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Oct. 6, 1998:
Economic advisers
discuss global financial reform.
Sept. 16, 1998:
Treasury Secretary
Rubin assesses the global markets
Sept.
7, 1998:
Economic strife in South Korea creates "IMF
orphans."
Aug. 26, 1998:
Why is the Russian
market collapsing?
Aug. 11, 1998:
One
World, One Market: Is globalization working?
June 17, 1998:
The U.S. helps bailout the
Yen.and Japan's troubled economy.
Jan. 1, 1998:
The connection between the IMF
and world economies.
Browse the NewsHour's coverage
of economic
issues, Asia,
Russia,
and South
America.
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PHIL PONCE: The World Bank and the International Monetary Fund -- commonly
known as the IMF -- officially
opened their 53rd annual meetings in Washington today against a backdrop
of global economic crisis.After beginning in Thailand a little more
than a year ago, financial turmoil struck other Asian countries including
South Korea, the Philippines, Malaysia and Indonesia, where it led to
the downfall of President Suharto.
The "Asian Flu" -- as it became known -- spread to Russia and now threatens
some Latin American countries, including Argentina, Mexico, Venezuela,
and Brazil. In recent days, the bad economic news has continued. Last
Wednesday, the IMF released its biannual world economic outlook predicting
the global economy will grow only 2 percent this year, compared to 4
percent last year.
The report states: "International economic and financial conditions
have deteriorated considerably in recent months. Chances of any significant
improvement in 1999 have also diminished, and the risks of a deeper,
wider, and more prolonged downturn have escalated." On Monday, the head
of Japan's central bank told U.S. government officials that his country's
banking system is in deeper trouble than once believed. And in the United
States, last week's interest rate cut by the Federal Reserve Board did
not stem the fall of the U.S. stock markets and others around the globe.
As of today -- the Dow Jones Industrial Average has fallen 17 percent
from its all time high in July. As the world's economic leaders meet
this week, they find themselves facing a growing backlash against the
free flow of capital in global markets. Last month, Malaysia, for example,
imposed controls on the buying and selling of its currency. In addition,
the IMF's own methods and effectiveness have come under renewed fire.
Although the agency has provided record levels of aid, nations receiving
these funds continue to face severe economic turmoil. This morning,
President Clinton addressed the IMF and the World Bank.
PRESIDENT CLINTON: As we are all acutely aware, today the world faces
perhaps its most serious financial crisis in half a century. The gains
of global economic exchange have been real and dramatic. But when tides
of capital first flood emerging markets then suddenly withdraw, when
bank failures and bankruptcies grip entire economies, when millions
in Asia, who have worked their way into the middle class, suddenly are
plunged into poverty, when nations half a world apart face the same
crisis at the same time, it is time for decisive action.
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The IMF and the World Bank have been vital to the  prosperity
of the world for the past half century. We must keep them vital to the
prosperity of the world for the next half century. Just as free nations
found a way after the Great Depression to tame the cycles of boom and
bust in domestic economies, we must now find ways to tame the cycles
of boom and bust that today shake the world economy. The most important
step, of course, and the first step, is for governments to hold fast
to policies that are sound and attuned to the realities of the international
marketplace. No nation can avoid the necessity of an open, transparent,
properly regulated financial system; an honest, effective tax system;
and laws that protect investment. And no nation can for long purchase
prosperity on the cheap, with policies that buy a few months of relief
at the price of disaster over the long run. We must address not only
a run on a bank or a firm, but also a run on nations.
If global markets are to bring the benefits we believe they can, we
simply must find a way to tame the pattern of boom-bust on an international
scale. This task is one of the most complex we face. We must summon
our most creative minds and carefully consider all options. In the end,
we must fashion arrangements that serve the global economy as our domestic
economies are served, enabling capital to flow freely without the crushing
burdens the boom-bust cycle brings. While we must not embrace false
cures that will backfire and lead, in the end, to less liquidity and
diminished confidence when we need more of both, we must -- we must
keep working until we find the right answers, and we don't have a moment
to waste.
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