Posts Tagged ‘IMF’

Greece and the economic hit men

August 3, 2015

Like many people, I once naively believed that banks made a profit by lending money to people who would pay them back.  I’m sure that is still true of the many honest bankers still left in the world.

But it can be more profitable for banks to lend money to people who can’t pay them back.  The lender collects higher interest rates.  Sometimes the loans are securitized and sold to suckers.   Foreclosures are profitable if the value of the underlying asset is greater than the loan.

And last, but not least, if the lender is large enough and politically powerful enough, a government will bail him out.

John Perkins, author of Confessions of an Economic Hit Man (which I haven’t read), gave an interview to a Greek radio station explaining how this works.

Essentially, my job was to identify countries that had resources that our corporations want, and that could be things like oil – or it could be markets – it could be transportation systems.  There are so many different things.

2014_911_perkins_st

John Perkins

Once we identified these countries, we arranged huge loans to them, but the money would never actually go to the countries; instead it would go to our own corporations to build infrastructure projects in those countries, things like power plants and highways that benefited a few wealthy people as well as our own corporations, but not the majority of people who couldn’t afford to buy into these things, and yet they were left holding a huge debt, very much like what Greece has today, a phenomenal debt.

And once [they were] bound by that debt, we would go back, usually in the form of the IMF – and in the case of Greece today, it’s the IMF and the EU [European Union] – and make tremendous demands on the country: increase taxes, cut back on spending, sell public sector utilities to private companies, things like power companies and water systems, transportation systems, privatize those, and basically become a slave to us, to the corporations, to the IMF, in your case to the EU, and basically, organizations like the World Bank, the IMF, the EU, are tools of the big corporations, what I call the “corporatocracy.”

via TruthOut.

The so-called “bailout” of Greece is not a bailout of the Greek people and does not reduce the Greek debt burden.  It is a bailout of banks by European governments and the International Monetary Fund.

I’d guess that’s the reason the Russian government turned down a Greek plea for help.   The Russians would get no benefit from providing funds to Greece that would flow through to European governments that support the Ukrainian government’s fight against pro-Russian separatists.  Far better, from the Russian standpoint, to wait until Greece defaults and disconnects from Europe, and then step in.

Ukraine itself will soon be in the same situation.  It has greater debts than it ever can repay, and rich assets, especially in agricultural land, that speculators would like to acquire.

∞∞∞

An Economic Hit Man Speaks Out: John Perkins on How Greece Has Fallen Victim to “Economic Hit Men”, an interview by Michael Nevradakis for Dialogos Radio in Greece.

Bailout Money Goes to Greece, Only to Flow Out Again by Jack Ewing and Liz Alderman for the New York Times.

Who Really Benefits From Bailouts? by Barry Ritholtz for BoombergView.

The foreign scene: November 4, 2014

November 4, 2014

EU unblocks ‘unprecedented levels’ of cash to secure gas for Ukraine on the EurActiv news site.  (Hat tip to Bill Harvey)

Ukraine Dips Into Dwindling Reserves to Pay Gazprom by Kenneth Rapoza for Forbes.

The International Monetary Fund will lend Ukraine the money needed to buy gas from Russia’s Gazprom, which will continue to sell gas to Ukraine at a subsidized rate.  This means Ukrainians, but European Union members who depend on Russian gas, will get safely through the winter.

It also means Ukraine will be in hock to the IMF, which will have to impose austerity on the Ukrainian people and sell off national assets, such as agricultural land, to pay back the IMF loan.  It is a win-win deal for everyone except the unfortunate Ukrainian people.

Dr. Adadevoh

Dr. Adadevoh

Doctor Stella Adadevoh Isolated Ebola Case, Stopped Nigaria Outbreak by Jonathan Cohn for The New Republic.

Nigeria is free of new Ebola outbreaks, and has been for more than six weeks.   This is an important accomplishment.  It would not have been the case except for a brave Nigerian physician, Dr. Stella Ameyo Adadevoh, who acted promptly to isolate an Ebola carrier and lost her own life to infection.

North Korea’s Gulags: a horror “without any parallel in the contemporary world” by Max Fisher for Vox.

