It's Education, Stupid !

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It’s that time of year when I spend much of my time reading the books that have been nominated for the FT/Goldman Sachs Business Book of the Year. It’s a judging duty that is both a pleasure and a pain. The pain is the sheer amount of time it takes to wade through thousands of pages.  The pleasure is reading books that would not necessarily cross my path. This year, as with the last, many of these books are written by economists and, understandably, focus on the state of the world economy. It is interesting to read how many agree that education and training are crucial to long-term economic success, for individuals, companies and countries. I made a similar argument in my most recent book The Shift, focusing in particular on the types of education and training that create specialization. Here are the two reasons why it has never been so critical to become educated:

• Rampaging connectivity – will see at least five billion people around the world using some form of mobile device to download information, access knowledge and coach and teach each other. Some will have the intellectual capacity and motivation to really make something of this extraordinary opportunity, wherever they happen to be born. These people will want to join the global talent pool and, if possible, migrate to creative and vibrant cities. By doing so, this vast crowd of talented people will increasingly compete with each other, continuously upping the stakes for what it takes to succeed.

• The technological revolution – brought mobile devices to billions, and is now transforming how work gets done. Robots are taking the place of unskilled and semi-skilled workers, while business analytics, modelling and collaborative technologies are taking away much of what has traditionally been the role of the middle manager. However, while technology may be replacing the mechanical aspects of work, it is not replacing the more complex, skilled work that involves creativity and innovation. That’s the high value piece that remains, and it is once that requires education and training. 

As high quality education becomes more of a premium, we can expect the sector to begin to transform itself even more rapidly. Just what this transformation will look like is difficult to predict with accuracy. But here are two emerging trends that I believe will shape it over the coming decades:

The Gutenberg Project: the race is on to digitalise many of the books and articles of the world, while the professors of academic institutions such as MIT are making their key lectures available on the web. Combined with hyper connectivity and the potentially global reach of the Cloud, this means that knowledge and wisdom will be available to anyone with access to the Internet. This could see the development of new ways of educating that leapfrog those of normal educational institutions, creating more fluid, virtual and vibrant networks of learning. 

Virtual Schools and Universities: there has been a great deal of research over the last decade focusing on how people learn. This has looked at e-learning, face-to-face teaching and over-the-phone coaching. What has become clear is that none of these on their own are the best; it’s the combination of all three that has the greatest impact. This is important for educational strategies since at least two of these processes are virtual, and F2F can largely be substituted by video conferencing. I saw the speed of this transformation recently when I visited UOC (Universitat Oberta de Catalunya) in Barcelona. Its sleek headquarters are the hub of a virtual university that has 60,000 students (and growing) taught by a faculty of over 3,000 virtual educators. Using simulations, games and collaborative environments, the institution is building deep expertise in supporting education across the world.

Some have argued that, of all the institutional forms, education has changed least over the past few decades. It looks as if the need for deeper knowledge and rapid advances in learning technologies may change all that.

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Can The U.S. Super Committee Solve The Debt Crisis?

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America’s relentlessly-escalating national debt seems like a problem that defies resolution. Congress and the Obama administration couldn’t solve it recently when they agreed to raise the U.S. debt ceiling by another $2.1 trillion.

see photosAFP/Getty ImagesClick for full photo gallery: 5 Ways The United States Can Get Out Of Debt

Instead of agreeing on measures to reduce the country’s staggering debt, Congress and the president handed off the problem to a so-called Super Committee. The 12-member, bipartisan committee of national legislators, with an equal number of Democrats and Republicans, will study U.S. finances and recommend $1.2 trillion in budget cuts by November 23. (Read more: “Can The U.S. Regain Its AAA Rating?“)

Reaching an Agreement If the committee reaches an agreement on budget cut proposals, Congress must vote approval on them by December 23. If Congress votes on them accordingly, the $1.2 trillion in cuts will go into effect. As usual, however, the issues will be what gets cut and by how much.

There are many items on the committee’s agenda for discussion, including: raising taxes, revamping the tax code, Social Security, Medicare, Medicaid, healthcare for the elderly and the federal retirement program; these are all major issues that have been long debated in Congress.

Also up for debate and possible reduction is the 35% U.S. corporate tax rate. Many Democrats and Republicans agree that the rate is too high relative to rates imposed in other countries. Democrats, however, have proposed plugging tax loopholes as a means of making up the difference in revenue if the corporate rate is lowered.

