The world is shifting towards a multi-polar system with a less dominant US and a more powerful China and India, and a "historic" transfer of wealth from west to east, according to a new US intelligence report. Financial Times
In the NIC's view, the rise of China, India and the rest will mean that by 2025 the US will be "one [my emphasis] of a number of important actors on the world stage, albeit still the most powerful". For more than 200 years, even when challenged, the US has been a rising power. The adjustment will not be easy. Philip Stephens -FT

This week's news of a drop in consumer prices may sound on the surface like a good deal for financially strapped U.S. households. But economists warn that sustained deflation -- a period of falling overall prices -- would deepen the nation's economic troubles. Such a period would make it harder for people to repay debts and would prompt consumers to delay purchases in anticipation of lower prices and harder times. "Everyone is having these huge sales, and consumers know if they wait longer, the chances of them not having a good selection is fairly small and the chances are that the prices will be lower," said Charles McMillion, an economist who runs MBG Information Services. "So why buy today? This is exactly why economists are always scared to death of deflation." Washington Post
When Obama takes office in two months, he will find a number of difficult foreign policy issues competing for his attention, each with strong advocates among his advisers. We believe that the Arab-Israeli peace process is one issue that requires priority attention.(...)The major elements of an agreement are well known. A key element in any new initiative would be for the U.S. president to declare publicly what, in the view of this country, the basic parameters of a fair and enduring peace ought to be. These should contain four principal elements: 1967 borders, with minor, reciprocal and agreed-upon modifications; compensation in lieu of the right of return for Palestinian refugees; Jerusalem as real home to two capitals; and a nonmilitarized Palestinian state. Brent Scowcroft and Zbigniew Brzezinski - Washington Post

"Deflation as a metaphor" compares the perception of America's relative decline as a superpower to economic deflation, where people hold off from making a purchase because, with prices falling, they think that they can get a better deal if they wait longer. When this happens, prices fall even faster as frantic sellers try to attract reluctant buyers with even lower prices and the potential buyers become even more reluctant to buy. Finally the economy seizes up and only those with great cash reserves benefit.

Deflation is a process, a self-fulfilling prophecy that feeds on itself: falling prices make prices fall faster.The National Intelligence Council's report, "Global Trends 2025: A Transformed World" postulates that by the year 2025 the United States will be dramatically less powerful than it is today. If we take deflationary process as our guide, the universal perception of America's decline should quickly accelerate that decline.

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As negotiations started for the release of a Saudi-owned supertanker seized by pirates off Somalia, the Indian Navy said on Wednesday that one of its warships fought a battle at sea with would-be hijackers in the Gulf of Aden, sinking one suspect vessel and forcing the pirates to abandon a second as they fled.(...) Cyrus Mody, of the International Maritime Bureau, which monitors global piracy, said in a telephone interview from London that the shipping industry had been urging stronger naval measures against the pirates' "mother ships" for some time and would approve of the Indian Navy's action. "This is the sort of action which should be taken to try to deal with the situation," he said. Peter Hinchliffe, the marine director of the International Chamber of Shipping in London, said in a separate telephone interview that the Indian Navy's action "is going to start to bring the message home" to pirates "that the international community really is ranged against them."(...) This year, at least 92 ships have been attacked in and around the Gulf of Aden, more than triple the number in 2007, according to the International Maritime Bureau. At least 14 of those ships, carrying more than 250 crew members, are still in the control of hijackers. New York Times

With all the speculations about new presidential appointments, readers may have missed one of those news items that alert the watchful to the arrival of a new era.

An Indian Navy warship has engaged and destroyed a Somali pirate vessel.

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Barack Obama's serious flirtation with his one-time rival, Hillary Clinton, over the post of secretary of State has been welcomed by everyone from Henry Kissinger to Bill Clinton as an effective, grand gesture by the president-elect. It's not playing quite as well, however, in some precincts of Obamaland. From his supporters on the progressive wing of the Democratic Party, to campaign aides of the soon-to-be commander-in-chief, there's a sense of ambivalence about giving a top political plum to a woman they spent 18 months hammering as the compromised standard-bearer of an era that deserves to be forgotten. "These are people who believe in this stuff more than Barack himself does," said a Democrat close to Obama's campaign. "These guys didn't put together a campaign in order to turn the government over to the Clintons." Ben Smith - Politico

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You might have thought that an emergency gathering of leaders from the world's 20 main rich and emerging economies, with the global economy poised for its worst slump since the Great Depression, would have aroused some interest. The event was deemed unworthy of the main section of Saturday's New York Times. (Room was found on the front page for a story about how hard it is to open the "clamshell" packaging of toys and electronic gadgets. The summit, "A crisis in finance", made page 3 of the business section.) On television news, world leaders' efforts to stave off disaster were displaced by speculation about Hillary Clinton's next job and by fires in California (four firemen injured).(...) neither the new president nor the Congress will seriously contemplate anything that might be seen as a surrender of sovereignty to international bodies. Desirable though it may be in principle to create some kind of supranational financial regulator, for example, this is not going to happen. In the regulatory sphere, as with fiscal and monetary policy, US policymaking will remain national for the foreseeable future. Clive Crook - Financial Times

It is notable that two major centers of power issued statements on the geopolitical scene that were quite forthright. Both the European Union in a unanimous statement and President Lula of Brazil said they looked forward to renewing collaboration with the United States, but this time as equals, not as junior partners. (...) Can Obama accept the fact that the United States is no longer the world's leader, merely a partner with other power centers? And, even if he can, can he somehow get the American people to accept this new reality? Immanuel Wallerstein

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"Brothers should pull up their pants. You are walking by your mother, your grandmother, your underwear is showing. What's wrong with that? Come on. Some people might not want to see your underwear. I'm one of them." -- President-elect Barack Obama - Quoted on Doonesbury

Barack Obama is being given ominous advice from leaders on both sides of the Atlantic to brace himself for an early assault from terrorists.(...) Lord West of Spithead, the Home Office Security Minister, spoke recently of a "huge threat", saying: "There is another great plot building up again and we are monitoring this." The Times

The day after the new president's election, al Qaeda issued a little-noticed statement declaring Barack Obama a murtad, i.e. an apostate whose betrayal of Islam is judged the most heinous. Believers have the duty to execute a murtad unlike other non-believers whose death sentence is optional. Debka

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