Stories by Jeffrey E. Garten

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    Jeffrey Garten on Obama's Antibusiness Attitude

    As job creation and an economic growth stall, the Obama administration is being criticized not just from all parts of the political spectrum in the U.S. but also from big business, which increasingly believes that the president harbors a thinly camouflaged antibusiness bias.
  • Garten On What the G20 Should Do

    When I was a trade official in the Clinton administration, I discovered that the British government was unusually talented at writing summaries after difficult negotiations. Their communiqués were not just eloquent, but managed to brilliantly paper over major differences among the participants. It is a skill that will be vital on April 2 when the heads of state of the G20 meet in London to coordinate policies for the worldwide economic crisis.Whatever happens at this summit, it will be light-years away from the expectations that have been building. British Prime Minister Gordon Brown has been calling for a global New Deal. French President Nicholas Sarkozy and German Chancellor Angela Merkel have talked about "remaking capitalism." IBM CEO Sam Palmisano has called for the summit to unleash a new wave of long-term investments, and Fred Bergsten, a prominent economic commentator, says the meeting is the best and last hope for significant policy coordination.Yet in today's highly...
  • The Big Bang of Bailouts

    World leaders have spent trillions on confused, inadequate rescue plans. They need to spend more.
  • No More Bail Outs

    On both sides of the Atlantic, governments are considering ways to buffer their automobile industries against the economic downturn. The EU has just agreed on a $50 billion package to help its companies meet new environmental standards. With Ford, General Motors and Chrysler on the ropes, Washington has just provided an injection of $25 billion to help Detroit retool for stricter mileage standards. Now the Big Three are alreadyclamoring for $50 billion more. Money being fungible, it's not clear how it eventually will be used in both the European and American cases. There are lots of lives at stake here, so no one should be cavalier about government help. But bailing out the auto companies themselves is precisely the wrong medicine.First came the bank bailouts. Then came the efforts of central banks to lower interest rates and keep economies from imploding. Now comes the attempt of specific industries to get a piece of government largesse, and politicians are particularly susceptible...
  • How to Put Pressure on Russia

    Empty words from the West encourage the Kremlin. But there are ways to push Russia in the right direction.
  • Mapping A New World

    A provocative book on the rise of Asia highlights the need to move beyond old notions of East and West.
  • Jeffrey Garten: The Weak Dollar Is More Dangerous Than It Appears

    So far, serious currency turmoil hasn't been a part of the subprime-induced credit crunch. Nevertheless, the monetary system could be more fragile than it appears. In fact, the way Washington has handled the U.S. dollar these past several years could be part of a future problem.President George W. Bush has seen a steadily weakening dollar as an answer to its ever-widening current account deficit. After all, the dollar has depreciated about 25 percent against a basket of currencies since 2002 without a peep from Washington. The United States has been pushing relentlessly for China and other Asian countries to revalue their currencies, thereby trying to make the greenback relatively weaker. And we've seen no sign that the United States is ready to broker a more orderly rebalancing of key currencies among major countries.Indeed, the Bush administration has been relying entirely on a depreciating dollar to increase exports and restrain imports. It has done little to rein in federal...
  • Garten: Tension Between U.S. and China Inevitable

    Whatever political spin is put on the meeting of cabinet members and ministers from the United States and China this week in Washington, the event has already failed. Indeed, despite the exhaustive efforts of U.S. Treasury Secretary Hank Paulson, it is difficult to see how the world's two most important countries can avoid rising tensions in the months and years ahead.The meeting, officially called the U.S.- China Strategic Dialogue, was the first and highest-profile initiative announced by Paulson when he took office last summer. The Treasury secretary wanted to elevate the U.S.-China relationship from constant trade skirmishes to discussions of long-term strategic cooperation, and to show Congress that it need not impose punitive tariffs it has been considering. In doing so, the former Goldman Sachs CEO, who had extensive dealmaking experience in China and an unprecedented range of personal relationships with Beijing's leaders, raised expectations in Washington that he could put...
  • Global Investor: Trade Starts At Home

    Not many Americans outside Washington care whether the bilateral trade agreements that the United States has negotiated with Panama, Colombia and Peru contain provisions to protect labor standards in those countries, or whether such treaties are ratified by Congress this spring. Not many are losing sleep over the fate of theDoha round of global trade negotiations that the Bush administration and other governments are frantically trying to save from collapse. Yet these issues have America's trade-policy community locked in round-the-clock political combat.While these are important questions, none amounts to the central problem in U.S. trade policy—dealing with the growing insecurity of Americans when it comes to economic change. The anxiety ranges from the 47 million citizens who are without health care to workers' fears about competition from China, where manufacturing wages are below 10 percent of those in America. At a time when trade has been growing more than twice as fast as...
  • Global Investor: Green Biz at Odds With Wall Street

