Remarks: Professor James Feinerman

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Thank you, Philip. It is nice to be back with old friends and also to have a chance to make the acquaintance of Ambassador Jones and Attorney General Solis Zelaya, but you may be wondering what I am doing here as an Asian specialist in a conference that is focused on Latin America. And with Phil's introduction I think it is clear that my knowledge of legal and economic development issues, which I hope are more global than parochial, may have some bearing on today's discussion.

Also, since Professor Fried made the point about the "Asian contagion" and its possible spread, I am here to say that I am not trying to spread the contagion, but perhaps to suggest some prophylactic measures that can be taken in Latin America to avoid falling ill to the same things that have affected so desperately the markets in certain Asian countries.

In fact, if you look in recent Washington Post articles from just the past several weeks, you can see a certain concern about what Henry Kissinger called in one article The Perils of Globalism and how interconnected markets, particularly financial markets, have become. Paul Blustein, The Post's economic correspondent for international matters, wrote in one of the Sunday op-ed pieces about the annus panicus--which, based on my Jesuit education, I do not think is legitimate Latin--based on my Jesuit education--for the IMF and what it means for the global economy.

And what I am going to talk about in the short time that I have this morning is essentially what national legal systems and national markets can do as a kind of reinforcing role with respect to what happens on the larger regional and global basis. I want to focus particularly about the role of the U.S. capital markets--which I have studied both as an academic and as a practitioner on Wall Street--and how they have acted to provide liquidity to foreign investors. They do this in a way that enhances overall confidence about economies and markets, but they also try to function as a disciplinary mechanism that allocates capital to more efficient users, penalizes those who fail to pursue shareholder and other stakeholder interests, and hopefully reduce the need for legal intervention in other areas.

I will not be able to cover all of this, and as a last-minute replacement for another panelist I am sorry that you do not have a paper in front of you that could flesh out my views.

I want to talk almost exclusively about the legalities of securities markets and finance, but I think it is important to note that this is part of a larger enterprise that parallels not only diversification and change in many other related commercial and financial markets, but really speaks to the question of the overall economic, political, and legal reform that is going on around the world, particularly--with the focus of this conference--in our own hemisphere. I think a number of important changes are transforming not only our financial markets but how we think about markets in general.

Capital markets are not, any more, domestic or even regional. They are truly global and what happens halfway around the globe can have a very direct effect on what was previously a more insulated national economy.

In fact, there are three points that I would make in greater detail if I had more time. I would speak about the increased volatility that flows as a result of this globalization, about the global competitive pressures that it puts secondly on many economies that have previously not had to face that kind of intense scrutiny, and about the attitude of various regions to try to circle the wagons--the European Union is particularly notable in this regard--to try to consolidate their own regulatory regimes but also act in a way that may make it possible for them to withstand the pressures that come from outside.

And underlying all this, of course, is a global attitude, which I think was initiated in the United States in the 1970s, about deregulation that complicates the efforts in these areas. …