Page 11: The Time story “The Committee to Save the World” was published February 15, 1999.
Page 15: I am grateful to Thomas Dawson, director of the IMF’s External Relations Department, for permitting me to cite him as the source of the anecdote about the IMF report on Vietnam, which he recalled from his days as U.S. executive director to the Fund.
Pages 16-17: Figures on cross-border transactions in securities come from the annual report of the Bank for International Settlements, June 8, 1998, available on the BIS website, www.bis.org. Figures on private flows to emerging markets come from data supplied by the IMF’s Research Department. Figures on the IMF’s war chest are based on the Fund’s “usable resources,” consisting of hard currencies contributed by member countries, including resources that have been committed in IMF programs, but excluding the IMF’s gold. The figures are on the IMF’s website.
CHAPTER 2: OPENING THE SPIGOT
Pages 19-20: The information about the number of economists who Join the IMF each year was supplied by Mohsin Khan of the IMF Institute. The figures on the numbers of staff, staff nationalities, and salaries come from the IMF’s 2002 Annual Report.
The salaries of U.S. citizens on the IMF staff are subject to tax the same as those of other Americans; however, the Fund provides them with substantial supplements to their salaries so that their after-tax earnings are comparable to those of staffers from other nations.
Page 28: Laura Papi has returned to the IMF. Her quotes come from an interview she gave me for a newspaper article in The Washington Post during the time she was employed at a banking firm in London.
Pages 32-33: Information about Camdessus comes from his official biography published on the IMF website; and from Paul Lewis, “The New Man at the IMF,” The New York Times, December 18, 1986; and George Graham,“Latin America Propels Camdessus to Top of IMF,” Financial Times, December 19, 1986. The quote by Fischer about Camdessus irritating “every bloc of the Fund’s membership,” but “never all at once,” is from Dow Jones News Service, “IMF Staff Bids Adieu to ‘Master Politician’ Camdessus,” February 10, 2000. Camdessus’s quote about being a “French socialist ... [and] an ultra neoliberal Anglo-Saxon” is from his press conference September 30, 1999, as cited in a transcript compiled by Federal News Service.
Page 34: Figures on the voting shares of IMF member countries come from the IMF website.
Pages 36-38: Information about Harry Dexter White and the history of the IMF comes from David Rees, Harry Dexter White: A Study in Paradox (Coward, McCann, and Geoghegan, New York, 1973); Margaret Garritsen de Vries, The IMF in a Changing World 1945-85 (International Monetary Fund, Washington, D.C., 1986); Lawrence J. McQuillan and Peter C. Montgomery, The International Monetary Fund: Financial Medic to the World? (Hoover Institution Press, Stanford, Calif., 1999); and James M. Boughton, “Harry Dexter White and the International Monetary Fund,” Finance and Development (IMF, September 1998).
Pages 39-40: Information about Mark Mobius comes from his books Passport to Profits (Warner Books, New York, 1999) and The Investor’s Guide to Emerging Markets (Pitman Publishing, London, 1996); and articles about him in the Los Angeles Times, May 13, 1997; Sunday Telegraph, June 8, 1997; Toronto Star, November 24, 1996; Tampa Tribune, December 25, 1996; and Financial Post, March 16, 1996. Information about the shareholder meeting at Roy Thompson Hall was reported by Kathryn Haines, ”Templeton Growth Fund Meeting Attracts 8,000 Shareholders,” Dow Jones News Service, July 18, 1996.
Page 40: The figures on the rapidly growing involvement of mutual funds in emerging markets come from “Private Market Financing for Developing Countries” (IMF, 1995), cited in Miles Kahler (ed.), Capital Flows and Financial Crises (Cornell University Press, Ithaca, N.Y., 1998), p. 165.
Pages 41-42: The figures on capital flows from rich countries to developed countries come from “Capital Flows to Emerging Market Economies,” published by the Institute of International Finance, Washington, D.C.
Pages 42-43: Figures on the carry trade come from the IMF’s “International Capital Markets Report,” 1998, available on the IMF website.
Page 43: Information about Antoine Van Agtmael and the origin of the term “emerging markets” comes from Leslie P. Norton, “Emerging Again? The Father of Emerging-Markets Investing Has Been Through a Rough Patch,” Barron’s, September 16, 1996.
An extensive account of the craze of the 1820s in South American bonds and gold mining shares is contained in Edward Chancellor, Devil Take the Hindmost: A History of Financial Speculation (Farrar, Straus and Giroux, New York, 1999).
