Transcript Marvin Zonis Slides

PLUS 2012 Symposia
GLOBAL RISKS AND THE GLOBAL ECONOMY:
CAN THE U.S. DEAL WITH DOMESTIC GRIDLOCK
& MEET ITS FOREIGN POLICY CHALLENGES?
GLOBAL RISKS AND THE GLOBAL ECONOMY:
CAN THE U.S. DEAL WITH DOMESTIC GRIDLOCK
& MEET ITS FOREIGN POLICY CHALLENGES?
SPEAKER:
Marvin Zonis, Professor Emeritus, the Graduate School of Business,
the University of Chicago.
The New Yorker, March 12, 2012
4
Global Political Challenges in 2012
Take Aways:
How Does the World Work?
*Nationalism
*Current Account Deficits/Surpluses
*Deleveraging
The Great Global Challenges of 2012:
*The Global Context
*The United States
*China
*Russia
*The Arab World
*Iran
*Pakistan/ Afghanistan
*The Eurozone
*Energy
*Emerging Markets
Global Political Challenges in 2012
Take Aways
*“It’s Not As Bad As It Sounds” (Mark Twain) BUT the really good news is 3 to 5 years off
*New presidents in 2012
*Globalization disseminates everything – not just goods but ideas, people, drugs,
services, revolution, disease, emotions, finance, and supply chains
*The Middle East in Turmoil – and the turn to Islam
*Pakistan and Afghanistan – not on “our” planet?
*The eurozone, as we know it, is doomed
*China-more instability, slower growth, stuck in middle income
*Russia living off oil while the Russians strike back
*Major oil price shock in 2012?
*Major transformations are in the works – booming developing economies and
technological marvels. Africa and Mexico big beneficiaries
Global Political Challenges in 2012
The Global Context in 2012
Economic Slowdown
Global Rebalancing
Deleveraging
New Presidents
International Air Travel: 02/08 – 01/12
(Passenger & Freight)
International Air Travel Association
Global Rebalancing:
How’s Your Current Account?
Country
Deficit
Country
Surplus
Turkey
-10.3%
Saudi Arabia
+24.4%
Greece
-8.6
Singapore
+18.4
Poland
-4.7
Switzerland
+13.6
Spain
-3.7
Malaysia
+12.1
Italy
-3.6
Taiwan
+8.2
U.S.A.
-3.1
Netherlands
+7.0
Canada
-2.9
Germany
+5.2
France
-2.5
China
+3.1
India
-2.3
South Korea
+2.6
Great Britain
-1.9
Japan
+2.2
Global Deleveraging
https://www.mckinseyquarterly.com/Working_out_of_debt_2914
Global Deleveraging
11
McKinsey Global Institute, Federal Reserve, Bea, Financial Times, March 13, 2012
New Presidents in 2012?
GDP
(Billions Current US$)
GDP
(PPP Billions US$)
China
$5,926.6
$10,169.5
Dominican Repub.
51.8
92.8
Finland
238.7
196.6
France
2,560.0
2,194.1
India
1,727.1
4,194.9
Korea
1,014.4
1,417.5
Mexico
1,034.8
1,644.4
Russia
1,479.8
2,812.3
Taiwan
430.6
821.8
U.S.
14,587.7
14,587.7
Venezuela
391.8
352.7
Total World
$63,123.9
$76,647.4
Presidents’ %
46.7 %
50.2 %
World Bank, World Development Indicators
Global Political Challenges in 2012
The United States
An Election Campaign in This Context
http://pewresearch.org/pubs/2167/rich-poor-social-conflict-class
14
How important Do You Think It Is For The Government
In Washington To
http://www.gallup.com/poll/151568/americans-prioritize-growing-economy-reducing-wealth-gap.aspx
And U.S. Deleveraging
McKinsey Global Institute, Federal Reserve, Bea, Financial Times, March 13, 2012
16
http://www.businessinsider.com/the-war-between-young-people-and-old-people-for-jobs-2011-9?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+clusterstock+%28ClusterStock%29
Proportion of Output Employers Spend on Labor
http://www.ritholtz.com/blog/2011/08
Whose Incomes Increased?
