Robert Naiman wrote: > You mean the owners of World Bank bonds? Surely they will. World Bank > bonds have a AAA rating, in part because they have a quasi-guarantee > from the USG. Entities which are only allowed to purchase government > securities are allowed to purchase them, they are generally considered > as safe as USG bonds.... I strongly doubt anyone is going > to be selling World Bank bonds as a result of this nomination, and if > they did, no-one would care, other people would be happy to buy them.
All else constant, if the WB started helping people in a way that hurt business interests and/or neoliberal ideology (such as dropping the fees at medical clinics in poor countries) it would reduce confidence in those bonds (while cutting fees would reduce WB cash flow). With Obama as president and with the GOP and conservative DP-types watching him like a hawk waiting to pounce, any deviations from neoliberal ideology would likely weaken the WB's backing by the USG.[*] We might thus see the AAA become an AA. So even though the sellers would be matched by "happy" buyers, the bond price would be lower. That means that the WB would have to offer higher yields on future bond issues. That means that it would be more expensive for the Bank to borrow. What kind of incentive does this imply? We already have a lot of people yelling that _the_ reason for the housing bubble and the 2007-08 financial crisis was that the USG encouraged relatively poor people to buy houses they couldn't afford. (It's Fannie and Freddie -- and the community development act -- that did the financial system in!!) I can only imagine that these folks will yell about any effort to give aid to the poor -- especially since they're in other countries (and don't look like _us_). Besides, it you help the poor, that simply encourages them to continue to be poor, rather than pulling themselves up by their bootstraps, yadda yadda. Given this, I'd say that Jim Yong Kim (who, by the way, is currently the president of an elite college) is most likely to provide more of the usual stuff that makes up Obama's policies: technocratic "fixes," not real reform or abolition of the WB. Even those would be pushed to the right and made even more cautious by the prevailing political winds. Jim Yong Kim may be better than Larry Summers, but few people eligible for running the WB are worse than Larry. All of this reinforces what I said before: the main good thing that the anti-Summers/pro-Sachs movement has achieved is to open up the _process_ of choosing the WB head, increasing transparency (which is a good thing). BTW, I recommend Howard Stein's 2008 book _Beyond the World Bank Agenda: An Institutional Approach to Development_ (Chicago: University of Chicago Press). -- Jim Devine / "In science one tries to tell people, in such a way as to be understood by everyone, something that no one ever knew before. But in poetry, it's the exact opposite." -- Paul Dirac [*] if this link is advertised widely, we'll see more right-wing attacks on the WB. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
