So far, in just two days, the market made a statement that everything is rosy again.
" .... U.S. Treasury Secretary Robert Rubin said on Saturday that there is no quick fix for the world's financial problems but the path to solving them and preventing future turmoil seems clear. ... One of the main challenges is to bridge the gap between ''the sovereignty of nations on the one hand, and the demands of the transnation global economy on the other hand,'' Rubin said in a speech to fellow alumni of the Yale Law School. .... World financial market turmoil, the collapse of growth in Asia and fears of a global credit crunch are forcing economists to lower their forecasts for global growth and admit that recession cannot be ruled out. .... But Rubin, a 1964 graduate who received the school's award of merit on Saturday, expressed optimism a more successful global financial framework can be hammered out. ... ''I believe that we have a good understanding of the crisis, what needs to be done and the components of an effective architecture for the future global financial system,'' he said. ... But he added, ''There are no magic wands or easy answers.''
..." biz.yahoo.com
10/17 Treasury's Rubin Says Tough Choices Required to Protect Global Economy bloomberg.com
Rubin Says Tough Choices Required for Global Economy (Update2)
(Adds Rubin comments in 6th-8th paragraphs.)
New Haven, Connecticut, Oct. 17 (Bloomberg) -- Governments around the world must make tough economic decisions, often at odds with their short-term political interests, to protect the increasingly interdependent global economy, said Treasury Secretary Robert Rubin.
''The world is now experiencing its most serious financial
crisis, in many respects, of the last 50 years,'' Rubin said in a
speech at Yale Law School, where he received a law degree in 1964. ''One of the great political challenges in the decades ahead is for democracies to be able to make the unpopular economic decisions requisite for success in a transnational, interdependent global economy.''
At the heart of the challenge is bridging the gap between the sovereignty of national governments and the demands of the global economy, Rubin said, blaming the current crisis on ''excesses in investment and credit extension from developed nations into developing nations without adequate weighting of risk.''
That requires building political support for unpopular reforms, Rubin said, citing the efforts of South Korea President Kim Dae Jung to bring together businesses and labor unions and help stabilize his country's currency crisis. ''A similar process occurred in Thailand, though in both cases great challenges remain ahead,'' he said.
That hasn't been the case in Russia and Indonesia, however, Rubin said. In those countries, ''the political systems never took ownership of reform, the economic policy decisions in the proposed reform programs consequently became irrelevant, and the economies are in dire straits,'' Rubin said.
Inadequate Legal Protections
In a global market, problems can arise when individual countries' legal systems are inadequate or undisciplined, and capital flows into the country without regard to risk, Rubin said.
World leaders must focus on ''overcoming the effectiveness of countries that choose to provide safe havens from regulation, a potential problem, for example, with respect to the possible regulation of hedge funds,'' he said.
The lack of strong bankruptcy laws has hindered economic recoveries in Korea and Thailand, he said. ''Government decisions will greatly affect how these markets will treat a country's economy,'' Rubin said.
Industrialized countries, as well as emerging markets, have trouble making what Rubin said were the right economic choices. The failure of Japan's government to gain support for overhauling its banking system and cutting taxes ''has led to seven years of extremely slow growth and three quarters now of recession.''
And Rubin said it took a year to persuade the U.S. Congress to agree to support an $18 billion infusion of capital into the International Monetary Fund. And, he said, ''we still must pay off our arrears to the United Nations, and support trade liberalization at a time when protectionist pressure may be building.''
The current crisis ''presents unprecedented and enormously complex challenges to the nations involved and the international community,'' Rubin said. There are ''no magic wands or easy answers,'' he said, and the problem will take time to work out. |
