Category Archives: Global Economics

Sinking Atlantic Coastline Meets Rapidly Rising Seas

My Comments: Our esteemed Governor, Rick Scott, has decreed that the phrase ‘climate change’ cannot be uttered by any state employee. OK.

But it doesn’t change the reality that the planet is experiencing a warming trend that may or may not be influenced by advances in human activity. The reality is that for the foreseeable future, our coastlines, and those who live there, are going to be increasingly under threat. I happen to live in central Florida where coastal flooding last happened many millions of years ago and I suspect I’ll be long gone before it happens again.

But my grandchildren will experience over the next 70 years and more what some of us can rationally predict will happen. Some effort by our elected leaders, to mitigate the threat, seems to be a rational expectation.

By John Upton, Climate Central on April 14, 2016

The 5,000 North Carolinians who call Hyde County home live in a region several hundred miles long where coastal residents are coping with severe changes that few other Americans have yet to endure.

Geological changes along the East Coast are causing land to sink along the seaboard. That’s exacerbating the flood-inducing effects of sea level rise, which has been occurring faster in the western Atlantic Ocean than elsewhere in recent years.

New research using GPS and prehistoric data has shown that nearly the entire coast is affected, from Massachusetts to Florida and parts of Maine.

The study, published this month in Geophysical Research Letters, outlines a hot spot from Delaware and Maryland into northern North Carolina where the effects of groundwater pumping are compounding the sinking effects of natural processes. Problems associated with sea level rise in that hot spot have been — in some places — three times as severe as elsewhere.

“The citizens of Hyde County have dealt with flooding issues since the incorporation of Hyde County in 1712,” said Kris Noble, the county’s planning and economic development director. “It’s just one of the things we deal with.”

On average, climate change is causing seas to rise globally by more than an inch per decade. That rate is increasing as rising levels of greenhouse gases in the atmosphere trap more heat, melting ice and expanding ocean waters. Seas are projected to rise by several feet this century — perhaps twice that much if the collapse of parts of the Antarctic ice sheet worsens.

Ocean circulation changes linked to global warming and other factors have been causing seas to rise much faster than that along the sinking mid-Atlantic coastline — more than 3.5 inches per decade from 2002 to 2014 north of Cape Hatteras in North Carolina, a recent study showed.

The relatively fast rate of rise in sea levels along the East Coast may have been a blip — for now. The rate of rise recorded so far this century may become the norm during the decades ahead. “Undoubtedly, these are the rates we’re heading towards,” said Simon Engelhart, a University of Rhode Island geoscientist.

Engelhart drew on data from prehistoric studies and worked with two University of South Florida, Tampa scientists to combine it with more modern GPS data to pinpoint the rates at which parts of the Eastern seaboard have been sinking.

Their study revealed that Hyde County — a sprawling but sparsely populated farming and wilderness municipality north of the Pamlico River — is among the region’s fastest-sinking areas, subsiding at a little more than an inch per decade.
CONTINUE-READING

High and Dry: Climate Change, Water, and the Economy

blackhole2My Comments: This video appeared on http://www.worldbank.org. It reminded me of comments from several years ago by Thomas P.M. Barnett, an American military geostrategist and former Chief Analyst at Wikistrat. He argued that over the next few decades, the US would remain the pre-eminent global society because we alone, perhaps along with Canada, have the necessary resources to feed ourselves. In short, the availability of, and ability to produce food, will be the primary determinant of who survives. But without water, there will be little food.

A new World Bank reports finds that water scarcity, exacerbated by climate change, could hinder economic growth, spur migration, and spark conflict. However, most countries can neutralize the adverse impacts of water scarcity by taking action to allocate and use water resources more efficiently.

