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Aug 24, 2013 | Yahoo.com
JACKSON HOLE, Wyoming (Reuters) - Emerging market nations can be adversely affected by large swings in investment and, therefore, must develop tools to control credit flows or risk relinquishing any independent monetary policy, a study shows.
These findings were presented at the Kansas City Federal Reserve's monetary policy symposium at Jackson Hole, which highlighted the global impact of the unconventional monetary policy of the United States and other major central banks.
Many countries, including India and Brazil, have recently experienced steep sell-offs in their currencies, linked in part to the prospect that the Fed might soon dial down the pace of its bond-buying monetary stimulus.
The Jackson Hole study highlights a shift in conventional economic thinking, which used to champion an open flow of money between countries, regardless of the consequences.
"Macroprudential policies are necessary to restore monetary policy independence for the non‐central countries," wrote Helene Rey, professor at the London Business School. "They can substitute for capital controls, although if they are not sufficient, capital controls must also be considered."
That, said the study, is because countries with floating exchange rates, the dominant global practice, would be abdicating their control over interest rates and credit creation from sources outside their control.
"Independent monetary policies are possible if - and only if - the capital account is managed, directly or indirectly, via macroprudential policies," Rey said. These can take many forms, including efforts to restrain credit growth in particular areas of the economy.
"Since, for a country, the most dangerous outcome of inappropriately loose global financial conditions is excessive credit growth, a sensible policy option is to monitor directly credit growth and leverage in each market," she said.
Terrence Checki, executive vice president of the Federal Reserve Bank of New York, charged with commenting on the paper, pushed back against the notion that rich-country central banks should start paying more attention to the international effects of their policies.
He said that, in keeping with conventional wisdom at the Fed, monetary policy should be aimed at domestic objectives.
"It's not clear we can control the financial cycle very well with monetary policy," Checki said.
(Editing by Vicki Allen and Gunna Dickson)
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August 13, 2013 | The American Conservative
ArizonaBumblebee:
I could make a strong argument about the benefits to mankind of imperial regimes. Certainly this was the case with the Han Chinese, Roman, Ottoman, and British empires. But we would be amiss if we didn't briefly address the downsides to empire.
Maintaining empire is an expensive proposition. I am not familiar with the Chinese dynasties, but I do know that the Roman, Ottoman, and British empires all eventually became financial basket cases. In virtually all of these instances imperial overreach was a major factor. Does this sound familiar? Read David Stockman's latest book to get an idea of how America's warfare state is leading it to financial ruin.
Second, all imperial regimes become arrogant and smug in their attitudes and actions toward outsiders and internal dissenters, which result in constant wars or domestic repression. Britain and France fought numerous wars over the centuries as did the Mongols and the Han Chinese and the Romans and the Persians. Wars and imperialism go hand in hand.
Finally, the idea that the United States is not an imperial power is preposterous on its face. Ask Evo Morales, whose presidential plane was forced down recently on the rumor he just might have Mr. Snowden on board. Or ask the leaders of countries in Latin America who have had to endure in recent decades death squads, resource exploitation, and invasions directed by the Washington elites. Or ask former President Morsi of Egypt, if you can locate him. The idea that America is not an imperialist power is amazing rubbish!
James Canning:
Yes, how convenient to omit discussion of the idiotic and illegal American invasion of Iraq in 2003.
Reinhold:
I don't think this article denounces American Umpire strongly enough for its clear triumphantilism and exceptionalism; it's a shameless case of propaganda and imperial apologetics. As is usual for propagandists, Hoffman claims that it's really the ones who CRITICIZE American imperialism who are contributing to Islamist terrorism, and not American imperialism itself; those who claim the latter are anti-American and, evidently if not directly, pro-Islamist. It's a sick joke and shouldn't be taken seriously as scholarship; it is not only a selective memory, but a deliberate falsification and misdirection of memory.
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Finally, journalists have started criticizing in earnest the leviathans of Silicon Valley, notably Google, now the world's third-largest company in market value. The new round of discussion began even before the revelations that the tech giants were routinely sharing our data with the National Security Agency, or maybe merging with it. Simultaneously another set of journalists, apparently unaware that the weather has changed, is still sneering at San Francisco, my hometown, for not lying down and loving Silicon Valley's looming presence.
The criticism of Silicon Valley is long overdue and some of the critiques are both thoughtful and scathing. The New Yorker, for example, has explored how start-ups are undermining the purpose of education at Stanford University, addressed the Valley's messianic delusions and political meddling, and considered Apple's massive tax avoidance.
The New York Times recently published an opinion piece that startled me, especially when I checked the byline. WikiLeaks founder Julian Assange, the fugitive in the Ecuadorean Embassy in London, focused on The New Digital Age, a book by top Google executives Eric Schmidt and Jared Cohen that to him exemplifies the melding of the technology corporation and the state.
It is, he claimed, a startlingly clear and provocative blueprint for technocratic imperialism, from two of our leading "witch doctors who construct a new idiom for United States global power in the twenty-first century." He added, "This idiom reflects the ever closer union between the State Department and Silicon Valley."
What do the US government and Silicon Valley already have in common? Above all, they want to remain opaque while making the rest of us entirely transparent through the capture of our data. What is arising is simply a new form of government, involving vast entities with the reach and power of government and little accountability to anyone.
Google, the company with the motto "Don't be evil", is rapidly becoming an empire. Not an empire of territory, as was Rome or the Soviet Union, but an empire controlling our access to data and our data itself. Antitrust lawsuits proliferating around the company demonstrate its quest for monopoly control over information in the information age.
Its search engine has become indispensable for most of us, and as Google critic and media professor Siva Vaidhyanathan puts it in his 2012 book The Googlization of Everything,
"We now allow Google to determine what is important, relevant, and true on the Web and in the world. We trust and believe that Google acts in our best interest. But we have surrendered control over the values, methods, and processes that make sense of our information ecosystem."
And that's just the search engine.
About three-quarters of a billion people use Gmail, which conveniently gives Google access to the content of their communications (scanned in such a way that they can target ads at you). Google tried and failed to claim proprietary control of digital versions of every book ever published; librarians and publishers fought back on that one. As the New York Times reported last fall, Paul Aiken, executive director of the Authors Guild, summed the situation up this way: "Google continues to profit from its use of millions of copyright-protected books without regard to authors' rights, and our class-action lawsuit on behalf of US authors continues."
The nonprofit Consumer Watchdog wrote to the attorney general on June 12th urging him "to block Google's just announced $1 billion acquisition of Waze, developers of a mobile mapping application, on antitrust grounds... Google already dominates the online mapping business with Google Maps. The Internet giant was able to muscle its way to dominance by unfairly favoring its own service ahead of such competitors as Mapquest in its online search results. Now with the proposed Waze acquisition, the Internet giant would remove the most viable competitor to Google Maps in the mobile space. Moreover it will allow Google access to even more data about online activity in a way that will increase its dominant position on the Internet."
The company seems to be cornering the online mapping business, seems in fact to be cornering so many things that eventually they may have us cornered.
In Europe, there's an antitrust lawsuit over Google's Android phone apps. In many ways, you can map Google's rise by the litter of antitrust lawsuits it crushed en route. By the way, Google bought Motorola. You know it owns YouTube, right? That makes Google possessor of the second and third most visited Websites on earth. (Facebook is first, and two more of the top six are also in Silicon Valley.)
Imagine that it's 1913 and the post office, the phone company, the public library, printing houses, the US Geological Survey mapping operations, movie houses, and all atlases are largely controlled by a secretive corporation unaccountable to the public. Jump a century and see that in the online world that's more or less where we are. A New York venture capitalist wrote that Google is trying to take over "the entire fucking Internet" and asked the question of the day: "Who will stop Google?"