The biggest CIA-drug money scandal you never read by Mark Ames for Pando Daily.

 

Neo-conservatives, neo-liberals and Ukraine

April 9, 2014

American foreign policy during the past couple of decades has been directed by two groups of people — the so-called neo-conservatives (who are not conservative) and the so-called neo-liberals (who are not liberal).  They are part of the deep state, the part of the government that is not affected by election results.

The goal of the neo-conservatives is to make the United States the dominant world military power by, among other things, keeping Russia weak and preventing China from growing strong.  They say that the only way the United States can be save is by preventing the emergence of any country with the power to threaten it.

1_hryvnia_2005_front1The goal of the neo-liberals is to free corporations and banks from the control of all governments, including the United States government, and to force nations to repay their debts to international banks at whatever cost to the well-being of the citizens.  They say this is the only path to a world that is prosperous and free.

Sometimes these groups work at cross purposes, and the Ukraine situation is a good example.

ukrainian-hryvniaAs Prof. Bill Black was written, if the U.S. government and the European Union wanted to stabilize the current Ukrainian government and detach it from Russian influence, the best way to do it would be to refinance their debt to the International Monetary Fund so that it could be repaid at low interest and in hryvnia, the Ukraine’s currency, rather than dollars or euros.

But evidently this is not on the table.   US and EU policy is to insist Ukraine accept the IMF terms, even though this means higher taxes, cuts in government services, higher prices and, most importantly, the selloff of Ukrainian national assets at bargain prices.

http://www.nakedcapitalism.com/2014/04/bill-black-ukraine-austerity-and-kamikaze-economics.html

The Ukraine crisis: Links & comments 3/30/14

March 30, 2014
Crimean Tatar women protest breakup of Ukraine

Crimean Tatar women protest breakup of Ukraine

Elections are scheduled in Ukraine for May 25.   I don’t know how free and fair the elections will be or whether Ukrainians will have meaningful choices.  But it matters little, because the present unelected government of Ukraine has committed the nation to an agreement with the International Monetary Fund that no elected government would ever agree to.  It is an example of Naomi Klein’s “shock doctrine” in action.

http://www.ianwelsh.net/ukraines-unelected-government-imposes-imf-austerity/

http://www.telegraph.co.uk/finance/financialcrisis/10728149/Windfall-for-hedge-funds-and-Russian-banks-as-IMF-rescues-Ukraine.html

https://philebersole.wordpress.com/2014/03/06/the-shock-doctrine-in-ukraine/

The Ukraine government will sell off national assets at bargain prices, raise gas prices and cut public services as a condition for its loans to foreign banks to be paid off.  Yet I don’t read anything meaningful about this aspect in the national press.  Here are summaries of what is going on in Ukraine that are better than anything Americans are likely to read in their local newspapers or see on their local TV news programs.

http://consortiumnews.com/2014/03/27/the-danger-of-false-narrative/

http://pando.com/2014/03/17/the-war-nerd-everything-you-know-about-crimea-is-wrong-er/

Another important aspect of the situation is the desire of certain neo-conservatives in the U.S. government to draw Ukraine into an anti-Russian alliance.   Vladimir Putin could not more tolerate the possibility of nuclear-armed American warships docking in Crimea than John F. Kennedy could tolerate Soviet nuclear missiles in Cuba.

http://www.theamericanconservative.com/articles/a-coup-in-crimea-or-in-russia/

http://nationalinterest.org/print/commentary/the-democratic-values-stake-ukraine-10069

Economic sanctions against Russia have a price that some countries – for example, Germany – may not be willing to pay..

http://www.dw.de/germanys-russian-energy-dilemma/a-17529685

That doesn’t mean that Ukrainians, including Russian speakers and ethnic Russians, necessarily want to be “rescued” by Vladimir Putin’s Russia.

http://www.newrepublic.com/article/117122/donetsk-letter-ukrainian-russians-dont-all-want-putin-protection

http://www.lrb.co.uk/v36/n06/james-meek/putins-counter-revolution

http://www.unitedhumanrights.org/genocide/ukraine_famine.htm

Dmitry Orlov gives a Russian perspective on his ClubOrlov blog.

