“The
real problem is the politicization, both real and imagined...
Elected officials violate their social contract with their citizens in name of fiscal balance, undermining the legitimacy of governments and the very process of market liberalization to which such high value is placed. Evidently, the best minds among us have only just begun to think about it.” (Eichengreen, Barry; Jul/Aug2002)
Those in charge of IMF and World Bank are self-critical while also self-absorbed ...this is still one of our most strenuous essays on the state of the union. It keeps being said, as if a worldwide Mantra: "It's the Economy, stupid."
Dubya has lost the election for the Republicans by going into 2009 sealing it with uncertainty, brokenness, and bankruptcy. So that is why we at MooPig keep posting this one unedited... we know it is unlikely to capture ones' imagination, but this is how those guys with "green" in their names actually talk:
by Patrick Darnell (June 13, 2006-Jan 29, 2008)Introduction -- ChinaThe IMF was established by the United Nations in 1944 to provide loans to countries in financial distress at a relatively low interest rate. Nations having balance-of-payments problems can borrow from the IMF for short time periods and such loans include economic and financial stipulations on the debtor nation. Typically, such stipulations require that the debtor nation follow an austerity program that limits government spending, domestic consumption, and imports. (2006, CTUO)
Sustainable development “requires not just liberalization and privatization, but also initiatives to ensure that all of society shares in the benefits.” When, or if, the IMF heeds its own advice for social and political stability by rubber stamping a process on the borrowing country, it can neglect some very unconstructive issues. "Negative impact on the distribution of wealth, and basic social needs occur when the IMF insists that the prevailed country both liberalize markets and privatize quickly, simultaneously demanding austerity.” (Eichengreen, Barry; Jul/Aug2002)
State of the Art: Developing Economies FestoonedAs the most up to speed world player, China gets the Gold medal in pragmatism:
“It’s the economy, stupid,” so says the Chinese in the field. The capitalist theme, can it lead to economic power? Freedom of thought, wounded once, now realized. In past, regional attitudes came from nationalist convolutions of the dogmatic leaders’ hatreds. Generally, this chaos of the recent past has been the chief building ingredient to the Chinese pragmatist’s view today.
The release and deliverance from menial work to better working conditions, and higher standard of living often is the first result after the first hurdle: Democratization. “The hardships our parents endured are the unbearable costs of freedom of thought, freedom of dialogue and personal power. Our lives must move to the next level. We must build paved roads leading to the market. The Journey is the story, not in exclusion of anything, but it is the journey,” are the words heard in China’s budding mercantile regions.
What is the Economy of Nations really Based on?
GREED________~~Economic conditions~~____________FEAR
Emboldened: Individualism empowers the Mobile
Today in China, the son and daughter of peasants can travel to and be emboldened by the sources of global rhetoric, in Europe and America from where freedom booms in their ears. Learn and return to their home and kiss the ground of their ancestors. At that emboldened moment the cheating and setups, and betrayals are seen for what they were. “If we have democracy, we have respect,” says the young man and woman.
Richness is the aim. The new leader must make others rich, because he/she is rich. Economics of the village are a clear balance sheet in face of historical corruption. Party politicians of previous decades took bribes, and lived relatively corrupt lives. Before, no one felt he/she could solve the problem.
Unchecked the fatality in corruption was made certain. The cost was over throwing largesse by the purer ones of the village. The repetition of the acts of the impure made the whole country to be scolded by the world.
“The developing economy is putting a lot of hope in the air, on the ground, and in spite of the criticism,” says the region’s mayor who just paved the road to the market. “It is easy to criticize a total country.” When the perspective moves to the individuals in the fields, criticism dies away. What one wants to do is to help: to join in and race against time, to finish, to achieve, to help, and leave the land better than when it was found. (China; 2006)
June 4, 1989 is remembered:
...as the slaughter of students in China. The criticism is giving loss of face to Chinese for generations to come. Resulting in overriding fear, again 2005, new issue of Japanese textbooks brought anti-Japanese riots in China. “A butterfly flapping its wings over the ocean can start a tornado over the nation. Don’t believe in rumors. Don’t participate in illegal demonstrations,” says the Chinese elders.
What the temperament of democratization depicts, is, after all a good-natured event. The clan loyalties detached as the peasants’ voting for the first time, billion people vote as if each is equal each, all over to all other. Often, women win elections over the men, and the load is eased. Results are the jovial campaigning, the over all good-humor of many voting from many levels of education, backgrounds, foregrounds and clans.
The son takes up the job long denied to his own father. It would be a shame if Chinese output does not make a contribution to the world. “If Chinese are to become richer with more money, taller buildings, and more cars and phones without making effort at giving back to the source of its wealth, it is a terrible shame.
Peasants once dreamed of hope in this:
Announcement of Dawn
Loyal to time,
Bring your message to all,
That what they have waited for so long,
Is coming. (Chinese Adage)
The unprecedented globalization, one market attitude of modern day humanity is tethered to many very deep-rooted conventions of the individuals. Primary to the formula of International Economics with the stride out to globalize, are variables of the history, economics and natural resources of the regions and are proving to be the most important aspects. (China; 2006)
“In short [banks and firms] are not oblivious to the risks, but they feel that the other risks are even greater.”(Eichengreen, Barry; Jul/Aug2002)
The Dawn is Here
In effort to understand the most important characteristics of workers in the world today, I am reading articles of secondary research titles. One particular article: “The globalization Wars: An Economist Reports from the Front Lines,” by Barry Eichengreen in Foreign Affairs, is commentary on memoirs of Joseph Stiglitz and his years in Washington, D.C.
