Daily Archives: December 18, 2013

Israel, United States

Why Stanley Fischer is such an inspired choice as US Fed vice chair

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It’s really quite incredible that there’s been more ink spilled over the decision of the American Studies Association, a US-based academic group, to boycott Israel than the potential nomination of Stanley Fischer, the former governor of the Bank of Israel, to become the next vice chair of the US Federal Reserve.ISrel Flag IconUSflag

It’s somewhat ironic that at a time when many critics are attacking the ASA’s decision (is it morally right to boycott the exchange of ideas, academic debate and discussion?), Fischer’s transition from Israeli central banker to US central banker would be a spectacular opportunity — for Fischer, for the Fed, for Israel, for the United States and, if the initial reaction holds, world markets, too.  Reuters reported late last week that Fischer was offered the spot, though there’s not been an official announcement.

Janet Yellen, the current Fed vice chair, is US president Barack Obama’s nominee to chair the Fed after Ben Bernanke completes his second term on January 31, 2014, and she is expected to be confirmed as the new Fed chair by the US Senate in a vote later this week.

Fischer, as the number-two official at the Fed, would bring with him eight years of experience setting monetary policy for Israel and the rock-star status of one of the world’s most accomplished economists.  As a longtime professor at the Massachusetts Institute of Technology, he not only served as thesis supervisor to Bernanke, the current Fed chair, but also Mario Draghi, the chair of the European Central Bank.

As The Financial Times reported last week, Fischer has a ‘dream resumé’ for the position, topped off by an eight-year stint as Israel’s central bank governor that is universally acclaimed:

Some clues to how Mr Fischer thinks about monetary policy come from his tenure as governor of the Bank of Israel. He was one of the country’s most respected public figures; when he announced he would be stepping down earlier this year, one commentator said the country was losing its last ”responsible adult”.

His eight years as governor coincided with fast economic growth, low unemployment – currently 6 per cent – and low inflation. Israel survived the financial crisis in 2008-9 without seeing a single bank collapse.  Unlike his predecessor Jacob Frenkel, who had a tight focus on fighting inflation, Mr Fischer is credited with broadening the Bank of Israel’s remit to influence growth and employment. His decisions were marked by pragmatism: he slashed interest rates in the wake of the financial crisis, then abandoned economic dogma to try to hold down Israel’s currency, before raising rates as the economy recovered.

Fischer was so successful in stabilizing Israel’s economy that the Bank of Israel was already raising interest rates by September 2009 — if it hadn’t been for his age (he’s 70 today), he would have been a strong candidate to succeed Dominique Strauss-Kahn as managing director of the International Monetary Fund in 2011.

Born in what is today Zambia, Fischer spent his childhood there and in what is today Zimbabwe (and what was then the colonial apartheid state of southern Rhodesia).  Fischer first came to the United States in 1966 for his Ph.D in economics at MIT, and he remained there as a professor through 1988, when he took a position as the World Bank’s chief economist for two years.  From 1994 to 2001, he served as the first deputy managing director of the IMF during the Asian currency crisis of the late 1990s and other financial crises from Mexico to Argentina to Russia.  After a brief stint in the private sector with Citigroup, he was appointed governor of the Bank of Israel in 2005 by then-prime minister Ariel Sharon — and recommended by the finance minister at the time, Benjamin Netanyahu.  He holds dual Israeli and US citizenship, and he would have been as credible a candidate to lead the Fed as either Yellen or former treasury secretary Lawrence Summers.

As Dylan Matthews wrote earlier this year for The Washington Post, Netanyahu and Sharon took a big chance on Fischer, who wasn’t an Israeli citizen at the time of his nomination:

No matter — Fischer’s results were more than enough to assuage any doubts. No Western country weathered the 2008-09 financial crisis better. For only one quarter — the second of 2009 — did the Israeli economy shrink, by a puny annual rate of 0.2 percent. That same period, the U.S. economy shrank by an annual rate of 4.6 percent. Many countries, including Britain and Germany, fared even worse.

So what would his appointment mean for the Fed?  Continue reading Why Stanley Fischer is such an inspired choice as US Fed vice chair →

United States

Love him or hate him, MITT is going to be an epic documentary

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It seems like in every US presidential election since Theodore H. White’s The Making of the President 1960, there’s one ‘definitive’ piece of journalism that captures the essence of the election — and that demonstrates to the rest of the world the inner workings of politics in the world’s oldest constitutional democracy. USflag

In 1972, it could have been Hunter S. Thompson’s Fear and Loathing on the Campaign Trail, an acid trip that revealed the emptiness of Republicans like Richard Nixon and Democrats like Hubert Humphrey.

In 1988, it was Richard Ben Cramer’s What It Takes, a 1072-page sextuple biography of the leading presidential contenders, including the winner George H.W. Bush and future vice president Joe Biden.

