The Empire 421

The Quiet Coup
by Simon Johnson
THE ATLANTIC MONTHLY
MAY 2009

The crash has laid bare many unpleasant truths about the United States.
One of the most alarming, says a former chief economist of the
International Monetary Fund, is that the finance industry has
effectively captured our government—a state of affairs that more
typically describes emerging markets, and is at the center of many
emerging-market crises. If the IMF’s staff could speak freely about the
U.S., it would tell us what it tells all countries in this situation:
recovery will fail unless we break the financial oligarchy that is
blocking essential reform. And if we are to prevent a true depression,
we’re running out of time.

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.

But I must tell you, to IMF officials, all of these crises looked
depressingly similar. Each country, of course, needed a loan, but more
than that, each needed to make big changes so that the loan could
really work. Almost always, countries in crisis need to learn to live
within their means after a period of excess—exports must be increased,
and imports cut—and the goal is to do this without the most horrible of
recessions. Naturally, the fund’s economists spend time figuring out
the policies—budget, money supply, and the like—that make sense in this

context. Yet the economic solution is seldom very hard to work out.

No, the real concern of the fund’s senior staff, and the biggest
obstacle to recovery, is almost invariably the politics of countries in
crisis.'
Lees verder: http://www.theatlantic.com/doc/200905/imf-advice