Think Locally Act Globally
BOSTON — Cue the Coca-Cola commercial. Let's all sing "We are the world."
The New World Order has arrived.
It may not last long, and it was prompted by frantic self interest, but these past few weeks have brought the beginnings of a global problem-solving economic structure.
This is amazing, historic stuff.
We all know about the domino crises that started in Asia 16 months ago and tumbled through emerging market countries.
But it wasn't until about six weeks ago that world leaders seemed to recognize the potential for serious harm on their home fronts and the need to respond on a more global scale. It looked as if financial crashes over there were generating a fear of flying over here.
Alan Greenspan, chairman of the US Federal Reserve Board, became a planetary superhero. He cut interest rates twice and last week indicated a willingness to go a third round next week if necessary.
It had become clear that the only way to keep hearth and home safe was to patrol the neighborhood.
Asian troubles did not pose a direct threat to the US economy, but they drained confidence from the financial system. A stock market crash seemed imminent.
Super 'Span's rate cuts supercharged not only Wall Street but markets in Europe and Asia. And they cast Greenspan as a sort of global central banker, prompting five European countries to cut their own rates last week.
Read the David Francis column to my left. It underscores another global move, one by developed nations to throw a financial safety net under emerging economies. Again, not out of concern for the less fortunate but from a startled recognition that emerging woes brought Europe and the US right to the brink.
We used to think about global business in terms of corporate excursions across international borders - General Electric plants near Bangkok, BMW plants in South Carolina.
And the rest of us became global investors, investing in mutual funds that went to places where the seasons are "hot, bloody hot, and rainy hot."
But the dynamic has shifted.
We may now have the beginnings of a problem-solving structure, what President Clinton and others term a new architecture for monitoring and tinkering with the global economy.
Whether the attitude change brings permanent benefits remain to be seen. Capitalism can take a dim view of tinkering, but, for now, the effort has pulled the fat from the fire on Wall Street, Fleet Street, and beyond.
We're not out of the woods yet. Last week brought a peculiar development from Japan. Several Western banks said they would no longer pay interest on deposits made in Japanese yen. In fact, they're going to charge interest.
Imagine walking up to your local bank to put money in a savings account and being told you'd have to pay the bank 3 percent a year for the privilege.
That twist of logic last occurred in the 1930s. In the 1990s, it indicates a complete lack of confidence in Japan's banks. (It may also mark bottom to Japan's bank crisis, a point at which things are so bad they can only get better.)
And the jury is still out on whether lower interest rates have the clout for a long-term rescue.
But at least the thinking has shifted from a global to a local scale.