Krugman backs Hong Kong step

Chris Burford cburford at gn.apc.org
Sun Sep 20 14:37:32 PDT 1998


I see from the latest issue of Fortune (28th Sept, not yet on their web site www.fortune.com) that Paul Krugman, prof of economics at MIT, is less embarrassed at the effect of his article advocating exchange controls for the Asian Economies, in the case of Hong Kong, than of Malaysia.

The manner of his argument is interesting.

He not only stresses the ultra-respectability of technocrat Joseph Lam as chief executive of the Hong Kong Monetary Authority. He points out "if I conspire against the stock of a US corporation, that is a violation of US law. But if hedge funds in New York atack some overseas financial market, it's unclear who, if anyone, has jurisdiction....

Capital markets are global; but the institutions that support and regulate them - that allow them to work - remain national. It's hard to imagine how truly global institutions could come into existence ... but until we figure it out, its going to be a very rough ride."

The tide seems to be moving against international laissez faire.

Chris Burford

London.



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