Voice

Finally, the voice of a leader can be heard

A voice of reason and leadership has emerged in recent days among those addressing the economic crisis in Europe, currently the most urgent and dire challenge facing the international community.

Unlike in the past, that voice is not however, the president of the United States, who has remained strangely quiet on this subject despite its direct implications for virtually all of the core U.S. economic issues that are his stated top priorities. Nor is it that of his secretary of the treasury who, though more visible on this issue recently, has not instilled confidence with statements that have, for example, asserting that under no circumstances would European leaders let their institutions fail, even though that has been precisely what they have been doing for years now.

Instead, the new voice comes from rather unlikely roots -- a scandal-rocked organization whose future value to the international community had, in the not-so-distant past, been questioned and a prior post that can only be seen as a potential drag on her credibility.

That voice however, belongs to IMF chief Christine Lagarde, and it has been so direct and crystal clear, so unafraid and so thoughtful, that within mere weeks of assuming office she has quickly gained recognition as one of the most important of the world's leaders.

Take her most recent remarks on the euro crisis and its international implications. In the first instance, she has crisply and accurately warned that a "vicious circle is gaining momentum" that could not only upset european efforts at bailing out its weakest economies but that also poses a threat to the world's financial system and to many of its so-called strongest economies, such as those that are the engines of european growth and that of the United States. At the center of that vicious circle she placed "political dysfunction" that had produced what has amounted to policy paralysis and may have us on the verge of a "dangerous new phase" of this on-going economic calamity.

Further, even as Central Banks agreed to pump in more money to prop up faltering banks, she suggested more might be needed. "Balance sheet uncertainty" was the immediate culprit, she observed, noting it existed at the government, bank and household levels. She accurately cited this as the core risk we face but then, with wisdom greater than most European and American political leaders, noted that debt solutions should not be so severe that they undermine the equally crucial issue of growth in Western economies.

She specifically and directly assailed "fiscal austerity that chips away at social protections; perceptions of unfairness in Wall Street being given priority over Main Street; and legacies of growth in many countries that predominantly benefited the top echelons of society." One can only hope her remarks resonated with all her new neighbors in Washington.

Of course, she could have gone farther. The fact that once again the banking community has put the rest of the world's futures at risk thanks to its mismanagement and greed and that, for the second time in three years, the cost will be trillions in lost growth and destroyed market value and hundreds of billions in bail out money, should be producing something more than outrage. It only reveals the inadequacy of current oversight, the complicity between regulators and bankers, and rigged nature of what is now an international system that effectively has put up the lives and work of everyone on the planet as the collateral that can back the bad bets of an irresponsible few who reap big rewards when they succeed and escape responsibility when they fail as they all too frequently do.

Lagarde suggested that the risks of social unrest were high. She is right but watching all this, one can only wonder why they are not higher. Here in the United States, with a system that has for the past dozen years essentially only offered growth and big rewards to the top one percent while squeezing the other 99 percent ever tighter and pushing more and more into poverty, we still see a government seemingly on track to cut back the benefits for the majority in order to fund support or tax benefits for elites. It is still hard to understand how the housing crisis that started it all, a crisis that crushed the retirement resources of the majority of Americans in ways deeper and more immediate than any looming problems with Social Security or Medicare might, goes unaddressed. We still have faintly ringing in our ears the financial fixers in the government saying that they had to address "systemic risks" on Wall Street while leaving the market to take care of the fate of individual home owners ... even though those homeowners were in fact, the real system, a system on which the world was depending for the consumer confidence and wealth creation that had made America the engine of its growth and the world's marketplace of last resort.

Fareed Zakaria, in a typically smart piece on the euro crisis that underscored the centrality of China to any of its successful outcomes, suggested that Lagarde might be the last head of the IMF not to come from China. Given the country's reserves and growing wealth, not to mention the fiscal track record of europe, historically the source of the Fund's leadership, that may prove to be a prescient observation. (Although it must be said China has quite a bit to prove in terms of the soundness of its own fiscal, monetary and financial system management.) Certainly, I think it is fair to suggest that this is the first global economic crisis in which China's role with regard to its disposition will be central; they've got the cash and this one is going to require a ton of it. That said, at this stage of this particular slow-motion global economic train wreck, it certainly seems we should be grateful that we have Christine Lagarde right where she is doing what she is doing and saying what she has been saying.

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David Rothkopf

The causes and effects of news poisoning

I think I am pregnant. It's not that I am putting on weight. It's the morning sickness.

Every day this week I have awakened and within minutes have been overwhelmed by nausea. Of course, I'm a bit past my prime child-bearing years. So, it might be something else. I'm pretty sure it's not something I ate. But it may well be things that I have read.

In fact, now that I think about it, what with being a middle-aged male and all, that's probably it. I'm suffering from news poisoning.

Daily newspapers ought to come with a warning label these days. "The Surgeon General has determined that reading the following newspaper could cause loss of appetite, mood swings, uncontrollable weeping, suicidal tendencies, rage, dizziness, chain-smoking, alcoholism, agoraphobia, uncontrollable nostalgia, and a strong impulse to live on a desert island."

