Just askin'.

"(If I had the answer for that, I'd have taken my wife's advice and moved our retirement funds into cash or Treasuries a couple of weeks ago. Oh well.) "

Given that I'm guessing you are probably not much more than a decade or so away from retirement, one would hope a significant proportion of your retirement funds are already in less volatile assets like treasuries and cash.

... the only one that really matters is number 2, and the likely answer to it is "No".

In 2011 and in all other periods, the proper responsibility of the United States is what the Chinese describe as tending one's own garden. The American garden is most marked at present by division, internal hostility, squabbling, and there is no sign this will change much soon. No reason to believe the United States is entity enough to pull off a strategic adjustment and small reason to believe the fissiparous current structure can even see the point of pulling together to design an implement one. There ain't much "together".

"the best we can hope for is at least a couple more years of very modest economic growth" Allow me to help you here. The growth we are likely to experience will be very modest indeed. In fact, I think we will find that it often is nominal if that good when balanced against inflation. This is "Stagflation" something we've been "enjoying" since 2006, with bona fide recessionary periods mixed in. This is likely to continue for a decade, AFTER we get our budget under control and correct our course. The first half of this will feel recessionary, the second half will feel a bit better.

"It has excellent higher education " I don't think you can say this. What did it cost you to go to school professor? I know it's many magnitudes more expensive today. This niggardly policy is reaping what we're sowing. Further, there is little accountability or honesty in college advising. Shouldn't these advisors have to provide accurate information as to the career prospects of their various degrees? They are nothing more than caveat emptor salesmen.

I hate to defend Perry, but, I don't think you can substantiate the claim that he's trigger happy. He certainly postures himself as a Christian Zionist, but his wife seems to think he's more fond of his male aids than his "faith" would show. I don't think he is any more serious than Bush and, if our state is any example, he will put the gov't up for sale to the highest bidder.

I think we need to internationalize our Navy, in deference to Bill Cohen's concern for Singapore and other nations for us to patrol the South China Sea. This would allow us to run a large flotilla without being on the hook for manning the all the posts, or funding all the costs. This would throw a bone to the military contractors, while cutting our defense budget. We let Mexicans and Blacks serve as cops, surely we can let Phillipean, Singapore, Sri Lankans and others serve in our Navy. We could sequester our spooks and covert ops to separate fleets, but perhaps just 5 could serve our national interest/needs.

As to China, this international Navy would be much more difficult for them to deal with than an overbearing, over-reaching US Naval patrol.

As to the EU, who knows, I think I agree with you in your pessimism.

As to the terrorist threat, are YOU aware that the FARC set off bombs in the US Congress in the 90's? We didn't over-react. There have been terrorist attacks in this country since the Gilded Age. They aren't an existential concern, as you property note.

I don't have a crystal ball for the Middle East, but I think the best thing for the ME will be neglect. The problems in Europe and the US bode well for that. The US this month became a net exporter of energy--this was missed by many, but as our energy demand decreases, our interest in the ME will hopefully recede.

We are entering a multipolar world. This will improve conditions for everyone though we will experience stagflation. Our boat will not rise, or fall relative to other countries which will rise. Their increase in prosperity will redound to our benefit, though it will be humbling and not always feel so good. We could fall into civil division and strife here and will face some perilous hours. If we don't succumb to our worst angels, we will be fine. But, we could come apart at the seams, even civil war can't be ruled out.

(...which tells you why President Kennedy used to complain that he wanted to meet a one-handed economist)

Wasn’t that Truman, not Kennedy, who used to complain about that? I mean if it really was Truman than it certainly ads him some points in the list of the best and worst foreign policy presidents... the good words are always better than the good deeds... or at least as good... whoops sorry confused him with Woodrow Wilson ;P

Stephen is obviously discounting all of the work done in the Middle East to keep the terrorist threat at bay. He seems to think that bringing back the troops is out of Obama's hands, but that was one of his primary action items in the last campaign. I think that Obama got into office and learned how the war over there was really key to the safety of our country, so he decided not to bring the troops home because it would have spelled disaster for the US on US soil where civilians would get hurt. That is the only reason I can see that Obama, an active opponent of the war and a pacifist would keep our men in such a situation.

