Just for laughs

Laugh if you want to or curse if you feel like. Both are dedicated at the Lotus feet of Baubo!! (The bold lettering is my work)

I am flagging a few gems for your entertainment. Lest you throw stones at me, these are extracts from the report submitted by Congressional Research Service. As to who exactly these people are, I am pasting the information as given in Wiki

    " The Congressional Research Service (CRS), known as "Congress's think tank", is the public policy research arm of the United States Congress. As a legislative branch agency within the Library of Congress, CRS works exclusively and directly for Members of Congress, their Committees and staff on a confidential, nonpartisan basis. Its staff of approximately 900 employees includes lawyers, economists, reference librarians, and social, natural, and physical scientists."

 I started by crossing out IMF because I can substitute it with the US Fed or the ECB, the central banks operated by the patron saints of IMF. After a feeble effort, I gave it up. 

Here go the extracts from CRS Report: The 1997-98 Asian Financial Crisis.

"With respect to moral hazard, the opinion of the IMF is that governments in trouble usually are too slow in approaching the Fund for help because of the conditions the IMF places on such support. According to the IMF, the real moral hazard is not with governments engaging in unsound lending but that, because IMF support is available, the private sector may be too willing to lend. Private sector financial institutions know that a country in trouble will go to the Fund rather than default on international loans.  Others, moreover, assert that the IMF is perpetuating the moral hazard that lies at the heart of the problem for troubled economies like South Korea-the absence of bankruptcy. 

"The IMF also placed certain conditions on Thailand. These reportedly included that the country commit itself to maintaining foreign exchange reserves at $23 billion in 1997 and $25 billion in 1998, slash its current account deficit to about 5% of GDP in 1997 and to 3% of GDP in 1998, and show a budget surplus equal to 1% of its GDP in FY1998" 

" In return for accepting the IMF emergency loans, Korea agreed to several conditions and reforms in order to strengthen its economy. On the macroeconomic side, the conditions included:

• reducing its current-account deficit to no more than 1% of GDP for 1998 and 1999 (about $5 billion),
• capping its yearly inflation rate at 5% in 1998 and 1999,
• building international reserves to more than two months of imports by the end of 1998, and
• recognizing that economic growth (in terms of GDP) for 1998 would likely fall from 6% to around 3%. In terms of financial restructuring, the IMF required a comprehensive restructuring and strengthening of Korea' s financial system in order to make it more sound, transparent, and efficient. The strategy comprised three broad elements: a clear and firm exit policy, strong market and supervisory discipline, and increased competition. The measures included:
• requiring that all banks that fail to meet the Basle Committee capital standards be restructured and recapitalized to include mergers and acquisitions by foreign institutions and losses by shareholders,"

"IMF assistance to the above three countries has been criticized for "bailing out" commercial banks and private investors at the expense of other less-favored groups and U. S. taxpayers"

There are many more gems yet to be extracted. I just thought a few samples are enough. Neither Europe nor USA are practicing what they enthusiastically preached. There are accidents (bank collapses) waiting to happen in Europe and I am not so confident about BofA either. I have reserved the best gem of the report to end this post.

Here it goes,

"Some corporations in certain countries have not been allowed to fail because of political or other reasons. In the words of one commentator, "Capitalism without bankruptcy is like Christianity without hell. There is no systematic means of controlling sinful excesses."