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March 19, 2013 | The Kremlin Stooge
marknesopMeanwhile, the situation in Cyprus remains a cliffhanger, with some sources suggesting the legislation is unlikely to pass.Greek sources – I love those guys, but they sometimes let their emotions run away with them and offer courses of action that came entirely out of their own heads – suggest Gazprom might bail out Cyprus. As if, with that tool Anastasiades running the show and apparently doing exactly what he is told by the IMF. Did nobody learn anything from watching Ukraine's experience with the World Bank and IMF following the Orange Revolution? This is getting formulaic, folks; sweep a democratizer to power, lend him a whole pile of money and let him blow it on whatever he likes, then say oh, by the way, you know you have to pay that back and it's due Friday. The IMF, for what it's worth, is apparently still backing the seize-depositors'-funds deal.
It should also be lost on nobody that Cyprus went in the hole owing to its disastrous exposure to bad Greek debt.
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Mar 7, 2013 | Voice of Russia
Dr. Hamdy Hassan, Director of the Center for African Future Studies based in UAE, speaks on the modern-day colonialism and the dominance of the West over new independent states in Africa and in Asia.
There's been a conference held in France this week and the conference was focusing on neocolonialism and anti-colonialism. And I found it a little bit ironic that the French should hold this kind of event, though they are now closely engaged in Mali. So, do you think that the issue of neocolonialism is really hot on the agenda or perhaps it is a more theoretical stuff?
If we talk about the theoretical issue of the different aspects of colonialism, you have the ancient type of colonialism and the neocolonialism which is widely used after the liberation movement in Asia and Africa and it meant of this kind of economic and political influence or dominance of the European powers over the new entities or new independent states in Africa and in Asia. But now the issue, if it is relevant to Africa in practice, we have a new issue which we describe as a new scramble for Africa. So, it reminds us about the first scramble for Africa in the 19th century when the European powers met in Berlin and many European capitals decided to divide Africa among themselves. Now, the new type of scramble is for mineral resources.
So, you have newcomers, you have China, you have this new economic powers like Brazil and so it is not only the Europeans this time, but the new factor here, regarding the ancient European powers like Britain and France, is that they try to create a new atmosphere to militarize this new scramble for Africa. This is why we can see why the West intervened militarily in Libya and now France decided to intervene in Mali. So, you can see this as an attempt to militarize the competition among these new powers and ancient powers to dominate the natural resources in Africa.
If you take the case of Mali, so Mali is important because of uranium. It is very rich in mineral resources and in Europe now they are using uranium in energy, in Europe they are turning it into atomic energy to produce electricity and power. So, now we can understand why France intervened in Mali. And last month, in February, the Obama Administration decided to send 100 military personnel to build a permanent military base in Niger in order to use drones against what they call the terrorist suspects in the area.
So, I guess we can see a new Cold War where each party tries to maximize its benefits on the land using whatever means they can use. So, the umbrella here is the war against terror, the umbrella here is to intervene to support the indigenous people or the local people. But the main goal of the Western powers is to guarantee their access to natural resources in Africa. Here we call it - it is not a mere theoretical neocolonialism, it is a new division of power in Africa again.
Sir, but what can African governments do to prevent this kind of scenario or is it now too late to talk about that?
The difference between the first scramble process in the 19th century and the second scramble for Africa in the 21st century is that they use African military as agents, because now if you look at the case of Mali, they are not intervening directly in many cases. They use the African military to intervene and they support them logistically and financially because the Africans, they cannot do it alone. So, they need the Western support in their national politics. In this is one of the main differences – they use the Africans themselves in order to achieve their goals.
Number two, there is a kind of coordination between the Western, when I say the Western, I mean Europe and America, in order to share the African cake. So, it is not a matter of individual partition of Africa - this part belongs to France, or the other one belongs to Britain - but in the same area they can have a kind of influence sharing. So, you have the French administration and the British administration coordinating their efforts in order to guarantee or support their goals in Mali. So, it is not a unilateral issue as it was before. Now you have this kind of gentlemen's agreement between the European powers in order to coordinate their advice in this new scramble for Africa.
If you look at the European Union it itself and its stance on the conflict in Mali - what they are looking for, for example with illegal immigration from Africa or fighting drugs and terror, they are looking at the conflict from their own perspective, from their own interests, not for the sake of the people of Mali or Africa. This is what is going on in Africa and this is why I do prefer, like the others, to call it a new scramble for Africa, because it is not a neocolonialism, but it is reminding us of a traditional case of colonialism or of partition of Africa.
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Amazon.com
the horrible consequences of empire for Asia May 5, 2003I'm of two minds about Chalmers Johnson's Blowback. On the one hand, it's probably the best critical introduction to US foreign policy in Asia. On the other hand, Johnson too often chooses polemics over nuance and has a somewhat confused approach to imperialism and what to do about it.
The first thing to know is that both the title and subtitle are misleading. This is a book almost exclusively about US imperialism in East and Southeast Asia. It rarely explores other regions or what's usually termed blowback. What Johnson does do is much more valuable - he explains America's military and economic policies toward Asia without getting stuck in the stultifying prose of security experts or the bewildering technical jargon of economists.
It's not a pretty picture. We see the destructive legacy of American bases in Okinawa and elsewhere, the US complicity in the South Korean military's atrocities on Cheju (after World War II) and Kwangju (1980), the US arming and training of Indonesia's death squad military, the relentless push for a militarized Asia by the American military-industrial complex, and the horrible consequences of American economic priorities. We also learn a good deal about the recent history and politics of the region's major states.
Johnson's strength is in recounting the specificities of US foreign policy; he's much weaker at an overall understanding of imperialism. He seems to think that American policymakers have naively built up the economic strength of their Japanese, Korean, and now Chinese competitors by focusing on maintaining their own military power. This is an old critique, resting on the notion that imperialism hurts the imperialists.
But Johnson is relying on the idea that "America" is a unitary entity, so that the hollowing out of industry hurts "America", not specific social groups within the country. In reality, US foreign policymakers work to advance the interests not of "America", but of those same business elites that have benefited from turning Asia into the world's sweatshop and undermining the unions that built their strength on American industry. American economic imperialism is not a failed conspiracy against the people of Asia, but an alliance between American elites and their Japanese, Korean, Indonesian, and Chinese counterparts - against the potential power of the working majority in all those countries. But it's more complex than that, too, since the US seeks to prevent the emergence of an independent military challenge (especially China, but also Japan) to its Asia hegemony while seeking to expand the power of American commercial interests in the region, even as it tries to keep Asian elites happy enough with the status quo to prevent their rebellion against it.
In other words, the US system in Asia is more complicated than Johnson conveys, and defending America's mythical "national interests" will never address its fundamental injustices. While Johnson seems to have abundant sympathy for the people of Asia, his nationalist framework prevents his from proposing the only real challenge to American hegemony: a popular anti-imperialist movement that crosses the barriers of nation-states.
Realistic: Why countries hate us, what we need to change November 16, 2001
"Blowback" is an important and timely critique of America's over-extended and obsolete empire not from a moral perspective but from practical considerations of the nation's future well being. The term "blowback" is derived from a CIA reference to American foreign policy decisions that generate unforeseeable, negative consequences. For example, following the Gulf War in 1991, the United States stationed more than 35,000 soldiers in Saudi Arabia to deter any further hostility from Iraq. An unexpected consequence of this decision was the sudden fomenting of intense hatred toward America on the part of radical Islamic fundamentalists including Osama Bin Laden.Johnson argues that while most great powers exploit their empires, America, is actually exploited by its own. During the Cold War the United States justifiably sought to create a buffer of Pacific satellite nations to cope with the threat of Soviet expansion in Asia. While this may have been an effective deterrent, it also came with a price. According to Johnson, the United States effectively bribed Japan with favorable economic conditions that fueled phenomenal growth in that country while largely destroying the manufacturing base in America. Although this may have been a prudent strategy during the Cold War, Johnson asks why the United States continues to sacrifice its productivity and living conditions at home in order to maintain a troop presence in Asia.
