day off in the media tour and I have a house to clean and kids to parent, hopefully while my spouse sees another good movie like she did last night.

REFERENCES:

ìWorld Economy Is Starting to Bloom, IMF Says, Projecting Strong Growth,î by Paul Blustein, Washington Post, 22 April, p. E1.

ìLower Expectations: Major Trade Deals Are Unlikely to Get Done This Year,î by Paul Blustein, WP, 23 April, p. E1.

ìChina Races to Reverse Its Falling Production of Grain,î by Jim Yardley, New York Times, 2 May, p. 6.

ìHow Qaddafi Became The Toast of Brussels,î by Matthew L. Wald, NYT, 2 May, p. WK3.

ìCelebrations of a New, Expanded Europe Are Clouded by Old Fears of Immigration,î by Patrick E. Tyler, NYT, 2 May, p. 8.

ìOfficer Suggest Iraqi Jail Abuse Was Encouraged: Humiliation and Assaults: Cellblock Was Controlled by Military Intelligence, General Contends,î by Philip Shenon, NYT, 2 May, p. 1.

Rehabbing a terrorist grand master in Qaddafi

ìHow Qaddafi Became The Toast of Brussels,î by Matthew L. Wald, New York Times, 2 May, p. WK3.

Does it stink to see Qaddafi toasted in Europe, apparently forgiven for all past sins because he got scared enough by our takedown of Saddam to finally go through with his long planned effort to weasel his way back into the Westís good graces by surrendering his WMD assets?

It sure as hell does.

But by submitting to that key rule set and apparently getting out of the business of supporting terrorist groups, the Core at least has to offer Libya the economic connectivity it seeks. We should have no illusions about this evil man. He will misbehave the minute he thinks he can get away with it. But sometimes we need to topple bad leaders on-the-slow as opposed to on-the-fast. We need to flood Libya with connectivity, andóby doing soóreduce Qaddafiís hold over the population as quickly as possible. Rot him out from within and hold our noses while we do it. Itís definitely unfair to all those lives he helped snuff out in his years of support to terrorist groups and Libyaís own efforts to kill Americans at willóthe most successful being the Lockerbie Pan Am 103 strike. But getting Libya on a different path shrinks the Gap just a little bit, while opening that society up to connectivity long denied by Qaddafiís failed regime. When his time comes, history will be sure to judge his rule as despotic and disastrous for the Libyan people, but for now we suffer this injustice to encourage this new element of order in the region.

Yes, now comes the ìgrain threatî from China!

ìChina Races to Reverse Its Falling Production of Grain,î by Jim Yardley, New York Times, 2 May, p. 6.

China is urbanizing so rapidly, that itís losing lands previously set aside for agriculture, raising the specter of being unable to feed itself, meaning it will have to rely on others increasingly for food.

This basically happens to every rapidly industrializing country. Should we get scared? No. We should simply encourage more reduction in agricultural trade barriers worldwide, something the Gap wants desperately so it can sell us food. But one of the old bugaboos about development is that all that specialization in production puts a country at risk of relying on others for basic needs, like food (they could starve us out!).

This is old think in the worst way, and I worry about China replicating some of the same stupid barriers to agricultural imports that we have in the U.S. and that Europe and Japan have in absurd abundance. Such a fear-threat reaction shows a deep mistrust of the mutual-assured dependence that marks a countryís deep integration into the global economy. Itís also a great way to keep the Gap on the outside looking inónoses pressed to the glass.

News flash! EU annexes East Central Europe!

ìCelebrations of a New, Expanded Europe Are Clouded by Old Fears of Immigration,î by Patrick E. Tyler, New York Times, 2 May, p. 8.

My book includes the ìstunning predictionî that America will grow by upwards of a dozen new member states over the coming decades, inevitably involving neighbors to our south. Aha! The ìneocon prophetî has openly declared, ìlet the conquering begin in the Western hemisphere!î

Meanwhile, the EU strikes a blow of its own in its quest for global domination by annexing East Central Europe. Tired of importing their waiters and prostitutes and nannies and carpenters, Old Europe simply swallowed New Europe in one fell swoop!

Amazing! Even crazier, as opposed to the last time Europe tried this under the Nazis, this time the East Europeans are going willingly!

Hmmm. Maybe there is something to this global economic integration process . . . maybe it doesnít involve military conquest but just societies coming together peacefully . . . hmmmm.

Rule Sets: A key difference between Core and Gap

ìOfficer Suggest Iraqi Jail Abuse Was Encouraged: Humiliation and Assaults: Cellblock Was Controlled by Military Intelligence, General Contends,î by Philip Shenon, New York Times, 2 May, p. 1.

They dismember the bodies of security personnel and have a street party to celebrate it in Falluja. We catch some Reservists treating Iraqi prisoners to humiliations and our people will likely spend years in a military jail as a result.

Thatís a key difference in rule sets on security. We have them in the Core; theyíre missing in the Gap.

