The Asian Specter

Asia's economic crisis cast a shadow over the otherwise upbeat assessment of the U.S. economy Alan Greenspan presented to the House of Representatives today. The outlook for...the United States is less assured of late because of storm clouds massing over the Western Pacific and heading our way, Greenspan warned, explaining the Feds decision to maintain interest rates.

TIME correspondent Bruce Van Voorst believes Decembers 9-year-record trade deficit is a sign of things to come, plummeting Asian currencies send a tsunami of cheap imports towards America, while Japan's failure to stimulate its domestic demand and absorb some of Asia's exports exacerbates the crisis. "If the trend reflected in the December U.S. trade deficit continues - and there's every reason to believe it will - the Asian crisis could knock 1 percent off our GDP and wipe out 1 million American jobs," says Van Voorst.

All of which makes Greenspan's warning a timely reminder of what's at stake for America in the forthcoming congressional debate over U.S. contributions to the International Monetary Fund's Asian bailout.