The Imf's Medicine Isn't Going Down Easy
The question discussed in recent months is not so much whether we need the International Monetary Fund, but whether it is up to the task. In "If there were no IMF, they'd have to invent one" (Economic Viewpoint, Mar. 9), Laura D'Andrea Tyson excuses the austerity measures the IMF has imposed on certain Asian countries because of the need to stop the free fall of the currencies. But she acknowledges the failure [of the measures] when she says that in a panic, nothing really helps. Well, there is a relatively successful way to fight a panic: Attack its perceived direct cause in a forceful, credible, and visible way.
It is somewhat bizarre that the IMF is now presenting crony capitalism, opaque financial structures, closed markets, and trade monopolies in these countries as the mothers of all evil. These structures, existing for decades, previously were considered integral components of Asia's economic miracle.
Recently, after more than half a year of crisis, the World Bank has come to the conclusion that there is probably no way out of the problems of the financial sectors of these countries without addressing the problems of their corporate sectors. That implies a restructuring of corporate foreign debt, debt-equity swaps, the sufficient availability of trade credits, and a reversal of the current austerity and liquidity-squeezing policies.