Brad Setser Is Not a Happy Camper

Brad Setser writes:

RGE - John Taylor's rhetoric on the IMF drives me nuts: Taylor seems to really think his under his watch, the "Bush Administration ended the bailout habits of the IMF" As Taylor notes in the Journal, the Taylor-led US Treasury did say no to Argentina in late 2001. But Taylor said no in December of 2001 only after saying yes to a horribly ill-conceived augmentation (increase in IMF lending) in the summer of 2001.

The IMF has stated that it intends to stick to its access limits. Of course, it also has a policy that allows it to go over its access limits whenever it and its major shareholders decide they want to. And every time a big emerging economy gets into trouble, they want to. The IMF hasn't given out any big loans recently, tis true. But that is because no one has gotten into trouble, not because the IMF and its big shareholders have stuck to the stated lending limits under pressure.... As for Taylor's real record, I think the facts speak for themselves. He approved a large augmentation for Argentina, and large loans for Turkey, Uruguay and Brazil....

Taylor could take credit for the IMF's successes in Brazil, Uruguay and Turkey. All three countries avoided default, regained access to markets, returned to growth and repaid the IMF. I would submit the current emerging market boom wouldn't have happened had Brazil defaulted in 2002 or early 2003. And without the IMF lifeline, that is exactly what would have happened. Taylor can even take credit for lending out the IMF's money to countries that subsequently repaid the Fund. But Taylor can not credibly take credit for scaling back IMF lending.

Yet Taylor consistently refuses to claim credit for the successes he did have, and insists on trying to get credit for something he didn't do - scale back IMF lending!...