Henri Reynard Speaks Out

Where Are We Now?

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Having traveled a little at times in my life when traveling was a better option than it is right now I learned one thing, to keep the maps close. My wife had long ago learned another thing, to keep the cash and credit cards in a small inside pocket pinned to the lining of the pocket. Between us we felt ready to face most of the world every morning in any city where war was not being waged. Most of our travel was done in the USA and it was always interesting and fun even when we were doing it mostly for business. We have been planning to go to Europe for years. We even had tickets last year but her father's final illness got in the way. Eventually we will go, but the world has changed, perhaps for the rest of our lives and maybe those of our children. 9/11 changed the world as much as any one event has for many years, and now we are changing it still more with the war in Iraq. In addition now there is SARS a disease that concerns anyone who is traveling anywhere in the far-east this year.

I don't think it has sunk in yet to me, how much these two events and this one disease have changed the world for those of us who like to travel. Now we wonder, even when we are going to New York, if it is safe. Neither my wife nor I are particularly obsessed with safety. We have walked through areas in our travels that are not on the recommended list of any Chamber of Commerce. I spent my teen-age years in an inner city where you watched for danger and carefully calculated when your mother was coming home so you could meet her at the bus. Nene had a far more dangerous environment to cope with in childhood. She was raised in Singapore during civil and racial unrest.

We are facing a world where life is more uncertain than at any time in the recent past. It is quite possible that we will never have the money to travel anywhere significant again, especially because of the dollar's likely decline. Oh yes, we will wander around this continent, but long trips to Europe may be beyond our reach. Asia is also off our map for now, and Indonesia. The Middle East is no longer attractive as a destination for us older and more sedate members of this society. Even with global warming Antarctica has never been in my plans, and Australia is a very long flight away.

I alluded to the drop in the value of the dollar. It is as yet uncertain what will happen to our currency because of the changes in our world. We have been the recipient of a very large beneficial flow of investment capital into the USA during the ten years prior to the start of 2003. That flow has balanced off our balance of payments deficit; which is pushing $400,000,000,000 per year. Yep that number is four hundred billion! If that flow of investment capital back into the USA slows or stops our currency's decline could be precipitous. That means the dollar might fall off a cliff. In the last year our dollar has dropped around 16% against the Euro. That means anyone holding investments in the USA and living in Europe cannot bring home their capital without losing 16% of its purchasing value. That kind of loss is significant, if it continues the desire to invest in the USA could easily disappear. It also impacts our economy here at home substantially since so much of what we consume is produced abroad. In fact a weaker dollar could make our balance of payments deficit substantially higher in relation to last year.

That is bad news for travelers to Europe from the US and it seems likely to get worse. The truth is the little war in Iraq showed the world how powerful we are militarily. It also demonstrated how unrestrained we can be in relation to the rest of humanity. Whether you believe that his war was necessary or not, the issue of what it will do to our image abroad has not seemed to be working in our favor yet. If that perception doesn't turn around the cost in value of the dollar might be significant. Furthermore, we are not likely to profit from this war with greater stability in the oil markets for long. It is now likely to be perceived to be in the interest of oil bearing nations to raise the price of oil substantially and limit its flow rate more than before the war. In geopolitical terms the USA has had an unparalleled period of unresisted dominance since the fall of Russia from the superpower ranks. That is now likely to come to an end. But we are winning the war in Iraq hands down, doesn't that make the world less dangerous? It may but the way we prosecuted the war against the objections of many nations and all major religions is not going to help us win the next period of peace as we have the last one.

What do I mean by winning the peace? It means that our economy expands rapidly and that the value of an investment in our economy grows more consistently than elsewhere in the world. It is the ability to grow capital more certainly and maintain a strong currency and a stable world that has made us as powerful as we are in international affairs today. The capacity to expend four hundred billion dollars of our national budget on defense depends on a strong economy. The powerful economy in this nation beats any opposition that could be mustered by any one nation in the world. It does not beat all possible alliances that could be assembled against us. If our new international policy, of preemptive war is eventually seen as not contributing to international stability, that will hurt our economy. If our currency is put under pressure by increases in the cost of oil due to political force assembled against our interests by new alliances our economy will suffer further devaluation. That will mean travel is more expensive. It will also make war more expensive and harder to justify or pay for as we wage it. The way balance of payments deficits work we could wind up in deep trouble if our internal deficits grow large and our balance of payments deficits grow even larger. Inflation will follow and that will further devalue our currency. All of these things work against travelers and retiree's, and most of the rest of us in this country.

We can win this peace but we will not do it by beating our chests after this war is over and singing endless renditions of we are the champions. The mood in this country is very patriotic, that is good. We need to turn that patriotism into a positive energy in world affairs or else we risk isolation from our friends and stronger coalitions of our enemies. That is certainly going to lead to economic setbacks for even the greatest economy in the world. It will also make travel abroad expensive and unpleasant for most of us in this nation.

We need to win the peace by using restraint in Iraq. We need to win the peace by listening to our allies, whether or not they supported our war on Iraq. Finally we need to win the peace by negotiating with our potential enemies from a position of strength but not one of bullying braggadocio. If we can muster the sense to do those three things our eventual victory in Iraq will have served our nation's long-term interests. If instead we take venal approaches to those three areas of policy we will suffer long into this century ahead from the results of that venality. The history of this time will be written after my generation is gone, but it will be the history of how we succeeded or failed in giving our children a decent world in which to raise our grandchildren. I believe that we can do this right, the price of doing it wrong is too dear for me to contemplate. God bless and keep you safe in these trying times.