Pages 43-44: An account of the development of “emerging markets” in the nineteenth and twentieth centuries is contained in Barry Eichengreen and Albert Fishlow, “Contending with Capital Flows: What Is Different About the 1990s?” in Kahler (ed.), Capital Flows and Financial Crises.
Pages 45-47: Biographical information on Larry Summers comes from Paul Blustein, “Something About Larry; Treasury’s Famously Prickly Deputy Wears the Mantle of Heir Apparent—and a Smile,” The Washington Post, March 14, 1999; also David Warsh, “Why Bush Named Dukakis’ Economist to a Bully Pulpit,” The Boston Globe, October 28, 1990; Rich Miller, “‘This Is About Winning’: Playing the Economics Game Treasury’s No. 2 Leads the Charge When Battling Global Crises,” USA Today, January 18, 1999; and John Cassidy, “The Triumphalist,” The New Yorker, July 6, 1998.
Pages 49-50: Statement of the Interim Committee, Hong Kong, China, September 21, 1997; Address by the Managing Director to the Board of Governors of the IMF, September 23, 1997; both available on the IMF website.
CHAPTER 3: WINNIE THE POOH AND THE BIG SECRET
Background about Asia’s economies and the origins of its crisis comes from the following sources, among others: Paul Krugman, The Return of Depression Economics (W. W. Norton & Co., New York, 1999); Stephan Haggard, The Political Economy of the Asian Financial Crisis (Institute for International Economics, Washington, D.C., 2000); Mark L. Clifford and Pete Engardio, Meltdown (Prentice-Hall, Englewood Cliffs, N.J., 2000); Morris Goldstein, The Asian Financial Crisis: Causes, Cures, and Systemic Implications (Institute for International Economics, Washington, D.C., 1998); William C. Hunter, George G. Kaufman, and Thomas H. Krueger (eds.), The Asian Financial Crisis: Origins, Implications, and Solutions (Kluwer Academic Publishers, Boston, 1999); Philippe F. Delhaise, Asia in Crisis: The Implosion of the Banking and Finance Systems (John Wiley & Sons [Asia] Ltd., 1998); Collum Henderson, Asia Falling: Making Sense of the Asian Crisis and Its Aftermath (BusinessWeek Books, 1998); Giancarlo Corsetti, Paolo Pesenti, and Nouriel Roubini, “What Caused the Asian Currency and Financial Crisis?” (published on Roubini’s homepage concerning the crisis, http://www.stern.nyu.edu/~nroubini/asia/Asia-Homepage.html); Nicholas D. Kristof and Sheryl WuDunn, Thunder from the East: Portrait of a Rising Asia (Alfred A. Knopf, New York, 2000); and Kahler (ed.), Capital Flows and Financial Crises.
Also extremely helpful are several IMF publications: Carl-Johan Lindgren et al., “Financial-Sector Crisis and Restructuring: Lessons from Asia,” IMF Occasional Paper, 1999; Timothy Lane et al., “IMF-Supported Programs in Indonesia, Korea, and Thailand: A Preliminary Assessment,” IMF Occasional Paper, 1999; and Jack Boorman et al., “Managing Financial Crises: The Experience in East Asia,” IMF Working Paper, 2000.
Background about Thailand’s economy and the origins of its crisis comes from Pasuk Phongpaichit and Chris Baker, Thailand’s Boom and Bust (Silkworm Books, Chiang Mai, 1998); also invaluable was the so-called Nukul Commission Report, based on an investigation by a government-appointed panel. The panel’s formal name is The Commission Tasked with Making Recommendations to Improve the Efficiency and Management of Thailand’s Financial System, and its report was translated into English and published in 1998 by Nation Multimedia Group, Bangkok.
Page 54: Information about how Thailand’s fixed exchange-rate system worked comes from the Nukul Commission Report and from Vatchara Charoonsantikul and Thanong Khanto
ng, “Paiboon’s Role in Baht Defense,” The Nation (Bangkok), April 3, 1998.
Page 56: Information about Finance One comes from Raphael Pura, “One Finance Tale: How Optimism Built—and Doomed—a Thai Empire,” The Asian Wall Street Journal, March 31, 1997; and Henny Sender,“Mirror Man: Finance One Head’s Fall Reflects Sector’s Woes,” Far Eastern Economic Review, March 27, 1997.
Page 57: Information about overall credit to private borrowers comes from Bank of Thailand statistics furnished to me by the Institute for International Finance, Washington, D.C.
