Posts Tagged ‘International Monetary Fund’

The passing scene – August 17, 2015

August 17, 2015

Seven Myths about the Greek Debt Crisis by Stergios Skaperdas, a University of California economics professor.  (Hat tip to naked capitalism).

An economist argues that (1) default would not be the worst outcome for Greece, (2) the troika (European Central Bank, International Monetary Fund, European Commission) is not trying to rescue Greece, (3) Greece’s problems are not caused by corruption and bad policy, (4) no Greek government could have carried out the troika’s policies, (5) the troika’s policies would not have benefited Greece, (6) exiting the Eurozone would not be catastrophic for Greece and (7) the Greek government in fact does have bargaining power.

Hillary Clinton Doesn’t Care That Much About Abortion Rights by Ted Rall for Counterpunch.

Instead of trying to persuade judges that abortion is a constitutional right, why don’t Hillary Clinton and other liberal Democrats support legislation to guarantee abortion rights?  Ted Rall thinks Democrats hold back because they cynically want to keep abortion alive as a issue.  But maybe they’re just timid.

Clown Genius by Scott Adams.   (Hat tip to Rod Dreher)

The creator of the Dilbert cartoons thinks most people probably would buy a used car from Donald Trump because his campaign demonstrates mastery of the classic techniques of salesmanship.

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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.

Germany got a debt writedown: Why not Greece?

July 9, 2015

After World War One, the Allies were saddled with war debts to the United States that were beyond their ability to pay.

Herman Josef Abs, center, representing Federal Republic of Germany, signs a 1953 agreement cutting Germany's debts to foreign creditors in half.

Herman Josef Abs, center, representing Federal Republic of Germany, signs a 1953 agreement cutting Germany’s debts to foreign creditors in half.

They hoped to get the money out of Germany, which was obligated to make reparations payments beyond that nation’s ability to pay.

Eventually Germany defaulted on its obligations to the Allies, and the Allies defaulted on their obligations to the USA and its bankers—but not in time to prevent the onset of the Great Depression and the rise of Adolf Hitler.

After World War Two, the Allies learned their lesson.  They allowed the German government [1] to write off half its debts.

If this hadn’t been done, the postwar German economic miracle might not have taken place, and the recovery of Europe as a whole would have been delayed.

Today Greece has more debt than it can repay.  Eventually there is going to have to be a write-down of this debt.

The question is whether the Greek population will have to be reduced to poverty and Greek national assets sold off at bargain prices before this happens.

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Poor nations and the new world order

April 28, 2015

One of the things I’ve come to realize in recent years is that institutions exist that constitute a kind of world government.

I always thought that for a world government to exist, it would have to have its own army.  But the International Monetary Fund, the World Bank and the investor-state dispute settlement judges in international trade agreements don’t need armies to enforce their—unless you consider the U.S. Central Intelligence Agency to be their army.

PrashadPoorerNations97818I just finished reading  THE POORER NATIONS: A Possible History of the Global South (2012) by Vijay Prashad, which is about how international institutions came into being to fight nationalistic governments in Africa, Asia and Latin America—the Third World.

These international institutions are greatly from the world government envisioned by the idealists who created the United Nations.

I’m worried about how the Trans Pacific Partnership agreement and other proposed trade agreements would create rules to protect international corporations and investors against national laws to protect labor, public health and the environment.  But for Third World nations, as Prashad showed, this is nothing new.

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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.

 

Low interest rates haven’t spurred a recovery

October 10, 2014

It’s a financial axiom that central banks can make money available and set the rates, but they cannot dictate where it goes.

Yet, the IMF just now seems to be figuring that out.

As for central bank sponsored “risk taking,” haven’t we seen enough already?

Where the Money Went

  • Junk bond speculation
  • Stock market speculation
  • Stock market buybacks at ludicrous prices
  • Robots in lieu of hiring
  • Free profit for banks thanks to interest on “excess reserves”
  • Private equity firms buying up houses
  • In Europe, banks loaded up on their own allegedly risk-free bonds
  • In China, property bubbles and profitless SOEs [state-owned enterprises]

Where the Money Didn’t Go

  • Higher wages
  • Infrastructure
  • Investment

via Mish’s Global Economic Trend Analysis.

(Hat tip to Naked Capitalism)

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The world scene: Links & comments 7/8/14

September 8, 2014

Rigged Rules: A Rogue Corporation in the World Bank’s Rogue Tribunal by Robin Broad and John Cavanaugh for Triple Crisis.  (via Naked Capitalism)

The government of El Salvador has denied a license to an Australian-Canadian company, Pacific Rim, to mine for gold because their operations would discharge arsenic and cyanide into streams from which half the population gets its drinking water.

