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The banks party through the crisis

Ireland has transformed its economy in recent years, luring multinational companies by offering low taxes and well-educated labour. Its participation in European economic and monetary union has also been an attraction. The economy has boomed. Ireland is running budget surpluses and paying down its debt out of privatization proceeds. But being a small nation in euroland also brings difficulties, like wholly inappropriate interest rates. The Irish economic miracle could be heading for disaster -- extraordinary rates of growth could well lead on to rampant inflation. Nick Kochan reports

The announcement from Jamil Mahuad, the president of Ecuador, that the country would not meet a coupon payment on its Brady bonds due at the end of August and that Ecuador intends to restructure its $13 billion of foreign debt, has dismayed banks and investors across the developed world.

James Wolfensohn is about to reach a milestone. His five-year term at the helm of the World Bank is coming to an end. US president Bill Clinton will shortly decide whether to reappoint him. James Smalhout examines the record.

World Bank president James Wolfensohn believes the Bank is becoming a more caring place, closer to the client it's trying to serve. One advanced management course includes a taste of poverty: living a week in a slum or village. Social aspects must match financial and macro concerns, he tells James Smalhout

Equities might enjoy all the glory at the moment but watch out for credit. This techno-laggard of the financial markets is set for an electronic great leap forward. If proof were needed - even the venerable CBOT has been showing interest. Antony Currie logs on.

Ten years after the Japanese stock market suffered its dramatic plunge, following a decade in which the Japanese economic model - with its corporate cross-shareholdings, scandal-ridden financial sector, and notorious convoy system which prevents well-managed companies from outperforming the bad - has been pilloried, Japanese equity markets are suddenly soaring.

In the run-up to the European single currency there were expectations of major political changes that might take place after monetary union leading to more decentralized funding, with local authorities and regions issuing more and sovereigns less. Generally in the eurozone this change has been slow in coming. Spain is a key test case. Any significant increase in debt issuance by local authorities may hinge on political horse-trading between the central government and the "fast-track" autonomous regions.

"Unreal city," wrote TS Eliot about London in his 1922 poem The Wasteland. If London induced feelings of bewilderment in Eliot one struggles to imagine what he might have thought about Washington DC. Between M Street in Georgetown and Independence Avenue on Capitol Hill are a couple of square miles into which many of the world's most rarefied institutions are concentrated. Here decisions are taken with resounding affects both across the US and the world. Yet the institutions are cocooned from the actualities over which they preside. There is an air of unreality about majestic Washington.

The emerging markets are bouncing back - at least some of them are. While they do, the market is holding its breath as crisis-hit countries implement fiscal and monetary reforms. And while economists believe growth rates will improve, they are also resigned to sovereign defaults on foreign debt. Commentary by Rebecca Cicolecchia, research by Alexa Marx.

by David Roche

Emerging market bond investors have up to now been extraordinarily ill-served by the index compilers. Only JP Morgan has made a concerted effort to provide a benchmark index to track emerging market debt, and its Emerging Market Bond Index (EMBI) and EMBI+ have as a result become the market standards.