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To: scotty who wrote (18537)	9/11/1998 6:16:00 PM
From: goldsnow	Respond to of 116759

Very educational chart...better than any words of "contrition" Pressure mounts on world leaders to calm markets 10:06 a.m. Sep 11, 1998 Eastern By Mike Dolan LONDON, Sept 11 (Reuters) - Pressure mounted in financial markets on Friday for the world's economic leaders to prevent a relentless crisis in emerging markets from becoming a global economic disaster. The growing conviction among analysts was that Federal Reserve Chairman Alan Greenspan may be the only man left with the power to prevent this happening. Major stock markets on Friday continued to fall and the health of the global economy was seen at risk. The rout in emerging markets continued. The Group of Seven (G7) industrialised nations is scheduled to hold a meeting in London on Monday. But in the absence of political leadership, all eyes turned to Greenspan, the one person seen as able to influence the global environment by lowering interest rates. ''Alan Greenspan is the only one in the driving seat who might be able to do something,'' said Avinash Persaud, head of currency research at J.P. Morgan in London. ''Individual countries are too small to deal with this tidal wave of contagion and it's begging for a global policy response,'' he said. The worrying thing is that even Greenspan may not have enough ammunition. Any U.S. interest rate cut is expected to be small and some analysts say this alone may not lift investor sentiment. Latin American economies, ironically the most diligent students of western economic orthodoxy in recent years, are the latest to be swamped by financial market turbulence. Investment funds are now so reluctant to leave their money in even remotely risky assets that few have any confidence that Brazil, which accounts for about 40 percent of the gross domestic product of Latin America, can protect its currency. As Brazilian stocks plunged 15 percent on Thursday, President Fernando Enrique Cardoso pleaded for help from the United States and other western leaders. This week more than $1 billion in capital has been bleeding out of the country each day. ''We must...talk with world leaders,'' said Cardoso late on Thursday. ''They must realise we are heading for a world situation that requires firmer decisions, principally from...the G7 and especially from the U.S.'' Analysts say the global political leadership required to coordinate a response is currently distracted. U.S. President Bill Clinton is facing possible impeachment by Congress, Germany's Chancellor Helmut Kohl has an election later this month and Japan's government is unsuccessfully grappling with its own ailing economy. Faith in the cash-strapped International Monetary Fund is at an all time low after its multi-billion-dollar rescue plans failed to prevent financial meltdown in Indonesia, Russia and elsewhere this year. Few in the markets are banking on anything concrete coming out of Monday's meeting of the G7 -- the U.S., Japan, Germany, Britain, France, Italy and Canada. It was not yet clear on Friday who would represent U.S. Treasury Secretary Robert Rubin. The wave of market fear and contagion started in southeast Asia 14 months ago and has subsequently drowned Russia, soaked central and eastern Europe and is now seeping into the economies of the G7. Investment funds have run scared and countries desperately in need of regular short-term foreign financing -- mainly those with high current account deficits -- are suffering from a classic credit crunch. Across the developing world, currencies have collapsed, inflaton has soared, debts have not been serviced, social unrest has risen and governments have fallen. ''There has been a qualitative shift in the global crisis,'' said Stuart Brown, head of emerging markets research at Banque Paribas in London. ''Latin America is under tremendous pressure and that really adds a whole new dimension to the situation,'' said Brown. ''We need some global leadership from Greenspan, Rubin, the IMF...someone, somewhere.'' Analysts said that if Greenspan did decide to take action by making U.S. credit cheaper he could boost global liquidity and help reflate what is now a highly integrated global economy. The underlying fear in the markets was that even if Greenspan did shave interest rates, it would not be by much and that would leave markets foundering. ''While a cut in U.S. interest rates could help to ease the situation, it may require a cut too large for the U.S. authorities to stomach,'' said Persaud at J.P. Morgan. ((London newsroom +44171 542 6762, fax: +583 7239, uk.emergingmarkets.news+reuters.com)) Copyright 1998 Reuters Limited.