Friday, September 26, 2008
WIth Congress now focused on the financial bailout, I wonder if this basically punts what's left on Congress' foreign policy plate (trade deals, U.S.-India nuclear deal) to the next administration.
Finally, a question of the week for TWR readers: do other countries look for leadership to the U.S. if they feel America conducts itself in alignment with its moral and cultural values--or had countries in the past accepted U.S. leadership because it was better than the alternatives? A question based on what sort of effect closing Guantanamo Bay might or might not have--especially if the U.S. closes the camp but its financial crisis negatively impacts the global economy.
This is not related to this post, but I was wondering if you could give us your oppinion on the Fukuyama change of heart and whether you think that the Neocon trend is beggining to recede or not...
This is I think rather how many people throughout the world feel about the U.S. today.
Commercial banks usually carry reserves of 10% of their loan portfolio in US. We may extend this to the global GDP vs. global “Debt” and suggest that a prudent size for the global financial assets must be set around 400 trillion.
It then follows that there is almost 340 trillion dollars of financial instruments out there that cannot be prudently based on the global GDP size. This extra amount, equivalent to more than 8 years of global output , must be liquidated – the financial sector must be downsized by this amount; at a minimum.
I have neither seen an acknowledgment of this issue nor a remedy from any government anywhere in the world.