As Israel’s attack on Gaza enters its third week, almost a thousand Palestinians have died, 40% among them women and children. In terms of the recent decrease in the number of Hamas’ rockets lobbing into the land of Israel, Ehud Barak’s, Israel’s defense minister, “Cast Lead Operation” can claim to have been succeeded. Nevertheless, the conflict is unlikely to end any time soon. Instead of stop shelling Palestinian schools and hospitals which are allegedly hiding Hamas combatants, Israel is expanding its military power onto the ground, and even moving reserve troops to the border. With dozens of civilians being killed and hundreds being wounded each day, International pressure on ceasefire is mounting.
To most people, Israel’s military operation is unjust. The sheer scale of its killing tells. From July last year to the start of the war, 4 Israelis had been killed by rockets fired by Hamas. To stop its innocent citizens from being hurt, Israel started the war, and in less than twenty days, it has killed nearly a thousand, most of them innocent non-combatants. Although the Israel government claims that it only attacks military targets, a lot of ordinary infrastructure has been bombed, including a UN school and a main hospital. Blackouts are now everywhere in Gaza. The cities are running out of food and clean water. And with sewage spilling onto the streets, hundreds of thousands of people are now under an impending risk of a widespread epidemic.
Since the start of the war, Israel has been condemned by much of the international community, including the United Nations and the European Union, for starting a war without enough justification. It is thus hard to believe that Israel has been stepping up its military actions day after day. Behind the scene of course is the silent endorsement from Washington. As a matter of fact, the United States certainly would like to see Hamas’ military power being crushed. It is because that would deal a hard blow to Iran, which is supporting the arming of Hamas. President-elect Barack Obama’s remarkably silence in the issue speaks to the point.
If we agreed that the conflict is not going to end soon, then the next question is, where will it go? Would Israel continue bombing until Hamas is forced into submission? Or would a mounting death toll of civilians force Israel into stopping it under diplomatic pressure? Would Obama’s coming into office bring anything new onto the diplomatic table? But no matter what, the hundred-year conflict between the Jews and the Arabs in the Middle East will only get worse before it get better.
Ever since the establishment of the Israel nation in 1948, bloodshed and killing has never stopped for a day in Jerusalem, Gaza and the West Bank. The fundamental reason is that the two people, the Jews and the Palestinians, are fighting for the same patch of land. Although it comes obvious to outsiders that since they cannot share the land, a partition, a two-state solution is the only way out, the two sides have never come together and negotiated terms on that. The most promising moment came at the turn of the century when Bill Clinton held a summit at Camp David. But unfortunately, no substantial progress had been made. The prospect of the two sides agreeing terms became even dimmer when Hamas won the election in 2006 against Fatah, the less combatant Palestinian organization that has a lot of support both inside and outside the Middle East. Against this backdrop, one may argue that Israel’s operation will lead to a weakened Hamas which make peace talks between Israel and the Palestinians less difficult. However, this line of reasoning misses an important point: although Hamas’s combatant power may well be temporarily diminished, the killing and bloodshed only makes it much easier to recruit ever more combatants and gain more support from the Arab world.
Tuesday, January 13, 2009
Monday, January 5, 2009
The aftermath of financial crises
In a recent research report titled "The Aftermath of Financial crises", Professor Reinhart from the University of Maryland and Professor Rogoff from the Harvard University investigate how past financial crises affect economies both in the industrial world and in the emerging world.
They gather statistics on house prices, equity prices, employment, output and government debt and adopt a comparative historical methodology to show that, in contrary to what many economists believe, there are a lot in common between the rich world and the emerging markets in the ways their economies are hit by banking crises.
In particular, the study singles out three characteristics. First, assets prices suffer deep and prolong declines. Housing prices fall an average 35 percent while equity prices plunge by 55 percent on average. The average duration of the drop is more then 4 years. Second, unemployment soars by an average 7 percentage points and output goes down by an average 9 percentage points. And notably, job losses in the rich world are in general much more severe than that in the emerging markets. The researchers attribute it to two factors: More flexible downward adjustment of wages and gaps in social safety net which makes job-losers more anxious to find new jobs. Also, the durations of declines in employment and output are also shorter than that of asset prices, below 2 years in general. Third, government debt soars by an average 86 percent in the aftermath of banking crises, mainly because of the inevitable decreases in tax revenues and big spending on counter-cyclical fiscal stimulation instead of the much more minor costs of bailing out financial institutions and recapitalizing them.
The study conclude by discussing how relevant it is to predicting the track of the current global financial crisis. Unfortunately, the geographical extent of the current crisis is rare in history and there are very few examples to learn from. with exception to the Great Depression, the crises covered are regional in nature which affect only a few countries or countries within a continent. In contrast, the crisis we are facing today started in the U.S. and has since then spread to West Europe, East Europe, Asia and Latin America. In a regional crisis, affected countries can grow their way out by exporting more and borrowing more. However, when the world economy take a hit all at the same time and credits are crunching everywhere, that is not feasible. In light of this, what would be more effective is massive fiscal stimulus. Therefore, countries with healthy budget surpluses and current-account surpluses and take the initiative to stimulate their economies will likely be the ones who recover first.
They gather statistics on house prices, equity prices, employment, output and government debt and adopt a comparative historical methodology to show that, in contrary to what many economists believe, there are a lot in common between the rich world and the emerging markets in the ways their economies are hit by banking crises.
In particular, the study singles out three characteristics. First, assets prices suffer deep and prolong declines. Housing prices fall an average 35 percent while equity prices plunge by 55 percent on average. The average duration of the drop is more then 4 years. Second, unemployment soars by an average 7 percentage points and output goes down by an average 9 percentage points. And notably, job losses in the rich world are in general much more severe than that in the emerging markets. The researchers attribute it to two factors: More flexible downward adjustment of wages and gaps in social safety net which makes job-losers more anxious to find new jobs. Also, the durations of declines in employment and output are also shorter than that of asset prices, below 2 years in general. Third, government debt soars by an average 86 percent in the aftermath of banking crises, mainly because of the inevitable decreases in tax revenues and big spending on counter-cyclical fiscal stimulation instead of the much more minor costs of bailing out financial institutions and recapitalizing them.
The study conclude by discussing how relevant it is to predicting the track of the current global financial crisis. Unfortunately, the geographical extent of the current crisis is rare in history and there are very few examples to learn from. with exception to the Great Depression, the crises covered are regional in nature which affect only a few countries or countries within a continent. In contrast, the crisis we are facing today started in the U.S. and has since then spread to West Europe, East Europe, Asia and Latin America. In a regional crisis, affected countries can grow their way out by exporting more and borrowing more. However, when the world economy take a hit all at the same time and credits are crunching everywhere, that is not feasible. In light of this, what would be more effective is massive fiscal stimulus. Therefore, countries with healthy budget surpluses and current-account surpluses and take the initiative to stimulate their economies will likely be the ones who recover first.
Subscribe to:
Posts (Atom)