"Last but by no means least, developments in the Middle East are fraught with uncertainty and portent. Will the "two-state solution" be dead and buried once-and-for-all, transforming the Israeli-Palestinian conflict into a struggle for democratic rights, or will the ever-elusive goal of "two states for two people"

I always wonder how the Israeli-Palestinian conflict is the epi-center of Middle East relations.

I see Syria murdering thousands of fellow Arab civilians - all independent of Israel, yet no mention by Walt. Why?

I see Iran planning to build a military base in Syria. Why not mention? I see Hezbollah gearing up for a future war with Israel because it might be cut lose by Syria if the Assad regime falls.

Israel is not the center of the Middle East. But in order for Walt to keep his job, and keep the Saudis pumping money into his academic chairmanship, these types of phony, shoddy "insights" will remain mainstream without any serious challenge.

Walt....you're embarrassing yourself. .

than certain cues being amplified by algo trading. 60% of all trades are executed by computers do so without human interaction. Which doesn't affect the direction of the markets, but tends to amplify each move.

With all the people (overwhelmingly young men) buying books on trading (as opposed to investing), I cannot help but think two things: they're hopelessly outclassed by the big boys and they swimming in shark infested waters. It really is much more of a gamble than is generally admitted.

Full disclosure: I got everything, every penny, out of the markets back in 2003.

"the possibility of a new terrorist attack did not make my
list of "Big Uncertainties." Why? Because I just don't think
al Qaeda or its affiliates are all that important... that would
be our mistake and not their achievement."

The general attitude of the US authorities - that they can
do whatever they want - makes it pretty tempting for
them to initiate some sort of a terrorist attack - if only
to boost the sagging patriotic morale of the public.

1) Malaise rather than meltdown. Eventually, we may see global debt rescheduling rather than outright default. There's plenty of precedent for this.

2) Less readjustment than the pulling in of horns you recommend. The COINdistas will have to get along with less because there remains considerable resistance to paying for these overseas adventures.

3) China recently put a Pakistani communication satellite into orbit, sent an aircraft carrier out for sea trials and are rumored to be testing a fifth generation fighter. On the other hand, they accepted a reminder from the United States of Laws of the Seas regarding the Spratly Islands dispute. I think they'll come to realize that they can get almost everything they want through dollar diplomacy and unless they are provoked they'll continue to take this path. They aren't dummies in Beijing.

4) The EU and eurozone will survive, though what direction it will take is anyone's guess. Europeans are just beginning to realize the consequences of monetary unification: some states will thrive, others will languish. Much like states in the US. I would look for further surrender of national sovereignty in favor of European unification in the form of mandates that individual members will need to have their budgets and borrowing scrutinized by the EU beforehand. This was debated early on in the debate on whether to adopt the Euro, and it was agreed on then that countries like Germany would become very real stakeholders in the political economies of countries like Finland.

5) This evolution of the Arab Spring is just one step in a multi-generational process. Libya will burn to the ground. Violence will become a permanent feature of Libyan political life for decades at least (it will take a real inspirational leader to lead Libya away from this, and as we've all seen, the transitional council has a huge leadership problem). Egypt will take a step forward, and remain secular, because the business classes will vote their pocketbook.. Syria will be decided in Tehran and Riyadh, not by Syrians. The irony here is that Syria could very well be about to become much like Lebanon. Ouch. Nothing changes with Israel v. Palestine, again, because there's a total lack of leadership, and the result will be that while Israel continues to expand through settlement building (1,600 new settlement buildings have been recently approved), Israel will not find lasting peace. "Managing" the violence is the process Israel decided to undertake. Unquestioned, blind US support will continue. Palestinian membership in the UN ain't going to happen this September, courtesy of Washington and due solely to domestic political concerns. Nobody dares ruffle the feathers of Jewish voters.

I'm taking a long view here, which deliberately ignores a lot of things going on right now, on the theory that most current events will find other events to counterbalance them. On the other hands, maybe aliens will invade earth.

The US: here a rapid decline in the popularity of the Tea Party would do the country a world of good. Whether it will decline is difficult to say. It espouses ideas a majority of Americans reject, but still it controls one of the major parties. If by some fluke the GOP candidate won the 2012 elections, the US would be in for four years of even greater disfunction and stupid policy in Washington. (Romney would probably be the least awful of the lot). We can hope Obama stays on.
Europe: I think the center of world instability is here since I do not see how the Euro can continue to be the currency of both the well run economies (Germany, France, Netherlands, etc., etc.) and those that have been terribly run (Greece, Portugal, Ireland). If the Euro zone breaks up or there is a real default by one of the EC members this could have quite devastating economic effects around the world. Nobody knows for sure what will happen.
China and Asia: I would expect China to continue to be prudent and calm since it knows that real conflict would retard its economic development. It will continue to build up its military, as is its right, but do so quietly and without fanfare. The main problem here is that Chinese growth will slow down due to the stagnant economies of the US and Europe. China needs very much to reorient its economy toward greater internal consumption so it depends less on selling cheap goods abroad.

"If another major attack occurred we'd probably overreact to it -- as we did in 2001"

What would have been an appropriate reaction to the 9/11 terrorist attacks. It is not to agree or disagree about how America DID react, but many people desired a measure of revenge, and no one wanted to wait around for it to get cold. Some who read that statement might be inclined to be offended, feeling that America was fully justified in its actions, no matter how far from the course it has strayed. In hind-sight, and in the considered opinion of reflective scholars, what would have been a better way to react to the attacks?

It's not exactly clear to me whether the US is even going to be around in a couple of years. It's interesting that that is not even a concern of yours.

Will the rise of China lead to war with the US?

Great power rivalries in history:

1. Spain versus Holland in the 16th century. [War]
2. Holland versus England in the 17th century. [War]
3. Britain versus France in both the 18th and 19th centuries. [War]
4. France and Britain versus Germany in the 20th century. [War]
5. Germany versus Russia in 1914. [War]
6. Germany versus Russia (Soviet Union) in 1941. [War]
7. Soviet Union versus the US and its allies in the Cold War after 1945. [No War]

When an empire runs into conflict with a rising power, the probability of war is 6 out of 7. Conflict and war can be avoided when both parties are democratic like America vs. Britain, which resulted in no great power rivalry.

A large part of the world has moved to a pre-collapse state where it won't take much to push it over a cliff.. Russia and China are in danger of collapse. America, Europe and Japan are in danger of economic collapse. The Middle East is now in the state of collapse. The UN predicts “global social crisis” stemming from the 2008-2009 economic downturn. If the world is a big sandpile, then it’s coming down soon.

It turns out that forests, sandpiles, the earth (earthquakes) and societies (wars, attacks within wars, riots and financial markets) all move into the future in the same way. Their crashes all follow the power law distribution. There is a similar mechanism at work in each system. When one of these systems reaches a pre-collapse state then watch out.

What happens when you put out every fire in a forest? It eventually reaches a pre-collapse state so massive that the next fire wipes out everything. Well, the world has reached this state.

More reasons for war:
http://www.1913intel.com/2010/11/30/25-signs-that-point-to-nuclear-war/

There are deep structural rumblings in our world, which the US cannot ignore. Increasing numbers of the young do not find work and may never work because there are no jobs for them and never will be; there are some with serious degrees now sweeping roads in Rome for 1000 Euro ($1400) a month. What are those less qualified to do? Along with this we have an increasingly grotesque divide between rich and the poor. Taken together these provide a classic recipe for profound upheaval and we see it stirring from Tahrir Square to the streets of London. We have evolved no philosophical scenario for an age when an adequate number cannot find subsistence activities. The phenomenon has been approaching for some time behind the barriers of social security and public health provision but the pressures have mounted of late and there are already leaks in the dam and signs of worse to come.. We have, alas, advanced faster technologically than we have evolved from primitive, instinctive lifestyles to those of rationality, and this has, as it were, put guns in the hands of greedy mad men.

