Wednesday 25 Nov 2020 | 02:05 | SYDNEY
Wednesday 25 Nov 2020 | 02:05 | SYDNEY

Rich world cant, developing world Schadenfreude?


Mark Thirlwell

6 February 2008 11:11

Nobel laureate and bane of the IMF, Joseph Stiglitz, has written a provocative column on this year’s World Economic Forum. In it, he notes that one consequence of the subprime crisis has been to make the usual rich world declarations on the importance of transparency, effective financial supervision and strong risk management systems ring a little hollow. 'How about practicing what you preach?' will now be the inevitable retort.  Not that this diminishes in any way the importance of getting these things right, of course, and any natural tendency to Schadenfreude on the part of the developing world will be tempered by concern about the adverse consequences of all this for the global economic environment.  

Rich world hypocrisy in the response to the sub-prime fallout is also touched upon in this comment in the Financial Times by Ricardo Haussmann, where he notes that some of the same voices that called for tough macroeconomic policy responses in the case of emerging markets crises are now arguing that the appropriate response to US economic difficulties is a significant loosening of economic policy.

Finally, also worth a look in the Financial Times is Ken Rogoff’s warning that we may be too optimistic about China’s growth prospects this year. While conceding that China’s economy demonstrated significant resilience during both the 1997-98 financial crisis and the 2001 downturn, Rogoff argues that this Olympic year is already providing the authorities with a series of tough economic challenges.