Here’s a short video that presents the analysis:

https://youtu.be/bTO6bNhsHl4
________________________________________
Key Findings
• Water scarcity, exacerbated by climate change, could cost some regions up to 6% of their GDP, spur migration, and spark conflict.
• The combined effects of growing populations, rising incomes, and expanding cities will see demand for water rising exponentially, while supply becomes more erratic and uncertain.
• Unless action is taken soon, water will become scarce in regions where it is currently abundant – such as Central Africa and East Asia – and scarcity will greatly worsen in regions where water is already in short supply – such as the Middle East and the Sahel in Africa. These regions could see their growth rates decline by as much as 6% of GDP by 2050 due to water-related impacts on agriculture, health, and incomes.
• Water insecurity could multiply the risk of conflict. Food price spikes caused by droughts can inflame latent conflicts and drive migration. Where economic growth is impacted by rainfall, episodes of droughts and floods have generated waves of migration and spikes in violence within countries.
• The negative impacts of climate change on water could be neutralized with better policy decisions, with some regions standing to improve their growth rates by up to 6% with better water resource management.
• Improved water stewardship pays high economic dividends. When governments respond to water shortages by boosting efficiency and allocating even 25% of water to more highly-valued uses, such as more efficient agricultural practices, losses decline dramatically and for some regions may even vanish.
• In the world’s extremely dry regions, more far-reaching policies are needed to avoid inefficient water use. Stronger policies and reforms are needed to cope with deepening climate stresses.
• Policies and investments that can help lead countries to more water secure and climate-resilient economies include:
o Better planning for water resource allocation
o Adoption of incentives to increase water efficiency, and
o Investments in infrastructure for more secure water supplies and availability.

7 Things That Will Soon Disappear Forever

My Comments: I try hard to worry only about the present and the future. Here are seven things I took for granted today that will soon be gone. Trying to bring these back, even if they hold good memories for us, will not be possible. I tell myself to get used to it, but it’s not always easy.

By David Muhlbaum, Ed Maixner and John Miley – April 19, 2016

Ten years ago, thousands of Blockbuster Video stores occupied buildings like the one above all over the country, renting DVDs and selling popcorn. Today, they’re virtually all gone. The company’s shares once traded for nearly $30. Now Blockbuster is a penny stock.

Obsolescence isn’t always so quick or so complete, but emerging technologies and changing practices are sounding the death knell for other familiar items. Check out these seven that we’ll be saying goodbye to soon.

Few things are as symbolic of farming as the moldboard plow, but the truth is, the practice of “turning the soil” is dying off.

Modern farmers have little use for it. It provides a deep tillage that turns up too much soil, encouraging erosion because the plow leaves no plant material on the surface to stop wind and rain water from carrying the soil away. It also requires a huge amount of diesel fuel to plow, compared with other tillage methods, cutting into farmers’ profits. The final straw: It releases more carbon dioxide into the air than other tillage methods.

The plow is winding down its days on small, poor farms that can’t afford new machinery. Most U.S. cropland is now managed as “no-till” or minimum-till, relying on herbicides and implements such as seed drills that work the ground with very little disturbance, among other practices.

By the end of this decade, digital formats for tablets and e-readers will displace physical books for assigned reading on college campuses, The Kiplinger Letter is forecasting. K–12 schools won’t be far behind, though they’ll mostly stick with larger computers as their platform of choice.

Digital texts figure to yield more bang for the buck than today’s textbooks. Interactive software will test younger pupils’ mastery of basic skills such as arithmetic and create customized lesson plans based on their responses. Older students will be able to take digital notes and even simulate chemistry experiments when bricks-and-mortar labs aren’t handy.

This is a mixed bag for publishers. They’ll sell more digital licenses of semester- or yearlong usage of electronic textbooks as their customers can’t turn to the used-book marketplace anymore. On the other hand, schools will seek free online, open-source databases of information and collaborate with other institutions and districts to develop their own content on digital models, cutting out traditional educational publishers.

Every year it seems that an additional car model loses the manual transmission option. Even the Ford F-150 pickup truck can’t be purchased with a stick anymore.

The decline of the manual transmission (in the U.S.) has been decades in the making, but two factors are, ahem, accelerating its demise:

Number one: Automatics are getting more efficient, with up to nine gear ratios, allowing engines to run at the lowest, most economical speeds. Many Mazdas and some BMWs, among others, now score better fuel mileage with an automatic than with a stick.

Number two: Among high-performance cars, such as Porsches, “automated” manual shifts are taking hold. They do away with the clutch pedal and use electronics to control shifting instead. The result: Shifting is faster than even for the most talented clutch-and-stick jockey. Plus, the costs on these are coming down, and they can be found in less-expensive sporty cars, such as the Golf GTI.

Even the biggest of highway trucks are abandoning the clutch and stick for automatics, for fuel-efficiency gains and to attract more drivers who won’t need to learn how to grind the gears.

