19 SEPTEMBER 2001
This week's cartoon: Counting our blessings
Crisis as a catalyst for co-operation
Recent events in the United States have affected the world's markets in no small way, but so far appear to have failed to collapse the financial world as we know it.
The media now speaks of gentlemen's agreements between financial houses, which, a week earlier, would have rejoiced in - and perhaps even played a part in - one another's fall from grace. Indeed, these events have brought the human being's resilience and affinity for co-operation to centrestage.
Perhaps now is an opportune moment to gauge the true extent of the Maltese market's interrelation with the rest of the world's markets rises and falls. Equities listed on the Malta Stock Exchange are weathering the storm to date, with no major upheavals in their average prices - a far cry from New York where the Dow Jones industrial average dropped more than seven per cent when it began trading again on Monday. Although the local international fund market has seen its trading interrupted.
Locally, there is speculation that if last week's hike in oil prices persists, the economy will probably be hard hit once again. Electricity prices would rise, Air Malta would post losses and criticisms on the lack of hedging agreements would surface once again. However, as sights are increasingly being set on Afghanistan it would seem that investors are regaining their confidence in the shaky stability of the Middle East.
But the extent to which other local industries and markets would be hit still remains undetermined and the truth will be told as events unfold. All we can do at the moment is wait with baited breath and hope that the forthcoming retaliations will be isolated on the true perpetrators and not take a further toll on innocent lives.
The euro a common goal
It's no wonder the government has been somewhat less willing to trumpet the benefits of joining the European Monetary Union than the governments of other EU membership candidate countries.
Indeed, the government still needs to convince a substantial section of the population that European Union membership in itself is the right path to take. One must crawl before one walks. Despite the government's understandable unwillingness to engage in a new debate, local businesses need to be informed on the consequences of their trading partners changing over to the new European standard.
At a recent press event in Budapest the Governor of the Hungarian Central Bank proudly stated that his country would be pursuing EMU membership immediately upon accession. An unequivocal choice to say the least and one that will fine-tune the country's economy with that of its main trading partners. Hungary, like other countries sharing our current state of pre-accession, enjoys a political consensus on the issue - effectively opening the gates toward immediate EMU membership.
Membership of the EMU, over and above EU membership, holds its inherent
advantages. Local companies would greatly benefit from the facilitated
trading mechanisms offered by using the same currency as our main trading
partners. Plus, numerous economical benefits would be derived from forming
part of a currency designed and capable of matching and perhaps bettering
the strength of the US dollar - in fiscal terms, in terms of production
and in terms of population.