Sydney Morning Herald
If anyone in the US media had thought to ask a former Australian prime minister for his assessment, they would have heard a different view. And they would not have been so surprised at Geithner's performance since.
In a speech to a closed gathering at the Lowy Institute in Sydney on Thursday, Paul Keating gave a starkly different account of Geithner's record in handling the Asian crisis: "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.
Read the rest here.
Why is this important? Thailand has this knack for following international trends instead of coming up with it own policies based on its own interests, because, if you have been following Thai Crisis's blog at all, Thai economic bureaucrats are insecure, inept and contradictory. It doesn't seem like they have a clue as to what they are doing, so they just copy somebody else.
But, guess what? This incompetence is not limited to Thailand. The incompetence is universal. I have been following economic news closely in Thailand and the rest of the world fairly closely for the last 15 years or so. The thing I have discovered is that most of these bureaucrats and politicians in the upper echelons of power are just winging it. Sometimes they get it right, sometimes they get it wrong. They are gambling, but they are playing with odds worse than slot machines. These great brains coming out of Harvard, Yale, Princeton, London School of Economics don't have such great brains after all. Their record speaks for itself.
I like Obama personally, but I think his policies are disastrous. Throwing money at problems and hoping for the best is not sound fiscal policy. But it seems Abhisit is doing exactly the same thing, both on the fiscal and monetary front. Abhisit has decided to go for broke on the simulus front, by borrowing from foreign capital at a premium, and bringing interest rates down to zero. Just like Obama. These policies won't work unless the world economy turns around quickly, but that is nothing but a pipe dream. For Thailand especially, Abhisit's policies are unsustainable. Thailand needs to go into bunker mode instead of relying on lame policies such as tourist fee waivers and flowery language about inviting non-existent foreign capital in for investment.
The interesting paradox of the 1997 crisis is that if Thailand never had the crisis, the country would probably be in economic ruins, and if the US had been paying attention and learned the lessons from that crisis, the world wouldn't be in the shape it is in right now.