“America told South Korea 11 years ago to implement a high interest rate policy during the Asian Financial Crisis, but now America itself is carrying out a low interest rate policy,” said the renowned economist Jeffrey Sachs, adding “So, Korea has a good reason to laugh out at America.”
Saches, director of the Earth Institute at Columbia University, said, “The economic crisis Korea will undergo this time will be less severe than what it was 11 years ago. The crisis may be a good opportunity for growth for Korea,” Chosun Ilbo Saturday carried the interview with Saches, who was recently in town to attend a climate change forum.
As for the solution to the financial crisis, Sachs advised that Korea should strengthen its economic cooperation with its two neighboring countries, China and Japan, adding that will be also a way for promoting a long-term economic growth for the nation.
“The three East Asian countries, namely, South Korea, China and Japan, are full of foreign reserves, trade surplus and investment opportunities. They can become an important ‘axis’ of the world economic order if they forge together to introduce a common currency and ramp up their economic liaison.”
Saches, however, was less otpmistic about the world economic prospect. “The current global recession will continue through 2010. There will be a steep downtown in many sectors,” he said. The dollar, for example, will be decpreciated by 20 to 25 percent in a short span of time, according to him.
Saches railed the U.S. Federal Reserve’s decision to bail out the investment house Lehman Brothers, calling it a “fatal mistake that pushed the world economy into a panic.”