If you don’t believe in the new global economy, you probably aren’t in the market.
Last week’s free fall in Hong Kong stock prices triggered a ripple effect worldwide. The Dow fell 187 points, or 2.33 percent, last Thursday, but recovered to a 50-point slide as of 2 p.m., EST Friday.
As dramatic as it was, financial experts predict a return to normalcy, at least as far U.S. markets are concerned.
But, even if that’s true, is that too casual a response?
What exactly is the global economy?
The wireless telecom business has become international in scope. Just ask the Cellular Telecommunications Industry Association, the Personal Communications Industry Association, the American Mobile Telecommunications Association and the Telecommunications Industry Association.
Everyone is on the global bandwagon headed for 2000: the much heralded New Millennium.
On the surface, at least, it appears times could not be better for the United States, the world leader of democracy, capitalism and high-tech. It seems nations everywhere, save for a handful of bad actors, want a try at the Great Experiment. Communism, they decided, is the pits.
As such, the United States has convinced the world to open its markets to telecom services and equipment trade. And who better to buy from than Uncle Sam.
Here, in the States, unrepentant optimists point to low unemployment, low inflation, a falling deficit and an unrelentingly raging bull market.
Could the turn of the century be that good for America?
For the moment, let’s just say the global techno-economy is more complicated than we know.
Arthur Schlesinger Jr., for one, a historian and former aide to President Kennedy, is suspicious of the “hyperinteractive state.”
“The computerized world poses problems for democracy,” he writes in the fall issue of Foreign Affairs. “Where the Industrial Revolution created more jobs than it destroyed, the Computer Revolution threatens to destroy more jobs than it creates … Those who skip or flunk the computer will fall into the Blade Runner proletariat, a snarling, embittered, violent underclass.”
Others believe the rising standard of living that new democracies and emerging markets create will fill the demand void and allow folks to clear inventories of pagers and pocket phones.
In the meantime, give Treasury securities a hard look.
