World Economy

Political heavyweights and economic experts from all corners of the globe will converge on this Swiss resort city on Thursday to ponder ways of pulling industrial nations out of an economic slump. The five-day World Economic Forum is chaired by former German Foreign Minister Hans Dietrich Genscher, former Bundesbank chairman Karl Otto Pohl and Sony Corp. head Akio Morita.

Shanghai was at the top and Sacramento near the bottom of new rankings of the world's best- and worst-performing metropolitan economies last year by the Brookings Institution. The rankings of the 200 largest metro areas that account for nearly half of the entire global economy underscore how the Great Recession has accelerated the shift in economic strength from the West to the East, and from industrialized countries to developing nations in Asia and South America. In Brookings' list, released Wednesday, 90% of the world's fastest-growing economies were outside North America and Western Europe.

The economies of the seven richest countries look better this year than last as their leaders and Russia's President Boris N. Yelt- sin open their annual summit meeting Friday. But, just beneath the gross domestic product numbers, the picture is less rosy. Many of the structural problems that plunged Asia into a financial turmoil in 1997 remain, European economic growth is fragile and even the United States' economy is beginning to show imbalances.

Despite weeks of tough warnings, the Obama administration has backed away from its calls to impose new and potentially crippling economic sanctions against Iran in retaliation for an alleged plot to kill Saudi Arabia's ambassador on U.S. soil, according to diplomats and American officials. Though U.S. officials had declared that they would "hold Iran accountable" for a purported plot, they now have decided that a proposed move against Iran's central bank could disrupt international oil markets and further damage the reeling American and world economies.

Fears about Japan roiled world financial markets last week--near-term fears that Japan's banks would fail and longer-term worries about Japan's curious economy, which has stagnated for a decade. There is cause to worry. In the next year or two, Japan is going to dramatically affect the world economy as it works out problems of government debt and industrial restructuring.

A gloomy forecast of slow-to-stagnant economic growth in the industrialized world--with little to indicate improvement in the next 18 months--was issued here Thursday by the 24-nation Organization for Economic Cooperation and Development. At the same time, the head of OECD's Economics and Statistical Department, David Henderson, warned bluntly that "the main single requirement is to bring down the U.S. fiscal deficit."

Agriculture is a vital part of the world's economy. But countries that depend heavily on it tend to be less developed and less wealthy. In fact, farmers are among the poorest people in the developing world. China is No. 1 in both wheat and rice production--two key crops. But developed nations are strong players in the wheat field. * Top World Producers of Rice (1993-94) 1. China 2. India 3. Indonesia 4. Bangladesh 5. Vietnam 6. Thailand 7. Myanmar 8. Brazil 9.

IMF Managing Director Michel Camdessus warned Thursday of the risk of "devastating trends" hitting the world economy and appealed for a global growth strategy to combat them. Setting the stage for a series of international financial meetings that start today, Camdessus painted a bleak picture of a world economy beset by high and rising unemployment, anemic growth and mounting protectionism. "There are important problems," the International Monetary Fund chief told reporters.

It may seem foolish, even improper, to think of finance and investments with American forces on the brink of war. But it's inescapable. The gyrations of financial markets are part of the daily crisis story, as hopes and fears drive stocks, bonds and the price of oil. Moreover, the world of finance is looked to for guidance. Financial experts are called upon to explain the economic underpinnings of the conflict and to gauge war's effect on the economy.

Recession, war and Eastern Europe's market revolution have dragged down the world's economy, which shrank 0.3% in 1991. The industrialized countries experienced the most anemic growth since the worldwide recession of 1982, according to the International Monetary Fund and World Bank. Economic slumps deepened in the United States, Canada and Britain, while high rates of growth recorded in 1990 by Japan and Germany slowed. In Eastern Europe, economies as a whole shrank 16.

With stock portfolios in shock because of Wall Street's gyrations, consumers have at least one thing to look forward to: The collapse in oil prices happening in near-tandem with the stock market blowout means that motorists should see pump prices drop as much as 50 cents a gallon over the next several weeks, energy experts said. While that might sound like great economic news, the underlying reasons are anything but. Oil prices have fallen on expectations that the world's economies are headed for a rough patch, which would reduce demand not only for oil and gasoline but also for employees and for things that businesses make and sell.