http://cluborlov.blogspot.com/2014/03/the-madness-of-president-putin.html

http://cluborlov.blogspot.com/2014/03/reichstag-fire-in-kiev.html

Pepe Escobar of Asia Times has sharp commentary on the geopolitical implications of the Ukraine crisis.   Read his articles to get an idea of how U.S. policy seems to the outside world.

http://www.atimes.com/atimes/Central_Asia/CEN-02-270314.html

http://www.atimes.com/atimes/Central_Asia/CEN-01-250314.html

http://www.atimes.com/atimes/Central_Asia/CEN-02-200314.html

http://www.atimes.com/atimes/Central_Asia/CEN-01-170314.html

http://www.atimes.com/atimes/Central_Asia/CEN-01-120314.html

There are links to the latest from Ian Welsh, Pepe Escobar and Dmitry Orlov on my Blogs I Like page.

Who in Ukraine will benefit from an IMF bailout?

March 23, 2014

Economists Michael Hudson and Jeffrey Sommers, in this informative interview with the Real News Network, said that most people in Ukraine will suffer, because the condition for an IMF loan will be lower living standards for a country already poor by European standards, higher taxes and fewer public services and a bankruptcy sale of the Ukraine’s rich farmland and other assets at bargain prices.

IMF loans never go to the people of the country receiving the loan.  They go to pay off the country’s creditors.  An IMF loan to a country is like a debt consolidation loan to a private individual.  In the case of Ukraine, the country’s creditors fall into two groups — the Russian Federation and its Gazprom natural gas company, to which Ukraine has billions of dollars owing and which no longer will sell Ukraine gas at a below-market price; and banks in western Europe and the United States, which have made billions of dollars in loans to the previous government.   Whichever group to which the IMF loans flow (I’m not betting on the Russian Federation), they won’t go to help ordinary Ukrainians.

Ukraine will then be in debt to the IMF, which will demand repayment by squeezing the money out of the Ukrainian people and by selling off Ukrainian national assets at bargain prices.  Rich Ukrainians may acquire some of these assets.  They will be the only Ukrainians who will benefit.

Hudson and Sommers pointed out that U.S. energy companies are planning for a disruption in Russian natural gas exports to western Europe, and building LNG (liquified natural gas) terms in U.S. ports so as to be able to sell gas in Europe.

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Three questions about self-determination

March 9, 2014
A woman lights a candle in Kiev in memory of protesters who died

A woman lights a candle in Kiev in memory of protesters killed in February

I think it is good for us Americans to hear points of view we don’t hear from the so-called mainstream press and broadcasters.  Here is Yanis Varoufakis, a professor of economics at the University of Athens, on the right of self-determination, as applied to Ukraine.

Let us accept (as I do) the principle that national minorities have the right to self-determination within lopsided multi-ethnic states; e.g. Croats and Kosovars seceding from Yugoslavia, Scots from the UK, Georgians from the Soviet Union etc.

Awkward question no. 1: On what principle can we deny, once Croatia, Kosovo, Scotland and Georgia have come into being, the right of Krajina Serbs, of Mitrovica Serbs, of Shetland Islanders and of Abkhazians to carve out, if they so wish, their own nation-states within the newly independent nation-states in the areas where they constitute a clear majority?

Awkward question no. 2: On what principle does a western liberal deny the right of Chechens to independence from Russia, but is prepared to defend to the hilt the Georgians’ or the Ukrainians’ right to self-determination?

Awkward question no. 3: On what principle is it justifiable that the West acquiesced to the razing to the ground of Grozny (Chechnya’s capital), not to mention the tens of thousands of civilian deaths, but responded fiercely, threatened with global sanctions, and raised the specter of a major Cold War-like confrontation over the (so far) bloodless deployment of undercover Russian troops in Crimea?

Varoufakis stipulated that Vladimir Putin is a dangerous despot, and that the (relatively) democratic values embodied in the European Union are preferable to the authoritarian values of the Putin-sponsored economic bloc, the Eurasian Union (consisting so far of Russia, Belarus and Kazakhstan).

