Neutralized by Fear

The May-June issue of Foreign Affairs, with an unsettling article by Daniel Yankelovich, expands on the "creepy feeling" I expressed last week regarding risks inherent in the stubborn goods-for-bonds trading relationship between China and the U.S.

The feeling is that, while it is clear that U.S. capital markets are living on other people's money, our markets may also be living on borrowed time. Big changes must take place in the Sino-American relationship in order to render it less unstable and more indefinitely sustainable. Since such changes are unlikely to take place soon, however, we are forced to live in a state of uncertainty about the timing and magnitude of any future adjustments and the degree of cooperation that will attend them.

Daniel Yankelovich is one of the pioneers of public opinion polling and the co-founder of Public Agenda, a nonprofit research organization. His Foreign Affairs article, "The Tipping Points," reports Public Agenda's findings on public attitudes toward U.S. foreign policy.

He finds that America's oil dependency has joined the Iraq war in having reached a tipping point in public attitudes. Further, his work perceives the issues of job outsourcing and illegal immigration both to be approaching a tipping point.

Yankelovich defines a tipping point as "the moment at which a large portion of the public begins to demand that the government address its concerns." It occurs when three conditions are met: an overwhelming majority of the public expresses concern about the issue; the intensity of that concern reaches significant levels; and the public believes that the government is capable of effective action on the issue.

Last June, it was only the war in Iraq that qualified on these three counts, but Yankelovich's January survey found that the persistence of high oil prices and the lack of any clearly agreed-upon strategy to address it has pushed oil dependency to a front-burner political issue.

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Jim Griffin is economic consultant and portfolio adviser to ING Investment Management and its Hartford-based unit, ING Aeltus, which manages institutional investment accounts and acts as adviser to the ING Mutual Funds. His commentary on the financial markets is based upon information thought to be reliable and is not meant as investment advice. While Griffin cannot provide investment advice or recommendations, he appreciates your feedback; click here to send him an email.