<!DOCTYPE HTML PUBLIC "-//W3C//DTD W3 HTML//EN"> <HTML> <HEAD> <META content=text/html;charset=iso-8859-1 http-equiv=Content-Type> <META content='"MSHTML 4.71.1712.3"' name=GENERATOR> </HEAD> <BODY bgColor=#ffffff> <DIV><FONT color=#000000>I recently saw Lawrence Lindsey - former member of the Federal Reserve Board of Governors during most of the 90s - on cable plugging his new book. He seemed like a perceptive guy, if unaware of the class dimension of things and, strangely enough, he sees little difference between Henry Gonzalez and, who is it?, Jim Leach. That is, between Democratic and Republican members of Congress. He layed out his views on the state of the global economy. He's not optimistic. Here's what I can remember:</FONT></DIV> <DIV><FONT color=#000000></FONT> </DIV> <DIV>Japan</DIV> <DIV>Japan's political system, set up by former Dictator MacArthur, won't be able to turn things around anytime soon. He was full of praise for Japanese technocrats, but it's the SYSTEM, he stressed.</DIV> <DIV> </DIV> <DIV>Europe</DIV> <DIV>Europe is sliding into default protectionism; they will drag their feet when told to comply with WTO judgements. Witness the trade-war over bananas. </DIV> <DIV> </DIV> <DIV>U.S.</DIV> <DIV>Our savings rate is going negative and our stock market is overvalued. We're the motor for the world economy but it can't last forever. It was interesting that he said if there's a large correction, maybe then the Fed will learn to try to take on the overvalued stock market earlier. Somebody could have pointed out to him that this stock market is what's keeping things afloat, right? Lindsey's solution is a 10% tax cut - about $70 billion. Unfeasable, he admitted. </DIV> <DIV> </DIV> <DIV>Lindsey said little about Latin America. I read in today's NYT that Brazil continues to walk the tight rope. Presumably to give the reader a little frisson, they wonder whether it will be another Russia or another South Korea?</DIV></BODY></HTML>