By Peter Alan Harper AP Business Writer Tuesday, September 22, 1998; 12:52 a.m. EDT
NEW YORK (AP) -- A leading investment guru and one of labor's biggest leaders are among those warning that the United States is closer to crisis than it thinks and must immediately increase its efforts to solve the global economic crisis.
Robert Hormats, a vice chairman at Goldman, Sachs & Co., said the United States is facing ''probably the biggest threat to prosperity since the oil crisis of the 1970s.''
He and AFL-CIO president John Sweeney spoke Monday at New York University Law School, part of a daylong conference on democracy and the global economy. President Clinton and British Prime Minister Tony Blair addressed a late afternoon session.
Sweeney spoke of being sure to include the world's devastated workers in any solution to global economic problems.
Hormats' remarks came on a day the International Monetary Fund said that global capital markets could face more turbulence if Japan does not resolve its pressing economic problems quickly and if financial difficulties in Asia and Latin America grow worse.
The IMF's annual report on capital markets also said net private capital flows to emerging markets fell dramatically in 1997, the first significant downturn in a decade.
The report did not address problems in Russia, where the government Monday began printing 1.9 billion rubles, or $55 million, in an attempt to resolve central banking problems.
Hormats and Sweeney spoke just hours after Japanese legislators failed to complete a bill resolving its multibillion dollar banking problems, which sent Japanese stocks into a swoon. Japan's main stock index hit a 12-year low.
Should the Japanese banking system fail, ''It would make the Russian crisis look like a picnic,'' Hormats said.
Hormats, who is working to resolve private investment problems in Russia and flew in for the panel, offered solutions:
--The Group of Seven industrialized nations rededicate themselves and work with emerging markets.
--The United States needs to ''help Brazil in every way. If that falls, lots of other problems will occur,'' Hormats said. ''If we abandon them now, those supporting reform will say we did not come in their hour of need.''
--Build community by helping those who need it most -- which also resolves long-term security problems.
''We need to show the softer side of capitalism,'' Hormats said. As an example, he suggested delivering medicine and food to northern Russia, where workers have not been paid for months on end
''They'll remember that. That will be an important contribution,'' Hormats said. ''We will look concerned about these countries and not just be lecturers.''
Sweeney -- chief of a 13 million-member labor federation that signed up 400,000 new members last year -- spoke for the workers.
''Make no mistake about it, the real economy is taking the hit,'' Sweeney said. ''Workers across the world'' are suffering.
Sweeney spoke of workers in South Korea, where 25 people commit suicide a day, an increase of 36 percent since the economic crisis began.
He also spoke of places where children leave school to help support their families.
''The middle class is being pushed back into poverty,'' said Sweeney, who subsequently offered a twist on such popular solutions as lowering interest rates in the United States and getting the Japanese economy stimulated.
The world ''needs new international agencies ... not credit agencies or life rafts'' for the rich, he said, taking a shot at such agencies as the IMF, whose prescriptions include saving banks and cutting employee ranks.
''The president is right. We need not be an oasis of prosperity in a sea of crisis.'' |
