BEST USE OF ECONOMIC THEORY Amartya Sen, winner of this year's Nobel Prize for economics, has spent a career exploring the causes of famine and poverty. His writings indicate that most famines are the result not of food shortages but of economic deprivation in parts of society. And he shows that democracies--even desperately poor ones like India--rarely suffer famines.

WORST USE OF ECONOMIC THEORY A year ago, Myron Scholes and Robert Merton were darlings of the financial world. Both had parlayed their Nobel Prizes in economics into partnerships in Long-Term Capital Management, a U.S. hedge fund favored by superrich investors. Fallout from Russia's financial crisis exposed real-life flaws in their theories and led to LTCM's near-collapse. The U.S. Federal Reserve stepped in and organized a rescue to prevent a panic in the global financial system.

BEST NEWS FOR GLOBAL INVESTORS A planned pan-European bourse will make it possible to trade, in one place, stocks listed on the London, Frankfurt, Paris and other major European markets.

WORST NEWS FOR GLOBAL INVESTORS The Hong Kong government's $15.2 billion intervention in the local stock exchange in August succeeded in propping up prices and frightening off short-sellers. But it has created uncertainty about true share values and badly tarnished the territory's reputation as a bastion of free-market forces.

BEST NEWS FOR WORLD TRADE China continues to insist that it will not give into the temptation of devaluing its currency. Though such a move would lift China's exports, it would also trigger a crippling new round of currency adjustments elsewhere in Asia.

WORST NEWS FOR WORLD TRADE A bizarre dispute between the U.S. and the European Union over the latter's curbs on Latin American banana imports threatened to ignite a trade war among the world's leading economic powers.

BEST IMF BAILOUT The $41 billion aid package put together in November for Brazil seems likely to preserve stability--as long as the government fulfills promises to reduce its budget deficit.

WORST IMF BAILOUT Despite compelling evidence that Russia was not getting its fiscal house in order, the IMF continued to send billions of dollars its way. That largesse exacerbated Russia's crash in the summer, and much of the money simply flowed into well-connected Russians' overseas bank accounts.

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R E L A T E D
S T O R I E S :

YEAR IN REVIEW There was more than just Monica CINEMA Nothing could touch Saving Private Ryan BOOKS Tom Wolfe returned as the novelist in full SPORTS France's World Cup of joy brimmed over

PEOPLE Seinfeld's sayonara was much ado about nothing SCANDALS No prizes for guessing The Big One BUSINESS A noble winner--and a pair of Nobel losers ENVIRONMENT Saving Suriname ... and the swordfish