[The following excerpts are from the feature piece in today's New York Times OP-ED section. It does not discuss any Y2K implications, but clearly, even minor Y2K problems could ripple quite badly throughout the world, given the present circumstances.]

===REPRINTED FOR RESEARCH/EDUCATIONAL PURPOSES ONLY===

"A Crisis Without A Reform" By Jeffrey E. Garten (Dean, 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 must have been more or less fixed. But this line of reasoning would be seriously flawed.

The fact is that although million 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.

[skip]

Last winter, I interviewed 20 top officials on Wall Street and in Washington to get their views on what caused the financial debacle and how to deal with it. They didn't agree on much, except on one point: we are in for a series of financial crises over the next several years. Why? The global system is no stronger than its weakest links. And there are plenty of them, from Japan, with its sky-high debts, to the tension-ridden emerging countries that are trying to move from closed to open societies. The executives pointed to widening regulatory gaps as the movement of money outpaced government's ability to supervise the system.

No one I interviewed would even dare guess when and how the next crisis will arise. But the most worrisome set of circumstances relates to the United States, which for the last few years has been single-handedly supporting the world economy. [snip]

There are also some glaring weak spots abroad. [China is now] flirting with devaluation, a move that could jeopardize the fragile recoveries of its neighbors by undercutting the prices of their exports. Argentina, until recently a pillar of strength in South America, is projecting negative growth of 3.5% this year. These are not huge economies, but remember that the last crisis began in Thailand.

The point is not to add up everything that could go wrong, but to recognize that globalization implies that everyone and everything is more closely connected than ever before, but on a foundation that is still shaky.

Of course, like last year at this time, our luck may hold. But its like playing Russian roulette with some additional bullets loaded into the chamber.

-- M.C. Hicks (mhicks@greenwich.com), August 18, 1999

Answers

I see it more like playing Russian Roulette with a semi-automatic pistol, with only one round chambered...

-- Mad Monk (madmonk@hawaiian.net), August 18, 1999.