So the committee may have a difficult time finding ideas that everyone – including their constituents – can agree on. For example, another particularly controversial tax deduction that some legislators proposed eliminating is the home mortgage interest exemption. A USA Today/Gallup poll conducted this spring asked survey participants if they would approve eliminating that deduction if overall tax rates were also lowered. Sixty-one percent opposed the idea.



What if an Agreement Can’t be reached? In the event that the committee fails to reach an agreement, $1.2 trillion in budget cuts will be automatically imposed in equal amounts on domestic and defense spending.

With committee members divided equally along opposing political lines, many observers believe a stalemate is inevitable.

The 12 appointed members are:

• Rep. Jeb Hensarling of Texas (Republican and committee co-chair):  Chairman of the House Republican Conference.   


• Sen. Patty Murray of Washington (Democrat and committee co-chair):  She is a member of the Budget and Appropriations committees.


• Rep. Chris Van Hollen of Maryland (Democrat): Van Hollen is the ranking Democrat on the Budget Committee.


• Sen. Jon Kyl of Arizona (Republican): The number two ranking Republican in the Senate behind Mitch McConnell and a member of the Finance Committee.


• Sen. John Kerry of Massachusetts (Democrat): A former presidential candidate in 2004 against incumbent George W. Bush, he is a member of the Finance Committee.  


• Sen. Pat Toomey of Pennsylvania (Republican): Elected to the Senate last year. Member of  the Senate Budget and Banking committees.


• Sen. Max Baucus of Montana (Democrat): Chairman of the Senate Finance Committee.  Also served on Obama’s debt commission.


• Sen. Rob Portman of Ohio (Republican): Former White House budget director in the Bush administration, and a member of Budget Committee.


• Rep. Xavier Becerra of California (Democrat): A senior member of the House Ways and Means Committee


• Rep. Dave Camp of Michigan (Republican): Chairman of the House Ways and Means Committee.   


• Rep. James Clyburn of South Carolina (Democrat): The third-ranking Democrat in the House and a member of the Appropriations Committee.


• Rep. Fred Upton of Michigan (Republican): Chairman of the House Energy and Commerce Committee.  

Committee members reportedly will draw upon previously proposed solutions from Republican and Democratic legislators, independent groups, Obama’s 2010 bipartisan deficit commission, among others, as a basis for discussion.

The American public, eager for solutions and an end to partisan bickering, have nevertheless been warned by analysts and former policy makers not to expect too much from the committee.

Reaching an Agreement If the committee reaches agreement, as a political and practical matter, the suggestions are expected to be narrow in focus and likely to win Congressional approval, while the still nagging major issues will remain: long term taxes and entitlements.

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Libya, from ally to devil in six months !

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 The big question now is which foreign power will dominate Libya. The United States, which has waged this little war from well offstage? Italy, which gets most of its oil from Libya? France, where President Sarkozy has been hinting at a Mediterranean union – bien sure, under French tutelage?

Image via Wikipedia

By Eric S. Margolis

WATCHING rebel gunmen rampage through Col Muammar Gaddafi's Bab al-Aziziya compound – once Tripoli's Forbidden City – was a strange experience for me.

I spent an evening there with Gaddafi in 1987, a year after it was bombed by US warplanes. Libya's "Brother Leader" talked about the Middle East, Palestine, North Africa. He led me by the hand through his ruined private quarters, still reeking of fire and smoke, and showed me the bed in which an American 1,000kg laser-guided bomb killed his two-year-old adopted daughter.

We sat in his gaily coloured Bedouin tent, talking into the night. He opened up to me about his love for fancy dress and beamed happily when I told him, tongue in cheek, how attractive he was to western women.

Call this dictator nostalgia – a feeling not of course shared by a majority of Libyans who are now trying to hunt down their deposed leader of 42 years. Few will miss him. Gaddafi was a blight on Libya and an embarrassment to the Arabs.

Meanwhile, Libya is literally turning into a gold rush as the big western oil firms pile into Libya and pay court to the new government in Tripoli, the National Transitional Council.

Police units and troops from Britain, France and Italy may soon follow – all, naturally, as part of the west's new "humanitarian intervention" strategy that has replaced "counter-terrorism".

Libya is in semi-chaos and its economy devastated by six months of conflict. The food distribution system has broken down. Thousands of heavily armed "rambos" make their own law. There are barely any state institutions aside from the national oil company and central bank. The secret police have evaporated.

