Throughout the course of the Bush administration, a constant irritant in the Asia/Pacific region was Bush's tendency to place antiterrorism at the top of the queue in Asia/Pacific Economic Cooperation (APEC) discussions. Not that anti-terrorism wasn't important, but APEC was not the proper forum for that -- APEC is all about regional economic integration. China, by wanting to talk about trade, made a lot of diplomatic headway by distinguishing itself from the United States.
I bring this up because, according to the FT's Edward Luce, it looks like the Obama administration's policy malaise on trade is not winning it any allies in East Asia:
In a meeting with President Barack Obama last week, Lee Kuan Yew, the veteran former prime minister of Singapore, said he felt privileged to meet the US leader at a “time of renewal and change in America and during a period of transition where the world order is changing”.
At private meetings around Washington, however, Mr Lee’s message was rather more blunt.
“You guys are giving China a free run in Asia,” he told Fred Bergsten, the director of the Peterson Institute for International Economics. “The vacuum in US policy is enabling the Chinese to make the running.”
Mr Lee’s timing was apposite. On Wednesday Mr Obama leaves for Tokyo for a regional tour that will include China, South Korea and Singapore, where Mr Lee’s government is hosting a summit of the Asia Pacific Economic Co-operation (Apec) forum this weekend. Surveys in each country show that Mr Obama’s popularity has helped to restore the battered US standing in the region.
But the views of Asian governments do not always chime with those of their public. Across the region, concern is rising about the absence of US leadership on trade since Mr Obama took office. Few believe that he has the will or power to restart the Doha round of global trade talks – and he has not asked Congress for a renewal of the presi- dent’s fast-track negotiating authority.
Fewer still believe that he will be able to ratify the landmark 2007 US-South Korea free-trade agreement in the face of strong hostility in Congress....
while globalisation gets steadily less popular in the US, other parts of the world are moving ahead. South Korea recently concluded a free-trade deal with Europe. Japan is holding similar talks with the European Union. Ironically, the EU broached the talks as a way of protecting itself against the trade-diverting effects of the now moribund US-Korea deal.
US business lobby groups are hoping Mr Obama will be able to achieve some kind of a breakthrough in Seoul next week. Given that it would be futile for him to send the free-trade agreement back to Capitol Hill, any new steps would have to include a renegotiation of the deal to include better market access for US cars.
“It is really important to understand just how badly the US is screwing itself on trade,” said Mr Bergsten. “By having an inactive trade policy, others are rushing to fill the vacuum.”
For an administration that claims it wants to have better relations with its allies, Obama and his foreign policy team have been remarkably tone-deaf when it comes to trade policy.
At every major summit meeting since he's come to office, Obama has heard complaints about the lack of U.S. leadership on the trade front. This administration has demonstrated that it's not afraid to tackle multiple, complex challenges at the same time -- and yet they've been either mute or worse when it comes to trade.
Barack Obama's decision to put trade policy in a lockbox and throw away the key is utterly appalling -- and, from a foreign policy perspective, completely counterproductive.
It occurs to me, however, that the Fall of the Wall is one of those rare Good News Events in which people remember where they were and what they were doing when it happened. For a multitude of cognitive reasons, I think most of these transcendent events -- the Kennedy assassination, the Challenger explosion, the 9/11 attacks -- are calamitous events. Beyond the fall of the Wall, I can only think of the Moon landing as a similar good new focal point.
So, my question to readers -- what were you doing when you heard the Berlin Wall had been breached? What was your reaction?
I'll go first -- I was a senior in college, and found out when I was in the coffee shop. My first thought was a profound desire to get on a plane and go to Berlin -- I had been there six months earlier, and here was no inkling of what was going to happen.
My second thought was unadulterated joy -- because the Cold War had been so omnipresent for my entire life, and it looked like it was headed for the dustbin.
What about you?
Greetings from tomorrow.
At least half the headlines were related to violent crime.
I don't think a pattern can be drawn from one day's worth of headlines. I suppose it's possible that the English-language editors of Asahi are thinking, "Push the violence! It's the only thing the dumb, stupid, not-so-bright Americans understand!"
Still, this sort of thing always reminds me to always cast a skeptical eye towards headlines devoted to acts of individual violence. The deaths are important; the motivations of the killers, less so. Unfortunately, the world does not suffer a shortage of variegated homocidal impulses.
UPDATE: Megan McArdle expresses the point I was trying to make in a more direct, non-jet-lagged manner:
There is absolutely no political lesson to be learned from this. Gun control would not have stopped a commissioned officer from obtaining guns. Barack Obama had no power to stop this. Infectious PTSD is a lousy theory. And nations certainly do not--and should not--shape their foreign policy around the possibility that a random psychopath will start shooting up a crowd. Evil people do evil things. That's all.
Over at Politico, Eamon Javers notes an odd trend in the Drudge Report:
On Tuesday, Matt Drudge ran a headline about the weakening U.S. dollar on his website, Drudgereport.com. In and of itself, that would be unremarkable, except that it was the 18th time Drudge had posted a link to a story about the weak dollar this month.
And October was only 20 days old.
Clearly, Matt Drudge has developed a fascination with the declining U.S. dollar.
“He’s fixated on it,” said Tom Rosenstiel, director of the Pew Research Center’s Project for Excellence in Journalism. “There’s no question that Drudge can alter what people are paying attention to.”
Market watchers say it’s unlikely that Drudge is actually moving the currency markets with his relentless attention.
“I don’t think that anyone who seriously trades currencies reads The Drudge Report before making important buy or sell decisions,” said Chris Roush, a professor of business journalism at the University of North Carolina at Chapel Hill. (emphasis added... because that's a priceless quote)
Drudge isn't the only one obsessed about the dollar. Last week, James Pethokoukis blogged the following for Reuters:
The aftershocks of the global financial crisis may now be propelling the dollar back to the political forefront. The greenback’s continuing slide makes it a handy metric that neatly encapsulates America’s current economic troubles and possible long-term decline. House Republicans for instance, have been using the weaker dollar as a weapon in their attacks on the Bernanke-led Federal Reserve.
For more evidence of the dollar’s return to political salience, look no further than the Facebook page of Sarah Palin. The 2008 GOP vice presidential nominee — and possible 2012 presidential candidate — has shown a knack for identifying hot-button political issues, such as the purported “death panels” she claims to have found in Democratic healthcare reform plans. In a recent Facebook posting, Palin expressed deep concern over the dollar’s “continued viability as an international reserve currency” in light of huge U.S. budget deficits.
