Opinion: The IMF should think very carefully about bailing out developed countries in this financial crisis. The facts behind the crisis - the greed, the housing bubbles, the over-consumption, the deceit - should not be used as an excuse to divert money away from the world's poor countries who did not enjoy the past decades orgy.
There is something particularly odious about middle class people who knowingly took on too-big mortgages, turning around and complaining about interest payment increases (mortgage interest rates do not come close to what they have been in the 70s and 80s).
There are profound structural reforms required in the developed countries to address this problem. By bailing it out with what is the world's emergency reserve of savings in the IMF, would be very irresponsible.
The Millennium Development Goals - due to be accomplished by 2015 - should be the priority for this extra cash.
As for the middle class in developed countries, they will need to work this out with their national governments, and face up to their own economic problems and priorities. As has been mentioned in many publications, the warning bells were going off over the past five years. International institution after institution issued thoroughly researched reports and memos saying debt levels were too high. National governments took no action, and this should be something for national leaders to contemplate.
IMF readies emergency aid for wounded economiesThu Oct 9, 2008 11:50am EDT Email | Print | Share | Reprints | Single Page | Recommend (0)[-] Text [+]1 of 4Full SizeRELATED NEWSCrisis to dent China, Brazil growth: IMF chief10:14am EDTECB's Stark: Don't expect wonders at IMF meeting10:00am EDT
By Lesley Wroughton
WASHINGTON (Reuters) - The International Monetary Fund said on Thursday it was ready to help countries hit by the raging global credit crunch and had activated an emergency financing mechanism first used in the 1990s Asian crisis.
The Fund already has a mission in Iceland, where the government has seized control of its largest bank, and has warned that the worst financial crisis since the 1930s Great Depression could inflict lasting economic harm on the world.
"Yesterday I activated emergency procedures so the IMF can respond quickly ... to be able to answer problems that may happen in some of the emerging countries," IMF Managing Director Dominique Strauss-Kahn told a news conference.
"We are ready to answer any demand by countries facing problems," he added.
Panic over toxic U.S. mortgage loans has sapped confidence in financial institutions, forced governments to pledge hundreds of billions of dollars of taxpayer money and pushed central banks to deliver the first coordinated interest rate cut.
Speaking ahead of IMF and World Bank meetings of finance leaders in Washington this weekend, Strauss-Kahn said the main task of global policy-makers was to restore confidence in global markets.
Group of Seven finance ministers and central bank chiefs also meet in Washington on Friday to consider their options.
The IMF's emergency facility was created in 1995 as a way of speeding up the approval of loans to countries in need. Continued...