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Feb 28, 1998

Encounters: To the rescue

Special mission for high-flying economist. Stop. Details to follow. Stop.

Shortly before Christmas, I was standing in a check-in line at Dulles airport when I noticed Sam. He was checking-in a few desks down from me - but he wasn't standing in line. Sam was flying first class. He stood on the red carpet behind the ropes which are used to shield important people from hoi polloi, looking for all the world like a B-list celebrity - someone who hopes to be recognized by trying hard not to be. But Sam isn't a celebrity. He's a sixty-something professor of economics at a west coast university. And even in the world of economists, he is distinctly B-list.

So why was he flying first class? And international first class at that. The lecture circuit, or at least the one Sam is on, isn't that generous. Even more intriguing, why was he flying out of Washington DC rather than his native San Francisco?

I glanced at the departure display. If I knew where he was going, I might be able to work out this conundrum. Glancing down the list of exotic and not so exotic destinations, one caught my attention: Seoul.

I'd read in the papers how the threat of Asian meltdown was being dealt with by the government. There had been meetings in the White House situation room - the secure underground briefing center which we all knew so well from countless movies. Six years ago they had been assessing the options for dealing with the imminent collapse of the Soviet Union. A decade before it was the Soviet invasion of Afghanistan. Twenty years before that, the Cuban missile crisis.

Now the threat of Korean - and even Japanese - banks defaulting on their loans had led to the political and military analysts being replaced by economists and investment bankers. And the agency the government was using to deal with the problem at arms length was the IMF rather than the CIA.

I remembered something I'd been reading on the plane to Washington about the successes of the CIA in dealing with hostile regimes. The article pointed out that those we want to get rid of always managed to hang on - Castro, Gaddafi, Saddam - while those we supported, like the Shah, went under. Maybe in the current clear and present danger, a different kind of spook would be more effective.

As my line shuffled slowly forward, Sam completed his check-in formalities and moved away. I watched him disappear. It was hard to imagine him being involved in covert operations. He is considerably older than Pierce Brosnan. In fact, he's probably about the same age Sean Connery is now but much shorter and plumper. He could, I suppose, be described as charismatic in his own way, but quadruple bypass surgery a few years back has taken its toll. Certainly, dry martinis, whether shaken or stirred, have long been ruled out by his doctor.

Thoughts about different folks for different strokes crossed my mind. Maybe the IMF could pull it off and save the global trading system, the world's currency markets and the US economy.

When the collapse of the Soviet Union was still fresh in the mind, there were those who spoke of the end of history. But others foresaw the ideological battle continuing by other means with economics replacing politics as the main battleground. With hindsight, it seems they might have been right - at least to the extent that politics and economics are now inextricably bound up with each other. But however we choose to read it, it seems that whatever went on in the bunkers and burrows of Washington did the trick - for the time being at least. The immediate crisis was weathered. South Korea and Japan didn't default. Free-market economics won through.

But before we celebrate too much, we should remember that it was only two years ago that there were many who were praising Asian values and lamenting the fact that our financial system was not more like that of Japan. Triumphalism often leads to hubris. So if we are to celebrate, let us do so quietly. After all, markets do sometimes get things wrong. They have been known to give the wrong signals. And they do get carried away with their own enthusiasms.

As for mysterious Sam's involvement in saving the world's economy, well I bumped into him again a few weeks ago. He told me he had been on his way to a health spa in northern Italy. He had flown first class because he had a load of mileage which was about to expire. And he had stopped over in Washington because his daughter had recently moved there. It all seemed very plausible. But then these covert operators do gem up on good cover stories, don't they?

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