Is this why Obama went to Canada?

The likes of Mr. Rich, the New York Times columnist, are scratching their heads trying to figure out what they would do to stop the meltdown of the financial system. And of course since they can’t figure out a solution they believe President Obama must be in an equal bind. To quote from Mr. Rich’s recent article, The Ecstasy and the Agony, “Therein lies the Catch-22 that could bring the recovery down. As Obama said, we can’t move forward without a functioning financial system. But voters of both parties will demand that their congressmen reject another costly rescue of it. Americans still don’t understand why many Wall Street malefactors remain in place or why the administration’s dithering banking policy lacks the boldness and clarity of Obama’s rhetoric.”

Given Mr. Obama’s moves to fundamentally restructure the American social and economic landscape, I believe a more likely solution to the banking problems of America is what Theresa Tedasco hints at in her article the “The Great Solvent North.” She points out that the World Economic Forum ranked the Canadian Banking System at # 1 in terms of stability. The Canadian Banking system, in short, is five large banks that are very carefully regulated by the Government and prevented them from taking huge risks and securitizing their loans.  And because it was only five banks it was easy for the regulators to regulate.

I think President Obama, more than to shake Mr. Harper’s hand, went to Canada to learn from the Federal Regulators how to manage banks and save them from themselves. President Obama and Mr. Volcker, former chairman of the Federal Reserve, both have talked up the virtues of the Canadian system.

If President Obama is seriously considering the Canadian model, the interesting part will be of course the journey — the transition from thousands of banks in the US to only five to ten consolidated banks. I watch the next year with baited breath.

What do the people of the world think? – Part I

BBC World Service Poll in conjunction with Program on International Policy Attitudes (PIPA) at the University of Maryland conducted  13,575 in-home or telephone interviews across a total of 21 countries between 21 November 2008 and 1 February 2009.

The poll asked if the individual’s view of a countries’ influence was “mainly positive”, “mainly negative” or “neutral?” The question was asked about 16 countries. 9 out of 16 countries had a net positive influence and 7 had a net negative influence per the poll (see graph below).

 

Some highlights based on the article and the poll results:

Rank 1: Germany

 Germany leads the rankings with 46 points net positive (61 positive vs. 15 negative). I can’t help but be amazed by the change in Germany’s fortune — very few at the end of WWII in 1945 would have thought that approx. 60 years later, the world population will view Germany as the most positive influence in the world!

 Germany has achieved this stellar ranking through deep economic, social and political engagements with the rest of the world, especially within EU. Angela Merkel comes across as a conscientious leader of a hard working nation: Germany has the highest export earnings of all countries. Secondly, the defanging of Germany since World War II has surely helped Germany since there has been none of the military mis-adventures like those that affect USA and other powerful nations.

Rank 2: Canada

Canada, with a net positive of 43 (57 positive and 14 negative) at # 2 is not a surprise though Canada is surely a soft power and most people, I suspect, who voted positive for Canada do so for the position it takes on various issues rather than what Canada does since, in my opinion, it doesn’t do as much as it can.

Rank 3: United Kingdom

With a net positive of 39 points (58 positive vs. 19 negative) United Kingdom is surely a surprise for me.  May be with the departure of Tony Blair people are disassociating UK from the USA, however, I do not see material difference in UK’s global policies in the one year since his departure. Gordon Brown played a crucial role in stabilizing the EU economy, at least temporarily, but if that is helping UK’s score, that is too generous an assessment since it is the same man who was singing the virtues of unbridled free markets like a canary all the way up until the advent of this recession. It can very well be the fact that UK is the magnet for all workers from other EU countries that is helping its score but whatever the case may be, I surely believe that UK can do more and the 3rd ranking is too high.

Rank 7: India

India comes in at 7th rank and has 6 points net positive (38 positive vs. 32 negative). While India is still looked upon as projecting positive influence it is a decrease of 5 net positive points when compared to last year (41 positive vs. 30 negative). The biggest change, per the report, has been in European countries, to quote, ” This is largely driven by sharp increases in negative views in European countries – France (35% to 50%), Germany (34% to 54%), Italy (30% to 43%), and Spain (35% to 47%) – as well as China (30% to 44%).”

I believe the nuclear deal with the US, the Mumbai bombing — perversely affecting the victim in a negative way, and a potential backlash against off-shoring — a business practice that affects jobs in richer countries more — at a time of economic uncertainty might be the factors driving the negative trend in Europe. The Indian leadership should be careful to not appear too undecisive in the name of non-alignment and pick up good and important causes at home and abroad to change this trend.