very so often in the history of
international affairs, a great
transnational turbulence shakes the
foundations of the world and brings many
of its older structures tumbling to the
ground, as we witnessed in 1919, 1945
and 1989. In the confusion and babble
that follow, it's difficult to see
through the dust and recognize the shape
of the altered strategic landscape.
Peering through the
wreckage of the past year's financial
crisis, it seems clear that every nation
was a loser in 2008. The world's
developed economies have taken a heavy
beating, whether measured by their
collapsing industrial production,
tumbling exports, surging unemployment,
frozen credit markets or the near-
paralysis of maritime trade.
Yet we also hear
cries of distress across the globe.
Vladimir Putin's proud Russia is reeling
toward internal collapse. China is
sending factory workers home to the
countryside. The International Monetary
Fund is trying to rescue Iceland and
Ukraine from economic oblivion. Brazil's
currency is plummeting against the U.S.
dollar. And the brief honeymoon for
commodity-exporting African countries is
over. Which national economy didn't take
a blow to the head in this annus
horribilus?
When the dust
settles, will we see all countries
equally battered, like the streets of
Dresden after the Allied bombings in
February 1945? Will every power simply
have taken several steps backwards, so
that the "order of things" that existed
in January 2008 will be the same in
December 2009? I doubt it.
In the midst of
general turmoil, there are always
relative winners and losers. Those who
are likely to lose most in the coming
year will include Russia, Venezuela and
Iran (too dependent on oil), most of
Africa and Latin America (too tied to
commodities), and Japan, Taiwan and
South Korea (too wedded to exports,
shipping, electronics).
By contrast, and
unless it falls into the trap of a
Pakistan war, India will advance; none
of its banks (so far) are on the Bear
Stearns Cos. track. China will take
hits, but that probably means an
increase in economic growth of 5 percent
or 6 percent, deriving more from
domestic development, and less from
cheap exports.
Europe's prospects
for 2009 are mixed, which is simply
another way of saying that here, too,
there will be relative winners and
losers. Norway will ride the storm on
its still-massive currency reserve and
the rest of Scandinavia has strength in
depth -- unlike the less competitive
economies of East and Central Europe.
Germany's combination of
ultra-high-quality production, superb
infrastructure and financial caution
(few Germans use credit cards:
Americans, take note!) give it strengths
that are lacking in the U.K., France,
Italy, Spain, Greece and other European
countries that fell for easy credit and
large government deficits. Prussian
fiscal rectitude will keep the euro
high, and compound the dollar's
weaknesses.
The biggest question
concerns the United States. My instinct
tells me it will lose ground in 2009. I
simply don't see how the Treasury can
print $1 trillion to cover deficit
spending, offer those bills at very low
interest rates, and expect foreigners
(not Americans, because we don't have
the savings) to buy them, persuading the
world to keep afloat its greatest debtor
since Phillip II of Spain. Why should
sensible Chinese investors do that when
they can buy Swiss bonds, gold, or
Scottish real estate? Yet if Asians
decline to buy tens of billions of
Treasuries each month in 2009, U.S.
interest rates will have to go up again.
So: India up, China
up, Germany up (all relatively). The
developing world down, Russia down, most
of Europe and Japan down, and President
Barack Obama's America down and down.
I'd like to believe I am very wrong. I
worry that I'm not.
min
t
,
from pl. of ill
Wes
Penre is a researcher,
journalist, the owner of the
domain