Start worrying
Tom Friedman zeroes in on the UNDP’s incisive report on the Arab world. “The three main reasons the Arab world is falling off the globe [are]… a shortage of freedom to speak, innovate and affect political life, a shortage of women’s rights and a shortage of quality education.”
I spent a lot of the last decade involved in World Economic Forum discussions about key issues for the world. When it came to geopolitics, the Middle East (meaning the Israel-Palestine conflict) came up, together with the Korean peninsula, Taiwan, conflict in sub-Saharan Africa. I don’t recall anyone focusing for long, however, on the instability of Saudi Arabia.
The prospect of an Iran-like collapse of the Saudi regime is increasingly something people I respect talk about. Few people would mourn the passing of the current regime (just as few lamented the end of the shah), but the prospect of something far worse is really worrying for global stability.
Ouch
There’s no doubt that Joe Stiglitz has increased the volume of his attacks on the IMF with the publication of his latest book, Globalization and Its Discontents. But the response of IMF chief economist Kenneth Rogoff is astounding for the level of personal vitriol.
“You seem to believe that when investors are no longer willing to hold a government’s debt, all that needs to be done is to increase the supply and it will sell like hot cakes. We at the IMF — no, make that we on the Planet Earth — have considerable experience suggesting otherwise. We earthlings have found that when a country in fiscal distress tries to escape by printing more money, inflation rises, often uncontrollably. Uncontrolled inflation strangles growth, hurting the entire populace but, especially the indigent. The laws of economics may be different in your part of the gamma quadrant, but around here we find that when an almost bankrupt government fails to credibly constrain the time profile of its fiscal deficits, things generally get worse instead of better.”
Stiglitz has a dignified reply in today’s Financial Times: “This was nothing to do with what I said, nothing to do with the substantive issues. It was 90% a personal diatribe.”