Dear Locke,
Yes, IMF is creating Moral Hazards. With the past records of writing off bad debts, more and more countries are asking IMF and World Bank to write off their debts from them as well.
Please read my response to Londontrader. I would say it is a Catch 22 situation we are facing now. The present crisis may build up to a magnitude that the whole world may not able to manage at all. This is not just about Greece or Spain. It is the whole PIIGS. The magnitude of the present crisis may be the biggest ever, supersede 1997 Asian Financial Crisis.
I am not suggesting that we don't help out but, whatever we plan to contribute, we must be mentally prepared to write it off. It is a very realistic question of HOW MUCH? That is why a good comparison should be made with other countries, in terms of per capital basis. The size of our economy is very small as compared to many other countries. I am not sure whether we should go into this when countries like Korea, Taiwan, India etc haven't commit themselves into this one.
Goh Meng Seng
Yes, IMF is creating Moral Hazards. With the past records of writing off bad debts, more and more countries are asking IMF and World Bank to write off their debts from them as well.
Please read my response to Londontrader. I would say it is a Catch 22 situation we are facing now. The present crisis may build up to a magnitude that the whole world may not able to manage at all. This is not just about Greece or Spain. It is the whole PIIGS. The magnitude of the present crisis may be the biggest ever, supersede 1997 Asian Financial Crisis.
I am not suggesting that we don't help out but, whatever we plan to contribute, we must be mentally prepared to write it off. It is a very realistic question of HOW MUCH? That is why a good comparison should be made with other countries, in terms of per capital basis. The size of our economy is very small as compared to many other countries. I am not sure whether we should go into this when countries like Korea, Taiwan, India etc haven't commit themselves into this one.
Goh Meng Seng
Dear GMS
It is a dog eat dog world, and Singapore has refined it to a fine art. Vis sa vis our GDP size, do u know how much Singapore contributes to a) world bank b ) asia development bank, c) Who and d) all manner of international organizations ? We give loans to the IMF because it is in our national interest, we give pittances to all other manner of international organizations because it is not in our national interest.
The fundamental question is even for market economist, do we accept some degree of moral hazard in return for greater and tighter regulation. Does the IMF create Moral Harzard ? We have to remember that if a country was not in shit, it would not have turned to the IMF to begin with. No healthy functioning government and or economy turns to the IMF. The IMF may be a loanshark but countries turn to the IMF after they have defaulted on debts to the private sector and have no other funding. The internal adjustment by the IMF is always painful but the alternative a lot lot worse.
Our national interest is a healthy stable functioning global market economy with free trade and capital flows. Dams and Development, health etc etc be dammed :_))
Locke