The American Strategist

Exports surged 19% year-on-year in the second quarter of 2008 and helped boost GDP growth to 3.3%. Though many think the US has become more competitive, higher exports actually reflect the higher prices of exported food and mineral fuels. Food and beverages accounted for 8.4% of the total goods exports, but because of the increase in prices during the second quarter they made up a staggering 18% of total export growth. Similarly, industrial products were driven up by the increase in refined fuel products.

Snapshot asks, if the commodity bubble has burst and rising commodity prices are driving GDP, what does that imply for third quarter growth?

UBS - Global Economic Perspectives
Wall Street Journal - U.S. Revises GDP Growth Higher

China's leadership is contemplating a RMB 400bn ($58bn) stimulus package that includes large spending on a backlog of transportation projects like subways and railroads, according to JPMorgan. The Chinese government, unlike that of the United States, understands the benefits that infrastructure investments have on increasing efficiency and stimulating a slowing economy. JPMorgan predicts Chinese leaders will release the stimulus once we see more signs of a weakening economy and commodity prices fall further, which would reduce the input costs for strained Chinese producers. If exporters, which make up 37.5% of GDP, are badly hit and shed jobs, infrastructure investment may even prop up private consumption, which has held up remarkably well despite inflating food prices and a falling stock market.

Snapshot asks, can we learn how to invest in public infrastructure and stimulate a slowing economy from the Chinese government?

Investors are fleeing Russian and Georgian assets due to the recent crisis. Russian foreign exchange reserves fell $16.4 billion in the past week, the largest decrease since the 1998 ruble crisis. Yields on ruble bonds rose 75 to 150 basis points and the business community complained about lack of access to credit. One Russian columnist wrote, "The million-headed hydra of the bourgeoisie has sent a signal: ‘change your course comrades!"

Snapshot asks, did the Russian business community yank the reins of the Russian military?

Newsweek - The Bulls Have Left Moscow
Financial Times - Investors quit Russia after Georgia war
Moscow Times - Reserves Plummet $16.4Bln in a Week
Reuters India - Emerging Markets-Russia, Georgia assets extends losses

Today, the day after Pakistani President Pervez Musharraf resigned, Pakistani Ambassador Hussein Haqqani will join New America President Steve Coll and American Strategy Program Director Steve Clemons live at 12:15 today, Tuesday August 19, 2008. 

High commodity prices masked weak economic fundamentals in many commodity exporting countries. Now the risk of a global slowdown is higher, reducing demand for commodities and hurting export revenues in commodity rich countries. Commodity rich Brazil, Russia, and Australia have been hurt by the falling prices while less demand in India and China also indicates there will be a world recession.

Snapshot asks, are we watching a commodity bubble pop or do falling commodity prices indicate a forthcoming world recession?

BNP Paribas - Market Watch
Financial Times - Falling Brics
BullionVault - Demand Destruction & Central Bankers

Foreign Policy (08/18) quotes Steve Clemons on speculation over Obama's coming VP pick.
UN Dispatch (08/18) ponders Steve Clemons' questioning on just what is happening in Pakistan.
Washington Post (08/17) features Peter Bergen analyzing the present state of Al Qaeda.
Middle East Online (08/15) quotes Daniel Levy's analysis on a possible civil war in Gaza.
CBS News (08/14) cites Steve Clemons' analysis on false clams of a Colin Powel Obama endorsement.
Washington Independent (08/14) cites Peter Bergen on terrorist havens in Northeast Pakistan.

The civil society in Pakistan has taken down President Musharraf, not with military might or mass revolts, but with political pressure. Whether Musharraf is loved or hated, we have to applaud Pakistan's political maturity. They, as Bolivia did just a week ago, exercised their rights through law and politics to determine the course their country would take. The peaceful release of presidential power by Musharraf stands in stark contrast to Pakistan's long history of military coups and assassinations.

This is what democracy looks like. It is a complex system that must go beyond the right to vote, far beyond. Elections can only skim the surface of democracy. The pulls and levers, checks and balance, the right to stick with, as in Bolivia, or replace, as in Pakistan, the elected leader: this is true democracy.

Greg Craig, Susan Rice, Barack Obama, Tony Lake, Maj. Gen Scott Gration, Samantha Power/NYT

Scripting America's Priorities:

A Discussion with Authors of the Democratic Party Platform

Click here to Register or Watch 

featured speakers

Susan Rice
Senior Foreign Policy Advisor to Barack Obama
Senior Fellow (on leave), Brookings Institution
Former Asst. Secretary of State

Karen Kornbluh
Principal Author, Democratic Party Platform
Policy Director (on leave), Office of Sen. Barack Obama

comments

Steve Coll
President & CEO
New America Foundation

Maya MacGuineas
President, Committee for a Responsible Federal Budget
Director, Fiscal Policy Program, New America Foundation

moderator

Steve Clemons
Director, American Strategy Program, New America Foundation
Publisher, TheWashingtonNote.com

Chicago Tribune (08/13) quotes Steve Clemons on liberal opposition to a Bayh VP slot.
Pravda (08/13) quotes Flynt Leverett on Georgia's strategic mistake in provoking Russian aggression.
Israel E News (08/13) quotes Daniel Levy on Israel's shaky ceasefire with Hamas.
Washington Independent (08/13) quotes Peter Bergen on safe havens for Al Qaeda.
Financial Times (08/12) cites Steve Clemons on conservatives who support Obama.
Guardian (08/12) mentions Peter Bergen on American elites' evolving attitudes towards fighting terror.

The Hotline (08/12) cites Flynt Leverett on Obama's call for Georgia to disavow force.
US News (08/10) cites Steve Clemons' analysis of the United States' tacit support for Russia's invasion.
Guardian (08/10) quotes Steve Clemons on John Edwards' recent confession.
Houston Chronicle (08/09) quotes Steve Clemons on speculation over Senator Lieberman's VP chances.
Jewish Daily (08/07) features Daniel Levy analyzing a possible civil war in Gaza.
US News (08/01) cites Sherle Schwenninger on the United States' coming $2 trillion deficit.