October 22nd, 2014
06:27 PM ET

A power shift in global oil dynamics

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By Global Public Square staff

Since the financial crisis of 2008, the global economy has been in slow motion. As a result, commodity prices have fallen dramatically. But there was one great puzzle – the price of oil had continued to go up, up, up.

In 2007, before the crash, oil cost $72 a barrel on average. By 2012, Brent Crude was trading at over $111 a barrel on average, a second year of historically high levels, according to the U.S. Energy Information Administration.

Well, now the trend has turned. Prices have dropped, dramatically. Last week, Brent oil, the global benchmark, fell to about $80 a barrel, nearing a four year low.

Why?

Well, today the world is awash in oil. There's too much supply and too little demand. The world's largest and second largest economies are probably the most responsible. That would be the United States and China. The China piece of this story is fascinating. FULL POST

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Topics: Energy • What in the World?
October 15th, 2014
03:10 PM ET

Why are Americans still gloomy about the economy?

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By Global Public Square staff

The American economy is back. Last week, the IMF projected that the United States will be one of the very fastest growing advanced economies in the world in 2015. In fact, the American economy is just about the great exception in a world that is showing signs of economic stagnation.

Good news keeps piling on. The Congressional Budget Office just announced that the U.S. deficit fell by nearly a third during the fiscal year, which marks a 6-year low. Meanwhile, the Dow Jones Industrial Average and the S&P 500 both surged to record highs over the last month. And the most recent economic snapshot from the Labor Department says that private sector employment grew in September for a 55th month in a row, a record, and that the unemployment rate is now at 5.9 percent, the lowest level it's been since July 2008.

But, and here is the paradox, despite a relatively robust recovery now, Americans aren't feeling more prosperous. In fact, 56 percent of Americans told the Pew Research Center in August that they are "'falling behind' financially." That's pretty much the same percentage as in October 2008, during the heat of the Wall Street financial crisis. FULL POST

September 16th, 2014
11:38 AM ET

Do sanctions actually work?

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By Global Public Square staff

The West has announced a new round of sanctions against Russia. But can America and Europe craft effective sanctions?

Sure, sanctions have already hurt the Russian economy: stock prices are down, capital is fleeing the country and the Russian ruble has taken a hit. But Vladimir Putin shows no signs of moving to the off ramp of diplomacy that President Obama has talked about. Indeed, he's retaliating against the West by basically imposing his own set of counter-sanctions, banning around $9 billion worth of food imports from the West, despite the fact that this will mean higher food prices for Russians.

And he's not changing his military strategy, which has been to encourage the Ukrainian separatists to stand firm. So, will yet another round of sanctions do the trick?

Well, here's the problem. Sanctions don't really have that great a track record. We think of sanctions as highly effective because they did bring the Iranians to the negotiating table, it seems. But those are unusually comprehensive sanctions, implemented by almost all countries. That's very rare. FULL POST

September 8th, 2014
07:06 PM ET

Some good news out of Washington

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By Global Public Square staff

We’re always on the lookout for good news – and we have some important good news this week, and it's actually coming out of Washington, despite all the polarization. Of course, true to form, the two parties disagree about this piece of news. So what is it?

Well, the nonpartisan Congressional Budget Office recently released its semi-annual outlook of the U.S. economy over the next decade. And the CBO's headline is that things are going better than expected. We are firmly in an economic recovery with substantially lower federal deficits, low interest rates and, we would add, little danger of inflation.

The CBO says that the federal deficit – the gap between revenues and spending – is projected to be $506 billion in 2014. That is just 2.9 percent of GDP, slightly lower than the average shortfall over the last four decades.

Keep in mind that in 2009 the federal deficit was 9.8 percent of GDP. The current number is much better than most believed was possible just a few years ago.  FULL POST

Topics: Economy • What in the World?
September 4th, 2014
12:13 PM ET

Why we should all use our vacation time

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The world's second richest man said recently that we should all be working just three days a week. Which is why Stephen Colbert joked: “Now you know why he’s only the second richest man.”

Actually, Mexico's telecom magnate Carlos Slim isn’t alone. His fellow billionaire, Larry Page (the co-founder of Google), recently pushed for a reduced work week as well.

Why are the mega-rich telling the rest of us to work less?

They have different strategies and goals. But they're right that being a workaholic is not only bad for your health and sanity – it's bad for the economy. Really.

Americans are notorious workaholics. They take much less vacation and work longer work weeks than most of their counterparts in advanced industrial countries. And here's one more piece of American exceptionalism: the U.S. is the only advanced economy in the world where workers are not guaranteed paid vacation time. As a result, it's said that as many as 23 percent of Americans get no paid holidays or vacation. Americans who do get paid time off only take about half of it on average, according to one survey. FULL POST

August 19th, 2014
11:31 AM ET

U.S. living in the past over Cuba

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By Global Public Square staff

Remember last December when President Barack Obama shook hands with Cuban President Raúl Castro at Nelson Mandela's memorial service, and got a lot of criticism for it? In truth it didn't signal any sort of a real rapprochement between the United States and Cuba. The Cuban rapprochement of note is a different one – with Vladimir Putin, who recently made the long trip to Havana.

While there, Putin forgave about $32 billion worth of debt that Cuba had accrued from the former Soviet Union decades ago and that Russia had inherited – that's 90 percent of Cuba's outstanding debt to Moscow.

