Editor’s Letter : A New Era Dawns

We at Global Finance are much like the child born on an important holiday who grows up confusing the holidays celebration with his own birthday. We have the same feeling each year as the anniversary of the magazines launch approaches. The reason for this is that Global Finance was first introduced in London on the day of the stock market crash in 1987. Every year, as October 20 looms, stories begin to appear in the press comparing the current financial situation with the one that existed in the run-up to October 20, 1987. Invariably they find similarities that indicate there could be another crash in late October. So far, theyve been wrong, except for October 27, 1997. But if they make this call often enough, they may eventually be right againlike the broken clock that tells the correct time twice a day.

Since 1987, the financial world has experienced a series of crashes and crises. Their immediate causes have differed, but each caused fears of contagion and systemic collapse. Even our current market, which as of this writing has major banks writing off billions of dollars of value as a result of problems in subprime mortgage lending, is raising these concerns.

Over the years, weve become more sanguine about the likelihood of these episodes causing systemic meltdowns or even serious cross-border contagion. Part of the reason is the growing parity of economic strength and resilience among countries; the financial world is no longer solely dependent on the success of the US economy. There are other large and strong economies that can pick up the pace when the US falters. An equally important contributor is the growth in the expertise and effectiveness of the worlds central bankers. As a group, they are more independent, skilled and knowledgeable, and they know how to operate in a borderless world. In the current credit crunch, it doesnt seem as though the central bankers have taken drastic steps. But that is the most important point: The system has developed to a level where more drastic steps are not required.

A significant element of our anniversary celebration has been forging a relationship with Amrit Davaa World Health, a charity that brings sustainable medical care to the poor. In the past, we might have expected Global Finances shareholders to protest that any charitable giving was to be made not by the company but, if they wished, by the shareholders directly. But today, models have emerged in which corporate philanthropy and social responsibility can be clearly aligned with company goals and strategies. Done properly, the result is a win-win situation for all: The company and shareholders achieve their goals, and the charity receives financing to conduct their good works for the benefit of society.