NY Times op-ed piece on global financial crisis

Louis Proyect lnp3 at SPAMpanix.com
Wed Aug 18 08:25:11 MDT 1999

A Crisis Without a Reform


(Garten is dean of Yale School of Management)

At this time last year it seemed as if the global economy was hanging by a
thread. Russia was defaulting on its debt, the first emerging market to do
so since the Asian crisis had begun. The world's largest hedge fund,
Long-Term Capital Management, was hemorrhaging badly and would soon require
a $3.5 billion bailout. And the Federal Reserve was preparing to lower
interest rates to keep the world financial system from imploding.

What a difference a year makes.

Or does it? Yes, the American economy is still booming, Europe is gaining
some steam, and even several emerging markets like South Korea and Mexico
seem to be on the mend. It would be easy to conclude that what President
Clinton, in a speech last fall, called the worst financial crisis in 50
years was vastly overblown. It's a short jump from that to believing that
whatever big problems existed have been more or less fixed. But this line
of reasoning would be seriously flawed.

The fact is that although millions of people in emerging markets have
suffered horribly -- losing their jobs, going bankrupt, sinking into
poverty -- the crisis wasn't long enough or deep enough to result in the
kinds of corrective measures that would result in a less risky global
economy. Indeed, little of a fundamental nature has changed, and in some
respects the environment is more fragile today. . .


Louis Proyect


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