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Not The Group Of Seven Dwarves

by | 8th, October 2008

THE guys from the Group of Seven are due to have a little chat and a nice lunch in Washington on Friday, for the annual IMF and World Bank meetings, but it looks as if Robert Zoellick, President of the World Bank, isn’t happy with them; he says they need to expand to include places like Brazil and China.

Unfortunately for Zoellick, the chances of anyone listening to a word he says are close to zero, since the World Bank and the IMF have lost that most valuable of assets, credibility.

Admittedly they were up the creek before all of this broke, but the paddle went when the US Treasury tore up the rules the IMF and the World Bank had so zealously inflicted on other countries, in favour of massively subsidising itself and abandoning all pretence of a free market.

The people who got screwed by the IMF see no reason why, other than the fact that the IMF is intellectually and morally bankrupt, it isn’t saying to the US the things it said to all those other countries with financial problems.

The IMF is doing its best to pretend that the Asian banking crisis 10 years ago happened in some other Universe, and is putting in serious pew time hoping to persuade God to wipe the collective memory banks.

God hasn’t obliged them; as the New York Times reported, back on December 3, 1998:

‘The decision last year by the International Monetary Fund and the United States Treasury to push Asian nations to send their interest rates soaring was a crucial blunder that worsened the world financial crisis, the World Bank concluded today in its first history of how the trouble started.

A 200-page report by the bank deliberately omitted any direct reference to the fund or to the Treasury, which has a major voice in fund decisions. The omission, bank officials said, was a conciliatory gesture to both institutions, which have often disagreed with the bank on how to repair the crisis since it began 18 months ago.’

So, not only did the IMF, and the US Treasury, screw the Asian financial crisis big time, but the World Bank was so independent and so unprejudiced that it was afraid to even directly mention it in its report.

This isn’t the sort of track record you need when you are trying to influence people. The Group of Seven probably does need to be expanded, and we sure as hell need some one to start thinking about how to take the derivative markets apart piece by piece, to see if we can find anything in there which actually has any value, but it isn’t likely to come from the institutions which presided serenely over this debacle without noticing that there was anything wrong…

Chenier



Posted: 8th, October 2008 | In: Money Comments (3) | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink