Outlook is mixed for 2009

by Gregory Clark

Looking at 2009, the good news is that the global economy is likely to recover much faster than predicted. The bad news is that global politics are likely to deteriorate much more rapidly than most expected.

From the beginning it was fairly clear that economies would pick up once governments and central banks began flooding markets with money. Provided the financial system can be kept intact, all markets eventually find their bottom. The rebound gets under way, as we saw with real estate after the U.S. savings and loan crisis of the late ’80s.

But our gloom and doom media experts could only focus on the drama of the day — increasing unemployment, falls in production and bankruptcies. They have yet to realize that these are the results, not the causes, of recessions. Fortunately the panic talk has allowed people like Ben Bernanke of the U.S. Federal Reserve, who have long realized the Keynesian imperative to spend heavily in times of recession, to slip into action with a minimum of conservative resistance. The supply-siders who caused this mess, with their naive beliefs in deregulation, small government and market fundamentalism as economic save-alls, have been left spluttering on the sidelines.

Stock market rebounds have traditionally preceded economic recoveries by some months. The smart investors are already moving in. If the stock-market recovery that began at yearend continues, other markets — commodities, etc. — will follow. We will be left wondering how and why we let ourselves get so media-panicked.

Needless to say, the last to realize any of this will be Japan. It has still to get its recovery package together. Its main economic newspaper, the Nikkei, is still clinging to the slogans from its long and damaging embrace of supply-sider “structural reform” wisdom.

Most have yet to realize that Japan, with its chronic, culturally induced, weak consumer spending, needs Keynesian solutions even more than others, and that if it is short of money it can, several top U.S. economists have vainly tried to advise, just order its central bank to create it. But as usual, it will no doubt do little, and be dragged along by recoveries elsewhere.

Sadly the global political situation shows no sign of similar recovery. The atrocious situation in Gaza will, like Iraq and Afghanistan, further radicalize Islamic opinion around the globe. The so-called moderate Islamic regimes in Egypt and Jordan will come under greater pressure.

Elsewhere, the crudity, cruelty and ignorance involved in trying to suppress militants, especially where the U.S. military is involved (invading Iraq with only 18 Arabic speakers in its ranks!), will also guarantee backlash and spread effects.

Afghanistan seems a lost cause (remember the delight with which the West and its media embraced President Hamid Karzai, now accused of corruption, mainly because he spoke fluent English). Pakistan could well be the next domino, then Somalia, possibly Lebanon. Iraq could well revert to chaos. Meanwhile, Iran and Hezbollah will gain further prestige through defying Israel.

Hopes for change are placed in the new U.S. administration. But already the Obama appointments make it clear that the militarization and Israelization of U.S. policies is beyond reversal.

Do not expect much enlightenment from our superficial Western media. As with the economic crisis, they can only look at what is thrust before their eyes, with little concern for cause and effect. The standard line says the Israeli attack on Gaza was brought on by Hamas launching rockets into Israel. Few want to ask what made Hamas engage in that suicidal rocketing in the first place, namely the the Israeli determination to hobble the Gaza economy, destroy the popularly elected Hamas regime and, as in the West Bank, humiliate its people.

A lot of brave people have been forced to choose death rather than continue to live as Nazi-style unter-menschen. If Gaza revives memories of the brave anti-Nazi Jewish resistance in the Warsaw Ghetto of 1945 I will be surprised. The anti-Islamist bias has sunk too deep.

Every so-called militant or “terrorist” our militaries manage to kill with such gusto leaves wives, families, friends and lovers determined to get revenge. Recently a woman whose Iraqi fiance had been killed by U.S. troops offered herself in grief as a suicide bomber. In the media her action was denounced as a new “terrorist” tactic. Her death was labeled as yet another “statistic” in the so-called war against “terror.” (“Terror” is when you resist the invasion or occupation of your country. I wonder what the original U.S. revolutionaries would have said about this definition.)

In March 2008 a quiet, pacifist Palestinian student from a good family in East Jerusalem was so enraged after watching for hours on TV the bodies of women and children being pulled out from yet another brutal Israeli bombing in Gaza that in anger he went out and shot some Jewish religionists nearby before being himself killed. For the BBC he was no more than a “Palestinian gunman.” For others he was just another “terrorist.” Those in the West have to do better than this.

Gregory Clark is a former Australian diplomat. A Japanese translation of this article will appear on www.gregoryclark.net