A small segment of enthusiast cars, such as the Ford Mustang, as well as a few price-leader economy models, such as the Nissan Versa and Ford Fiesta, will continue to offer the traditional three-pedal arrangement for some years to come. “It will be reserved for the ‘driver’s vehicle,’” says Ivan Drury, an analyst for Edmunds.com. But dealers will stock only a handful of the cars, and some will need to be special-ordered.

First-class mail volume is plummeting, down 55% from 2004 to 2013. So, around the country, the U.S. Postal Service has been cutting back on those iconic blue collection boxes. The number has fallen by more than half since the mid 1980s. Since it costs time and fuel for mail carriers to stop by each one, the USPS monitors usage and pulls out boxes that don’t see enough traffic.

Some boxes will find new homes in places with greater foot traffic, such as shopping centers, public transit stops and grocery stores. But on a quiet corner at the end of your street? Say goodbye.

No, government energy cops are not going to come yank the lightbulbs out of your fixtures, as some firebrand politicians foment. But the traditional incandescent lightbulb that traces its roots back to Thomas Edison is definitely on its way out. As of January 1, 2014, the manufacture and importation of 40- to 100-watt incandescent bulbs became illegal in the U.S., part of a much broader effort to get Americans to use less electricity.

Stores can still sell whatever inventory they have left, but once the hoarders have had their run, that’s it. And with incandescent bulbs burning for only about 1,000 hours each, eventually they’ll flicker out.

The lighting industry has moved forward with compact fluorescents, LEDs, halogen bulbs and other technologies.

Soon, the only places you’ll still see the telltale glow of a tungsten filament in a glass vacuum will be in three-way bulbs (such as the 50/100/150 watt), heavy-duty and appliance bulbs, and some decorative bulbs.

If you are online, you better assume that you already have no privacy and act accordingly. Every mouse click and keystroke is tracked, logged and potentially analyzed and eventually used by Web site product managers, marketers, hackers and others. To use most services, users have to opt-in to lengthy terms and conditions that allow their data to be crunched by all sorts of actors.

The list of tracking devices is set to boom, as sensors are added to appliances, lights, locks, HVAC systems and even trash cans. Other innovations: Using Wi-Fi signals, for instance, to track movements, from where you’re driving or walking down to your heartbeat. Retailers will use the technology to track in minute detail how folks walk around a store and reach for products. Also, facial-recognition software that can change display advertising to personalize it to you (time for a mask?). Transcription software will be so good that many businesses will soon collect mountains of phone-conversation data to mine and analyze.

And think of this: Most of us already carry around an always-on tracking device for which we usually pay good money—a smart phone. Your phone is loaded up with sensors and GPS data, and will soon collect lots of health data, too.

One reason not to fret: Encryption methods are getting better at walling off at least some aspects of our digital lives. But living the reclusive life of J.D. Salinger might soon become real fiction.

If you want to hear the once-familiar beeps and whirs of a computer going online through a modem, you will soon need to do that either in a museum or in some very, very remote location.

According to a study from the Pew Foundation, only 3% of U.S. households went online via a dial-up connection in 2013. Thirteen years before that, only 3% had broadband (Today, 70% have home broadband). Massive federal spending on broadband initiatives, passed during the last recession to encourage economic recovery, has helped considerably.

Some providers will continue to offer dial-up as an afterthought for those who can’t or don’t want to connect via cable or another broadband means. But a number of the bigger internet service providers, such as Verizon Online, have quit signing up new dial-up subscribers altogether.

Keeping America Great (Again)

flag USMy Comments: Despite what some so called “leaders” are exclaiming, America is still a great place to live, work and dream. Sure, there are some troubling issues to deal with, but tell me, was there any point in time when there was perfection. I don’t believe you can.

Personally, I’m far more interested in what is happening today and how we can best improve on an already successful model. For example, I’m having doubts about my long held belief in free trade. As I now look at it, I realize it too has been hijacked by special interests that could care less whether I’m alive or not.

More than once I’ve shared on this forum the thoughts of Scott Minerd, who is the Chairman of Investments and Global Chief Investment Officer for Guggenheim Partners. I like how he thinks and how he expresses his thoughts. I also recognize that you don’t achieve a title like his without knowing what the hell is going on.