    As public interest in the threat of climate change grows in the United States, a large number of companies are announcing that they are going green. Some institutional invest ors are cajoling those who aren't. New business coalitions are forming to highlight the need for more action. Daniel C. Esty, a colleague of mine at Yale, and an expert on the connections between environment, business and law, goes so far as to say in a new book that business is now leading an environmental revolution in America.While climate change is certainly a monumental challenge, I am skeptical that most big companies will move as far and fast as optimists hope. To be sure, there are exceptions. General Electric has announced a program to develop energy saving technologies across all of its divisions, from aircraft engines to light bulbs. Among its targets: to expand research on green technology from $700 million in 2005 to $1.5 billion by 2010. Wal-Mart is revamping its stores and transportation systems...
  • Global Investor: Too Wealthy For Worries

    Emotions ran high at last week's meeting of G-7 finance ministers in Essen, Germany. Euro-zone officials were annoyed with their Japanese counterparts because the yen had sunk to all-time lows against the euro, signaling trouble for the Continent's exporters. Tokyo sniped that the euro was buoyed mainly by European Central Bank interest rate rises. U.S. Treasury Secretary Hank Paulson pooh-poohed Europe's charges against Japan, attributing the weak yen to market forces. But Paulson then pointed a finger at Beijing for not revaluing fast enough. In other words, everyone was mad at everyone else.You would have thought that Wall Street, the City of London, and other financial centers would have paid more attention to the fireworks. After all, currency tensions can be an early warning of broader troubles. In the late 1980s, for example, squabbling among the United States, Japan and Germany over the relative values of the dollar, yen and D-mark was a precursor to the 1987 global stock...
  • Global Investor: Why Worry, Wall Street?

    For several months, Treasury Secretary Hank Paulson and a number of top guns on Wall Street have been screaming that U.S. capital markets are losing their competitiveness to London and Hong Kong. Two months ago their claims received support from a study by some of America's most highly respected financiers and academics. In mid-January, McKinsey & Co., focusing on New York City in particular, delivered a report to Mayor Michael Bloomberg also bolstering Wall Street's fears. Now the U.S. Treasury plans to host a conference on the subject this spring. You have to give credit to the American financial community for orchestrating this crusade with such persistence. But the fact is, the bankers have a very flimsy case. They are too smart not to know that, so you have to wonder what's really going on.Their central argument rests on the decline in the number of initial public offerings in the United States and the simultaneous growth of such listings abroad. This is undeniable,...
  • Global Investor: Off The Radar: The No. 1 Risk

    Earlier this month I spent several days in Singapore meeting with government and business executives for a Yale project to identify key trends in Asia. It was fascinating for what I heard, and what I did not hear.With most of the emerging markets in the region entering their fifth year of an economic boom, it is no surprise that sentiment is bullish. There is an acknowledgment of possible risks, such as pandemics or North Korean nukes. The rise of China and India fall somewhere in between. Reactions range from enthusiasm about taking advantage of the new dynamism these giants are bringing to Asia to some apprehension that Beijing and New Delhi could over time monopolize capital, trade and technology. What surprised me most, however, was how little was said about the United States--about the opportunities that it will bring in the future or the risks its policies pose.I have a theory: The biggest risk in the world economy today, for Asia especially but for everyone else too, is the...
  • Let the Good Times Roll

    Ten years ago, when the "big bang" hit London, a burst of deregulation reversed years of stagnation in the markets and propelled the City to become one of the world's biggest and most vibrant financial centers. When we look back on 2007, there is a good chance that it will be remembered as the year of the global big bang, ushering in a new boom in financialdeals from mergers to buyouts to IPOs, in unprecedented numbers and scale, with a quantum expansion of deals across national borders. Whether this phenomenon lasts or whether it ends in a collapsing financial universe --well, that's another question.The first flares of the global big bang are already visible. The world's biggest IPOs are coming out of China, such as the recent $350 billion underwriting deal for the Industrial and Commercial Bank of China, and more are on the way. David Vinar, Goldman Sachs's CFO, says that the firm's pipeline of deals is bigger than at any time since the height of the Internet boom. David...
  • Bracing for a Rough Patch

    Over the next decade, the biggest change in the world's corporate hierarchy will be the rise of companies from developing countries. Corporations such as China's Huawei (telecommunications equipment), India's Infosys (IT and business outsourcing services) and South Africa's SABMiller (beer and beverages) are already big global enterprises. But this juggernaut is just gathering momentum. As Antoine van Agtmael, president of Emerging Markets Management, says in a fascinating new book, due out in early January and called "The Emerging Markets Century: How a New Breed of World-Class Companies Is Overtaking the World," the household names of today--be they companies such as IBM, Shell or Sony--are in danger of becoming the has-beens of tomorrow, and the next Microsofts and General Electrics are more likely to appear in emerging markets than in the advanced nations.Despite their promise, however, in 2007 emerging multinationals could face strong headwinds. In some respects, they have done...
  • Hot Markets, Solid Ground

