This story about the IMF rescue package for Ukraine (second of many, after Iceland) quotes Timothy Ash, head of emerging-market research at Royal Bank of Scotland Group Plc in London as saying
`The money is only half of the issue, conditionality is key. We hope the fund is maintaining its push for a more flexible exchange rate, far- reaching reforms in the banking sector and more privatization.”
Mr Ash, just returned from a six-week holiday on Mars, was reading from his prepared boilerplate script and had yet not been advised of the recent nationalisation of the Royal Bank of Scotland.
(found in today’s AFR)
John Quiggin 
While JQ laments the push for privatisation of Banks I lament the push for floating exchange rates. We should have learnt our lesson by now. And we should have closed the IMF long ago, it is a morph monster doing stuff way beyond it’s original brief and doing it baddly. We should be floating interest rates not currencies.
That is priceless!
I reckon even bacteria would show a greater ability to learn from experience.
I wonder how much Mr Ash gets paid for saying stuff like that.
Spiros, there is actually plenty of evidence that bacteria are indeed capable of learning. Not sure about bankers.
Has the IMF hasn’t learned anything since Stiglitz’s damning critique? Have they learned from how conditionality made the Asian financial crisis worse? Have they have not learned anything from the current financial crisis? When the IMF stuffs up, it is not them that have to deal with the consequences, it is the poor in countries subjected to the IMF’s conditionality. We have a moral hazard problem.
Peter – in some ways it used to be worse. IMF staff used to be insulated from their own fiscal policy advice. If they recommended higher taxes then the IMF adjusted their salaries to compensate for the higher taxes. They used to doll out austerity advice without suffering from it’s effect. The IMF should be abolished.
It’s only the fear of my boss wanting an explanation that stops me from ROFL.
The IMF has stated:
“Yes, bold action is needed,’ says the International Monetary Fund (IMF).
It’s ready to lend to countries in dire need of capital.”
Nobody is to blame. It’s happening because
“[banks are] paralysed for now by fear and distrust.�
The IMF is a laugh. It reminds me of “The Laughing Policeman” compassion.
Bagging bankers — how original.
why does it upset you so much joseph
how do you defend such parasites is what i wonder?
The Royal Bank of Scotland Group, one of the so-called “jewels” of the Scottish economy, has beneficial shareholdings in at least 128 companies incorporated in tax havens, according to its annual return.
Included in its portfolio are 62 firms in the Cayman Islands, 29 in Jersey, 11 in Guernsey, seven in the British Virgin Islands (BVI) and four in the Bahamas.
sundayherald.com/news/heraldnews/display.var.2463294.0.wish_you_were_here.php
Another lazy theory from the neo-Kenysians, they are wrong so that makes us right.
And it seems you are already trying to steal Hayeks and Mises Cycle theroy. You know the one that predicted the 29 and 08 Crash, not just the Bubbles, but the system failures?
from WaPo
We Forgot Everything Keynes Taught Us
“`The price level is not a leading, but a lagging, indicator. Asset bubbles can coexist with a stable price level, even while the rest of the economy is starting to slide into depression. And this, in essence, is what Keynes believed was happening in the late 1920s. . . Every financial crash is different in detail — today’s started in the banking system, not the stock market — but the anatomy of all is surprisingly similar: A speculative frenzy, triggered by some technical innovation such as mortgage-backed securities, that collapses when reality — in the form of more sober valuations — kicks in.'”
Seems the IMF fancies printing its own money.
Comedy becomes Tragedy.
IMF may need to “print money” as crisis spreads
if you financial alchemists put your mighty brains to the cause of creating a rational economic system, we wouldn’t have to ‘laugh’ as bankers explain why the system is basically ‘sound’.
socialism and democracy, possums, is the path to salvation. you have grasped the efficacy of regulation in the operation of automobiles and airplanes, you require badges of competence from doctors and plumbers, why then should the financial system be in fact a non-system, unfettered by planning or regulation?
a rhetorical question, of course- i quit trying to modify religious beliefs some time ago. but a system that needs to be re-set at frequent irregular intervals is a non-system. believers who insist that capitalism works if just [insert qualification here] are mere religious fanatics, since [qualification] never happens.
al loomis,
If (and it is if) the price of avoiding dictatorship is occasional financial turmoil, then that is a price I am more than comfortable paying. Living my life as a serf to a State is far worse than occasionally having to worry about where I deposit my funds.
Is a serf to ‘the market’ such an improvment?
Personally, I’d prefer a flesh and blod dictatorship over the irrational and invisible ‘market forces’. I’m with al on this – it’s all a bit too quasi-religious for me.