The following paragraphs come from Guggenheims Fixed-Income Outlook | First Quarter 2016. There’s always jargon when the subject is economics, but some is necessary. Here you have to understand the distinction between macro economics and micro economics. An analogy you might appreciate is understanding and appreciating the quality of the American beef industry and understanding and appreciating the quality of the steak you are buying from Publix. From a macro perspective, Is the industry healthy and functioning well and from a micro perspective, is the steak you buy going to be tender and tasty?

Here is Scott Minerds Macroeconimic Outlook.

Fears of a 2016 U.S. recession are overblown. A rebalancing oil market should calm markets in the second half of the year.

A sharp selloff in global equities and continued volatility in credit markets have rattled investors, but we do not believe the factors roiling the markets will derail the ongoing U.S. expansion. A stronger dollar has weighed on the U.S. economy, but consumer spending, which accounts for 70 percent of the U.S. economy, has been resilient. Aided by the windfall of lower energy prices, final domestic demand contributed 2.5 percentage points to real GDP growth in 2015 (see chart, top right).

The labor market is now operating near full employment with the unemployment rate at 4.9 percent, and tight labor market conditions are beginning to spur faster wage growth. Based on our analysis of these and other factors, we believe the U.S. economy is fundamentally sound, and find little evidence to support the conclusion that the economy will fall into a recession in 2016. Our base case is that the next recession will arrive in 2018 or later.

The decline in oil prices may be helping consumers, but as our sector managers relate throughout this report, it has taken a toll on corporate credit. Our research team’s oil model indicates that oil prices will rise toward $40 per barrel in 2016, however, as global supply and demand rebalance (see chart, bottom right).

Despite the relative health of the U.S. economy, markets are questioning the Fed’s resolve to increase rates. Giving rise to this view are concerns that sluggish global growth will hold back the U.S. expansion, that inflation will remain below the Fed’s target for longer, and that tighter conditions in credit markets have raised recession risks. Our view is that the Fed remains focused on fulfilling its dual mandate objectives of maximum employment and price stability, and thus is biased toward normalizing policy. We expect further declines in the unemployment rate as job gains outstrip growth in the labor force. Meanwhile, core and headline inflation should move closer to the Fed’s target by year end, reflecting our forecasts for a tighter labor market and a modest rise in oil prices. This should keep a couple of Fed rate hikes on the table in 2016, which we would interpret as a sign that the
expansion remains intact. A solid macroeconomic backdrop and a rebalancing oil market should support an improving credit picture in the second half of 2016.
16-03-18 $40 barrel oil

Britain Is Sleepwalking Into A New Recession

My Comments: Never mind for the moment whether Britain decides to leave the European Union or not. They are now a key player in the world economy and a critical player in the world’s efforts to push back against terrorism.

Removing themselves from the EU “…because we had it better before…” is similar to the old king standing on the beach telling the tide to recede. There’s a parallel in this country by folks wanting to ‘take back America”. Not going to happen, if for no other reason than they cannot answer the simple question “from whom”.

There’s more to this article that I’ve put here in this post so if you are still interested, go to the link at the end and see the rest of the reasons behind this argument.

Jim Edwards Mar. 12, 2016

There are two types of people in Britain right now. People who are asleep, and people who are awake.

The sleepers think that the economy has never been better. Jobs are up. Unemployment is down. Things are good. Most people, including you, are asleep.

And then there are the people who are awake. We call these people economists. They spend their time looking into the future, and mostly they see an economic slump coming. They are alarmed by it. That’s why the ECB reduced interest rates to zero last week.

But weirdly, it feels like we’ve never had it so good. Here is our current situation according to a great set of charts from Barclays:

Technically, we’re at full employment. Self-employment rates are high. The current employment rate is the highest since records began in the mid 1970s.

But economists don’t care much about the present. They want to know what’s going to happen next. And what they’re seeing is scary. The economy is slowing down, and many of the key indicators are in decline.

We’re sleepwalking into the next recession.

Scroll on for a scary look at the future …

Wages are up and hours worked are down. That’s a good thing for workers. It may even be holding back growth overall — ideally, you want everyone to be as productive as possible. But the fact that workers can reduce their hours while pay stays high in a low-inflation environment means this is as sunny as it gets for workers.