She might be onto something here, politically and economically. A recent Rasmussen poll, for instance, found that 88 percent of Americans say the dollar should remain the dominant global currency. Now, the average voter may not fully understand the subtleties of international finance nor appreciate exactly how a dominant dollar has benefited the U.S economy. But they sure think a weaker dollar is a sign of a weaker America.
The dollar's slide in value has been predictable, as the need for a financial safe haven has abated. By and large, a depreciating dollar helps the U.S. trade balance (though it would help much more if the Chinese renminbi got in on the appreciation).
Even the Chinese, who have spoken like they want an alternative to the dollar as a reserve currency, are in point of fact not doing much to alter the status quo. Why? To paraphrase Winston Churchill, the dollar is a lousy, rotten reserve currency - until one contemplates the alternatives.
Because all of the alternatives have serious problems. The euro, the only truly viable substitute for the dollar, is not located in the region responsible for the largest surge of growth. It would be unlikely for the ASEAN +3 countries to agree to switch from the dollar to a new currency over which regional actors have no influence (the Europeans wouldn't be thrilled either, as it would lead to an even greater appreciation of the currency). Oh, and the European Union has no consolidated sovereign debt market. The euro is worth watching, but it's not going to replace the dollar anytime soon.
The other alternatives are even less attractive. Most other national currencies beyond the euro - the yen, pound, Swiss franc, Australian dollar - are based in markets too small to sustain the inflows that would come from reserve currency status. The renminbi remains inconvertible. A return to the gold standard in this day and age would be infeasible - the liquidity constraints and vagaries of supply would be too powerful. There's the using-the-Special-Drawing-Right-as-a-template-for-a-super-sovereign currency idea, but this is an implausible solution. As it currently stands, the SDR is not a currency so much as a unit of account. Even after the recent IMF authorizations, there are less than $400 billion SDR-denominated assets in the world, which is far too small for a proper reserve currency.
So, what's really going on here with the dollar obsession? I suspect that with the Dow Jones going back over 10,000, Republicans are looking for some other Very Simple Metric that shows Obama Stinks. The dollar looks like it's going to be declining for a while, so why not that? Never mind that the dollar was even weaker during the George W. Bush era -- they want people to focus on the here and now.
The thing is, I'm not sure this gambit is going to work. People who already think Obama is a socialist will go for it, sure, but that's only rallying the base. I'm not sure how much fence-sitters care about a strong dollar, however. If anything, populist movements tend to favor a debasing of the currency rather than a strengthening of it.
Still, I'm just a political scientist -- I'm sure that, "theories on political behavior are best left to CNN, pollsters, pundits, historians, candidates, political parties, and the voters."
So, have at it, readers! Will the falling dollar be a source of populist outrage if Drudge links to it enough?
No, that's not the name of my new band -- though, man, that would be a geekily awesome name for a band -- but a cue for my latest bloggingheads diavlog with NSN's Heather Hurlburt. Topics include Iran, the G-20 summit, and multilateralism more generally:
One follow-up note -- I've been amused to read the reactions to the G-20 summit, which range from (justifiably) mocking the communique to complaining that the summit failed to develop a cure for cancer to worries about a new oppressive global governance mechanism.
I believe that I might be the only blogger who thinks that the G-20 solved the Goldilocks problem of not being meaningless without being so binding that there's no wiggle room. The peer review mechanism is the best enforcement arrangement that's possible given the heterogeneous cluster of countries involved, and I give the Obama administration full marks for setting its agenda on macroeconomic imbalances.
That is all
As previously noted, the G-20 has done a much better job than I would have thought possible a year ago. It now looks like the Obama administration is close to earning consensus on a framework arrangement on macroeconomic policy coordination. The devil's in the implementation, of course, but the fact that they're close to consensus on such a framework is truly surprising.
Naturally, the French like to focus on peripheral issues that they are convinced contributed to last year's financial meltdown. Last April it was tax havens; this time France's pet peeve is placing a cap on bank bonuses (admittedly less peripheral than the tax havens).
It now looks like there will be agreement on that issue -- in part because the caps will not include specific monetary caps.
I raise all of this because Nicolas Sarkozy's "bonus tsar", Michel Camdessus, gave an interview to the Financial Times in which he was refreshingly candid about the issue:
France’s bonus tsar on Thursday said that traders’ bonuses were a largely symbolic issue for G20 leaders, and that in terms of money they were the “least important” item on the agenda.
Michel Camdessus, the former head of the International Monetary Fund, said: “If you look at this issue of remuneration in the global agenda of the G20, it is certainly – in terms of cash, money – the least important of all issues on the table.”Mr Camdessus, charged by Nicolas Sarkozy, the French president, last month with monitoring bonuses of traders at state-aided banks, added: “But if you look at the symbolic value of the issue, it is one of the most important.”
Fine -- it's symbolically important. But if a symbolic agreement can allow the G-20 to keep their eyes on the macroeconomic prize, then three cheers for symbolic gestures.
When the Obama administraton announced the decision to slap a 35% tariff on Chinese tire imports, I was pretty sure that free traders would be incensed. And I haven't been disappointed -- even the financial markets are freaking out over this one.
We trade enthusiasts are an excitable lot, however, what with everything leading to the falling off of cliffs, crossroads being reached, and red zones being breached. Seven years ago, the allegedly free-trade Bush administration imposed steel tariffs that were found to be WTO-inconsistent. There was a lot of gnashing of teeth and wailing at the time about the end of the open economy as we knew it -- yet the world trade system proved to be pretty robust. So maybe my trade compatriots are exaggerating things a wee bit, yes? In all likelihood, won't this be resolved via the WTO dispute settlement mechanism about 18 months from now?
For the first eight months of the Obama administration, I've been resisting the urge to shout "protectionism" at the drop of the hat. This time, however, there are four reasons why I'm feeling much more nervous:
1) This isn't your garden-variety protectionism. Last month, Chad Bown explained the Financial Times why this decision was a very special kind of protectionism:
[A] little-known loophole in the rules governing China’s 2001 WTO accession makes it easy for a global protectionist response to spread faster and further than that which took hold in 2002. Nowadays, once any one country imposes a China safeguard on imports, all other WTO members can immediately follow suit, without investigating whether their own industries have been injured.
So this trade dispute can metastasize more quickly than most.
