El Salvador's dollar bonds started crashing right after the Bitcoin announcement, before the IMF bailed; Bukele had already snubbed the IMF six months before when he "fired five top judges and the attorney general" [1].
> Bukele is wildly popular in El Salvador
This is correct [2]. I'm not certain how this makes me feel about supporting them when this inevitably fails.
[1] https://www.bloomberg.com/news/articles/2021-11-22/bitcoin-b...
[2] https://www.reuters.com/markets/currencies/majority-salvador...
El Salvador started having this problem as Bukele eliminated other branches of government. That's why he pushed Bitcoin adoption in the first place - to work around the problems caused by his desired form of government.
My wife worked for a Ministry here and saw how the world bank shoved loans on non-functioning institutions and charged my country interest ON THE AVAILABLE FUNDS (like a credit line but it doesn't matter if you use it or not) despite them being executed or not.
I dont know wtf these people are doing, but benevolent they are not.
The loans are a way to circumvent budgeting. Not sure on specifics but it's easier for them to accept the loan vs getting cash handed to them by the country's comptroller (Contraloria is the entity in Spanish).
You go to the IMF when no one wants to loan you money.
Some of the employees in those institutions are actually connected politically locally and they favor insiders from their party. Others want the press-release and don't give a fuck if the project actually gets completed or if it impacts people. They're just as involved in politics as the locals: I'll give you this loan so you have cash to do whatever and you help me with this project I'm pushing throughout the region.
Sounds like a regular day at the office I guess but dunno I thought people who worked in these institutions wanted to do good. I guess I ate up some propaganda and never questioned it until I saw it first-hand through my wife's experience.
> and charged my country interest ON THE AVAILABLE FUNDS
That's actually fair. The problem is that many countries lack the capacity to satisfy the conditions and requirements for unlocking such funds. My understanding (and you can correct me if you have more accurate fact), is that the WB pass this interest to the relevant country rather than charge it for profit. Since the money was allocated by the institutions, they expect yield whether it is deployed or not. Obviously, the WB is not going to bear that cost.
But anyway I'm curious about your thoughts, what is the alternative? How would a better system look like?
This sounds strict, but think about it: every single company I've seen (correct me if this is biased in the wrong direction) doesn't allow just any employee to take out a loan. Heck, even the CEO can't just go to the bank and take out a loan if the collateral are assets/equity in the company - the board needs to approve that.
Why would we allow someone who's tenure is basically guaranteed to be <5 years to take out loans?
I know this sounds like a non-answer but maybe it's that simple: a specific institution/bureaucrat can't take leverage. The central govt can take out loans and increase budget to hand out.
Second, no branch of government has been eliminated. What happened is that his party impeached the justices on their supreme court, replacing them with justices from his party. In fact, "packing" the court, the same thing leftists are urging the Democrats to do in the USA.
Third, the claim that the IMF does not lend to dictators is obviously untrue.
Didn’t Bukele also declare martial law? That’s another traditional tool on the way to a dictatorship.
[1] https://www.laprensagrafica.com/elsalvador/Sindicato-de-doce...
[2] https://m.dw.com/es/el-salvador-m%C3%A1s-de-200-jueces-cesad...
[3] https://www.laprensagrafica.com/elsalvador/Cuestionan-retiro...
Does the Salvadoran constitution allow immediate reelection? Has that changed recently? If so, by whom?
This is wrong. The IMF, USA, and Europe deal with dictators on a regular basis.
> because anything given to a dictatorship goes straight to the cronies at the top.
That's funny because the opposite happened where I live.
> El Salvador started having this problem as Bukele eliminated other branches of government. That's why he pushed Bitcoin adoption in the first place - to work around the problems caused by his desired form of government.
El Salvador had an astronomical crime rate, and bad finances long before Bukele. It's unlikely that Bukele (or a single man) can eliminate anything in the government or a democratic system. What happens is these system collapses and Bukele is just the symptom of it.
You mean the corrupt criminal network in El Salvador somehow collapsed because of inexplicable reasons? The collapse is not even to some degree the effect of intentional political changes?
Also many countries on the https://www.imf.org/en/Topics/imf-and-covid19/COVID-Lending-... don't look very democratic. But again, it depends on what is criteria here.
He seems to have successfully controlled crime in El Salvador. Usually, there is something behind these strong men if they are still popular. Homicide is down from 103 in 2015 to 17.6 last year. People will stick with such figure; it's not clear why previous rulers have failed. 103 is scary as shit number. Bitcoin will look like a blip in his mishaps from the citizenry point of view.
And I put understand in quotes because the IMF does get Bitcoin, Crypto and finance better than most countries. They understand that crypto is mostly bad news for weak countries because they are already having trouble with capital outflow as is.
See https://en.wikipedia.org/wiki/Structural_adjustment#Criticis... and https://en.wikipedia.org/wiki/Enough_Is_Enough_(letter) for examples.