In addition, Russian officials recently confirmed that Cuba has also provisionally agreed to reopen a spy post. This eavesdropping facility, 150 miles off the coast of Florida, allowed Russia to spy on the United States until it closed in 2001. (Putin denied claims that he's reopening the listening post in Cuba, but many experts doubt his denial).

What in the world is going on? FULL POST

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Topics: Cuba • What in the World?
August 11th, 2014
12:56 PM ET

And now for the good news

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By Fareed Zakaria

Wherever you look these days, the world seems like it’s on fire.

New hot spots like Russia and Ukraine are competing with the old ones like Gaza and festering conflicts like those in Syria and Iraq – especially Iraq – are getting much worse. Even Afghanistan, which seemed in better shape than the other places, had a setback this past week.

So, is there any good news out there? In fact, there is. Some of the most important countries in the world are making remarkable progress, affecting at least 1.5 billion people. FULL POST

July 22nd, 2014
11:28 AM ET

A rival to the World Bank?

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By Global Public Square staff

World leaders came together in Brazil last week to celebrate. And no, this had nothing to do with the World Cup. We’re talking about the 6th annual BRICS summit.

The leaders of all the BRICS nations – that is Vladimir Putin, Narendra Modi, Dilma Rousseff, Xi Jinping and Jacob Zuma – all gathered in Fortaleza, Brazil. And on Tuesday they sent a shot across the bow by announcing a $50 billion bank meant to rival the World Bank, and a $100 billion crisis fund to replace the IMF.

It’s clear why they made this move.

You see, these five nations – Brazil, Russia, India, China and South Africa – now account for more than 40 percent of the world's population, almost 20 percent of the world's total GDP and 17 percent of global trade. Yes, growth in the emerging markets has slowed recently, but these countries have still become a large enough force in the global system that they want a seat at the table.

FULL POST

July 15th, 2014
11:33 AM ET

The danger of America's 'economic drone'

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By Global Public Square staff

We’re sure you heard about the Paris-based bank, BNP Paribas, which fell afoul of Washington's regulators and agreed to plead guilty to a felony and pay a staggering $8.9 billion fine – larger than its annual profits.

So it must have violated a slew of laws, right? Actually, no. It hadn't violated French law, or EU law, or any of its obligations under the WTO or the United Nations. It hadn't even violated a French-American treaty.

What in the world?

BNP Paribas violated a set of unilateral American sanctions, passed by Congress, that were never affirmed or followed by the European Union or France.And neither the buyers nor the sellers in any of the transactions BNP was involved in were Americans.

So what was Washington's hold on BNP? It all centers on the central role that the dollar plays in today's globalized economy. You see, even if two foreign companies want to do a deal, assuming it’s a large transaction, the deal is likely to be denominated in dollars – the currency that everyone has access to, is available in ample supply, is a symbol of stability and, as a result, remains the world's reserve currency.

FULL POST

July 7th, 2014
04:51 PM ET

Why the Export-Import Bank matters

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By Global Public Square staff

You know countries don't always play by the rules of international trade, especially countries where the government and large companies are really all part of the same team.

Take, for example, China – the most notorious player who hasn't read the rule sheet. The government of China lavishes subsidies on its companies to make their products more competitive in the global marketplace.

And it's not just subsidies that help Chinese companies. Last year, China's government gave its domestic companies $111 billion in guarantees, loans and insurance to help them sell their various products overseas.

And China is just one example – Japan's companies got $33 billion worth of such treatment, South Korea $24 billion. And by contrast, the U.S. total was just $15 billion. Keep in mind that South Korea's economy is less than 1/10th the size of America's!

FULL POST

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Topics: China • Economy • United States • What in the World?
July 2nd, 2014
08:39 AM ET

The return of Muqtada al-Sadr?

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By Global Public Square staff

It seems that everyone – President Obama, John Kerry, NATO, Grand Ayatollah Sistani, even the Iranian government – has the same advice for the prime minister of Iraq, Nuri al-Maliki: Form a broad-based, inclusive government that reaches out to the Sunnis. That would take away some of the sense of grievance that fuels their support for radical Sunni groups like ISIS that are threatening Iraq's existence as a nation.

So why in the world is al-Maliki flatly refusing to do this?

Partly it's because he’s a hard line Shiite politician himself whose party draws its support from the Shiites, who are not particularly well disposed to the notion of being nice to the Sunnis, their former overlords.

But it's probably at least as much because al-Maliki needs to worry about radical Shiites as much as radical Sunnis. You see, he has his own Tea Party. And this one has an army of its own.

FULL POST

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Topics: Iraq • What in the World?
June 24th, 2014
10:28 AM ET

A smarter way to tackle poverty

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By Global Public Square staff

The economic buzzword of the year is inequality – it has sparked protests around the world, it’s a centerpiece of President Obama's agenda now, and it has even inspired an unlikely bestseller.

People watch the growing inequality around the world and in the United States and despair about what to do. One of the most popular fixes is raising the minimum wage – and that’s not just on the left. Germany's Chancellor Angela Merkel has recently supported a new wage increase, as has Britain's Chancellor of the Exchequer the Conservative Party’s George Osborne.

In the United States, President Obama proposed boosting the federal minimum wage to $10.10 an hour at the beginning of the year. That's a 39 percent increase over the current wage minimum of $7.25. Republicans have, of course, made it clear that they will never pass this in Congress.

Last week, the International Monetary Fund weighed in and urged the U.S. to raise the wage floor, saying it is low by both historical and international standards. The federal minimum wage in America was about 38 percent of the median wage in 2011, which is one of lowest percentages among the rich countries of the world.

FULL POST

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