Bubble troubles

If the past is another country then the roaring ‘90s was the land of milk and honey. With its IT hysteria and unabashed market confidence, the last millennium really does seem like a millennium ago - before terror struck the World Trade Center, war started in South Asia and when anthrax was nothing more than an obscure chemical compound.

Unfortunately the world terrorist threat came a step closer to home last week when a suspicious package addressed to the office of Prime Minister Leszek Miller was found to contain white powder. Elsewhere, Sweden's Parliament was sealed off and evacuated after a suspicious letter was received, while one of Tokyo's major subway lines was shut after a dubious package containing white powder was found on the station. In the United States, 32 anthrax cases have been confirmed, with three deaths.

Clearly bioterrorism is now taking on global proportions, although no confirmed cases have been found outside America. And while the threat is a genuine one, there are no proven links to Osama Bin Laden or to any other terrorist organization. Nevertheless, the mention of any biochemical skulduggery rightly sends shivers down the spines of ordinary people the world over.

To show that Poland is serious about the issue, an anti-terrorism conference will be held in Warsaw next week. No doubt the U.S. bombing campaign in Afghanistan and bioterrorism will top the agenda. But clearly the main message to businesses and consumers alike has to be: Do not let the terrorists win. This was the immediate message after the New York attacks, when Wall Street proclaimed it was business as usual and markets around the world responded favorably. But early optimism is fading fast.

Now with the U.S. creeping toward recession, long-term economic gloom in Japan and torpor affecting the eurozone economies, global markets everywhere are starting to reel under the combined pressure of declining profit margins and political and economic uncertainty.

To try to talk common sense back into the world, U.S. Federal Reserve Chairman Alan Greenspan last week reiterated the mantra that fear of terrorism must not be allowed to paralyze the global economy.

As usual, the European Central Bank (ECB) responded with an ostrich-like refusal to face facts - or help out for that matter - by leaving eurozone interest rates unchanged, a factor that will almost certainly turn the screw on Germany's beleaguered economy. That, in turn, will almost certainly affect much of the rest of Europe.

Unlike the ECB, the Monetary Policy Council (RPP) went some way to helping restore confidence in Poland by cutting interest rates by 150 basis points to 13% last week. Also Miller's proclamations that the new government would continue to stabilize public finances helped ease pressure on the local market. But what the world needs now is a shot in the arm to rally everyone.

True, until the external threat of terrorism has been stamped out, normality could be in short supply. But the global economy is here to stay, like it or not, and participants in next week's conference have to ram home to business people and consumers that regardless of terrorism, it has to be business as usual. The United States, Europe and Japan have to act so the bad guys lose. No one can live in a bubble. Bubbles always tend to burst.