July 28th, 2014
04:44 PM ET

What I'm reading: Sanctions and Russia’s Achilles heel

By Fareed Zakaria

“But even by hinting as to what sectoral sanctions might look like, Obama has upset Russia’s economic calculations. Obama is often criticized for not backing up the ‘red lines’ that he draws. But in Ukraine, Obama essentially has drawn a ‘gray line’ – demanding Russia take certain actions to end the crisis,” writes William E. Pomeranz for Reuters. “No one knows when this gray line is crossed, however. So these new sanctions only heighten the uncertainty – and risk – of doing business in Russia.”

“The market responded immediately, with dramatic declines in the Russian ruble and the Moscow stock market. In addition, the sanctions only exacerbated an already difficult situation for Russian companies. Syndicated loans for Russian commodities producers are down more than 80 percent over the past six months. The appetite for Russian bonds has also decreased considerably in the aftermath of the Ukraine crisis. So the current round of sanctions made a bad situation worse.”

“Arab leaders, usually prodigal in their outpourings of ritual solidarity with the Palestinians, have been curiously silent,” writes David Gardner in the Financial Times. “Partly that is because Saudi Arabia, Egypt and their allies are so hostile to the Muslim Brotherhood, of which Hamas is the Palestinian chapter. It is also because the ferocious Syrian war, and lightning surge of Sunni jihadis from Syria into Iraq, eclipses what for many looks like a new episode in a wearisomely familiar feud. Paradoxically, Israel wants to weaken but not overthrow Hamas – the cynical military expression is ‘mowing the lawn.’ For beyond Hamas lies the unbridled savagery of movements such as the Islamic State of Iraq and the Levant (Isis), which already has followers in Gaza and the Palestinian refugee camps up and down the eastern Mediterranean that serve as universities of jihad.” FULL POST

May 15th, 2014
11:53 AM ET

What I'm reading: Nixon's 'Wizard plan'

By Fareed Zakaria

"Now Nixon’s preoccupation, even obsession, after being forced from office was to become a respected figure. It wasn’t for him to live out the rest of his life in disgrace. He was determined to become someone people listened to—a senior statesman, a sage," writes Elizabeth Drew in The Atlantic. "And the best way to be considered a sage, Nixon understood, was to establish one’s credentials as an expert in foreign policy, a man known to world leaders. Domestic policy didn’t cut it the same way: Lectures and articles on education or the environment didn’t attract the Brahmins and the business leaders Nixon wanted to attract, didn’t occupy nearly as much space on the stage. No splashy trips."

"In accordance with the Wizard plan, the former president first would write another memoir (because statesmen wrote memoirs), both to make money and to give his own version of events." FULL POST

April 28th, 2014
04:03 PM ET

What I'm reading: The eurozone’s dangerous path

By Fareed Zakaria

“One only needs to look at the United States to see how dangerous – and indeed unsustainable – the eurozone’s path has become,” writes Hans-Werner Sinns for Project Syndicate. “When one of the US states runs up too much debt, creditors become jittery and austerity measures are introduced to avert the risk of bankruptcy – as has happened in the past few years in California, Illinois, and Minnesota.”

“But all of that occurs while the debt/GDP ratio is still minimal and clearly below 10 percent, because creditors know that no one will come to their aid. The Federal Reserve will not buy their government bonds, and the federal authorities will not issue any guarantees.”

“The existence of the global middle class, however fragile, is a great success of globalization. But will this success deepen (by making slippages less likely) and broaden (by bringing more people into the global middle class)? This depends foremost on the continuation of high rates of growth in large, still relatively poor, countries,” argues Branko Milanovic in the Financial Times. “While the attention of the world was focused on Asia, the growing population in Africa means the “battlefield” on which both the reduction in poverty and expansion of the global middle class will be fought is gradually moving there. Overall Asia and Africa have survived remarkably well the worst years of the Great Recession. If their growth rates do not decelerate, we can look fairly confidently to the growth of the global middle class. But many dangers loom.”

FULL POST

April 24th, 2014
05:14 PM ET

What I'm reading: Syria key to handling Russia

By Fareed Zakaria

“[S]hots fired by the U.S. in Syria will echo loudly in Russia. The great irony is that Putin is now seeking to do in Ukraine exactly what Assad has done so successfully: portray a legitimate political opposition as a gang of thugs and terrorists, while relying on provocations and lies to turn non-violent protest into violent attacks that then justify an armed response,” writes Anne-Marie Slaughter in Project Syndicate.

Recall that the Syrian opposition marched peacefully under fire for six months before the first units of the Free Syrian Army tentatively began to form. In Ukraine, Putin would be happy to turn a peaceful opposition’s ouster of a corrupt government into a civil war. Putin may believe, as Western powers have repeatedly told their own citizens, that NATO forces will never risk the possibility of nuclear war by deploying in Ukraine. Perhaps not. But the Russian forces destabilizing eastern Ukraine wear no insignia. Mystery soldiers can fight on both sides.”

