Surprising Opportunities From the Global Economic Mess
As bad as the global economic crisis is, there are some opportunities and benefits that we can derive from it, if the U.S. plays its cards well:
Business Reform– In my first Post on GlobalPolitics.com, Comment about the Purpose of Capitalism and Free Markets (12/17/09), I made the point that capitalism’s goal is true value creation. Flushing out all the bad deals and bad money may hopefully bring us back to focusing on this goal, versus creating bubbles from pointless (and dangerous) higher asset prices. I am hoping that when enacting new regulations on the financial markets, President Obama and the Democrats do not overreach and instead keep these goals in mind. Unfortunately, there are signs that this may not be the case (i.e., the House passed $900 billion Obama stimulus package which is loaded with pork and waste). We will see . . .
Global Cooperation– The U.S. real estate bubble has crashed economies all over the world. Russia, China, Japan, europe, and the U.S. are all in the dumps. This gives all of us the hard evidence that the world major economies depend on each other. When one crashes, others will follow. Because of this, there is an opportunity that global actors will want to cooperate more on important matters, knowing that a breakdown in cooperation can bring about economic contraction or worse. In my opinion, President Obama, being well received by the world community thus far, is well positioned to push this shift in global thinking. If he succeeds, this could be the real foreign policy achievement of his Presidency.
Net Oil Exporter Regimes are in Trouble– Iran, Venezuela, and Russia are having major difficulties now that crude oil is hovering around $40 a barrel. For example, Hugo Chavez in Venezuela is having problems from lower crude, finally being called in for economic mismanagement of his country which he got away with while oil prices were booming. Iran as an importer of gasoline, is also running into serious problems due to the low prices of crude. Iranian President Mahmoud Ahmenidijad, the near insane Iranian hardliner and Holocaust denier, is soon up for reelection and he could lose. All this may help tame aggressive behavior by these regimes. Let’s hope so, but we remain vigilant with them and not make any assumptions regarding this yet.
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