Hanke tells it like it is

Economist paints gloomy outlook at Forbes meeting

SINGAPORE - Delegates at the Forbes CEO Global Conference in Singapore heard today some harsh facts about the US economy made worse by the September 11 attacks on the World Trade Center and Pentagon.

Respected economist and regular Forbes columnist, Professor Steve H Hanke, Professor of Applied Economics, Johns Hopkins University, said that, before the attacks, the US economy was already looking dire.

On September 9, he said he had already advised "everyone to get out of the market."

The terrorist attacks only made things worse and he said it would be a "long and difficult battle ahead".

Speaking through a video-conference, Hanke said the terrorists' choice of destroying the twin towers of World Trade Center was no accident. "They represent the rule of law and capitalism."

And he put into perspective how important the US economy was to the rest of the world. He said he had recently calculated the total capitalisation of all shares in the world and 78 percent of the amount was US$-denominated and in New York.

"The rest are sideshows," he said. This was why, he added, high-tech companies everywhere wanted to do their IPOs in New York.

"That's why we have to realise the significance of the twin towers thing. It is mind-boggling to think of the capital concentrated in New York and the brain power that was destroyed."

Hanke said, "There will be no quick fix. We can't say let's have a quick win, quick war and get it over with."

He also did not hold out any hope of an IMF-led recovery and likened the IMF to a wrecking ball, destroying everything around it, and he pointed to countries in Asia where IMF policies had not worked.

IMF, he said, was "unreformable".

He also called the Japanese "hopeless", saying they had been trying to fix their economy for 10 years but held hope for the new Prime Minister's policies.

Beyond the prospect of a military war, Hanke said there was also a "war of ideas with anti-capitalists". He cited the 40,000 NGOs around the world, whom he called "anti-capitalists" and "our biggest problem".

"Most companies are kowtowing to the NGOs and 50 percent of their funds are derived from governments."