IMF, ad nauseum

mondongo · Mar 4, 2004

Yes....another IMF post. As reported in diariolibre.com, via DR1 News, University of Miami Professor Miachael Connolly states his opinion on IMF intervention. It is basically what some of us have been saying here on DR1 for a long time.

http://diariolibre.com/(g4etpnrhn5fjo0uk4j1dci45)/aspx/article.aspx?id=6655

Here is an excerpt from the interview:

"?Cu?l es la responsabilidad de los acreedores cuando prestan a un pa?s que no les garantiza un retorno?

Los inversionistas asumen la ayuda externa de Rusia y cuando el pa?s no les puede pagar, el FMI le entrega US$9,000 millones y ellos sacan su dinero. El FMI no ha rescatado a los inversionistas en el caso de Rusia ni en el caso de Argentina. Los acreedores deben correr el riesgo de no pago del pa?s. Ellos pueden calcular cu?les son las recetas del Gobierno. Preguntarse: ?me pueden pagar? Por desgracia, muchas veces dicen: bueno, si no pagan, seremos rescatados por el FMI.

?Cu?l es entonces el papel del FMI?

El dinero del FMI entra por una puerta y sale por la otra. El papel del FMI era hacer pr?stamos de corto plazo en casos de emergencia y poner condiciones. Pero en los ?ltimos a?os han hecho pr?stamos para salvar a los inversionistas extranjeros que hicieron pr?stamos que sab?an de antemano que no pod?an ser pagados. Pas? con Argentina y con Rusia. Ellos han creado un riesgo moral, porque est?n jugando el papel de prestamista de ?ltima instancia, que no es el suyo.

?La intervenci?n del FMI no produce un ?salvataje? de las econom?as en crisis?

En algunos casos, cuando el gobierno es muy corrupto, el dinero sale directamente hacia Suiza. En otros casos, cuando el dinero se demora, sale directamente hacia Washington para pagar a los acreedores. En la mayor?a de los casos el dinero sale del pa?s. El dinero m?s bien produce en los gobiernos una falta de voluntad politica. Es un juego. "

BTW: yesterdays auction by the Central Bank was NOT the first time that they have issued 50%+ certificates. They have been doing this for over a month now. Furthermore, the highest interest rate they have paid is 60%.

Porfio_Rubirosa · Mar 5, 2004

Does this mean that Mongongo and I get tenure at UM also? Go Canes!

mondongo · Mar 6, 2004

Some DR1 posters will eventually have to surrender their "the IMF and international banks have no culpability" binky.

Texas Bill · Mar 6, 2004

mondongo said:
Yes....another IMF post. As reported in diariolibre.com, via DR1 News, University of Miami Professor Miachael Connolly states his opinion on IMF intervention. It is basically what some of us have been saying here on DR1 for a long time.

http://diariolibre.com/(g4etpnrhn5fjo0uk4j1dci45)/aspx/article.aspx?id=6655

Here is an excerpt from the interview:

"?Cu?l es la responsabilidad de los acreedores cuando prestan a un pa?s que no les garantiza un retorno?

Los inversionistas asumen la ayuda externa de Rusia y cuando el pa?s no les puede pagar, el FMI le entrega US$9,000 millones y ellos sacan su dinero. El FMI no ha rescatado a los inversionistas en el caso de Rusia ni en el caso de Argentina. Los acreedores deben correr el riesgo de no pago del pa?s. Ellos pueden calcular cu?les son las recetas del Gobierno. Preguntarse: ?me pueden pagar? Por desgracia, muchas veces dicen: bueno, si no pagan, seremos rescatados por el FMI.

?Cu?l es entonces el papel del FMI?

