Your Fortune article attributes the IMF's conditions to the Treasury Department's desire to mollify anti-IMF Congressmen who demand something "in return" for the bailout money. (Thus nicely deflecting responsibility for the IMF's conditions to the IMF's opponents!)
Am I the only person in the world who finds that argument totally implausible? What do you make of Mickey Kantor's quote, cited in Weisbrot's article: "the troubles of the tiger economies offered a golden opportunity for the West to reassert its commercial interests. When countries seek help from the IMF, Europe and America should use the IMF as a battering ram to gain advantage."
I suppose Kantor's a rogue elephant. No one at Treasury thinks this way. They only care about feeding the hungry...
> ----------
> From: Brad DeLong[SMTP:delong at econ.Berkeley.EDU]
> Reply To: lbo-talk at lists.panix.com
> Sent: Wednesday, October 11, 2000 7:35 PM
> To: lbo-talk at lists.panix.com
> Subject: RE: everything's really ok
>
> >No, Brad. You're wrong. Nader does not say moral hazard is "the problem"
> >with the IMF. And there is not "no distinction" between Nader's critique
> and
> >the Meltzer critique.
> >
> >Nader says moral hazard is *a* problem with the IMF. (Are you saying
> moral
> >hazard doesn't exist?) But he directs most rhetorical fire at IMF lending
> >conditionalities, which he opposes wholesale. Meltzer wants *more*
> >conditions. That is a distinction. Who's on the Scrooge side of that
> debate?
>
> Actually, Meltzer doesn't want *more* conditions, he wants fewer
> loans. Ask Allan, and he'll tell you that it would be much better to
> have governments disciplined by a laissez-faire capital market than
> disciplined by an IMF imposing conditions.
>
> The distinction appears scholastic to me: Nader doesn't want any IMF
> money to be loaned, but if it were to be loaned it should be loaned
> without conditions attached, but he doesn't want any IMF money to be
> loaned. Meltzer doesn't want any IMF money to be loaned, but if it
> were to be loaned it should be loaned with heavy conditions that
> mimic what the laissez-faire market would require governments to do.
>
> In either case, it's the *opposite* of Stiglitz's and Sachs's (and
> my) criticisms of the IMF: we think it should loan more money for
> longer periods of time at lower interest rates with less
> conditionality...
>
> >
> >Why do you always ignore the issue of IMF conditions?
> >
> >Seth
>
> I don't always ignore the issue of IMF conditions. For example, in
> _Fortune_ on July 24, I wrote:
>
> "The blizzard of commentary carries the message that the IMF, the
> World Bank, and the U.S Treasury made a bunch of bad mistakes. The
> U.S. Treasury demanded early repayment of its loans to Mexico,
> worsening Mexico's situation in order to show a large profit for the
> Treasury and score political points against the Alfonse D'Amatos and
> Jack Kemps who claimed that somehow U.S. taxpayers' money was being
> "wasted." The IMF closed down some but not all of Indonesia's
> insolvent banks, causing each Indonesian to fear that their bank was
> insolvent too and deepening the panic. The IMF demanded that
> fundamentally healthy East Asian economies showing budget surpluses
> raise taxes, thus shrinking aggregate demand further and deepening
> the recession.
>
> "I agree with all three of these criticisms..."
>
> So the only appropriate answer I can make to "why do you always
> ignore the issue of IMF conditions?" is "when did you stop beating
> your wife?"
>
> Brad DeLong
>