2) Beijing is not lying down on this. China's furious and swift reaction points to another problem: the United States is not the only country feeling protectionist urges at the moment. Economic nationalism in China is riding quite high at the moment, as Keith Bradsher suggests in the New York Times:
The Chinese government’s strong countermove followed a weekend of nationalistic vitriol against the United States on Chinese Web sites in response to the tire tariff. “The U.S. is shameless!” said one posting, while another called on the Chinese government to sell all of its huge holdings of Treasury bonds....
China had initially issued a fairly formulaic criticism of the tire dispute Saturday. But rising nationalism in China is making it harder for Chinese officials to gloss over American criticism.
“All kinds of policymaking, not just trade policy, is increasingly reactive to Internet opinion,” said Victor Shih, a Northwestern University specialist in economic policy formulation.
Methinks Shih and Bradsher are exaggerating things a wee bit -- imagine for a moment if U.S. foreign policy was driven by people getting upset on the Internet -- but you get the point.
The U.S. use of this provision is doubly troubling, because from Beijing's perspective their WTO accession negotiations were seen as a humiliating kowtow to the power of the West. China is not going to be selling its bonds anytime soon, but Beijing has not quite mastered how to cope with these kinds of domestic pressures, so they could do something really, really stupid.
3) Politically, Obama has boxed himself in. As egregious as the Bush steel tariffs were, they were targeted at a sector and not a country. Furthermore, the Bush administration responded to the hubbub very quickly by watering down the worst effect of the tariffs.
The Obama administration's new tariff is expressly directed at China. And I'm not saying that China is blameless here. But because it's country-specific, the administration has less room to maneuver -- either the tariffs are applied against China or they aren't. It can't walk this back without it looking like a flip-flop. Which means that there's little room for concession or negotiation.
4) Obama's base scares me on trade. When the Bush administration did what it did, it was fulfilling a campaign promise to the state of West Virginia steelwokers. Fortunately, the rest of Bush's winning political coalition was not seeking trade relief. So the protectionist instinct pretty much ended with the steel tariffs -- and everyone in the Bush administration knew that they'd be overturned by the WTO eventually.
With the Obama administration, however, this feels like the tip of the iceberg. Most of Obama's core constituencies want greater levels of trade protection for one reason (improving labor standards) or another (protecting union jobs). This isn't going to stop. "Trade enforcement" has been part and parcel of Obama's trade rhetoric since the campaign. The idea that better trade enforcement will correct the trade deficit, however, is pure fantasy. It belongs in the Department of Hoary Political Promises, like, "We'll balance the budget by cracking down on tax cheats!" or "By cutting taxes I can raise government revenues!" It. Can't. Happen.
If I knew this was where the Obama administration would stop with this sort of nonsense, I'd feel a bit queasy but chalk it up to routine trade politics. When I look at Obama's base, however, quasiness starts turning into true nausea.
Developing.... in a very, very scary way.
One of the Economist's leaders this week focuses on the global economy and the nature of the incipient recovery. They use an alphabet metaphor to explain the possibilities:
The first step in any recovery is for output to stop shrinking. But the more interesting question is what shape the recovery will take. The debate centres around three scenarios: “V”, “U” and “W”. A V-shaped recovery would be vigorous, as pent-up demand is unleashed. A U-shaped one would be feebler and flatter. And in a W-shape, growth would return for a few quarters, only to peter out once more.
Well, first of all, their description of the "U" trajectory sounds an awful lot like an "L" to me.
Second of all, if that's the case, well, it seems they were paying awfully close attention to an obscure report entitled "Alphabet Soup."
Third of all, if anything, I'm more convinced of the likelihood of the "W" path coming to fruition. The nature of the Chinese recovery and the absence of any other global economic locomotive is playing a large role in my calculations here.
For reasons that will soon become clear, your humble blogger has been reading up on Iceland's financial boom and bust in recent years. So I noted with interest that yesterday, Iceland's Prime Minister Jóhanna Sigurðardóttir took to the pages of the Financial Times to vent about her country's treatment at the hand of big countries... like the Netherlands. See if you can spot the contradiction in her statements:
In its efforts to conclude negotiations over compensation for foreign savers in failed banks, Iceland has been accused of a tendency to imagine a British or Dutch conspiracy behind any bad news.
Iceland has no such tendency. It is battling the effects of severe banking and currency crises and a recession that is affecting our part of the world as much as any other. My government, which took over in February and gained a majority in general elections in May, has to deal with the aftermath of the fall of nearly all of Iceland’s privatised banking sector....
The FT has reported how the Dutch opposed the IMF lending to Iceland in order to enforce their demands on Icesave [an online bank headquartered in Iceland that attracted upwards of 300,000 British and Dutch depositors--DD], claiming the UK and Germany as allies. The perception is that Treasury officials in the UK and the Netherlands used their bargaining power against a much weaker party when the Icesave deal, now being debated in the Icelandic parliament, was struck.
This has made it difficult for Iceland’s government to convince the parliament and Icelanders that an agreement on Icesave accounts with the UK and the Netherlands is un-avoidable.
Here's the funny thing -- if you click on the link from the FT about how the Dutch are using the IMF to put the screws on Iceland, you get this story which sources those suspicions to.... Icelandic officials. The story also goes on to say that, "The view in London is that Iceland has a tendency to imagine a British or Dutch conspiracy behind any bad news."
To be fair to Sigurðardóttir, she wasn't in power when Iceland got itself into this mess. Furthermore, Iceland did have help getting into this mess -- reading up, it's clear that EU banking regulations are even more screwed-up than US banking regulations. And it wouldn't stun me if the Dutch were putting the screws on Iceland.
Still, reading up on the mess in Reykjavik, it is truly stunning how little Icelanders seem to blame themselves for their current plight (and how much they thought their run of success was completely deserved). The fault always seems to lie with cabals of hedge funds, rating agencies, foreign central bankers, etc.
Iceland has had its share of bad luck, and until recently had a political class that was by far the most incompetent in the OECD area (and the competition in this arena is admittedly intense). Still, reading Sigurðardóttir's op-ed, I can see why Henry Kissinger once described Iceland as the most arrogant small country he had ever encountered.
For the past week, your humble blogger has not been blogging from home, but rather in the Swiss city of Basel (for those speaking German), also called Basle (for those speaking French), teaching a summer course on the global political economy.
