IMF Bailouts

Tom Plate, in his column Nov. 25, quoted Steven Radelet approvingly when he said, “The IMF puts conditions on these countries that are sometimes too onerous.”

Plate fails to mention one of the key reasons why these conditions are so strict, namely, foreign private banks. The IMF loans, to any country, cover only a small part of the total debt burden. When a country is in sufficient trouble that it is willing to lose face by going to the IMF for help, it is in trouble indeed. A rational bank will therefore call in its loans, or at least refuse to roll them over, unless fairly drastic changes are made.

After all, it was “business as usual” that got the country in trouble; minor changes are not going to get it out. The need to reassure foreign banks, giving those banks the confidence they need to leave their loans in the country, is a crucial reason why the IMF has to deliver strong medicine.

BRUCE WALKER

San Pedro

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It’s amazing how quickly high-flying free-market capitalists are transformed into International Monetary Fund socialists by government bailouts that allow them to feed without a risk at the welfare funds trough they presumably despise for the unwashed multitudes.

WM. N. McNAIRN

Palos Verdes Estates