Re: Argentina and the IMF

["Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>]

Stiglitz parallels Robert McNamara as part and parcel of the establishment
that got the world in a mess and late in life repented.  Stiglitz was on the
faculty of MIT, Yale and Stanford, joined the Clinton administration in 1993
as member of the Council of Economic Advisors, later was named the Council?s
Chairman. In 1997 he took the post of Senior Vice President and Chief
Economist at the World Bank, the same year of the Asian financial crises.
Though a consummate political insider, and up to 1997 a card carrying memeber
of neo-liberal market fundamtalism and globalization, Stiglitz grew
increasingly disillusioned with the failures of neo-liberal policy and began
to voice his thinking in public speeches. He was ousted from his World Bank
post, allegedly on orders from US Treasury Secretary Larry Summers.  His
current policy

Responding to Economic Crises:
      Policy Alternatives for Equitable Recovery and Development

                           Remarks at the North-South Institute Seminar
                                      Recovery from Crisis

                                               by
                                        Joseph Stiglitz
                        Senior Vice President and Chief Economist
                                       The World Bank

                               Ottawa, Canada, September 29, 1998

The most important policy for socially equitable development is full
employment.

In approaching the challenges of globalization, we must eschew ideology and
over-simplified models.
Today, with the continuing decline in economic activity in East Asia, with the
new crisis in Russia, with
the contagion threatening economies elsewhere, faith in the market economy is
eroding in many parts of
the world. It is now clear that the emphasis on privatization, liberalization,
and macroeconomic stability
that dominated thinking about developing economies, represented neither fully
captured the essentials of a
market economy, nor provided a recipe for growth and stability, let alone for
the broader goals of
democratic, sustainable, and equitable development.

Our challenge today is to prevent the pendulum from swinging too far to the
other side. A sound market
economy integrated into the global system is the key to economic success. But
this requires sound
institutional infrastructure, which in turn requires an effective and
efficient government focusing on the
essential functions of the public sector. We have a huge task in redesigning
the international architecture.
But if we set our sights high, if we keep our objectives broad, if we keep our
instruments wide, if we
eschew ideology but use all of the limited knowledge that we have effectively,
we can make progress.

We must not let the perfect be the enemy of the good. In a downpour, it is
better to have a leaky umbrella
than no umbrella at all. There are reforms to the international economic
architecture that can bring the
advantages of globalization, including global capital markets, while
mitigating their risks. We are beginning
to see a new consensus forming around ways to restrain the risk of "hot money"
and the goal of
developing procedures for orderly workouts. Hopefully the continuing
international dialogue on these and
other issues will continue to make progress in these and other areas.


dkostzer@xxxxxxxxxx wrote:

> Dear PKTrs:
> A very interesting article by Stiglitz on Argentina was published last
> sunday in the Washington Post.
> http://www.washingtonpost.com/wp-dyn/articles/A3893-2002May10.html
> I think it is worth taking a look at it.
> The world press highlights the role of corruption on the Argentinean
> crisis, something that it is fully true, but nobodies says that corruption
> is a bilateral crime. Look to whom were the beneficiaries of the
> corruption and you will have the other side of the coin.
> Stiglitz highlights the role of the privatization of the pension fund
> schema on the fiscal deficit, that reduced state revenues and enlarged its
> obligations, but at the same time there was a reduction by half of the
> contributions by employers, what enlarged the deficit, not to account the
> debt servicing, and all that under the pressure of the IMF.
> The privatization of the pension funds implied an enormous transfer to the
> private sector of 5 billion dollars per year. The reduction of the
> contributions is of the same amount and benefits mainly the service
> sector, not the tradables.
> Since the beginning of 2001 the banks, mainly international ones, flew the
> money taking advantage of the currency board. 83% of the reduction of
> deposits was explained by the private banks, while 59% by the first 10
> banks. The IMF encouraged the internationalization of the banking system
> under the argument that the local branches will require funds from their
> centrals in Spain, England or USA. None of that happened.
> Didn´t know the IMF that silently banks were inducing capital flights? It
> is almost funny to see that public banks saw a reduction of 4.9% in their
> balance sheets of  the item ?other credits? and ?other liabilities? while
> private banks presented reductions of 48.5%. Something was happening there
> and the IMF and the Central Bank looked to the side.
> To have the silent and ordered withdrawal of reserves from Argentina,
> banks had the complicity of the IMF auditors and the Central bank. Is it a
> mere coincidence that the IMF was pushing to abolish the laws that made
> the heads of the central bank liable for their acts? Is it to adhere to
> conspiracies theories to think that there are second intentions in the
> abolishment of the white collar crime law or the reform of the bankruptcy
> law are a requirement in order to achieve IMF support? One of the bankers
> in jail is the partner of David Mulford . Their bank is accused of major
> capital flights after the December crisis.
> On top of that, there is the suggestion of major  orthodox adjustments in
> the economy.
> Dear PKTers, there should be an alternative for us Argentineans. Perhaps
> many of you had thought on that. Will be nice to discuss ideas and
> alternatives.
>
> Daniel Kostzer