So it has come to this. The political squabbling over passing the US federal budget has reached such an impasse that a shutdown of the US government looms.
The sticking point is spending cuts. The Republicans want to slash and burn tens of billions of dollars in the name of fiscal prudence in the face of record-setting US deficits. Or, as the Republican House speaker John Boehner bluntly puts it: "We're broke."
Hang on, the Democrats say. Budget cutting is one thing but stripping away vital social services and laying off federal workers is hardly going to boost America's fragile economy, and will certainly only worsen the plight of the poor and the jobless.
The result is political deadlock on passing the budget. Republicans have now added so many cuts that the current plan will be the biggest roll-back of government spending programmes since the Second World War.
Meanwhile, Barack Obama, the president, has said he will veto the whole thing unless some of the more egregious slashes are removed.
If neither side blinks by Friday, then federal wage payments will start to wind down, some government offices will close, new passports will not be issued and other non-essential federal services will shut down.
The looming crisis has all America transfixed. The last time this happened was in 1995 under the then president Bill Clinton, when hard-charging Republicans under the then House leader Newt Gingrich brought government to a shuddering halt.
Then, as now, it seemed to be a clash of two distinct ideologies: one that said government helped people; the other that said government spent too much money and got in the way.
The parallels are eerie, which is a shame because in many ways the entire vicious fight over the budget is at best woefully misguided, and at worst a Potemkin debate of fake political theatre.
Voices as politically distinct as the liberal columnist Paul Krugman for The New York Times, and the conservative magazine The Economist, have pointed out that the part of the budget being argued about is so small as to make almost no different to America's projected US$1.65 trillion (Dh6.06tn) current deficit.
The entire budget debate concerns the area of spending called "non-defence discretionary spending", which makes up a mere 15 per cent of the total budget.
Two points need to be made. First, trimming here will not only make very little difference, it will also severely hurt vital services such as veterans' health, the running of the FBI, the prison system and drugs law enforcement.
Second, the percentage of GDP made up by non-defence discretionary spending is about 3.6 per cent, just as it was in 1963. In other words, in real terms it has not budged in more than four decades, which should be a sobering thought for those who claim trimming this area of the budget will stop "spiralling" government spending.
The real areas of the budget that have spun out of control lie in the "mandatory" bits of the budget, which are dictated by various laws and not up for annual review by Congress. This vast area of spending includes the main government programmes of social security, Medicare, Medicaid and agricultural subsidies.
It is here the US government is spending vast amounts of money and, especially in healthcare schemes, where waste and stupidity often seem the rule, not the exception. Nor is that simply a right-wing argument by those opposed to government aid in areas such as health care.
As Mr Krugman put it in a recent column, liberal Americans can argue for an efficient shake-up of mandatory spending on health care that would reflect their values and also ease the deficit by saving money.
"What would a serious approach to our fiscal problems involve?" he asked. "I can summarise it in seven words: health care; health care; health care; revenue." But no one wants to have that debate.
Republicans will never countenance raising taxes and indeed just dramatically worsened the deficit by giving hundreds of billions of dollars of tax breaks to the wealthiest Americans.
Meanwhile, both sides refuse to suggest a real reform of the biggest government social services out of a fear that it would make them unelectable with voters. Instead they pick a fight in the 15 per cent of the budget that does not really matter to them but nor does it matter much to actually reducing the country's debts.
In fact, Republicans and Democrats will even risk shutting the entire government down in order to avoid debating the real issues. It truly is the blind leading the blind.
business@thenational.ae
Cricket World Cup League 2
UAE results
Lost to Oman by eight runs
Beat Namibia by three wickets
Lost to Oman by 12 runs
Beat Namibia by 43 runs
UAE fixtures
Free admission. All fixtures broadcast live on icc.tv
Tuesday March 15, v PNG at Sharjah Cricket Stadium
Friday March 18, v Nepal at Dubai International Stadium
Saturday March 19, v PNG at Dubai International Stadium
Monday March 21, v Nepal at Dubai International Stadium
Emergency
Director: Kangana Ranaut
Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry
Rating: 2/5
COMPANY%20PROFILE
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Mia Man’s tips for fermentation
- Start with a simple recipe such as yogurt or sauerkraut
- Keep your hands and kitchen tools clean. Sanitize knives, cutting boards, tongs and storage jars with boiling water before you start.
- Mold is bad: the colour pink is a sign of mold. If yogurt turns pink as it ferments, you need to discard it and start again. For kraut, if you remove the top leaves and see any sign of mold, you should discard the batch.
- Always use clean, closed, airtight lids and containers such as mason jars when fermenting yogurt and kraut. Keep the lid closed to prevent insects and contaminants from getting in.
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
Europe’s rearming plan
- Suspend strict budget rules to allow member countries to step up defence spending
- Create new "instrument" providing €150 billion of loans to member countries for defence investment
- Use the existing EU budget to direct more funds towards defence-related investment
- Engage the bloc's European Investment Bank to drop limits on lending to defence firms
- Create a savings and investments union to help companies access capital
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The specs
Engine: Dual 180kW and 300kW front and rear motors
Power: 480kW
Torque: 850Nm
Transmission: Single-speed automatic
Price: From Dh359,900 ($98,000)
On sale: Now