Cowboy CapitalismrnLessons From the Asian Meltdownrnby Alfred E. EckesrnAs the Asian financial and currency crisis spun out of control,rnthe world glimpsed the dark side of the new internationalrneconomic order. It is highly efficient—linking globalrnmarkets for goods and money—but dangerously unstable andrnasymmetrical.rnFor speculators, traders, bankers, and tycoons, there are unlimitedrnopportunities to make money in the global economy.rnThey buy and sell currencies, lend and invest in equity marketsrnand real estate. For many of them, whatever the risks, it is a winwinrnsituation. They profit from their gains, and when the bubblernbursts, as it did in Thailand and South Korea, the hiternationalrnMonetary Fund steps in with bail-outs. Anxious tornrestore stability and market confidence, the IMF allows localrnofficials to collectivize private losses and cushions lenders fromrnthe consequences of their mistakes.rnFor the common people, the global system works quite differentlyrnwhen things go wrong. The IMF prescribes a deflafionaryrnprogram for the debtor countr’ that forces up interestrnrates, cuts government spending, and boosts unemployment.rnSince the IMF typically insists that developing countries openrncapital markets and privatize industries, many in developingrncountries consider it a front for expanding Wall Street influencernand American interference.rnOf course, the economic internationalists who back thernClinton administration’s efforts to make the world safe for WallrnAlfred E. Eckes is Ohio Eminent Research Professor at OhiornUniversity and a former chairman and commissioner of the U.S.rnInternational Trade Commission.rnStreet and multinationals have a different interpretation. Inrntimes of economic crisis, they say, the world’s most powerfulrneconomy has special responsibilities for managing the globalrneconomic system. America has a duty, they assert, to act as bothrnthe lender and importer of last resort. The first obligationrnmeans making dollars available to underwrite the IMF, restorernconfidence in currencies, and avoid widespread defaults. Thernsecond—strict adherence to unilateral free trade—offers a wayrnfor debtors to export their way to financial recovery and to payrnoff debts.rnIn the current financial crisis, this means that the UnitedrnStates, with a huge current-account deficit of $166 billion, willrnshoulder most of the adjustment burden. Although WesternrnEurope and Japan have current account surpluses totaling overrn$200 billion, only America is prepared to act as the locomotivernfor the global economy. When the subject of burden-sharingrncomes up, European and Japanese officials drag their feet. CitingrnEurope’s 18 million unemployed and the problems of expandingrnthe European Union and adopting the euro currency,rnJacques Santer, president of the European Commission, bluntlyrntold Asia: “Everyone has to put his own house in order.”rnJapan seems incapable of action. Despite extensive investmentrnand trade ties with Southeast Asia, Japan has been slow tornstimulate its economy in a way certain to boost imports fromrnother Asian countries. Part of the problem is that both the Europeansrnand the Japanese know that Ainerica’s internationalistrnleadership will pay any price and accept any burden for the sakernof sustaining the open economic order. Washington has donernthat since 1945.rn26/CHRONICLESrnrnrn