El dinero del FMI entra por una puerta y sale por la otra. El papel del FMI era hacer pr?stamos de corto plazo en casos de emergencia y poner condiciones. Pero en los ?ltimos a?os han hecho pr?stamos para salvar a los inversionistas extranjeros que hicieron pr?stamos que sab?an de antemano que no pod?an ser pagados. Pas? con Argentina y con Rusia. Ellos han creado un riesgo moral, porque est?n jugando el papel de prestamista de ?ltima instancia, que no es el suyo.

?La intervenci?n del FMI no produce un ?salvataje? de las econom?as en crisis?

En algunos casos, cuando el gobierno es muy corrupto, el dinero sale directamente hacia Suiza. En otros casos, cuando el dinero se demora, sale directamente hacia Washington para pagar a los acreedores. En la mayor?a de los casos el dinero sale del pa?s. El dinero m?s bien produce en los gobiernos una falta de voluntad politica. Es un juego. "

BTW: yesterdays auction by the Central Bank was NOT the first time that they have issued 50%+ certificates. They have been doing this for over a month now. Furthermore, the highest interest rate they have paid is 60%.

Mondongo

Your post would be very interesting if I could read Spanish. How about doing all us expats who don't the favor of a translation? It surely would be helpful.
Before you castigate me for living here and not speaking the language, bear in mind that I'm 77 and the ole brain just isn't as absorbant as it was when I was 18-30.
I appreciate your posting, but by the time I get through stumbling through it, Codetel has kicked me off the system yet again.

Texas Bill

PICHARDO · Mar 7, 2004

OK this may make not sense after I translate it but for all it's woth here it goes:

"?Which it is the responsibility of the creditors when they lend to a country that doesn't offer a return guarantee?

The investors assumed the external aid of Russia and when the country couldn't pay them, the IMF delivers US$9,000.000.00 and they recap their money. The IMF has not rescued the investors in the case of Russia neither in the case of Argentina. The creditors should run the risk of non payment from the country. They can calculate which are the (economy) prescriptions of the Government. To be asked: ?can they pay me? Unfortunately, many times they answer: good, if not, we will be rescued by the IMF.
Which is then the role of the IMF?

The money of the IMF enters from one door and leaves by the other. The role of the IMF was to make loans of short term limits in cases of emergency and to put conditions. But in recent years they have done loans to save the foreign investors that made loans that they knew beforehand could not be paid. It happened with Argentina and Russia. They have created a moral risk, because they're playing the role of lender of last instance, that is not their function.

The intervention of the IMF does not produce a ?salvage? of the economies in crisis?

In some cases, when the government is very corrupt, the money leaves directly toward Switzerland. In other cases, when the money delays, it leaves directly toward Washington to pay to the creditors. In most cases the money leaves the country. The money more than usual produce in the governments a lack of political will. Is a game. "

I hope you can get an idea of what this guy was talking about, because to me it seemed to contradict himself in two points as he explained the inner workings of so called lenders and the activities of the IMF.

PICHARDO · Mar 7, 2004

This turns out to be a load of fresh mixed with some old manure, the IMF doesn't bail out investors for the sake of saving them from total ruin but in fact bails out the country's economy before it collapses entirely, in which case the IMF and several other countries economic interests could be affected immensely.

Take Argentina as an example, when the IMF refused to bail out the collapsing Argentian economy every investor and lender saw their loan's interests and even the capital go up in smoke, the Gov. couldn't provide for all loans and capital interests at all, in turn you had an economy stalled to a grinding halt bringing the sources of income plummeting down just as a house of cards blown away in seconds, the hole porpoise of capital gain it's to keep the earnings coming on a timely manner for the planned amount of time, otherwise how can you pay dividends to all your stock holders and expect those same holders to keep their liquids in your investment fund to achieve the maximum R.O.I and capital gain that were the intended goals in the first place, lenders want to squeeze every penny possible from your pocket not ruin you so you can't repay the loan and in turn they lose capital gain on the interests, simple math tells you this.

The IMF was set to provide countries with a viable influx of funds for direct upgrades on the infrastructures which in turn could spell a foment in the industrial development of such country, resulting in the re-investment of such funds to help a maximize those developing industries into the world market to achieve more bang for the buck for international trading and investors, in black and white.

