The world is experiencing some of the best economic conditions in
more than a decade.
In fact, elements of the "miracle" economy in the United States
are now starting to show up in many industrialized nations - rapid
growth and relatively low inflation.
Even stock markets, just two years ago a source of concern from
New York to Hong Kong, are now starting to make money for everyone
from fry cooks to fund managers again.
It's a "blowout," says Stephen Roach, chief economist of Morgan
Stanley, a New York investment banking firm, of growth rates
One reason for the turnaround in the $32 trillion world economy
is lessons learned from the East Asian financial crisis of 1997, the
Russian devaluation of 1998, and the subsequent failure of a huge
American hedge fund. International bodies and nations are
implementing reforms aimed at making the world's financial systems
more stable, less subject to crisis.
"There is some progress," says Morris Goldstein, an economist
with the Institute for International Economics in Washington.
The Group of Eight leaders of the world's major industrial
countries, attending a summit last weekend in Okinawa, looked
outward to a much cheerier global scene than in their previous three
Wall Street is back
Consider just the financial markets. The value of all US stock
July 17 was $17.33 trillion, just above the previous peak in March
of $17.29 trillion, says J. Paul Horne, London-based economist for
Salomon Smith Barney. "The United States equity market has never
been so buoyant," he says.
Some fluff blew off the market this spring. Internet and some
price-rich technology stocks were hit hard. The Dow Jones Industrial
Average of 30 Blue Chip stocks remains well below its January top.
But the broader Standard & Poor's 500 index stands close to its
peak. Prices on the technology-laden Nasdaq market have leaped some
20 percent since late May.
Reflecting a more vigorous economic picture, Mexico stock prices
are up nearly 25 percent since May, Canada 16 percent, Brazil 13
percent, and South Korea 15.6 percent.
Not all is rosy on the world economic scene, though. One concern
is that Saudi Arabia will not pump enough crude oil to depress
Mr. Horne sees signs that the high cost of energy is starting to
have an impact on other goods, raising the prospects of inflation.
Another recurring danger is the high US stock prices. Despite the
recent downturn, the value of all American stocks amounts to almost
1.8 times current US gross domestic product - a record. This makes
the goal of the Federal Reserve to slow the US economy more tricky. …