“So, Mr Wolfowitz – you are here to audition for the role of Tarzan…?”
I got about as far as the insinuation that the absence of risk premiums in World Bank loans are a selling point for the Bank status quo, and lost all interest in Salmon’s opinion. Risk premiums are not a bug, they’re a feature, and loan practices which do not take proper risk premiums into account generate moral hazards. I’m a history major, and even I know that much.
Poor fucking Wolfie – sent off to slave fruitlessly among the development fairies and their golden funding toilets, which produce wealth from a magical combination of shit, money and energetic flushing motions.
what moral hazard and what insinuation ?
Salmon didn’t insinuate, he pretty much stated outright that World Bank loans have a negligible risk premium compared to private capital loans because the World Bank’s loans are super-secured and the risk of default is consequently negligible.
Mr. Salmon doesn’t do much to counter the arguments set forth in the article, but he does litter his responses with partisan detritus; (“We can surely assume that whenever Wolfowitz has to come down on one side or the other – whenever the Third World wants on thing and the USA wants another – he will do America’s bidding.”)
In another part of the article he responds to the assertion that 70% of the World Banks non-aid funds go to 11 countries who have capital markets with a lengthy argument against “ignoring” those 11 countries. Mr. Salmon misses the obvious point that maybe a lower percentage of non-aid funds could be allocated to these countries, allowing more to be loaned out to other countries with greater needs.
I’d say Mr. Salmon may have some good points to make against the WSJ article, but he wasn’t successful here.
Comments are closed.