INTERNATIONAL EDITIONS: HIGHLIGHTS AND EXCLUSIVES,
FEBRUARY 4, 2008
COVER: Road to Recession. (All overseas editions). Senior Writer Daniel Gross looks at the signs that are pointing to a recession in America and whether or not that will pull the rest of world down with it. A recession is defined as a widespread contraction in economic activity lasting more than a few months, and because of the lag in financial data, recessions typically aren’t officially declared until long after they start. In short, the U.S. could already be in one. “Though world markets stabilized by late last week, buoyed by the Fed’s rate-cut action and a proposed stimulus package of $150 billion that was hastily cobbled together by leaders in the House of Representatives and President Bush, the question remains: how ugly will it get, and when will it end?” Gross writes.
http://www.newsweek.com/id/105558
As part of the cover package, Newsweek asked giants of finance to weigh in on a week of volatility and economic turmoil. Some of those voices:
Kenneth Rogoff, a professor of economics at Harvard University. “The U.S. economy is probably experiencing mildly negative growth right now. If we have no bad news like a slowdown in China … we’ll just have a mild recession in the United States and recovery setting in by the year-end. The rest of the world will feel some pain, but the global economy itself will not go into recession.”
http://www.newsweek.com/id/104334
Mohamed A. El-Erian, co-CEO and co-CIO of PIMCO. The current volatility “illustrates the extent to which market and policy infrastructures have failed to keep up with the range of activities enabled by global economic transformations and financial innovations.”
http://www.newsweek.com/id/104334/page/2
Barton Biggs, a managing partner of the Traxis Partners hedge fund. “The world is in an old-style financial panic out of the late 19th or early 20th century. Investors today, just as then, are human beings subject to extremes of greed and fear.”
http://www.newsweek.com/id/104334/page/3
Heizo Takenaka, director of the Global Security Research Institute at Keio University and former Economics minister of Japan. “Is the American credit crisis like the Japanese crisis of the 1990s? No. The key difference is between a liquidity crisis and a capital crisis.”
http://www.newsweek.com/id/104334/page/3
Lawrence Summers, a professor of economics at Harvard University and a managing director at D.E. Shaw & Co. “The United States is at the root of the current market problems, and it should be at the center of the solution. I would like to see U.S. officials engaged in efforts to strengthen and enhance fiscal confidence and stability in the short and medium term.”
http://www.newsweek.com/id/104334/page/4
Robert Reich, secretary of Labor in the Clinton administration. “Even experienced Wall Street hands have no idea whether we’re near the bottom. We can expect even more violent swings in the stock market. The reason for all the uncertainty is that the big banks and lenders simply have no idea how many bad loans they’re holding.”
http://www.newsweek.com/id/104334/page/5
Just Don’t Know What To Do With Myself. Editor-At-Large Evan Thomas and National Correspondent Suzanne Smalley, with a team of Newsweek correspondents, report on the impact former president Bill Clinton may be having on his wife’s presidential campaign. Whether Clinton’s attacks are part of some grand campaign strategy is almost beside the point. He is an unstoppable force of nature, a keenly intuitive politician who is not going to be part of someone’s strategic plan unless it’s his own, and even then he’ll roar off in a different direction if his mood or his instincts move him.
http://www.newsweek.com/id/105679
France’s New Western Idea. Special Correspondent Tracy McNicoll reports that French President Nicolas Sarkozy’s foreign policy is not likely to sit well with everyone in the European Union. Sarkozy seems to be aiming to reposition France as a full-blooded member of what he calls the “Western family” of nations. In practice it means a France that is ostentatiously chummy with the United States, a friend of Israel and proud of its “Christian roots.” That’s radical stuff for a country that has a growing Muslim population and a fiercely uncompromising tradition of laïcité, or secularism.
http://www.newsweek.com/id/105526
The Kremlin Wises Up. Moscow Bureau Chief Owen Matthews reports that Russia has been working to restore its old geopolitical clout. But, it seems, the Kremlin has learned its lesson. Rather than using overt force, which turned many of its neighbors away, President Vladimir Putin’s latest power plays demonstrate greater subtlety, and his new tactics—trading gas supplies and international diplomatic backing for loyalty—are proving more effective.
http://www.newsweek.com/id/105527
The Titans in Their Twilight. Hong Kong Bureau Chief George Wehrfritz reports on Southeast Asia’s once powerful, aging leaders such as Indonesia’s Suharto, Thailand’s King Bhumibol Adulyadej, Malaysia’s Mahathir Mohammad and Singapore’s Lee Kuan Yew and what these countries will likely experience once they are gone.
http://www.newsweek.com/id/105529
INTERVIEW: Afghan President Hamid Karzai. Special Diplomatic Correspondent Lally Weymouth interviews Karzai about Pakistan and his country’s relationship with Iran. “We have had a particularly good relationship with Iran the past six years,” Karzai says. “It’s a relationship that I hope will continue. We have opened our doors to them. They have been helping us in Afghanistan. The United States very wisely understood that it was our neighbor and encouraged that relationship”
http://www.newsweek.com/id/105561
INTERVIEW: Israeli Defense Chief Ehud Barak. Barak tells Weymouth that Israel still believes that Iranians are aiming at nuclear capability despite the recent U.S. National Intelligence Estimate on Iran. “We suspect they are probably already working on warheads for ground-to-ground missiles which are much more sophisticated that those carried by the Enola Gay … They are clearly developing missiles, and there is no reason to develop missiles that can fly 1,500 miles if you just want to … it’s usually for unconventional warheads.”
http://www.newsweek.com/id/105562
WORLD VIEW: The World Bails Us Out. Newsweek International Editor Fareed Zakaria writes that even with global stock markets in a state of flux last week, the United States’ economic slowdown will likely be cushioned by the world. “There are no indications that other countries are tumbling. In particular, the fastest-growing economies in the world—China, India, Brazil—appear set to continue with their robust growth … Those emerging markets will all continue to expand—to buy, sell and trade—and this will help the United States,” he writes.
http://www.newsweek.com/id/105563
THE LAST WORD: Democratic presidential candidate Sen. Barack Obama. Obama says he knows he’s going to get knocked around when asked about what Bill Clinton called the “contact sport” of politics. “It’s not my preference. Do you remember when [Michael] Jordan’s Bulls were playing the Detroit Pistons? They had the ‘Jordan Rules’ [defense] ... But until the Bulls learned to push back, it was going to be hard for them to win. It’s not something I shy away from, but not something I relish. We’re not going to back down.”
http://www.newsweek.com/id/105568
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