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

To: Stitch who wrote (7043)	10/10/1998 11:56:00 AM
From: Sam	Read Replies (1) \| Respond to of 9980

Stitch, An extended excerpt from the article you kindly reprinted: <<The conclusion, presumably, is that the IMF should stop lending altogether. This is wrong. Plainly a balance must be struck between coping with the emergencies that come along (which argues for more IMF lending) and discouraging emergencies from happening in the first place (which argues for less). The least unsatisfactory answer is to be found in the muddled middle: not all that far, in fact, from where the system is today. If there were no official lending at all, here might be fewer crises, but there would still be some—and some of those might be terribly severe. (The recessions in Asia are bad as it is; imagine how much worse they would have been without the Fund's big injections of resources.) It is simply not credible to suppose that governments could stand aside. The cliché is true: if the IMF (and its loans) did not exist, governments would now be trying to invent it. The mistake is to think that the moral-hazard dilemma can be eliminated, either with vastly greater IMF lending-plus-supervision, or with no IMF lending at all. The dilemma cannot be eliminated.>> Well, maybe. But this skirts the real issue and what I take to be the real claim of those who wish to disband the IMF and all such organizations: the "really severe" crises occur because of bad government policies and government corruption in the first place. If it didn't exist as a possibility, if all of these governments were simply allowed to "reap what they have sowed", in the ripeness of time, these bad policies and corrupt governments would [presumably] be weeded out and changed. The truth is that building a reasonably stable national economy on a sound basis takes time, it takes generations. But many of these countries' governments tried to take short cuts, IMO, because they weren't really first of all interested in building stable national economies with strong middle classes, but they were first of all interested in building a few huge private fortunes, with the national economic strength and stability as a desirable side effect. When organizations like the IMF come in with a "rescue" package for all comers, they reward this behavior and the fundamentally corrupt "policies" that set up the situation. Perhaps one of the differences is that I have come to see many of these so-called "governments" as far more hopelessly corrupt than those who support the bailouts do. I put the word governments in quotes because to the extent that they are corrupt, they are fundamentally illegitimate, not deserving of the name, and not deserving of being propped up. Some initial thoughts, anyway. Anyone else? Best, Sam