[Ahem, weren't you doing this in Barcelona a few weeks ago?--ed. Um... well... yes. I know, I know, my life really sucks right now.]
My students this time are a bit more homogenous -- 85% Swiss, with a few Germans and the stray Russian thrown in. A few minor notes:
1. Maybe it's because they're Swiss, but the whole "Americans are manipulating the world" meme isn't as powerful here as it was in Barcelona. I've been asked the occasional question about the military-industrial complex causing the Iraq War, and one student asked me about whether central bankers timed certain moves to bail out rich bankers during the Great Depression. Those were outliers, however.
2. Man, if you think the bank bailouts are unpopular in the United States, try the Swiss reaction to the Swiss federal government's bailout of UBS. It's to the Voldamortian point where they asked me not to say "UBS" because it's so embarrassing. We have compromised -- I can now say "UBS," but must then spit three times over my right shoulder to ward off evil spirits.
3. McDonald's is the most ubiquitous U.S. multinational in Europe, but I must say I'm impressed at the expanding reach of Starbucks. They now have coffeehouses in 15 European countries. This is pretty surprising to me, because it's not like they have a shortage of good coffee on this continent. It's not cheap, either -- a tall latte goes for about $6.50 here.
Rather, I would chalk it up to two other reasons. First, the cafes themselves are quite friendly and open -- chalk a victory for Virginia Postrel here. Second, local cafes don't have anything that approximates the frappuccino. [Aha!! The secret American plan to fatten up Europeans is working!!--ed. Shhhh.......]
UPDATE: A source based in Geneva e-mails an additional explanation for the European success of Starbucks:
My strong sense of Starbuck's success here is that they have wifi and cheesecake. Forget the coffee - the foreigners love it because it's familiar, and young Swiss who've traveled, because it's fun. But everyone I know goes there mainly because of the easy and free connection plus seats that work if you have a laptop. I often meet people there - Lausanne or Geneva - for informal business meetings.
While I'm on vacation at an undisclosed location, feel free to peruse my latest non-blog publication, Alphabet Soup: The Political Economy of the Great Recession (.pdf), commissioned by the Glasshouse Forum. As they put it:
The current global economic crisis, which began as a subprime crisis and developed into a general credit crisis, is the deepest since the Depression of the 1930’s. There are many signs that we are now facing the beginning of a structural sea change. But what will it be like?
To get a better understanding of the medium-term effects of the crisis, Glasshouse Forum asked Daniel W. Drezner, Professor of International Politics at The Fletcher School, Tufts University, and author of the Glasshouse Forum report White Whale or Red Herring? Assessing Sovereign Wealth Funds, to draft scenarios and make qualified estimates based on as much objective data and historical parallels as possible.
I'd like to stress the word "qualified."
In his Newsweek column, Fareed Zakaria proposes eliminating the Depression analogy to describe our current situation:
Over the last six months, the doomsday industry has moved into high gear. Economists and business pundits are competing with each other to describe the next Great Depression. Except that the world we live in bears little resemblance to the 1930s. There is much greater and more widespread wealth in Western societies, with middle classes that can withstand job losses in ways that they could not in the 1930s. Bear in mind, unemployment in the non-farm sector in America rose to 37 percent in the 1930s. Unemployment in the United States today is 8.9 percent. And government benefits—nonexistent in the '30s—play a vast role in cushioning the blow from an economic slowdown.
The biggest difference between the 1930s and today, however, lies in the human response. Governments across the world have reacted with amazing speed and scale, lowering interest rates, recapitalizing banks and budgeting for large government expenditures. In total, all the various fiscal--stimulus packages amount to something in the range of $2 trillion. Central banks—mainly the Federal Reserve—have pumped in much larger amounts of cash into the economy. While we debate the intricacies of each and every move—is the TALF well -structured?—the basic reality is that governments have thrown everything but the kitchen sink at this problem and, taking into account the inevitable time lag, their actions are already taking effect. That does not mean a painless recovery or a return to robust growth. But it does mean that we should retire the analogies to the Great Depression, when policymakers—especially central banks—did everything wrong.
I really, really want Zakaria to be correct here. And I'm not covinced that he's necessarily wrong -- these are probabilistic calls. That said, there are a few things that worry me about his logic.
The big question is whether and how much learning has actually taken place in the world. Zakaria asserts that policymakers have learned their lessons from the Great Depression and won't do the things that are so stupid that they exacerbate a serious downturn into something worse.
Well... maybe. This proposition makes three pretty big assumptions. The first is that the measures that have been thrown at the downturn to date actually help to arrest the fall and spur growth. One certainly hopes that this is correct, but given the current state of the financial sector, that's far from a forgone conclusion.
Second, it presumes that central bankers will be able to know roughly when it is time to clamp down on easy credit without triggering either double-digit inflation or a a double-dip depression. Here I am much less sanguine. This is no slight against Ben Bernanke, Jean-Claude Trichet, or Zhou Xiaochuan, all of whom are Way Smarter Than I Am. It's just that no central banker has really mastered this kind of maneuver.
Third, the mistakes of the past are not the only kind that worry me. Never underestimate the ability of policymakers to devise completely new and novel ways of screwing things up.
One final note. Zakaria commits a sin I've seen a lot recently, which is to compare the state of the U.S. economy during the absolute depths of the Depression with its current state. If you do this, then Zakaria's right -- we're nowhere near as bad off as we were then. But I'm not sure this is the fair comparison. If you compare how the U.S. looks at the beginning of the great depression with how we're doing now, the comparison looks more apt. And if we head into double-dip territory, then we're looking at several years of low to negative growth.
If we have multiple years of flat or negative growth, then I truly do think all bets are off. The more desperate the situation looks, the more likely policymakers will revisit ideas that might seem stupid now -- rank protectionism, beggar-thy-neighbor inflation -- but won't seem so stupid in the future.
Earlier this week Facebook VP of Global Communications, Marketing, and Public Policy Elliott Schrage gave an interview to cfr.org that's worth reading. As you would expect, Schrage was pretty upbeat about the use of social networking technologies as a means for political action:
So, do I see Facebook as being an incredibly valuable tool for public diplomacy? Absolutely.
Some of the most interesting uses of Facebook have been for the purpose of social action, which is essentially political action, whether it's an extraordinary rallying of support by the Colombian community around the world to protest the terrorist activities of FARC-the Colombian militants-or whether it's students protesting bank fees and bank charges in Great Britain, or whether it's the Obama presidential campaign generating almost six million supporters on Facebook as a means of communicating his policies, his positions, and his campaign activities....