“Sixty-one years ago, a telegram arrived at the State Department from the U.S. embassy in Moscow. Its purpose was to examine the sources of the conduct of the men who ruled in the Kremlin. Its impact was immediate,” writes Yuliya Tymoshenko for Foreign Affairs’ iPad extra on Ukraine. “The ‘Long Telegram,’ penned by a young diplomat named George Kennan, became the basis for U.S. policy toward the Soviet Union for the next half century. Although the Soviet Union is long gone, the West is once again groping to understand what motivates the leaders in the Kremlin.”

FULL POST

April 15th, 2014
06:15 PM ET

What I'm reading: The real history of the 2nd Amendment

By Fareed Zakaria

"Emotional claims that the right to possess deadly weapons is so important that it is protected by the federal Constitution distort intelligent debate about the wisdom of particular aspects of proposed legislation designed to minimize the slaughter caused by the prevalence of guns in private hands," writes John Paul Stevens in the Washington Post. "Those emotional arguments would be nullified by the adoption of my proposed amendment. The amendment certainly would not silence the powerful voice of the gun lobby; it would merely eliminate its ability to advance one mistaken argument."

“In Ukraine, nuclear emissions could exceed both Chernobyl and Fukushima. Wartime conditions would prevent emergency crews from getting to an affected plant to contain radiological releases should reactor containments fail. And, with government services shut down in the midst of fighting, civilians attempting to escape radioactive contamination would not know what to do or where to go to protect themselves,” writes Bennett Ramberg for Project Syndicate.

“Such risks might be one reason for Russian President Vladimir Putin to think twice about ordering a military invasion of Ukraine. But, should war come, combatants must do all they can to keep conflict away from the nuclear sites and the off-site power sources feeding them.”

FULL POST

February 28th, 2014
01:52 PM ET

What I'm reading: Can Ukraine avoid partition?

By Fareed Zakaria

“If neither the Slavophiles nor the Westernizers can carry the entire territory, some kind of separation starts to look inevitable. Such a separation might come about as paramilitary groups establish local supremacy. Or it might happen as a result of Russian intervention, as in Armenia, Moldova and, later, South Ossetia,” writes Daniel Hannan in The Telegraph. “It is easy enough to imagine Russian security forces crossing the border at the request of local proxies and establishing a de facto Russophone state. The Trans-Dniester Republic still exists, unrecognized but very much in force, on Ukraine’s western border; why not a Trans-Dnieper Republic to its east?”

“Does Nato have the will to prevent such a development? If not, what are our options? If a partition is coming anyway, might it not be better to take ownership of the process: to see that the border is decided peacefully and by referendum rather than by military occupation?”

“Crimea could become a part of Ukraine that is not really ruled by Ukraine,” argues Anne Applebaum in the Washington Post. “Clearly, the men with machine guns are not the product of a chaotic social movement, as were the protesters in Kiev. Someone bought them their unmarked uniforms, and somebody planned their carefully timed arrival on the scene. Their presence, coupled with major Russian military exercises in the area, may be intended to encourage separatism. So are the warnings that the Russian media have issued about “fascism” and extremism in Kiev. And if separatists don’t appear in large numbers, then the issue can be used anyway, as a constant source of anxiety and tension for the fragile new government in Kiev.”

FULL POST

February 13th, 2014
11:19 AM ET

What I'm reading

By Fareed Zakaria

"Argentina and Venezuela have run out of heterodox policy tricks," writes Dani Rodrik for Project Syndicate. "Brazil and India need new growth models. Turkey and Thailand are mired in political crises that reflect long-simmering domestic conflicts. In Africa, concern is mounting about the lack of structural change and industrialization. And the main question concerning China is whether its economic slowdown will take the form of a soft or hard landing."

"This is not the first time that developing countries have been hit hard by abrupt mood swings in global financial markets. The surprise is that we are surprised. Economists, in particular, should have learned a few fundamental lessons long ago."

FULL POST

February 11th, 2014
04:19 PM ET

What I'm reading: Employer-based health benefits need rethink

By Fareed Zakaria

“It’s never made a bit of sense for health-care benefits to be routed through employers. The system emerged in the U.S. by accident,” writes Ezra Klein for Bloomberg. “Wage controls during World War II made it impossible for companies to attract workers by offering higher salaries. Because health benefits were exempt from high wartime taxes, companies began using them to attract talent. After the war, unions joined employers in pressuring Congress to ensure employer-based health benefits were never taxed. So the U.S. emerged with an odd system in which a dollar of untaxed employer-based health benefits was worth much more to a worker than a dollar of taxed salary. Employers became the main vehicles for insurance not because anyone thought it was a good idea, but because the tax code made it a bargain.”

