by Simon Johnson
One thing you learn rather quickly when working at the International Monetary Fund is that no one is ever very happy to see you. Typically, your “clients” come in only after private capital has abandoned them, after regional trading-bloc partners have been unable to throw a strong enough lifeline, after last-ditch attempts to borrow from powerful friends like China or the European Union have fallen through. You’re never at the top of anyone’s dance card.
One thing you learn rather quickly when working at the International Monetary Fund is that no one is ever very happy to see you. Typically, your “clients” come in only after private capital has abandoned them, after regional trading-bloc partners have been unable to throw a strong enough lifeline, after last-ditch attempts to borrow from powerful friends like China or the European Union have fallen through. You’re never at the top of anyone’s dance card.
The reason, of course, is that the IMF specializes in telling its clients what they don’t want to hear. I should know; I pressed painful changes on many foreign officials during my time there as chief economist in 2007 and 2008. And I felt the effects of IMF pressure, at least indirectly, when I worked with governments in Eastern Europe as they struggled after 1989, and with the private sector in Asia and Latin America during the crises of the late 1990s and early 2000s. Over that time, from every vantage point, I saw firsthand the steady flow of officials—from Ukraine, Russia, Thailand, Indonesia, South Korea, and elsewhere—trudging to the fund when circumstances were dire and all else had failed.
Every crisis is different, of course. Ukraine faced hyperinflation in 1994; Russia desperately needed help when its short-term-debt rollover scheme exploded in the summer of 1998; the Indonesian rupiah plunged in 1997, nearly leveling the corporate economy; that same year, South Korea’s 30-year economic miracle ground to a halt when foreign banks suddenly refused to extend new credit.
A week or so ago Peacenik gave a link to Matt Taibbi's article, The Big Takeover, in the Rolling Stone. That article is the best explanation that Peacenik has read about what happened at AIG. Today, Peacenik links to The Quiet Coup by Simon Johnson. Simon Johnson was a chief economist at the IMF.
Peacenik thinks anything longer than 200 words is long. Both of these are long pieces. This one describes how the U.S has become a banana republic. And unhappily it forecasts a depression worse than the Great Depression--unless. Unless what? There is no unless. We are in the march towards an even greater depression, and there is nothing anyone in this world, including Peacenik can do about it except stock up on lima beans, post on Punditman until the electricity runs out and then head for the compound. So when will it hit? How will it hit? Peacenik thinks it has hit. But if you watch American Idol, and enter hockey playoff pools, and kibbitz at the pub, and spend your last bit of credit, you might be able to ignore it. For a bit longer. In the meantime, Peacenik is getting prepared. Are you?