Frankly speaking, some of our greater successes are in countries where the means of distributing information have not been easy or without friction. So, for example, in Colombia we have remarkable market penetration. In Indonesia we have among our fastest-growing market share. Chile, I believe we have close to 50 percent of the online population now on Facebook. In Europe we're doing extremely well. And in the Middle East we've achieved very interesting degrees of penetration, and in fact just recently announced that we are launching right-to-left languages in addition to left-to-right languages.
There's an obvious PR element to Schrage's spiel, but then again, let's wander over to the Financial Times' Najmeh Bozorgmehr on how Facebook is being used in Iran's presidential elections:
As they struggle to compete against an Iranian president who enjoys the support of a powerful state apparatus, leading candidates in June’s election are resorting to Facebook to spread their messages....
“We are using new technologies because they have the capacity to be multiplied by people themselves who can forward Bluetooth, e-mails and text messages and invite more supporters on Facebook,” said Behzad Mortazavi, who is in charge of Mr Moussavi’s campaign committee.
He said the wireless technology of Bluetooth would be used “extensively” to send out speeches and photo slideshows. The supporters of Mr Moussavi have opened about 20 Facebook pages calling on others to vote for him and have attracted about 7,500 members so far.
Although Mr Ahmadi-Nejad’s opponents on Facebook are not yet campaigning against his re-election, their posts may help strengthen the anti-incumbent mood among the elite.
A page called “I bet I can find 1,000,000 people who dislike Mahmoud Ahmadi-Nejad” has so far attracted more than 35,000 members, the highest number in all pages related to the president.
Yeah, the thing about that Facebook page is:
Question to readers: is the power of social networking real or exaggerated in "countries where the means of distributing information have not been easy or without friction"?
Yesterday I participated in an on-the-record panel at the Council on Foreign Relations entitled "The Financial Crisis and Global Financial and Monetary Cooperation." The other participants were Time's Michael Elliott, the Washington Post's Sebastian Mallaby, and CFR's Steven Dunaway (who is the author of an extremely accessible report on the build-up of the global imbalances that contributed to the crisis).
The podcast is worth a listen, if only to hear how many times I say "umm..." and "you know."
David Brooks' column today looks at the lessons that the swine flu outbreak have for the future of global governance:
So how do we deal with [transnational problems]? Do we build centralized global institutions that are strong enough to respond to transnational threats? Or do we rely on diverse and decentralized communities and nation-states?
A couple of years ago, G. John Ikenberry of Princeton wrote a superb paper making the case for the centralized response. He argued that America should help build a series of multinational institutions to address global problems. The great powers should construct an “infrastructure of international cooperation ... creating shared capacities to respond to a wide variety of contingencies.”
If you apply that logic to the swine flu, you could say that the world should beef up the World Health Organization to give it the power to analyze the spread of the disease, decide when and where quarantines are necessary and organize a single global response....
The response to swine flu suggests that a decentralized approach is best. This crisis is only days old, yet we’ve already seen a bottom-up, highly aggressive response....
If the response were coordinated by a global agency, those local officials would not be so empowered. Power would be wielded by officials from nations that are far away and emotionally aloof from ground zero. The institution would have to poll its members, negotiate internal differences and proceed, as all multinationals do, at the pace of the most recalcitrant stragglers.
Second, the decentralized approach is more credible. It is a fact of human nature that in times of crisis, people like to feel protected by one of their own. They will only trust people who share their historical experience, who understand their cultural assumptions about disease and the threat of outsiders and who have the legitimacy to make brutal choices. If some authority is going to restrict freedom, it should be somebody elected by the people, not a stranger.
Finally, the decentralized approach has coped reasonably well with uncertainty. It is clear from the response, so far, that there is an informal network of scientists who have met over the years and come to certain shared understandings about things like quarantining and rates of infection. It is also clear that there is a ton they don’t understand.
A single global response would produce a uniform approach. A decentralized response fosters experimentation.
Reading this, my first thought was, "wait a minute... Brooks' characterization of Ikenberry's poition ("Power would be wielded by officials from nations that are far away and emotionally aloof from ground zero.") doesn't sound like Ikenberry's stuff.
If you look at the Ikenberry paper that Brooks cites, he proposes, "a strategy in which the United States leads the way in the creation and operation of a loose rule-based international order. The United States provides public goods and solves global collection action problems (emphasis added)." That doesn't sound terribly centralized to me. Indeed, my hunch would be that Ikenberry would find centralized and decentralized responses to complement rather than substitute for each other.
Don't trust me on this, however. I asked John Ikenberry this morning what he thought about Brooks' argument. Here's his response in full:
The problem with David’s analysis is that he thinks the two strategies – national and international – are alternatives. We need both. National governments need to strengthen their capacities to monitor and respond. International capacities – at least the sorts that I propose – are meant to reinforce and assist national governments. This international capacity is particularly important in cases where nations have weak capacities to respond on their own or where coordinated action is the only way to tackle the threat. When it comes to transnational threats like health pandemics everyone everywhere is vulnerable to the weakest link (i.e. weakest nation) in the system, and so no nation can be left behind.
This is not a new idea – it is the idea that underlay America’s strategy of order building after WWII. Jacob Viner, a leading international economist of that era, captured the logic in 1942 as it relates to global markets: "There is wide agreement today that major depressions, mass unemployment, are social evils, and that it is the obligation of governments. . . to prevent them." Moreover, he said, there is "wide agreement also that it is extraordinarily difficult, if not outright impossible, for any country to cope alone with the problems of cyclical booms and depressions. . . while there is good prospect that with international cooperation. . . the problem of the business cycle and of mass unemployment can be largely solved." What Viner says about economic cooperation in the 1940s is even more the case for the diffuse, shifting, and uncertain threats of our era. States need collective capacities to they can make good on their own national obligations to respond.
[You've been dreaming of this kind of Annie Hall/Marshall McLuhan moment for a while, haven't you?--ed. Yes. Yes I have.]
UPDATE: Anne Applebaum offers a more focused critique of the World Health Organization -- and its critics -- in her column today.
As one reads what the Chinese economic elites are saying about the rest of the world's economies, one begins to wonder why they don't start blogging. The snark level is rising fast.
Lou Jiwei, head of China Investment Corp, said he was pleased he did not make a single trip to Europe in 2008 after EU officials expressed concerns about his fund’s transparency and intentions.
