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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Jay Scott who wrote (6539)	9/21/1998 9:45:00 AM
From: Henry Volquardsen	Read Replies (2) \| Respond to of 9980

Agreed. The IMF has focused to much of its efforts on bailing out the big international lenders. The focus should be on real market and legal reform. In addition greater sanity will return to international lending once large lenders recognize that there is a reason they are paid a risk premium.

To: Jay Scott who wrote (6539)	9/21/1998 8:56:00 PM
From: Dayuhan	Read Replies (2) \| Respond to of 9980

Jay, <<Steven, you're right, it won't be an easy task to correct the excesses of the IMF. At this point, we need to establish a consensus that there IS a problem, then the real work starts.>> I think everyone agrees that there is a problem. What nobody seems to agree on is the nature of the problem. Any discussion of the role and future of the IMF must inevitably include discussion of the entire system of global capital flow. There is no doubt that free markets are the most efficient financial system in existence. There is also no doubt that they can be unacceptably ruthless and destructive. We observed this long ago in our own economy, and introduced regulations to prevent systemic abuse. No such regulations have been adopted internationally, the inevitable abuses have occurred, and the biggest losers have been the underdeveloped countries, in transition from communism or from neocolonial feudalism. The backlashes we are seeing in Asia, and the potentially far more dangerous backlash which could easily come in Russia, are only to be expected. It must be remembered that it takes far longer to develop the internal political and economic structure and strength needed to survive in a free market than it does to strike down trade barriers. The transparency and efficiency which we see in the US economy took decades of struggling through boom/bust cycles to achieve. Like other now-dominant economies, the US resorted to protectionist and mercantilist intervention whenever it suited short-term purposes. Is it realistic to expect other countries to jump past these developmental stages? Any discussion of a "new IMF" must deal with the notion of long-term managed transition, instead of assuming that throwing the door wide open will solve all problems. It must also be acknowledged that any effort to separate economic reform from political reform is futile. <<Part of my frustration as an American taxpayer is that, at the risk of sounding cynical, I would prefer to just make my check payable to "Citicorp, et al" and cut out the middlemen. The flow chart for the bailouts looks something like this: Taxpayer-->U.S. Treasury-->IMF-->(Insert country name)-->Western bank>> Paying taxes to both US and Philippine governments, I get it from both ends. It needs to be recalled that when all those electronic zeroes have settled in their respective homes (and it would be very interesting to know what those homes are), it's the taxpayers of the borrowing countries that get stuck with the bill. 60% of the Philippine budget goes to debt service. This causes unending frustration to Philippine taxpayers, who know all too well how little of the money being paid back ever found its way to this country. Steve