Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

The IMF had already put tens of billions of euros into Eastern Europe. The eurozone would take even more. In a new age of globalization, was a deep engagement in Europe the right direction for the IMF to be headed? And in dealing with European countries with powerful representation on the Fund’s own board, could the Fund’s economists be certain that their expertise would prevail? Specifically, would the Europeans take the IMF’s advice on the question of restructuring? Did they even understand the policy that the IMF was duty bound to pursue? Following its disastrous experience in Argentina’s financial crisis in 2001, the IMF had established new rules.25 The Fund would lend only to solvent borrowers, otherwise there must be restructuring. And if it was to lend, it would insist on lending early, before panic set in. Given the scale of speculative firepower that could be mobilized in leveraged financial markets, to lend once a run had started was likely to be both expensive and ineffectual. Given how far the Greek crisis had already progressed by the early months of 2010, it was hard to argue that it met either of these criteria.