IMF offical: "The Quiet Coup" by the US financial industry

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From an interesting article by an International Monetary Fund official, in the May 2009, Atlantic. Why does this paragraph make me think of Tulsa and Great Plains Airlines?

Typically, these countries are in a desperate economic situation for one simple reason--the powerful elites within them overreached in good times and took too many risks. Emerging-market governments and their private-sector allies commonly form a tight-knit--and, most of the time, genteel--oligarchy, running the country rather like a profit-seeking company in which they are the controlling shareholders. When a country like Indonesia or South Korea or Russia grows, so do the ambitions of its captains of industry. As masters of their mini-universe, these people make some investments that clearly benefit the broader economy, but they also start making bigger and riskier bets. They reckon--correctly, in most cases--that their political connections will allow them to push onto the government any substantial problems that arise....

Squeezing the oligarchs, though, is seldom the strategy of choice among emerging-market governments. Quite the contrary: at the outset of the crisis, the oligarchs are usually among the first to get extra help from the government, such as preferential access to foreign currency, or maybe a nice tax break, or--here's a classic Kremlin bailout technique--the assumption of private debt obligations by the government. Under duress, generosity toward old friends takes many innovative forms.

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This page contains a single entry by Michael Bates published on March 18, 2010 12:22 PM.

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