I think I like the author's framework as a jumping-off point for speculating about future geopolitical developments. He's put his finger on five very important uncertainties.

My thoughts:

1. Economic meltdown or muddle through? I have no idea. I think we're overdue for a meltdown, speaking historically, and all of the ingredients for one have been nicely sown. But whether one will happen is a true uncertainty.

2. Strategic adjustment for the US? I think our hand is being forced to it. We can't sustain the levels of debt required to continue our trigger-happy interventions, and spending trillions to offset the threat posed by around 4000 Al Queda insurgents is not good for our bottom line.

3. Whither China? Nowhere, in the next ten years, I think. Economic growth for China will be hampered by doldrums elsewhere. Their navy isn't able to project enough force to realize their ambitions in the South China Sea, either. But the real goal post for China is Siberia. That's their route to true superpower status. But they can only get it if Russia disintegrates into a civil war, and I don't see that happening any time soon.

4. The Euro is doomed. The mostly conservative governments ruling in the Eurozone are not capable of giving up the sovereignty required to make the Euro work. So, back to national currencies within a few years, is my guess. It'll be disruptive, and some ugly politics will result, but we might hope that nothing like the Nazis will arise and make a worse mess.

5. The Middle East: nobody ever earned a positive reputation as a prognosticator by predicting success and happiness in the Middle East. My bet is there will be no real progress towards peace, and as the US is forced to militarily retrench out of the region, the likelihood of another full-out war will rise. Iran is the wild card here. If they can pose a credible nuclear threat to Israel, then Mutually-Assured Destruction (MAD) might force all parties to stick to conventional warfare, at least initially. Which might not bode well for Israel's chances. And it might go nuclear anyway if Israel is on the verge of defeat. The Middle East remains the most dangerous place on Earth, where the actors are rarely capable of cooperating to mutual benefit.

Or maybe not. The future is uncertain. :-)

Well, i think bewteen Meltdown or Malaise, i would say "Malaise". Our economy has problems, that's for sure, but i'm sure we can do it. "Avec un peu d'huile d'olive, on peut tout faire" like we say in France...

I think Mr. Walt is right about the European Union, but I don't think the euro is going down for too long. It's a matter of time for our countries in East Europe to grow a stronger economy and strengthen the EU, and yes I believe the Euro is here to stay.

I would state them as big uncertainties of the teens (2010 -2020)

1. "The economy" is a bit broad descriptively. We've become a global economy, and elements of that won't change, but some elements will decentralize as the global business to business economy is reaching its tap out scale. What more could we need, at least as far as America is concerned.

There is a need for a healthy ecology of markets, meaning healthy global markets for global commodities/goods/services, healthy regional markets, healthy micro-regional markets, healthy community markets. Whereas in the past, the tendency of economies of scale (fixed cost/marginal profit business dynamic) have driven institutions to broader markets (local growing to regional growing to national growing to global - Walmart for example), there will be a slight reversion hopefully.

The global economy (relative to regional) can also be described as an urban economy (central relative to rural decentral or even urban neighborhood).

There are so many structural problems with the global economy, that it is utterly impossible to predict.
A. Lack of "blood" flow to regional and local enterprise (capital investment), B. Inadequate purchasing power resulting from inadequate value addition regionally to support actual regional economy
C. Divestment/concentration of skills needed to be predominately regionally self-reliant
D. Financial bubbles in securities and commodities

The combination of B and D is the result of jaded class relationships, robber barons. And, it is made much worse by a tax code that penalizes work and enterprise, in favor of speculation.

