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  • Carolyn_Novice Carolyn_Novice Feb 20, 2001 9:17 AM Flag

    Subj: Not the right time

    All of which is unquestionably wretched for those concerned, but is it instructive? The Sunbeam saga is atypical on its face -- a protracted example, as presented, of a singularly ruthless and unsuccessful corporate restructuring.

    Nevertheless, toward the end of her book, Ms. Garson attempts to apply the Sunbeam story to the global economy. She devotes several pages to the 1997-98 Asian currency meltdown -- which brings in the International Monetary Fund, the World Bank, George Soros and all the usual suspects. The book more or less concludes with an appeal for the regulation of international capital flows.

    Ms. Garson's point seems to be that as mature economies offer fewer restructuring candidates, and as Western capital hunts for a home, financiers will look to emerging markets for their takeover targets. The liberalization that IMF bailouts impose on otherwise statist economies, she believes, will act as a Trojan horse for such private capital flows. The result will be a deluge of failed takeovers and restructurings -- like the Sunbeam deal, which seems to serve as her template.

    But this is hyperbole. Most restructurings do not blow up as Sunbeam's did. The idea behind them -- more often realized than not, one could easily argue -- is to free up unneeded capital for productive use elsewhere, including the Third World, thereby creating more opportunity, more jobs, higher wages and more wealth overall. The efficiencies created through this sort of "creative destruction" are precisely what allow for steadier rates of growth -- an assertion that the consistently hardy U.S. economy of the past 18 years would seem to confirm.

    In any case, Ms. Garson's final chapters seem tacked on, as if someone felt that "Money Makes the World Go Around" should include something or other on the IMF, what with all the controversy about its role in Third World debt. In the end even Ms. Garson can't get her mind off the things that capital generates. In an odd -- and oddly welcome -- appendix, she offers us a recipe for dehydrated jellyfish.

    ---

    Mr. Lilly is a featured writer at fsb.com, the Fortune Small Business Web site.

 
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