As a modest historian, I am delighted when history draws striking parallels. We now see the fascinating spectacle of those old colonial powers, Britain, France, and Italy, starting to move back into their former overseas possessions.

Britain ruled Libya until a young colonel named Muammar Gaddafi overthrew the doddering old British puppet, King Idris. The US lost one of its largest bomber bases at Libya's Wheelus Field. Neither nation was to forgive Gaddafi.



Imperial Britain had seized Libya from Italy's fascist regime in 1943. Italy colonised Libya after tearing it away from the crumbling Ottoman Empire. Italy used concentration camps and poison gas to terrorise Libyans into submission.

France, whose colonial empire included neighbouring Tunisia, Algeria, Morocco, Chad, and Niger, long competed with Italy and Spain for regional domination. Mussolini's Fascist regime pressed claims to Tunisia, Corsica, Nice and Cannes.

An obscure colonial border dispute over Chad's Aouzou Strip dating from the 1920's between France and Italy led to a nasty little Franco-Libyan border war there in 1987.

French Foreign Legionnaires in jeeps, disguised as Chadian nomads, drove the wretched Libyan army from Aouzou in what became known as the "Toyota War". Disguised French special forces and Legionnaires, as well as Britain's SAS, just used the same theatrical tactics in Libya.

The big question now is which foreign power will dominate Libya. The United States, which has waged this little war from well offstage? Italy, which gets most of its oil from Libya? France, where President Sarkozy has been hinting at a Mediterranean union – bien sure, under French tutelage?

Oil is a potent aphrodisiac. Libya has vast reserves of premium, low-sulphur oil and gas, and a hundred-year supply of ancient artesian water.

Energy-rich Libya will become an important market for European consumer products and industrial exports, as well as a huge major supplier of investment funds from its estimated US$50 billion worth of annual oil exports.

There are more prizes to be had: Libya's gold reserves, estimated at US$4-5 billion; and its nearly US$100 billion of foreign deposits and investments.

The files of its intelligence agencies which may reveal the true story behind the bombings of a French and US airliner in the 1980's.

Western intelligence will also want to talk to Gaddafi's intelligence chief, closest confidant and brother-in-law, Abdullah Senoussi, with whom I spent a most interesting evening in Tripoli. France has a warrant out for his arrest for the 1989 bombing of a UTA airliner over Niger.

It's likely US, British and French intelligence have already grabbed Gaddafi's files.

Eric S. Margolis is an award-winning, internationally syndicated columnist, writing mainly about the Middle East and South Asia. Comments: letters@thesundaily.com

Related Post:
Ex-colonizers aid Libyan Rebels Assault on Tripoli 'planned weeks ago';No easy transition, rebuilding after Gaddafi  

Malaysia's future: A time for Malay renewal !

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A time for renewal, too

Ceritalah By KARIM RASLAN

The debate over Malay identity is fundamental to Malaysia’s future. Only when tensions within the Malay community itself are cooled will the resentment and grievances between Malaysia’s ethnic groups be resolved.

AS I reflect over the events of the fasting month – and indeed the past 12 months – I cannot help but conclude that Malaysian Malays are facing an existential crisis, which is primarily political in nature.

Moreover, because the Muslim/Malay community is dominant numerically; its tribulations will impact the rest of the nation.

In short, no one can be insulated from the community’s uncertainties.

Sadly, Malaysia’s communal peace has been further rocked by the Jais raid on the Damansara Utama Methodist Church (DUMC).

This has been accompanied by a steep increase in the number of claims of Christian proselytising amongst Muslims.

Such fears over murtad are nothing new.

They have been current for years, even decades, peaking in times of political uncertainty: witness the Maria Hertogh riots back in 1950.

However, we need to put things in perspective; 2011 is not 1950.

Malay/Muslims currently outnumber non-Muslims significantly. In short, demography favours the ummah. Moreover, the position of Islam is constitutionally-assured.

Nonetheless, the re-emergence of the murtad issue suggests a more deep-rooted anxiety among Malay-Muslims about the future.

Indeed, there are fundamental concerns about the Muslim response to both globalisation and modernity.

How do we maintain our faith and culture in an era when interaction with non-Muslims has become both a norm and a necessity?

The ummah has responded to such challenges differently and this reflects the Malay/Muslim community’s underlying heterogenity.

Contrary to Umno’s obsession with Malay unity, the community is by no means monolithic.

At the same time, political developments post-2008, have heightened and accentuated these shifts – lending them a partisan hue as PAS, Umno and PKR have weighed in on various issues.