Where American troops were once stationed abroad as a buffer against Soviet expansion, they are now used to influence the countries they occupy or to train governments in counter insurgency and political repression. Johnson points out that in several cases American intervention on behalf of a repressive government merely turned American protectorates into implacable enemies. Johnson sites Vietnam and Iran as two examples of this failed strategy, and he warns of impending identical results in Indonesia and Saudi Arabia. The tragedy of America's misguided foreign policy, according to Johnson is that while it drains enormous resources from America, it fails to provide the nation with beneficial results.
Instead of continuing its obsolete Cold War strategy, Johnson calls on the United States to reevaluate its strategic requirements and to formulate a new foreign policy. An honest evaluation of American objectives according to Johnson would probably result in the recall of most American troops stationed abroad. Johnson foresees enormous resistance to such change from the military, which is the chief beneficiary of America's global military deployment. Johnson also argues that America is much better off accepting and working with China's inevitable economic surge and its increasing political status than attempting to contain the inevitable.
To anyone who is wondering why citizens of many foreign countries hate the United States, this book is a must read. In case after case, Johnson demonstrates the negative impact of American military bases on local communities such as Okinawa and parts of the Philippines where, rape, crime, noise, disease, and environmental contamination are routine byproducts of American military presence.
Add to this American complicity in atrocities such as the Kwangju massacre (South Korea 1980) or the inept reorganization of foreign economies by American controlled institutions such as the IMF and the World Bank and foreign hostility toward the United States ceases to be a mystery. Written prior to the terrorist attacks of September 11th, this book accurately predicts increasing blowback against the United States both at home and abroad in response to its late 20th Century foreign policy. The American challenge in the 21st Century according to Johnson involves dismantling the American empire and coping with blowback.
This book is also a must read for self-styled Machiavellians, or believers in Real Politic. Johnson effectively argues that blowback is not a unique American phenomenon but is the product of expansionist nations in general. To this day, for example, Japan must tread carefully in its political dealings with nations such as South Korea and China that retain bitter memories of Japanese conduct prior to the end of the Second World War.
To argue that American imperialism in its current form is realistic and necessary is to ignore historical examples that demonstrate the failure of empires that displayed similar arrogance, aggression, and a distinct inability to comprehend the perspective of their protectorates.
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Amazon.com
Donald L. Conover:
Tour de Force! February 23, 2007
Tour de Force! That's the only way to describe Pepe Escobar's remarkable achievement with Globalistan: How the Globalized World Is Dissolving into Liquid War. In page after page, Mr. Escobar demonstrates his remarkable erudition gained in a peripatetic career, spanning the caves of Tora Bora to the slums of Sao Paolo and Mumbai; from the halls of venality to the palaces of the gluttonously wealthy; from conversations with forgotten Pentagon warlords to raps with Brazilian gang lords.
Our Neocon leaders seem to think the rest of the World is frozen in situ, waiting for them to hatch their nefarious schemes. Globalistan shows us the consequences of such a blindered [or should I say "blundered"] attitude.
Producers for the talking heads of "mainstream" media will have to have this book. It is the one volume necessary to make sense of our churning humanity in the 21st Century. A quick scan can provide the background on every crisis from Iran to "Chindia"; from Shiiteistan to the Gazprom Nation; from PetroEurostan to the Bush White House.
Escobar demonstrates why it is true that if we don't find ways to spread our prosperity around the World, the have-nots will come and take it away from us with guns and bombs and box cutters. All of the walls and fences cannot protect the United States, Europe, and Saudi Arabia from overwhelming illegal immigration. Weapons and fences doom us, like the Texans at the Alamo. Eventually they will be overrun by 3 billion human beings living in abject poverty, but with access to the latest episodes of "24" and "Sleeper Cell," unless we help the Mexicans achieve their dreams of Texas in Mexico.
A special ring of "Hell" is reserved for the mainstream media, who trumpet terrorist propaganda and minor successes around the World with lethal effect; providing Al Qaeda and other miscreants with the raw material for their recruiting campaigns. Jihad Inc. is a Neocon invention, designed to manipulate American ignorance with World class fear mongering.
I found Escobar's analysis of Hugo Chavez, President of Venezuela, most compelling. He points out that Chavez's position is that Venezuela can't develop nuclear energy or the United States will bomb it away, so he has decided to fight with pipelines. Indeed, pipelines are a major theme of Globalistan, criss crossing, as they do, some of the most formidable territory on the planet, both because of their location and the brigands that guard them [or not].
What came to my mind about Mr. Escobar, after reading his encyclopedic presentation of the dark under side of global venality, was Albert Einstein's quote once applied to another, "Men will scarce believe that such a one as this ever walked upon the earth." Pepe Escobar's Globalistan is an achievement without parallel!
A Reader:
A Must Read, July 5, 2007
This book describes in apt detail the minimalist morality and crass materialism of the glitzy and high tech age of mass consumerism and "disposability" that has come to characterise the world since the world's second incarnation of "British" power, the US Imperium, won the cold war back at the end of 1991 and took on its final form which people commonly refer to as "neo-con". This initiated the present violent epoch of chaos characterised by the typical but merciless Anglo robber capitalism at its peak that can be summed up as a "dog-eat-dog" creed of selfishness, greed, apathy, cynicism and devil-may-care ignorance. Its policies have caused social decay and explosive upheaval and instability leading to breakdown of order in backward countries and cultures - as we are witness to here in Pakistan. The Anglo powers and the West in general support corrupt westernised ruling elites in Third World countries that suck the blood of their own people, but who maintain a local status quo favourable to the interests their Western patrons and masters. For this, these toady elites are awarded a place at their masters'grand table. The West once even supported militant Islam as a geopolitical tactic (against their Soviet rivals) - till 2001 that is, when it turned around and bit its master like some diseased dog on 9/11. That is why Al-Qaeda exists today. Nowadays, as a result of all these policies and actions, within a short span of just fifteen years, the world has ended up as a dangerous, explosive and uncertain place which is on the boil as never before in recorded Human history.
It is a sad fact that nowadays the only effective opposition to Anglo-American "globalism" comes from raving Islamist fanatics. It is clear that globalism as it exists is destined for destruction. We only hope that it doesn't take the world, as well as modern (European) mankind's positive technological, scientific and cultural achievements along with it. This globalism is surely the forerunner of the future system of all mankind; but it is defective and will need destruction and replacement after the rapacious Anglo powers are defeated, shorn from it and done to the dust. Then only can a true Eurasian-African-American global dispensation of the whole of humanity replace it. The summary on globalism which I have given above is fully documented in the book under review, Globalistan by Pepe Escobar. Escobar is an intrepid Latino globetrotter and reporter from the USA who not only has an accurate grasp of the regions he visits, but he has also employed a unique glossary of terms in his book with which to describe the idiosyncrasies of this topsy-turvy bad new American world. In the process of doing so, he leads his readers to accurate new insights. His contextual reportage and background information are highly accurate and well researched. His style is somewhat jocular, but that again is a "modern" trend in today's informal and casual world, that can be forgiven.
As I noted above, the world has been reduced to "black and white" when dealing with opposing issues such as Anglo-American globalist capitalism and Islam, both of which are reprehensible with one being worse than the other. But Escobar falls in neither category, and this fact strikes one as refreshing. This book is not a hyped-up criticism-for-criticism's-sake account of the type that we are nowadays deluged with by the Anglo-American corporate media nexus; it is a quality analysis. It is an original and contemporary work on the current state of the world and should therefore be read by all.