Job creation in the UK is fantastic right now — the bulk of new jobs are high-skilled, the kind that carry high wages, and high productivity. There are fewer low-skilled jobs being created. But that is pretty much the end of the good news because …

CONTINUE-READING

Oil Wars; Saudi Arabia May Have Screwed The Pooch

oil productionMy Comments: If you are concerned about how fracking is an environmental threat, this might interest you. Much of our collective angst is driven by the runup to next November’s presidential election. All the while, however, there are forces at work beyond our control that will greatly influence how our lives play out over the next 20 years, much less the next four.

This article, from the New York Times, describes events in the Middle-East that impact the oil dependency of the United States, how Russia and other influential countries around the world react to each other, and, by extension, effect our economy and how we define what is in our best interest for the next generation of Americans.

By ANDREW SCOTT COOPER MARCH 12, 2016

FOR the past half-century, the world economy has been held hostage by just one country: the Kingdom of Saudi Arabia. Vast petroleum reserves and untapped production allowed the kingdom to play an outsize role as swing producer, filling or draining the global system at will.

The 1973-74 oil embargo was the first demonstration that the House of Saud was willing to weaponize the oil markets. In October 1973, a coalition of Arab states led by Saudi Arabia abruptly halted oil shipments in retaliation for America’s support of Israel during the Yom Kippur War. The price of a barrel of oil quickly quadrupled; the resulting shock to the oil-dependent economies of the West led to a sharp rise in the cost of living, mass unemployment and growing social discontent.

“If I was the president,” Secretary of State Henry Kissinger fumed to his deputy Brent Scowcroft, “I would tell the Arabs to shove their oil.” But the president, Richard M. Nixon, was in no position to dictate to the Saudis.

In the West, we have largely forgotten the lessons of 1974, partly because our economies have changed and are less vulnerable, but mainly because we are not the Saudis’ principal target. Predictions that global oil production would eventually peak, ensuring prices stayed permanently high, never materialized. Today’s oil crises are determined less by the floating price of crude than by crude regional politics. The oil wars of the 21st century are underway.

In recent years, the Saudis have made clear that they regard the oil markets as a critical front line in the Sunni Muslim-majority kingdom’s battle against its Shiite-dominated rival, Iran. Their favored tactic of “flooding,” pumping surplus crude into a soft market, is tantamount to war by economic means: the oil trade’s equivalent of dropping the bomb on a rival.

In 2006, Nawaf Obaid, a Saudi security adviser, warned that Riyadh was prepared to force prices down to “strangle” Iran’s economy. Two years later, the Saudis did just that, with the aim of hampering Tehran’s ability to support Shiite militia groups in Iraq, Lebanon and elsewhere.

Then, in 2011, Prince Turki al-Faisal, the former chief of Saudi intelligence, told NATO officials that Riyadh was prepared to flood the market to stir unrest inside Iran. Three years later, the Saudis struck again, turning on the spigot.

But this time, they overplayed their hand.

When Saudi officials made their move in the fall of 2014, taking advantage of an already glutted market, they no doubt hoped that lower prices would undercut the American shale industry, which was challenging the kingdom’s market dominance. But their main purpose was to make life difficult for Tehran: “Iran will come under unprecedented economic and financial pressure as it tries to sustain an economy already battered by international sanctions,” argued Mr. Obaid.

Oil-producing countries, especially ones like Russia, with relatively undiversified economies, base their budgets on oil prices not falling below a certain threshold. If prices plunge below that level, fiscal meltdown looms. The Saudis expected a sharp reduction in oil prices not just to hurt the American fracking industry, but also to hammer the economies of Iran and Russia. That in turn would weaken their ability to support allies and proxies, particularly in Iraq and Syria.

The tactic had been brutally effective in the past. This was the grim scenario that confronted the shah in 1977 when the Saudis flooded the oil market to rein in Iran’s influence. The 1977 flood was not the sole cause of the Iranian revolution, but it certainly was a factor: The shah’s rule was destabilized just as Ayatollah Ruhollah Khomeini mounted his offensive to replace a pro-Western monarchy with a theocratic state. In that sense, the oil markets fueled the rise of political Islam.
The price of oil also helped end the Cold War. Then, like Russia today, the Communist superpower was a global energy producer heavily reliant on revenues from oil and gas. In 1985-86, the Saudis’ decision to flood the market — which some believe was encouraged by the Reagan administration — led to a collapse in prices that sent the Soviet economy into a tailspin.