FULL POST

January 16th, 2014
11:46 AM ET

What I'm reading: Enough 1914 comparisons

By Fareed Zakaria

“Today’s world is different from the world of 1914 in several important ways,” writes Joseph Nye for Project Syndicate. “One is that nuclear weapons give political leaders the equivalent of a crystal ball that shows what their world would look like after escalation. Perhaps if the Emperor, the Kaiser, and the Czar had had a crystal ball showing their empires destroyed and their thrones lost in 1918, they would have been more prudent in 1914. Certainly, the crystal-ball effect had a strong influence on US and Soviet leaders during the Cuban missile crisis. It would likely have a similar influence on U.S. and Chinese leaders today.”

“Another difference is that the ideology of war is much weaker nowadays. In 1914, war really was thought to be inevitable, a fatalistic view reinforced by the Social Darwinist argument that war should be welcomed, because it would “clear the air” like a good summer storm.”

FULL POST

January 10th, 2014
02:21 PM ET

What I'm reading: Do central bankers need economic rehab?

By Fareed Zakaria

“In the summer, both the Fed and the People’s Bank of China signaled their intention to normalize monetary policy,” writes Niall Ferguson for Project Syndicate. “Fed Chairman Ben Bernanke talked openly of ‘tapering’ the Fed’s policy of open-ended bond purchases, also known as quantitative easing (QE). PBOC Governor Zhou Xiaochuan actually did try to rein in his country’s runaway credit growth. But when markets in both countries reacted more violently than expected – with bond yields soaring in the United States and inter-bank lending rates spiking in China – the monetary authorities backed off.”

“It is a problem many a pop singer has encountered: After years of stimulus, rehab is just not that easy.”

“In 1970, when 11 percent of adult Americans had bachelor's degrees or more, degree holders were viewed as the nation's best and brightest,” write Richard Vedder and Christopher Denhart in the Wall Street Journal. “Today, with over 30 percent with degrees, a significant portion of college graduates are similar to the average American – not demonstrably smarter or more disciplined. Declining academic standards and grade inflation add to employers' perceptions that college degrees say little about job readiness.”

“There are exceptions. Applications to top universities are booming, as employers recognize these graduates will become our society's future innovators and leaders. The earnings differential between bachelor's and master's degree holders has grown in recent years, as those holding graduate degrees are perceived to be sharper and more responsible. But unless colleges plan to offer master's degrees in janitorial studies, they will have to change.”

FULL POST

December 4th, 2013
06:59 PM ET

What I'm reading: Networked nature of gun violence

By Fareed Zakaria

“There are still huge pools of private wealth sitting on the sidelines that can be rapidly mobilized to support productive infrastructure. The government needs to help with rights of way before construction, and with strong regulation to protect the public interest afterwards,” writes Ken Rogoff for Project Syndicate.

“In his first term in office, U.S. President Barack Obama suggested the creation of an infrastructure bank to help promote public-private partnerships. It is still a good idea, particularly if the bank maintained a professional staff to help guide public choice on costs and benefits (including environmental costs and benefits). Even if Keynesian multipliers are truly at the upper end of consensus, mobilizing private capital for investment has most of the advantages of issuing public debt.”

“Even as the Suez Canal has become a touchstone of Egyptian nationalism, the great power of today – the United States – tends to see the waterway in similar terms as the colonial powers of the past,” argues Steven Cook in Foreign Affairs. “Like Disraeli, U.S. presidents and strategic planners have long regarded the canal as a means to another end – a critical component of global trade and a vital conduit for U.S. warships between the Mediterranean and the Persian Gulf. The question is no longer about control; Egyptian control of the canal is universally accepted. Yet as the debate about U.S. military aid to Egypt raged after the July 3 military coup, and as the subsequent low-level insurgency broke out in the Sinai Peninsula, analysts have begun to question just how secure the canal is – and whether that even matters anymore.”

FULL POST

September 23rd, 2013
05:22 PM ET

What I'm reading: Why Saudis are wary over Syria war

By Fareed Zakaria

“The Syrian war presents the Saudis with a chance to hit three birds with one stone: Iran, its rival for regional dominance, Tehran’s ally Assad, and his Hezbollah supporters,” writes Fahad Nazer in the New York Times.

“But Riyadh’s policy makers are wary. They know that once fully committed, it will be difficult to disengage. And so they are taking to heart the lessons of another regional war that flared on their border 50 years ago.”

“To many observers, Glass-Steagall made no sense. Why shouldn’t banks be allowed to engage in any business they want, at least as long as we have regulators to ensure that the banks’ activities do not jeopardize the entire financial infrastructure?” argues Robert Shiller for Project Syndicate.

“In fact, the main advantages of the original Glass-Steagall Act may have been more sociological than technical, changing the business culture and environment in subtle ways. By keeping the deal-making business separate, banks may have focused more on their traditional core business.”

FULL POST

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