Aside from the content of the book, I also consider the quality of its cover, printing, type-setting and paper: I must say that this edition excels in this aspect too.
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Patrick
Perdu:
For geopolitics junkies, September 30, 2009
Once again Pepe Escobar, one of the most astute observers of the world scene, signs here a reference guide on our crazy world.
Except for the format of the book (large and thin) it could be a travel phrasebook for the news navigator.
No literature here, just different shades of light on facts, facts, facts.
As far as intelligence means making connections (inter lego), this is a pretty pure: you will not find detailed meeting reports in here, or day by day analysis of the Russia-Georgian war, but for the avid reader of news Pepe Escobar makes the connections between seemingly non-related events. His forte: looking at the same situation from the different points of view, backed up by a life devoted to meeting the actors to get their first hand interpretation.
For those who have read Pepe Escobar's Pipelinistan, the ceter part of this book is essentially an update on the subject - just great.
This is not a book for the casual reader. Actually it is best read close to Google, Wikipedia or CIA world fact book as Pepe does not detail much the facts beyond mentioning them.
Every paragraph, nearly each sentence is meaningful to a point that would render the reading tedious were it not for the humor and light style.
All in all one of the most enlightening books you could get on geopolitics / geostrategy provided you are already somewhat versed in the subject. Certainly not a Christmas present for your average 16 something Beyonce-loving niece.
For me a clear killer - a well deserved five stars
Pattberg "Thorsten Pattberg" (Beijing, China)
I started reading Pepe Escobar's vivid political analyses right after 9/11. His column prominently features on atimes which I often open first thing on a monday morning, whether when I am in Shanghai, Beijing, Tokyo, or Boston.
Pepe is a journalist maverick (and youtube ninja) with his own guerilla style, a stupendeous range of vocabulary, and a cartoonish way ("Obama", "is it the Messiah" or "Emperor Barack?") to depict very complex geopolitical strategy and introduce the who's who in all that mess in an easily understandable jargon: "Declaring war on the world is not a sensible way of dealing with Islamist terrorism."
Always backed by quotations of those "Berkely/Chicago/Harvard crowd" in power, of course. To many, he is the Tariq Ali of Brazil, a resistance warrior against "Western Imperialism", born in a place, Brazil, that - it's bewildering - for some reason hardly ever features in a European newspaper. "Obama does Globalistan" is the companion to "Globalistan", both are essential a collection of some of Pepe's finest pieces on crazy "Obamanomics" from before the great meltdown of America in 2011, that let to the meltdown of America in 2011.
Yes, it can get a bit cynical, but it is highly detailed and certainly an entertaining read for the left, and those who want to understand the left.
Charles Rover
"Welcome, comrade Maobama"..., November 22, 2009
In Pepe Escobar I found a superb journalist, critic, and a cultural phenomenon in (almost surreal) geopolitical writing - every article another bombshell dropped on the tedious political correctness of our time, the shallow dignity of postmodern statecraft, and the ugly business of deception and show-politics. He is a brand name, too, with a readership of at least 100.000 people online.
Much in this unique book is convincing and eye-opening. Yes, he is very provocative, his evaluations uncompromising in nature, and, sometimes, even prophetic. A recurrent theme in his books and articles seems to be "war" (be it military, economical, cultural, or just ideological etc.) or some form of "conspiracy theory", and presidents, supreme leaders, oligarchs and dictators are just goofy pieces on "Ground zero of a global jihad". "Welcome, comrade Maobama", "Liquid wars in Globalistan", 9/11, "Get Osama! Now! Or else...", Iran, Afghanistan, Iran, "Scorpions in a bottle", Eurabia... you name some dark spots in geopolitics and Escobar's sharp mind and "Roving Eye" is not very far, and certainly not shy; the whole drama of post-Cold-War 'Great Game', as he often uses slang, "just gets bigger".
His language may not be a language of blissful happiness, but the language of positive discontent (you may call it playful cynicism). It is also not the language of a conventional scholar either, but the language of a technocratic geek, confirmative an extremely flexible one, with a vast knowledge, a stupendous vocabulary, and a strong affinity for decorative details, places, names (incl. titles and job descriptions), abbreviations (TSAs, PSAs, IMF, INOC, IPI, TAP (now TAPI), ADB, BP, NATO... and this is only page 77/78), and clichés ('black gold', 'blue gold', 'Bush administration wasteland', 'Obamania', 'New Rome' etc...). Sentences like "But Iraqis were not fooled by the smoke and mirrors - nor by Big Oil hardball" or "It's as if the world was turning on its gyre as in a psychedelic kaleidoscope reviving modern history in high-speed", I found cartoonish but they will give you the general idea about style and spirit of his three books (so far) and most of hundreds of well-written articles in various opinion papers.
This book is essentially an essay of 116 pages considered a "supplement to" his 366-pages "Globistan". I guess it's fine reading it as a stand-alone, but I would recommend getting both of them - and reading some of his articles, too. If you like concise, idiosyncratic and thought-provoking books with loads of new word creations from an unusually talented writer on recent US foreign policy (aka 'New Rome') stunts in the Middle East and East-Asia, Pepe Escobar is worth your time and money and deserves a 5/5!
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Jesse's Café Américain
"History teaches us that the capacity of things to get worse is limitless. Roman history suggests that the short, happy life of the American republic may be coming to its end... [the US will probably] maintain a facade of constitutional government and drift along until financial bankruptcy overtakes it.Of course, bankruptcy will not mean the literal end of the United States any more than it did for Germany in 1923, China in 1948, or Argentina in 2002-03.
It might, in fact, open the way for an unexpected restoration of the American system, or for military rule or simply for some development we cannot yet imagine. Certainly, such a bankruptcy would mean a drastic lowering of our standard of living, a loss of control over international affairs, a process of adjusting to the rise of other powers, including China and India..."
- Chalmers Johnson, Nemesis: The Last Days of the American Republic, 2007
An interesting interview by Chalmers Johnson
http://www.youtube.com/watch?feature=player_embedded&v=Q2CCs-x9q9U
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Amazon.com
David Egan
Sloppiness and equivocation mar an important work January 17, 2004
The thesis of this book is important and compelling, so it's worth summarizing before I explain why I can only give it a three-star rating.The International Monetary Fund (IMF) was the post-war brainchild of John Maynard Keynes, who thought future economic downturns could be reduced by establishing a source of funds to stimulate the economies of countries without the resources to provide stimulus packages from their own reserves. As an international institution, the Fund would provide impartial aid and offset the protectionist beggar-thy-neighbor policies that had made the Great Depression a global phenomenon.
In the 1980's, however, the Fund's mission was derailed by the new brand of market fundamentalism that marked the Reagan/Thatcher years: the market always knows best, and the best thing a government can do is to stay out of it as much as possible. Subsequently, the Fund's loans have come with a number of restrictive conditions, forcing recipient governments to balance their budgets and keep inflation down, quite the opposite of what Keynes had initially intended.
The evidence through the 1990's, particularly with respect to the Asian financial crisis of 1997, and the transition to capitalism of the former Soviet bloc countries, is that the IMF's market fundamentalism has been a terrible mistake. Stiglitz argues convincingly that the IMF has not only failed to prevent the disasters in Asia and Eastern Europe, but that its policies have been a leading cause of the disasters in the first place, and its subsequent actions only made matters worse. Sending huge aid packages to Russia to hold off devaluation of the ruble only meant that the super-rich oligarchs had a little more time to pocket their cash, ship it out of the country and transform it safely into hard currency.
