When Russia announced a moratorium on its debt payments and a rouble devaluation, Latin American debt traders had only one thing to say: "The markets are closed."

During the crisis in emerging markets, equity fund managers that have invested in Asia, Latin America and eastern Europe are most concerned with their exposures to specific countries. How much do they have in Russia, how much in Indonesia? According to a report by ING Barings, however, those portfolios managers may be asking the wrong questions. They should be analyzing how much they have in value stocks, how much in growth.

Only floating exchange rates will allow the world to steer between the Scylla of capital controls and the Charybdis of recurrent financial crisis and wealth destruction, argues Bernard Connolly.

When Hotman Hutapea, Indonesia's premier bankruptcy advocate, presented his first case to the new commercial court on September 1, he set telephones ringing in bank offices all over town. "Now they believe it," says one senior banker. "They see they'd better do a deal - or else."

The men charged with sorting out Korea's sickly, debt-laden corporate sector are making many of the right noises, but old habits are proving hard to break. A year after they went bust, Kia is still churning out cars and Jinro is still brewing the nation's favourite tipple. Jack Lowenstein reports on the dangerous brew of nationalism, legal failings and bureaucratic intransigence which is preventing Korea Inc from getting back on its feet.

It's a measure of the turmoil in world markets that not a single bank was at first prepared to supply the forfaiting rates used by Euromoney in its calculation of these country-risk rankings. So fast were things changing that even these usually stable indicators became too volatile. Banks supplied them on request on a day-by-day basis to clients an indication of how difficult trade finance, the lubricant of the real economy, was becoming.

Vicious dogs and bottom-dwelling, scum-sucking creatures of the deep - and that's just what they call themselves. But don't be too unkind to the vulture funds hunting for deals in Asia, they are playing a useful role in bringing value back to a depressed continent. And they are not the only ones doing deals. Conglomerates are restructuring and western financial institutions are looking for partners. We profile a mixed bunch of Asia's top deal makers. Some are ex-soldiers, some are former consultants and analysts. One is even a leading Asian central banker

Eugene Black argues the case for an alternative method of funding the IMF that would enable it to tap the private markets and reduce the need to return to member states for additional funds.

Profits are down, salaries are being sliced, portfolios are moving into cash, buyers are getting choosy about the brokers they use. Is it all doom and gloom? Not if you're smart. Markets that were overbroked are losing the dross: that means new opportunities for firms with good counterparty risk. And research is getting better as brokers fight to sell their services to investors. Steven Irvine sketches in the background to the Euromoney/Global Investor 10th annual Asian broker survey.

They remain small and vulnerable to outside shocks, but the Middle East's stock markets have grown substantially over the past few years and, as Alex Mathias reports, are attracting a broader range of investors. Research by Luciano. Mondellini

You've heard of America's forty-niners, well these are the ninety-niners, preparing for the gold-rush when Europe's single currency rolls into play in January. A frenzy of asset-allocation has already started. With a single interest rate, corporate bonds will begin to outweigh government issues, equity markets will take on new importance, and cross-border competition will drive M&A. Peter Lee reports.

Outside it is a bright, warm summer's day and the narrow streets of Prague are thronged with tourists. Inside the faceless municipal building that houses the new Czech Securities Commission (CSC) the light is thick and gloomy and there is an almost unnatural quiet. It may reveal a sense of anticipation. Equally, it could be foreboding.

The price of failure is not something that traders like to contemplate, no matter how used to it they have become during the summer financial market crisis. But in the first weeks of 1999, they may be forced to confront failure on an unprecedented scale; the introduction of the euro could make it inevitable.

For a system that supposedly conquered the world in 1990, free-market capitalism doesn't look so good any more. After Mexico, Thailand, Korea, Indonesia, Russia, which of capitalism's self-appointed disciples will stumble next? And who is to blame? The track record has embarrassed all but hard-liners into thinking there might be a Third Way - between free capital flows with floating exchange rates and the dirigiste controls of the 1960s. Chile, China, James Tobin - they've all been held to ridicule for their batty market ideas. But today it's not just bleeding-hearts and socialists who are looking at their attempts more closely. Michelle Celarier reports.

World stock and futures exchanges are in a turmoil of change and uncertainty. Fusion and cross-border linkages are in the air. Regulation to take account of this rapid change lags far behind, and stateless, borderless trading facilities may soon make it impossible. Remember, the only reason for an exchange to exist is to reduce transaction costs, argues Ruben Lee. Any new step that doesn't will end in tears.