2. Strategic Adjustment - I wish it were possible. If the US "admitted failure" in Iraq and Afghanistan, then there would be another period of vacuum of power, and another period of escalation of hostilities and uncertainty. The Gulf states are still the primary source of fuel for the country and Europe and instability there would hurt both the opportunistic dominant corporations, and the US/world economy as a whole.

There is no alternative international policeman. Both the ability to enact and to enforce international law provisions are in decline currently. China is not interested in fulfilling that role, nor is the UN capable of it.

3.4 Both the UN and the European Union suffer from their entities being similar to the US before the constitution. The problems of debt and relationship to central European Union mirror problems of debt with the individual states relative to the original US confederation.

No authoritative centrally supported currency. No mandatory discipline to policy. No functional legislature able to enforce laws enacted. A voluntary association.

Individual states, or factions of states, end up as police, end up as currency, end up as lingua franca. But, that is empire, as Latin became the lingua franca of the western world for a thousand years, as gold became currency, as Rome and then the church became police and intimate police (morality).

5. For a change, Israel is the hope of the middle east. The tent city demonstrations (standing on the shoulders of Tahrir Sq), are based on an Israel that is of all its citizens. The content of the demonstrations crosses communities, ethnicities, political perspectives. It mutually humanizes in practice (still at early stages).

Set in an electoral environment, in which a groundswell is perceived as the will of the people (not the state as asserted as the will of the people), peaceful change to those benign values are possible. Shortly after implemented, the spirit of mutual acceptance will result in a change in administration, then quickly change policy relative to the PA, and collaboratively end the occupation.

There are many left journalists that insist that the occupation be the only subject of conversation, but that is the opposite of what needs to happen there, as the evolution of consciousness to color-blind ethnic-blind IS occurring, like few other places on the planet.

I want some of what you have been smoking !

Sir,
I like your article about the 5 big uncertainties. I would add one: Africa. Don't quote me on numbers but I think it was a 500 million people continent in the mid-seventies, it is now a one billion people "region"and could reach 2 billion by 2025 or 2030.
We tend to ignore it because it is messy, very often poor, because our eyes are on the middle-east, but we should pay attention.
It is rich in minerals, oil, rare and precious metals. It is "up for grabs" and it seems that the Chinese are investing there or even "buying" Africa. The future of Africa, its political regimes and stability or unstability its reliance on foreign aid, are, to me very big and uncertain factors.
What do you think?
Cordialement

Senator Patrick Leahy claims Shayetet 13 unit, undercover Duvdevan unit, and the Israel Air Force Shaldag unit are involved in human rights violations in occupied territories.
By Barak RavidTags: IDFWest BankGazaEhud Barak

U.S. Senator Patrick Leahy is promoting a bill to suspend U.S. assistance to three elite Israel Defense Forces units, alleging they are involved in human rights violations in the West Bank and Gaza Strip.

Leahy, a Democrat and senior member of the U.S. Senate, wants assistance withheld from the Israel Navy's Shayetet 13 unit, the undercover Duvdevan unit and the Israel Air Force's Shaldag unit.

Defense Minister Ehud Barak, a long-time friend of Leahy's, met with him in Washington two weeks ago to try to persuade him to withdraw the initiative.

According to a senior Israeli official in Jerusalem, Leahy began promoting the legislation in recent months after he was approached by voters in his home state of Vermont.

Should American politicians intervene in Israeli defense strategy? Visit Haaretz.com on Facebook and share your thoughts.

A few months ago, a group of pro-Palestinian protesters staged a rally across from Leahy's office, demanding that he denounce the killing by Shayetet 13 commandos of nine Turkish activists who were part of the flotilla to Gaza last May.

Leahy, who heads the Senate Appropriations Committee's sub-committee on foreign operations, was the principle sponsor of a 1997 bill prohibiting the United States from providing military assistance or funding to foreign military units suspected of human rights abuses or war crimes. The law also stipulates that the U.S. Defense Department screen foreign officers and soldiers who come to the United States for training for this purpose.

