Panel Presents Talk on Global FinancesBy Jennifer Chung
associate news editor
The fifth annual Catherine N. Stratton Lecture on Critical Issues was held yesterday in front of a large crowd at the Wong Auditorium.
Moderated by InstituteProfessor Emeritus Robert M. Solow, the topic was "Global Financial Crises:Dangers andOpportunities", and the distinguished panelists were Professor of Economics Rudiger W. Dornbusch, Marina v. N. Whitman, professor of business administration andpublic policy at the University ofMichigan, and Janet L. Yellen, chair of the President's Council of Economic Advisers.
The panel was sponsored by the MITWomen's League.
Panelists discuss current issues
Explaining the current Asian financial crises, Dornbusch stated that "vulnerability is the issue," in the first of the three presentations. Poor supervision and poor regulation were some of the factors he cited as contributing to the financial crises of some nations.
Dornbusch began by suggesting that financial crises are related either to "sleazy governments"or hedge funds. However, Dornbusch indicated that the main reason for the crises was the rapid financial deregulation which allowed large cross-border liabilities and investment in at best long-term, liquid projects.
"Almost every country in the world has been impacted" by the current Asian financial crisis, Yellen said in the second presentation. As an example, Yellen said that Chile and Peru have been hit by falling copper prices.
Predictions for Future
The outlook for Japan is bad, "like finding out your mother-in-law has a twin sister,"Dornbusch said. Dornbusch also predicted that Brazil will be next, because it has "huge short-term liabilities, and it has already lost $40 billion in reserves,"he said.
In Indonesia, "the questions are much bigger," Dornbusch said. In that nation, there are possibilities for hyperinflation and governmental instability.
The United States has "not remained unaffected by this," Yellen said. Exports have declined, and impact from the crisis has amounted to $30 billion, she said.
"We hope that with good policy and good luck, the UnitedStates will be okay," Yellen said. "It is extremely important that we are starting from a position of strength," she said.