everything's really ok

[Brad DeLong]

>Those of you who don't subscribe to Brad de Long's list missed this:
>
>>A couple of years ago everyone seemed to agree that the 
>>international financial institutions needed major reform--even 
>>though half of critics (the Jeffrey Sachs-Joseph Stiglitz wing) 
>>believed the institutions were too scrooge-like, and the other half 
>>(the Ralph Nader-Wall Street Journal wing) believed the 
>>institutions were too generous and liberal. The IMF was forcing 
>>countries into deflationary policies that caused severe 
>>depressions, or the IMF's generosity had encouraged overlending and 
>>overproduction that had caused widespread crisis. But even though 
>>the directions of the proposed reforms were directly opposed, 
>>everyone seemed to agree that such major reforms were absolutely 
>>necessary: all agreed that, in the words of William Greider of the 
>>Nation, "the usual financial remedies [would] lead only to failure."
>>
>>Yet here we are. So what went right?
>>
>>What went right was that our global institutions did a much better 
>>job of handling the crises of the 1990s than the folk wisdom holds.
>
>How blissful it is to live in this best of all possible worlds.
>
>Doug

Hey. It's not the best of all possible worlds.

But the East Asian financial crisis was not the apocalypse. It was 
not the end of capitalism. It wasn't even the terminal crisis of the 
East Asian mode of development. Instead, it was a standard variety 
creditors' panic.

It did set economic development back one year in South Korea, two 
years in Thailand and Malaysia, and (I hope) less than five years in 
Indonesia. It could have been much, much worse. It wasn't much much 
worse because Camdessus and Fischer brought a lot of money to the 
party and used it as Walter Bagehot said it should be used (even 
though they also made inappropriate recommendations on fiscal policy 
and bank regulatory policy at the same time)...

Brad DeLong