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."