Global Economy in a Swirling Freefall

The mismanagement of our government and related institutions have a solution. We should outsource the government of Pakistan to the World Bank.

Moeen Qureshi did an excellent job as Prime Misnister, and we need outside professionals to come back and run our country like a business. Clearly there is money to be made for outside agencies. Benazir and Nawaz have become multimillionaires while in power. The Arthur Andersen Contract Finance Group can probably do a better job than Sharif & Bhutto at a lower cost to the country.

Think about it-it is not as wierd an idea as it sounds initially.

I totally agree with the view of the writer.

I think the reasons for which IMF was created in 1944 do not exist anymore. Petrified that 1930s-style depression and hyperinflation might again provoke war in Europe the major Western nations met and created a fixed-currency
exchange rate system.

According to the Heritage Foundation, a vocal IMF critic, 81 of the 137 countries that received IMF loans in 1965-1995 actually increased, not decreased, their dependence on the fund over time. Of the 89 less-developed countries that borrowed from the IMF in the same period, 48 are no better off, and 32 actually are poorer, than before the fund intervened. In the early 1980s, this disappointing record, combined with the conservative Reagan-Thatcher resurgence in Britain and the United States, the fund`s two largest donors, might have doomed the IMF. Instead, the US savings-and-loan crisis, the second oil shock and the Latin American debt crisis gave it new life.

Global economy in a free fall is a rather bleak forecast. Granted countries like S.KOrea Thailand and INdonesia were in deep trouble, - primarily due to lax govt regulation of the banking system.

Japan although mired in recession, is still a very resilient economy, the problem in Japan is not the commercial sector but the government, which continues to bail out the teetring industrial sector.

Russia is a basket case, primarily because social attitudes gradual change and to force a market economy down the socialist mind set has given it a severecase of indigestion. The CHinese understand this well, and have gradually eased their economy rather than the drastic propsal advocated by Western pundits.

Blaming the IMF for all third world ills, is misleading, - Granted the Bretton-Woods doctrine is wee bit obsolete, but the main purpose of the IMF is to ensure liquidity of US trading partners and to further US economic interests.

Pakistan is a prime example of a basket case, where institutional management in unheard of. Consequently we what we face in Pakiland is an econmic meltdown - quite possibly followed by civil strife. ( a la Somalia).

There is a silver lining to this bleak future, the German economy is in resurgence ready to power the European continent away from over-regulation with the introduction of a common monetary policy. As
the Europeans deregulate their economy, - The US
is finally reapaing the benefits of the REagan era deregulation in the banking/insurance/transportation & telecommunication sectors. While the growth fueled in the 90`s was primarily through technological innovation, and corresponding productivity increases, - the growth in the next 10 years will be fueled by the information age hitting the consumers and the consolidation of hugh enterprises aliging themselves to counter global competition.

The present state of international economic planning, and its unfortunate consequences is the result of out-dated institutional policies. The IMF`s policies have not changed since its inception. It is a continuation of the Breton Woods conference and its decisions to restore order in post World War 2 world. That was fifty years ago, no wonder the implementation of those policies does not work miracles in today`s world.

Manzur

Your article correctly describes the current scenario of the world economy. It is very well written.

But I tend to disagree with you in blaming the IMF or WB for all the downfalls in the global economy.

Yes, you are right that due to IMF`s rigid and biased policies some economies in Asia have suffered but there is no denial to the fact that Asia itself is much to blame too, actually more to blame.

Corrupt politicians, defaulting institutions, and lack of long term planning brought down the so called `Asian Tigers`. As for Russia, with the economy as big as the Netherlands and armed to the teeth, I would agree with you that giving them more than $30 billion dollars in aid was a U.S./IMF way of saying, ``Here don`t sell your nukes to Iran etc, we`ll keep your corrupt politicians warm!``

Now as for Japan, it has always been a policy of Japan to aggressively drive into Western markets (dumping etc). The government financed the conglomerates to establish business in the west....well if you start from bad policy of lies and deceit....you end up the same way.

Japan went through boom or bull years during the early 80`s when the U.S. economy was in a `minor recession`. They could not maintain the bull due to the fact that too much money had been given to defaulting institutions whose sole purpose was to `Finish competition in the west`.

Well, the western countries are no fools either, the companies here proved their products are as good or even better then their Japanese counterparts and sales increased (example: Automobile Industry!)

So, as you can see that IMF/WB/U.S. sure is responsible for screw-ups in some countries, but most have just axed their own feet!

Anwar