    I have generally been a worrier when it comes to thinking about risks in an ever-shrinking global economy. But not now, not on one of the critical questions facing the world in 2006: whether countries such as China, India, Turkey, Russia and other emerging markets will continue to boom, or go bust, just as they did in 1997. After all, in July of that year a seemingly insignificant event in the global scheme of things--a devaluation of the Thai baht--led to a financial crisis that spread from Indonesia to South Korea and eventually enveloped countries as far away as Russia and Brazil. Growth collapsed in those countries. Capital flows dried up. Poverty soared. A global financial meltdown was narrowly avoided. All this occurred against a background of enormous capital flows to emerging markets and great optimism about them in the world's capitals and financial centers--conditions that seem to mirror those of today.Yes, that great optimism is back. Most analysts are painting rosy...
  • Players to Watch in 2006

    Global corporations, as we all know, are important for the return on investment they provide, the jobs they generate, the new technologies they develop, the products they offer. But there is another reason to take an interest in them, too: many are at the cutting edge of some of the biggest public-policy issues of our times. Here are several with the potential to make a big impact on society in the coming year.Start with General Electric. Last May, Jeff Immelt, its chairman and CEO, announced an "Ecoimagination" project that cuts across the conglomerate's 11 businesses--from aircraft engines to medical imaging. Immelt promised to invest billions to develop and deploy technologies that would protect the environment, promote energy efficiency, lower emissions, reduce the use of fossil fuels and increase the supply of usable water, creating specific targets and goals so the public can measure GE's progress. Immelt made it unabashedly clear that he sees an opportunity for substantial...
  • To Save World Trade: Plan B

    The mood among the trade ministers gathering in Hong Kong this week is likely to be downbeat. That's because after two years of struggling to move global trade negotiations toward a conclusion, the 149 countries of the World Trade Organization have failed to bridge huge gaps in their respective positions. If ever there was a time for a robust plan B, this is it.Just a few months ago, the negotiators had expected to have in front of them this week a clear road map with specific outlines for an omnibus trade deal that they would conclude by the end of 2006. This was to be a landmark agreement because more than any other round of trade talks, what is being called the Doha Development Round was to bring developing countries into the heart of the trading system by dismantling restrictions that hit them particularly hard, such as barriers to their exports of sugar, wheat, fruits and cotton.The centerpiece of the negotiations was supposed to be major cuts in agricultural protections among...
  • The Saudis Slip In Silently

    The big news is often in the silence. that was certainly true in the case of Saudi Arabia's quiet entry into the World Trade Organization. Last week trade ambassadors in Geneva blessed the move, which will be made official at the upcoming summit in Hong Kong. It's been a long haul--Riyadh has been knocking at the WTO's door since 1993--which hints at lengthy and difficult behind-the-scenes negotiations.Yet there have been few headlines and little public debate about the linkup between the world's most important multilateral organization and a country that possesses 25 percent of the global oil reserves, greatly influences the price of the Earth's most important natural resource and affects the trade balance of virtually every country. Could it be that trade negotiators tried to bury serious flaws in this process? It sure looks that way. At the least, some big issues should have received more attention by the U.S. Congress and others.The comparison with China says it all. Beijing's...
  • Battle of the Asian Summits

    The world's attention will be focused on Busan, South Korea, this week, where the heads of state of some of the world's most dynamic economies will gather at the Asia-Pacific Economic Cooperation annual meeting. But that summit is likely to be trumped by two others coming in December. In Kuala Lumpur, the leaders of 16 Asia-Pacific countries, from Japan to India and from South Korea to Australia, will hold the first-ever summit of what is being called the East Asian Community, with the United States notably not invited. Later that week in Hong Kong, the 148 members of the World Trade Organization will try to agree on the next steps in the Doha Round, an effort to liberalize global trade. Those two meetings will highlight tensions between regional and global approaches to trade and finance. And the outcomes will provide a clearer picture of how the winds will be blowing in the global economy over the next decade.In Kuala Lumpur, Asian leaders will celebrate the economic dynamism of...
  • Plummet of The Americas

    As leaders of Latin America and the Caribbean gather this week for the fourth Summit of the Americas, big-bang reform is probably the last thing on their minds. Mexico's Vicente Fox is a lame duck. Argentina's Nestor Kirchner is turning to economic nationalism and Venezuela's Hugo Chavez to destructive populism. Brazil's Luiz Inacio Lula da Silva is enveloped in scandal. Political dramas in Ecuador, Bolivia and Peru are turning into farces. Too bad, because these countries are in serious trouble.Instead of focusing on the urgent need for dramatic social and economic reform, leaders at the summit likely will be thinking about the 19 major elections taking place in the next 18 months. They will also be taking credit, no doubt, for buoyant economic conditions, even though so much of the real credit goes to forces beyond their control--low interest rates, near-record flows of capital into emerging markets and soaring demand from China for commodities such as oil, copper, meat products...

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