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Iwan Morgan

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  • Are America and Europe Sinking into Meltdown 2.0?

    On August 5, the Dow had its largest single-day fall since December 1, 2008.  Things were just as bad across the Atlantic, with the equivalent of nearly $80 billion wiped off the shares of Britain's 100 biggest companies.

    The recent debt ceiling crisis in the U.S. produced a very inward-looking perspective among pundits and economist, and the same was true in Europe when the financial crisis hit individual countries over here.  However, yesterday's stock market declines show that America and Europe are in the same sinking boat.  We are no longer the different planets of Mars and Venus, to use Robert Kagan's terms.  We're one and the same planet  (and I'd say it was Pluto with its all its gloomy connotations). 


  • A minority victory without precedent?

    Drawing on nearly forty years of teaching and researching US history and politics, I cannot think of a greater victory won by a minority party than the Republican success in forcing a solution to the debt limitation controversy that met GOP preferences.

    I would be grateful if anyone could provide me with a better example.

    The Democrats know all too well that they have been bested.  It's possible to pick out any number of admissions to this effect after the House vote, but two will suffice.  Raul Grijalva (Arizona) declared: "We have given much and received nothing in return.  The lesson today is that Republicans can hold their breath long enough to get what they want." Congressional Black Caucus chair Emmanuel Cleaver of Missouri , a Methodist pastor, graphically described the House bill as a "sugar-coated Satan sandwich."

    Republican success is mainly built on the party's determination to stand by its clearly held beliefs, while the Democrats were always looking for a deal (though not necessarily this one).  The impending crisis of default also played to the advantage of the intransigent party in the negotiations.  Yet it should be recognized that the GOP's success is further built on its ability to define the debt/deficit problem as a spe


  • The debt deal in sight - but what next?

    To the relief of financial markets from the Far East to London and by now Wall Street, the congressional leadership appears to have a debt limit deal to hand.  Assuming that it gets approved by both Houses, however, the debt problem is simply moving onto a different level rather than being resolved.

    There's still a danger that the current imbroglio over debt limitation will result in a downgrading of the US debt by credit rating agencies.  That's less serious than would have happened in the event of a default, but lenders could interpret it as signaling that the US is no longer risk-free in terms of debt repayment.

    More significantly for those of us more interested in the impact of the debt issue on ordinary people, there's a lot of politics still left to flesh out the details of the debt limit agreement.  There's still room for revenue enhancement and a portion of the spending retrenchment will come from the rundown of US involvement in Iraq and Afghanistan.  But that still necessitates a big bite out of federal domestic spending.

    Whatever the distribution of the eventual fiscal retrenchment that will follow a debt limit deal, the effect on the economy is likely to be contraction.  There is a school of economic thought which argues that fiscal austerity brings expansionary ben


  • The Perils of Moderation

    In the past Europeans have often been critical of American political parties for being non-ideological coalitions dedicated to election-winning and deal- making.  Now these distant days seem like a golden age of common sense and pragmatism!

    We hear a lot over here about Republican ideological commitment, currently manifested in intransigence over raising the debt limit.  But we're not sure what to make of the Democrats.  If American politics is polarized, it's difficult to make out where President Obama's party is situated.  They are certainly nowhere near as liberal as the Republicans are conservative - in fact, the partisan battle seems to be right v center-right rather than right v left.  Paul Krugman's commentary "The Centrist Cop-Out" in yesterday's New York Times has certainly resonated over here.   

    President Obama has made so many concessions to the Republican preferences on taxation and spending that it is difficult for us outsiders to make out what the fight is all about.  The agenda seems dominated by the party that controls just one chamber of Congress, while the party that controls the other chamber and the White House appears in retreat from power.

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