The IMF looks only at the limited set of numbers, like inflation and deficit, that affect the lives of Wall Street financiers, and pays no attention to figures like unemployment that matter to the poorest citizens in the countries the IMF is supposed to be helping. As a result, the rich are getting richer, and the poor are getting angrier. Globalization has unprecedented potential to raise the standard of living of people across the globe, but as it is presently being handled it is ravaging the developing world.
These are all points well worth making, and I'm glad I read the book to come to a clearer understanding of them. Despite its good intent, however, it's hamstrung by poor writing and presentation, and worse, by a vindictive righteousness that leads Stiglitz occasionally to ignore or distort the truth if it will help him to make his argument sound more convincing.
The problems begin with the title. The book isn't really about globalization per se; it focuses on the aspect of globalization with which Stiglitz is intimately familiar: international financial institutions like the World Bank and the IMF. "Globalization and its Discontents" is a catchy title, and I suppose it must have been hard to resist. But to be clear: this book is essentially an invective against the IMF, where Stiglitz stops short of accusing the Fund of outright malice, preferring to emphasize its dogmatism, stupidity, narrowness, and occasional venality.
The misleading title is symptomatic of the uncertain thrust of the book. The style is plodding--a couple of clichéd nautical metaphors hardly lift Stiglitz's style out of the mud--not to mention repetitive. The structure is unclear, so that Stiglitz returns to the same points in several chapters while never fully fleshing out other important points, all the while leaving the reader uncertain of where the argument is going. Besides the soporific style and sloppy structure, there are more than a few typos and inconsistencies in convention (is it the "Washington Consensus" or the "Washington consensus"?)
These shortcomings make for a tiresome read and weaken Stiglitz's argument at many points. What's worse is that Stiglitz seems willing to take a few steps beyond the truth if it helps him make his point. In one controversial passage, he all but claims that Stan Fischer, former deputy managing director of the IMF, was in the pocket of Citigroup and obediently took orders from Citigroup while planning the Fund's policies. He has since denied that he intended to smear Fischer, and I believe him. But sloppy writing is evidence of sloppy thinking: unintentionally accusing a respected economist of criminal venality is no small error.
In a similar vein, Stiglitz falls into equivocation where it serves his purpose. At the beginning of chapter 6, he first points to the number of former communist countries, including Russia, currently governed by former communists as evidence of Eastern Europe's disillusionment with market fundamentalism. In the following paragraphs, he attacks Yeltsin and Putin for the crony capitalism and corruption that's come from allying themselves with Wall Street's interests. Either the Russian leaders represent a rejection of the IMF's market fundamentalism or they don't; you can't have it both ways, certainly not in consecutive paragraphs. Nor can you insist that successful development relies on policies suited to intimate knowledge of the particulars of each individual country and then insist, as Stiglitz does early in the book, that the prime minister of Ethiopia is a responsible leader because Stiglitz chatted with him and he seemed like a nice guy. Stiglitz seems determined to make his point, and he won't let facts or logic get in his way. I want to agree with him, but he doesn't inspire my trust.
It's a shame that Stiglitz makes this book hard to like because I think it's an important one. The same argument could have been made in a shorter, clearer book that didn't stretch the truth in order to sound convincing. As it stands, the book provides plenty of easy targets for those who aren't inclined to agree with Stiglitz, and so it isn't likely to persuade many of the unconverted that the IMF needs to change its approach.
Loyd E. Eskildson "Pragmatist" (Phoenix, AZ.)
Excellent, but Now Dated -, February 15, 2012
Professor Stiglitz's experiences include discussing transitioning to a market economy with China's leaders back in 1980 (he advocated gradualism), becoming a critic of 'shock therapy' as practiced in Russia and some Soviet Union countries, then membership on Clinton's Council of Economic Advisors, Chief Economist at the World Bank, and being awarded a Nobel Prize in economics. Within his academic years, Stiglitz's specialty was information asymmetries - eg. between worker and employer, lender and borrower, insurance company and the insured, etc.
Stiglitz does not believe that markets, by themselves, solve every market failure. Pollution and unemployment are two obvious examples. (The Tea Party and conservatives avoid the topic of market failure vs. Global Warming by denying the existence of Global Warming. Similarly, in other areas.
Stiglitz IMF experience was that decisions were according to ideology, and often simply on the basis of helping special interests within the major nations. Alternative opinions were not sought. Its remedies failed more often than they worked, resulting in hunger and riots, disproportionate benefits to the better-off. China's GDP was 60% that of Russia's by 1990, and by 2000 this had been reversed.
Much U.S. trade policy is hypocritical - keeping trade barriers, while pushing others to eliminate theirs and accepting our subsidized agricultural products. Help other customers find the most helpful reviews
Comment (1)
Li Li Chong "Lil" (Belgium)
Antenna Twentythree (Philadelphia) - See all my reviewsGlobalisation explained at its best, February 1, 2012
I always thought that globalization would do more good than harm yet, having read this book made me realized that globalization has long been vilified by those in power. I find this book compelling because it is written by someone who had a unique position as an insider and had experienced all of this first hand.
Joseph Stiglitz is certainly no stranger in the world of economics, being the winner for the Nobel Prize for Economics in 2001. Hence, there is no other more competent person to tell us what globalization has done so far, although Stiglitz's former employers may regard his insights and ideas as the `inconvenient truth'. Basically, the book reveals how the West drove its global agenda to further its own interests as a form of financial colonialism. Stiglitz observed that decisions made in the 1990's were often influenced by ideology and politics and regrettably, the actions that followed suit only fit in the interests of those in power. Hardly surprisingly, it was none other than the international economic institutions, namely the World Bank and International Monetary Fund (IMF), which set the rules of the game. These organizations are meant to help eliminate poverty and improve the standard of living in developing nations through globalization. But how could the developing nations advance if globalization is controlled by say, IMF and in particular, the United States of America (US)? The Western countries push trade liberalization for the products they export, but at the same time, continue to protect those sectors in which competition from developing countries would have threatened their economies. This is how they benefit at the expense of developing countries.
With respect to countries that heavily depended on IMF for loan assistance, IMF not only dictated the terms of loan agreements, they also forced countries to embrace so-called financial market liberalization which in the end, led to banking failures and financial crises. Developing countries were not only left impoverished, their economics condition worsened in no time in pursuit of globalization.
That is why financial independence is so important and history has proven that.
Stiglitiz mentions that in 1997, Malaysia was the only country that chose not to have IMF's programmes when the rest succumbed to its mercy. But despite being severely criticized by the international financial community for not accepting IMF's assistance, Malaysia's downturn was in fact much less as compared to other East Asian countries during the economic crisis. At that time, Malaysia imposed strong regulations to maintain economic stability and that put her in a far better position than those countries which relied on IMF. The economic downturn had taught most East Asian countries invaluable lessons through discontents, resentments and recessions. That was when we all began appreciating the importance of corporate governance in accounting standards and that transparency was no longer an alien concept. However, Stiglitz sees that the IMF did not really observe the preach for openness and hence, he suggests that the time has come for us to grade the IMF on how well or rather how poorly they have promoted growth or poverty.
But apart from discontent, globalization can bring good to the nation. In a chapter dedicated only on East Asia, Stiglitz states how some East Asian countries have benefited from globalization. An outsider would marvel at the developmental transformation where the increase in income and the poverty reduction in East Asia over the last 3 decades have been unprecedented. He expressed admiration at the phenomenal growth rates and the standard of living which has soared enormously. To mention a few for instance, Korea is now well known for its large conglomerates and independent enterprises such as Samsung, Hyundai, LG and the like. Malaysia, Singapore and China, on the other hand, owe their successful developmental stories to foreign direct investment (FDI) where they manage to control the inflow of investment independently and stably at their own pace.
