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Saturday, March 07, 2009

Australian PM: Geithner Screwed Up Asia in 97-98 Crisis

Tim Geithner played the key role in his position at the IMF during the Asian crisis of 1997-98. Paul Keating, then Australia's Prime Minister, recently said that Geithner's "solution" to the crisis was dead wrong and devastated many Asian economies, in particular Indonesia. From the Syndney Morning Herald courtesy of The American Thinker:

"Tim Geithner was the Treasury line officer who wrote the IMF [International Monetary Fund] program for Indonesia in 1997-98, which was to apply current account solutions to a capital account crisis."

In other words, Geithner fundamentally misdiagnosed the problem. And his misdiagnosis led to a dreadfully wrong prescription...

But Geithner, through his influence on the IMF, imposed the same cure the IMF had imposed on Latin America and Mexico. It was the wrong cure. Indeed, it only aggravated the problem.

Keating continued: "Soeharto's government delivered 21 years of 7 per cent compound growth. It takes a gigantic fool to mess that up. But the IMF messed it up. The end result was the biggest fall in GDP in the 20th century.

I travelled to Indonesia in 1998 and saw firsthand the devastating depression the country endured. Restaurants and hotels completely empty, huge unemployment and a near-worthless currency. And now we are supposed to trust him and Obama with the U.S. economy? Really?