Discussion in 'Trading' started by chasinfla, Aug 11, 2002.

  1. <font size=1>

    I can't post a rebuttal at Le Cafe', so I figured I'd do it here. My problem with this article is not that I'm a fan of nor do I trust the IMF, nor am I convinced of the creditworthiness of South America right now. The problem is this: the author declares that, because the nature of the financing provided does not allow for Brazil to take the money and buy stuff, the financing is a 'lie.'

    It reminds me of prop trading. The firm gives a trader a half a million dollars or more a day to trade. He can't take that 'credit' and go out and buy houses, cars, and yachts, BUT he can take that credit into the marketplace and trade with it. It's non-fungible and it's used to meet margin (or 'reserve') requirements.

    And, he can lose money, (in which case the provider of his aid will cut him off or monitor him more closely or put him with a more experienced deployer of capital or whatever), so it really <i>is</i> a loan, albeit one with strings attached.

    While some prop traders are responsible financially, others, given a half a mil in the morning and a poor history of managing this amount of cash, might have it all spent on schemes, toys and girls by noon. The Latin American countries have proven themselves unfit to handle the aid they've been given so often in the past. Indeed, the lenders themselves have repeatedly shown themselves unfit to make such loans.

    This type of credit, one that can't be spent, is probably the wisest kind of aid that can be given. It enables them to function, encourages them to reform, but it's not carte blanche.

    Of course there is risk involved. We're dealing with money and human nature, not to mention the track record of the subjects. But there is a built in discipline to the aid. It's speaks of a responsibility on the part of the aid giver that is subtle genius. This, of course, is lost on conspiracy theorists and perpetual cynics.
  2. Bryan Roberts

    Bryan Roberts Guest

    i think your analysis is very astute!!! my only problem is the conclusion. if we look at the imf's track record in asia and argetina it is abyssmal!!!! i would not be surprised if soros was shorting the real heavily. i don't want to get into conspiracy theories, i just want to stick with what we see going on at the present. it just seems that chaos follows the world bank/imf around like stink on hogs!!! i'm sure we can pin some blame on the local politicians but i would love to follow the money trail of their backers. is the US immune from this???

    and another thing that bothers me is this has been going on for awhile in argentina, why is the media just now jumping on the story???

  3. Rigel


  4. Bryan Roberts

    Bryan Roberts Guest

    they forgot the last purpose:

    To enslave the everyday citizens of all countries with the debt we supply them under the auspices of rescuing their economies. we will insure the payment of interest owed to us by taxing the citizens on an exponentially accelerated tax burden. we will back only those politicians that conform to our agenda and we will by force, via the US military crush all opponents. eventually the citizens will pay 60 to 90 percent of their income in taxes just to service the interest on their nation's debt.
  5. The media has been reporting about Argentina's problems for at least a couple years. However, the US and the IMF for the most part decided not to get involved because Argentina's woes are due to its reckless policies, and putting more money into propping up bad policies is just throwing money into a black hole. Additionally, Argentina's problems will have limited spill over effect. However, Brazil has had RESPONSIBLE economic policies, and much of its current problems are due to the limited spillover from Argentina. However, we must help out Brazil, the largest Latin American economy, not only to encourage good economic policies, but also because a spill over from problems in Brazil will cause far reaching problems (including a significant one in the US, both directly and as a result of a domino effect).

    Thus, the media is now reporting on Brazil so much because the problems in Argentina were slowly building, and because the world has decided Argentina must correct itself, painful as that may be. Brazil's problems, on the other hand, have come about suddenly and largely as a result of Argentina's recklessness, and the US and IMF (among others) is ready to lend a helping hand! What's more, Brazil's economy (and spill over effect) will have a greater impact than Argentina. Clearly, all of these factors make Brazil's problems and our response a more prominent news headline!
  6. Roberts, where do you get this crap. First of all, we have forgiven most Latin American debt over the years (and we have given billions away as aid). Secondly, when have we used our military to "crush" nations that don't pay us back our loans? Do you really follow the news and world events, or do you just talk with some radicals in some coffee house and slap each other on the back for being "non-conformists?"
  7. By the way Roberts, while IMF policies may certainly be brought into question, the suggestion that chaos follows the IMF everywhere is a rediculous cause and effect conclusion. That's like asking, "Why does a brain surgeon have so many patients that die?" Obviously, much of the IMF's job is to help countries that have long had and continue to have great economic (and often political) problems! In these cases, it cannot throw money at corrupt politicians, mismanagement or incompetence. It must push for accountability, efficiency and sound policy, especially since new loans for other countries in need is partly dependent upon the IMF's success in getting repayment of its current loans. This is not to say that the IMF's determination of the "best economic policies" are in fact the best. That is a seperate debate. But I am saying that your assertions and conclusions are misguided!
  8. Bryan Roberts

    Bryan Roberts Guest

    btw you misspelled ridiculous!!! just hit check spelling next time you post. ;)

    here is what i ACTUALLY said, "it just seems that chaos follows the world bank/imf around like stink on hogs!!!" so are you saying the imf wasn't involved with argentina until they collapsed??? why are you getting so emotional about this...did i strike a nerve??? i was just asking a are more than welcome to assert your opinion and i will not attack you personally like you have me. as far as the US military is concerned i am speaking about the far as forgiven loans go that just burdens the US tax payer...nothing to worry about there, HUH???? do me a favor and quit attacking me personally then we can have a mature debate and who knows we both might learn something. oh yeah, btw, just call me bryan.
  9. Bryan Roberts

    Bryan Roberts Guest

    ok...i will state the obvious. yes, some media has reported the crises in argentina for awhile now or we both obviously would not have known about it. my point, is that it is now being trumpeted by the mainstream press with much more coverage. now the avg joe may actually become aware of the situation.
  10. Bryan Roberts

    Bryan Roberts Guest

    we are on the same page given your comments above....just relax a probably aren't even 40 yet!!!!
    #10     Aug 11, 2002