The inauguration of a US president is traditionally a spectacular festival -- a show of unity for the country after divisive elections, and an opportunity for entrepreneurs to curry favor with the White House.
But whether the second term of President George W. Bush will bring a spectacular economy is another question. The weakness of the dollar and record deficits throw long shadows across the economic landscape.
Bush has not lacked volunteers to pick up the US$40 million price tag on the celebrations.
Oil baron T. Boone Pickens of Texas threw US$250,000 into the inaugural basket.
John Kane, the chief lobbyist of the Atomic Energy Institute, is another big contributor -- in recognition for all Bush has done for the nuclear power industry, Kane told the Washington Post recently.
Bush already spent the first four years showing what a good friend he was to the corporate world. They received the lion's share of the benefits when Congress pushed through Bush's tax-cut programs.
In fact, the inaugural cup runneth over in covering the expensive balls -- including one for military officers who have served in Iraq, a gesture of somberness that recognizes there is a war going on.
But things don't look so rosy at the public coffers. The recession and the war in Iraq have already burned through the surpluses Bush inherited from former President Bill Clinton, and increased the US deficit at a rate of more than US$400 billion a year. The expensive tax cuts have put the government even further in the red.
The deficit stands at 3.6 percent of GDP. Economists and bankers, like Timothy Geithner, head of the New York Federal Reserve Bank, warn of the consequences.
He warned that international investors who pumped US$600 billion into the US economy last year could lose their confidence.
Specter
Worried that the current account deficit has reached 5 percent of GDP, Federal Reserve chairman Alan Greenspan, speaking in Frankfurt late last year, raised the specter of decreasing enthusiasm for dollar purchases.
"It seems persuasive that, given the size of the US current account deficit, a diminished appetite for adding to dollar balances must occur at some point," he said. "But when, through what channels, and from what level of the dollar? Regrettably, no answer to those questions is convincing. This is a reason that forecasting the exchange rate for the dollar and other major currencies is problematic."
The value of the dollar has dropped steadily, a net 10 percent by mid-month over the three years since introduction of the European currency.
While the drop has helped US exports, economists warn that Greenspan could be forced to escalate interest rates even faster if the dollar continues to decline, in order to keep investors interested.
Higher US interest rates could in turn slow down the US recovery -- and in turn have global repercussions for the world's main economic locomotive.
Vulnerable
Two economic analysts, Maurice Obstfeld and Kenneth Rogoff, of the National Bureau of Economic Research, recently came to the conclusion that the world economy is even more vulnerable to such changes than it was four years ago.
It is clear that the Bush administration does not share the unease of the economists. Paul O'Neill, ousted as Bush's treasury secretary in 2002, objected to Bush's plans for a second round of tax cuts.
But when he discussed his concerns with Vice President Dick Cheney, according to reports, Cheney quipped: "You know, Paul, Reagan proved deficits don't matter."
John Taylor, a top official in the treasury department, recently sought to reassure the public that a plan is in place to reduce the deficit, and told the Heritage institute that government spending would be held in check.
Americans on the other hand are counting on export opportunities to grow as soon as Europe starts to rebound from its malaise, and are pushing China to introduce more flexible exchange rates that would reduce the competitive advantage that the Asian giant now has in export trade.
If China were to stop linking its currency rigidly to the dollar, the US trade deficit with China -- which holds the largest portion of the deficit pie -- would improve.
Taylor said he expected the budget deficit would slide under 3 percent of GDP this year, and down to 1.8 percent of GDP by 2009.
Wall Street remains optimistic for this year despite all the gloomy pronouncements. In a survey of the country's 70 most influential economists, the expectation is for an economic growth rate of 3.6 percent this year, Bloomberg financial news service reported.
Saudi Arabian largesse is flooding Egypt’s cultural scene, but the reception is mixed. Some welcome new “cooperation” between two regional powerhouses, while others fear a hostile takeover by Riyadh. In Cairo, historically the cultural capital of the Arab world, Egyptian Minister of Culture Nevine al-Kilany recently hosted Saudi Arabian General Entertainment Authority chairman Turki al-Sheikh. The deep-pocketed al-Sheikh has emerged as a Medici-like patron for Egypt’s cultural elite, courted by Cairo’s top talent to produce a slew of forthcoming films. A new three-way agreement between al-Sheikh, Kilany and United Media Services — a multi-media conglomerate linked to state intelligence that owns much of
The US and other countries should take concrete steps to confront the threats from Beijing to avoid war, US Representative Mario Diaz-Balart said in an interview with Voice of America on March 13. The US should use “every diplomatic economic tool at our disposal to treat China as what it is... to avoid war,” Diaz-Balart said. Giving an example of what the US could do, he said that it has to be more aggressive in its military sales to Taiwan. Actions by cross-party US lawmakers in the past few years such as meeting with Taiwanese officials in Washington and Taipei, and
The Republic of China (ROC) on Taiwan has no official diplomatic allies in the EU. With the exception of the Vatican, it has no official allies in Europe at all. This does not prevent the ROC — Taiwan — from having close relations with EU member states and other European countries. The exact nature of the relationship does bear revisiting, if only to clarify what is a very complicated and sensitive idea, the details of which leave considerable room for misunderstanding, misrepresentation and disagreement. Only this week, President Tsai Ing-wen (蔡英文) received members of the European Parliament’s Delegation for Relations
Denmark’s “one China” policy more and more resembles Beijing’s “one China” principle. At least, this is how things appear. In recent interactions with the Danish state, such as applying for residency permits, a Taiwanese’s nationality would be listed as “China.” That designation occurs for a Taiwanese student coming to Denmark or a Danish citizen arriving in Denmark with, for example, their Taiwanese partner. Details of this were published on Sunday in an article in the Danish daily Berlingske written by Alexander Sjoberg and Tobias Reinwald. The pretext for this new practice is that Denmark does not recognize Taiwan as a state under