“The timeline of the collapse of the Soviet Union can be traced to Sept. 13, 1985,” wrote the Russian economist Yegor Gaidar. “On this date Sheikh Ahmed Zaki Yamani, the minister of oil of Saudi Arabia, declared that the monarchy had decided to alter its oil policy radically.”

Today, in Russia, fully half of government revenue comes from oil and gas. Even if oil returns to $40 a barrel — it twice fell below $30 earlier this year — that depressed price still creates “a dangerous scenario,” according to Mikhail Dmitriev, a former Russian deputy economic minister. Inflation in Russia hit double digits last year; its sovereign wealth fund, which bails out struggling Russian companies, is depleted; and factory closings are fueling labor unrest.

Unhappily for President Vladimir V. Putin, Russia’s fiscal crisis has coincided with his military interventions in eastern Ukraine and Syria. If Russia’s economy worsens and Mr. Putin feels cornered, he may look for ways to distract the Russian people with more rally-round-the-flag provocations, as well as induce panic in the oil markets about supplies and gin prices back up.

Future shock has already arrived for oil producers like Venezuela, whose economy has been gutted by lost revenues from oil, which makes up 95 percent of its export earnings. With inflation predicted by the International Monetary Fund to reach 720 percent this year, Venezuela has become a financial zombie state — a harsh reminder of what can happen to countries that rely so heavily on a single unstable commodity price. President Nicolás Maduro is at the mercy of the markets that, every day, nudge his tottering regime nearer the abyss.

Another oil producer, Nigeria, is running out of money, hobbling President Muhammadu Buhari’s campaign against the Islamist Boko Haram insurgents in the northeast. The plunge in oil prices has also shaken Central Asia, where Azerbaijan and Kazakhstan have expressed interest in emergency bailouts from the I.M.F. and other lenders.

In the Middle East, reduced oil revenues have restricted Iraq’s ability to wage war against the Islamic State. Persian Gulf oil producers like Qatar and the United Arab Emirates estimate collective losses of $360 billion in export earnings in the past year. Such a big budgetary hole poses problems with maintaining order at home while fighting wars in Syria and Yemen, and propping up cash-strapped allies like Egypt.

And then there is Saudi Arabia itself.

All the evidence suggests that Saudi officials never expected oil prices to fall below $60 a barrel. But then they never expected to lose their sway as the swing producer within the Organization of the Petroleum Exporting Countries, or OPEC. Despite wishful statements from Saudi ministers, the kingdom’s efforts last month to make a deal with Russia, Venezuela and Qatar to restrict supply and push up prices collapsed.

The I.M.F. has warned that if government spending is not reined in, the Saudis will be bankrupt by 2020. Suddenly, the world’s reserve bank of black gold is looking to borrow billions of dollars from foreign lenders. King Salman’s response has been to promise austerity, higher taxes and subsidy cuts to a people who have grown used to state largess and handouts. That raises questions about the kingdom’s internal cohesion — even as the king decided to shoulder the burden of regional security in the Middle East, fighting wars on two fronts. Has there ever been an oil state as overleveraged at home and overextended abroad?

Meanwhile, by concluding the historic nuclear agreement, Iran is getting out from under the burden of economic sanctions. It will not be lost on Riyadh that this adds another oil producer to the world market that it can no longer control.

The instability and economic misery for smaller oil-producing states like Nigeria and Azerbaijan look set to continue. But that’s collateral damage. The real story is how the Saudis have been hurt by their own weapon.

Andrew Scott Cooper is the author of “The Oil Kings: How the United States, Iran and Saudi Arabia Changed the Balance of Power in the Middle East” and the forthcoming “The Fall of Heaven: The Pahlavis and the Final Days of Imperial Iran.”

Obama’s Implicit Foreign Policy

flag USMy Comments: As an immigrant and naturalized US citizen, and having lived in foreign countries during my lifetime, I’m endlessly interested is world affairs.

Many of the so called ‘political elites’ these days seem to be unaware that the world today is quite different from what it was as little as 25 years ago. I, for one, would hope they start talking about the reality of the future instead of worrying about the past.