Since most underdeveloped countries suffer from acute rampant corruption the funds provided by the IMF find their way into the pockets of these "circle of corrupts" yet some of it does end up at their targeted goals and do in fact keep giving these "failing economies" a wing and a prayer to hold on a few more miles before they inevitably crash and burn themselves up in flames.

"Don't shoot the messenger but the reason behind the bad news"

Texas Bill · Mar 7, 2004

PICHARDO said:
This turns out to be a load of fresh mixed with some old manure, the IMF doesn't bail out investors for the sake of saving them from total ruin but in fact bails out the country's economy before it collapses entirely, in which case the IMF and several other countries economic interests could be affected immensely.

Take Argentina as an example, when the IMF refused to bail out the collapsing Argentian economy every investor and lender saw their loan's interests and even the capital go up in smoke, the Gov. couldn't provide for all loans and capital interests at all, in turn you had an economy stalled to a grinding halt bringing the sources of income plummeting down just as a house of cards blown away in seconds, the hole porpoise of capital gain it's to keep the earnings coming on a timely manner for the planned amount of time, otherwise how can you pay dividends to all your stock holders and expect those same holders to keep their liquids in your investment fund to achieve the maximum R.O.I and capital gain that were the intended goals in the first place, lenders want to squeeze every penny possible from your pocket not ruin you so you can't repay the loan and in turn they lose capital gain on the interests, simple math tells you this.

The IMF was set to provide countries with a viable influx of funds for direct upgrades on the infrastructures which in turn could spell a foment in the industrial development of such country, resulting in the re-investment of such funds to help a maximize those developing industries into the world market to achieve more bang for the buck for international trading and investors, in black and white.

Since most underdeveloped countries suffer from acute rampant corruption the funds provided by the IMF find their way into the pockets of these "circle of corrupts" yet some of it does end up at their targeted goals and do in fact keep giving these "failing economies" a wing and a prayer to hold on a few more miles before they inevitably crash and burn themselves up in flames.

"Don't shoot the messenger but the reason behind the bad news"

Pichardo;

You have explained very succinctly the oroginal purpose of the IMF and it's evolution in recent times. I have, on a couple occasions tried to do what you have done, but somehow couldn't get through to the intended recipients of the post.

Thank you for your very enlightening post. Maybe some posters will now look behind the headlines and start placing the blame in the correct place instead of a lot of inuendo about the foreign lending organizations.

Texas Bill

Porfio_Rubirosa · Mar 7, 2004

1. If you were an investment bank, would you have lent money to Hippo (without collateral) if the IMF did not exist?

2. Did the IMF and World Bank do Argentina a favor by not "bailing it out"? Was an even larger collapse caused by the fact that the IMF and World Bank had bailed out Argentina so many times before?

3. Will a large sum of the IMF's money be used by Hippo to try to buy reelection?

4. Will the rest go to Miami and Switzerland?

5. In the series of "bail outs" of the DR to come, will the IMF and World Bank demand that more and more of the DR's assets be sold to US and European investors?

If you answered these questions honestly, then you could not have failed to have seen the inescapable truth about the IMF.

Texas Bill said:
...Maybe some posters will now look behind the headlines and start placing the blame in the correct place instead of a lot of inuendo about the foreign lending organizations.
Texas Bill

Jeez I'm sick of the blame game. I was going to write a metaphor about shared responsibility, but Texas and company would just write back that it's ALL the fault of the incredibly economically marginalized Dominicans and other poor nationalities who should stand up and fight their corrupt governments. What Texas and others don't dispute is that those corrupt governments are, through the IMF and other multilateral lenders, essentially backed by the full faith and credit of the New World Order.

Hey, Texas, you forgot to add the part about how anybody who disagrees with you must be a Casto-loving communist. You're slipping!