But speaking at the Boao Forum for Asia, China’s riposte to the annual World Economic Forum meeting in Davos, he said he was considering investing on the continent again, now that European officials have been humbled by the global financial crisis. “I have to thank these European officials,” Mr Lou said. “They saved me a lot of money. Now they come to me without conditions and I am beginning to consider making investments in Europe again.”
Mr Lou did not mention CIC’s experience in the US, where the fund made controversial – and costly – investments in Blackstone, the private equity group, and Morgan Stanley on the eve of the crisis.
Actually, Lou could probably retort that since CIC held a lot of their overseas assets in liquid dollar investments, they did surprisingly well in the past year.
To the wise investors, go the snark.
In addition to reforming our international financial institutions for the new challenges of globalisation we agreed on the desirability of a new global consensus on the key values and principles that will promote sustainable economic activity. We support discussion on such a charter for sustainable economic activity with a view to further discussion at our next meeting. We take note of the work started in other fora in this regard and look forward to further discussion of this charter for sustainable economic activity.
The final G-20 communique -- get it while it's hot! -- contains the following strong statement: "We will not repeat the historic mistakes of protectionism of previous eras."
This is likely true, though one should never underestimate the ability of governments to devise new and unforseen ways to commit new mistakes about protectionism in the current era.*
How could that happen? Check out my latest column in The National Interest online to see how a world of considerably less trade is possible, even within the confines of the World Trade Organization.
The essay is a thought experiment -- I'd put my money on it not happening. But I can't completely dismiss this scenario out of hand.
* Indeed, The FT's Alan Beattie and Jean Eaglesham have the best single sentence on this point of the G-20 statement: "The commitments on protectionism in the G20 communiqué, although longer than their equivalents after November’s Group of 20 meeting, are, if anything, shorter on concrete promises."
Your humble blogger has learned that, in an amazing reversal of fortune, the leaders of the G-20 have heeded President Obama's call to embrace a "responsiblity to co-ordinate our action and find our common ground." The result will be a communique that actually addresses the current crisis on concrete terms.
Recognizing the need for a "grand bargain," French president Nicolas Sarkozy and Angela Merkel pledged to offer a combined $400 billion in fiscal stimulus in return for a United States agreement to allow for enhanced regulation of large financial institutions. China agreed to match U.S. and European commitments to the International Monetary Fund, in return for a doubling of its voting quota within the Fund. Furthermore, all parties agreed on their joint responsibility in unwinding the macroeconomic imbalances that contributed to the current crisis, thereby pleasing Martin Wolf to no end.
The G-20 leaders summit will have an immediate follow-up of a meeting of the G-20 trade negotiators, with the stated intent of completing the Doha round before the end of the year. The Obama administration, in line with attempts to reduce the budget deficit, have taken the first concrete step, pledging to slash agricultural subsidies by more than 80% over the next four years.
In related news, France and the United Kingdom agreed to relinquish their Security Council seats in return for an "EU" seat, paving the way for Japan, India and Brazil to join as permanent members, creating a new "P-7" in the Security Council.
These breakthroughs were achieved on the same day that a mysterious chemical attack was unleashed in Washington DC that rendered Bill O'Reilly, Keith Olbermann, Glenn Beck, Chris Matthews, Sean Hannity, James Carville, Paul Begala and Bill Bennett permanently and irrevocably mute.
Susan Strange, the godmother of international political economy, wrote a book that is suddenly very relevant to thinking about today's international monetary system. In Sterling and British Policy, Strange talked about different types of international currency. Top currencies, for example, are forms of international money where the economic incentive to hold them is pretty overwhelming. Negotiated currencies, on the other hand, are forms of international money where there the economic incentive is more muted, but political imperatives lead to an agreement on a particular form of currency as the reserve to hold.
Why am I bringing this up? Remember, like 48 hours ago, when I said that this news item warranted watching?
Well, this Financial Times story by Jamil Anderlini drops the other shoe:
China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.
In an essay posted on the People’s Bank of China’s website, Zhou Xiaochuan, the central bank’s governor, said the goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies”.
Analysts said the proposal was an indication of Beijing’s fears that actions being taken to save the domestic US economy would have a negative impact on China.
“This is a clear sign that China, as the largest holder of US dollar financial assets, is concerned about the potential inflationary risk of the US Federal Reserve printing money,” said Qu Hongbin, chief China economist for HSBC....
China has little choice but to hold the bulk of its $2,000bn of foreign exchange reserves in US dollars, and this is unlikely to change in the near future.
Here's a link to the actual paper, which is not long.
That last paragraph is important -- what China is proposing is not going to happen anytime soon. Indeed, looking at the actual proposal, I'm not convinced that Beijing's idea is even doable (a show of hands -- who's comfortable with the IMF as the world's central bank? Anyone?).
With China and Russia both proposing some sort of change in the international monetary system, we're about to some veeery interesting economic negotiations. There are other important players -- the EU, UK, Japan, Brazil, the Gulf economies, etc. And their incentives to switch away from the dollar are more cross-cutting. For example, while the EU would probably love to switch to a system that keeps the euro from appreciating too much, I suspect they will be loathe to reallocate the IMF voting quotas that China would demand in any switch to a new system. Both Japan and the Gulf economies have security considerations that make them less eager to change.
If this does happen, however, the United States will suffer a serious loss of standing and, oh yes, a much harder budget constraint. And whatever happens, it would be difficult to call the dollar a top currency anymore. I think we have clearly crossed some threshhold where the dollar is now a negotiated currency -- and some of the negotiating partners are pretty hostile to U.S. hegemony.
Day two of the Brussels Forum had more off-the-record events, but here are the juicy tidbits:
Henry Farrell points out the political reasons for why regulatory coordination is unlikely to take place at the G20 summit this April. To lift and/or depress Henry's spirits, however, there's this FT story by Tony Barber:
The US and the European Union are finding common ground in their efforts to strengthen global financial market regulation in spite of differences between Anglo-American and continental European cultures, the European Commission’s president said on Friday.
Speaking on the final day of a two-day EU summit in Brussels, José Manuel Barroso predicted that, if the push for tighter regulation ran into obstacles, they might come from big emerging countries such as China rather than the US or UK.
“While I recognise there are differences of legal and financial culture between the so-called Anglo-Saxon and continental models, what I see as a trend is convergence, and not at all that there’s some big fight,” Mr Barroso said.
