Buba moralizes

Tom Lehman uswa12 at lorainccc.edu
Fri Jul 3 12:42:11 PDT 1998

Dear Doug, A friend of mine recently returned from a visit to Germany after 25 years. His email to me states that all you see on the autobahn are Mercedes and BMW's!

This AM union brother "Bumper" had to go to a tool store to pick-up a couple of sets of impact sockets for the learning center. The counter"boy" flim-flamed brother "Bumper" into taking a couple of sets of foreign made impact sockets. "Bumper showed them to me when he got back. I reminded "Bumper" of our Union made-American made policy. The impact sockets are now on their way back to the tool store! Fraternally yours, Tom Lehman

Doug Henwood wrote:

> The German sadomonetarists aren't happy.
> Doug
> ----
> Munchau, Wolfgang, Bundesbank attacks IMF over Asia., 07-03-1998.
> ------------------------------------------------------------------------
> Senior German government and Bundesbank officials yesterday criticised
> the International Monetary Fund, saying it had contributed to the
> financial crisis in Asia through generous financial assistance.
> Hans Tietmeyer, president of the Bundesbank, and Jurgen Stark, state
> secretary in the finance ministry, said consecutive IMF bail-outs had
> lulled investors and lenders into a false sense of security, and had
> helped spread the crisis throughout the region.
> They warned in particular about "moral hazard", as investors get used to
> being bailed out by IMF support programmes.
> The outspoken criticism, at a joint conference organised by the
> Bundesbank and the IMF, highlights the long-standing gulf between
> Europe's conservative financial establishment and the IMF.
> In a speech to the conference, Mr Tietmeyer said: "The basic problem of
> any form of interventionist economic policy [is that] the other players
> come to expect interventions and anticipate subsequent measures. On
> balance, it has become clear that an interventionist strategy for
> managing financial crises can easily lead to a dead end."
> Michel Camdessus, managing director of the IMF, gave a vigorous defence
> of the IMF's record: "These [IMF] programmes are hardly bail-outs. Many
> private investors are taking heavy losses. With stock markets and
> exchange rates plunging, foreign equity investors have lost nearly three
> quarters, if not more, of the value of their equity holdings in some
> markets."
> In a thinly disguised counter-offensive he called on Europe to play a
> bigger role in the IMF than previously. "Europe must have a greater
> presence and must take on more responsibility as the biggest shareholder
> of the IMF," he said.
> European countries are the largest shareholders in the IMF, even though
> the US carries the strongest influence. European monetary officials have
> signalled that they intend to play up to their joint strength after the
> start of economic and monetary union among 11 European countries next
> year.
> In a separate session, Michael Mussa, the IMF's economic director,
> acknowledged the problem of moral hazard, especially in bailouts of
> large countries, such as Russia.
> But he said moral hazard was mostly created by domestic policies in the
> affected country rather than by IMF programmes.
> He said the large capital flows into Mexico and Asia had not been made
> by investors who expected IMF bail-outs
> Mr Stark, who is about to move from the finance ministry to become
> deputy president of the Bundesbank, countered that financial assistance
> to Mexico four years ago had triggered a fall in emerging markets bond
> spreads, caused in part by financial markets discounting future IMF
> intervention.
> Both sides agreed, however, that crisis prevention and management
> required better statistical information about capital flows, especially
> about loans with a short maturity, which played an important part in
> the Asian crisis.
> There was also broad agreement to engage private sector bankers dir-
> ectly in the crisis management. .
> Copyright Financial Times 1998. All Rights Reserved

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