The thousands of demonstrators massing in Washington at the weekend to call for the destruction of the international financial system might as well pack their bags and go home.
After last week's stock market rout, capitalism may be at death's door - but its demise would have nothing to do with marches, or even the four tonnes of cow dung dumped on the steps of the World Bank.
Without a window being smashed or a skull being broken by a police truncheon, the financial markets are on the brink of a crash. When Wall Street opens today just after lunchtime in the UK, the whole of the developed world will be watching to see if the financial markets plunge into an abyss.
Last week saw the Nasdaq, the symbol of the hi-tech new economy internet boom, tumble by almost 10 per cent, leaving it down by a massive 25 per cent on the week. The old-economy Dow Jones Industrial Average index was caught up in the carnage, suffering its largest one-day points fall ever to close down by more than 5 per cent.
The timing could not better for the Mobilisation for Global Justice, the loose coalitionwhose aim is to "reclaim the power" from the faceless bureaucrats and financiers in the US Treasury, Wall Street, the IMF and the World Bank.
The irony is, of course, that for once the economists at the IMF spotted the potential timebomb within the global economy in good time. Only last week the fund gave a stark warning that the huge imbalances between the main regions of the world economy were the key threat to its stability. It went as far as to say there was a one-in-three chance of the a sharp slowdown in US growth, triggering a recession whose effects would be felt across the globe.
It highlighted three elements to this chemical reaction: the over valued stock market; the strength of the dollar; and the record trade and current account deficits. "Experience shows that such asset price inflation can be particularly destabilising, because it may encourage households to over-consume, and because of the danger that the financial system may become vulnerable to an eventual downward correction in asset prices," it said.
An acceleration of last week's slump in stock prices - which took trillions of virtual dollars out of the pockets of American households - could shock consumers into pulling in their horns and cutting spending, so hitting business profits and domestic growth.
It could also could trigger a flight of capital from the US as institutions seek better homes for investments, knocking the value of the dollar and opening up the threat of inflation as import costs rose. "The attendant fall in domestic demand could well lead to a mild recession in 2001 in the US and more limited output losses in the rest of the world," the IMF said.
There is also mounting concern about the lopsided pattern of global growth. Japan is running a zero interest-rate policy in an attempt to kick-start its recessionary economy and avoid deflation, while the year-old European single currency is still weak and euroland interest rates are almost half the level of those in the US. The test for policy makers is to slow US growth without shocking the system, while at same time boosting growth in the rest of the world.
The IMF forecasts the US to grow by 4.4 per cent this year and 3 per cent in 2001, upward revisions of 0.5 and 1.8 points respectively. This compared with 3.2 per cent in both years in Europe and 0.9 and 1.8 per cent in Japan. Under the IMF's "alternative scenario" the US economy surges of expectations this year, triggering sharp rate rises that bring growth to a grinding halt, with real GDP rising just 1 per cent in 2001 and 2002 as domestic demand collapses, the dollar devalues by 20 per cent and inflation hits 3.3 per cent.
The simple recipe for the US economy is more small rate rises now to prevent the runaway boom accelerating further; taking the punchbowl away just as the party is getting going, as the old saying goes.
It was the realisation on Friday that a sudden up-tick in inflation could mean much steeper interest-rate rises than anticipated that sent the markets spinning. The US acknowledges that structural changes are needed; specifically, that the government must do more to raise the low level of private savings. The rest of the world also needs to raise its game.
But, as Lawrence Summers, the US Treasury Secretary, said, global expansion needs to be balanced up rather than down. The US wants Europe to press ahead with the reforms of labour, products and capital markets it believes will unleash growth the way it has in America. And it wants similar radical reform in Japan that will encourage demand-led growth based on private investment and job creation.
This concern topped the agenda for the meeting of the G7 finance ministers. In the end the G7 chose to wax lyrical about the longer-term outlook for the global economy, despite the markets' gyrations. The final irony is that the US administration and the policy wonks in the IMF are just as powerless to tackle the imbalances in the global financial system as the protesters outside on the streets of Washington.
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