As these differences of opinion surface, we are faced with a secondary challenge: how do we deal with disagreements over what it means to be Malay and Muslim?

Can we maintain our dignity, objectivity and calm when face-to-face with opposing views? How do we manage when our major political parties – PAS and Umno – assume conflicting positions?

Amid the debate, many are electing to withdraw, preferring isolation to engagement. Such a retreat makes dissent, however reasonable, even more complicated and potentially dangerous. To my mind, withdrawal is a disaster.

The Malay community has always possessed an outward-looking mindset. We cannot, and should not, abdicate from our engagement with the world. We have thrived by exchanging ideas and knowledge with others as traders, scholars and travellers. Indeed, the decline of the Muslim world came when we closed our hearts, minds and borders.



Still, I am not disputing the need for Muslims to maintain their faith, but the notion that the only way we can do this is by shunning non-Muslims and/or trampling on the rights of minorities is nonsensical.

Doing so will only reinforce the misperception that Islam is intolerant and regressive. It also hastens our own decline.

Given these concerns I’ve been heartened by Prime Minister Najib Razak’s recent attempts to recapture the centre ground.

His willingness to end censorship and reform the electoral system is most welcome.

It displays an openness (however belated) to listen to others. This is courageous given the narrow-mindedness of many of his fellow party members.

However, opening up in the midst of a debate is always tough. Will tentative changes be enough to satisfy an increasingly restive Malay (and Malaysian) public? Will it be too little and too late?

The debate about Malay identity is fundamental to Malaysia’s future.

It will become increasingly heated and painful. For example, Malay identity cannot be separate from the role of the Rulers. This bond has to be examined and questioned.

Given the depth and breadth of the upcoming debate we must ask whether Umno alone can manage this process? Indeed, has PAS’ greater moral authority sidelined the party of Merdeka?

The consequences of half-hearted reforms are obvious if we look across the Causeway to Singapore where the presidential elections have just been concluded.

While the PAP government deserves praise for allowing all four candidates to campaign openly – providing them with equal mainstream media coverage, there’s no doubt that many Singaporeans feel “shortchanged”.

Reforming from within rarely satisfies. Indeed, Dr Tony Tan’s incredibly slim margin of victory underlines the unhappiness of ordinary Singaporeans who expect much, much more from their politics.

Malaysians will be like their cousins across the Causeway. They won’t be willing to suffer timidity and half-hearted reforms.

Tentative steps will be swept away by a tide of popular resentment. Indeed, boldness will be the only solution.

At a time when the very core of Malay identity is being debated, piecemeal reform will not be enough. Reform will go nowhere unless the state loosens its grip.

The Najib administration must recognise that a mere shift in tactics will not be enough to win back Malaysia’s cynical and jaded electorate, especially the Malays.

The last three years have taught us that the Malay/Muslim community is becoming more complex and indeed, difficult to please.

As Umno and the Prime Minister discovered during the Bersih 2.0 debacle, it is no longer possible to succeed solely on emotive appeals for ethnic and religious unity.

Rather, Najib and his government must be willing to accept the diversity that now exists within Malay discourse, and tailor their policies accordingly.

Indeed, Umno no longer controls the debate.

For instance, economic policies need to champion the interests of middle- and working-class Malays, rather than expecting them to automatically back the ventures of the intra-ethnic elite.

Barisan has to keep asking themselves: what’s really in it for the people?

Furthermore, differing views over culture and faith must be allowed rather than repressed.

Indeed, one feels that such an approach may very well work among every race in Malaysia in general.

All the same, the resentment and grievances between Malaysia’s ethnic groups can only be resolved when tensions within the Malay community itself are cooled.

This Hari Raya must not only be a time of celebration for Malaysian Malays, but also renewal.

Related posts:

Malaysia still in pursuit of full independence 

The true meaning of independence

 Reviving our winning ways     

Rage of the youth is growing !

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By Pankaj Mishra, Guardian News & Media Ltd

Even in the West there is little chance of stable jobs or affordable education. A secure and dignified life seems even more remote for most. Across the world, the rage will grow.

Image Credit: AP

• Supporters of Anna Hazare wave Indian flags and shout slogans during 12th day of Hazare's fast against corruption in New Delhi on Saturday.

