''Whenever your economy is in a crisis, the first thing to remember is
not to call the IMF.'' This is a very wise counsel, consistent with my
posts many days ago here.
Sankar, who forced Indonesia, Thailand and Korea to call IMF?
The biggest champions of the so-called free-market economy do not
understand the meaning of free-markets. I recall once Fischer Black (the
author of Black-Scholes formula) was invited by the Fed. At the BOG
meeting, Fischer said to Alan Greenspan and the Board to close the
Federal Reserve Board and abolish the organization since that would be
optimal for tax-payers.
You're lucky to be privy to this kind of meeting/conference, but I suspect that you're not giving us the whole picture here.
In a free-market, a Central Bank has no role
Is this your view? Again, I suspect you're not sharing your whole view. As long as we rely on fiat money, how can we operate w/o a central bank? Who is missing something here?
and an IMF is distortionary; these institutions try to achieve their own
agenda when they get an opportunity, like squeezing every drop of blood
from SE Asia to the advantage of the creditors who are at fault in
lending excessively to companies without adequate monitoring.
I don't think any creditor nation will send armed forces to impose IMF on the debtors.
I can easily sense that removing corruption is not an important goal of
the IMF and that the IMF would rather entice the corrupt officials to
toe their line on other matters -- repay loans at any cost and reduce
the asset values so that the same capital can get in to acquisition of
the assets at low prices. The main IMF goal (IMO) appears to
economically recolonialize the SE Asian nations by taking over their
economies. Kissinger has issued a warning in this regard because of the
anti-Americation sentiment that is likely to ensue in Asia.
I don't understand you logic here. One the one hand you think IMF is invading these countries, but one the other hand you want it to add the goal to fight local corruption to its agenda? This paragraph seems to be a politician's statement than an economist's opinion. When Japanese went about buying companies, trophy properties in the US a few years back, a lot of people were also raising emotional statements similar to yours here. You know how right those people turned out. I'm not saying that there won't be resentment against the US there, but I'd characterize it as a normal consequence of the US's current success.
In a free market, these countries would simply not pay their debt when
they could not. This is the standard tenet of borrowing and lending in a
free market. This is why a creditor spends a considerable time and
energy to asses the borrowers' creditworthiness and accounts for the
possibility of defaults.
I wonder too why they're not doing exactly this, but chose to deal with the "evil" IMF.
When a company in the US does not pay its
creditors; the company simply walks out -- US regulators do not force
the shareholders to come up with money from their parents or from their
other endowments.
This statement is true for incorporated entities, but it is not true for other form of organizations. Depending on the legal form of organization, some owners are responsible for a company's liabilities.
I'm not aware in any situation that in the US anyone is obligated to take over others' liabilities because of any relationships except when cosigning is involved.
Why should Koreans or Indonesians pay for the banks
and companies that did the wrong or for the misdeed of creditors like
Citibank? I do not understand why these countries should have to listen
to the dictates of the IMF that is forcing massive unemployment, poverty
and social unrest?
I agree here, but I think it's entirely up to a country to weigh the pros and cons in taking over the liabilities.
Well, this is a form of subtle corruption that is
being fostered in the name of help and to achieve the ulterior goals
(IMO).
I understand that you are a busy man who has very little need to justify his own views on this forum, but anything here to elaborate on this accusation will be greatly appreciated.
I am afraid that many of Suharto's pet projects, proposed by his
cronies, will be allowed to continue and that he will stay in power
despite massive corruption to get his consent to the IMF policies. My
belief is that Indonesian policy makers have been doing their best under
the restrictions of their president and that they may have advised him
for seeking a moratorium. The government did not borrow much. IMO, the
Citibank, Chase Mahattan, Morgan Stanley, etc. are at fault by extending
excessive credit to companies without monitoring the abilities of those
companies, under the presumption that the Korean govt or the Indonesian
govt would rescue. IMO, these countries should not have gone to IMF,
consistent with Sachs' views, and should not have declared their support
for the irrational policy prescriptions.
I also repeat my wondering here. Why did they choose to deal with IMF? I think Malaysia chose not to ask for IMF help.
-Al |
