Notes of the roundtable

Former Costa Rican president, José María Figueres Olsen, with Bubba and a redhead, August 2000

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Yesterday I attended a round table discussion about the world "crisis" which was held in one of Spain's largest banks. There were economic and political analysts from the Spanish government, banks, foundations, embassies, etc. The round table was chaired by the former president of Costa Rica, José María Figueres-Olsen, educated at West Point and Harvard, who, in my opinion, said some of the most interesting things of the whole afternoon.

Some of the themes of concern mentioned were the possibilities of:

• Return of protectionism

• End of globalization
  

• Less funds for aid to developing countries

• Change in the balance of world power

• Lack of leadership in the European Union

• Destabilization of China and Russia
  

One of the most interesting speakers was a Chinese analyst that spoke of the enormous significance of the China-Japan-Korea summit held last week. These are key countries whose relations have historically been very bad and full cooperation between them in facing the present crisis might mean a true shift in the world balance of power. The summit certainly hasn't received the attention it deserves

Many of the analysts seemed to hope and believe that under the new Obama administration America would take take the lead in strong measures to snap the world out of its slump.

President Figueres, who is center-left, pointed out to the assembled analysts that the people who had voted for Obama were expecting him to get them out of the crisis, not the world, and that he would be judged accordingly and that those outside the USA should not get their hopes too far up, especially in regards to the further liberalization of world trade.

Figueres also had an observation about the new Obama team, which was the fruit of his own extensive administrative experience. He said that Obama's new cabinet, made up of "luminarios", was an "all-star" team, and he had serious doubts that a group containing such a group of gigantic egos (and he knows many of them personally) in most of the sensitive areas, could work together smoothly.

As to the role that the USA might play in fixing things, one bright, young Spanish analyst from the BBVA brought up the London Economic Conference of 1933, where Franklyn D. Roosevelt scuppered any chance of an international economic agreement, one which might have ended the depression and avoided World War Two, as an indication of America's probable reaction in times of a general world economic crisis.

If I had been on the dias, I would have opened with a quote from Marx (Groucho) "The secret of life is honesty and fair dealing: if you can fake that, you've got it made". At the heart of the crisis is the failure of American credibility.

If the USA is not able to take the medicine of fiscal orthodoxy it has forced painfully down everybody's throats in the past, nobody is ever going to take them or their prescriptions seriously again. This is something that has to be faced.

I am not at all sure that Bernake and his printing press are going to do anything finally but destroy the dollar and create Argentinian type hyper-inflation... once people get deleveraged who is going to want to hold depreciating US dollars?

Some analysts felt that the European Central Bank should follow the fed in flooding the system with newly printed cash. It would seem to me that one of the clearest and unfifying achievments of the EU has been the Euro's creation and its value. From a view to European unity it doesn't make much sense to lower its value in any way, even if maintaining it is painful.

Others feared that the crisis might make the EU more inward looking.

As I understand it the EU is a market of 450M people and that most of what we consume here is produced within the Union itself... I would think that a strategic understanding with neighboring Russia, in order to take mutual advantage of the fabulous synergies, would make the EU as nearly self-sufficient as it would be possible for anyone, anywhere to be.

In my opinion one of the most important reasons that European unity is not getting people excited is that it is being presented as a partnership with the USA to run around the world jousting with windmills, which the people in Europe don't want to do. The EU and the US have vastly different geopolitical realities and objectives... another fact that finally must be faced.

Really, as soon as the USA has nationalized Freddy and Fannie and Citi Bank and now Detroit... what is the meaningful economic difference between the USA, Russia and China? At this point both the capitalism and the social democracy of the EU is clearer than Russia's, China's and the USA's. Only the European Union has both a meaningful social net and correct financial fundamentals.

As to spreading democracy, I think that in these troubled times if we can maintain democracy in the countries where there is a tradition and a culture of democracy we will be doing very well, indeed. I don't think the Chinese people will want to risk destabilizing their country in the midst of a crisis and I don't imagine the Russians will either... The temptation in troubled times will be toward authoritarian regimes and the Russians and the Chinese already have them.

Although things are bad and getting worse, I think this period may finally be vindicated by people getting truly serious about who we are and what we really want and need and what we are prepared to pay for it. DS