iTulip.com
Concentration of Wealth
http://www.zerohedge.com/article/guest-post-fed-housing-and-stocks-chimera-middle-class-assets
Income Inequality Growing
The New York Times, March 26, 2011
21
Budget Threats
http://www.fms.treas.gov/fr/11frusg/11guide.pdf
22
But It’s The Interest Payments
http://www.fms.treas.gov/fr/11frusg/11guide.pdf
23
The Wall Street Journal, April 28, 2011
Global Political Challenges in 2012
The Middle East
Still Smiling?
“The priority today is the return of security,
which cannot be achieved unless terrorism is hit
with an iron fist.”
Still Smiling?
“The priority today is the return of security, which cannot
be achieved unless terrorism is hit with an iron fist.”
An Alawite Redoubt?
A Turkish Border Refuge Zone?
http://geocurrents.info/geopolitics/confusion-about-syrias-alawites
Libya Struggles to Create a Government
Spiegel Online, March 21 2011
Libya in Parts
Egypt: 70.49% of Seats to “Islam”
The Winners of 21 Percent of the Vote
“Even if we can’t provide economic renewal, it’s
enough if we can lift the non-believers up and show
them monotheism.”
Said Abdul-Azzim Ali. The leader of Nour in Alexandria
Financial Times, November 16, 2011
Bad (Economic) Times Ahead
http://www.economist.com/node/21546018
Iraq - Feb. 22, ‘12: 26 Attacks, 13 Bombs:
55 Dead, 100s Injured
Saudi King Abdullah’s Problems
Saudi King Abdullah’s Problems
Saudi Budget Squeeze
Water Subsidies:
$20 billion
Electricity Subsidies:
$15 billion
Abdullah’s New Promises:
$130 billion
Saudi Gas:
$.48 per gallon
http://pewresearch.org/pubs/1814/muslim-public-opinion-hamas-hezbollah-al-qaeda-islam-role-in-politics-democracy
If “Islam is the Answer”
Is Turkey the Question?
http://www.talkturkey.us/images/mrandmrserdogan.gif
If “Islam is the Answer”
Is Turkey the Question?
http://www.talkturkey.us/images/mrandmrserdogan.gif
Global Political Challenges in 2012
Iran
Ayatollah Khamene’i
February 3, 2012
This "truly cancerous tumor,
Israel, must disappear from
this region, and this
undoubtedly will take place."
http://www.leader.ir/langs/fa/index.php?p=contentShow&id=9093
New Iranian Nuclear Site
http://news.cnet.com/8301-30685_3-10362358-264.html?part=rss&subj=news&tag=2547-1_3-0-20
Iranian Missile Program
44
Iran’s Developing Nuclear and Missile Program, CSIS, 2-15-07
Before: Iranian Missile Development Base
Before: Iranian Missile Development Base
Before: Iranian Missile Development Base
/
http://isis-online.org/isis-reports/detail/satellite-image-showing-damage-from-november-12-2011-blast-at-military-base
After- Missile Base Outside Bid Khaneh
http://isis-online.org/isis-reports/detail/satellite-image-showing-damage-from-november-12-2011-blast-at-military-base/
Global Political Challenges in 2012
Pakistan - Afghanistan
Pakistan
Sirajuddin Haqqani
"The Haqqani network...
acts as a veritable arm of
Pakistan's Inter-Services
Intelligence Agency."
Admiral Mike Mullen,
Chairman, Joint Chiefs of
Staff, September 26, 2011.
Pakistani Beliefs
http://pewresearch.org/pubs/1683/
“Men Are Fundamental.
Women Are Secondary.”