Pacific Rim has sued El Salvador for $300 million under the “investor-state” provisions of the Central American Free Trade Agreement, and the case will be decided by the World Bank’s International Center for Settlement of Investment Disputes in Washington, D.C.

Similar provisions to override national sovereignty are part of the 12-nation Trans Pacific Partnership Agreement and 28-nation Tranatlantic Trade and Investment Partnership (aka TAFTA) now being negotiated by the United States.

Losing Credibility: The IMF’s New Cold War Loan to Ukraine by Michael Hudson for Naked Capitalism.

The International Monetary Fund violates its own rules by lending the Ukrainian government more money than it has any reason to think can be paid back, in order to finance the Ukrainian governments war with eastern Ukrainian separatists.

Economist Michael Hudson says the IMF’s real objective is to force Ukraine to sell off its agricultural land and to open itself up to fracking for natural gas.

‘Why Not Kill Them All?’ by Keith Gessen for the London Review of Books.

Keith Gessen, reporting from Donetsk, described the Ukrainian war as a conflict between fascistic Russian-backed separatists and a fascistic Ukrainian government, with sincere democratic reformers and ordinary people left without any options.

Three Reasons Why Putin Laughs At Impotent America by Eamonn Fingleton for Forbes.

Once the United States was the world’s leading manufacturing nation, the world’s leading creditor nation and the world’s leading trading nation.   We Americans have thrown away all these advantages.

Now American companies have off-shored production to foreign countries, which means that the USA is losing our old American know-how.  The USA as a whole, not just our government, is in debt, which means foreigners are buying up national assets.  And we open our market to foreign companies unconditionally, rather than using this as a lever to gain advantage.

The world still must reckon with our huge military forces and our dominance of international financial institutions, but these are the afterglow of our past power.

It’s not President Obama as an individual who is weak.  It is the USA as a whole.

Only Cool Heads Can Defeat ISIS by Patrick J. Buchanan for The American Conservative.

The tide is turning against the bloodthirsty so-called Islamic State, which has suffered defeats by the Iraqi army and the Kurdish peshmerga militia.  ISIS is vastly outnumbered by the armies of Iraq, Syria and Turkey.

If ISIS is U.S. Enemy No. One, then it doesn’t make sense to be trying to destroy the enemies of ISIS—Syria, Iran, Hezbollah, the Kurdish PKK fighters in Turkey and Vladimir Putin’s Russia.

ISIS would like the U.S. government to unilaterally send troops into another Middle East quagmire war.   President Obama is wise to not play into their hands.

How Obama’s Non-Strategy ISIS Strategy Works by Leon Hadar for The American Conservative.

President Obama is wise to hold back and allow Turkey, Saudi Arabia and other Middle East countries to take the lead in attacking ISIS.  The flaw in Obama’s policy is the idea that the U.S. can wage a proxy war against the Syrian government and the ISIS forces in Syria at the same time.

 

 

The plan to frack and sell off the Ukrainian land

August 5, 2014

For more background, click on The hidden hands behind East-West conflict in Ukraine by Martin Kirk for Al Jazeera.

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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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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IMF offers “help” to Egypt, Tunisia

July 21, 2011

The International Monetary Fund has offered loans to the new governments of Egypt and Tunisia—a truly bad idea of which these countries’ leaders are rightly wary.

Now, before Tunisia and Egypt even have new governments in place, the IMF has jumped to offer them loans for vast infrastructure projects in the desert—as if the fund didn’t know that young Arabs there want ways to start businesses and have careers, not temporary construction jobs.

The Greek debacle and the North African drama raise existential questions about the IMF. Responsible governments have no business borrowing vast sums from abroad, rather than from domestic sources. That’s what tinpot regimes do. And lending even more to borrowers who can’t pay what they already owe? That’s what loan sharks and mafiosi do.

via Newsweek.

It isn’t hard to imagine the consequences of massive loans 10 or 20 years from now—the Egyptian and Tunisian government unable to pay back the loans, and being forced to cut back public services and sell off national assets as part of an enforced “austerity” program.

I think that this is misguided generosity.  A cynical view would be that this is just what the IMF administrators intend.

Click on What’s Wrong With the IMF for the full article by Amar Bhide and Edmund Phelps in Newsweek.  (Hat tip to National Review Online).

Click on Kudos to Egypt for Ditching the IMF for analysis by Mark Engler in Dissent magazine.

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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