Figures about the margin loans held by finance companies in 1996 come from Gordon Fairclough, “Tick, Tick, Tick,” Far Eastern Economic Review, October 3, 1996. Figures about the overbuilding of Bangkok come from Michael Vatikiotis and Gary Silverman, “State of Denial,” Far Eastern Economic Review, March 6, 1997. Information about Muang Thong Thani Estate comes from Kristof and WuDunn, Thunder from the East, and Clifford and Engardio, Meltdown.
The figure on nonperforming loans comes from Carl-Johan Lindgren et al., “Financial-Sector Crisis and Restructuring: Lessons from Asia,” IMF, 1999.
Pages 57-58: Information about the Bangkok Bank of Commerce scandal comes from the Nukul Commission Report and from Phongpaichit and Baker, Thailand’s Boom and Bust.
Pages 59-61: The IMF Article IV mission report was, and remains, a confidential document.
Page 59: The Bank of Thailand plan and letter concerning the idea for turning Bangkok into a financial center are quoted in the Nukul Commission Report.
Pages 59-60: Information about the Bangkok International Banking Facilities, including the figure showing their growth from 1994 to 1997, comes from the Bank of Thailand’s “Economic Focus,” vol. 2, no. 2, April-June 1998, p. 4.
Page 60: The purchase by Mobius’s emerging-market fund of stock in the parent company of Muang Thong Thani was reported by Nicholas D. Kristof and David E. Sanger in “How U.S. Wooed Asia to Let Cash Flow In,” The New York Times, February 16, 1999.
Concerning the recommendation in the IMF’s Article IV report for Thailand: Paradoxical as it may seem today, the idea was that by unfixing the baht, the Thai currency would rise somewhat, in response to the simple laws of supply and demand as dollars poured into the country. The result would be a decrease in the inflow of dollars, because the riskiness of, say, purchasing a Thai certificate of deposit would increase once the baht began fluctuating more in value against the dollar.
Pages 61-62: Information on hedge funds and their chiefs comes from “The Risk Business,” The Economist, October 17, 1998; Joshua Chaffin, William Lewis, and Gary Silverman, “Sinking Fortunes,” Financial Times, May 5, 2000; Randall Smith, “Louis Bacon Aims to Win at All Costs ... and Does,” The Wall Street Journal, September 23, 1993; and Roger Lowenstein, When Genius Failed: The Rise and Fall of Long-Term Capital Management (Random House, New York, 2000).
Pages 62-63: The quote is from George Soros, The Crisis of Global Capitalism: Open Society Endangered (PublicAffairs, New York, 1998), p. 142.
Pages 63-64: The letters from Camdessus and Fischer to Amnuay, and the information about the IMF Article IV mission and Camdessus’s pleading with Rerngchai, are reported in the Nukul Commission Report.
Pages 65-66: Information about Chaiyawat, in addition to interview material, comes from a profile in the Bangkok Post, March 8, 1997.
Chaiyawat sought to downplay his role in formulating the Bank of Thailand’s foreign exchange policy in the period leading up to the floating of the baht. He was quoted in the Nukul Commission Report as saying that he “was surprised to hear that the Governor [Rerngchai] viewed him as a key person in important policy decisions.” He also pointed out that he “was not in charge of the BOT’s Banking Department which was tasked with the daily foreign exchange market’s daily supervision and intervention,” and he said he didn’t even have “access to operational information in the departments not under my supervision.” However, the report concluded that Chaiyawat’s role was much greater than he had acknowledged. As the Bank of Thailand’s “major technocrat,” who was its “most capable BOT finance and foreign exchange official,” his “foreign exchange views carried important weight with BOT officials, including Rerngchai,” the report said, adding: “Both Rerngchai and Amnuay didn’t take any actions which contradicted Chaiyawat’s point of view. Ultimately, though, Rerngchai still should be held responsible for any policy decisions.”
Pages 66-67: The episode on May 22 in which Fischer and other IMF officials urged Thailand to widen the currency band is cited in the Nukul Commission Report.
Page 69: Attackers of the baht are listed in Michael R. Sesit and Laura Jereski, “Traders Burnt in Thailand’s Battle of Baht,” The Wall Street Journal, May 22, 1997.
Pages 69-71: A detailed explanation of the Bank of Thailand’s strategy and thinking, including the quote “The market is not afraid,” is contained in the Nukul Commission Report.
Pages 71-72: Information about the May 15 counterattack by the Bank of Thailand, including the estimated losses inflicted on foreign financial institutions, comes from Deborah Orr, “Banks Get Burnt by Baht,” South China Morning Post, May 24, 1997; and AP-Dow Jones, “Thai Central Bank Earns up to $250M from May Baht Crisis,” May 28, 1997. Chaiyawat’s quote is from AP-Dow Jones, “Speculators Must ‘Pay the Price,’” May 16, 1997; and Druckenmiller’s quote is from “Druckenmiller Applauds Thai Central Bank’s Play Against Them,” Bloomberg News, July 2, 1997.
