International -- Readers Report
MARKET SHOCKS: HOW MUCH PAIN? (int'l edition)
"The fundamentals of the U.S. economy are basically sound." Those words are frequently spoken by economists after any market change for the worse ("After the shock," Special Report, Nov. 10). They say inflation is under control, growth is strong, unemployment is low, the budget deficit is below expectations, and productivity is rising.
The problem is that those numbers benefit only the upper 20% of American society. The remaining 80% are excluded. This is bad for the prospects of the American people and the world. Income distribution should be addressed as one of the fundamentals of any economy. If this factor starts to be taken into the equation, then the fundamentals may not be all that bright. Future adjustments in wealth distribution may be costly to the economy and the people, in the form of profit cutting, increased welfare expenses, heavier wages, strikes, and other types of social turmoil. After all, this and other future shocks may be trying to tell us some few important things. The sooner the corrections, the less painful the future will be.
Your special report on stock market shock was thorough and well-documented. But now, all of Eastern Asia is melting down, with the notable exception of China. It would be hard to imagine that no one else, including the U.S., will get hurt. Asia makes up about 60% of Japan's foreign revenues. Investments have been made all around the world, including Latin America and Africa, to meet the future Chinese and Asian demand. In anticipation of growth in Asia, some chemical plants built there will have output bigger than production in all of Europe.
One might seriously consider the soundness of the global economy. Before the meltdown, the Standard & Poor's 500-stock index and Dow Jones industrial average would have been safe around 650 and 6500.
Now, safety would advise to sell most of your stock, buy treasury bonds, and wait until April, 1998, to evaluate the extent of global damages before investing in stock or real estate.
You printed a remarkable photo captioned "Come back, bull." Unfortunately you failed to give credit to the artist. Arturo DiModica's 3 1/2-ton bronze sculpture, "Charging Bull," is here at Bowling Green at the southern tip of Broadway near Wall Street.
Arthur R. Piccolo
Bowling Green Assn.
New YorkReturn to top
WHY FRANCE AND ITALY NEED GOVERNMENT AID (int'l edition)
Rudi Dornbusch is miffed at French and Italian voters for backing government intervention to provide jobs and protect them against the downward auction of globalization. He hopes Germany will not follow suit ("A turning point in the battle for Europe?" Economic Viewpoint, Nov. 10). However, if the alternative is more downsizing, rising inequality, and the loss of job security and the social safety net, the result, beyond the politics, is less consumption. Added to the frugality imposed on their peoples by the rulers of the Asian industrial countries and now the International Monetary Fund, this would mean more of the overcapacity that endangers the world economy. The French and Italians may soon have lots of company.
John E. Ullmann
Professor Emeritus of Management
Hempstead, N.Y.Return to top