Monthly Archives: November 2010

The news earlier this month that three bottles of Château Lafite, from the 1869 vintage, had sold at auction in Hong Kong for £437,900 gives a new meaning to the “China price”. This phrase usually means the lowest price – reflecting the competitiveness of Chinese manufacturers. But there is also a “China price” at the top end of the market, as rich Chinese bid up the price of rare, luxury goods to levels that make western rivals go pale and slink out of the auction room.

The “revelations” in the latest download from WikiLeaks strike me as surprisingly dull. You would have thought that, in 250,000 pages of diplomatic cables, there would be insights that were a bit more startling than the suggestions that Angela Merkel is cautious, Silvio Berlusconi is vain, Nicolas Sarkozy is thin-skinned and David Cameron is a bit of a lightweight. Tell me something, I didn’t know.

It may be that, as people trawl through the data, they come across something genuinely interesting. For the moment, however, the only thing that made me raise even half an eyebrow was the suggestion that the Saudis and the other Gulf Arabs are pushing the Americans to bomb Iran. The Israelis have been saying that this is the Saudi position for ages – but, hitherto, I’ve always taken that with a pinch of salt, since it is obviously in Israel’s interests to make that case. So it is a bit surprising to find out that the Saudis really do seem to want a strike on Iran. Read more

Yesterday, I had a rather sad conversation with a friend in Portugal. The country has just had to force through another austerity budget; and fears are mounting that it will be next in line for an EU bail-out. “We should never have entered the euro”, my friend lamented. “Everything went downhill from there. For us and for everyone.”

Until recently, it was extremely hard to find members of the Portuguese business and political elite who would entertain such thoughts. I remember visiting the country in late 2002, and writing a gloomy column for The Economist which made the argument that the euro was working out very badly for Portugal. I recieved a courteous welcome in Lisbon. But I think they dismissed what I had to say as the ramblings of a Eurosceptic Brit. Read more

In this week’s podcast: We look at Ireland and its four-year austerity plan announced yesterday and as the euro plunges further we discuss the impact of the Irish debt crisis on Portugal and Spain. But we start this week’s show in Asia and the unprovoked attacks on South Korea by North Korea. Read more

Britain’s Conservative Party promised to restrict immigration during the last election campaign. But the policies they unveiled this week are pointless and self-defeating. At a time when Britain should be doing everything it can to help private business, the government is deliberately setting out to make things harder by imposing an arbitary cap on the number of skilled migrants who can come into the country to work.

The people the government are seeking to exclude are not poor foreigners who will compete with unskilled workers, or who will sit around on the dole. These are talented people with job offers, who will help British businesses to grow and who will pay taxes in Britain and spend their salaries here. And yet the government is intent on cutting their numbers. Read more

By Daniel Dombey, US Diplomatic Correspondent

You can understand why the latest flare-up of tension in the Korean peninsula has left Barack Obama none too happy.

Obama has had a pretty poor November so far, what with historic reverses in the midterm elections and a wretched G20 in Seoul where, rather than rallying the rest of the world against China’s currency policy, he found himself at the receiving end of several countries’ strictures about the Fed’s attempts to reflate the stumbling US economy. Read more

North Korea has launched an artillery barrage against a South Korean island, killing two servicemen and seriously injuring more than a dozen troops and civilians, in a dangerous escalation of tensions on the Korean peninsula.

South Korea returned artillery fire after North Korea on Tuesday unleashed a hail of 200 shells on Yeonpyeong island in the Yellow Sea.

“Tell me how this ends,” was the question posed by General David Petraeus about the Iraq war. European leaders are asking the same question as they contemplate the crisis in the eurozone.

Having failed to construct a firebreak in Greece, the Europeans are hoping that they can stop the euro crisis in Ireland. But, even as an Irish rescue package is put together, the bond markets are already looking with unhealthy interest at Portugal. After Portugal, Spain is assumed to be next. And, if a really big economy such as Spain needed to call the financial fire brigade, the whole future of the euro would be in serious peril.

I hadn’t fully taken on board the American right’s demonisation of George Soros, until I attended a Republican Party rally in Nevada last month. I asked one of the women organising it whether she was one of those people who believe that Obama was not born in America. “Oh no”, she said, “but I think he’s controlled by foreigners.” Like who, I asked. “George Soros”, was the reply.

Now a new level of Soros hatred has been reached with a long attack on the billionaire financier on Fox Television by Glenn Beck, who is probably now the most powerful right-wing pundit in the United States. Watch it here. It’s staggering. Read more

Audio Ireland, Berlusconi, food prices

In the podcast this week: We ask whether the resignation of four officials earlier this week marks the end of the Berlusconi era; we look at the results of the Food and Agriculture Organization food outlook report about rising prices and what this means for emerging markets and we ask what is the future for Ireland as it teeters on the edge of accepting a bailout loan from the EU and the IMF.

