Remember the handshake & 'my word is my bond'. In the crazy world of currency & derivatives trading, that used to be the case. Then they began taping the phones for records. In large (non-exchange traded) derivative deals, paper contracts were signed after the verbal trade. Now Enron & document shredding. There will likely be more cases, as the auditors will be reluctant to sign the annual reports. When some unknown auditor signs, the investors will KNOW the gig is up.
In the Govt Agency, Intergovt world, & NGO world there is incredible redundancy. Careers are developed and protected with a vengence. The last consideration (in my opinion) is how to get the most benefit to the cause/need. I participated in a seminar to members of The World Bank (around 1991). Mediocre bunch of bureaucrats in my opinion. To expect solutions to come from these monoliths is a pipe dream. Unintended consequences are likely even IF the money gets put to work as intended, as unbiased scientific probability studies are not the norm.
Enough.
Steve
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Mike,
Dealing in money is so confusing. If I lend you money to improve your circumstances, I would expect to see your circumstances improving.
This because you would mend the hole in the roof, get the car running again so you can work, pay the mortgage, and so on.
In fact, I would probably insist on seeing those things are done when I lend you the money.
If you suggested a quick trip to Las Vegas first, I would say certainly not. This shows that if you get yourself into the hands of a moneylender, you give up your freedom - a terrible thing to happen to anyone.
But, say I have to go to see my sick aunt and while I'm gone, you stop everything and head for Las Vegas. When you get back, I am there and say why haven't you repaired the roof.
You start making excuses, and I foreclose on you.
Should you have some kind of Chapter that gets you out from under the problem - but which means I lose the money I lent you?
Doesn't seem fair does it?
In any event, I won't lend you anything again.
Now, this is what happens with IMF loans. They arrange help for a poor nation, and they work with black, brown, yellow, or white, Harvard, or Oxford, trained business suits, who are anxious to do good. As one CEO told me about negotiations with the union: "At least now they are people like you."
And the multicolored business suits do very well - for a venal heart can beat under a suit, no matter the color of the wearer.
Just as I want you to use my loan to improve your circumstance, so does the IMF want a recipient country to repair its roofs, get the transportation system working again, get rid of high interest debts - give the economy a jump-start so people have jobs.
Argentina was a basket case long before the IMF became involved. The first thing the lender would want, for example, is to end the 5000% inflation.
Seems fair enough, doesn't it?
Then, they want the economy to return to the free market - a vastly better agent for controlling the economy than government servants.
When the government is wrong, the best you can get from them is OOPS! - followed by excuses. When a private operator is wrong he goes broke. Who has a greater incentive to be right?
However, what you get from a body like the IMG is a government instituted free market - perhaps the greatest oxymoron of them all. So, they trot out such nonsense as "privatization". This failed with Maggie Thatcher, but apparently they didn't notice.
In Argentina, they seem to have privatized the roads - an unbelievable mistake. But they are all neo-classical economists now, and neo-classicism failed almost before it began.
It now has a zombie like existence because there has grown around it a horde of politicians and economists who keep it alive because their jobs depend on it.
Unfortunately, they infuse it with our blood.
Add to this a corruption of politicians - hey, there is a new generic" - and you have a "one size fits all " disaster waiting to play out its grisly scenario.
I have never supported the IMF and give only luke-warm support to the WTO. I hope the civil servants, who perhaps joined the WTO wanting to break down the barriers between people and peoples, still have their girlish laughter.
But, I bet it's getting a little shrill.
Stiglitz has become the darling of the anti-IMF crowd. Perhaps they don't realize he is free trader. But, what is his number one concern? Land reform - getting billions of peasants out from under the crushing burden of a 50% rent system.
Just think what would happen to food production if these peasants got 100% of their production instead of half! Nothing improves production better than working for yourself.
But that's enough of real life. Let's get back to Chapter 9, or 11, or (choose a number).
Harry
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-- http://magma.ca/~gpco/ http://www.scientists4pr.org/ Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.—Kenneth Boulding
