----- Original Message ----- From: "boddhisatva" <boddhisatva at netzero.net> To: <lbo-talk at lbo-talk.org> Sent: Thursday, October 16, 2003 8:38 AM Subject: [lbo-talk] Thai baht, Matahir and the Euro - a tale of two (possibly three) currencies
>
>
> Back in the nineties I got it wrong, or at least I've reversed myself
> since then. I thought and wrote that Matahir Mohamad was wrong to peg the
> ringit and limit capital flows and I thought that the euro was a doomed
> concept. What it was really about was the border between the theoretical
> and the practical. Theoretically, I always thought the Euro was a good
idea
> but I thought the practical problems of implementation were too risky.
> Practically, I knew that Malaysia would suffer from the rapid inflows and
> outflows of hot money but I felt that the Matahir represented the old,
> wrongheaded theory of national autarky. I think ATTAC may well represent
> that wrongheaded idea today. I also think the Thai government is probably
> very smart in threatening to use a hot money tax as a way of fighting the
> strength of the baht versus the dollar.
>
> In the nineties I wanted to make the point that there was no use trying
> to go back to a time before hot money. The empire of the dollar has
> developed largely from the need of all people for international liquidity.
> It seemed crazy to think that a country like Malaysia could wall itself
off
> from that flow and prosper. I didn't realize just how vulnerable these
> small currencies are. They are essentially in permanent crisis and all
the
> governments can do is fight to keep the crisis from becoming acute.
>
> I also didn't realize how strong that need for international liquidity
> is. The euro system has many faults, but the fundamental logic of it is
so
> strong that once a nation is in, I think that nation quickly loses any
> thought of getting out. With all its faults, I think it is not
unreasonable
> to say that the euro has the most potential to create meaningful change of
> any concept in political economy right now. Mired as it may be in
Brussels
> for the moment, one can only imagine the transformative effect the euro
may
> have in countries like Turkey and Russia. Hopefully Brussels will get its
> act together and promote the expansion of the Euro with a fair-minded
> federalist approach.
>
> peace,
>
> boddi
>
>
>
>
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