INTERNATIONAL EDITIONS: HIGHLIGHTS AND EXCLUSIVES, OCTOBER 27, 2008 ISSUE

COVER: Blame It on Him! (All overseas editions). Paul Kedrosky, Senior Fellow at the Kauffman Foundation, reports on the role of the Internet in this current financial crisis.  Alan Greenspan, former chairman of the U.S. Federal Reserve, was a huge proponent of the idea that the Internet would help make world markets faster and safer.  The Internet was supposed to empower individual investors and make the world financial system accessible to everyone, but the vision backfired.  Not only did the Internet transform finance, it also enabled the current credit crisis.  Kedrosky suggests that one of the ways of averting the next crisis is to make the Internet better at consolidating information and keeping trades a public matter.

http://www.newsweek.com/id/164588

In a Few Fateful Days  Zachary Karabell, president of River Twice Research, writes in an essay that the global financial system catalyzed by New Economy technology has evolved at light speed.  In response to the financial crisis, each national bank, finance ministry and treasury department worked independently and in tandem across great distances, sharing information.  The model-not surprisingly-is the Internet itself. 

http://www.newsweek.com/id/164593

Gordon's Comeback.   Chief Foreign Correspondent Rod Nordland and Contributing Editor Stryker McGuire report on British Prime Minister Gordon Brown's bold plan to rescue Britain's banks, and the impact it has made on his reputation.  With the lowest poll numbers of any prime minister in recent history just weeks ago, he is now being greeted as a hero by other leaders and even his worst critics were at least momentarily gagged.  However, the lead is a dangerous position and no one knows yet if the bank rescue will work. 

http://www.newsweek.com/id/164592

$600,000,000,000,000?   Reporter Barrett Sheridan examines the derivatives market, which has been cited as totalling $600 trillion, and explains why it is actually smaller and less ominous than it seems-with the total market value of the world's derivatives actually closer to $15 trillion.  But that's still huge and it's growing fast.  For the last decade the derivatives market has been doubling in size every two to three years, due in part to modern computers and the continuing rise of "quants"-math geniuses who
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International Highlights
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 Wall Street began recruiting in the mid-1980s, precisely to invent exotic new financial products.

http://www.newsweek.com/id/164591

Not All Has Been Lost.  European Economics Correspondent Stefan Theil and London Reporter William Underhill report on the handful of global banks that are not only surviving the financial- industry shakeout, but thriving amid it.  These banks focused on consumers and small businesses and stuck to conservative banking culture.  These survivors offer a new business model for the world's financial industry.

http://www.newsweek.com/id/164597

The Silly Ideas of the South.  Jorge Castañeda, former foreign minister of Mexico and Global Distinguished Professor at New York University, writes in a guest essay about the impact of the financial crisis on Latin America.  Many Latin American leaders assumed they would be immune from the crisis, but now growth forecasts for the last quarter of 2008 have been cut drastically.  "While many Latin banks do not depend as much on foreign credit..., suppliers' credits are key for exports, foreign loans are crucial for infrastructure projects and foreign investment remains important for many economies."  For the Latin American countries that don't emerge from this unscathed, their leaders will have to recognize that what impacts the United States and Europe will certainly have an impact on Latin America as well, he writes. 

http://www.newsweek.com/id/164601

Why the Banks All Fell Down.  Lawrence Lessig, professor of law at Stanford Law School and founder of its Center for Internet and Society, writes in a guest essay that the crisis was not caused by banks' reckless gambling, but rather because they locked themselves into flawed, computer-based models that did not take into account the "herd behavior" that led us to our current state. "The machine has its limits.  When we bind ourselves to the machine, we bind our fate to those limits," he writes.

http://www.newsweek.com/id/164595

Hanging by a Finger.  Hong Kong Bureau Chief George Wehrfritz reports that even with a number of perks being offered to home buyers in Shanghai and Hangzhou, prices are still expected to drop 20 to 30 percent in coming months.  The crash bodes ill for the broader economy at a time when Beijing hopes to ramp up domestic demand.  The housing crisis  has shown its effects on the auto and steel industries, with slowdowns expected to continue.

http://www.newsweek.com/id/164626

Time to Go Back Home.  Underhill reports on Britain's new approach to immigration.  For the first time in history, the government will release a list of who is (ballet dancers, engineers) and who is not (midwives, social workers) eligible to move in and seek employment in the country.  England is now the most densely populated country in Europe, apart from Malta, and immigration is now the "No. 1 issue of public concern."  However, political strategists know pushing too hard on the immigration issue can raise accusations of racism.  The country's best hope may actually lie with recession.  Anecdotal evidence suggests that tens of thousands of Poles are already heading home as the British economy falters, and others may be following. 

http://www.newsweek.com/id/164598

WORLD VIEW: The Case for Barack Obama. Newsweek International Editor Fareed Zakaria writes about the fundamental differences between McCain's and Obama's campaigns and why Obama represents the fresh thinking that America needs.  "Imagine what people around the world would think if they saw America once again inventing the future...If they saw that there really were no barriers in their country, not even to the highest office in the land, not even to a man with a brown face and a strange name.  I admit to a personal interest.  I have a 9-year-old son named Omar.  I firmly believe that he will be able to do absolutely anything he wants in this country when he grows up.  But I admit that I will feel more confident about his future if a man named Barack Obama became president of the United States."

http://www.newsweek.com/id/164498

THE LAST WORD: Economist Paul Krugman. Newly anointed Nobel Laureate in economics, Paul Krugman shared his thoughts on the new economic era, politics and the prize.  "I was in a hotel room in D.C., stepping into the shower.  My initial reaction was, 'That's an obviously fake Swedish accent; this must be a practical joke.'  Then there were more Swedish accents, and I figured it must be real."

http://www.newsweek.com/id/164602
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