PLUS 2012 Symposia GLOBAL RISKS AND THE GLOBAL ECONOMY: CAN THE U.S. DEAL WITH DOMESTIC GRIDLOCK...

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

Take Aways:How Does the World Work?

*Nationalism*Current Account Deficits/Surpluses*Deleveraging

The Great Global Challenges of 2012:

Global Political Challenges in 2012

*The Global Context *China*The United States *Russia*The Arab World *The Eurozone*Iran *Energy*Pakistan/ Afghanistan *Emerging Markets

Global Political Challenges in 2012Take 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 2012Economic SlowdownGlobal RebalancingDeleveragingNew 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

World Bank, World Development Indicators

Total World $63,123.9 $76,647.4

Presidents’ % 46.7 % 50.2 %

Global Political Challenges in 2012

The United States

An Election Campaign in This Context

http://pewresearch.org/pubs/2167/rich-poor-social-conflict-class14

http://www.gallup.com/poll/151568/americans-prioritize-growing-economy-reducing-wealth-gap.aspx

How important Do You Think It Is For The Government In Washington To

And U.S. Deleveraging

16

McKinsey Global Institute, Federal Reserve, Bea, Financial Times, March 13, 2012

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, 201121

Budget Threats

http://www.fms.treas.gov/fr/11frusg/11guide.pdf22

But It’s The Interest Payments

http://www.fms.treas.gov/fr/11frusg/11guide.pdf23

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

44

Iranian Missile Program

Iran’s Developing Nuclear and Missile Program, CSIS, 2-15-07

Before: Iranian Missile Development Base

http://isis-online.org/isis-reports/detail/satellite-image-showing-damage-from-november-12-2011-blast-at-military-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/

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/

Foreign Policy, May 19, 2011

“Men Are Fundamental. Women Are Secondary.”

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’simage, let’s people down and makes them lose faith in us.”

The Wall Street Journal, March 17-18, 2012

What Are The Delegates Wearing?

www.weibo.com/menglikeerZegna Jacket

China’s Exports

58

http://www.usfunds.com/investor-resources/frank-talk/?i=2803

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 AccountabilityPolitical StabilityGovernment EffectivenessRegulatory QualityRule of LawControl of Corruption

64

Of 101 Middle-income Economies In 1960, Only 13 Became High Income By 2008

65http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2012/02/28/000356161_20120228001303/Rendered/PDF/671790WP0P127500China020300complete.pdf

http://www.ft.com/cms/s/0/1cfa57c4-ed03-11df-9912-00144feab49a.html#axzz15JYJJ7A9

“A Healthy Great Power Mentality”

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.”

KGSNightWatch@KGSNightWatch.com, 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

71

http://cache.gawkerassets.com/assets/images/7/2011/12/28292cf2f8be4d6dfe8ec21941e88fa2.jp

What Happens with Political Instability

72

Capital Flight

2010: $33.6 billion

Capital Flight

2011: $84.2 billion

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 DefinitionsWorld Bank Governance Indicators

Voice and AccountabilityPolitical StabilityGovernment EffectivenessRegulatory QualityRule of LawControl 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 ChancellorAt the Beginning Now

77

http://Europe on the Brink, Policy Brief, Peterson Institute for International Economics, July 2011

Principal To Be Paid From July 2011 to July 2012 (light) Plus budget Deficits (dark) For Euro Area Members As % of 2011 Estimated GDP

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 Futures2010 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 Futures2010 2011 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

90

http://www.imf.org/external/pubs/ft/weo/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

Wi-Fi is only available on Level 4, the Ballroom Level and will not work in other areas of the hotel.