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