CHAOS-ONOMICS: Strangely Attracted to the Truth
Apr 14
chaos-onomics.com
If the Sars virus maintains its present pathogenicity and transmissibility, Sars could
become the first severe new disease of the 21st century with global epidemic potential
Dr David Heymann, Executive Director of WHO's communicable disease
programmes
The ancient Greeks had a story which seems relevant to current events, that of Eris and the apple of discord. According to the myth, Eris was a bit peeved at not being invited to a party of the Gods and, after making a golden apple with the word, "Kallisti" (to the fairest one) inscribed on it, threw it among the partying Gods, which, as one might expect, led to infighting. Harmony, good order, or "Eunomia", as the Greeks thought of it, seems to be sorely lacking these days which leads me to "dub" weekend international economic and financial meetings, the "Washington Discords".
While the press coverage is playing up the international community's ability to agree, this 'agreement', like the recent 'non-decision/decision' on the US budget, which left the President's proposed tax cut in limbo between $350B and $550B, and consequently the dividend tax reduction up in the air, reminds me of punting on third down, for fear of fumbling. US efforts to get the IMF and World Bank on the Iraq case outside the aegis of the UN failed, as seems clear from Treasury Secretary Snow's denial of any compromise, despite Thursday's claims to being "baffled" at the need for such a resolution. Of course, should the IMF and World Bank get involved in Iraqi reconstruction as usual, this would put Iraq once again on the US$ standard, as these institutions lend in US$. While the initial stages of the military battle winds down, Eris' apple representing not only Iraqi oil wealth but control of global lender of last resort facilities continues to inspire infighting among the "Gods" of our time.
I choose an ancient world metaphor today to highlight what I see as a significant problem in the Middle East, or more precisely in the dealings between the "civilized" world and that region, among others, the seeming incompatibility of the modern conception of a nation state with the facts on the ground in that region. As the tragic looting of the Baghdad Museum reminds, the popular history of the region extends some 7000 years in the past. This history is filled with tribal war as different cultures rose and fell, in turn moving from ruler to ruled and back again with interludes of calm as the will to organize ebbed.
When I consider the histories of the Ottoman and Persian Empires and their clear decay during the 18th and 19th centuries in the light of past cycles, the current inability to organize reminds me of those interludes when the people turned their back on Empire, much as the citizens of the western Roman Empire did in the 5th century. The overlay of the western idea of a 'nation-state' on these old empires as in Turkey and Iran, or the balkanization of the Arab world as in Syria, Saudi Arabia, Kuwait, Iraq, etc. has done little to change the cultural awareness of the people. Yet the west continues to impose this one size fits all political ideology, granting those who bend the people to the mold, international legitimacy. Saddam Hussein was not the only tyrannical ruler in the region which suggests to me that absent some organic desire to coalesce into 'nation-states', imposition of the form requires draconian measures. These draconian measures breed resentment, thus suggesting that hopes for a general Middle-East peace seem a bit far-fetched from where I sit. Deposing Saddam might as well inspire a series of civil wars in the region as peace, which might not run counter to the aims of some war planners.
Coming back down to earth, so to write, the SARS outbreak continues to spread in Asia, effects of are spreading beyond the tourism industry into commerce more generally. Imagine if dock workers refuse to load containers in Asia, or unload them in the West for fear of disease and you can see how this epidemic can 'chill' world trade. Traders, thus far, seem to be taking the SARS story in stride, focusing instead on US corporate earnings and equity option expirations at the end of this holiday shortened week. While not a forecast, I think the chance of an upside CPI surprise on Wednesday is not small, which, given the international limbo over the US$ or Euro as funny money of choice might lead some investors to choose. While the powers that be continue to push off into the future the decisions of today, financial markets remain, in my view, very unsettled. It is a high risk environment. |
