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CFR: Hatoyama’s resignation casts doubt on DPJ’s leadership prospects. In the FT: the US needs a new philosophy of economics and finance. In the Globe and Mail: the big spill shows that innovation is outpacing government's ability to supervise. And could China’s provincial governments be incubating Greek-style debt crises?
Japan resignation raises doubts about the nation’s political stability
Sheila A. Smith, senior fellow for Japan studies at the Council on Foreign Relations, writes on CFR.org that Japanese Prime Minister Yukio Hatoyama’s resignation puts into question whether the Democratic Party of Japan can offer the country true leadership and the ability to tackle the nation’s complex challenges.
QUOTE: What remains to be seen is how the Democratic Party of Japan internalizes the lessons learned over the past eight months as Japan's governing party and what the legacy of Hatoyama's resignation will be.
Turkey a crucial bridge between East and West
Columnist Thomas Friedman writes in the New York Times that Turkey has played a crucial role as a link between the East and West. He writes that Turkey must move beyond the current crisis with Israel over the Gaza flotilla clashes and resume its roles as a mediator between the United States, Israel and the Arab world.
QUOTE: It really matters whether Turkey is a bridge or ditch between the Judeo-Christian West and the Arab and Muslim East. Turkey’s role in balancing and interpreting East and West is one of the critical pivot points that helps keep the world stable.
US to see most important financial reform in decades
Henry Kaufman, president of Henry Kaufman & Company, writes in the Financial Times that the United States will soon have its most important financial reform in decades. He writes that the reforms will slow the growth of credit. They will also challenge the Federal Reserve’s quasi-autonomous status.
QUOTE: What America needs, to benefit from the proposed financial regulation, is a new economic philosophy that integrates economics and finance. The absence of such a philosophy has been a great failing.
China faces similar Greek crisis
Fan Gang, a professor of economics at Beijing University and a member of the monetary policy committee of the People’s Bank of China, writes in Abu Dhabi’s the National that China faces problems similar to Greece's due to its massive public debt. He says China’s problem is local officials borrowing to ensure their region’s growth remains high.
QUOTE: Chinese officials are drawing lessons from this heavy debt burden, as they fear the prospect of local governments creating an internal “Greek crisis” for the rest of China. The authorities recognize the need for strict fiscal discipline and financial regulation. The leverage of any public entity must be monitored, supervised, and restricted.
America sees boost of entrepreneurs, also known as the unemployed
Robert B. Reich, a former US secretary of labor, writes in the New York Times that the United States has seen an explosion of entrepreneurial activity. He states that this is due to millions of Americans losing their jobs or their retirement savings. While some may be benefiting from this, many others became self-employed because they had no other options and are now worse off than before.
QUOTE: New businesses are vital to job growth, and entrepreneurship does fuel the economy. And surely some of America’s new independent workers will build their own companies. But when the economy is still so hard on so many, it’s important to distinguish between entrepreneurial zeal and self-employed desperation.
UK struggles with high inflation
Madsen Pirie, the president of the Adam Smith Institute, writes in The Telegraph that Britain now faces the highest rate of inflation in the Western world. Pirie states that this is killing savings as well as prospects for long-term investment. Pirie calls the inflation “an early warning of the dangers to come.”
QUOTE:The Bank of England will have to raise interest rates to bring inflation under control, which is not good news for an economy struggling with a still fragile recovery. It is going to take some determined action by both the Bank and the new Government to get a handle on things.
West to see generations battle over public spending, taxes
Columnist Anatole Kaletsky writes in the Times of London that an aging generation of so-called baby boomers threatens the American and European economies. He argues that the future will see a political battle between generations over public spending and taxes.
QUOTE: Young people will realize that different categories of public spending are in direct conflict — if they want more spending on schools, universities and environmental improvements they must vote for cuts in health and pensions.
Greece’s problems have only just begun
Thomas F. Cooley, a professor of economics and emeritus dean of the NYU Stern School of Business, writes in Forbes that Greece has only seen the beginning of its economic crisis. He states that it will be years before Greece returns to its pre-crisis consumption levels. He argues that wages will fall and Greece will be forced to restructure its debt.
QUOTE: Like other promises Greek politicians made that they can't keep, they may not be able to pay their debts. They can't grow their way out of the problem, because their economy is too inefficient.
Britain must focus on ties with Europe
Charles Kupchan, a professor of international affairs at Georgetown University and senior fellow at the Council on Foreign Relations, writes in the Financial Times that the new British government should focus on becoming a leader in Europe rather than restoring its close relationship with the United States.
QUOTE: British leadership is sorely needed to help lead the EU out of its doldrums. Having liberalized its economy, Britain can facilitate economic reforms on the continent. If Europe is to make progress in forging a more collective approach to foreign and security policy, then surely Britain must be front and centre.
Governments must find ways to regulate fast-changing technologies
Kenneth Rogoff, a professor of economics and public policy at Harvard University and former chief economist at the IMF, writes in Toronto’s Globe and Mail that modern societies must now grapple with how to regulate new technologies employed by companies such as BP. He argues that the speed of innovation is outpacing government’s ability to predict risks or plan for them.
QUOTE: If ever there were a wakeup call for Western society to rethink its dependence on ever-accelerating technological innovation for ever-expanding fuel consumption, surely the BP oil spill should be it. Even China, with its “Boom now, deal with the environment later” strategy should be taking a hard look at the situation in the Gulf of Mexico.