Among the market speculators who concluded that the Bank of Thailand had triumphed was Daniel Lian, head of Natwest Markets’ Asian bonds and currency research, who was quoted in AP-Dow Jones, “Thai Central Bank Earns up to $250M from May Baht Crisis,” May 28, 1997. “I don’t think the offshore speculators have the muscle to come back and launch another massive [attack] again,” he said.
Page 72: Information about Chavalit’s promise of a victory party, and the June 21 meeting at the Bank of Thailand, comes from the Nukul Commission Report.
Pages 72-73: Details of the Bank of Thailand’s July 2 announcement about the baht, and Rerngchai’s quote, come from “Floating the Baht,” Bangkok Post, July 3, 1997.
Page 75: Information about the conditions of the IMF’s program for Thailand comes from an IMF press release, “IMF Approves Stand-by Credit for Thailand,” August 20, 1997, on the IMF website.
Page 77: The $20 billion figure for the amount of loans extended to financial institutions comes from the Bank of Thailand’s “Economic Focus,” vol. 2, no. 2, April-June 1998.
Pages 77-78: Before the August 5 announcement that the operations would be suspended for a total of fifty-eight finance companies, sixteen had already been suspended, including Finance One; now forty-two more were being added to the list, with the understanding that they would be taken over by the government if they couldn’t shore up their financial conditions.
The plan to provide a guarantee to all depositors and creditors in banks and finance companies was built on earlier announcements by the Thai government. It did not apply to some creditors in the sixteen finance companies for which operations had already been suspended. The guarantee was funded by the imposition of a new fee on financial institutions.
Pages 78-79: The quotes by Geithner and Thanong to Sakakibara come from Sakakibara’s article, “Thai Crisis Played Part in IMF Idea,” Daily Yomiuri, November 26, 1999.
Details of the IMF’s program and the amounts contributed by the various donors come from the IMF press release, “IMF Approves Stand-by Credit for Thailand,” August 20, 1997, on the IMF website.
Pages 79-80: Camdessus’s quote comes from “IMF’s Camdessus Says Worst of Thai Crisis Is Past,” Bloomberg News, August 21, 1997.
Page 80: The markets’ reaction to the IMF’s Thailand program is derived from G. Pierre Goad, “Investors Lack Faith in Thailand’s Bailout,” The Asian Wall Street Journal, August 25, 1997; and Dow Jones News Service, “Baht Ends at Record Low on Fears over Reserves,” August 22, 19
97. Hanna’s quote is from Paul M. Sherer and G. Pierre Goad, “Rescue Package Isn’t a Panacea for Thailand,” The Asian Wall Street Journal, August 22, 1997.
Pages 80-81: Taylor’s quote was first reported in Thanong Khanthong and Vatchara Charoonsantikul, “Lack of Data Made Thai Woes Worse,” The Nation (Bangkok), February 25, 1999.
Pages 81-82: The report in which IMF staff members express criticism about the disclosure concerning Thailand’s reserves, and about fiscal policy in the Thai program, is titled “IMF-Supported Programs in Indonesia, Korea, and Thailand: A Preliminary Assessment,” IMF, Washington, D.C., 1999.
Page 83: The independent panel report faulting the IMF staff on the issue of capital account liberalization is titled “External Evaluation of IMF Surveillance: Report by a Group of Independent Experts,” IMF, 1999.
CHAPTER 4: MALIGNANCY
Among the particularly useful sources on the Indonesian crisis is a study written by a former World Bank staff member, Lloyd R. Kenward, “From the Trenches: The First Year of Indonesia’s Crisis of 1997/98 as Seen from the World Bank Offices in Jakarta.” Also helpful is John Bresnan, “The United States, the IMF, and the Indonesian Financial Crisis,” in Adam Schwartz and Jonathan Paris, eds., The Politics of Post-Suharto Indonesia (Council on Foreign Relations, New York, 1999).
Page 86: The quote from the senior IMF official comes from Paul Blustein, “IMF Readies Credit Line at Indonesia’s Request,” The Washington Post, October 9, 1997.
Page 87: The figures on the impact of the crisis on Indonesian workers and their wages come from Frankenberg et al., “The Real Costs of Indonesia’s Economic Crisis: Preliminary Findings from the Indonesia Family Life Surveys,” 1999, cited in a consultation draft of a World Bank report.
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