Globalization has long been a controversial topic because it has been `mismanaged' by those who are in control. But on a positive note, globalization can actually be reshaped and when it is properly done so and fairly run, with all countries having a voice in policies affecting them, there is a possibility that it will help create a new global economy in which growth will be sustainable and equitably shared. This is what we should aim for through globalization.
On top of what I have briefly mentioned above, there are many more interesting arguments raised throughout Stiglitz's book. Therefore, I strongly recommend this book for those who wish to grasp the concept of globalization and how discontents caused by globalization may be deterred in future. Notwithstanding how intensely thought-provoking this book is, in my view, a mere reading of this book without any action would be meaningless. If such a strong testimony by Stiglitz fails to create awareness at the very least, no matter how much recognition the book receives, all of his work would have been in vain. Thus, those whose lives are affected by the decisions of globalization should take the proactive action by having a say in policies and debates to protect their economy.
Ten Things I learned from Globalization and its Discontents,April 10, 2007 1. This book is highly informdative about the effects of the IMF and the World Bank on the world's unequal economy, with a closer focus on the IMF.
2. It describes in detail the muddy mix of false beliefs, borderline corruption and gross incompetence that drive the international financial institutions and inform their ivory tower decisions which have such profound effect on the people of the world.
3. Stiglitz clearly explains economic theories that clearly rebut the policies of the IMF.
4. He gives in-depth case studies that illustrate the inextricable mess these lending institutions can make in attempting to control the macroeconomic processes of poor nations.
5. He is especially informative in his unpacking of the Asian Financial Crisis of 1998, its causes, and how the IMF contributed to large-scale economic disaster. He explains the speculation encouraged by the IMF and the subsequent scares that led investors to flee en masse from the region. Then he discusses how the IMF's policies of structural adjustment and budgetary restraint further harmed nations. Malaysia, who refused to listen to the IMF, suffered the least from the massive economic downturn.
6. He also enlightens the reader about why Russia fell into such disarray after its post-Cold War "freedom." Without a gradual transition to a market economy, as China has been successful in accomplishing, Russia found itself in a crisis where the powerful managed to gain the bulk of the wealth and those with little power descended into poverty without a welfare state to aid them.
7. He explains clearly the conflict between the IMF's Keynsian roots, which aim to support failing economies by extending credit to be able to continue functioning, and its present policies, which force failing economies to reduce its spending, thereby causing nations and people to suffer.
8. As an insider, Stiglitz is able to describe the callousness with which the IMF views - or doesn't view - the people most affected by their policies is part of the organizational structure.
9. The worst part is that we can get all of this information, but lending institutions are not accountable to us or to the people for whom they make such life-altering decisions.
10. Yet only by sharing this information will nations who do have to decide to accept that IMF loan or not be able to understand the consequences of their decision, will individuals be able to stage protest or other forms of dissent, and will change hopefully eventually come in the large institutions that control so much of what happens in the world.
A. Ghent (La Jolla, CA)
The Dangers of Ideology, June 11, 2006 By
This book makes the dangerous consequences of organizational ideology painstakingly clear. While Stiglitz takes an extreme view of the IMF's actions and, to a lesser extent, its motivations, his point regarding the ill effects of rigidly adhering to abstract economic models is well taken.
Ideas are exceptionally powerful and too many economists are seduced into viewing the world in a black and white theoretical framework.
Models are only useful insofar as they capture salient aspects of the world. Despite manifest evidence to the contrary, the IMF repeatedly failed to acknowledge that their models were in fact not capturing such key features. The IMF's focus on reducing inflation in the Asian economies was particularly silly and Stiglitz does the profession a service by pointing out the common fallacy of treating price stability as an end rather than the means to a healthy macroeconomy. The IMF policies had disastrous humanitarian consequences and Stiglitz makes it clear that, for the most part, these were gratuitous rather than part of the necessary cost of healing sick economies.
To be fair, development is a very young discipline and Stiglitz does not sufficiently recognize how difficult it is to come up with good macroeconomic policies for developing nations.
But Stiglitz is not commenting as a Monday morning quarterback; him and others warned the IMF of the consequences while the crises were underway. Stiglitz's book is an important lesson and he writes compellingly
Luc REYNAERT (Beernem, Belgium)
Secrecy undermines democracy, February 22, 2006
As Joseph Stiglitz explains in this remarkably candid analysis, globalization (the removal of barriers of free trade and the closer integration of national economics) has, in theory, the potential to enrich everyone in the world. But, the way it has been managed, including the international trade agreements and the policies imposed on developing countries, was not less than disastrous. The main culprits for the disaster were international economic institutions: the IMF, the World Bank and the WTO.
Joseph Stiglitz attacks in this book relentlessly the IMF, accusing it even of cooking the books (data and economic forecasts) in order to make its programs seem to work! It failed in its original mission of promoting global economic stability and served instead the interest of global finance. The author calls it completely incompetent (!) and its policies `a blend of ideology and bad economics'. With its `colonial mentality and social insensitivity' it forced its catastrophic fundamentalist `free market dogma' on its client states. It stressed fiscal austerity, excessively rapid privatization and market liberalization, even before social safety nets were in place as well as adequate competition and a regulatory framework. Its policies were probably the single most important cause of recessions in many countries! Politically speaking, the IMF is not democratic. Its actions affect the lives of billions throughout the developing world, but those voices are not heard. On the contrary, bankers who insist on getting repaid are very well represented through the finance ministers and central bank governors. Joseph Stiglitz calls for a change in IMF governance via a change in voting rights. In the short run, he asks complete transparency and, for every intervention, a report on the expected poverty and unemployment impact of its programs in order to force it to be more responsive to the poor, to the environment, to broader political and social concerns.
Stiglitz stresses rightly that development is about transforming societies, improving the lives of the poor and enabling everyone to have a chance at success and access to health care and education. But for the World Bank, commercial and financial interests supersede concern for the environment, democracy, human rights and social justice: billions of dollars were available to bail out banks, but not the paltry sums needed to provide food subsidies for those thrown out of work!
Western hypocrisy is totally blatant in the different WTO rounds. Western countries pushed poor countries to eliminate trade barriers, but kept their own barriers, preventing developing countries from exporting their agricultural products. More, they ensured that they garner a disproportionate share of the benefits of trade liberalization with the ultimate result that some of the poorest countries in the world were actually made worse off (!), e.g., the agreements on intellectual property rights had as a consequence that drugs were not available any more in poor countries at affordable prices: thousands were effectively condemned to death.
For Stiglitz, systems of global governance are essential and he proposes that the existing institutions return to their initial responsibilities: the UN for global political security, the IMF for global economic stability and the World Bank for `human' economic development.
This is a book of a superb free mind and a must read for all those interested in world politics.
I also recommend in the same vein, the book of Robert Heilbroner `Behind the veil of economics' and the works of Robert Kuttner. For a voice from the South, see Walden Bello's incisive `Dilemmas of Domination'.
Andrew Mitchell (Victoria, British Columbia Canada)
Well written critique of globalization for non-specialists, December 4, 2004
The subject of Joseph Stiglitz's widely reviewed and bestselling book "Globalization and Its Discontents" is the costs and consequences of free market "fundamentalism". Winner of the 2001 Nobel Prize in Economics, Stiglitz argues in "Globalization" that the policies of the International Monetary Fund (IMF), the World Bank, and the World Trade Organization (WTO), enrich wealthy nations at the expense of the developing world.
The IMF, World Bank, and WTO were created at the United Nations Monetary and Financial Conference (Bretton Woods) in July 1944 to increase global wealth by liberalizing international trade. Nevertheless, many signatory governments succumbed to pressure from domestic producers and were either slow to liberalize trade or actually increased trade barriers.