Referring to a London G20 summit on April 2 of the world’s advanced and emerging economies, he told reporters: “The main problem will come from other countries, like China, for example, that don’t have the culture of a common setting of rules.”
Given the outcome of the G20 Finance Ministers meeting, I agree that there might be less of a transatlantic rift than political scientists would predict. A bargain on regulatory and fiscal arrangements seems quite doable.
On the other hand, that China language coming from Barroso is a bit odd. Having written a book about this, I'd point out that it's not that China doesn't have a "culture of a common setting of rules." It's that until very, very recently, China wasn't invited to the table to write these rules.
One last thing: this bears watching.
Chinese premier Wen Jiabao, in his annual press conference, fired a verbal shot across the bow of U.S. asset markets:
Speaking at a news conference at the end of the Chinese parliament’s annual session, Mr. Wen said he was “worried” about China’s holdings of Treasury bonds and other debt, and that China was watching United States economic developments closely.
"President Obama and his new government have adopted a series of measures to deal with the financial crisis. We have expectations as to the effects of these measures,” Mr. Wen said. “We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried.”
He called on the United States to “maintain its good credit, to honor its promises and to guarantee the safety of China’s assets.”
When a country that owns $1 trillion of your debt starts making these noises, it's time to fidget a little.
Or is it? I'll have more to say about this later, but for now it's worth pointing out that China's financial leverage over the United States might not be as great as people think. The Wall Street Journal's Andrew Peaple explains why:
Rhetoric aside, it bears repeating that China will find it hard to make a meaningful shift out of Treasurys, the prime current channel for investment of its $1.95 trillion foreign exchange reserves.
Some say China could switch holdings into gold -- but that market's highly volatile, and not large enough to absorb more than a small proportion of China's reserves. It's not clear, meanwhile, that euro, or yen-denominated debt is any safer, more liquid, or profitable than U.S. debt -- key criteria for China's leadership.
Most pertinent of all, even if China decided to sell off some of its U.S. Treasury holdings, it would scarcely be able to dump that in large blocks. And a partial selloff would surely lead to a slump in the Treasury market, eroding the remaining value of China's portfolio.
Three months ago I blogged that the World Bank's growth projections for this year were too optimistic. Let's review my reasons:
- Credit markets have yet to really unfreeze, because the underlying problem -- putting a price on a lot of toxic debt -- has yet to take place;
- It's going to take some time for trust -- a vital public good -- to return to global capital markets;
- The crisis has done nothing to unwind the global macroeconomic imbalances that contributed to the asset bubble in the first place -- if anything, the crisis has temporarily reinforced it;
- There is a very dangerous prisoner's dilemma game brewing in the interplay of fiscal expansion and trade policy. Unless export engines like Germany start to signal that they'll prime their pump as well, you're going to start to see some nasty protectionist attachments to any new government spending;
- Fiscal expansions are going to take a long time to kick in, and the ones being proposed are not necessarily conducive to countercyclical boosts.
- Beyond the fiscal expansion, this crisis is going to result in a lot more state intervention in the economy. Given what's happened, it would be intellectually dishonest of me not to acknowledge that some of this intervention will be necessary. A lot of it, however, is going to be misguided and stunt long-term growth.
I would be very surprised if global growth was not negative in 2009.
With the very partial exception of no. 5, all of the other factors are still very, very present in the global economy.
And, alas, it now appears that the Bank has caught up with my doom and gloom.
Developing countries face a financing shortfall of $270-700 billion this year, as private sector creditors shun emerging markets, and only one quarter of the most vulnerable countries have the resources to prevent a rise in poverty, the World Bank said....
The global economy is likely to shrink this year for the first time since World War Two, with growth at least 5 percentage points below potential. World Bank forecasts show that global industrial production by the middle of 2009 could be as much as 15 percent lower than levels in 2008. World trade is on track in 2009 to record its largest decline in 80 years, with the sharpest losses in East Asia.
The financial crisis will have long-term implications for developing countries. Debt issuance by high-income countries is set to increase dramatically, crowding out many developing country borrowers, both private and public. Many institutions that have provided financial intermediation for developing country clients have virtually disappeared. Developing countries that can still access financial markets face higher borrowing costs, and lower capital flows, leading to weaker investment and slower growth in the future.
There's something else going on that should bother IR scholars. One of the benefits of having a hegemon is supposed to be greater provision of global public goods. According to hegemonic stability theory, if the United States is really still the hegemon, then it should be providing the following things:
The U.S. did all of these things during the Asian financial crisis, for example.
This time around, the U.S. grade is not as high. There has certainly been provisions of liquidity -- though if one defines the start of this crisis as the fall o 2007, then it's not like LIBOR has fallen to pre-crisis levels.
The U.S. is not a market for distressed goods. On the margins this is due to incipient protectionism, but mostly this is due to the U.S. economic contraction. Indeed, this is why the recession has so deeply affected Pacific Rim exporters.
The worst grade, however, is on counter-cyclical lending. As the New York Times' Peter Goodman writes:
American investors are ditching foreign ventures and bringing their dollars home, entrusting them to the supposed bedrock safety of United States government bonds. And China continues to buy staggering quantities of American debt.
These actions are lifting the value of the dollar and providing the Obama administration with a crucial infusion of financing as it directs trillions of dollars toward rescuing banks and stimulating the economy, enabling the government to pay for these efforts without lifting interest rates.
And yet in a global economy crippled by a lack of confidence and capital, with lending and investment mechanisms dysfunctional from Milan to Manila, the tilt of money toward the United States appears to be exacerbating the crisis elsewhere.
The pursuit of capital suddenly seems like a zero sum game. A dollar invested by foreign central banks and investors in American government bonds is a dollar that is not available to Eastern European countries desperately seeking to refinance debt. It is a dollar that cannot reach Africa, where many countries are struggling with the loss of aid and foreign investment.
Developing.... in a very, very bad way.
I have a column in the latest issue of Foreign Policy (The Magazine) about some of the unanticipated political, socioeconomic, and cultural effects of the global economic crisis.
Go check it out to read all about better (and more corrupt) governments, evangelicals, the increasingly annoying Interwebs, state schools, Nouriel Roubini's frequent flyer miles, and -- of course -- Playboy centerfolds.
China should seek guarantees that its $682 billion holdings of U.S. government debt won’t be eroded by “reckless policies,” said Yu Yongding, a former adviser to the central bank.
