January 18th, 2010
05:59 PM GMT
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Some of you may recall the 1984 television campaign by fast food giant Wendy's, “Where’s the Beef?” It featured a little old lady looking under a giant hamburger bun, wondering why there was a lack of real beef.

The ad became part of that year’s U.S. presidential campaign, with Walter Mondale chiding Democratic opponent, Gary Hart that his new ideas lacked substance.

The commercial could apply to the start of this trading year and the new decade. There is a lid on most equity markets right now, pointing to what appears to be a beefless recovery.

Germany reported the worst annual performance since World War II, down five percent in 2009. Most European followers feel comfortable that a recovery of 1.5 percent is possible this year, but with eurozone unemployment at 10 percent, the “feel good factor” after record government intervention over the past year is fading fast.

I sat down with Umayya Toukan of Jordan this past week, while he was in London to receive his award for Central Bank Governor of the Year. We talked about what is a critical turning point in global economic policy: When is the right time to start closing the monetary spigots?

“That is the most critical issue,” he said. “There will have to be exit strategies made public actually, in particular the timing of the exits.”

Toukan acknowledged that due to political cycles around the globe, marking those exits will be difficult. Nevertheless, bringing back budget discipline is essential in his view.

Toukan was given the award for his prudent monetary policies prior to the downturn and the swift bank guarantees offered when the crisis hit home.

Jordan is a small country by population, but punches above its weight due to an army of white-collar workers scattered throughout the Gulf and its open economy. Trade represents nearly two-thirds of GDP in Jordan.

The country was riding the recent trend of capturing investment from the Gulf that stayed closer to home in the MENA region. Last year, that regional foreign direct investment dropped by 50 percent. As these economies shore up their books, it will be essential to see that investment pick up once again. During Germany’s horrendous performance last year, investment dropped 20 percent.

For the year, the IMF is forecasting global growth of about 3.5 percent with Indonesia ahead of the pack. China’s move to boost reserve requirements for its banks sent shivers through financial markets, since it came about a quarter earlier than anyone expected. China will grow at least eight percent, but it will not be a runaway train - the brakes are already being applied.

In the Middle East, Saudi Arabia, Qatar and Abu Dhabi have so much investment already earmarked that the start to the new decade will only build on last year’s performance. The Kingdom, for example, is ploughing $80 billion a year into domestic projects for the next four years, but with an eye on bringing down its budget deficit and inflation within acceptable levels.

That does not seem to be the same conversation in Washington, London or Brussels. The exercise of reigning in spending has not started just yet and still investors and consumers - in the absence of economic momentum and job creation - are asking, “Where’s the beef?”



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