A New Era Dawns

Article excerpt

We at Global Finance are much like the child born on an important holiday who grows up confusing the holiday's celebration with his own birthday. We have the same feeling each year as the anniversary of the magazine s launch approaches. The reason for this is that Global Finance was first introduced in London on the day of the stock market crash in 1987. Every year, as October 20 looms, stories begin to appear in the press comparing the current financial situation with the one that existed in the run-up to October 20, 1987. Invariably they find similarities that indicate there could be another crash in late October. So far, they've been wrong, except for October 27,1997. But if they make this call often enough, they may eventually be right again-like the broken clock that tells the correct time twice a day.

Since 1987, the financial world has experienced a series of crashes and crises. Their immediate causes have differed, but each caused fears of contagion and systemic collapse. Even our current market, which as of this writing has major banks writing off billions of dollars of value as a result of problems in subprime mortgage lending, is raising these concerns.

Over the years, we've become more sanguine about the likelihood of these episodes causing systemic meltdowns or even serious cross-border contagion. Part of the reason is the growing parity of economic strength and resilience among countries; the financial world is no longer solely dependent on the success of the US economy. …