Leahy wants the new clause to become a part of the U.S. foreign assistance legislation for 2012, placing restrictions on military assistance to Israel, particularly to those three units.

Leahy says these units are responsible for harming innocent Palestinian civilians and that no system of investigation is in place to ensure that their members are not committing human rights violations. According to Leahy's proposal, U.S. military assistance to Israel would be subject to the same restrictions that apply to countries such as Egypt, Pakistan and Jordan.

The senior Israeli official said that the Israeli Embassy in Washington had been trying unsuccessfully now for some months to persuade Leahy to back down from the initiative.

Two weeks ago, during Barak's visit to Washington, Israel's ambassador to the United States, Michael Oren, asked Barak to meet with Leahy to dissuade him from promoting the legislation.

Leahy, who is on the Democratic Party's left flank, has for many years promoted human rights issues globally. He has been sharply critical of Israel in recent years, especially following Operation Cast Lead in late 2008.

However, he also signed Congressional resolutions supporting Israel's right to self-defense.

Leahy, 71, has served in the Senate for 35 years. He was a personal friend of former Prime Minister Yitzhak Rabin and has known Ehud Barak since the latter was IDF chief of staff.

Barak, who met with Leahy privately, was quoted by the senior Israeli official as telling the senator: "The difference between Israel and terror groups or other countries in the Middle East is that we give an accounting and there is monitoring."

Barak also said the IDF had a strict judiciary with broader powers than the judiciary in the United States armed forces.

Barak was also quoted as telling Leahy that the IDF military advocate general is not subservient to the military command, but rather to the attorney general, and has complete autonomy.

"If a Palestinian is injured, he can approach the High Court of Justice," Barak said. "The investigations undergo judicial review that is independent of commanders. There are dozens of hearings every year that are based on Palestinians' complaints against soldiers. They reach the highest and most independent authorities," he said.

Leahy listened to Barak, but he did not say whether he would withdraw his initiative. According to the senior Israeli official, Israel does know whether Leahy has done so.

However, the official said Barak felt Leahy had understood his message, and that the Israeli Embassy in Washington was following the matter. If necessary, Barak and Leahy would hold another talk, the official added.

Leahy's spokesman, David Carle, said the senator did not comment on his private conversations.

I like your article about the 5 big uncertainties...
U.S. Senator Patrick Leahy is promoting a bill to suspend U.S. assistance to three elite Israel Defense Forces units, alleging they are involved in human rights violations in the West Bank and Gaza Strip.

Leahy, a Democrat and senior member of the U.S. Senate, wants assistance withheld from the Israel Crystal Jewelry Navy's Shayetet 13 unit, the undercover Duvdevan unit and the Israel Air Force's Shaldag unit.

Defense Minister Ehud Barak, a long-time friend of Leahy's, met with him in Washington two weeks ago to try to persuade him to withdraw the initiative.

According to a senior Israeli official in Jerusalem, Leahy began promoting the legislation in recent months after he was approached by voters in his home state of Vermont.

Should American politicians intervene in Silver Jewelry Israeli defense strategy? Visit Haaretz.com on Facebook and share your thoughts.

A few months ago, a group of pro-Palestinian protesters staged a rally across from Leahy's office, demanding that he denounce the killing by Shayetet 13 commandos of nine Turkish activists who were part of the flotilla to Gaza last May.

www.aimengcrystal.com

It would be a great boon to the world if its leaders would leave a lot of things alone and let them take their homeprojects course. Had that happened in Europe, the nations might now be much closer and happy to move even further together.

If that sounds like the foreign policy stance of Tim Pawlenty, that's because it is. Pawlenty also supports best chainsaw an unapologetic and assertive foreign policy that rejects calls for retrenchment. But Perry is also planning to add his record on international trade to that set of ideas.