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Smooth Transfer of Power in Honduras

 


Last time I mentioned the election in Honduras I said that Xiomara Castro had won, but that her victory might well be contested.

I have proved too pessimistic. The National Party has in fact conceded the election results and stepped aside. Castro will be sworn in on January 27. 

Ah, I remember when things worked that smoothly in transfers of power in The United States.

Where will things go now? Well ... the new President is a professed socialist, but I suspect that is mostly a matter of the marketing power of that label. [Yes, I know, it's marketing power in the US still seems negative outside of Vermont. Honduras is a different place, folks.] 

What we know is that she has demanded a new deal from the International Monetary Fund in terms of her country's debt. I can hardly blame her and I have to observe that she doesn't have a great hand to play there. The IMF is simply a surrogate for global bond markets, and they are a stronger force than any momentum generated by an election. 

  

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  1. HemantDecember 22, 2021 at 2:29 PM

    Could you explain (not at length or in great detail) exactly what you meant by this: "The IMF is simply a surrogate for global bond markets."

    The IMF is not exactly the most popular international organization, and there is very good reason for that. Some of the 'advice' they have peddled to developing countries -- which is much like the 'advice' that the street-corner gang leader gives to the local wimp -- has lead to a lot of human misery in these places.

    But exactly why do you think the IMF is in bed with the bond markets?

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    1. ChristopherDecember 22, 2021 at 9:43 PM

      Fascinating question, and one that deserves a detailed response. But you want the "TL;DR" version. So: the IMF was created at Bretton Woods in 1944 precisely because the finance poohbahs gathered there thought it would be necessary in the post-war world to have one institution devoted to international liquidity: devoted, to is, to ensuring that sovereign states can continue to borrow money as they need. The IMF has remained true to that institutional goal.

      Indeed, the IMF maintains a blog. If you go to the homepage of its blog and scan the postings, you'll see that most of them concern precisely this issue of who borrows from whom. Right now if you go there you'll see, for example: "Chart of the Week: The World's Top Recipients of Foreign Direct Investments. "

      The ability to borrow implies 'good credit.' Among countries that don't have that, it implies a commitment to restructuring so as to create it. In other words, the IMF is the closest thing the world has to a bankruptcy court for sovereigns. The big bondholders, of course, and the bankruptcy debtors.

      Here's that blog, BTW. https://blogs.imf.org/

      Delete
    2. ChristopherDecember 22, 2021 at 9:45 PM

      In the penultimate sentence above, I should have written "The big bondholders, of course, ARE the bankruptcy debtors."

      Delete

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