[EDITORIALS]Absorbing the Shock Waves

The shock waves emanating from New York and Washington are rapidly spreading around the world. The serial acts of terrorism that took place on Tuesday and the confusion engulfing the U.S. economy are also putting to test our ability to respond to a large-scale crisis.

The destruction and paralysis in the heart of the world's financial center are leaving a mark on the world economy, as the effect spreads at the speed of light. Stock markets around the world, including Europe and Japan, are plummeting, and the U.S. dollar is losing strength. Crude oil prices and the price of gold are rising sharply.

In this country, given the unresolved structural problems in the financial and currency markets, we are faced with the heightened possibility of capital flight in the short run, if the effects of the attacks are added. Our response to the crisis must be in place urgently, and its focus should lie in minimizing the effects on our financial and currency markets by absorbing the shock wave. What is necessary to that end is a stable and ample supply of liquidity and foreign reserves.

A larger cause for concern is that the attacks may trigger a longer-term stagnation or a recession in the U.S. economy. Recent reports have placed consumption in the United States as a relative strongpoint sustaining the economy there. But Tuesday's attacks may begin a gradual erosion of consumer confidence and eventually may push the current stagnation of the economy into a longer-term recession. What concerns us is that any hopes that the U.S. economy will begin a recovery before the end of the year may have been shattered.

The U.S. economy has become the driving force behind the global economy, and a shock originating from America is likely to affect our trade and investment activities, given their heavy dependence on it. The expected fallout arising from this reliance can be aggravated by the fact that ours is an economy that is at a crossroads of recovery and recession. As we sift through the repercussions and formulate measures to counter the fallout, we may easily run into difficulties that may even derail the ongoing economic reform.

But we warn against a hasty and exaggerated response intended to ride out the looming global recession by putting economic restructuring in the backseat. Whether the massive confusion blanketing the United States will develop into a world-wide economic crisis is left to be seen; it is closely tied with how the U.S. authorities respond to its crisis. In trying to minimize the effect of the shock wave, our economic leadership must ensure that its responses are coordinated with the direction taken by the U.S. economy.

No one will suggest that our economy will be spared the aftermath of the attacks on the United States. We urge the government and the business leadership to make a swift and resolute response to our own potential crisis.