Richebacher's bleak scenario

[Brad De Long]

>Brad De Long wrote:
>
>>As Stanley Fischer never tires of saying, the primary point of the 
>>peso support package was to help *Mexico.*
>
>This is a bit hard to believe. Why this concern for Mexico and not, 
>say, Africa? Insofar as there was any IMF (meaning U.S. Treasury) 
>concern about Mexico's domestic economy, it was to keep it together 
>enough to slow the northward flow of migrants. I'm not even going to 
>mention the relative role of private creditors (large for Mexico, 
>tiny for Africa).
>
>Doug

It seemed clear at the time (to me at least) that a big loan 
guarantee to Mexico had a good chance of stemming (or at least 
shortening the recession arising from) Mexico's currency crisis, in 
large part because it seemed to be driven by a panic flight from 
Mexico by New York investors.

I don't know what to do (besides convince Congress to multiply the 
foreign aid budget tenfold) to improve the chances for economic 
growth in much of sub-Saharan Africa...

Brad DeLong