NEW YORK, March 25, 2013. The “Great Game” of global economics and geo-politics entered a dangerous chapter last weekend while Americans consumed too many diet-busting treats, entranced with the spectacle of college basketball.
America and our Western allies stand today on treacherous ground that could open, swiftly into a yawning wormhole and tear asunder the semblance of progress we have enjoyed since 1981.
America is glued to the NCAA Tournament. Yet, in the end, a “hoops” victory here and upset there on the road to the 2013 Championship will matter far less than stumbles, rumbles and jumbles that are playing out now on the world stage.
Stumbles in Europe
Ten days ago, Cyprus was only a beguiling travel destination and not the center of a fast-moving hurricane now threatening stability inside the Euro-zone.
In Forbes, Augustino Fontevecchia rightly notes today that recent decisions by overlords of Cyprus threaten the integrity of the European project.
Is the challenge posed by mismanagement of Cyprus potentially much more profound?
We do not yet have granular details concerning the true obstacles faced by financial institutions in Cyprus. Nor do we know much about what Cyprus can offer trading partners in the new world that nation faces, where no sensible investor will deploy more than insignificant capital sums.
What must be clear is this: the chain of Euro-zone nations is not as strong as export juggernaut Germany; instead, large depositors in Europe must examine carefully just how strong each nation and each resident bank is within the Euro-zone.
Coming on the heels of surprising revelations concerning effectiveness of controls at JPMorgan Chase, developments in Cyprus and wider implications for Europe must raise one further question: do global market participants truly understand counterparty risk?
In September 2008, the Federal Reserve System was able to lend massive support to the U.S. economy, to Europe and to other nations.
How many other “whales” lurk inside nations, financial institutions, and corporations?
How much latitude and wherewithal does the Fed have in March 2013 to shore up multi-lateral lenders of last resort, should this need arise in the quiet of the night?
Rumbles in the Middle East
He came, he saw, but President Obama certainly did not conquer vexing problems that have beset American leaders for decades in the Middle East, during his latest touchdown in Israel and Jordan.
In two other test cases, the President must understand, by now, that “leading from behind” is simply hollow folly.
In an ancient, scarred landscape that claimed other Empires, fear mounts as reality now rises. The Taliban are coming down from hideouts to rule in Kabul and across Afghanistan. The other cheek will not be turned: instead, rough Sharia justice will likely be the order of each severe day after America leaves.
As Afghanistan seethes, Iraq threatens to follow a course once suggested by Vice President Biden and splinter into multiple, constituent states. In the alternative, America’s short tenure in Iraq may yield a different form of despotism, cloaked in Shi’a Islamism rather than Saddam Hussein’s Ba’ath inspired cult of personality.
In nations we “liberated” starting in 2002, millions learned the power of American military might. For all our sacrifice and for all the pain, we cannot fairly claim that our way forward actually took hold.
What of the many other nations with interests in the wider Middle East?
Leaders and the populace in Sunni Islamic lands surely must watch retreating American backs with knowing, condescending smiles.
The mullahs of Iran can only be chortling as they bide time and prepare to bare the clandestine nuclear capabilities their scientists and rogue supporters must be relentlessly advancing.
Energy rich Russia likely is ranking entry points and alternatives to cement a new, far more involved role throughout a region virtually foreclosed to it scant years ago.
And then there is Israel, brave Israel knowing how cold it can get at night in the Middle East, surrounded on many sides and increasingly very much alone.
Do we truly believe threats to global peace are lower in 2013 than they were in August 2008 before the last chapter of the ongoing Financial Crisis?
With regard to the Middle East, has any Laureate fairly earned a Nobel Peace Prize?
Jumbles in Asia
Far removed from Europe and the Middle East, America is linked closely to a mélange of changing fortunes in energy-starved Asia.
To the north, Japan remains stuck in economic quicksand that relentlessly consumes bright hopes one generation realistically held back in 1989, when that nation seemed set to lead the global economy. An aging population, inflexibly rooted to business principles that served well initially after 1945, must manage its towering debt as her pile of savings and private sector incomes dwindle.
Nearby, South Korea struggles under threat from a bellicose northern neighbor. Like Japan, South Korea has an export-focused economy and an internal market that is quite small in comparison to countries in North America and to Europe. And like Japan, South Korea has a population whose present make-up and likely future composition do not augur well for robust internal growth.
Meanwhile, the China that soared surely forward in 2008 seems five years later a different place, full of potential but beset by growth pains and an inability to display with convincing, transparent metrics, evidence of solid, sustaining economic progress. Is the Chinese miracle yet another mirage as concerns the masses?
Then we must examine India and other rising nations in the Asia-Pacific region. Yes, there are some temporary bright spots, but what enlightened super-power will emerge to regulate cross-border justice and protect the peace if America and Western Europe are consumed in long-simmering problems of our own making?
Above all, who decides how energy for Asia that is chiefly resident in the Middle East will make its way to fuel economic progress?
Moreover, as Europe struggles and the Mideast smolders, what are Russia’s ambitions in the many Asian nations with which it shares borders?
One Step Forward, Two Steps Back
When I think about the long period from 1981 forward, I hear the phrase “One Step Forward, Two Steps Back” resonating loudly in my mind.
Just as the American Confederation of States foundered in the 18th century, so may Europe’s confederation fail to achieve potential touted even today by the political elite.
Nations in the Middle East, so tightly bound by Islamic faith and tradition, may never mold themselves upon secular examples that have forged economic and political progress for differing cultures in America, Europe and the Asia-Pacific.
Humanity is concentrated in Asia, chafing to taste fruits of material advancement so ardently touted in the West as being worth the sacrifice but hardly evident for the yearning majority.
Spring is a time pregnant in hope. Nonetheless, we would do well to remember these words from William Butler Yeats, written in 1919, concerning dangers that mount when foundation for world order suddenly crumbles:
“Things fall apart, the center cannot hold;
Mere anarchy is loosed upon the world.
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned.
The best lack all conviction, while the worst
Are full of passionate intensity.”
2013 is already one devilish snake of a year, rustling so near chasms of calamity.
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