In an op-ed article in the
Financial Times of London,
Professor Robert Reich of Brandeis University, who was secretary of labor in
the first Clinton administration, warned Thursday that the world could be
facing a rerun of the 1930s. "We are entering a similar era," he wrote. "But we
have become so accustomed to the danger of excessive demand that we no longer
appreciate the danger of its opposite--inadequate demand. Nor do we feel the
urgency of taking pre-emptive action." "A large, unco-ordinated global
contraction is under way," he added. "We are experiencing only the
beginnings."
"Consider
the big picture," Reich wrote. "[A]n east Asia of toppling currencies and bank
insolvency; rising unemployment in Latin America's largest economy [Brazil] and
falling real wages throughout the region; stagnation and unemployment in
Europe; a rapidly approaching limit to the capacity of US consumers to take on
more debt. As the global economy slows, social unrest threatens." Reich called
on central bankers in advanced economies to consider whether it was time to
loosen the reins on the money supply. For the United States, he recommended
that pending budget surpluses be used for tax cuts and additional spending.
On the front page of Wednesday's Le Monde of Paris, the famous
French economist and former presidential adviser Jacques Attali said the world
was on the edge of an abyss and could plunge into "a planetary
recession of which democracy, in several countries, could be the principal
victim." The reason, he said, was that society was "ruled by the laws of
panic"--"the sheep-like movement in which everybody imitates the madness of
everybody else." "In economics, as in psychoanalysis, understanding is the
first step towards a cure. ... We must therefore learn to live with panic; that
is to say--to use a fashionable Silicon Valley metaphor--learn to 'surf on an
avalanche,' " Attali wrote.
He listed
six other steps for averting disaster: 1) equipping international institutions
with the research facilities to stop lying and to tell the truth about the real
state of the world economy; 2) taking the worst-affected countries into
international trusteeship before financing them; 3) multiplying the fire breaks
by sealing off the world's most volatile foreign-exchange markets; 4) taxing
international speculation to increase the financial resources of international
organizations; 5) taking counter-panic measures by, for example, getting
governments around the world to make public international investments to show
the global community's confidence in its own long-term future; 6) encouraging
in the markets a taste for being different, for "finding it fashionable to be
unfashionable," for going against the grain.
In La Repubblica of Rome, the columnist Bernardo Valli discussed the prevailing skepticism of American economists
and media opinion toward the single European currency, the euro, citing Milton
Friedman's prediction that it would fail and Martin Feldstein's (in Foreign
Affairs ) that it could lead to bitter conflict in Europe. Valli dwelt, in
particular, on American disbelief that a currency managed by a lot of feuding
European countries could ever compete, as it was intended to, with the U.S.
dollar.
"American
perplexity over how a politically impotent entity [the European central bank]
could govern such an ambitious currency is well founded," he wrote. "The
governor of the European bank certainly won't be able to manage relations with
the other side of the Atlantic. That task would be far beyond his role. But
despite its importance, this subject remains taboo in European capitals, where
nobody dares to utter the most relevant but most forbidden word of the
moment--the word 'federation.' Chancellor Kohl wouldn't risk saying it in an
election year overshadowed by the imminent abandonment of the beloved deutsche
mark. Nor would Chirac or Jospin dream of doing so for fear of provoking
believers in the nation state. The Americans are (almost) right not to
understand."
Wednesday, the Independent of London reported what it claimed were
exclusive background details to the execution of four Jordanian students in
Baghdad last month, which soured relations between Jordan and Iraq. The
students' official crime had been smuggling car parts into Iraq, but "their
death had nothing to do with their crime," the Independent 's Jerusalem
correspondent, Patrick Cockburn, wrote. "It was retaliation for what President
Saddam Hussein believed was Jordanian involvement in a conspiracy against him.
It followed interception by Iraqi security of a letter from Jordan to Maj.-Gen.
Talib al-Sadoun, an Iraqi general, giving details of a plot."
Cockburn
quoted Gen. Wafiq al-Sammara'i, former head of Iraqi military intelligence now
in exile, as saying: "Saddam Hussein thinks the Jordanian government knew about
the plot. Therefore he killed the four students to send King Hussein a
message." The recipient of the letter, Sadoun, who worked in the headquarters
of the ruling Baath party, was executed two weeks ago, Gen. Sammara'i
added.
Also in London, the Sun , Rupert
Murdoch's biggest-selling tabloid newspaper, covered its front page with the
headline "Japan Says Sorry to the Sun." Inside, it published what it claimed
was "the first article for any newspaper" by Japanese Prime Minister Ryutaro
Hashimoto. After extolling Anglo-Japanese friendship and recalling his own
childhood membership in the Boy Scout movement ("I still cherish the memory of
a simple meal shared with scouts on a cold Welsh shore"), Hashimoto reiterated
his recent public apology for Japan's brutal treatment of British prisoners
during World War II and promised new reconciliation initiatives.
"This will not bring back
the dead," he added. "But I hope the British people will see it in the spirit
in which it is intended--one of reconciliation and peace and hopes for the
future." The Sun , which claims 11 million readers, explained that
Hashimoto had written the article to warm up the welcome for Emperor Akihito
when he visits Britain in May. And the ploy seems to be working. The
notoriously jingoistic Sun , which has never before shown even a hint of
friendship toward Japan, published an editorial promising "a new era of better
relations between our two countries."