Texas Bill · Mar 8, 2004

I'd answer you, but we would end up "OFF THREAD" again and I promised Robert I wouldn'd do that or be the cause.

Thanks, but no thanks.

Texas Bill

Porfio_Rubirosa · Mar 9, 2004

Off topic?

Off topic? The topic is the IMF!

Oh, the part about you and others demeaning anyone who disagrees with you. Yea, you're right. That's off topic.

Someone really must try to explain how a quasi-governmental organization like the IMF can meddle in another country's affairs and then not be even partially responsible for the intended and unintended consequences of that meddling.

PICHARDO · Mar 9, 2004

Porfio_Rubirosa said:
1. If you were an investment bank, would you have lent money to Hippo (without collateral) if the IMF did not exist?

Yes I would indee since international commerce law estipulates and provides a vast arsenal of ways to recap capital plus lost interest, which was in fact the the only guaranteed nations had to obtain loans(read Cuba and it's default getting it to halt all international loans and investments for quite a long time)

Porfio_Rubirosa said:
2. Did the IMF and World Bank do Argentina a favor by not "bailing it out"? Was an even larger collapse caused by the fact that the IMF and World Bank had bailed out Argentina so many times before?

Yes indee they did! the collapse of the Argentinian economy was due in major part to the insecurity and ill-divised recovery program put in place by the Argentinian Gov. and the rest fell in the shoulder of a mass of corrupted bank officials whom for a very long time were allowed to cook the books to cover for what we brand as an "Enron" today.

Porfio_Rubirosa said:
3. Will a large sum of the IMF's money be used by Hippo to try to buy reelection?

What do you think pinky? are you pondenring what I'm pondering?

Porfio_Rubirosa said:
4. Will the rest go to Miami and Switzerland?

Dominicans enjoy their loot at home, why else do you think he buys all those guayaberas...

Porfio_Rubirosa said:
5. In the series of "bail outs" of the DR to come, will the IMF and World Bank demand that more and more of the DR's assets be sold to US and European investors?

Funny that you mention that... but who in their right minds will follow on the trail of Edenorte and Edesur???? are you eating the green plantains without peeling them first???!!!

Porfio_Rubirosa said:
If you answered these questions honestly, then you could not have failed to have seen the inescapable truth about the IMF.

Munch, crunch, chew, chew...
Yep those Green plantains taste better without peeling first, now was that a pink elephant flying by me or what?..

mondongo · Mar 10, 2004

PICHARDO said:
....the IMF doesn't bail out investors for the sake of saving them from total ruin but in fact bails out the country's economy before it collapses entirely

You are afflitcted with a terminal case of naivitee.

mondongo · Mar 10, 2004

If you want to discuss Argentina and the IMF, do a DR1 search on my previous posts on the subject.

http://biz.yahoo.com/rb/040309/economy_argentina_11.html

For starters, read this story out today about Argentina and IMF. Argentina is refusing (good for them) to pay the bondholders. They are only offering 25 cents on the dollar. They refuse to use their reserves to pay the debts. Only when the IMF offers to make another loan of US$13.3B, does Argentina make a payment of US$3B.

What does this tell you? It tells you that the IMF and the rest of the lenders are scared. They are trying to sweet talk Argentina into repaying 1/2 of the debt, instead of the 1/4 existing offer.

There is no international law that forces Argentina to repay. Where did you get that silly idea?

PICHARDO · Mar 10, 2004

mondongo said:
You are afflitcted with a terminal case of naivitee.

Maybe I should cash in all my stocks and save them into the FDIC box to make them safe, you should learn a bit more about the inner workings of the FMI or IMF as you know it, since you think of it as an entity of one.

mondongo · Mar 10, 2004

Are either of you paying attention to what is happening in the DR? When Mejia decides to pay for fuel....when Mejia decides to make payments to creditors....where are these monies coming from?

