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Article U.S. Middle East Policy - A Road to Disaster Go to Main Site for Other Articles and Links Enter Main Comments If the nation's capital needs anything this winter, it's a breath of fresh air. Too bad we can't bottle Paul Volcker, economic advisor to President Obama and Carter's former chairman of the Federal Reserve Board. It's nice to have him here. Fareed Zakaria proved that on February 14, 2010 in his interview with the 6' 8" Paul Volcker. ZAKARIA: Explain to the average viewer what is at stake here. Why is it important to get this financial reform passed? VOLCKER: If a big, non-bank institution gets in trouble and threatens the whole system, there ought to be some authority that can step in, take over that organization and liquidate it or merge it -- not save it. It's what I call euthanasia, not a rescue. And that has to be clear enough so that you avoid the so-called "moral hazard," that people think they're going to be rescued and, therefore, will take risks that they shouldn't be doing, in my view. This is what we pushed, what the president has accepted. They shouldn't be doing highly speculated activity. They shouldn't be doing so-called "proprietary" activity, where they're off there trading for their own interest. They're trading to make money. And you get very aggressive traders, and they're out there. Millions of dollars are at stake, and personal bonuses, so they have a real incentive to take risks, which is fine, if you're not being protected by the government. ZAKARIA: You've been around Washington, in and out, for 40, 45 years. Have you -- is this the worst... VOLCKER: Yes. ZAKARIA: You saw this crisis coming. You gave several speeches in which you outlined why you thought we were at a very dangerous point, in some cases, a year-and-a-half, two years before it hit. What did you see that worried you? VOLCKER: Well, this country, I'm afraid, went on a kind of consumption binge. ZAKARIA: So, the core problem is that Americans started consuming too much... VOLCKER: Right. ZAKARIA: ... and consuming more than their historical averages. And that's perhaps what really got us the growth of the last 10 or 15 years. VOLCKER: That certainly -- that gave a rosy complexion to the growth. That's correct. But it was built on a foundation that can't persist. We need to do more manufacturing again. We're never going to be the major world manufacturer as we were some years ago, but we could do more than we're doing and be more competitive. And we've got to close that big gap. You know, consumption is running about 5 percent above normal. That 5 percent is reflected just about equally to what we're importing in excess of what we're exporting. And we've got to bring that back into closer balance. ZAKARIA: You feel that the longer term issue, the big issue is really this issue of how do we get real growth. How do we get exports, manufacturing -- not growth that's based on borrowing, not growth that's based on each of us selling each other our own houses in a kind of ascending spiral... VOLCKER: Absolutely. VOLCKER: We've got to produce something that somebody else wants to buy. VOLCKER: All of those things add up to some extent. And some of it is kind of a mystery, in a way. I hate to pick a particular industry, or whatever, and just anecdotally. But I understand that the cost of shipping a ton of steel from China to the United States, one ton, is about the same as the total labor cost to produce a ton of steel in the United States. So, if, in effect, it's not all our labor costs, they're offset by the transport cost, why are we still importing so much steel? The challenge is very substantial. I think we can do it. I mean, we used to be, not so long ago, the world's greatest manufacturer. And we haven't got any big cost disadvantage relative to Europe or other developed countries. But the emerging world certainly has a big competitive advantage. Kudos for Alternative Insight for having written similar assertions in several articles during the last three years. |
Observations Index of Economic
Freedom World Rankings Free 1 Hong Kong 89.7 2 Singapore 82.6 4 New Zealand 82.1 5 Ireland 81.3 6 Switzerland 81.1 7 Canada 80.4 Mostly Free 8 United States 78.0 9 Denmark 77.9 10 Chile 77.2 13 Bahrain 76.3 15 Netherlands 75.0 18 Iceland 73.7 23 Germany 71.1 Moderately Free 43 Oman 67.7 44 Israel 67.7 45 Peru 67.6 64 France 64.2 73 Greece 62.7 Mostly Unfree 124 India 53.8 140 China 51.0 143 Russia 50.3 Repressed 144 Vietnam 49.8 http://www.heritage.org/index/topten.aspx
But what can a decent man speak of with most pleasure? Answer: Of himself. Well, so I will talk about myself. Fyodor
Dostoevsky
More than 300 different lanterns, including 100 from Taiwan, lit up the park running along the Confucius Temple-Qinhuai River scenic belt, kicking off the fair. (Xinhua Photo) |
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