Every day the relentless drumbeat of negative stories has seemed to grow more insistent, ominous, louder. Economic bad news in the United States, Europe, Japan, and the emerging world. Continuing instability in the Middle East. Violence in Syria. Qaddafi at large. Al Qaeda in Nigeria. Pipeline explosions in Kenya. Starvation. Disappearing ice caps. Futility in Afghanistan. Political dysfunction.

What's more, each day there are a handful of stories or opinion pieces that are so odious that they seem to challenge every bile duct in my body to act up and start my internal organs to churn.

For example, at the start of the week, in the New York Times, there was that op-ed by Turki al-Faisal titled "Veto a State, Lose an Ally." In it, the author, one of Saudi Arabia's most influential foreign-policy voices, demanded that the United States support Palestine's bid for statehood or else. Or else what? "If it does not," he wrote, "American influence will decline further, Israeli security will be undermined and Iran will be empowered, increasing the chances of another war in the region. Moreover, Saudi Arabia would no longer be able to cooperate with America in the same way it historically has."

Gak. Blerg. There is so much in that to offend the digestion of even those, like myself, with both a strong constitution and a predisposition to support the establishment of an independent Palestinian state at the earliest reasonable moment. First, there is the snide assertion that U.S. "influence will decline further." In other words, you guys in America are already on the ropes; we know it and we will try to play it to our advantage. Next, there is the feigned concern for Israeli security. Then, there is the notion that somehow Iran will be empowered more by resisting the Palestinian state than by further elevating and empowering its clients like Hamas.

But, the most galling part of the statement comes with the assertion that somehow if the United States continued to pursue its policy of seeking negotiated terms of statehood prior to actually conferring it, that we will lose the "special relationship" we have with Saudi Arabia. Some special relationship. This one will be recalled in future years in the Encyclopedia of Chutzpah given the Saudi leadership's history of being only a fair-weather, public friend to the United States, supporting us when it suited them and all the while supporting terrorist groups bent on destroying us, playing havoc with our economy in order to enrich themselves, and regularly being as much of an impediment to progress on the Palestine issue as they have been a supporter of a lasting peace with Israel that actually includes a thriving, Jewish Israel in the equation.

Then in yesterday morning's papers on an entirely different front, we had reporting on the Republican debate where much of the "analysis" turned on whether or not Governor Rick Perry had done a disservice to the girls of his state by ordering them vaccinated against a virus that can cause cervical cancer. This was disturbing on several levels. First, there was the shocking reality that in their efforts to blaze new trails in American politics, several of the fringier members of the Republican clown college that is the sideshow at these Romney-Perry debates have gone from taking bold stances against science, math, and history to actually taking what effectively amounted to stand in favor of cancer. While I'm all for giving the little guy a voice in politics, I draw the line at viruses. Especially at those that can trigger abnormal cell growth and painful deaths.

Also vaguely unsettling was finding myself inclined to defend Rick Perry; however, that was quickly offset by the fact that he started to distance himself from his own position. Thus, I was relieved to find myself supporting a Perry policy that at least had the virtue of now apparently being opposed by Perry.

On a far more serious note, today's economic headlines literally did have me sick to my stomach. It's hard to have any other reaction to stories like the Wall Street Journal's "Income Slides to 1996 Levels," the Washington Post's "Census shows the impact of recession," the Financial Times' "Number of Americans in poverty highest in 50 years" and the New York Times' "Soaring Poverty Casts Spotlight on 'Lost Decade.'" One in six Americans in poverty? Almost 50 million people living in families in which the median income (for four) is below $22,314 a year? Almost one in four American children living in poverty? A third of Hispanic children? Forty percent of all black children? The percentage of Americans living without health care is statistically unchanged over the past couple of years, but the absolute numbers have gone up by a million?

Inequality has grown ever worse. Median household income is down over 7 percent since its peak in 1999. The bottom tenth have seen their incomes fall more than 50 percent faster, declining 12.1 percent. But the top 10 percent have only seen a 1.5 percent decline, and the top 1 percent, the bosses in Plantation America, they are the only group to have seen income rise in that period.

Elsewhere in the Post there was a chart illustrating "Why the job hunt is so hard" that showed the gap between the number of people who should be employed and the number who are is at its widest level in modern history and not shrinking as it has in past recessionary cycles. Worse, the headlines from Europe suggest that shocks to the global economy could well make this terrible situation worse before we know it.

It's enough to make a guy forget the sanctimony and dissembling of a guy like Prince Turki and to make the reshuffling of ideological deck chairs by the mental midgets of the Republican debating circuit seem almost laughable. But all these things are happening at once. And our leaders seem incapable of rising to any of the challenges at hand, much less all of them.

The patient is failing. Worse, the patient is us.

Perhaps that is actually what explains all those other symptoms in the first place.

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