Solomon Mcharo’s Reviews > Globalization and its Discontents > Status Update

If globalization continues to be conducted in the way it had been in the past, if we continue to fail to learn from our mistakes, globalization will not only not succeed in promoting development but will continue to create poverty and instability.

Local wars , unless contained and defused, can draw in others, until they become global conflagrations. An economic downturn in one country can lead to slowdowns elsewhere. In 1998 the great concern was that a crisis in emerging markets might lead to a global economic meltdown.

The typical central bank governor begins his day worrying about inflation statistics, not poverty statistics; the trade minister worries about export numbers, not pollution indices.

Prior to the East Asian crisis, the most recent financial crisis was the real estate crash in the late 1980s and early 1990s in Sweden, Norway and Finland, some of the most transparent nations in the world. There were many countries that were far less transparent than Korea, Malaysia, and Indonesia — and they did not have a crisis.

A twenty-eight-year-old man in the Bucharest branch of an international private bank, by making a loan of a few million dollars, had the power to decide whether or not the IMF, the World Bank, and the EU would provide Romania with more than a billion dollars of money. In effect, the Fund had delegated its responsibility for assessing whether to lend to the country to this twenty eight year old.

Romania was a particularly mystifying example. It was not threatening a default; it only wanted new money from the IMF to signal that it was creditworthy, which would help to lower the interest rates it paid. But new lenders will only lend if they get an interest rate commensurate with the risk they face. New lenders cannot be forced to take a “haircut”.

Irony - “America’s robber barons created wealth, even as they accumulated fortunes. They left the country much richer, even as they got a big slice of the larger pie. Russia’s oligarchs stole assets, stripped them, leaving their country much poorer. The enterprises were left on the verge of bankruptcy, while the oligarch’s bank accounts were enriched”