Glenn Greenwald, a commentator in Salon, posted a scary observation in which he compares the U.S. economy to Russia and Argentina. He quotes Desmond Lachman, an IMF expert on emerging markets and former Salomon banker, who notes how we’ve seen the same thing in those emerging markets.

In an emerging market, a banking crisis like this looks like a liquidity crisis, and the government tries to shore things up with an injection of cash. In fact, it’s a solvency crisis. Outsiders like the IMF generally recommend to fix such things with transparency not with cash. Otherwise the local oligarchs will manipulate the crisis to get rich off the ‘recovery’ money. Meanwhile, the IMF and such require the government to reduce spending on social programs to pay for the enrichment of the fat cats.

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