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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: jayhawk969 who wrote (21397)	11/14/1998 2:36:00 PM
From: IQBAL LATIF	Read Replies (2) \| Respond to of 50167

JD-- I was just looking through my research, a vigil on weekends sometime extending for a whole day, for what I make out the worst may be over, 98 was the worst year as GBP growth was concerned in ASEA we had terrible negative growth but we expect these countries to pick up momentum in 99, on a separate note I have never under estimated the recuperative capability of nations rising from economic abyss, I do think that Japan looks bad but aftermath of financial bubble takes a while to disappear, the crisis in Japan finds its roots to inaction as soon US was hit with S&L crisis you had a solution put in place, you did not let things go out of hand, these loans in Japan were well known cancers but Japanese just keep on hiding the troubles under calm surface of cultural respectability, it is all culmination of political 'cronyism' and cultural habits of 'continuation' with present set of rules, inability to break form regimentation on one this discipline add and instills great national virtue of growth but innovation is stifled in the process, human nature of incentive cannot be tamed, unfortunately societies which undermine incentives and promote mass equality, create habits that becomes barriers to bring about change have to go through these prolonged periods of adjustments..

To: jayhawk969 who wrote (21397)	11/16/1998 4:37:00 AM
From: IQBAL LATIF	Read Replies (1) \| Respond to of 50167

ROBERT CHOTE: A world in the woods There is political momentum behind the global economic reform agenda advanced with substance and style by the G7 last week It would be easy to dismiss last Friday's statement on global economic reform by the Group of Seven leading industrial nations as a mere rehash of proposals that had already won support at the annual meetings of the Bretton Woods institutions in Washington a month ago. But this would be to underestimate its significance. The document from finance ministers and central bank governors - accompanied by a parallel statement from heads of government - underscores the political momentum behind the reform agenda. This is important at a time when critics lament a lack of global leadership and when financial markets need reassurance as a multi-billion dollar rescue package for Brazil nears completion. The statement struck a careful balance, highlighting recent positive policy developments - notably the interest rate cuts implemented in many industrial countries and the passing of banking sector reform legislation in Japan - while avoiding the suggestion that the world economy is now out of the woods. Policymakers remain very nervous about the prospects for Latin America, let alone the political and economic aftershocks of the crises in Asia and Russia. But there was substance as well as style. A month ago the G7 agreed only to "explore" President Bill Clinton's proposal to extend precautionary credit lines to well-run emerging market economies in order to inoculate them against potentially contagious financial crises. This lukewarm language reflected German reluctance, which the change of government in Bonn and some intensive lobbying of Hans Tietmeyer, the Bundesbank president, have helped to ameliorate. The G7 now backs the proposal, which will be able to draw on the $90bn of fresh lendable resources that will be released to the International Monetary Fund by agreement in the US Congress on its capital increase and enlarged credit lines. By trumpeting its backing for this proposal the G7 is clearly trying to bolster investor sentiment ahead of the announcement of the Brazilian package. Officials from the G7 and the IMF are well aware that the Brazilian congress could easily undermine the fiscal tightening promised by the government, while the short-term maturity of much of the country's domestic debt remains a serious threat. Larry Summers, the US deputy treasury secretary, said on Friday that "some of the ideas involved with contingency financing could possibly find application with Brazil". But the essence of the precautionary credit line proposal is that it should provide an insurance policy to protect "innocent bystanders" from an indiscriminate loss of investor confidence. As its substantial budget and current account deficits indicate only too clearly, Brazil lost its innocence some time ago. The G7's expression of support for the precautionary credit line proposal does not mean there is a fully worked out mechanism ready. Indeed, there is resentment in Washington that the proposal is being foisted on the IMF staff and even its executive directors without adequate thought. After all, problems soon became apparent when a similar idea was mooted some years ago to help smaller industrial countries. First, there is the issue of defining an "innocent bystander" and thereby deciding which countries might qualify for such a credit line. Does Chile's current account deficit signify a failure to adjust policy or the unavoidable consequence of a terms-of-trade shock? Second, there is the problem of what to do with countries granted credit lines on the strength of strong policies, only for those policies to deteriorate once the credit lines are in place. The IMF's executive board would be reluctant to withdraw a credit line from a country where policy was going off track, for fear of triggering a crisis. The only way to ascertain the importance of these problems is to launch the facility and wait and see. But there are many officials in Washington who doubt that precautionary credit lines can have a permanent place in the IMF's armoury. In addition to the anti-contagion measures, the G7 also picked up several themes from the Group of 22, a US-inspired collection of industrial and developing countries. These included: Promoting transparency of national policies (including annual audits by the IMF and a commitment to detail public sector foreign exchange positions). Aiding crisis resolution (including informal IMF-sanctioned debt standstills and bond contract clauses to restrain rogue creditors). Strengthening financial systems (including greater co-ordination among supervisors and an examination of hedge fund supervision). As important as the substance is the fact that the G7 has taken up the G22 agenda. The creation of the G22 reflected US frustration at the over-representation of Europe - and under-representation of key emerging markets - in the IMF's "interim" committee and the Basle-based Group of 10. Robert Rubin, the US treasury secretary, has caved in to pressure from smaller European countries for admission to the G22 (now at least 26). These countries argued that they had extended credit lines to the IMF, yet the US wanted them frozen out of the global financial reform debate. Despite this concession, France and Germany remain concerned at the role of the G22. But by bringing its agenda back under the G7 umbrella, Gordon Brown, the UK chancellor, may have started to heal the rift. The G7 statement may look like a singularly modest advance. But in the byzantine world of international financial diplomacy even a modest advance can be a cause for cheer.