Back in late January I wrote here about a book by David A. Phillips that examined efforts at re-organizing the World Bank. Phillips, who worked at the Bank for 14 years himself, looks with especial care at a 20 year period, 1988 - 2008. He ends up quite disenchanted. I continue to read the book in small pieces. In chapter 8, Phillips quotes Gavin and Rodrik thus: "There is something more than a little schizophrenic about an agency that preempts potential private lenders because they are allegedly too risk averse (a main rationale for Bank lending), then demands that its loans should be senior to any other, thereby shifting most of the risk onto private lenders." Yes, you might say, "rings true, but who are Gavin and Rodrik?" The answer, M. Gavin and D. Rodrik are the co-authors of an article in the American Economic Review in 1995, "The World Bank in Historical Perspective." That's what I get from a footnote in Phillips book. Can I dig a ...
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Such efforts tend to go in circles. Today's reform is to undo yesterday's reform, and tomorrow's reform will be to recreate the one that we undid today. It doesn't work day-to-day though. But year by year and decade by decade. This is one conclusion one draws from the book REFORMING THE WORLD BANK: TWENTY YEARS OF TRIAL -- AND ERROR by David A, Phillips, The"20 years" number in the subtitle indicates that Phillips focuses especially upon the period 1986 -- 2006, beginning with the appointment of Barber Conable, a former member of the US House of Representatives. That was a time of great concern about Latin American indebtedness to the big New York and London banks, and worry about what a wave of defaults would do to those institutions. That concern led to the Baker plan in the middle of the decade, followed by the creation of "Brady bonds" to allow debt relief short of open default. In this fraught context, Conable immediately hired an outside c...
The Trump appointed head of the World Bank, David Malpass, has resigned. For those who need a refresher: the head of the WB, a Bretton Woods institution, is appointed by the President of the United States because of a deal made at that 1944 conference. The head of its sister institution, the International Monetary Fund, is under the same deal always a European (chosen by the IMF's own executive board.) Anyway: Malpass is leaving -- the reasons why are not obvious -- and his departure means that President Biden has an appointment opportunity he had not expected. On Malpass' way out the door, I want to make one point about his earlier career as a business executive and economist. Malpass was the Chief Economist at Bear Stearns for six years. Those happened also to be the last six years of the existence of Bear Stearns as an independent entity. The post of Chief Economist disappeared when Bear was purchased by JPMorgan Chase in March 2008, as the Subprime Crisis of...
That woman who tried to get another woman fired for eating on the train was a World Bank employee. You may have heard of this. It was one of those 15 minute social media sensations. A World Bank employee who is also an author (not just a hobbyist -- she had a book deal pending when this scandal broke) tweeted angrily about an employee of the Washington Metropolitan Area Transit Authority (WMATA) whom she had seen eating on the train. Apparently that is verboten. The WB employee tweeted about this and mentioned the employee's obnoxious response to a question on the subject, right at 9 AM on a workday. So I would imagine she had just gotten to work when she did so. So far, no biggie. What makes it something of a biggie is that the commuter sent a complaint to the WMATA. It replied. "Thank you for catching this and helping us to make sure all Metro employees are held accountable. Can you confirm the time you were on the train, the direction you were headed and w...
It was my twitter feed that first alerted me last weekend to the news that Zambia's President had forced the central bank head in that country out of office and vowed lower interest rates. Good for twitter! this is proof of its value -- the value of net based social media generally -- in tailoring news. In old-fashioned dead-tree newspapers, whence most of my news used to come (until very recently) the goings-on in Zambia would have been tucked into a small item very deep in the paper, if it was deemed fir to print at all by the papers in the "developed" world. But in fact, I deem it an important, perhaps the biggest one coming at us that day, and I'm glad to have received it when I did. One of the significant facts about the story is that it dramatically demonstrates that central banks are only independent of the executive offices of a country when they are allowed to be independent by those executive offices. In other words, they aren't really all th...