The U.S. “should make the Chinese feel confident that the value of the assets at least will not be eroded in a significant way,” Yu, who now heads the World Economics and Politics Institute at the Chinese Academy of Social Sciences, said in response to e-mailed questions yesterday from Beijing.
Well, there's mostly hate going on -- but keep that bolded section in mind the next time someone mentions the prospect of China exercising its creditor power.
China will continue to buy US Treasury bonds even though it knows the dollar will depreciate because such investments remain its “only option” in a perilous world, a senior Chinese banking regulator said on Wednesday....
Luo Ping, a director-general at the China Banking Regulatory Commission, said after a speech in New York on Wednesday that China would continue to buy Treasuries in spite of its misgivings about US finances.
“Except for US Treasuries, what can you hold?” he asked. “Gold? You don’t hold Japanese government bonds or UK bonds. US Treasuries are the safe haven. For everyone, including China, it is the only option.”
Mr Luo, whose English tends toward the colloquial, added: “We hate you guys. Once you start issuing $1 trillion-$2 trillion [$1,000bn-$2,000bn] . . .we know the dollar is going to depreciate, so we hate you guys but there is nothing much we can do.” (emphasis added)
Back in the day, it was thought that bustling Dubai would act as a guide for how the Gulf economies should liberalize in order to increase their economic growth. Dubai would not bring democratization, but cultural tolerance, transparency and cosmpolilitanism are pretty nice to have, and Dubai seemed to have more of these traits than the rest of the Gulf.
In the wake of the current downturn, Dubai is struggling along with the rest of the region. Unfortunately, Robert Worth reports in the NYT that the emirate's response has not been in a liberal direction:
Instead of moving toward greater transparency, the emirates seem to be moving in the other direction. A new draft media law would make it a crime to damage the country’s reputation or economy, punishable by fines of up to 1 million dirhams (about $272,000). Some say it is already having a chilling effect on reporting about the crisis.
Last month, local newspapers reported that Dubai was canceling 1,500 work visas every day, citing unnamed government officials. Asked about the number, Humaid bin Dimas, a spokesman for Dubai’s Labor Ministry, said he would not confirm or deny it and refused to comment further. Some say the true figure is much higher.
I seriously doubt that this tactic is going to improve Dubai's economic health.
The rest of the essay suggests that the emirate is in such desperate straits that it will be forced to go to Abu Dhabi -- the more conservative and oil-rich emirate -- for a bailout.
A lot of bloggers are linking to this Dave Schuler post about how bad things are in East Asia. I certainly don't dispute the facts in the post, but I'm a bit worried about the implicit schadenfreude that's accompanying a lot of the links.
To understand why I'm worried, consider this latest blast of bad economic news from the FT's Geoff Dyer:
Chinese exports dropped 17.5 per cent in January compared with the same month the year before, the biggest decline in more than a decade as the impact on the economy from the global slump gathered pace.
Imports to China declined by a dramatic 43.1 per cent in a further indication of sharply lower demand in the Chinese economy over the last few months which has caused unemployment to soar.
January was the third month in a row that Chinese exports fell although the pace of decline was much faster than the 2.8 per cent drop in December. The decline in imports also accelerated sharply from the 21.3 per cent contraction in December....
With imports falling faster than exports, China recorded another large trade surplus in January of $39.11bn, just below the record of $40.1bn set in November last year.
Everyone will focus on the export number, because that's seen as the important sign of China's economic health. My concern is with the import number. Brad Setser explains:
What worries me the most? The possibility that the sharp y/y fall in imports doesn’t just reflect a fall in imported components or a fall in commodity prices, but rather a major deceleration in China’s domestic economy.
In some sense, it is hard to imagine a worse combination. China’s export are falling, making China understandably reluctant to allow its currency to appreciate. But China’s trade surplus is also rising … certainly in nominal terms and quite possibly in real terms. That isn’t good for the world.
At a time when the world is short demand, China seems to be subtracting from global demand not adding to it. The best solution: an absolutely enormous domestic stimulus in China.
For the global economy to start growing again, China is going to have to be one of the locomotives. But these kind of numbers are going to make it difficult for Beijing to do anything more on its currency or domestic consumption. This inaction is going to depress the export sectors of a lot of economies, and I'm really worried about the political response to that.
Your humble blogger will be posting on an odd and infrequent schedule over the next few days, as my day job calls me to a conference on the WTO.
On the way here, I read two days worth of Financial Times stories and op-eds excoriating the "Buy American" provisions contained in the House and Senate stimulus packages. [But John B. Judis says that those provisions are harmless to world trade, and they will create jobs!!--ed. No. Wrong on both counts.]
I worried that something like this was going to happen back in December, but now that it's actually happening, I'm cautiously optimistic. The extent of the global blowback, combined with the recognition that an economic recovery will require some serious policy coordination, might just be the slap of cold water to Barack Obama's belief that trade was going to be a tertiary issue during his administration. And, encouragingly, Obama has started to signal that he'll take care of it.
Maybe this is me still being an optimist, but I have to hope that this is precisely the scare that both the administration and Congress needed to realize that they can't just stuff protectionist pork into the stimulus sausage without consequence.
Readers -- am I being too optimistic?
protester threw an athletic shoe at the Chinese prime minister, Wen Jiabao, during his speech at Cambridge University's concert hall on Monday, seven weeks after a similar incident involving President Bush in Iraq. The shoe missed Mr. Wen by at least 30 feet, but security officials promptly escorted the protester from the hall.The police arrested the man on suspicion of a public order offense. Witnesses described him as a goateed European in his 20s or 30s speaking foreign-accented English. They said he blew a whistle as Mr. Wen spoke, causing him to pause and look up. “You should be ashamed of yourselves,” the man said, according to witnesses. “How can you listen to the lies he’s telling?” he shouted, in a video of the incident shown on Sky News television.
Here's a video link.
What's interesting about this is that while shoes have long been associated with insults in Arab culture, shoe-throwing has no cultural history in China. This is a case of an insult gone viral.
Of course, this leads to a much more fascinating question -- which culture-specific insults would you like to see go global? Shoe-throwing appears to have supplanted pie-facing as the insult du jour. What should replace shoe-throwing as the way to take leaders down a peg?
For some reason my thoughts run to this, though I recognize that what's being described is not exactly an insult.
Daniel W. Drezner is professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University.