The whirlwind that is hitting Ireland may feel like the kind of crisis that nobody could have anticipated. In fact, in the years that I lived in Brussels (between 2000-2005), I did have occasional conversations with EU officials about what would happen if a member of the euro-zone ran into financial difficulties and had to be bailed out by the other members.

Reading the news of the Irish bail-out this morning, one particular conversation came to mind. I was talking to a friend at the commission about the prospect that Portugal would run out of money. (At the time they seemed like the front-runners in the insolvency stakes, with Ireland not even regarded as a runner.) My commission friend, a German as it happens, said that the Portuguese would then have to borrow from the rest of Europe. He added with a grim smile – “And then Portugal will become a colony of Brussels.” Read more

If Burma followed Hollywood rules then the rest of the Aung San Suu Kyi story would now follow a predictable and uplifting narrative. After her release from imprisonment, the beautiful and heroic leading lady would sweep aside the hatchet-faced generals and become the leader of a grateful and united country. She would eventually retire as a revered international stateswoman – Asia’s Nelson Mandela.

If you have ever wondered what a Martin Wolf column would look like, if it was animated and then turned into a rap-song, here is the answer.

I think this US-Sino currency rap battle video is inspired. The economics seem to me entirely accurate; the political judgements are sound. And it rhymes. I came across the video on the FP Passport web-site, who say that it is made in Taiwan. And the You Tube version says it has already had 185,000 hits, so I wouldn’t claim it’s my unique discovery. But, for those of you who haven’t yet come across it, it’s definitely worth a look. Read more

In this week’s podcast: America’s secretary of state for Europe, Phil Gordon, on US/European cooperation in Afghanistan and over Iran; the first elections in 20 years in Burma; the rumpus caused by the president of the World Bank, Robert Zoellick as he calls for the return to the gold standard. Read more

Trying to curry favour with the world’s rising powers by supporting their membership of the UN Security Council is all the rage. Barack Obama came out in favour of Indian membership on his trip to Delhi. William Hague, Britain’s foreign secretary, has decided to support Brazil’s bid.

I can see the attraction of making speeches along these lines. You get applause and gratitude. But the likelihood is still that nothing much will happen. That is because, while everybody can agree that the composition of the five permanent members is an anachronistic holdover from 1945, actually opening the discussion about how to add new members is bit like peeking into Pandora’s box. Read more

It is was kind of David Cameron and Barack Obama to join in the efforts to promote my new book, Zero-Sum World – albeit by contradicting its argument. In speeches in China and India, this week, both leaders have gone on record to say that we are not, in fact, living in a Zero-Sum World.

David Cameron’s speech today said that Britain regards the rise of China as an opportunity. In that strange staccato style of speaking that he seems to have inherited from the speeches of Tony Blair, Cameron told his audience that he believed in – “Enagement not disengagement. Dialogue not stand-off. Mututal benefit not zero-sum game.” Read more

As the leaders of the world’s biggest powers gather for a Group of 20 summit, their South Korean hosts talk hopefully of the organisation as a “steering committee of the world”. But there are so many different hands grabbing for the steering wheel that the G20 will be lucky to survive without a serious accident.

The visit of Barack Obama to India is interesting partly for what is not being said. For understandable reasons, Obama is keen to emphasise trade and jobs. The relaxation of America’s export controls regime is significant because both China and India complain that the Americans moan about their lack of exports to Asia – and then promptly ban the sales of much of the hi-tech stuff that the Indians and Chinese might be interested in buying, on security grounds.

However, I suspect that the Americans will be much warier of relaxing export restrictions when it comes to China itself. And that comes down to the unstated sub-text of this Obama trip – the shared concerns that India and the US have about the rise of China. Read more

G20, Obama and France/UK treaty

In this week’s podcast: The preparations for the G20 meeting in South Korea, President Obama’s high-profile return to Indonesia and the new ‘entente cordiale’ between Britain and France.

For all the excited headlines about the midterm elections in the US, it seems to me that the results are pretty much as expected. Republicans win the House; Democrats keep the Senate – gridlock beckons. It may be a terrible night for Obama, as Ed Luce and others argue, but it’s hardly an unexpected turn of events. Governing parties tend to do badly in elections held in the middle of an economic downturn - in America as elsewhere.

It is also striking that the things that would have made really big headlines, didn’t actually happen. So Harry Reid, the Democrats leader in the Senate, actually won his seat. The Democrats did not lose control of the Senate. The most outre Tea Party candidates – Christine O’Donnell and Sharron Angle – disappointed journalists everywhere by losing. In looking for an emblematic “bad moment for the Democrats”, the media were reduced to fastening onto the loss of Obama’s old Senate seat in Illinois – which somehow doesn’t quite cut it as “the moment of the night”. Read more