Globalization -- shrinking the Gap -- Saves Lives

ìLiving in Extreme Poverty,î by Shannon Reilly and Marcy E. Mullins, USA Today, 29 April, p. 1A.

Simple page 1 graphic from USA Today makes point I use in book: more has been accomplished to reduce global poverty in last couple of decades thanks to spread of global economy than in previous century. Pulling in such New Core heavyweights as India and China and Brazil means serious poverty reduction in the world, both as a percent of total population and in terms of absolute numbers.

40% of the world population in 1981 lived on less than $1/day. That number is 21% in 2001. The absolute number of truly poor in 1981 was 1.5 billion. That number is now down to 1.1 billion.

Those are lives extended and improved. Those are premature deaths (especially the kids) avoided. That is globalization saving lives, pure and simple.

Old disease? Look in Gap

ìThe troubling fight against an old killer: Malaria in Africa,î by Steve Sternberg, USA Today, 29 April, p. 8D.

Great map in story shows where malaria is worst. Except for southern Mexico, northern Brazil and India, all of the areas lie within the Gap. That trio effectively lie on the Seam, so no great surprise there. No Core state removed from the Seam has any issue with malaria.

My point: the Core-Gap divide is a map we look at every day without realizing it. This map exists in so many forms, tracking so many different parametersóit is simply undeniable as the overarching security paradigm of this age.

Security defines satisfaction in Iraq

ìIraq is split on war and its aftermath,î by Julie Snider, USA Today, 29 April, p. 4A.

Interesting polling data in Iraq, where breakdowns given for Baghdad, Shiites, Sunnis and Kurds. Across the board, those most happy with US-led occupation to date are the Kurds. No surprise, because they feel the most secure.

Polls show ordinary Iraqis happy that we came and got rid of Saddam, but get more resentful of our presence over time due to deteriorating securityóexcept for Kurds, who frankly had their stuff together before we got there thanks to the Northern Fly Zone effectively granting them independence from Saddam.

As I often note, it all starts with security in terms of economic development and the growth of connectivity, but all the bad stuff starts likewise with the lack of securityóincluding a growing hatred of our presence in Iraq.

Trading with the near-peer competitor

ìBush Resists Calls to Pressure China,î by Neil King, Jr., and Michael Schroeder, Wall Street Journal, 29 April, p. A5.

The Pentagon loves to focus on China as the big downstream military threat, but the White House is resisting pressure from US labor unions to get tough on China on trade, which just happens to be up 76% since 2001.

You go, near-peer! Keep sticking it to America with cheap manufactured goods! Pretty soon weíll be putty in Beijingís hands.

G.D. capitalists!

Whoops! I meant ìcommunists.î

Thanks to globalization, shrinking the Gap in Calcutta

ìInflux of Tech Jobs Ushers In Malls, Modernity to Calcutta,î by Joanna Slater, Wall Street Journal, 28 April, p. B1.

Calcutta, or what India now calls Kolkata, is famous for what in your mind?

Ah yes, the Black Hole and Mother Teresa. Surely, globalization would never penetrate there. International business refuses to enter truly poor areas, yes?Tell it to IBM. Their new facility in Calcutta makes that city second only to Bangalore as a target of Big Blueís foreign direct investment in India.

But that only helps high-tech workers there right? Yeah, but guess what? They want to eat in nice restaurants, drive in cabs, go to health clubsóall jobs that trickle down to the poor.

So the Black Hole, she gets a bit smaller each day and globalization rolls on.

The evil twin separated at birth

ìSouth Korea Casts Wary Glance to North,î by James Brooke, New York Times, 29 April, p. W1.

Just a couple of good stats on the nature/nurture debate regarding commie North and capitalist South Korea.

First, six decades of socialist ìbrillianceî at the hands of the great/dear leaders, the Kims, leaves North Korea with $2 billion in industrial inventory. Ah, those socialists know how to generate industry, yes?

South Korea, on the other hand, gets by with a mere $489 billion in industrial inventory.

Great mentor China does about $1billion trade with the North each year, but almost $60billion with South Korea.

Think the U.S. canít cut a deal with Beijing to take down Kim and open up the North?

More reasons why Kim Jong Il should be taken down now

ìNorth Koreaís Top Priority Remains Secrecy After Blast,î by James Brooke, New York Times, 29 April, p. A10.

Just like the famine in late 1990s when Kim refused to let worldís aid in for fear of losing his grip on power, thus letting 3 million of his people starve to death needlessly (half a Holocaust, say I, wondering where the peace marchers are on that one), Pyongyang is yet again stonewalling on aid to victims of the huge explosion last week. Hundreds of blinded kids, we are told, although no one is sureósuch is the extreme disconnectedness in that country that no one outside really knows.

