> At 11:39 AM 10/7/98 -0400, Carl Remick wrote: >Re Michael's: "It looks
> like we have a left--right alliance not to fund the IMF. The left thinks
> the IMF actions are distructive the right thinks American money is wasted.
> This is probably a good thing. Without American Funds the G7 will probably
> want non--American leadership (no cure all but can't be much worse than the
> present)."
>
> Now what does it mean that "the world crisis hits the rich countries in a
> significant way"? First, it might mean further stock market decline, not
> just a gentle decline, but an out-and-out Panic with a capital "P" --
> likely a result of continued economic decline outside of Wall Street. The
> Fed would then step in to bring liquidity to the rich, as it did in 1987.
>
> But that would be a minor blip; financial stability would be restored, with
> the DJIA at a signficantly lower level than at the start of 1998. And the
> economy would likely be in much worse shape than 10 months ago, too, in
> terms of real GDP and unemployment measures.
Jim, I would tend to agree with you with regard to the US and perhaps England, actually more or less. My point is that there is other major wealth in the world aside from the US. Should they take over the IMF or construct another institutions many other alternatives are possible. The US is not the only source of Capital world wide. I'd be looking closely at the Continential European and Japanese sources of Capital if I wanted to predict the worldwide response to a crisis..
I would hesitate to guess what the Continental powers and Japan would do and are going to do. At 4.3% unemployment give or take a percentage point the Japanese are capable of handing out $260.00 per person to simply spend the money immediately. While this is no cure all, it is a very clever gimmick to get people to spend immediately. There are much stronger labor movements outside the US. Continental European and Japanese elites are at least as familiar with Keynesian and Marxian economics as their US. counterparts.
Should the collapse in the third world lead to significant damage to the developed economies of Continential Europe as well as Japan, I would expect a more liberal response from Europe and a more response excluding the US from Japan. Even the likes of Alexander Haig is now arguing against austerity on the grounds it leads to "political instability". I heard him say so last night on TV. If there is major worldwide pump priming abroad then on an optimistic note the US will be dragged along relunctantly for fear of loosing preferential trading relations and markets abroad. So much the better. It appears apparent that US elites either because of class or other political pressures, or because of straight incompetence lack the ability to help developing nations in economic crises. The world might be better off without elite American "leadership" even if it means loosing the capital we these elites can provide.
As far as crises go, it seems we can barely manage our own! For example, the rest of the world has managed to get variants of national health insurance passed their legislatures. In many ways socially the US is half way between Latin American undeveloped countries and Western Europe and it is getting more backward every day.
--mike -- Michael Cohen mike at cns.bu.edu Work: 677 Beacon, Street, Rm313 Boston, Mass 02115 Home: 25 Stearns Rd, #3 Brookline, Mass 02146 Tel-Work: 617-353-9484 Tel-Home:617-734-8828 Tel-FAX:617-353-7755