Sunday, April 28, 2013

Anwar Ibrahim, IMF and Asian Financial Crisis...

It's been a long time since I've written anything in this blog....but lately, I feel the urge to post something related to Anwar Ibrahim....but I won't talk about him regarding his sex scandal or personal life...I just want to point out certain stuff based on paperworks and quotations from the people related closely to economic field.....

first,I would present this excerpt written by the author Nile Bowie (2013) (a Russian political analyst) taken from his article about Anwar Ibrahim, after he was sacked by Dr.M.

"During his political tenure, Anwar was sacked for implementing IMF austerity measures while Mahathir spearheaded Malaysia’s recovery from the 1997 Asian financial crisis through currency controls and protectionist measures. After his political fall, he served as Chairman of the Development Committee of the World Bank and IMF in 1998, and later chaired the Washington-based Foundation for the Future, a US-funded think-tank established by Elizabeth Cheney, the daughter of the former US Vice President. Anwar enraged many in Muslim-majority Malaysia when he stated that he would support a policy to protect the security of Israel in an interview with the Wall Street Journal – a stark contrast to the ruling coalitions’ firm stance in support of Palestine. Anwar’s unique credentials and close ties to the US political and financial establishment make him undeniably preferred in Washington"
Nile  Bowie

Noticed that I highlight the part that he is working with IMF...It gives the impression that he's doing a good job....he makes us proud right....

So what does the Chairman of the Development Committee of the World Bank and IMF do?

"The Committee's mandate is to advise the Boards of Governors of the Bank and the Fund on critical development issues and on the financial resources required to promote economic development in developing countries. Over the years, the Committee has interpreted this mandate to include trade and global environmental issues in addition to traditional development matters."

In other word, they advise the Bank and the Fund regarding the conditions that borrower countries had to abide in exchange for the loan....this also include the governance aspect and sovereignty of the country....

Martin Feldstein (1998) (  Professor of Economics at Harvard University and President of the National Bureau of Economic Research) wrote 
"But the IMF's role in Thailand and Indonesia went far beyond the role that it played in Latin America. Instead of relying on private banks and serving primarily as a monitor of performance, the IMF took the lead in providing credit. In exchange, it has imposed programs requiring governments to reform their financial institutions and to make substantial changes in their economic structures and political behavior."

Now another excerpt from Pradumna B. Rana, (2012) ( an associate professor in Nanyang University, Singapore) about the root cause of Asian Financial Crisis.

"The root cause of the Asian crisis was the weaknesses of domestic banking sectors, which had recently been liberalised and encouraged to borrow from abroad.
 In such a crisis, the appropriate remedy would have been to inject liquidity in the economy through easier monetary and financial policies – exactly the opposite of what the IMF did, at least initially"

And now the excerpt taken from Paul Krugman's (1998)( an economist expert, professor at Princeton university and a winner for Nobel Memorial Prize in Economic Sciences) paperwork about IMF failure to remedy Asian Financial Crisis

"Macroeconomic stabilisation prescribed by the IMF not only failed to address the root cause of the crisis but, also pushed the countries into deep recessions"

C. Randall Henning and Mohsin S. Khan (2011) (C. Randall Henning, visiting fellow, has been associated with the Institute since 1986. He is Professor of International Economic Relations at the School of International Service, American University. Mohsin S. Khan has been a senior fellow at the Peterson Institute for International Economics.)  wrote in their journal

  “Asian countries were convinced that the Fund misdiagnosed the problems the countries were facing and imposed excessively harsh and inappropriate conditions for the financing it was providing. Despite the fact that the Fund later on acknowledged the mistakes is has made during the Asian financial crisis, and changed its views, the damage had been done and the mistrust of the Fund by the Asian countries lingered”.

The last one is the excerpt from the article written by Joseph Stiglitz (2000) (the Chief Economist at the World Bank during the crisis)

“IMF experts believe that they are brighter, more educated, and less politically motivated than the economists in the countries they visit.  In fact,…. the IMF staff….frequently consists of third-rank students from first-rate universities….Quite frankly, a student who turned in the IMF’s answer to the test questions “What should be the fiscal stance of Thailand, facing an economic downturn?” would have gotten an F.”

I'm sure many of you would ask....what does all these has something to do with Anwar put it simply Anwar Ibrahim is part of the team...IMF made the financial crisis in Asia becoming worse than it already was...

Here is the timeline of Asia (plus Russia + Brazil) financial crisis...

In Malaysia, back in 1998...the interest rate for the loan imposed by the bank was 14% minimum...many people were out of job, the unemployment rate spiked....many local company had to default and foreign company pack their stuff and run from was hard....but thanks to the Dr.Evil, we were not desperate enough to beg for IMF mercy....

If you are willing to look the other way about Anwar's personal's up to you...but if you turn a blind eye towards his affiliation with IMF back then, and how he also contributed to the plunging of Indonesia, Thailand and Philippines economy and trust him to run this country....good luck....may we be prosper as US would be in 20 years to come....


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