Foreign Policy, May 19, 2011
Global Political Challenges in 2012
China
Xi Jinping and Li Keqiang
55
http://www.zimbio.com/photos/Xi+Jinping/Li+Keqiang/NPC+Seventh+Plenary+Session/5BkdR4EtIcn
Bo Xilai Out; Xi Jinping Speaks
“If you crave to be
ostentatious, to play to the
crowd,
and seek fame and fortune.
. . (it) damages the party’s
image, let’s people down
and makes them lose faith
in us.”
The Wall Street Journal, March 17-18, 2012
What Are The Delegates Wearing?
Zegna Jacket
www.weibo.com/menglikeer
China’s Exports
http://www.usfunds.com/investor-resources/frank-talk/?i=2803
58
Shanghai 1990
http://www.businessinsider.com
Shanghai 2010
http://www.businessinsider.com
Vice President Xi Jinping
“We must develop the economy
mainly by relying on the domestic
market and attach great importance
to domestic demand, especially
consumption demand, in driving
economic develop-ment. . . It is
important that we open our
markets even wider, firmly oppose
and resist protectionism in all
forms, and uphold a fair, free and
open global trade and investment
system. . .”
Bloomberg, April 10, 2010
Up to $1.9 Trillion of New Consumption?
GNI Per Capita and Governance Score
(2010)
Middle
Income
Countries
High
Income
Countries
Country
GNI/Capita
Governance Score
Country
GNI/Capita
Governance Score
Belarus
$6,130
107.4
Hong Kong
$32,780
524.1
Russia
9,910
158.2
U.S.A.
47,240
501.3
China
4,260
211.1
Argentina
8,500
248.7
Colombia
5,510
259.0
Turkey
9,890
302.5
Brazil
9,390
339.8
South Africa
6,090
356.1
Malaysia
7,760
363.4
Lithuania
11,390
435.4
World Bank - http://worldbank.org
World Bank Governance
World Bank Governance Indicators
Voice and Accountability
Political Stability
Government Effectiveness
Regulatory Quality
Rule of Law
Control of Corruption
64
Of 101 Middle-income Economies In 1960, Only 13 Became High
Income By 2008
65
http://www-
“A Healthy
Great Power
Mentality”
http://www.ft.com/cms/s/0/1cfa57c4-ed03-11df-9912-00144feab49a.html#axzz15JYJJ7A9
President Hu on the West
"We must clearly see that international hostile forces are
intensifying the strategic plot of Westernizing and dividing
China, and ideological and cultural fields are the focal areas of
their long-term infiltration. . . We should deeply understand
the seriousness and complexity of the ideological struggle,
always sound the alarms and remain vigilant, and take forceful
measures to be on guard and respond. . .The overall strength of
Chinese culture and its international influence is not
commensurate with China's international status. . .The
international culture of West is strong while we are weak.”
[email protected], January 4, 2012
But Repression Is Increasing
http://pewresearch.org/pubs/1945/chinese-may-not-be-ready-for-revolution
The Chinese Get Richer – And Then What?
The Wall Street Journal, November 2, 2011
Global Political Challenges in 2012
Russia
The President
http://cache.gawkerassets.com/assets/images/7/2011/12/28292cf2f8be4d6dfe8ec21941e88fa2.jp
71
What Happens with Political Instability
Capital Flight
2010: $33.6 billion
Capital Flight
2011: $84.2 billion
72
GNI Per Capita and Governance Score
(2010)
Middle
Income
Countries
High
Income
Countries
Country
GNI/Capita
Governance Score
Country
GNI/Capita
Governance Score
Belarus
$6,130
107.4
Hong Kong
$32,780
524.1
Russia
9,910
158.2
U.S.A.