In India, tens of thousands of middle-class people respond to a quasi-Gandhian activist's call for a second freedom struggle — this time, against the country's venal "brown masters", as one protester told the Wall Street Journal. Middle-class Israelis demanding "social justice" turn out for their country's first major demonstrations in years. In China, the state broadcaster CCTV unprecedentedly joins millions of cyber-critics in blaming a government that placed wealth creation above social welfare for the fatal high-speed train crash last month.

Add to this the uprisings against kleptocracies in Egypt and Tunisia, the street protests in Greece and Spain, and you are looking at a fresh political awakening. The grievances may be diversely phrased, but public anger derives from the same source: extreme and seemingly insurmountable inequality.

As Forbes magazine, that well-known socialist tool, describes it, protesters everywhere are driven by "the conviction that the power structure, corporate and government, work together to screw the broad middle class" (and the working class too, whose distress is not usually examined in Forbes).

For years now, the mantra of ‘econ-omic growth' justified government interventions on behalf of big business and investors with generous tax breaks (and, in the West, the rescue of criminally reckless speculators with massive bailouts). The fact that a few people get very rich while the majority remains poor seemed of little importance as long as the GDP figures looked impressive.



In heavily populated countries like India, even a small number of people moving into the middle class made for an awe-inspiring spectacle.

Helped by a ‘patriotic' corporate media, you could easily ignore the bad news — the suicides, for instance, of hundreds of thousands of farmers. However, the illusions of globalisation shattered when even its putative beneficiaries — the educated and aspiring classes — began to hurt from high inflation, decreasing access to education and other opportunities for upward mobility.

False promises

Economic growth is no defence against the frustration of the semi-empowered. The economies of both India and Israel have recorded dramatic growth in recent years. But inequality has also grown spectacularly. The Financial Times, which recently compared India's oligarchic business families to Russia's mafia-capitalists, pointed out two weeks ago that "the 10 largest business families in Israel own about 30 per cent of the stock market value" while one quarter of Israeli families live below the poverty line.

Last month the Indian supreme court blamed increasing social violence in the country on the "false promises of ever-increasing spirals of consumption leading to economic growth that will lift everyone".

Obviously it is not the supreme court's remit to define India's economic policies. Nor should Anna Hazare be entrusted with establishing the office of an anti-corruption ombudsman, a mission that amounts to nothing in a country littered with compromised and impotent institutions.

Still, they respond, however incoherently, to a crisis of legitimacy afflicting their country's highest institutions, and their supposed watchdog, the media.

In the last decade, billionaires, ‘billionaire-friendly' legislators and CEO-worshipping journalists have together constituted what the political economist Ha Joon Chang calls a "powerful propaganda machine, a financial-intellectual complex backed by money and power".

Nevertheless, the real facts about ‘economic growth' are getting through to those most vulnerable to it in both the east and the west: the young.

Denouncing "the corruption among politicians, businessmen and bankers" that leaves "us helpless, without a voice", the manifesto of the Spanish indignados could have been authored by the Indian supporters of Hazare.

Even as they export jobs and capital to Asia, economic globalisers in the West continue to preach the importance of upgrading skills at home. Yet the dead-end of globalisation looms clearly before Europe and America's youth: little chance of stable employment, or even affordable education.

The violence in European cities this year comes at the end of a long cycle of steady socio-economic growth. In postcolonial India and China this cycle had barely begun before it began to splutter. A secure and dignified life seems even more remote for most.

Worried by the prospect of social unrest, China's leaders frankly describe their nation's apparently booming economy as "unstable, unbalanced, uncoordinated and ultimately unsustainable".

The Chinese philosopher Zhang Junmai once wrote that an agrarian country has few ‘material demands' and can exist over a long period of time with ‘poverty but equality, scarcity but peace'. Returning to an austere age of wisely managed expectations is no longer possible — even if it was desirable. It remains to be seen what political forms this summer's unrest will take. But there is no doubt that many more people across a wide swathe of the world will awaken with rage to what Zhang warned against: "A condition of prosperity without equality, wealth without peace."

Pankaj Mishra's new book The Revenge of the East will be published next year

Making a Chinese dream come true

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CHINA DAILY By ZHU YUAN

BEIJING: Although Chinese People’s American Dream by Shui Guang was only published recently, it was written more than a decade ago when an increasing number of Chinese people who had left China to study abroad began to consider pursuing their career back home.

It made me wonder whether there is a Chinese dream. And if so, what is it?

Without a native religion in the sense of Christianity or Islam, Chinese people’s ethos is characterised by pragmatism.