As the Soviet Union began to crumble in the 1980s, however, renewed attention was given to international trade liberalization. Neoliberal economists gained considerable influence in the IMF, U.S. Treasury, and other powerful organizations, and turned their policies toward monetarism and supply-side economics and against government participation in the economy. Countries adopting these doctrines have slashed taxes, reduced or eliminated social programs, privatized public services, and, especially in the developing world, experienced great social, political, and economic turmoil.
Stiglitz argues that since the 1980s the IMF, WTO, the U.S. Treasury, and other influential bodies, have pushed a neoliberal agenda with little knowledge or concern for the states affected. He contends that proponents of "globalization" are neoliberals so hidebound by their ideology they ignore the reality of the developing world when prescribing economic policies.
Stiglitz begins his critique of globalization by noting that privatization of public services is the first tenet of neoliberalism. He generally agrees with neoliberals that industries operated by governments are not as efficient as those run by businesses. He points-out, however, that governments - especially those in developing nations - often run industries because the private sector has failed to deliver the essential services industries provide, and argues that privatization in the developing world increases unemployment and results in the transfer of valuable capital assets from countries that need them most.
Trade liberalization is the second tenet of globalization scrutinized by Stiglitz. According to neoliberals, liberalizing international trade increases global wealth by forcing countries to shift capital from less to more productive uses. Stiglitz, however, claims the IMF and other proponents of globalization create economic and social havoc in the developing world by forcing countries to liberalize trade before they have developed the institutional, technological and financial infrastructures necessary to support the emergence of internationally competitive enterprises. Stiglitz also notes the hypocrisy of Western countries - the principal proponents of globalization - pushing trade liberalization for goods they produce but balking at removing import restrictions on products from the developing world.
Stiglitz concludes his broad analysis if globalization by examining the role of foreign investment in the developing world. Neoliberals argue that developing economies benefit from foreign investment because, among other things, it reduces the cost of financial capital, increases the transfer of technology from the "first" to the "third" world, and forces developing nations to make reforms attractive to investors. By contrast, Stiglitz argues that foreign investment can create instability because foreign lenders offer better rates than domestic lenders, fail to lend to small and medium enterprises, and are immune to discipline by the host nation's central bank.
Joseph Stiglitz's "Globalization and Its Discontents" is a good survey of the costs and consequences of globalization. Its greatest strength is that it is an intelligent and well-written critique of globalization from a pro-capitalist perspective. Essentially, Stiglitz contents that globalization has met with a groundswell of protest from around the world because its neoliberal authors forgot that economics is a social science, and that it must therefore concern itself with the welfare of people not just corporations.
By failing adequately to address education, welfare, the environment, and the redistribution of income and opportunity in the "developed" and "developing" worlds, the IMF, the World Bank, the WTO, the U.S. Treasury, and other neoliberal institutions, have neglected the most important wants and needs of the world's people.
S. Park (Bay Area, CA)
A systematic critique of certain IMF policies, December 29, 2003
As many reviewers correctly point out, the book is not about globalization per se. It is about the tasks international financial institutions have to deal with *due* to globalization, and a critique of the current policies that concern economic crises, mainly those of the International Monetary Fund (IMF). The book starts with a brief history of the international financial institutions (IMF, World Bank, WTO, etc), and then proceeds with discussions of failed economic policies of the institutions. Specific examples (East Asia, Russia, Latin America) of failures of the IMF-proposed policies are provided in subsequent chapters, followed by what the author regards as the reasons behind IMF's suboptimal policies, and what the author thinks should be implemented. Some examples of what Stiglitz considers as bad IMF policies:
- At the onset of the east Asian financial crisis, governments of countries fallen prey held balanced to surplus budgets and faced low inflationary pressures. IMF at this time ordered these governments to maintain balanced budgets. (During recessions tax revenues decrease, thus to keep a balanced budget governments have to cut down expenditures, which would further depress the economies).
- East Asian governments were asked to build trade surplus without resorting to currency devaluation or tariffs. (According to the author this effectively amounted to asking to cut income to reduce imports because increasing export was close to impossible under the situation.)
- IMF called for rapid privatization in the midst of the 1998 Russian financial crisis. (At that time the author claims Russia didn't even have an effective tax system, rendering tax collection from the newly privatized companies obsolete).
Some reasons behind IMF's calling for bad policies:
- "Revolving doors" -- US government officials do favors for companies only to be appointed heads of the very companies they help after end of term/resignation.
- Inexperience of the economists within the institution -- many according to Stiglitz lack experience dealing with problems specific to developing countries.
- Conflict of interest -- IMF policies consistently strived to protect creditors to the developing countries foremost.
This may be seen in IMF's opposition to currency devaluation during the East Asian and Russian financial crises. 4) Lack of transparency in decision-making -- the developed countries hold majority votes in the institution. In fact only US holds rights to effective veto.
Stiglitz summarizes what is needed in the chapter titled "The Way Ahead." In his own words: Acceptance of dangers of capital market liberalization and short-term capital ("hot money") flows. Bankruptcy reforms and standstills. Less reliance on bailouts. Improved banking regulation under certain circumstances. Improved risk management, safety nets and response to crises.
It is interesting to see reviewers criticizing Stiglitz on a partisan basis. He did not purport nationalization of private companies, nor oppose market liberalization in this book. He simply emphasized the importance of sequencing and pacing of privatization and market liberalization. In fact it is such "market fundamentalists" that he criticizes. To him every financial crisis requires eyes specific to the problem -- unilateralism, and substitution of sound economic reasoning with ideology, are to be shunned.
Having lived in a country that went through a financial crisis that resulted in IMF intervention, I agree with Stiglitz when he says that bad IMF policies may lead the respective country's citizens to hating US. There the managing director Camdessus even had become a household name. Though I did not know whether the suggested policies would prove to be true in the end they certainly looked Draconian. The grievances of the people I felt palpable as well.
For globalization to succeed it seems evident that discussions regarding the practices of financial institutions are required. This book is welcome in that it brings to the table an open invitation for such discussions. Stiglitz' points are well argued and thoroughly researched. However due to his canon-like exposition (he goes back to the same crises over and over again to make only slightly different observations) the book becomes tedious in the later half, and for this reason I would only recommend it to specialists.
Gaetan Lion
Stiglitz and his distemper, December 24, 2003
This book's focus is far narrower than its title suggests. Its material on globalization is very limited and would have been more appropriately covered in a single article within The Economist or BusinessWeek. The book is mainly a critique of the International Monetary Fund (IMF). The author indicates that the IMF was created in 1947, shortly after the Bretton Woods Conference of 1944. It's purpose was to enforce the rules of an elaborate system of currency and capital controls under a Fixed Exchange Rate System. However in 1971, this Fixed Exchange Rate System was succeeded by the Floating Exchange Rate System.
According to Stiglitz, this change from fixed to floating exchange rate rendered the IMF original mission completely obsolete. Back in 1971, the IMF should have closed its doors, and its staff should have moved on to more fruitful ventures. But, the IMF did not close down. Instead, it recycled itself into an international foreign aid agency implementing Western economic reforms, including:
- privatization of government assets and utilities,
- deregulation of markets,
- free trade and opening up of domestic markets, and
- liberalization of capital markets.
Stiglitz refers to these measures as the "Washington Consensus."
Stiglitz analysis of the IMF performance is right on the mark. It is true that the IMF economic interventions have had poor results. Whenever they structured a country's bailing out, they typically have enforced the reverse policies that Allan Greenspan and Congress would have taken to get our U.S. economy out of a recession. For example, the IMF standard cure is to implement an increase in interest rates to shore up the currency value. It is also to promote a balanced fiscal budget and a balanced current account. The problem is that this standard package of policy is recessionary, and will further exacerbate an economic crisis. So, here Stiglitz is right.