Read the newspapers. Read how Mejia takes out loans to pay for electricity....to pay the interest and principal on the sovereign notes.

Ask yourself this question: through taxes and loans, the total intake by the Mejia govt over the last 4 years is over US$10Billion....thats right, over US$10Billion....where has all this money gone?

Has it gone to fix the electrcity problem? Has it gone to build schools and educate the populace? Has it gone to fix roads?

As Prof Connolly correctly alludes,most of this money gone to the pockets of the PRD. He correctly postulates that a lot of this money has gone outside the borders of the DR.

PICHARDO · Mar 10, 2004

mondongo said:
If you want to discuss Argentina and the IMF, do a DR1 search on my previous posts on the subject.

http://biz.yahoo.com/rb/040309/economy_argentina_11.html

For starters, read this story out today about Argentina and IMF. Argentina is refusing (good for them) to pay the bondholders. They are only offering 25 cents on the dollar. They refuse to use their reserves to pay the debts. Only when the IMF offers to make another loan of US$13.3B, does Argentina make a payment of US$3B.

What does this tell you? It tells you that the IMF and the rest of the lenders are scared. They are trying to sweet talk Argentina into repaying 1/2 of the debt, instead of the 1/4 existing offer.

There is no international law that forces Argentina to repay. Where did you get that silly idea?

Let me impart some economy lessons here:

A country owns their monetary individuality yet they rely on the international market to obtain goods or services that otherwise they cannot afford to provide or manufacture themselves at home, in turn these goods or services are payable in international transactions with an acceptable form to all parties included in the trade of such goods or services, if country A has to provide for monetary goods to country B, then it shall be recognized that country A needs to obtain such funds they don't issue themselves from the open market{read world market} at face value{read country's A monetary rate at time of purchase} therefore it has to provide for a collateral of such funds it provides to obtain the foreign monetary liquid to cancel it's debt for goods or services in the form of Gold, Silver, etc to the entity which receives country's A issued monetary tool{read paper bill or note}, this collateral is held for a period until country A can provide the reserve{read US$ for the common or Euro} to re-cap their monetary collateral, when a country defaults it's payments their reserves which are used as collateral are embargoed until the country in question reaches and agreement with the collectors, otherwise you have a country like Argentina which depleted their national reserves and are now in the process of recapping those to achieve a lower inflation rate and a robust monetary tool.

If you can't understand it the way as I had to put it, then I'm afraid you slept too much in you economy classes in college...

mondongo · Mar 10, 2004

PICHARDO said:
Let me impart some economy lessons here:

A country owns their monetary individuality yet they rely on the international market to obtain goods or services that otherwise they cannot afford to provide or manufacture themselves at home, in turn these goods or services are payable in international transactions with an acceptable form to all parties included in the trade of such goods or services, if country A has to provide for monetary goods to country B, then it shall be recognized that country A needs to obtain such funds they don't issue themselves from the open market{read world market} at face value{read country's A monetary rate at time of purchase} therefore it has to provide for a collateral of such funds it provides to obtain the foreign monetary liquid to cancel it's debt for goods or services in the form of Gold, Silver, etc to the entity which recieves country's A issued monetary tool{read paper bill or note}, this collateral is held for a period until country A can provide the reserve{read US$ for the common or Euro} to recap their monetary collateral, when a country defaults it's payments their reserves which are used as collateral are embargoed until the country in question reaches and agreement with the collectors, otherwise you have a country like Argentina which depleted their national reserves and are now in the proccess of recapping those to achieve a lower inflation rate and a robust monetary tool.

If you can't understand it the way as I had to put it, then I'm afraid you slept too much in you economy classes in college...

PICHARDO, have you considered taking English classes?

Edited to Add: Look, PICHARDO, I am giving you analysis based on facts. Do you have anything factual to contribute?