There’s a Very Very Serious!!!(VVS) double irony here that any of us can chuckle at any financial statement by anyone now. That’s because fiat money, the unit of account is fast approaching near meaningless now. I should say many fiat currencies here and their meaningless exchange rates and interest rates. Take the AUD which has gone from buying 104 Yen to around 57 in 3 months, a currency on which the Japanese can earn no interest for saving locally and such a movement in which will see Toyota workers despair at selling the product of their labour to Australians. That is, apart from hybrids to anointed ones who can guarantee as much paper as is required in any day, while that same ‘guarantee’ sees around 65000 of their compatriots suddenly guaranteed nothing. Makes you wonder why they don’t copy the US anointed ones and borrow more paper at close to zero interest to satisfy all. Apparently the more paper you borrow the cheaper it gets to borrow which is a marvellous new arrangement, given that many people exchange things you want for it. Deja vu as I recall my young daughter and her friend while we’re all at the checkout many years ago, excitedly telling each other how they both want one of those plastic cards I’ve got when they grow up.
As the billions turn into trillions in a blur that boggles the neurons, I wake up to find the Dow has jumped 11% with such child-like excitement. Comforting watching that item on telly last night about networking and how I like you are only ‘six steps away’ from such largesse, although who would have thunk it, that when Clinton decided all those years ago it was a good idea to begin to communally lend houses to people you wouldn’t dream of doing yourself, we’d all be just six steps away from sub-prime ourselves. It would appear now that all fiat money is just six steps away from being rooted in anything of serious value any longer. I’ll leave markets and regulators to work that out for themselves now.
I used to think Mogambo was taking the piss at stocking his Mogambo Bunker of Doom with tasty victuals, drink, guns, ammo and gold but not any more, although I’m not even sure about the gold bit any more. I’ll stick with the deadly serious stuff like guns, ammo and sustenance now.
Right… so capitalism’s busted, Marx was right, socialism is the answer.
Oh dear… if socialism is the answer then we’re clearly asking the wrong question.
Yes – the financial system is currently in a mess. But its a touch melodramatic to say that it won’t get sorted out and capitalism is dead.
The world needs capitalism. Bankers might be disliked (alot at the moment) – but next time someone comes up with a bright idea for a business, guess who they’ll go have a chat with.
Michael,
You are no more a serf to the market than you allow yourself to be. That is the beauty of a free market – within the limits of your capacity you get to choose what you want, when you want. Under socialism that gets chosen for you.
“..next time someone comes up with a bright idea for a business, guess who they’ll go have a chat with.”
The Barter Card rep and their local black-market gun dealer?
observa,
What are you going to buy the “…deadly serious stuff like guns, ammo and sustenance…” with? The “meaningless” fiat money? Oops – not quite meaningless, is it.
With those entries in the banks’ computers and double quick before everyone else is just six steps away from me.
the beauty of a free market Andrew is that it is an illusion, a mirage in the hot desert,
and the only limit to its brilliance is your imagination …
not only that, but if you imagine a free market of such exquisite beauty and perfection that it inspires millions,
you get a big prize and go to all the parties
As opposed to a socialist who tells everyone that working for the reswt of your life for the glory of the State is much more important than going to parties. Give me that, anytime.
“Meanwhile in a galaxy far, far away …� Apt.
the major difference Andrew,
is that anyone with half a brain understands that the marxist/communist dream evaporated horribly a long time ago,
most left leaning people are realistic about the failure of that god,
the utopian vision of the late twentieth century was the private sector, efficient-market based system hwere some invisible force balanced all information and interests perfectly,
most stooges of this utopian vision are still crooning like some harpees on a brutal shore, as the ship is torn to pieces,
just like communism, the idea in the hand of fanatics pushed to extreme ends in death, misery and this time probably the destruction of the biosphere,
you chose the wrong side andrew, face it
I fail to regard freedom as being the wrong side, smiths. I will let you choose yours. If you choose the freedom to submit, so be it.
Andrew, here are some freedoms not available under the free market:
– not to be surrounded by ludicrous destructive 4WD’s driven by homicidal yuppie-rednecks when I’m trying to cycle quietly around my inner-city neighbourhood
– not to have all coastal regions of Australia destroyed by overdevelopment
– as a low-income renter, to have a home (ie. somewhere where I am permitted to think of as domicile for more than 6 months at a time)
– (too innumerable to list)
Pure ‘free-market’ thinking has nothing to do with non-notional freedom of individuals. Like all political philosophies, it’s a collective choice to privilege some goods (freedoms amongst others) over others, for some individuals over others. As such it’s just one of a spectrum of thousands of possible choices in a state-space of goods distributions. It might be perfectly defensible to value the particular distribution of goods favoured by ‘free markets’, but this is no more than one such choice amongst others, and has no more intrinsic connection with ‘individual freedom’ than any other.
