Newspaper article The Christian Science Monitor

Malaysia's Mahathir vs. 'Immoral' Markets

Newspaper article The Christian Science Monitor

Malaysia's Mahathir vs. 'Immoral' Markets

Article excerpt

If Malaysian Prime Minister Mahathir had his way, international financier George Soros and other currency speculators would be out of a job and possibly behind bars.

"Currency trading is unnecessary, unproductive and totally immoral," he told delegates at the joint annual meeting of the World Bank and the International Monetary Fund (IMF) in Hong Kong Sept. 20. "It should be stopped, it should be made illegal."

The comments add fuel to a debate over what can be done to curb the exchange-rate swings that take many developing nations on an economic roller coaster. One trillion dollars changes hands in the currency markets every day - 20 times more than the amount needed to finance trade in goods and services. Malaysia's leader contends that treating money as a commodity - such as oil or pork belly futures - serves no one other than the traders. "No substantial jobs are created, no products or services enjoyed by the average man in the street," he said. Indeed, currency swings can play havoc with the ability of consumers to buy imported goods or businesses to expand abroad. Dr. Mahathir contends that investment houses and the "hedge funds" that manage money for the wealthy manipulate currency and share prices with their huge resources. And he has accused Mr. Soros of engineering the currency crisis that has seen the purchasing power of many Southeast Asian countries fall by as much as 30 percent since July. Soros, who also spoke to the World Bank/IMF gathering, denied the charges. He said he has actually been betting that currencies like Malaysia's ringgit will strengthen, not depreciate. "Interfering with the convertibility of capital at a moment like this," he added, "is a recipe for disaster. Dr. Mahathir is a menace to his own country." Most economists tend to agree with the financier. The IMF and World Bank maintain they warned Thailand and Malaysia ahead of time that their currencies were vulnerable because of underlying economic weaknesses, such as troubled banks or overambitious government spending. …

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