|THE LAST STAND|
November 24, 1998
The IMF put together a $41.5 billion deal to help Brazil defend its economy against the spreading global economic crisis. Asia's and Russia's economies have already been crippled. Will the IMF plan work this time?
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Marvin George, Sierra Vista, AZ:
This is before the fact as they said to help Brazil out its crisis. You can't stop the movement of money if you want to have an open world economy. You need the investor of your country as well as foreign investors and this includes the US. If the politics get out of hand then the investor's will take action and force the necessary change as means of taking out their money. Is this the way of the new world order in which the investors keep societies under control?
Paul Warnow, San Francisco, CA:
The bail out will only dampen the degree to which the economic crisis impacts the world. Structural deficiencies exist, within the global economic community, which cause extensive leakages, increased income and resource disparities, reduced multipliers, increased destabilization, and increased economic failures.
Regardless of what the global economic community does, there will be a downward convergence of real wages; real median wages within industrialized nations will decline, while real median wages within emerging nations will only marginally increase.
The question is the degree to which the convergence will be declining.
If the global economic community properly addresses these issues, the decline will be dampened and the duration will be diminished. But, if it fails to address these issues, the decline and duration will be more sustained.
Robert M. Pearson, Medford, OR:
IMF bailouts are more to help big banks than they are to help the peoples of these countries. I for one am sick and tired of using my tax dollars to keep the largest banks in the world from losing money. They made the loans let them eat the costs.
Ted Adams, CA :
Any country that has graft so much a part of it's system cannot expect that the political faction not to be corrupt Pouring money into an environment of this type to solve the financial problem can be likened to pouring gasoline on a fire. Until we can learn to live together ethically, how does it do the world a benefit to prop up corrupt governments?
Frank Vogl, Washington, DC :
The danger is that of over-genealization. The key to emerging markets is differentiation. Your question, by placing the Asian crisis and Russia alongside Brazil suggests that you fail to recognize the fundamental differences. First, the longer-term view --- foreign direct investment into Brazil reached a record of $17 billion in 1997, it was as UNCTAD (www.unctad.org) said last week "the champion" in Latin America and the new World Investment Report (not reported on PBS) prediced that the total FDI inflow would be $22 billion this year. In other words, a lot of long-term corporate investors have a lot of confidence in Brazil (data for Russia, or Indonesia are miserable by comparison and for many good reasons). One good reason is that investors around the world see Brazil as considerably less corrupt than Russia and Indonesia (see www.transparency.de for the Transparency International Corruption Perceptions Index 1998) and that makes the IMF task a lot easier -- again the corruption issue gets short shift on the NewsHour...why? To understand differentiation even more, may I suggest that you look to some of the most somber and soundest of international investors, such as former Trasury Secretary Nicholas Brady and former World Bank Managing Director Richard Frank, now respectively CEO and COO of Darby Overseas Investment Limited in Washington thast is investing in private equity in key companies in Brazil, notably in the packaging, books, hotels areas. Then you want to look very carefully at the differentiation that sophisticated investors are making in the shorter-term field of global investing. In this regard you could do a lot worse than get some data on inflows, reserves and bond spreads from Kevin Barnes at the Institute of International Finance in Washington DC and see its latest comments on globalisation and financial reform from its Board (talk with Citigroup Vice Chairman Bill Rhodes for example in New York) and its management (talk with Charles Dallara, former Assistant Treasury Secretry and now heading IIF -- www.iif.com)....in sum, look carefully and closely at the diverse trends and developments in the emerging markets---differentiation is at the core of globalization and your viewers need more and sounder information on this issue...meanwhile, Charles Krause's piece on Friday night's NewsHour was excellent.
Donna Sandin, Reston, VA:
As a translator for 20 years of Brazilian current events and other documents, I have serious doubts that Pres. Cardoso can keep the promises his economic team has made. He missed his big chance during honeymoon period when first elected 4 years ago. Petty and personal interests prevail in Congress and at local level. My hopes have been raised and dashed many times in recent years (some of which I spent in Brazil).
Tom Jeffries, Madison, WI:
Brazil will survive with or without the IMF support. The funds are more to save outside investments than to salvage the Brazilian economy. The Brazilian people have many resources and an amazing resiliance.
Eugene Hunter, Sun City, AZ:
I don't understand sending money to all these countries to bail them out. We have people on the streets and hungry children here at home. Who will bail you out if you out if you overspend and get into financial trouble?
Robert R. Page, Houston, TX:
It seems that the main thrust of the IMF is to protect the investors who made the bad investment decisions. Why not let the people who made the bad decisions fail. Then let people who have not failed round up the surviving assets at fire sale prices and start anew. Better yet why not empower as many local people as possible. It seems that many IMF programs make the poor people suffer and reward the bad decision makers.