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Western Press Review: World Economy Under Inspection

  • Don Hill

Prague, 7 October 1998 (RFE/RL) -- Commentary in the Western press today again focuses on the threat of a worldwide economic recession. One problem: There is broad disagreement on how serious the problem is, and on what to do about it.

WASHINGTON POST: No one should expect easy answers

The Washington Post editorializes that restructuring of world financial institutions should be approached cautiously, if at all. It says: "With many countries in recession and many more feeling themselves in danger, a search for a quick fix is not surprising." It adds: "The current crisis certainly points out the need for reforms - in rich, investing countries; in developing countries; and in the international institutions that mediate between them. But many reforms now being advocated -- for a new global central bank, for mandatory controls on capital flows -- have not been well thought out."

Finding the right course, The Post says, won't be easy. It notes that "(U.S.) Treasury Secretary Robert Rubin has proposed lending money to deserving countries before crises start", but adds "how to do so without scaring private investors away will be a challenge."

The editorial concludes: "It is encouraging to see finance officers from many countries groping toward solutions. But no one should expect easy answers. Those who advocate new institutions should first explain the functions to be performed, then answer why a new agency will be any more skillful than the IMF at predicting which country is likely to have problems and what solutions will prove politically feasible."

WASHINGTON POST: International economy was neither so terrific in the spring, nor so terrible in the fall

In the same newspaper, James K. Glassman, a fellow at the American Enterprise Institute, writes in a commentary that the threat itself is being overstated. Glassman comments: "Judging from the panicky pronouncements of politicians, journalists and financiers, you would think we were on the brink of another Great Depression."

But Glassman disagrees. He writes: "Before we make the errors of haste, let's recall that never in history have businesses been better run. Never have markets been freer and wealth more abundant. Never has technology for communicating, producing and healing been so widely available. Rarely has inflation been less threatening. Rarely have the raw materials of industrial growth - from copper to wheat to oil - been so cheap. Rarely has the world been so peaceful."

Glassman writes that "the truth is, the international economy was neither as terrific as practically everyone said it was in the spring, nor is it as terrible as practically everyone says it is in the fall. So, let's cool it before we do something irrevocably stupid."

NEW YORK TIMES: European governments are challenging the United States

European leaders are displaying a new assertiveness in on international economic issues, Richard W. Stevenson writes in a New York Times analysis. He says: "After more than a year on the sidelines, European governments are challenging the United States over how to address the world financial crisis, suggesting that new ideas and leadership are needed as the turmoil persists and Congress continues to block new funding for the International Monetary Fund."

The writer says: "In the last several weeks and during meetings (in Washington) in the past few days, (European officials) have proposed shifting more power into a committee within the IMF, a move that could have restricted the ability of the United States to exert its influence over the fund's management."

He writes: "The new German government in particular, although not represented at this week's meetings, has made clear that it sees controls on capital flows as a subject for serious consideration."

INTERNATIONAL HERALD TRIBUNE: Schroeder has his chance to make history

Writing in the International Herald Tribune, international affairs commentator E. J. Dionne hails the government transition in Germany as a major opportunity. Dionne writes: "With the world teetering between a recession and something much worse, the election of a new government in Germany created possibilities for coordinated action by the wealthy nations to stop the slide."

He writes: "With economic trouble looming (German Chancellor-elect Gerhard) Schroeder has his chance to make history. He and center-left leaders in other capitals could work together to write new rules for a global economy."

Dionne says: "One of the great tragedies of European Social Democrats was their inept handling of the economic downturn in the late 1920s and early 1930s." He writes: "History has dealt them a second chance to stop a downturn before it becomes catastrophic. A lot depends on whether Mr. Schroeder and his Third Way friends can pull it off this time."

TIMES: Facing reality is the first step to economic rescue

The London Times joins calls for caution, urging against coming to the wrong conclusion about how to proceed. In an editorial, The Times says: "Facing reality is the first step to economic rescue. The very worst is yet to come and could come very quickly."

But, the newspaper says: "Some of the horror may be overstated. The trumpets of doom (sounds of alarm) are sounding loudest from those Western investment and commercial banks who share the blame." It says: "(A) wrong answer (would be) to (blame) free markets, including capital markets, and head back to the presumed safety of capital controls."

The Times says "The single most important need is to maintain domestic demand and open trading regimes in the U.S. and European markets." The Times urges world financial officials to follow the lead of the U.S. federal reserve (central bank) and lower interest rates.

WESTFAELLISCHE ANZEIGER: The G7 is nothing more than an exclusive club

The Westfaellische Anzeiger, Hamm, Germany, says there has been a lack of leadership from the Group of Seven largest industrialized countries. "In reality," it says, "the G7 is nothing more than an exclusive club protecting national interests."

SUEDDEUTSCH ZEITUNG: It is scandalous that Japan has so long avoided admitting the truth

A commentator in The Sueddeutsche Zeitung criticizes Japan, saying it has worsened its own and the world's plight by publishing misleading economic statistics over recent years. Gebhard Hielscher writes: "It was certainly a very strange course of events. (Yesterday) the Japanese cabinet under the leadership of Prime Minister Keizo Obuchi revised its forecast for economic growth in the current financial year from plus 1.9 percent to minus 1.8 percent -- an incredible discrepancy of nearly four (percentage points)."

Hielscher says: "It is scandalous that Japan has so long avoided admitting the truth and has tried to march on ignoring the gravity of its state finances." The writer says: "The Japanese government's thoughtless approach to its own economic data is one of the major reasons why foreign markets have little confidence in Tokyo's management of the current crisis."