To stop media interviews with survivors, North Korea stopped Chinaís attempts to aid victims of blindness. The regime refused to let South Korea trucks cross the border with relief supplies, fearing its border would be compromised in some unacceptable fashion.

So the suffering continues while the Dear Leader is nowhere to be found on the subject.

Meanwhile the official state media circulates stories claiming residents in the affected areas ran back into their houses to first save their portraits of the Dear Leader, leaving kids behind to suffer longer or even die. First things first for the Wizard of Odd.

If that man isnít an advertisement for the utility of assassinating an evil leader, then who the hell is?

China floats Japanís boat

ìJumping Out of Sick Bay,î by Thomas L. Friedman, New York Times, 29 April, p. A27.

Great quote in Friedman piece: ìTwo-thirds of the reason for [Japanís] recovery is China,î says a Japanese management consultant.

Japan and China hold almost $1Trillion in U.S. Treasury bonds. Increasingly, their view of the world will merge, with Chinaís moving closer to pragmatic Japanís. The U.S. is looking at a dual strategic partner in this pair. We better get used to it, plan for it, and exploit it whenever possible. Those two countries bought the bulk of the sovereign debt we floated to pay for the Iraq war. We better make sure they get the outcome they thought they were buying when they purchased all that debt. Otherwise, next time they may not finance the war.

WTF: UNís bold move on stopping Osama from getting WMD

ìBan on Weapons of Doom Is Extended to Qaeda-Style Groups,î Warren Hoge, New York Times, 29 April, p. A3.

UN Security Council just passed a resolution making it illegal for terror groups to acquire WMD. Of course, no enforcement mechanism is included in the resolution, but member states can lob sanctions against states found guilty of letting the technology get into al Qaedaís hands.

Oooh! That feels safer doesnít it? Pakistan may have to pay a fine or something for enabling Osama to set off a nuke in Manhattan someday.

Digging down deeper on micro loans

ìDebate Stirs Over Tiny Loans for Worldís Poorest,î Celia W. Dugger, New York Times, 29 April, P. A1.

Great article describes push in development community to mandate that more of the money being put into micro-loan programs which are hugely successful (and something I advocate in the conclusion of my book) be directed to the very poor, or those living on less than $1 a day.

Great idea, say I.

Test: PNM News and Mail Bag

Just posting this to see how RSS feeds are rendered.

PNMNews: at /news/news_index.htm

And, some responses to the book Tom received via email.

Oh, the FQA about the PNM is posted now, too.

China's Self-Synchronization of Rule Sets on Finance

(1) "China's Listings Lose Steam: Several Big Stock Sales Are Put Off Amid Accounting Questions," by Joel Baglole, Wall Street Journal, 26 April. p. A13.

Great story on how international investors are beginning to raise more questions about accounting practices in China. Yet another sign that as China opens up to the world to get funding for all that development, it will be forced to import the Core's rule sets more and more. Remember: no rules, no money; no money, no infrastructure, etc.

That's why I call it a "global" transaction strategy!

(2) "Could Overseas Financing Hurt the U.S.?" by Greg Ip. Wall Street Journal, 26 April, p. A2.

Basic theme of PNM book is that US conducts a series of grand transactions with rest of world in terms of what we offer and what we expect in return. One thing we offer world through our willingness to overspend on our budget is a military that can export security to the world. How do we pay for this? We don't on many levels. That sovereign debt is purchased by other nations that prefer to "import" that service from us.

Good article raises the new bugaboo for those smart observers who are catching on to this reality. We are world's biggest debtor, so someone is paying for all that defense buildup after 9/11, plus the two wars, plus the Iraq occupation. That someone is first and foremost China and Japan. Together they now hold roughly a trillion dollars of U.S. Treasury bonds. What they do with those bonds can have huge impact on the U.S. economy, and thus our continued ability to fund defense.

So if you think we're just spending on defense for ourselves, you're wrong. Someone else is buying this service as well, so if we pretend to wage war solely within the context of war and ignore the everything elseólike who pays for itówe're just kidding ourselves about our "unilateralism." China and Japan better continue to approve of the security exports we offer the world, because when they stop approving of that service, we will be hard pressed to continue offering it and the world will suffer.

This is why I say the Core is in this Global War On Terror together or not at all. That's why how we explain ourselves in this GWOT is crucialóno happy ending revealed means no one willing to fund the war.

Building the Sys Admin force on the fly in Iraq

(3) "Army Seeks Ways to Bolster Force in Iraq," by Greg Jaffe, Wall Street Journal, 26 April, p. A4.

Another great article on change within DoD from Greg Jaffe. Speaks to realities like the Pentagon "burning through military police" and "running short of construction-engineer units" in its ongoing occupation of Iraq.

I will say it again: we field a first-half team in a league that keeps score until the end of the game. We are watching halftime adjustments here that would make Bill Walsh shudder with anguish, but make them we must. We need the Sys Admin force here and now in Iraq, and if we have to remake the Reserve Component to get it, we will.