Big Engines That Could

For much the same reason that runaway train movies fascinate audiences, the spreading global economic crisis has grabbed public attention in a way the dismal science seldom does.

The plot looks simple: Will Alan Greenspan (or Robert Rubin) crawl over the roof of the engine, nip in the window, and apply the brakes before passenger coaches Brazil, Europe, and the US plunge over the broken trestle after the Orient Express?

That's too simple. What's needed is to halt the crisis in Brazil, then stimulate growth in Japan, the US, and Europe.

First, to stop economic contagion, Brazil's just-reelected President Cardoso must quickly implement his plans to cut government spending (and staffing). That, plus a planned $30 billion international package to back Brazil's currency, may help lure skittish investors back to bidding for state industries still being privatized. Revenue from privatization will help reduce the weight of debt on Brazil's budget - and the diversion from consumer spending and investment.

Second, the US Federal Reserve should make further interest rate cuts. That will stimulate real estate, auto, and general consumer buying, offsetting five months of gradually declining consumer confidence.

Third, Japan must loosen its government purse strings and finance the switch of small depositors from insolvent banks into those remaining afloat. Tokyo also ought to fund loans to Asian neighbors where Japanese investments are threatened by the crisis. Hoarding Japan's wealth for the coming retirement pension surge is penny-wise, yen foolish, since it allows erosion of the very investments and institutions that will later be needed to pay those pensions.

Fourth, Europe's big center-left governments must move on their versions of Clinton's "the era of big government is over." That's the best way to create jobs and boost economies. Germany's finance minister-designate, Oscar Lafontaine, seems ready, with his vigorous call to "lower our expectations of the state" because "not everything that is desirable can be financed."

None of these various ratchetings of the global trains' levers is as exciting as talking grand designs for a world lender of last resort. We have long urged planning for a better global system - including a real central bank for central banks and a global antitrust body to keep the playing field both open and level. We hope the major finance ministers and central bankers will persist in this quest.

But for the moment their task is to halt the runaway. And that requires quick action from the big engines that could. Afterward they can improve the signals and strengthen the bridges.