Often, in tough times, there's suspicion that others secretly enjoy your strife. Sometimes this schadenfreude is real, but often it is not. R. Seetharaman, the CEO of Qatar-based Doha Bank, on a press tour in New York last month, was certainly displaying none of it. Doha is the Middle East's fastest-growing bank with assets of $8 billion and some trade finance operations in New York that bring him to the States on a semi-regular basis.
His message was quite clear: the Middle East might be awash in dollars thanks to the geographical quirk that has bestowed upon it vast quantities of oil and natural gas resources, but when it comes to the global financial markets we are all in it together, and the U.S. is still, and will remain, the driving force for the global economy.
He noted incredulously that just a year ago people argued that emerging markets were decoupling from the U.S. and no longer relied on the world's largest economy to drive the global economy, a point of view that has been thoroughly rebuked by recent events. "We're living in one world" and there ought to be "global solutions" done in concert with a "shared mission and shared leadership." Groups such as the G-7 and his own Gulf Cooperation Council need to coordinate.
Seetharaman was speaking in his hotel room on Times Square, powdered and ready for an appearance on Bloomberg TV, a week before the U.S. government announced its most dramatic intervention into the financial markets, committing $250 billion of taxpayer money to take equity stakes in nine large financial institutions, with a promise to invest in other banks that sought such aid. While some of Seetharaman's prescriptions for how the U.S. should cope with the financial crisis sounded a bit extreme at the time, a week later they started to seem downright mainstream.
To restore consumer confidence, the U.S. government should nationalize many banks and absorb their toxic debt. Then, over time, the government could partially but not fully privatize them. Long term, a public/private partnership in the banking sector is necessary to mitigate market risk and preserve confidence, he argued. As for the inevitable hit to the U.S. economy such a sweeping reorganization would cause, he said even negative growth for a year or two would be a small price to pay to put the financial system back on sound footing. The U.S. "can afford to absorb that stress," he said, an argument that, while refreshingly long-horizoned, belies the fact that his country's leaders do not face reelection every two years.
While there's much hard work ahead to sort out the mess both in the U.S. and globally, Seetharaman was upbeat about the U.S. long-term, arguing that what has been temporarily lost is consumer confidence in the financial system, not the fundamental vibrancy of the U.S. or its place in the global economy. He even took time to extol the virtues of the U.S.'s 200 year-old immigration experiment, a source of economic strength and a fine example other countries around the world are finally beginning to emulate.
As for the comments by some, such as Germany's Finance Minister Peer Steinbrueck, that "the USA will lose its superpower status in the global financial systems," Seetharaman was dismissive. That argument greatly "underestimates the U.S.," he says; other countries' economies, notably China, may catch the U.S. but it would take "centuries" for the U.S. to lose its global economic sway.
Tough times may encourage schadenfreude, but such moments also reveal one's real friends.