Re: Argentina and the IMF

["Gunnar Tomasson" <gunnar.tomasson@xxxxxxxxxxx>]

Henry:

I don't know Stiglitz from Adam - but I do know that he would never have
been appointed as Chief Economist of the World Bank unless the powers that
be had reason to regard him as "reliable".  That is to say, someone who
would not rock the boat.

Galbraith wrote something to the effect that an astute scholar in economics
knows when to break with the past - that when the parade passing down the
street is set to pass him by, he will step out smartly and take up the
banner of whatever the parade is about and march up front.

All of which leaves me with but one question:

Where the hell was Stiglitz when it counted?

Gunnar

----- Original Message -----
From: "Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>
To: <pkt@xxxxxxxxxxxxxxxx>
Sent: Tuesday, May 14, 2002 6:57 PM
Subject: Re: Argentina and the IMF


> 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
>
>