smiths,
I think you need to be aware that when some of us talk of the beauty of ‘free markets’ we implicitly assume we are talking of ‘real free markets’ rather than phoney nominal ones. ie the transactions are real ones with real tradeoffs, not funny money ones. I admit we’re having a wee bit of a problem visualising the former just at present but we’re ever the optimists. You might say nearly as optimistic as those who believe that very soon they can overlay a global CO2 ETS and all the derivatives that sail with it, over all you see before you now. A global network of hubs and fiat money flows you’ll note, that have never been overseen by more sets of regulations and regulators in living memory. Chuck more regulations, guarantees and fiat money at it all you reckon?
Andrew, you should have pointed out how Porsche owners just struck a blow for the little bloke against them evil short sellers (I’ll be good John promise!)-
‘VOLKSWAGEN briefly became the world’s biggest company by market value overnight, as short sellers caught betting on a price drop with borrowed stock scrambled to find shares after a buying spree by Porsche.
Short sellers desperate to close their positions paid as much as €1005 ($1989) a share during the session following Sunday’s news that there was less than 6 per cent of VW voting stock still floating in the market.
At that price Volkswagen’s voting stock was worth €296 billion, or more than the $US343 billion ($531 billion) market capitalisation of Exxon Mobil.’
observa,
nowhere in anything i have written here have i advocated more regulations, guarantees and fiat money,
as i have stated in earlier threads,
when you have a network of tax havens and shadow banking, coupled with political institutions that effectively merge with big companies, the media and banks, regulation is meaningless
ironically the flaw is the same in both system,
humans,
all are equal in the market, except some are more equal than others
Crispin,
What do you understand by “…within the limits of your capacity…”?
.
so, smiths, you have never called for more regulation. Really, or was that just you putting your words into his mouth.
BTW – for all your hand waving over the current system, you have never said what it is you actually want. As usual, a critic, not a creator.
andrew the link doesnt work,
i must admit i was quite excited to see what it was i had previously written that contradicts what i just wrote,
also what is hand waving?
is it a cross between hand-wringing and flag-waving?
C’mon neoliberal claqueurs. You’ve gotta do better than that.
One of your leading mouthpieces, Timothy Ash of the RBOS, has made a prize prat of himself and all you can do is point and yell “don’t look here! Look over there!”
Seriously now fellahs, how would you write Timothy’s speech so that it takes due notice of the horrible condition of state serfdom under which he now labours as a villein of the British Government?
Or do you think that poor Timothy was tortured into making his neoliberal speech by those very slavemasters in an attempt to cause us to forget that we are all vassals now?
If so, it looks like the ruse has worked on you patsies.
This ‘capacity’ isn’t a natural kind, but is a set of attributes rated highly by ‘free market’ proponents (and no doubt differently by other political philosophies). So despite the nominal obfuscation, the ‘free market’ promotes not human freedom, but a particular set of goods that are valued by its proponents, for everybody.
John, according to some wright-wing commentators the blame for the current financial crisis around the globe is the result of regulators falling asleep behind the wheel. But the facts speak for themselves, the current global mess is the result of thirty years of neo-liberal reforms and deregulation.
Andrew @#19.
I think there’s more to it than a contrived choice between socialist dictatorship and the ‘free market’.
Thankfully, we are freed of utopian visions of socialism, and now await delivery from the chains of the utopian ‘free market’ delusions.
Crispin,
Bollocks, to put it mildly. People get paid according to what they can get and what they want to put in. There is no claque of “free market proponents” setting prices or anything else anywhere. That would run directly contrary to what a “free market” is.
If you want to see a system that does what you describe, look under “socialism” in any dictionary.
.
Michael,
An economy that taxes its citizens nearly 50% of their income is hardly an ideal of deregulation.
“That’s because fiat money, the unit of account is fast approaching near meaningless now.” -Observa
Well can I have some of your’s then?
“Bollocks, to put it mildly. People get paid according to what they can get and what they want to put in. There is no claque of “free market proponentsâ€? setting prices or anything else anywhere.” – Andrew Reynolds
“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” – Adam Smith
Michael, if central bankers have the social monopoly on the polyester of the realm and blow it by deliberately targetting 2-3% annual reduction in its purchasing power, as well as allowing so much of it to be printed to facilitate asset price booms and their inevitable busts, then expect me to be their most virulent critic. I have no truck with their facilitation of taxation by stealth any more than their like facilitation of plunder by carpetbaggers. It is real savings and investment that will lift material well-being, rather than an environment that fosters something for nothing casinos.