PICHARDO · Mar 10, 2004

I don't have syntax under my belt as of yet, so don't kick my balls about it!
I would post in Spanish if I knew most of the Forum posters had the ability to read it as well as I do in my mother tongue, yet I find myself at the mercy of my self taught street English, please bare with me as I try to paste my humbled opinions and ideas here to engage in this dynamic medium so many outstanding and prolific minds that so eagerly and with the tension of an epee under ones chin impart a tongue in cheek to those of us who dared challenge the opium of this sanctimonious message board and cohorts.
:bunny:

PICHARDO · Mar 10, 2004

I do study world economy and trade relations in my free time, or as much as I can afford every time I visit the NYC public library at Bryant Park.

I analyzed the pre-condition and results of the Argentinian economy collapse with great passion as I could identified many symptoms currently present in the DR economy as of today, to say one can understand completely what happened and all the symptoms of the Argentinian House of cards it's a fallacy, yet all points of view are valid always that you don't deviate from the nucleus of the disaster, by this I mean you can't blame Argentina neither can you blame the foreign pressure that weighted the situation even more to the point when it collapsed, to say it happened because the IMF didn't bail them out it's totally a statement void of substance, not one thing can be said to support the view that such loans and guarantees would had avoided the collapse, worst yet it would had only prolonged it for a few more months maybe a year or two, but the end result would had been a country unable to replenish it's reserves at all in any given circumstance.

It's the facto a complex and sometime at mathematical odds situation, you can't keep providing to an economy that won't start-up no matter how much money you throw at it and at the same time you can't expect to salvage what little is there to begin with, kind of a catch 22 when you think of it.

George W. Bush called it "Fuzzy Numbers", William J. Clinton Called it "A Balancing Act", I myself call it "It's the economy stupid!" and leave it at it.

Like I said before it all depends on your point of view.

As for your question on considering English classes, heck yes! I want to!

Texas Bill · Mar 10, 2004

Porfio_Rubirosa said:
Off topic? The topic is the IMF!

Oh, the part about you and others demeaning anyone who disagrees with you. Yea, you're right. That's off topic.

Someone really must try to explain how a quasi-governmental organization like the IMF can meddle in another country's affairs and then not be even partially responsible for the intended and unintended consequences of that meddling.

What you have failed to acknowledge all along is that the "meddling" has been at the invitation of the affected country! NO lending agency can FORCE a country to borrow beyound it's ability to repay what is borrowed! Organizations which lend credit(s) (either locally or internationally) will often place requirements on the borrower as to how those credits are to be used and/or accept, at face value, what the borrower SAYS he will use the credits for. If the borrower uses those credits for other items, then who is the cause of a default?? The lender or the borrower?? That, my friend is the point I've been trying to make! The lending agencies haven't hoodwinked the borrower, but rather the other way around! And I submit that the lenders are a stupid bunch if they continue to lend monies to incumbent administrations who have lied to them in the past. I really don't think that there is a conspiracy as your post suggest. There is a probability that a second (and subsequent) round of loans will have some rather severe stipulations attached, and I wouldn't blame the lenders at all for doing so. If the borrower can't, or won't clean his own house of dirt and filth, that isn't the fault of the lender!
In the case of the Doninican Republic(and other ""south of the border" countries), it is and has been a problem for many years; the administrations keep lying to the lenders and keep putting the money in their pockets to the detriment of that country's economy. I submit that if the lending organizations didn't keep shelling out, the entire "south of the border" economy's would collapse and thus place the world economy in jeapordy of the same event.
You can piss and moan all you want to, but the fault in all this mess lies in the individual administration of each political entity addresses. If you would take YOUR blinders off, you would see that!
I think it's safe to say that the fault is in the area of 50/50, not 100/0 as you imply.

Texas Bill

IMF, ad nauseum

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One Dominican at a time, please!

One Dominican at a time, please!

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One Dominican at a time, please!

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One Dominican at a time, please!

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One Dominican at a time, please!

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One Dominican at a time, please!

One Dominican at a time, please!

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