There is a Peking Opera piece called Happi­ness from Heaven, its lyrics describe a world in which good weather guarantees a bumper harvest, clean and honest government does not impose heavy taxes, well-disciplined residents do not make unreasonable demands, and everyone lives in happiness and peace.
This would be the dream that the majority of Chinese people pursued in ancient times, when they knew little about science, demo­cracy and social institutions.

This dream was shattered when Western powers forced open China’s door and Western ideas of science and democracy entered the country.

Despite the fact that many ordinary residents still cherished the dream of leading a peaceful and comfortable life, characterised by having land to plough and enough food to feed their family, the ideal of creating a society of equality and fairness appealed to some Chinese intellectuals. Hence, the years of civil wars and the struggle for state power between two major political parties dominated the first half of the last century.



If Chinese people had a dream during that period, it was for nothing more than to live in peace.

The founding of People’s Republic of China was the start of a period in which collective consciousness left little room for people to pursue an individual dream. They were told that everyone would be able to get what he or she needs in a communist society, but people must first make sacrifices for its realisation and the common good.

It was not until the late 1970s when the reform and opening-up policy was implemented that Chinese residents as individuals started to pursue their own dreams again.

Market competition in a great variety of fields made it possible for individuals to be audacious enough to cherish a dream of prosperity and success that might be achieved through their own efforts.

After more than half a century of state employment, Chinese people could quit their job to start a business on their own, they could go abroad to study, they could even idle away their time if they had the means to support themselves. They could do anything as long as they did not break the law.

Yet, the dream of a better life is not as simple as it used to be. People used to be content with having enough to eat and wear and a place to live. With much higher living standards and more materialistic temptations, they now have much higher demands of life.

To be a true Chinese Dream, the opportunity should be there for all. However, the increasingly serious corruption among government officials and the widening gap between the haves and have-nots tilt the distribution of social resources and wealth in favour of those in power and those who can manipulate power with money and/or connections. This dampens ordinary residents’ enthusiasm to struggle for their dreams and encourages people to make their dream come true through irregular means.

Common prosperity once identified by Deng Xiaoping as the ultimate goal of economic reform and opening-up necessitates a political will to ensure that the distribution of social wealth is fair.
Image via Wikipedia
A Chinese dream, if there is one, should not be that different from its American counterpart – that life can be better, richer and fuller for everyone, with opportunity for each according to ability and achievement regardless of social class or circumstances of birth.

But to achieve this, great efforts are needed on the part of the government and all residents to create an environment in which, as Confucius said, people can go confidently in the direction of their dreams and live the life they have imagined.

US Treasuries not safe, said don

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Don: US Treasuries not safe, emerging economies should find other ways to buffer themselvesImage via Wikipedia

JACKSON HOLE, Wyoming: Emerging economies should find other ways to buffer themselves from global crises than stockpiling US government debt, a prominent economist argued.

US Treasuries and the debt of other advanced nations might be liquid, but it was far from safe, Cornell University professor Eswar Prasad said in a paper presented to a group of central bankers gathered here.

Emerging countries seeking protection from global shocks by individually stocking up on US debt would be better off banding together to create a pool of funds that could be drawn on in a crisis, he argued. Doing so would give them a backstop should they need it, without saddling their national investment portfolios with debt that could turn sour.



Sharply rising levels of public borrowing and weak growth prospects in the United States mean that over time the dollar will continue to decline against the currencies of faster-growing emerging markets, eroding the value of emerging nations' foreign investments, he said. And the risks are not only for the long-term. The United States' near brush with default earlier this month, as lawmakers refused to raise the country's borrowing ceiling until a deficit-cutting deal was reached, brought the potential pitfalls of holding US debt into sharp relief.

“As demonstrated by recent events in the eurozone, bond investors both domestic and foreign can quickly turn against a vulnerable country with high debt levels, leaving the country little breathing room on fiscal tightening and precipitating a crisis,” Prasad wrote. “The US is large, special and central to global finance, but the tolerance of bond investors may have its limits.”

The dollar has long been the world's main reserve currency, and since the financial crisis emerging economies have built their reserves by buying Treasuries and the debt of a few other advanced economies, according to Prasad.

Any change could hurt the ability of the United States to borrow at low rates despite soaring debt levels.
That would turn the tables in a world where traditionally it was developed nations that pressured developing ones to bring their finances under control, he said.

“It is high time for advanced economies to take the tonic of macroeconomic and structural reforms that they have for so long dispensed to the emerging markets,” he said. Reuters

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