----- Original Message ----- From: MichaelP <[EMAIL PROTECTED]> Sent: Tuesday, March 07, 2000 4:46 AM Subject: Why the US blocks Germany's IMF plans > Does anyone understand this stuff? Can choosing one IMF candidate over > another have any effect on the possible demise of the capitalist system? > Or is this a more abstruswe description of how Mr. Greed operates at my > expense? > > Comments ? > > > Cheers > MichaelP > > > > ========================= > > BBC Friday, 3 March, 2000, 16:01 GMT > > Why the US blocks Germany's IMF plans > > Larry Summers and Bill Clinton have their doubts about Germany's IMF > candidate > > Using unusually sharp language, the US government has rejected the > European Union candidate to take over as director general of the > International Monetary Fund. The BBC's Rodney Smith explains the > reasons. > > Whether he stays or he goes, there is one very good reason why the > United States is rejecting Caio Koch-Weser to head the International > Monetary Fund. > > There is some personal animosity. US Treasury Secretary Larry Summers > and World Bank boss James Wolfenson are said to have been less than > overwhelmed by his intellectual and management abilities, and are > apparently positively discouraged by his ability to sway with > argument. > > Caio Koch-Weser at the EU finance minister meeting on 28 February 2000 > > Caio Koch-Weser still insists that he is the right man for the job > > However after 26 years at the World Bank, Mr Koch-Weser did achieve > managing director level, and it takes more than languages and his > allegedly suave manner to achieve that. > > His World Bank experience may count both for him and against him: For, > sensitivity to the developing world; against, it also means he's > unlikely to make the changes many now feel are needed at the Fund. > > Many of the IMF's critics believe this change of leadership offers an > excellent opportunity to modify the Fund, get rid of the opaque > practices and dictatorial habits that brought such opprobrium down > upon it after the Asian crisis. > > Storm clouds > > But that may not be the main thing in the minds of America's economic > planners. > > Rodney Smith > > Rodney Smith > > They may be looking farther ahead than their European counterparts - > and seeing very unpleasant storm clouds on the horizon. > > Federal Reserve chairman Alan Greenspan has made no secret of his > considerable anxiety about the overheated high-tech stock market. This > has to an extent deflected general attention away from that other > nightmare-in-waiting, the mountainous derivatives market. > > Mr Greenspan indicates that the New Economic Paradigm is a fragile > flower, and may be much more unstable than Europe's planners may be > aware. > > Conspiracy theories are flying > > An example of the underlying tensions is the shenanigans in the > bullion market. American congressmen are deluged daily with > conspiracy-speak from gold lobbyists convinced that the Fed - sorry, > they changed their minds recently, now they think it's the US Treasury > - has been depressing the gold price in collusion with other central > banks. > > The trouble with conspiracy theorists and paranoids is that their > behaviour sometimes masks a real problem. The ridicule they invite > often obscures the message. > > So it may be with the bullion market. Rational gold miners who do not > subscribe to conspiracy theories, say they do see evidence that unseen > forces are depressing the gold price every time it pops. > > There may be good reason why this should be the case. > > Many of the so-called bullion banks, the banks which bought gold > miners' hedge positions in the days before last October's rude > awakening, are sitting, like some of the miners, on huge, even > destructive potential losses if the gold price rises strongly. > > Some experts estimate they may be short 10,000 tonnes or more. You > know the rule, if you owe the bank a dollar it will sue to get it > back; if you owe a million it will lend you more because default would > be too expensive. > > The abyss > > The Fed and other central banks are bound in the same way. When LTCM, > Long Term Capital Management, collapsed 18 months ago, the Fed > organised a rescue. The consequences of not doing so could have been > huge and widespread financial damage as the derivatives house of cards > imploded. > > The Fed looked into the abyss back in September 1998, and saw horrors > other central bankers have been spared - so far. > > It's a theme never far from Alan Greenspan's musings these days. > He takes hefty criticism from Americans who believe he should be much > tougher with monetary policy - his only real tool - to rein in the > excesses which are the overhanging cloud of potential fallout from the > huge derivatives market. > > The end of Goldilocks > > Maybe he should. By allowing America's so-called Goldilocks scenario > of high growth, low inflation and low unemployment to develop > unchecked, he is allowing the tensions many see in the US markets to > reach critical proportions. > > But he is well aware where the real danger lies. He and Larry Summers > both know that if the storm does break in the US, the tsunami, the > tidal wave, will soon reach other shores. > > That is when the world will need the help and guidance of the only > international institution that may still be able to help - the > International Monetary Fund. > > So it is hardly surprising that Washington is eager to have someone in > the top job with experience of crisis. Someone with the outstanding > qualities of leadership the future may require. > > > ================================= > > > *** NOTICE: In accordance with Title 17 U.S.C. Section 107, this material > is distributed without profit to those who have expressed a prior interest > in receiving the included information for research and educational > purposes. 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