>>Wow, there is no end to smartest-guy-in-the-room Larry Summer's
>>bright ideas. It would appear that the whole purpose of this IMF
>>hedge fund
>Hey, Larry needs a job. He probably envies Rubin and the hotshots who
>run the Harvard portfolio. This would be a perfect opportunity for
>him.
It's not so much LS who needs a job as the IMF. The IMF and WB were the Bretton Woods institutions, put in place to administer a system of fixed exchange rates which no longer exists. They were therefore more or less redundant by 1977. Luckily, the third world debt crisis came along just in time, meaning that the IMF was able to reinvent itself as a policy lender to manage the process of default. When that was finally more or less resolved, the IMF was once more at a loose end. Luckily, the Mexico crisis happened along and the IMF was able to say that it was a "global lender of last resort", until it became patently obvious that it neither had the money to do so nor any realistic prospect of getting it. Since then, we've had suggestions for the IMF as global macroeconomic consultant, the IMF as global bond rating agency, as maintainer of the integrity of global economic statistics, the IMF as global capital markets regulator and now this.
Every couple of years some academic or other writes an article on the general subject of "Isn't it time to just give up and get rid of the IMF, it appears to be very useless" and is either quietly ignored, told to shut up or given a bursary. The World Bank isn't all that much better; since big project lending is right out of fashion, and there are very few other kinds of projects that are worth lending to, it keeps trying to muscle its way into the aid business, usually with bad results. It's all a bit of a joke at the expense of the global taxpayer, but you Americans pick up most of the tab so the rest of us don't care.
I'd also note that Larry Summers' reputation as "an incredibly smart guy" seems to be utterly impervious to anything the man actually says. I've seen this happen a few times in banks; somebody's intellectual reputation achieves a kind of escape velocity and from that point on, they can spout the most unutterable crap without anyone questioning their eternal wisdom. A reputation for being really intelligent is much more difficult to shake off than a reputation for being a sheepshagger.
best dd
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