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In the FT, Münchau argues that Europe’s $1 trillion bailout merely buys time, while the Economist suggests it implies an undemocratic shift toward greater economic unity. Plus, how Chinese education is failing.
European Union package will only buy time
Columnist Wolfgang Münchau writes in the Financial Times that the European Union has shown that it can act quickly in the face of financial calamity. But the recent move to provide 750 billion euros to nations in need, he argues, is merely a way to buy time as the European Union sorts out the euro zone. The billions of euros thrown at the problem will not change southern Europe’s solvency position.
QUOTE: This deal is going to be ineffective beyond the very short term, unless it is followed up by substantive reforms – the introduction of a single European bond, an agenda to co-ordinate economic reforms with specific relevance for the monetary union, policies to reduce economic imbalances, much tighter supervision of fiscal policies that kick in well before budgets have already been announced, and, in my view also a kernel of a fiscal union — in essence all the things over which the E.U. has been, and still is, in denial.
Competing messages on eurozone signify trouble
The Economist blog “Charlemagne’s notebook” evaluates the European Union bailout and argues that it illustrates that politics in Europe have shifted recently towards pushing the narrative to markets that the euro zone should be treated as a single entity. However, the blog argues that the rhetoric inside the euro zone itself has not changed as dramatically, and this could prove problematic.
QUOTE: If the markets outside are being told to treat the euro zone as a single fortress, defended by unlimited budgetary firepower from the rich members of the club, voters in places like Germany, the Netherlands or Finland are absolutely not being told that they now inhabit a single economic entity, in which big chunks of the budget are pooled.
China must reform its education system to remain global power
Shaun Rein, the founder and managing director of the China Market Research Group, writes in Bloomberg’s BusinessWeek that China’s rise demonstrates that being a superpower is no longer just about military might. He writes, “Economic power and the ability to launch chaos via cyber and financial warfare should define superpower status.” In order for China to remain strong globally, he argues, it must build its international reputation as well as reform its education system.
QUOTE: Despite the commonly held belief that China continues to graduate top-notch engineers, the fact is that the education system is not adequately preparing its students for a global business world. Most of the top students go to the U.S. to continue their graduate studies at universities like Harvard and Stanford because it is difficult to get the training they need at home.
Eight suggestions for improving corporate board governance
John J. Brennan, the chairman emeritus of Vanguard, writes in the Wall Street Journal that despite complaints concerning executive compensation and lax directors, corporate board governance has improved over the past 25 years. He states that he has seen a shift “away from doing what is right for the insiders to doing what is right for the shareholders.” Nonetheless, he states corporate boards can be improved and gives eight suggestions.
QUOTE: 1) Know that you are the shareholders' first line of defense. You are our hands-on supervisors of the management team. You are the individuals we rely on to ensure that the capital we've invested is well-stewarded. Permanent shareholders simply cannot, nor do they want to, get involved with the management of companies. As a result, their focus is on you, the members of the board; on your qualifications and character; and on your level of engagement with your owners.
European nations redefine their roles
Foreign Affairs columnist Michael Moran writes in GlobalPost that as the European Union manages its debt crisis, some nations have been forced to make decisions that reveal new priorities and perhaps a “New Europe.” Publicly, Germany’s chancellor is striving to put national interests ahead of European unity. The next British government is likely to be far more independent from the United States. And Turkey is moving away from the West and developing closer ties with the Middle East, Russia and China.
QUOTE: Across the Atlantic, the nations that represented America’s most reliable allies since the end of World War II are changing.
Obama and the global economy need big oil
World business editor Carl Mortished writes in the Times of London that President Obama must be careful when handling the oil disaster in the Gulf of Mexico. He argues that as the White House takes a tough line with BP, it must make sure it does not support policies that lead to higher gas prices as this could have a ripple effect in the global economy.
QUOTE: When prices are too high, Americans drive fewer miles, not helpful when the world is on a cliff-edge of debt, insolvency and possibly a new recession.
China’s embrace of North Korea troubling
Editorial page editor Fred Hiatt writes in the Washington Post that North Korean leader Kim Jong Il’s recent trip to Beijing reveals that North Korea is unlikely to face serious consequences for the sinking of a South Korean warship. Instead, it looks like China will continue to maintain the status quo on food aid, refugees and the nuclear program.
QUOTE: For a U.S. government hoping that China would rein in North Korea's nuclear program and back sanctions strong enough to influence Iran's behavior, Hu's post-Cheonan embrace of the Dear Leader must be a little dispiriting.
Kagan a smart choice for US Supreme Court
Columnist E.J. Dionne writes in the Washington Post that he supports President Obama’s choice of U.S. Solicitor General Elena Kagan as his nomination for the Supreme Court. He argues that she is smart, experienced and has the right temperament for the job. Furthermore, he argues Kagan will be able to fight against what he calls the rise of conservative judicial activism.
QUOTE: Precisely because Kagan is not seen as an ideologue and has a long history of cordial and thoughtful intellectual and personal relationships with those to her right, she is the kind of person who can make the necessary case for judicial restraint.
Revolution in the air in Asia
The “Banyan” blog in the Economist argues that countries across Asia are seeing revolutionary movements like the region did two decades ago. It states that the difference now is that the movements are “directed not at autocracies but at governments that are, at least formally, pluralist democracies.” Lessons to be drawn from these protests include: old power structures can be difficult to destroy, people-powered movements inspire others and finally, a nation’s security forces determine a movement’s ultimate success.
QUOTE: Then, as now, the anger had different roots in different countries. But protesters took heart from the courage and, sometimes, success of their counterparts elsewhere—not just in Asia but in eastern Europe too.