Former U.S. President Bill Clinton used to open his speeches--particularly the big ones--with the line, "I was born in a place called Hope." Indeed, Clinton was born in the town of Hope, Ark.--and the concept of "hope," of optimism about the future, has often been a clarion call of the political left. In contrast, conservatives tend to live in a darker world, where realism--and sometimes cynicism--reign. Leaders on the political right such as U.S. President George W. Bush and Prime Minister Junichiro Koizumi distrust optimism and instead encourage their citizens to take off their rose-colored glasses and to see the messy and troublesome world about which the philosopher Thomas Hobbes wrote so much.
For example, Bush on Feb. 8 gave a widely watched interview with Tim Russert on the NBC television show, "Meet the Press," declaring: "I'm a war president. I make decisions here in the Oval Office in foreign policy matters with war on my mind. Again, I wish it wasn't true, but it is true. And the American people need to know they got a president who sees the world the way it is. And I see dangers that exist, and it's important for us to deal with them."
The United States is today a warrior nation, a hegemonic power that wants to redraw the global map of leaders and peoples and nations to make itself and, it argues, the rest of the world, a safer place. But it is tough to be optimistic today, either on the political left or right.
While the United States scared former Iraqi President Saddam Hussein into a hole, it is at the same time sending aid money and buying military basing arrangements in a Central Asian country, which is ruled by a thug no less wicked than Saddam.
While the United States ballyhoos the benefits of democracy and basic human rights, particularly when it comes to legal justice, thousands of detainees have been held for years in relative isolation in Guantanamo Bay without having formal charges brought against them.
While neoconservatives argue that The United States' war on terrorism is a war about values and not oil, our rapidly expanding military presence in the Middle East, the Caucuses and North Africa gives the United States a solid reach into the Caspian oil region and provides it with access to China's western border. Was the Iraq war about oil? No. But certainly the fact that the United States' hand is strengthened in the next great game for oil does not help win hearts and minds around the world.
The world's greatest mountains make their own weather, and their storms can be unpredictable. Today, the United States is making its own weather and startling those nations, such as Japan and in Europe, that are struggling with the currents of power flowing in and around the world's remaining superpower and its shifting grip on the world. At the Group of Seven meeting in Boca Raton, Fla., the United States made its own weather again, punctuating clearly and definitely something the world had already suspected: America is pursuing a weak dollar policy and has abandoned its commitment to and even the rhetoric about a strong dollar.
Since December 2000, the dollar has depreciated by 56 percent against the euro. Over the past year the dollar has slipped about 13 percent against the yen, even though Japan spent 187 billion dollars in 2003 buying all the dollars it could. With Japan and China serving as the United States' largest financiers of its current account deficit, now running at an annual rate of over 5 percent of gross domestic product, the U.S. Treasury bills and bonds held by these foreign governments are sinking in value while at the same time American exporters are enjoying a huge currency-driven advantage in world markets.
To remain competitive, Japan must keep dumping yen and buying dollars; China, on the other hand, has a currency pegged to the dollar, and it is sinking to lower and lower levels. The Europeans, who have intervened in currency markets the least and whose currency is probably the most honest, are in the worst shape.
This flip-flop in U.S. policy is intriguing, as the strong dollar policy was used by the government in the past to increase imports and to keep U.S. wages constrained by the pressures of foreign wage competition. In an election year when Bush wants to exploit every opportunity for short-term economic growth, he is helping factory workers not through Section 201 trade sanctions, which the World Trade Organization recently ruled against, but by devaluing U.S. assets, U.S. labor, and U.S. products. In other words, U.S. is telling the rest of the world that because it provided leadership in Iraq and Afghanistan when no one else would, and because it is leading the war on terrorism, the U.S. economy needs to be pumped up first, even at the expense of allies and friends.
Cynical as this move clearly is, the United States is probably right that it more than any other nation needs to generate growth. On the losing side, Japan is experienced at holding assets of diminishing value. After the 1985 Plaza Accord that pushed the value of the yen to nearly double its value against the dollar, Japanese investments in trophy properties such as the Rockefeller Center, Pebble Beach Golf Course, Columbia Pictures and Universal Studios, bought at sky-high prices, eventually collapsed in value.
It is ironic that Boca Raton, the idyllic getaway for the U.S.'s wealthy elite, is one of the places former U.S. President Richard Nixon disappeared to after the debacle of Watergate, and it was Nixon who on Aug. 15, 1971 repudiated the Bretton Woods agreement that gave foreign governments and central banks the right to redeem dollars for gold at 35 dollars per ounce and on the same day floated the dollar on world markets. Nixon thrived in the harsh realities of a cynical world in which the course of national interest could be charted against the competing interests of other nations. Boca Raton then was the ideal place to consider where floating rates had led the world to today.
The United States prevailed in Florida and insisted that Europe and Japan submit to U.S. "flexibility" regarding the dollar. In exchange, Japan got permission to continue to intervene in foreign exchange markets, and the Europeans earned the right to continue complaining about "excess volatility" in those markets. In other words, the status quo prevailed, but the United States. dropped the facade of arguing that it was pursuing a strong dollar policy.
Stock analysts are famed for dumping stocks they recommend their clients buy and for purchasing stocks that the y have encouraged others to sell. Perhaps the United States' confession that a weak dollar is what it wanted all along really means that a reversal is on the way. At least that is what a cynic might say.
Copyright 2004, The Daily Yomiuri (Tokyo)