This imaginary speech by Obama reflects, in my opinion, how the global landscape has changed and how we as a people should evaluate ourselves and our elected leaders. We do it with ourselves to remain relevant with our changing environment; why not apply some of those same ideas and steps when selecting our next set of leaders.

Roger Cohen FEB. 25, 2016 http://www.nytimes.com

WASHINGTON — This is the speech President Obama did not make on his foreign policy (with thanks to Stephen Heintz, a shrewd observer of America’s role in the world):

My fellow Americans:

I have based my foreign policy on some tough realities that are hard to talk about because no American likes to hear about the limits of our power. But those limits have grown. American power in the 21st century cannot be what it was in 1945 — or even in 1990.

To say this is to be accused of defeatism, of managing American decline and of giving up on American exceptionalism. That is why I have pursued an implicit foreign policy rather than an explicit one. That is why I waited so long to give this speech on my doctrine of restraint. No president wants to make a speech called “The Consequences of the End of the American Century.” It’s political suicide.

Implicit has meant letting actions speak. Some say I have failed to understand the theater of American leadership. I’ll leave the strutting on the world stage to others.

Our world is more interdependent than ever. China, India and other nations have grown rapidly, ending an era of Western domination. The Chinese economy has quintupled in size since 1990. The wars in Afghanistan and Iraq consumed trillions of dollars but did not bring victory. The enemies we face, often groups of violent extremists, cannot be vanquished through conventional warfare.

The consequence is that American power still counts but no longer clinches the deal. Multilateral solutions to international problems must be pursued. The Iran nuclear agreement — reached with help from Russia, China, Britain, France and Germany — is one example. Another is the Paris Climate Agreement. Military power can only be used as a last resort, for clear and achievable political ends, and when there is a workable plan for post-military development. That was not the case in Iraq. Look at the price.

I know that many people think my policies have failed in the Middle East, particularly in Syria, and that President Putin has filled the vacuum. My priority was to avoid overreach in the use of American power, adjust our ambitions to the realities of the world and devote resources to neglected domestic priorities including infrastructure, inequality and health care.

In 2016, we have no business building other nations. It is for them to decide their fates. As a result, I have asked a lot of questions, so many that I hear that Bob Blackwill, a senior fellow at the Council on Foreign Relations, calls me “the king of the slippery-slope school of foreign policy.”

I’ll take that moniker, if the alternative is to embrace feel-good posturing and drift into another intractable war in which young Americans die for murky causes in the indifferent sands of the Middle East.

Should I have backed the pro-democracy uprising of young Iranians in 2009 against the regime, and might American support have tipped the balance? Should I have done more to ensure the fragile Egyptian experiment in democracy did not fail by pressing former President Mohamed Morsi to restrain his divisive Muslim Brotherhood agenda? Should I have called the coup that ousted him a “coup”?

Should I have armed the rebels in Syria, or established a no-fly zone once President Bashar al-Assad began murdering his citizens en masse, or set up a safe area to protect desperate refugees as a gage of our determination? Should I have upheld through one-off punitive military strikes against Assad the “red line” I set against the use of chemical weapons and so demonstrated to the Saudis and other Sunni gulf states that I was not, as they believe, in the pocket of the Shia world? In short, should I have kept my word and taken more risks to save Syria, oust Assad and stop Putin dictating the outcome?

Perhaps. I know members of my foreign policy team have agonized over Syria and its quarter-million dead. One or two may have been close to resigning. The refugee flow into Europe destabilizes allies. But I do not lose sleep. This job is about tough choices. Restraint was the wiser option for a chastened America unready to pass the mantle but condemned now to share it.

I have built new bridges — to Iran, to Cuba. We are working with China to advance Afghan-Pakistani dialogue and bring peace in Afghanistan. Tough love for Israel, more conditional friendships with Saudi Arabia and other Arab autocracies and a gradual reduction in the isolation of Iran are, in my view, the only path over time to a new, stable order in a Middle East where our strategic priorities have changed with energy independence.

That’s about it. You see now why I chose the implicit approach. I hope you will understand the wisdom of my restraint. Perhaps you will even become nostalgic for it. The pendulum swings — and American adventurism may well make a comeback with my successor.

Follow The New York Times Opinion section on Facebook and Twitter, and sign up for the Opinion Today newsletter.