“Undeterred, he battles valiantly on behalf of impoverished nations against the unrelenting ‘globalizers’ of the International Monetary Fund.” Says Eichengreen: “As the tale unfolds, the reader waits with bated breath to learn whether the hero can save the world’s poor from the consequences of bad economic advice.” (Eichengreen, Barry; Jul/Aug2002)
According to the critic, Stiglitz is contending that “too often those concerned with economic development have seen economic openness and liberalization as panaceas,” or magic potions. Alternatively, power of the great ideas of the past must carry forward, not be cast aside. Panaceas are non-existing.
Joseph Stiglitz is an economic analyst who took a leave of absence of Stanford University to be the chief economist at the World Bank. His aim was to serve his country and “improve the lot of the developing world.” He found while heading the Council of Economics Advisory during the Clinton years, a:
- Morass of Political opportunism
- Ideologically motivated decision-making
- And bureaucratic inertia
In developing countries, such as China, Ecuador, Malaysia and others, the result of promoting policies “helpful to US commercial and financial interests” has been “devastation.” Developing countries that open themselves to trade all too often will:
- Deregulate their financial markets
- Abruptly privatize national enterprise
- Experience more economic and social disruption than growth
“Foreign direct investments have destroyed potentially viable domestic companies,” and “liberalized international finance has made emerging-market economies more vulnerable to erratic shifts in investor sentiment without conferring [bestowing] any visible benefits.” (Eichengreen, Barry; Jul/Aug2002)
Stiglitz argues: “academics [like him] once seduced by globe trotting [expense accounts] may lose sight of their original motivation for public service...” How soon one forgets that the purpose is “to enlist science in the pursuit of human betterment.” Shamefully, global public employé often have to choose “between dissent [objectivity] and professional [self] advancement.” (Eichengreen, Barry; Jul/Aug2002)
Most prominent in recent history, Stiglitz was a major opponent to the 1997 IMF push for IMF-World Bank meetings that would lead to deregulation of international capital flows. The money that flows is regulated in previous checks/ balances that must be left in place, because Stiglitz has defined statistically asymmetric information.
Asymmetric information is Stiglitz’s master-mind. It means that the lending country has considerably more information about the transaction than does the borrowing country. The imbalance of information pervades the entire term of the loan, and is the main reason why there is little catalyst for private enterprise to follow IMF capital advances.
Stiglitz regards “the poor timing of the meetings as evidence that the IMF saw a liberalized financial system not as a means to development or stability but rather as an end to itself, [or self-serving].”
”The proposal was driven by bureaucratic inertia – scarcely ...flattering.” Stiglitz then was against the interest rate increases of the same year that would “restore balance to the countries caught in the Asian financial crisis.” What is being preached is that the method used in the USA banking system rising and lowering the prime to stave off various economic ills and windfalls, is not the answer as Stiglitz has found in his statistical numerations.
Moreover, administrators do not “have the intellectual luxury of academics,” therefore each decision is miraculous: miraculous because there is so much error in the decisions made each day as the market opens. Lending and rate increases are putting a heavy burden even on the “IMF Managers who as PhD’s understand the threat that higher interest rates place pressure on debt-laden banks and firms.”
Unfortunately, the theory and practice are still unprecedented to a point that “back of the envelope calculations” are becoming as common as taking “long term money out of crisis countries,” like old time runs on banks.
So, who makes out in Global Economic Uncertainty?
There remains so much risk in international monetary finances that one wonders why the USA is so involved in the sordid business. The USA is the “main stakeholder, controlling the single largest block of votes, in the voting of IMF-World Bank affairs.”
One insidious reason that comes to mind is that as politicians go global, like lame duck second term presidents in the last two years of their administration, they go abroad and far away so they don’t have to face their constituency. “Elected officials violate their social contract with their citizens in name of fiscal balance, undermining the legitimacy of governments and the very process of market liberalization to which such high value is placed.” (Eichengreen, Barry; Jul/Aug2002)
Additionally, IMF uses other citizens’ money to take inordinate risks. Then when the interest rates go up to balance the developing country’s economy, the interest earnings are wiped out. The exercise is futile, and practiced on so many fronts, that it makes no sense.
“The real problem is the politicization, both real and imagined.” IMF economic advice reflects the mixed agendas of its principal stakeholders. These agents of globalization Stiglitz warns in his book “are experiencing a crisis of their own, in legitimacy.” That is legality, authority, and authenticity.
Every time the IMF is on path to shift the balance between “debtors and creditors’” there is the mammoth predicament of “moral hazards in shifting that balance... in letting debtors become their own bankers, and bankruptcy judges.” Suffice to say, “Evidently, the best minds among us have only just begun to think about it.” (Eichengreen, Barry; Jul/Aug2002)
Hope: Dream’s friend, Illusion’s sister. [I Ch’ing] (fin)
References
Eichengreen, Barry; The Globalization Wars. Foreign Affairs; Jul/Aug2002, Vol. 81 Issue 4, p157-164, 8p Document Type: Book Review Subject Terms: ECONOMICS* ECONOMIC policy *GLOBALIZATION *INTERNATIONAL Monetary Fund UNITED States 1993- NONFICTION DEVELOPING countries Reviews & Products: GLOBALIZATION & Its Discontents (Book) NAICS/Industry Codes: 928120 International Affairs People.
STIGLITZ, Joseph Database: Business Source Elite
http://search.epnet.com/login.aspx?direct=true&db=bsh&an=6836492&loginpage=Login.asp
Stiglitz, Joseph; Globalization and Its Discontents, book, New York: W. W. Norton, 2002, Pages: 282.
China; An historical presentation for TV Discover Channel, June 13, 2006.
by Patrick Darnell (June 13, 2006-Jan 29, 2008)