In 1992, it was the documentary, The War Room, about the campaign team that propelled Arkansas governor Bill Clinton to the presidency.

In 2008, it was Game Change, the book by John Heilemann and Mark Halperin that transformed Barack Obama’s legendary presidential victory into a thrilling page-turner.

But despite at least two major blockbuster books on the 2012 presidential race, including a second volume from Heilemann and Halperin, I haven’t seen anything that really captures the race in an extraordinarily compelling way.  Enter MITT, a documentary that Netflix will debut in January 2014.  If the trailer (embedded above) is any indication, it could become the definite media chronicle of 2012.  In the trailer alone, you can see Romney’s real-time reaction to the news that he’d lost the presidency.

Greg Whiteley followed Romney for six years in order to shoot the documentary — starting just after Romney left office as Massachusetts governor, through his unsuccessful primary campaign to become the 2008 Republican nominee and the grueling 2012 campaign.  Romney ultimately lost that race to Obama, the incumbent, by a margin of 51.1% to 47.2% (an electoral vote loss of 332 to 206).

South Sudan

How to prevent South Sudan’s impending civil war

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Around 48 hours ago, South Sudanese president Salva Kiir announced that his government had halted a hazy coup attempt against Kiir’s government, which took power in July 2011 after the country emerged as an independent nation from Sudan.southsudan

But Kiir’s announcement seemed less like the end of the matter than the start of the worst ethno-political rupture since South Sudanese independence, pitting Kiir’s Dinka ethnic group against the Nuer ethnic group of his fiercest rival, former South Sudanese vice president Riek Machar.  Instead of stability in the capital city of Juba, the past two days have brought sporadic rounds of gunfire as armed forces allied with either Kiir (pictured above) or Machar clash in the streets, and there are reports of at least 500 people dead in Juba.

Kiir reshuffled his cabinet in July 2013, which led to Machar’s dismissal from the South Sudanese government.  For his part, Machar has criticized Kiir as increasingly ‘dictatorial.’

sudan-mapHopes ran high in the aftermath of the January 2011 referendum, in which 98.83% of the South Sudanese voted in favor of separating from Khartoum.  But since July 9, 2011, the country’s first 29 months have not been good ones for the world’s youngest country.  Aside from oil, the revenues of which South Sudan shares untidily with Sudan (which controls access to the oil pipelines that pump petroleum from South Sudan to the Red Sea coast), the country has been described as the world’s most underdeveloped.

It’s difficult to understand just how difficult the challenge is for South Sudan.

When it separated from Sudan, it was a country with virtually no institutions — don’t think of it like the pushes for Scottish or Catalan independence, where the sub-national units have experience with regional governance.  To the contrary, southern Sudan had essentially been engaged in a resistance struggle against its northern rulers in Khartoum for all but 10 years of the 55 years between Sudanese independence from the British and South Sudanese independence from Sudan.  It’s a landlocked country with no access to ports.  Oil wealth has proved a source of wealth, but also nearly unbelievable corruption.  Its GDP in 2012 was just $9.4 billion, and its GDP per capita is around $860.  Its literacy rate is around 27%.  Though its past is linked to Sudan in the north, and its leaders largely agree that its future lies with east African neighbors, such as Uganda and Kenya, its present is marked by rupture with the former and a lack of durable links with the latter.  It faces a long slog in terms of simply building roads and delivering fresh water to its citizens.  Infant mortality is 105 per 1,000 live births and the maternal mortality rate is 2,054 per 100,000 live births — these are some of the worst mortality statistics in the world.

Facts remain relatively dodgy, and it’s not certain if the ‘coup’ attempt on Sunday and Monday was a genuine plot or Kiir’s response an oversensitive reaction — Machar, speaking to the Sudan Tribune Wednesday, argued that the ‘coup’ itself was a misunderstanding between South Sudanese soldiers before calling Kiir an ‘illegal president.’

But with the US embassy in Juba evacuating all of its non-essential personnel and with thousands of South Sudanese seeking refuge at UN compounds in Juba, the situation seems to be worsening.  As South Sudan appears to move closer to the point of civil war, it’s important to remember that its chief ethnic groups have much more in common with each other than with the Khartoum elite that once ruled Juba from afar — and who would love to take advantage of internal South Sudanese strike in order to gain firm control of the Abyei region and, potentially, launch incursions to other oil-rich areas.  Though the Dinka (about 15% of the South Sudanese population) and the Nuer (about 10%) represent the two largest and politically strongest ethnic groups in the country, around three-fourths of South Sudan’s 11 million people belong to one of over five dozen other ethnic groups.

Speaking of its past, you can lay many of South Sudan’s woes at the feet of Khartoum, which for so long simply ignored what used to be southern Sudan, or even the British colonialists who so curiously fashioned the failed state that would later become Sudan.   Continue reading How to prevent South Sudan’s impending civil war →