Never under-estimate the ability of Congress to muck things up. In the 1930s, the US Congress did a lot to turn a financial crisis into a depression by passing the Smoot-Hawley tariff act. Have America’s politicians just done it again, by rejecting the Paulson bail-out?
I suspect not – but only because I think that the market reaction last night was so strong that Congress will have to re-think and pass some version of the bail-out soon.
The Congressional naysayers, it seems to me, were motivated by three emotions: political fear, political pique and genuine ideological or practical reservations. The first two motivations will have been undermined by the collapse in the Dow after Monday’s vote. The huge fall in the stock market made the point that there is indeed a connection between the fate of Wall Street and the fate of Main Street in a much more eloquent fashion than any American politician has so far managed. Congressmen who feared being punished at the polls in November, if they voted for the package, may now have to recalculate. Read more
The great Wall Street meltdown is a huge economic and financial event. But might it also signal a historic shift in global politics – a moment that both marks and accelerates the decline of American power? Read more
Anyone who was hoping for some reassurance at this time of financial crisis, will not have got much from tonight’s presidential election debate. I thought the McCain-Obama exchanges on the Wall Street meltdown and the bail-out plan were feeble in the extreme.
At least Obama had four succinct points to make at the beginning, before getting sidetracked into debates about “earmarks” and other irrelevances. McCain gave the impression that he thought that the source of the problem is excessive spending in Congress. Or maybe he just knew that voters would respond to slogans about “pork-barrel spending” – and would get bored or irritated by complex talk of bail-outs. Still, the level of the discussion of the financial crisis was frankly depressing. Read more
The atmosphere was gloomy in Beijing this week – literally and metaphorically. When they weren’t worrying about poisoned baby milk (which is the scandal of the day), Beijing residents were complaining about the end of the traffic restrictions that were introduced just before the Olympics.
The city authorities kept the restrictions in force, even after the athletes departed. The rule was that only half the city’s cars could take to the roads on any single day – odd-numbered plates on one day, even-numbered the other. The effect was apparently dramatic. As one expat enthused to me – “You could breathe the air, you could see the mountains and you could hop into a taxi and get across the city in twenty minutes.” There was some official discussion about whether to keep the traffic restrictions in perpetuity. But the car-owning lobby won out.
And last Sunday it was back to traffic as normal. The locals I spoke to in Beijing were unanimous that they could feel the deterioration in the air quality immediately. Read more
I arrived at the World Economic Forum in Tianjin a couple of hours ago. Tianjin, a couple of hours up the road from Beijing, is a modest little place – just 11.2m inhabitants.
Being a loyal company man, one of the first things I did was to log onto the FT website to get the latest on the great meltdown. I thought the most eloquent single fact was that a story headlining the “biggest bank failure in US history” (Washington Mutual) was only the third headline. Headlines four and five were also fairly eye-popping – the German finance minister calling the end of America’s days as a financial superpower, and the withdrawal of billions of dollars from Morgan Stanley. Read more
I am in Beijing. But even here it is hard to get away from the American presidential election campaign. This morning, in my role as all-purpose seer, I met a group of Chinese journalists. The first question I was asked was – “What do you think of McCain’s decision to suspend his campaign?” Since, the second question was – “When do you think the Chinese stock market will recover?” – I think I’ll answer the easy one .
I’m doubtless revealing my bias here, but I think McCain’s decision is batty. Read more
Sitting in the front room of his suburban house in Delhi, Shri K. Subrahmanyam, the doyen of Indian strategic thinkers, sips some tea, coughs a little – and remembers the moment he decided that India must develop nuclear weapons. “It was on a visit to America in 1968,” he recalls. “I saw all the top strategic thinkers. Kissinger, who was still at Harvard at the time, Schelling; it was after that, that I decided we must have the bomb. As a matter of national survival.” Read more
I first visited Bangalore in 1996, when the information technology boom was just getting going. One of my stops 12 years ago was Infosys, an Indian IT company, which then employed roughly 3,000 people and had revenues of $30m a year. Revisiting the firm last Friday, I discovered that it now employs 97,000 people and has a market cap of about $20 billion.
