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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: E who wrote (1768)	9/29/2001 12:33:41 AM
From: E	Read Replies (2) \| Respond to of 281500

ASSAULT ON AMERICA ECONOMY: Shockwaves take uneven path around global market ECONOMIC IMPACT: Financial Times; Sep 27, 2001 By ALAN BEATTIE It is a growing belief that economic globalisation means that a shock to one economy - such as the September 11 attacks in the US - is a shock to all. The International Monetary Fund's analysis, contained in the world economic outlook published yesterday, suggests that in practice this is a highly uneven and erratic phenomenon. But for slowdowns - like the present one - originating in the industrialised world, the sheer size of the economic blocs involved and their status as leaders rather than followers suggest that the global linkages will be at their strongest. The immediate case for intense economic globalisation is not dramatic. For example, there is surprisingly little evidence that the large economies trade with each other much more than previously. For most of the Group of Seven industrialised economies, the average share of exports and imports to other G7 economies was no more than 2 percentage points higher in the 1990s than in the 1970s. Moreover, despite stronger links through international asset holding, the correlation between growth rates in some of those big economies fell sharply during the last decade. In Germany and Japan, economic shocks unique to each country - the aftermath of the asset price bubble in Japan and unification in Germany - meant their economic paths diverged from the US. Even when trade links are much stronger, economies can still diverge markedly. Despite some astonishingly broad trade links with the US in countries such as Malaysia and the Philippines, correlations of their economic growth with the US dropped sharply during the 1990s as a result of the Asian crisis - for which the impetus started in domestic financial turmoil, not reduced export demand from a US economic slowdown. But Alec Chrystal, professor of finance at City University in London, says that the current situation is one where the links are likely to assert themselves strongly. He says the situation is different from the Asian crisis, when pure financial contagion - investors indiscriminately pulling out of all emerging market assets - was more widespread but the effects on global trade and the large economies turned out to be far smaller. "With the US and Europe involved and Japan having been a basket case for some time, this is a more traditional widespread investment and industry-led slowdown," he says. The IMF study confirms that the links are asymmetric: developing country exports suffer badly from downturns in the G7 business cycle, while their imports are largely unaffected. It singles out emerging-market Asia and Central America as areas likely to suffer most because of their trade links with the US. The IMF study says: "Many developing countries produce low value-added manufactures for which competition is fierce, and prices tend to fluctuate in tandem with demand from industrial countries." Microprocessor prices have already dropped during the current slowdown, and there are particularly strong links between the general level of G7 demand and metals prices, exported by many poor countries. The IMF also says that official aid flows on which many countries depend are volatile and seem to go up and down with the economic cycle in donor countries: rich nations feel more generous when they are better off. Indeed, the preliminary results from a study being conducted by the World Bank - due to be published early next week - are understood to show that developing countries will be among the biggest sufferers from the terrorist attacks. Initial estimates from bank economists predict that the attacks could cut 1 per cent from growth in industrialised countries but 1.3 per cent growth from the larger developing economies, leading to the possible deaths of 25,000-50,000 children through higher infant mortality and poverty. Prof Chrystal says the conditions are exactly right for a synchronised slowdown. "There is no part of the world where there is a strong growth story," he says. "Anyone planning an investment project anywhere in the world will be thinking about putting it off." globalarchive.ft.com

To: E who wrote (1768)	9/29/2001 9:19:02 AM
From: Selectric II	Read Replies (1) \| Respond to of 281500

"This is at the bottom of a communication I just today from a pacifist organization. Hate cannot drive out hate; only love can do that." The Reverend Martin Luther King, Jr. Former member, The Fellowship of Reconciliation Unfortunately, one had better not rely on love, either. You mean all those Jews in Auschwitz couldn't have loved their way out of the gas chambers? And why couldn't the plane passengers defeat the terrorist skyjackers with expressions of love? Geez, the pacifists don't have a solution for murderous enemies without a conscience, do they?