Venezuela and others [May 10].

So, of course we've already talked about Venezuela's pending withdrawal from the World Bank and the IMF, but the Stiglitz reading really makes it relevant. Venezuelan Finance Minister Rodrigo Cabezas that there is absolutely no question that Venezuela will honor its debts, and of course bondholders will not rashly pull out as soon as the country breaks away from its international lenders. Well, Venezuela did pay its debt back early in 2006, so it seems like there's a good case to believe them here. On the other hand, they've also negotiated to reduce repayment before using the spectre of default, and this time, again, around $21 billion is at stake because of President Chavez's announcement, a not at all insignificant amount of money.

I always get the giggles when I find online articles from the 90s; here's one on the bailout situation in South Korea in 1997. The article details the strict policies IMF forces on borrowers, including the old-school classical practices of reduced government spending and higher taxes. Something interesting to note is that at the time, unemployment was only 2.5%, a figure we could only dream of--and the IMF's policies threatened to drive it up to 7% (that's only a little less than half the unemployment that led to the premise of Koushun Tamaki's 1999 novel, Battle Royale. How much effect did the economic crisis have on the creation of that work?).

Another point mentioned in Stiglitz: debt relief for Iraq. Interestingly, Saudi Arabia has written off around 80% of the $15 billion Iraq owes them; now we're in the symbolic paper-signing stages of additional debt relief, as well as whatever concessions anyone can ring out of the country. One individual from the omniscient Rand Corporation is quoted as saying that this agreement doesn't matter, as Iraq isn't currently paying back debts anyway--unsurprising, considering it's still an occupied nation with all sorts of violence still happening on its soil. Perhaps when it can manage a stable flow of crude oil out, it will be able to take advantage of some of that debt relief (though relying solely on oil could probably prove calamitous for them, what with the ever-shifting value of it).

An article from Reuters on Stiglitz offers his criticisms of the IMF and the World Bank in a nutshell; Europe needs to stop appointing the head of the IMF, and the US needs to stop appointing the head of the World Bank. The Wolfowitz debacle, according to him, is just one more log on the fire.

Yesterday, the Prime Minister of Macedonia announced that his country will be paying back its debts to the IMF early, which could save it up to $9.4 million this year alone, according to the article. It's interesting that the IMF, whose nominal goal is to help countries develop with repayable loans manages to lend in such a manner that debt accrues through that compound interest. Of course, on a scale of hundreds of millions to billions of dollars, such a burden metastasizes rapidly, and is only worsened by any whiff of crisis that causes all the fluid capital to flow out as through a bottomless bucket.