She's from Argentina, She knows whats up

[Odin]

Originally posted by Lawrence of Arabia
where is the loot?

Shareholders' pockets.

[Lawrence of Arabia]

Shareholders' pockets.

so are you saying argentina would be better off without multinational corporations brining in capital and employing people?

[Odin]

Originally posted by Lawrence of Arabia


so are you saying argentina would be better off without multinational corporations brining in capital and employing people?

No, what I am saying is that the profits go to shareholders instead of being re-invested in the 3rd world.

[chequita guevara]

Originally posted by Lawrence of Arabia
where is the loot? since everything bought by multinationals needs to be paid, either in credit, or cash, theres a transfer in both directions.

But because they had been public property, they were generally sold to foreign corporations at much less than market value. This reults in a short inflow of cash, but because high interest rates have to be guaranteed under the IMF plan, that money quickly is sucked back to the 1st world. Back in the old days, the formula was that for each dollar that the 1st world put into a developing nation, it removed a dollar seventy. These days, it removes much more.

[chequita guevara]

Originally posted by Lawrence of Arabia
so are you saying argentina would be better off without multinational corporations brining in capital and employing people?

From an historical stand point, they were. One only has to look at the countries that told the IMF to go screw themselves (the Asian tigers) and those that did what the IMF told them to do (Latin America) to see the effectiveness of prostrating yourself before rapists.

[lord of the mark]

Originally posted by chegitz guevara


But because they had been public property, they were generally sold to foreign corporations at much less than market value. This reults in a short inflow of cash, but because high interest rates have to be guaranteed under the IMF plan, that money quickly is sucked back to the 1st world. Back in the old days, the formula was that for each dollar that the 1st world put into a developing nation, it removed a dollar seventy. These days, it removes much more.

1. Most foreign direct investment is in new capital, not just sold public property. Many LDC never had that much public property. In particular the east asian tigers you cite never had as much public property as the Latin Americans did.

2. Why would they be sold at less than market value? In some cases there is corruption, but thats hardly the IMFs fault. A fair auction should get market value.

3. Does IMF set interest rates? They lend at market interest rates (correct me here, LOA) If no IMF, states would have to borrow directly from banks, or default - a strategy some advocate, but not the path taken by the asian tigers.

[lord of the mark]

Originally posted by chegitz guevara


From an historical stand point, they were. One only has to look at the countries that told the IMF to go screw themselves (the Asian tigers) and those that did what the IMF told them to do (Latin America) to see the effectiveness of prostrating yourself before rapists.

Which asian tigers had high rates of inflation in the early 90's?

[Dinner]

The IMF most certainly did not cause Argentina's problems. Argentina's problem was that they borrowed far more then they could repay. The IMF is simply the lender of last resort who loans money to countries who's credit is so screwed up that private investors won't loan to them.

Naturally, the IMF doesn't want to throw good money after bad so they insist budgets be cut so that income and expenses are balanced. Other wise another debt crisis will occur.

[Dinner]

Originally posted by lord of the mark
Which asian tigers had high rates of inflation in the early 90's?

Also Taiwan has always had a very open economy. They knew their domestic market was small fries so they worked in free trade agreements with both the US and Japan in the 1960's. Taiwan traditionally relied upon low wage, educated workers to fuel their growth.,

[Dinner]

Originally posted by Odin
No, what I am saying is that the profits go to shareholders instead of being re-invested in the 3rd world.

Without a profit motive no one invests to begin with. Offer enough profit motive and more people invest creating more jobs and paying more taxes. This isn't abstract theory this is demosratabe economics.

[lord of the mark]

Originally posted by Oerdin
The IMF most certainly did cause Argentina's problems. Argentina's problem was that they borrowed far more then they could repay. The IMF is simply the lender of last resort who loans money to countries who's credit is so screwed up that private investors won't loan to them.

.

which theyve admitted:

"The crisis resulted from the failure of Argentine
policymakers to take necessary corrective measures
sufficiently early, particularly in the consistency of
fiscal policy with their choice of exchange rate
regime. The IMF on its part erred in the precrisis period
by supporting the country’s weak policies too
long, even after it had become evident in the late
1990s that the political ability to deliver the necessary
fiscal discipline and structural reforms was lacking.
By the time the crisis hit Argentina in late 2000, there
were grave concerns about the country’s exchange
rate and debt sustainability, but there was no easy solution.
Given the extensive dollarization of the economy,
the costs of exiting the convertibility regime
were already very large. The IMF supported Argentina’s
efforts to preserve the exchange rate regime
with a substantial commitment of resources, which
was subsequently augmented on two occasions. This
support was justifiable initially, but the IMF continued
to provide support through 2001 despite repeated
policy inadequacies. In retrospect, the resources used
in an attempt to preserve the existing policy regime
during 2001 could have been better used to mitigate
at least some of the inevitable costs of exit, if the IMF
had called an earlier halt to support for a strategy that,
as implemented, was not sustainable and had pushed
instead for an alternative approach."

[Dinner]

LotM, That was a typo. It was supposed to say the IMF did not cause the problem. The problem was Argentina borrowing more then they could repay.

[lord of the mark]

Originally posted by Oerdin


Also Taiwan has always had a very open economy. They knew their domestic market was small fries so they worked in free trade agreements with both the US and Japan in the 1960's. Taiwan traditionally relied upon low wage, educated workers to fuel their growth.,

Taiwans an interesting example - an open economy that focused hard on cheap labor for comparative advantage, yet also had land reform, and, IIUC, a welfare state as well. Sort of a poster case for a third way approach to development, not really in favor with either the hardline free maret folks or the antiglobalization lefties.

[chequita guevara]

Originally posted by lord of the mark
1. Most foreign direct investment is in new capital, not just sold public property. Many LDC never had that much public property. In particular the east asian tigers you cite never had as much public property as the Latin Americans did.

No, but their governments worked hand in glove with local oligarchs, guaranteeing their loans, backing them in which ever way the corporations needed to accumulate capital.

2 Why would they be sold at less than market value? In some cases there is corruption, but thats hardly the IMFs fault. A fair auction should get market value.

What auctions?

3. Does IMF set interest rates?

In a way. Part of the deal getting the loan is requiring high intrest rates in the receiving nation's banks. Initially this wouold mean a large inflow of capital, which would be available to loan in country, but when those loans fail to be repaid, the system collapses quickly and depositers pull their money out overnight.

As for Argentina, one also needs to remember that the country is being forced to pay back loans that were taken out by the dictators, and not a democratic government. That's pretty much the case of most of Latin America.

[Last Conformist]

As for Argentina, one also needs to remember that the country is being forced to pay back loans that were taken out by the dictators, and not a democratic government. That's pretty much the case of most of Latin America.

And this proves what, beyond the economic incompetence of the average Caudillo? The IMF certainly didn't force them to take those loans.