However, Stiglitz crosses the line when he mounts a relentless polemical attack on the "Washington Consensus." One could easily deduct that he stands for the opposite, which would be: 1) nationalization of private commercial assets, 2) reregulation of markets, 3) protectionism, and 4) foreign exchange and capital markets controls.
Within a post WWII framework, no country has ever succeeded following such anti Washington Consensus economic policies.
After reading this book, one can see why he was fired from the World Bank. He comes across as arrogant. He could have written an excellent article regarding the failures of the IMF. Instead he wrote a weak polemic book attacking capitalism.
If you want to read an excellent and more balanced account of globalization, I suggest "The Lexus and the Olive Tree" by Thomas Friedman. This book is also so much broader in scope than Stiglitz book.
Keith Appleyard "kapple999" (Brighton, UK)
Blame it all on the IMF, December 6, 2003
I thought the title is misleading - this is not anti-Globalisation, in fact Stiglitz is pro-Globalisation, as am I. It turned out to be a criticism of everything that the IMF has ever done, in Asia, Russia etc. There is some criticism of how the WTO is in the pocket of the USA, creating spurious arguments for Trade Sanctions.
One of the first examples he gives is when in 1992 Jamaica's milk market was opened up to US imports. His rationale is that it 'may have hurt local dairy farmers but it also meant that poor children could get milk more cheaply'. Now I think that's bad. What about the poor(er) children of the dairy farmers themselves? Why ship US milk 2,000 miles from Wisconsin to Jamaica - not as if that market penetration would make any difference to Wisconsin's economy. And how much fuel & energy are consumed in transporting all that milk, and how fresh is it when it gets there? My (UK) milk supply comes from a dairy less than 10 miles away. So now a poor economy like Jamaica isn't self-sufficient in a basic foodstuff? We get Stilgitz saying that was a good thing in 1992, but that lots of similar events since then are not?
I'm no fan of the IMF or the World Bank, but I don't buy his argument that everything is the fault of the IMF. It got quite boring in the end.
Boris Bangemann "boyse" (Singapore)
What happens when ideology overrides common sense, November 6, 2003
I wonder whether Joseph Stieglitz regrets that his book with the slightly misleading title "Globalization and its Discontents" made him the poster-boy of the opponents of globalization. It is a big misunderstanding. The book does not denounce globalization as such, but only the way the IMF mismanaged the economic crises that erupted during the process of globalization. Stieglitz is quite clear about this: "I believe that globalization - the removal of barriers to free trade and the closer integration of national economies - can be a force for good and that it has the POTENTIAL [in italics in the original text] to enrich everyone in the world, particularly the poor." (ix) Stieglitz criticizes in his book the dogmatic, ignorant and impatient approach of the IMF to managing crises and system changes. The Asian Financial Crisis of 1997 and the reforms in Russia in the 1990s provide him with his case studies. What emerges from these case studies is that the IMF
(1) tried to apply a "one-size-fits-all" model to all countries (essentially blindly applying the lessons learned in Latin America in the 1980s, which was that crises are caused by loose monetary policies and imprudent fiscal policies);
(2) privatized at all cost, even when there was no regulatory structure in place;
(3) deepened the crisis of the real economy by enforcing a monetary contraction (which reminds me of the practice of applying leeches to cure a patient suffering from a high fever - state-of-the-art medicine in the 18th century but absolutely counterproductive);
(4) was partially responsible for the onset of the Asian financial crisis through the enforcement of excessively rapid financial and capital market liberalization;
(5) ignored matters of sequencing by blithely assuming that once property rights were established all else would follow naturally "including the institutions and the kinds of legal structures that make market economies work" (73).
Eventually the IMF's mismanagement of economic crises is a result of the dominating role of market fundamentalists in the IMF who believe that markets by and large work well and that governments by and large work badly. Which is very ironic because the IMF was conceived to deal with situations where markets failed and global concerted action was called for (the prime example being the Great Depression of the 1930s).
Stieglitz's book is important because it stresses that local conditions and market imperfections have to be addressed before liberalization and privatization can take place; he argues for controlling the pace and the sequencing of opening an economy to the forces of international market economics, not for protectionism; and he does not share the hostility against multinational companies felt by most opponents of globalization. But these fine points are lost on most readers, even the Newsweek journalists who recently alleged that "Joseph Stieglitz, a Nobel Prize-winning economist, argues that developing countries should have looked to protectionist Asia countries, such as Japan and Korea, as their models for development and not thrown open their economies prematurely to ravages of multinationals."
Bottom-line: an eye-opener about the ideology ruling the IMF, not an in-depth study of globalization, but well worth reading.
Bibliophile
Extraordinary, September 20, 2003
Many Americans are unhappy with the UN, but not many know how much harm is done by the incompetence of the IMF and the World Bank (which happen to be the cousins of the UN itself). Stiglitz indicts both, writing with the authority not only of a great economist but from an insider perspective. He is not so much anti-globalization as fed up with the way these two institutions mismanage globalization. The IMF and the World Bank, charges Stiglitz, gave the wrong medicine to developing countries in crisis, making things even worse than if they had done nothing at all. These include Latin America, Russia, Thailand, South Korea - all of which suffered needlessly from the foolish policies imposed upon them from outside. It is as though applying powerful shock treatment to a patient in psychological distress - the shocks are more painful than the original illness, and the result is long term brain damage, if not suicide.
As a counter example Stiglitz cites China as successfully navigating through the Asian Financial Crisis by resisting the unsolicited advice from these venerable agencies. "China was the other country that followed an independent course," writes Stiglitz. China managed to achieve high growth with stability all the while the surrounding economies were crashing down (and as Japan remained mired in recession). "China achieved this by following the prescriptions of economic orthodoxy. These were not the Hooverite IMF prescriptions," Stiglitz continues, "but the standard prescriptions that economists have been teaching for more than half a century: When faced with an economic downturn, respond with an expansionary macroeconomic policy."
You wonder how Stiglitz views the Bush tax cuts as the "fix" of America's jobless recovery! (No doubt he is as disdainful as Warren Buffett.)
Stiglitz continues: "The standard medicine worked, and China averted a growth slowdown.....I think it is no accident that the only major East Asian country, China, to avert the crisis took a course DIRECTLY OPPOSITE THAT ADVOCATED BY THE IMF [my capitals], and that the country with the shortest downturn, Malaysia, also explicitly rejects an IMF strategy."
Stiglitz's criticism of the WTO is milder by far (indeed he has much less to say about it); he admits it is a much more democratic organization.
The IMF and the World Bank are clearly discredited. If they don't change then they are doomed to irrelevance (like what Bush likes to say about the UN). As I read this book I feel the presence of a brilliant, almost genius-level mind who calmly keeps his cool while he takes his side with the young, gas-masked protesters throwing rocks and Molotov-cocktails on the streets of Seattle (or wherever their meetings happen to be this year). The difference is that Stiglitz's arguments hit much harder and make a bigger dent.
Former Secretary of the Treasury (now Harvard University's President) Lawrence Summers, whose awesome reputation as an economist is equally matched by his abrasive personality (he never hesitated to lecture Senators during hearings), once said, after meeting with China's then Prime Minister Zhu Rongzhi, "This man must have an IQ of 200!" It is no accident that Zhu was in charge of China's economy during the Asian Financial Crisis, and that he rejected IMF's prescriptions completely. One gets the feeling that Joseph Stiglitz's own IQ is in the same league as Premier Zhu's and President Summers's.
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