How do you wean crisis countries away from official bail-outs onto private funding? There has to be a way to reward borrowers for improved behaviour yet punish lenders for piling in indiscriminately. New lending models include contingent repos, sovereign default options and credit spread bonds. But will they catch on? James Smalhout reports.

From time to time Romania's political leadership launches a plan for reform. Foreign bankers and investors respond with a wave of enthusiasm about the country. Then things go awry. This year, following the latest reform plan, foreign banks are starting to expand outside the capital and are looking for privatization mandates. Will things be different this time? James Rutter finds out.

Pedro Luis Uriarte's timing on emerging markets seemed brilliant. The CEO of Banco Bilbao Vizcaya, Spain's second largest bank by assets, scaled back in Asia and Russia ahead of the crises. But will his luck hold in Latin America? In the last three years BBV has invested $3 billion buying stakes in banks and financial institutions in 12 Latin countries with major deals in Brazil and Chile sown up recently. Uriarte, whose mantra is shareholder value, aims to compensate for lower margins in Europe by reaping higher returns in Latin America. If he succeeds, BBV may rank among the world's top 10 banks by market capitalization. But the risks are high. Since the emerging markets storm blew up, BBV's share price has fallen 25% and rating agencies have put it under review for a downgrade. In an interview with Brian Caplen, Uriarte is adamant that the bank's Latin earnings will be unaffected. He speaks about the bank's acquisition strategy in Europe, his management style, his relationship with his chairman, Emilio Ybarra, and his wish to retire before the mandatory age of 62 Uriarte is 55 and became CEO in 1994. He has worked at the bank since 1974 taking a four-year break in the early 1980s to be minister of economy and finance for the Basque regional government.

The free market doesn't work. The emerging markets are crying foul. Global capital has been rampaging through their economies with dire effects. The most extreme case is Malaysia, prompting Mahathir Mohamad, that country's populist demagogue, to declare that "the free market has failed disastrously".

Singapore has fared better than its neighbours since the onset of the Asian crisis. But its financial authorities recognize that the situation could worsen. Measures to support corporations have been introduced and there has been an intensification of efforts to make the island a major financial centre, including market liberalization and an encouragement of banking consolidation. Gill Baker reports.

Slovenian banks are among the most protected in Europe. But a new banking law and reforms linked to the country's accession to the EU will shake them up. Charles Olivier reports.

The crises, first in east Asia, then on the doorstep in Russia, have side-swiped Central Asia but the downturn is not without hope. Kazakhstan is pressing on with reforms despite the slide in commodity prices, and opening up to foreign banks. Uzbekistan may be stuck in a time warp, but Azerbaijan shows new signs of offering value to foreign banks and investors. By Suzanne Miller.

You can't keep a good man down. So Andre Lee has set up his own firm, 01 Inc, in Seoul. Lee, who ran failed investment bank Peregrine's fixed-income side, is credited with single-handedly created the Asian debt markets. When Asia melted down, as did Lee's bonds and Peregrine, he looked much less visionary .

When Germany's federal election takes place on September 27 the miracle of chancellor Helmut Kohl's winning in 1994 against all predictions won't be repeated. There are good reasons why. Germany's economy may be picking up, but domestic demand recovery is tentative. During 1997 the rebound was export-led, and although the domestic investment cycle is turning up, household spending remains flat at best. At 10.7% unemployment is still too high and much of the recent job creation has come from government-sponsored schemes, especially in the eastern Länder where Kohl's ruling Christian Democrats (CDU) remain deeply unpopular.

Last National Bank of Boot Hill, Moorgate, London EC2

Economic projections: Methodology

Who is surprised by the savage way markets have punished politicians, bankers, speculators and economists? The structure of financial markets needs a rethink. Our cover story tears them apart as follows:

Savvy sovereign issuers are rethinking the use of trustees. By Christopher Stoakes

Hank Paulson, appointed co-chairman and co-chief executive (to serve alongside Jon Corzine) of Goldman Sachs in June, is known for being intensely hard-working - although he says he has never prided himself on trying to work more hours a day than anyone else. A committed and active conservationist (along with his wife), he also likes to spend his holidays in the wild outdoors.

For foreigners, Japan is a topsy-turvy land where economic theory stands on its head. Nowhere more so than in the banking sector, a gravity-defying edifice which appears to be propping up the entire economy. If you were to rebuild it, you wouldn't start from here. But it has a terrifying logic, eloquently defended by Japan's elite. And remember, they wouldn't be in this mess if the Basle committee had been tougher 10 years ago. Steven Irvine reports.