Thursday News Headlines

To Find The Roots Of The Next Financial Crisis, Look At Global Debt As the global economy continues to feel the reverberations of the 2008 financial crisis, it might be wise to begin preparing for the next disruptive event. To get the best sense of where the roots of a future crisis reside, American Enterprise Institute scholar Desmond Lachman says one need only follow the global debt because indebtedness is usually the most common cause for economic crises.

And there is reason to be concerned.

“Of particular concern has to be the over-indebtedness in key regions of the global economy. Among the more vulnerable of these regions has to be the formerly rapidly growing emerging-market economies, which now account for around 40 percent of world GDP. Since 2008, corporate indebtedness of the emerging market economies has more than doubled to around $23 trillion, which makes that debt market approximately the same size as the U.S. high-yield debt market,” cautions Lachman.

Writing in Australia’s MoneyMorning, Ken Wangdong echoes Lachman’s concern that global and national economies are trapped (willingly) in a cycle that cannot sustain itself.

Wangdong says governments that rely on debt-driven stimulus to generate economic activity are not actually creating economic growth, but are creating asset bubbles.

“And what happens when you have a bubble? It bursts, sending economic activity to the downside, steeply and quickly. It’s at this point that policymakers take control yet again…pushing the ‘swing’ higher before it has a chance to digest its momentum on the downside. The process repeats, generating more excess, more bubbles, more need for debt-driven stimulus and, unfortunately, more problems for social stability in the long run,” he writes.

US Should Employ Its Power To Coerce More Often
Many of the critics of the deals entered into President Barack Obama with Cuba and Iran note that they agreements appear to offer those nations exactly what they seek without doing much to enforce the demands made on Havana and Tehran. In Cuba, the regime of Raul Castro was supposed to move toward improving human rights and releasing political prisoners, but no movement has been made. In fact, human rights have worsened since Washington relaxed restrictions on the island nation.

Similarly, in the deal with Iran, most agree the enforcement measures are toothless, including giving a heads-up to Iran before inspections. What is needed in both cases is for the administration (and the next) to utilize one of the singular weapons in the US arsenal – coercion.

“While it cannot always substitute for hard military force, the power to coerce can raise the threshold for war as a last resort. The term power to coerce describes techniques that not only have the potential to avoid the use of military force and other existing forms of deterrence, but also to stop, reverse or at least punish transgressions short of force. Developments in recent years, regarding Iran, Russia, Arab dictatorships and others, illuminate both the utility and the limits of the power to coerce,” ­

says David Gompert, former principal deputy director of National Intelligence, is an adjunct senior fellow at the RAND Corporation.

Securing Cities In A Globalized World
The recent wave of terror attacks in Europe and the Middle East and the crises caused by the spread of ebola in Africa and Zika in Latin America may seem to be different threats, but they are both part of a panoply of challenges facing metropolitan areas in a globalized age.

As Michael O’Hanlon and former US Army Chief of Staff Ray Odierno note in a recent article, as cities have grown over the decades, so too have their vulnerabilities. And as drivers of economic growth throughout the world, ensuring the safety and stability of metropolitan areas is an economic and security imperative.

And the burden of protecting large and small cities will fall on the shoulders of various actors beyond law enforcement and civil security forces.

“Not only military, intelligence and law enforcement organizations, but also law and criminal justice systems, schools, businesses and NGOs are crucial players. Cities need to coordinate how they handle immediate crises, how they anticipate and preempt future challenges, and how they improve conditions in places that are breeding grounds as well as transportation and communications hubs for the world’s criminal and extremist movements,” they assert.

With so many organizations and departments playing different roles, cooperation and communication will be essential.

“Cities around the world have already developed many best practices. Much of the challenge is to disseminate them, while sharing insights on how to adapt core principles to various specific circumstances from one region and one metropolitan area to another. Doing so is an important step for strengthening urban security and economic development across the globe,” the pair counsel.

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