While the Obama administration struggles to jump-start the stalled U.S. recovery, policymakers in Beijing have an opposite but equally formidable task: putting the brakes on China's speeding economy without triggering a slump. How well they succeed holds enormous consequences for the world economy, where China has emerged as one of the few reliable engines of growth. The government announced this week that China's economy expanded at an annualized rate of 9.5% in the second quarter from a year earlier.

When President Obama took to Wisconsin to sell the ideas in his State of the Union speech, he had an equally important mission: to recapture the state and try to restore his electoral viability. In Wisconsin, like in other states that propelled his 2008 presidential victory, voters are concerned about the economy, rising federal deficits and the president's healthcare plan, according to strategists from both parties. Even though the state's unemployment rate is a comparatively mild 7.5% ?

President Obama appeared to fall short in his attempt to forge a unified approach to boosting the global economy as a frequently rancorous meeting of world leaders seemed set to conclude in Seoul on Friday without agreement on specific steps to avert damaging currency and trade wars. Leaders of the world's biggest economies showed that they were in no mood to compromise during the two-day summit. Instead, they were headed toward broad, general pledges that did little to mask their inability to find common ground for immediate action.

Despite a furious round of negotiations the last few days, the U.S. failed Thursday to work out a free-trade agreement with South Korea, denying President Obama a deal he had hoped would be a strong kickoff to a key economic summit of world leaders. Obama said he still hopes for a pact within weeks, and believes that representatives of the top 20 industrialized and developing economies will reach "a broad-based consensus" on reconciling trade imbalances while they are meeting here this week.

Polishing a pair of black men's dress shoes, Ji Soon-dol said he was honored to take an economic hit for the sake of his country. In preparation for this week's Group of 20 economic summit here, merchants at the mammoth Coex mall have been told the site will be off-limits to shoppers while it hosts the two-day forum. "It's a big deal for South Korea," the shoe repairman said. "We all must do our part. " Seoul has summit fever. All around the capital, banners proclaim the gathering of the world's 20 leading economies as the nation's biggest showcase since the 2002 soccer World Cup, a chance for this economic powerhouse to show that it has joined the world's heavyweights.

One year later, the October, 1987, stock market crash is just another financial panic. The history of capitalism is in fact littered with financial crashes. Tulip mania, the South Sea Bubble, the Great Crash of 1929 all have become part of our colorful history. Many more crashes have been forgotten. In the 19th Century, financial panic occurred at a rate of better than one a decade. Several panics, crashes, manias or bubbles occurred between 1900 and 1929.

Less than a generation ago, the only financial crises that really mattered to Americans were those close at hand. In the 1970s, Congress fretted for weeks before approving a $750-million rescue of Lockheed Aircraft Corp., and a similar debate gripped the country before President Carter agreed to put up $1.2 billion in taxpayer money to save Chrysler Corp. and its 130,000 jobs. At the same time, the International Monetary Fund was pulling Britain and Italy back from the financial brink.

Frank Englmann used a personal story about his grandfather to make his point to a local bank bigwig about German reluctance to risk the inflation that might come with the kind of carefree spending advocated by the Obama administration. It was 1922, and Englmann's grandfather had amassed a small fortune that he wanted to spend on a house. But his wife persuaded him to save the money for their daughters' educations. Then the German economy collapsed, the money became worthless and the family penniless.

Europe's $1-trillion rescue plan for its weakest countries sent battered financial markets rebounding dramatically worldwide Monday on hopes that the deal would avert another global economic crisis. The massive loan package hashed out over the weekend by the European Union, and a separate aid program from the European Central Bank, reassured investors by giving Greece, Portugal and other debt-ridden eurozone nations new credit lifelines. Major European stock markets rocketed higher, some more than 10% for the day. U.S. stocks also posted steep gains, with the Dow Jones industrial average soaring about 405 points, or nearly 4%, to 10,785.