Unfortunately, he said, Western leaders don’t necessarily have Ukraine’s interests at heart.

The Ukraine is, and was always going to be, the battleground between Russia’s industrial neo-feudalism, the U.S. State Department’s ambitions, and Germany’s neo-Lebensraum policies.

Various [U.S.] ‘Eurasianists’ see the crisis in Kiev as a great opportunity to promote a program of full confrontation with Russia, one that is reminiscent of Z. Brzezinski’s 1970s anti-Soviet strategy.  Importantly, they also see the Ukraine as an excellent excuse to torpedo America’s role in normalizing relations with Iran and minimizing the human cost in Syria.

At the same time, the IMF cannot wait to enter Russia’s underbelly with a view to imposing another ‘stabilization-and-structural-adjustment program’ that will bring that whole part of the former Soviet Union under its purview.

As for Germany, it has its own agenda which pulls it in two different directions at once: securing as much of the former Soviet Union as part of its neo-Lebensraum strategy of expanding its market/industrial space eastwards; while, at the same time, preserving its privileged access to gas supplies from [Russia’s] Gazprom.

He believes that President Obama and Secretary of State John Kerry understand the limits of American power and the danger of an overly hawkish response to events in Ukraine.   I hope he’s right, but I’m not so sure.

Click on Yanis Varoufakis: Ukraine – Three Awkward Questions for Western Liberals and a Comment on the EU’s Role | naked capitalism to read his whole article.

[Update 3/10/14.  I edited this post lightly for clarity.]

The shock doctrine in Ukraine

March 6, 2014

Naomi Klein, in her book, The Shock Doctrine, told how the global banking system took advantage of crises, and sometimes created crises, in order to force national leaders to accept policies against their will.   This seems to be what is going on in Ukraine.

Ukraine has beem in gave financial difficulties.  Last fall the International Monetary Fund offered Prime Minister Viktor Yanukovich a bailout, under conditions that reportedly included a doubling of prices for gas and electricity to industry and homes, the lifting of a ban on private sale of Ukraine’s rich agricultural lands, a sale of state assets, a devaluation of the currency and cuts in funding for schools and pensions to balance the budget.  In return, Ukraine would have got a $4 billion loan, a small fraction of what was needed.

Then the Russian Federation offered a $15 billion loan and a 30 percent cut in gas export prices.  Naturally Prime Minister Yanukovich accepted.  Then all hell broke loose.

Arseny Yatsenyuk

Arseny Yatsenyuk

A mysterious sniper killed peaceful demonstrators in Maidan square in Kiev and, as has happened with mysterious sniper attacks in Venezuela, Thailand and other countries, the killings sparked a violent uprising.

U.S. Assistant Secretary of State Victoria Nuland said in a leaked telephone conversation with the Ukraine ambassador that “we” want the former banker, Arseny Yatsenyuk, installed at Yanukovich’s replacement, rather than some more popular politician.  And that’s what happened.

Yatsenyuk said he will do whatever it takes to get IMF financing, even though this probably will make him the most unpopular prime minister in Ukraine history.  He in fact has little choice.  The Russian offer has understandably been withdrawn, and Ukraine is in a much more desperate plight than it was six months ago.

Elections are scheduled for May, but that’s plenty of time for Ukraine to be locked into binding commitments to the IMF.

Ukraine is a country rich in natural resources but poor in money — an inviting target for financial speculators.   Based on what has happened in other countries in like situations, I look for Ukraine’s resources and assets to be sold off at bargain prices.

I don’t see what business a U.S. Assistant Secretary of State has trying to name the head of a foreign government, or how this in any way benefits the American people.  It seems to be an example of the workings of Wall Street as a component of Michael Lofgren’s deep state.

LINKS

The shock doctrine

Washington’s Man Yatsenyuk Setting Ukraine Up for Ruin by Kenneth Rapoza for Forbes.

The Rape of Ukraine: Phase Two Begins by F. William Engdahl for World News Daily Information Clearing House.

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What kind of a socialist is Strauss-Kahn?