Chatting to my hosts, we established that the man I had interviewed 12 years ago was none other than Narayana Murthy, the company’s co-founder. They were a bit startled that I couldn’t instantly recall his name. I suppose it’s a bit like turning up at Microsoft and vaguely remembering once having interviewed a chap with glasses – who turns out to have been Bill Gates.
Talking of American business icons, I then went on to visit the John F. Welch technology centre run by GE in Bangalore. The first time Welch, the legendary boss of General Electric, visited India – he had what you might call a gut reaction. He got a stomach bug so bad that he decided that he wanted nothing further to do with the country. Fortunately for GE and for India, he was eventually prevailed upon to change his mind. GE opened a research centre and technology park in Bangalore in 2000. It now employs 4,000 engineers – with a further 2,000 hires planned. Read more
Like a lot of foreign journalists and business people who pass through Pakistan, I’ve stayed at the Marriott hotel in Islamabad – twice, in fact. Everybody knew that it was a target for terrorists. It has been attacked a couple of times already. I remember that when I mentioned to one Pakistan specialist that I was booked in at the Marriott, he winced and said – “Ask for a room at the back of the hotel”.
But the bombing that hit the Marriott today sounds as if it has pretty much demolished the whole place. The vast majority of the casualties are likely to be Pakistani Muslims – not that this ever seems to bother al-Qaeda or its affiliates. Read more
Taking the Jet airways flight from Delhi to Mumbai (Bombay) does not feel very different from taking an inter-city shuttle flight in the US or Europe: New York to Washington say, or Barcelona-Madrid. There are the same young businessmen, plugged into their i-pods or watching portable DVD players, while their older peers scan the business newspapers. The only difference I noticed is that the Jet Airways food is rather better.
But what makes India so startling – and unsettling – is that i-pod India exists side by side with Mother Theresa India, a country of desperate poverty and medieval technology where some 450m people still live below the World Bank poverty line of $1.35 a day.
Step outside the business and bureaucratic bubble and Mother Theresa India grabs you by the arm – literally. The other night I went for dinner with a couple of colleagues in a crowded bit of Delhi. The restaurant was down a few side alleys and we swiftly attracted a swarm of small, begging children. It was the old dilemma. Do you give? Do you ignore? Do you try and brush off the the kids, who are clinging to you and howling. Once you have made it to the restaurant, all is air-conditioned cool – and you are back among the i-pod crowd. But the child beggars outside put those traditional restaurant dilemmas – do I have room for a creme brule? – into a new light. Read more
I am told that the population of India is now around 1.2 billion. So it is slightly surprising that many of the politicians I have met over the last couple of days seem to be related to each other.
On Monday I met Omar Abdullah, a young and charismatic MP, who represents a regional Kashmiri party. The conversation on the future of Kashmir and Pakistan was fascinating – the only distraction being several large dogs frolicking behind him in the garden. (I thought I spotted a St.Bernard – I do hope not, since it’s a long way from the Alps.) When we took our leave, I mentioned that we were going on to see Sachin Pilot – a young Congress Party MP. He turned out to be Abullah’s brother-in-law.
Today started with an interview with Manvendra Singh, a rising star in the BJP. It ended with a chat with Jaswant Singh, a former Indian foreign minister – and Manvendra’s dad. The next door neighbour was Farooq Abdullah – who turned out to be Omar’s father. Jaswant Singh’s other neighbour was Manmohan Singh – otherwise known as the prime minister and, surprisingly enough, no relation. Read more
One of the more comic episodes during the last US presidential election was the effort by Britain’s Guardian newspaper to influence the vote. The Guardian accurately foresaw that the state of Ohio was going to be crucial to the outcome. So it provided its readers with the addresses of 14,000 voters in Clark County, Ohio – and encouraged them to write letters, urging a vote against George W. Bush.
Ken Loach, a British film director, set the tone for this charm offensive by writing: “Today your country is reviled across continents as never before.” But – sadly – this effort to win friends and influence voters backfired spectacularly. In the event Clark was the only one of Ohio’s 88 counties to switch from Democrat to Republican in 2004. A headline in the Springfield News-Sun, an Ohio paper, summed up the local mood: “Butt out Brits, voters say.” Read more
Yes, I am aware that the global financial system is in meltdown. But here in Delhi, the big news is that the prime minister of Nepal is staying at my hotel. And he is not just any old prime minister of Nepal: “Prachanda” (his nom de guerre) is a former Maoist guerilla, who waged a ten-year-war against the government, before winning power in elections. The businessmen I met filing into meetings with him at the hotel seemed rather tickled by his revolutionary past and kept saying – “He’s a Maoist you know”, and roaring with laughter.
