The Troika & The IMF
August 13, 2016Posted by on
This week on Facebook: My innate cynicism tells me that that this exercise in flagellation by the International Money Fund (IMF) issuing their critical report¹, is not a pursuit of penance but rather a manipulation of the media. The Moving Finger writes; and, having writ, moves on:… and so does the IMF. The media criticism of the IMF’s handling of crises mentioned in the report, especially the crisis in Greece and that of the Eurozone, will soon be forgotten as the media also moves on. The IMF will be left to continue dispensing what is euphemistically called its aid, regardless of its efficacy to those in receipt of it.
My contention is that good men (not bad men) consistently acting upon that position would act as cruelly and unjustly as the greatest tyrants. They might in some respects act even worse. Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience. They may be more likely to go to Heaven yet at the same time likelier to make a Hell of earth. This very kindness stings with intolerable insult. To be ‘cured’ against one’s will and cured of states which we may not regard as disease is to be put on a level of those who have not yet reached the age of reason or those who never will; to be classed with infants, imbeciles, and domestic animals.
C. S. Lewis “God in the Dock” (1948):
Monday 8/8/16 Internal auditor slams IMF handling of Greece bailout: Independence compromised? The IEO report bluntly criticized the rush by the Fund’s management, led former French finance minister Dominique Strauss-Kahn up to May 2011, to join the European Central Bank and European Commission in the crisis bailouts of Greece, Ireland and Portugal.
Tuesday 9/8/16 Critical IMF report heralds new Greek bailout battle: The most critical assessment is about the most important programme among the eurozone crisis, the Greek debt crisis and the two bailouts programmes in which the IMF participated. There was no rigorous attempt to articulate a convincing path to restoring debt sustainability in Greece, other than a program of official financing, fiscal adjustment and structural reforms.
Wednesday 10/8/16 How The IMF And The EU Screwed Over Greece: When the crisis came, the IMF provided bailout funds to Greece on the condition that it introduce painful economic reforms, which have kept it in economic depression ever since. However, going against IMF rules, these reforms were enforced without the offer of debt relief, despite the clear unsustainability of Greece’s long-term debt.
Thursday 11/8/16 A complacent, secretive IMF failed to deal with EU crisis; what’s changed? The IMF also found itself sidelined by its Troika partners in the European Union (EU): the European Central Bank (ECB) and the Commission. By the time IMF came to the table in March 2010, the “train had already left the station.” The message was clear: the Eurozone crisis was a European problem and EU institutions would provide the solutions.
Friday 12/8/16 The IMF confesses it immolated Greece on behalf of the Eurogroup: An urgent apology is due to the Greek people, not just by the IMF but also by the ECB and the Commission. An apology and a collective mea culpa from the troika is woefully inadequate, it needs to be followed up by the immediate dismissal of at least three functionaries.
My cynicism over this charade goes back some 5 years in which I had previously written:
In November 2011 (The Trojan Börse) — You have to wonder how a euro-member state could even issue gilts when it has no lender of last resort to back them up (certainly not the ECB), perhaps concluding that they are indeed trading in a Trojan Börse. All of which suggest that the euro-zone always was a house of cards. Greece just happened to be the first card to collapse.
In December 2011 (Euronomics) — The Euro has succeeded in serving as a vehicle for centralisation in Europe and for the French government’s goal of establishing a European Empire under its control—curbing the influence of the German State. Three possibilities: first, the system will break up; second, the Stability and Growth Pact (SGP) will be reformed and finally enforced; and third, incentives toward having higher deficits than other countries will lead to a pronounced transfer union.
In February 2012 (EUmenides) — In this tragedy, Greece itself is the ‘tragic protagonist’. The ‘divinities‘ are the Troika – the European Commission (EC), the International Monetary Fund (IMF), and the European Central Bank (ECB), with all three of them practising ‘divination’. The inevitably flawed humans, whose actions destin them to be pursued by the Erinyes (Furies) are the members of the European Union. Not even the divinities can predict the outcome of this tragedy other than the continuance of their own immortality.
In June 2012 (The Flawed Euro) — A Europe made up of economies each enjoying optimal macro-economic policy settings, trading with each other on special terms and negotiating trade arrangements with the rest of the world as a single entity, consciously pursuing convergence across the whole field of regulation , coordinating and aligning policy development wherever possible, increasingly working together in pan-European deliberative and eventually legislative bodies, would serve Europe’s economic interests much more effectively and do more to promote a genuine sense of European identity than the current abortive attempts to impose from above a European super-state. A State that only a tiny elite has ever wanted.
In July 2012 (In Bondage) — The global race for economic growth has always been one of ‘beggar my neighbour’, a toxic policy in which a shared currency offers no guarantee of a share in economic growth, and there are no points for guessing where that road leads. The shared set of goals and mutual reinforcement of illusions among Europe’s policy elite and bankers, is reflected in the mutual reinforcement of disillusions shared by those subject to the machinations of this coterie.
In January 2015 (That Odious Greek Debt) — As author Jason Manolopoulos claims in his book: ‘When the former French finance minister Christine Lagarde said in 2010 that the Greek rescue package was not like the USA sorting out California, it was a tacit admission that the EU had created something that it could not manage. There was a single currency but not a single political or fiscal framework’. On January 26 2015 Public Finance International reported that it was a travesty of democratic process to make the electorate think that the recent Greek election was about competing parties proposals to deal with ‘Greece’s huge and unsustainable debt’. Had it been recognised that Greece’s net debt is actually less than 20% of GDP, the election outcome may have been a lot different.