May 28, 2011

Before his arrest in New York City on charges of attempted rape of a hotel maid, Dominique Strauss-Kahn was considered the front-runner for the Socialist Party’s nomination for President of France.

Socialism historically has been a movement against economic injustice and in favor of greater economic equality.  Socialists claim to represent workers in their struggle against the economic elite.  How does Strauss-Kahn fit into this historic tradition?

Strauss-Kahn entering friend's Porsche

According to Forbes magazine, Strauss-Kahn’s lawyer said his bank balance is in the “low seven figures.”  He was paid roughly $420,000 as managing director of the International Monetary Fund, and got an additional $75,000 to maintain a style of life appropriate to his position.  He and his third wife, Anne Sinclair, an heiress and TV personality, have economic assets estimated by Forbes as worth $100 million to $200 million. Most of this is the art collection of Sinclair’s grandfather Paul Rosenberg, an art dealer who represented Picasso, Matisse and Braque.  This estimate does not include more than $90 million worth of art she’s sold over the years.

Strauss-Kahn and his wife live well.  He and Sinclair own a house in the Georgetown section of Washington, D.C. (which is headquarters of the IMF), not one but two luxury apartments in Paris, and a traditional Moroccan house in Marrakesh.  The houses have a combined value of $15 million, according to Forbes.

Strauss-Kahn’s wealth is small change compared to the wealth of the world’s billionaires, but it is a lot by most people’s standards.  Political opponents call him a “caviar socialist.”  There was an uproar when he was photographed getting into a friend’s $140,000 Porsche earlier this year.

He and his wife of course have a right to spend their money as they choose.  The question is whether someone who is (literally) wedded to great wealth can understand and champion the interests of working people.  His record in French politics and as managing director of the IMF help provide answers to that question.

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Sexual abuse, hotel maids and why unions matter

May 26, 2011

Do rich and powerful men ever commit rape?  Evidently many people – including Bernard-Henri Levy, the French philosopher, and Ben Stein, the conservative American writer and TV personality – think that the eminence of Dominique Strauss-Kahn, the former managing director of the International Monetary Fund, could be guilty of the charge of attempted rape brought by a hotel maid who, as they both point out, is a mere nobody.

Public opinion polls indicate that a majority of the French people, and an overwhelming majority of French socialists, think Strauss-Kahn was set up.  And judging by the comment threads of some of the on-line articles I’ve read, there are many Americans who think a white Frenchman who pays $3,000 a night for a hotel room is inherently more credible than an African immigrant maid.

Dominique Strauss-Kahn

The fact is that hotel guests who sexually abuse hotel maids often get away with it.  Hotels want to please their guests.  Hotel maids – often women of color, often poor immigrants, sometimes illegal immigrants – are often working on the margin of economic survival, and know they can easily be replaced.  If a hotel guest gropes them, or exposes himself, or worse, it is risky to mention it.  The hotel has every incentive to believe the guest rather than the maid.

If you can do something with impunity, a certain number of people will do it.  There are rich people who think their wealth gives them impunity.  There are international civil servants who think diplomatic immunity gives them impunity.

The maid allegedly raped by Strauss-Kahn was a poor immigrant from Guinea, in West Africa.  She might not have spoken up if not for a supportive employer, the Sofitel hotel corporation, and a strong labor union, the New York Hotel Trades Council.  Holding a union card, being protected by a union contract, meant that she did not have to face with wealth and power represented by Strauss-Kahn on her own.  As the old union song, “Solidarity Forever” goes, What force on earth is weaker than the feeble strength of one? But the union makes us strong!

My newspaper training tells me to use words like “allegedly” and “accused of” so as not to assume that someone is guilty of a crime until the person has been found guilty in a court of law.  I will say that, based on the facts that have come out, the police had probable cause to make an arrest, and prosecution to bring charges, and let it go at that.  But the burden of proof is on the prosecution, as it should be.  Dominique Strauss-Kahn will, I am sure, enjoy the full benefit of the law in presenting his defense – if the case even goes to trial.  I’d say the odds are that the alleged victim will be offered a huge cash settlement to keep the charge from ever coming to trial.

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