With the global financial system on life support, the old world order has been crumbling with alarming speed. Sadly, the dreams of the emerging markets have crumbled even faster than the financial system that helped enable their meteoric growth. What has been perhaps most shocking, though, is the speed with which many of the developing economies abandoned their independence and thrust themselves into the clumsily welcoming arms of a magically revitalized International Monetary Fund. And while we might have hoped that both the IMF and its hapless clients had learned from past mistakes and taken a different approach to stabilizing stumbling economies, the reality is quite the opposite.
As Global Finance was going to press it was becoming apparent that the new crop of countries seeking help from the IMF would be coerced into taking the same old medicine-an IMF-sanctioned fiscal straitjacket whose purpose is not so much to ensure the longterm economic and social health of the borrower nation as to make sure the IMF gets its money back.
Both the IMF and the World Bank have come under heavy-and mostly reasonable-criticism for the flaws in their rescue and development efforts in emerging markets over the past decade or so. That the IMF is apparently not viewing this crisis-and the IMF's own dramatic revival from near-irrelevance-as an opportunity to remake its model and to provide support that does foster long-term, sustainable economic growth in its client states is a true tragedy.
