Reference no: EM132830927

You are the chair of an IMF task force. Your job is to reevaluate the policy of bailing out national governments that suffer losses in the private sector. Current policy is to enlist the governments of industrialized countries in bailing out emerging nations in the midst of financial crises. Taxpayers in industrial countries typically foot the bill for IMF activities, with total loans running into the many billions of dollars. Recent examples are the bailouts of Mexico, Indonesia, and Thailand. Some critics call this system a kind of "remnant socialism" that rescues financial institutions and investors from their own mistakes with money from taxpayers. For instance, the financial crisis in Thailand was largely a private-sector affair. Thai banks and insurance companies were heavily in debt and the central bank had recklessly pledged its foreign exchange reserves to shore up the currency.

As chair of the task force, what is your position on this dilemma?

Do you believe that the current system socializes losses (the government bails them out) and privatizes profits?

Explain exactly who benefits from such bailouts. What is an alternative to an IMF bailout?