47,240
501.3
China
4,260
211.1
Argentina
8,500
248.7
Colombia
5,510
259.0
Turkey
9,890
302.5
Brazil
9,390
339.8
South Africa
6,090
356.1
Malaysia
7,760
363.4
Lithuania
11,390
435.4
World Bank - http://worldbank.org
World Bank Definitions
World Bank Governance Indicators
Voice and Accountability
Political Stability
Government Effectiveness
Regulatory Quality
Rule of Law
Control of Corruption
Gross National Income (same as GDP) –
Atlas Method in Current US $
National Income converted to US $ using a three year average
of exchange rates adjusted for inflation
74
Global Political Challenges in 2012
The Euro
What It Means to be German Chancellor
At the Beginning
Now
Principal To Be Paid From July 2011 to July 2012 (light) Plus budget Deficits (dark) For Euro Area
Members As % of 2011 Estimated GDP
http://Europe on the Brink, Policy Brief, Peterson Institute for International Economics, July 2011
77
163 % of GDP Declining to 120 by 2020
http://www.spiegel.de/international/europe/bild-815097-309872.html
Portugal Bond Yield
http://www.google.com/imgres?q=portugal&start=0&ndsp=19&ved=1t:429,r:9,s:0
How The U.S. Did It!
http://upload.wikimedia.org/wikipedia/en/thumb/2/27/US_Public_debt_per_GDP_1791-2006.svg/697px-US_Public_debt_per_GDP_1791-2006.svg.png
Global Political Challenges in 2012
The Oil Problem
Spending More
82
International Energy Agency, Financial Times, March 24, 2012
Global Political Challenges in 2012
The Continued Emergence of the Emerging
Markets
Global Political Challenges in 2012
Mexico
President Calderon and Bombardier
Gannett News Service
Enrique Pena Nieto, Andrés Manuel López Obrador Josefina
Vazquez Mota
Mexico
The New York Times, July 6, 2011
The True Size of Africa
African Futures
2010
2011
2012
Angola
1.6%
7.8%
10.5%
Botswana
8.6
6.0
6.6
D.R. Congo
7.2
6.5
6.0
Republic of Congo
9.1
7.8
4.7
Ethiopia
8.0
8.5
8.0
Kenya
5.0
5.7
6.5
Mali
4.5
6.0
5.4
Mozambique
7.0
7.5
7.8
Niger
7.5
5.5
15.4
Nigeria
8.4
6.9
6.6
Rwanda
6.5
6.5
7.0
Tanzania
6.5
6.4
6.6
Uganda
5.2
6.0
6.5
Zimbabwe
9.0
7.3
5.7
http://www.imf.org/external/pubs/ft/weo/2011/
Asian Futures
2010
2012
Bangladesh
6.0%
6.3%
6.6%
Cambodia
6.0
6.5
6.5
China
10.3
9.6
9.5
India
10.4
8.2
7.8
Indonesia
6.1
6.2
6.5
Lao P.D. R.
7.7
7.5
7.3
Malaysia
7.2
5.5
5.2
Myanmar
5.3
5.5
5.5
Philippines
7.3
5.0
5.0
Sri Lanka
9.1
7.0
6.5
Thailand
7.8
4.0
4.5
Vietnam
6.8
6.3
6.8
http://www.imf.org/external/pubs/ft/weo/2011
90
2011
Latin America Futures
2010
2011
2012
Costa Rica
4.7%
4.4%
4.5%
Dominican Republic
7.8
5.5
5.5
Panama
7.5
7.4
7.2
Argentina
9.2
6.0
4.6
Brazil
7.5
4.1
3.6
Chile
5.2
6.2
5.0
Colombia
4.3
4.6
4.5
Peru
8.9
6.6
5.9
http://www.imf.org/external/pubs/ft/weo/2011/update/02/pdf/0611.pdf
It’s Up To US
The challenges confronting the United States and the world are
many. The resources – intellectual, financial, political, military –
for confronting, surmounting and ultimately benefitting from
those challenges are huge. What are the impediments? As
usual – ideology, self-interest, narrow mindedness, lack of
political will, fear. What will you do to help this country
overcome those impediments. YOU!
PLUS has made Wi-Fi available
to all PLUS attendees during the Symposia.
The Wi-Fi Code is PLUS-Symp2012
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