Regulators of all political persuasions around the world have been guilty of deliberately fuelling this giant ponzi scheme and their collective remedy for past incompetence is more of the same unless you’ve been asleep of late. They all have the powers and the regulations to cease such behaviour, but by their apparent incompetence, have created a massive crisis of confidence in fiat money. However, perhaps I’m judging them too harshly and they really have a secret long term plan in doing that. They’re all closet Austrians perhaps?
Ask yourself a rhetorical question Michael. Why is it $100 under the mattress must always buy 2-3% less in a year’s time than 2-3% more? It aint that hard Michael, but the latter is totally beyond the experience of anyone here I’ll wager. OTOH perhaps I’m just one of those imaginative, dreamer types from a galaxy far far away..
Ask yourself a rhetorical question Michael – if Observa is correct and roughly 99.999999% of the world’s economists, business professionals and politicians are wrong why is he wasting his time posting on internet forums when with the vast incalculable wealth he should have accumulated by now he could be sailing the South Pacific in his megayacht while being simultaneously serviced by a bevy of courtesans?
observa, i lay my head on the block: ‘fiat’ money is the only kind that’s worth anything. if national treasurers get it right, there’s just enough fm to do the nation’s business and maintain stability of prices. if..
what other money can do this? certainly not gold, gold supply is notoriously volatile…
as for you who equate socialism with dictatorship, i will be generous and commiserate with you about the quality of your education. there have been state capitalist dictatorships, they must have terrified your mother when carrying you.
but sweden is a socialist nation with a better track record than oz, in just about every area of freedom save freedom from taxation. it’s nobody’s idea of repressive dictatorship.
then there’s switzerland, bless their little snobbish hearts. something quite close to democracy, fundamentally capitalist, but a good social safety net, peaceful but actively engaged in making the world a better place. the contrast with the oz oligarchy should be a cause of shame to ozzians who continue voting for gundog governments while public hospitals and schools spiral into 3rd world levels.
Andrew, surely there isn’t anyone left in the 21st C who believes that our political choices come down to ‘socialism’ or ‘the free market’?
As for the “bollocks”: if you could validly operationalise ‘human freedom’ (scare quotes a requirement here), and compare any two countries on your scale, it would be unlikely to correlate any better with a measure of ‘free-market’ goodness than with a measure of some other political choice. Some freedoms and other human goods happen to be enhanced by what falls out of a market, and some diminished. Because ‘free market’ philosophy is an ideology rather than a theory, its proponents will respond by denying the value of the diminished goods, either by privileging a fiat notion of ‘human freedom’ above them, or by using an a priori notion of ‘capability’ to locate causes in the individual (it wouldn’t take you more than an hour or two of research to find out quite how empirically unmotivated such a notion of ‘capability’ is). ‘Free market’ ideology is just a particular choice of distribution of human goods, and has no privileged relation with the real free choices of actual human beings.
Deleted for policy violation again
And 99.999999% of the kings horses and 99.999999% of the kings men wonder why they can’t put Humpty together again 😉
Damocles @40,
If you are happy with that quote from Adam Smith I challenge you to read on. He goes on to demolish most of the edifice that social democrats have come up with even before it was more than partially developed. Go on, read it. I dare you. I doubt you would have the intellectual duplicity to stand up for that quote and then diswagree with the context.
BTW – thanks for bringing that up. I know that this (selective) quote is a favourite of people on the left. Pity that as soon as you actually read the context it destroys your case.
.
Crispin,
Ultimately the question is one of information. Resource allocation can be done in many ways. I tend to believe that the most efficient way (as well as the ione allowing the greatest freedom) is to allow the individuals affected by their own decisions the latitude to make those decision as far as possible on their own. To me, people are intelligent and able to decide their own life path by themselves – they have the best information about what they want to do, better than any centralised bureaucracy could ever possibly have. If you want to believe that it is better to take roughly half of all people’s wealth away, waste some of it and then give it back to them with strings attached, then who really is believing in freedom and the people, and who is attempting to run their lives for them?
.
observa,
Perhaps you should wonder why M1 is used at all. In the world today why do you just include bank deposits? Are money market deposits as liquid – or even more so? What about lines on a credit card – they can be used in just the same way. What, precisely, is “money”? Be precise, please.
You mean we should all be relaxed and comfortable that M1 is only the tip of the iceberg Andrew? The US has given up on publishing M3 I hear.
The overarching lesson is that mild inflation is now viewed as some benign drug like THC. Like THC regular and prolonged use has some nasty consequences. We can see it in those quintessential words of Mr Camillo-
“There will be a hell of a lot of money available and this is a great opportunity,�
relax observa,
andrew says banks dont create money out of thin air