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Sunday, 8 March 2009

Soeharto's government delivered 21 years of 7 per cent compound growth. It takes a gigantic fool to mess that up. But the IMF MESSED IT UP. The end result was the biggest fall in GDP in the 20th century. That dubious distinction went to Indonesia. And, of course, Soeharto lost power.

The asian financial crisis was a capital account problem unlike the Latin American crisis which is a current account crisis.In this kind of crisis, the central cause is that the government has run impossibly big debts.The Asian governments that went to the IMF for emergency loans - Thailand, South Korea and Indonesia - all had sound public finances.
An injustice has been done to those countries.

Terminal damage has been done to the credibility of the IMF, with seismic geoeconomic consequences: "The IMF is the gun that can't shoot straight. They've been making a mess of things for the last 20-odd years, and the greatest mess they made was in east Asia in 1997-98, so much so that no east Asian state will put its head in the IMF noose."


Now that they have run impossibly big debts, we see what?

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