Thought this was somewhat humorous -- there was another piece in which a business group was calling for rate cuts as well.
biz.yahoo.com
BUENOS AIRES, Sept 16 (Reuters) - U.S. political scientist Francis Fukuyama fears ''eerie parallels to 1929'' in
the current world economy could trigger a ''potentially disastrous meltdown globally'' if the U.S. Federal Reserve
does not cut rates.
''Money has been coming out of all emerging markets and flowing into dollars,'' Fukuyama, best known for his 1989 book ''The End of History and
the Last Man,'' told Reuters in an interview Tuesday during a visit to Buenos Aires. ''So I do believe the next major move is really on the part of the
Federal Reserve.''
In his book Fukuyama argued that society had entered a new and lasting phase. He claimed that the change was so dramatic that it might be accurately
depicted as representing the end of history.
''Everybody wants dollars so I think it (the Federal Reserve) has a certain obligation to provide them. People will worry that will trigger inflation in the
United States but the alternative is potentially a disastrous meltdown globally,'' Fukuyama said in the interview.
Fukuyama, who was a deputy director of the U.S. State Department's policy planning staff under Ronald Reagan, said there had been a general lack
of leadership in the world's most powerful countries during the current turmoil flailing emerging markets.
''I think the country where its (a lack of leadership) the most acute is obviously Japan,'' Fukuyama said. ''They need to take fairly dramatic steps to
clean up their financial sector.''
But he also said the weakened leadership of scandal-ridden President Bill Clinton was ''very dangerous for the United States and the world as a
whole.''
He said he was concerned that in their efforts to fight inflation, central bankers had lost sight of the magnitude of current global problems.
''I guess the thing that I am worried about is that a lot of central bankers have been fighting the last war which was an inflationary war,'' Fukuyama
said. ''That is not the problem right now with every commodity price in the world declining in the past year.''
''There are some eerie parallels to 1929 that make you worry about whether you are on the verge of something more dramatic,'' he said.
Fukuyama said he was thankful that Federal Reserve Chairman Alan Greenspan had indicated in comments at the beginning of September that inflation
was no longer the main threat to the U.S. economy. ''I think increasingly markets are counting on a rate cut by the Federal Reserve.''
The Fed's policy-setting Federal Open Market Committee (FOMC) next meets on Sept. 29.
''I think 1929 didn't develop into the Great Depression without some very serious mistakes on the part of policy makers, particularly by the Fed,''
Fukuyama said. ''Assuming that we avoid those kinds of mistakes, I think we should be able to get through this.'' |