The combination of a prime ministerial presence and the weekend bombings in Delhi means that security is tight around the hotel – at least in theory. When I set off the metal detector this afternoon, the security guard watching me just laughed – and then bowed deeply.
Despite all the Delhi bustle, I find it hard to stop my mind drifting off in the direction of Wall Street. Is this the long-awaited final crisis of capitalism? They don’t seem to think so here in India where – after years of failed socialism – they are now rather keen on capitalism. Read more
I’ve just arrived in Delhi. A few hours before my plane touched down last night, five bombs went off in markets and parks around the city. Between twenty and thirty people seem to have been killed and lots more injured – and three further bombs have been defused.
At my hotel, they have advised me to avoid “crowded places” – which arguably rules out the whole of India. There is round the clock coverage on television – I counted four all-news channels, and that was just in English. It’s the usual grim post-terror footage of shocked crowds, bloodied streets, sirens, hospital wards and politicians calling for calm. Read more
The first thing that happens on 9/11 is that there are memorial services and commemorations for the people who died. The second thing that happens is that lots of opinion polls are published.
This year – as ever – they make startling reading. A 17-nation survey published by WorldPublicOpinion – which is affiliated with the University of Maryland – finds that in only 9 of 17 countries surveyed are majorities prepared to believe that al-Qaeda was responsible for the attacks. This seems odd to me since al-Qaeda leaders have actually claimed responsibility for the attacks. But maybe that was some sort of fancy double-bluff. Or maybe the man in the video was actually Donald Rumsfeld wearing a fake beard. Read more
I love Thailand. In many ways it is a serious country: a dynamic economy, a big power in South-East Asia, an important tourist destination. Yet there is a deep vein of sillyness in the country’s public life that makes it a great source of entertainment.
Only in Thailand, I think, would a prime minister lose his job for making guest appearances on a television cookery programme. Who knows whether the dismissal of Samak Sundaravej will resolve the country’s political crisis? But the reason for his downfall is delightfully original. Read more
In May of this year a close aide to President Mikheil Saakashvili of Georgia visited me in London. He complained about Russian provocation: the next time a Russian military plane violated Georgian airspace, he said, the Georgians would shoot it down. He added that the Georgian government had informed the US of its intentions and had been given the go-ahead. Read more
Congratulations to Asif Ali Zardari who will be sworn in as Pakistan’s president on Tuesday. But you have to wonder why he wants the job?
The next president is going to be squeezed between the increasingly impatient Americans and the threat of domestic terrorism. Both problems have been on display over the past week. The Americans have launched two separate incursions into the Pakistani tribal areas. With the Afghan war going badly and a presidential election underway, the US may be increasingly tempted to get involved in military action on Pakistani soil. That will inevitably cause a backlash that President Zardari will have to cope with.
Meanwhile, domestic terrorism and militancy remains a big threat – witness the suicide bombing that killed 35 people in Peshawar this week. The threat in Pakistan is often misunderstood in the west. The prospect of an Islamist takeover of the central government is remote. The real threat is that more and more of the country will become ungovernable. The tribal areas are already out of control. And Peshawar – a mere three hours drive from the capital – is increasingly anarchic, isolated and dangerous. Read more
After all the sound and fury of the US political conventions, it looks like we might be right back to where we started from. The most recent CBS News poll puts McCain and Obama in a dead heat – 42-42 – which is about where they were, going into the Democratic convention two weeks ago.
I suppose that needn’t be surprising. Both parties got the expected bounce out of their convention. Obama opened up a lead for the Democrats, but the Republicans have bounced back. Read more
We are all familiar with the basic theory. Economic growth = a rising middle class = pressure for democracy.
So what are we to make of events in Thailand? The middle-class of Bangkok are out in the street – but they appear to be agitating for a roll-back of democracy. Forget the fact that their umbrella organisation is called “The People’s Alliance for Democracy” – the PAD’s main demand is highly undemocratic. It wants a new system in which the Thai parliament is 70% appointed. Read more