September 1998

Capitalism and serfdom: Capitalism on the wild frontier


The market, like nature, is red in tooth and claw. It has no concept of ethics, morality or justice. Its agents are predatory and are concerned mainly with their own survival. They have no thought for the good of the system. That doesn't mean the market is bad or that it doesn't work. It means that present prescriptions for emerging economies do not reflect these realities. Nothing highlights more starkly the inappropriateness of the blind application of free market thinking to emerging markets more than the role of hedge funds. By Simon Brady.


Global capital turns nasty
Too many risks, too few rewards
The spectre of intervention
Can the IMF play supercop?
Throwing good money after bad
A breathing space for the IMF

So Russia was going to discriminate against foreign holders of its rouble-denominated treasury debt. Under the terms of the country's debt rescheduling, foreign holders of GKOs were to receive only a fraction of the amount paid to Russian holders. Credit Suisse First Boston's Russia Update note of August 19 fulminated against this double-cross and, for a while, managed to stall the restructuring process. A few days later, when it seemed that the Russians weren't even listening to the firm that had best access to the oligarchs when the going was good, another CSFB spokesman raged: "Russia's elite is plundering the capital of the country," as though this long-evident truth had only just become clear.

CSFB protests that although foreign investors...


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