> From: "Nathan Newman" <nathan.newman at yale.edu>
> .... this reflects less disagreement about how abusive the IMF
> has been (since Bonior has stated he has no disagreement with Sanders on
> that issue) but how to change the situation.
>
> The fear is that in the absence of government recapitalization, private
> monies will step into the breach without any constraint, yet they will (as
> Long Term Capital shows) still ultimately be backed by the government
Yes, i.e., your tax monies generally speaking. DO something about that, won't you. Keeping those institutions -- commercial banks, derivative funds, the IMF, the World Bank -- going really hurts the rest of the world.
if
> the economy goes south. That was what happened with the Latin American
> debt "crisis" (meaning in Henwoodian terms, a threat to bank profits). It
> was only when private loans had spiralled out of control that the IMF,
> then the Brady Bonds stepped in with all the pain and destruction of
> structural adjustment.
Right, that reflects the power relations of the 1970s-90s, and particularly the lack of yankee consciousness about the way their continual recapitalisation of the IMF/Bank served to bail out the NY banks.
Doesn't the far more serious character of the crisis today -- and the fact that the IMF is the key institution (along with US Treasury and the Fed) enforcing status quo policies -- offer grounds for a rethink? Don't Malaysia and even Thailand have grounds for slightly more reflationary policies now that there's little hope in hell of them getting (hence seeking via high interest rates and fiscal shrinkage) private sector portfolio flows? Those aren't by any stretch democratic states, but they do feel -- I gather from my contacts there -- somewhat less pressure than we do in South Africa today, lying totally prone as we do to the ideology of attracting hot money inflows. It is the very lack of IMF influence that removes the threat posed by int'l hot money, you'd have to concede.
This was the goal of many on the SA left. We worked very hard to get a radical statement against foreign borrowing into the ANC electoral programme, and of course that was very quickly a broken promise. But the sentiment remains very strong here, that opportunities for foreign borrowing provided by an IMF seal of good housekeeping (a $850 mn loan in December 1993) really strengthened the conservative forces in Pretoria; and, logically, that delinking (not autarchy mind you) from international financial circuits -- through capital controls, contesting the odious apartheid-era debt, etc -- is a prerequisite for social progress. Samir Amin gave two talks here this week with very much that message, and got rave reviews. I'll supply more info about this really impressive, still emerging but undeniable, progressive offensive against int'l finance if anyone wants. The ANC even officially conceded early this month that global capitalism faces a capitalist overaccumulation crisis heightened by financial speculation. Now the struggle is to take forward the implications of this analysis into policy.
> The threats against IMF funding, however, have been used by an odd
> coalition of progressive people like Bonior and conservatives to force
> some changes (although not that significant yet) on the IMF.
No, they were significant. Significantly worse if I understand it correctly, in that the IMF will charge HIGHER rates and demand a SHORTER repayment period in the wake of the congressional deal. Enlighten me if I'm mistaken, please.
> In a sense,
> the politics of the IMF has an odd concentric ring structure:
> damn-the-consequences leftwing and rightwing politicians in total
> opposition, pragmatic left and right politicans using the former
> opposition to extract concessions, and the center left and right in full
> support.
It is an incomprehensible kind of machiavellian politics practiced by this "pragmatic left," as you describe Bonior et al. It plays to a mass US polity that is often xenophobic on trade, it seems, but too ignorant or confused about IMF recapitalisation (or too uncaring about third world people) to warrant mass mobilisations along the lines of the anti-Nafta movement. With no other semblance of accountability or mass participatory democracy in the US, this weak congressional rump of liberals therefore pander to the AFL-CIO (big donors, they) which for whatever incomprehensible reason also supported IMF recap (maybe they already got their minimum wage or fast-track defeat or whatever and didn't want to piss off the president some more, as it has been described to me by people close to Nader). It's a fucking cesspool, Nathan (and Max), admit it.
> I honestly am not sure which strategy makes most sense, since it is not
> clear to me that the total abscense of IMF money wouldn't lead to an even
> more savage round of privatization in search of foreign money. In the
> ideal, the abscence of the IMF would induce a debtors strike against loan
> repayment, but a global fire sale to international capital seems just as
> likely, with a general economic crisis just exascerbating poverty
> globally.
No, think about what Cardoso would have done under circumstances of no fresh $30 bn. Would his left flank allowed wholescale privatisation? In the key sites of struggle around the world, this isn't an option. After all, a more conservative Brazilian regime actually defaulted on its foreign debt from Feb-Sept'87, and more or less got away with it (trade finance still flowed, preventing any import-export problems); as did apartheid South Africa during the debt repayment "standstill" of late 1985. We need a few more cases of contemporary high-profile resistance -- Mahathir the most obvious notwithstanding despicable politics, China and India refusing financial liberalisation, Thailand putting on some exchange controls, Russia's currency controls, all add up, but not yet to a critical mass -- and then, yes, just as Russia catalysed via a $40 bn default, hopefully that would be the basis for one, two, many LTCMs, and hopefully in turn attempts to bail out the US rentiers would kick off even a moment of populist resistance in the US. That's the only hope, if we don't want to see Summers/Fischer designing the next several dozen Indonesias over the coming years.
> Is it clear to you that in the absence of the lure of IMF money,
> governments in crisis would avoid even more severe policies than those
> imposed by the IMF?
Yes, I'm pretty well convinced that we do need a massive shift in power relations, urgently, and as much as that puts client-comprador regimes (like SA) in crisis, it would also put the global financial elite in such a fix that -- as occurred during the 1930s -- there would be sufficient space in the South and East to reconstitute some greater degree of national sovereignty. Which is the only way to slow the massive bleeding of surpluses still underway to NYC. Nathan, wake up to the fact that all of these emerging markets are being forced to run the highest interest rates in their history now, just to keep feeding the international speculators. In June-July, my mortgage rate went up 6% (and is now at a real rate of 16%) during a 30% raid on the currency, so even the petty bourgeoisie are getting a little desperate. I understand Brazil has hit 33% real rates this month.
My sense is that since the NY bankers don't have another globocop aside from the IMF, they'd come to any kind of international bankruptcy bargaining table with the humility of, say, the 1930s bondholders. A third of the world's countries defaulted then and lived to tell the tale, some like SA and Zimbabwe growing at their fastest-ever rate and with more balance (even income distribution by race, believe it or not) than before or since over that 15-year period (1933-48) of northern decay. Maybe the idiot investors in hedge and mutual funds, overfed middle-class yanks trusting their savings to yuppies and unaccountable pension managers, would finally wake up then, and taste the financial devalorization they've been visiting upon the rest of us.
Sorry for being so cheeky.
P.