8.4.13 / FAB/IMF – INTERNATIONAL MONETARY FUND
Times editors admit IMF policies aren’t widely loved. It “forced countries in financial distress to adopt counterproductive austerity policies, and it failed to anticipate the financial crisis.”
No matter. It “helped stabilize the global economy, most recently by providing loans to troubled European countries like Greece and Ireland.” It’s “the world’s primary defense against global financial disasters.”
“Increasing the fund’s resources will ensure that it can respond quickly to another wave of turmoil in Europe or elsewhere that would inevitably hurt the American economy.”
It’s hard imagining more twisted thinking.
It’s hugely exploitive. It’s the loan shark of last resort. It makes neighborhood ones look saintly by comparison. It doesn’t solve problems. It exacerbates existing ones. It creates new ones. It debt entraps nations. Bondage suffocates them.
Public wealth shifts to private hands. Western bankers and other corporate favorites profit hugely. Ordinary people suffer.
Indebted nations are obligated to take new loans. They’re needed them to service old ones. Doing so increases indebtedness. Structural adjustment harshness follows. It’s force-fed. Debtor nations have no choice. IMF diktats demand:
- privatizing state enterprises;
- selling them at a fraction of their real worth;
- mass layoffs;
- deep social spending cuts;
- wage freezes or cuts;
- unrestricted free market access for Western corporations;
- corporate-friendly tax cuts;
- tax increases for working households;
- trade unionism crushed or marginalized; and
- harsh repression against non-believers.
Democratic values don’t matter. Human needs go begging. Countries forfeit their material wealth and resources. Freedom’s lost. A race to the bottom follows.
Workers become serfs. Economies are financialized into debt bondage. Doing so transforms them into dystopian backwaters.
IMF shock therapy takes no prisoners. Debt service overrides national sovereignty. Poverty, unemployment and deprivation follow. Numerous examples explain.
Chileans under Pinochet suffered. Inflation skyrocketed. Unemployment exceeded 20%. About 45% of Chileans became impoverished. Output fell 12.9%. Cheap imports flooded the country. Social safety net protections ended.
Trade unionist crackdowns became policy. Local businesses closed. Severe repression targeted non-believers. Democracy under Allende died. Wealth shifted up to the top. Much of Chile’s middle class disappeared.
Out-of-control corruption and cronyism replaced it. For privileged insiders, Chilean society was paradise. Most others suffered Great Depression deprivation.
Chile’s model spread cross border. Through the early 1990s, Latin American debt rose exponentially. In 1980, it was $110 billion. In 1992, it reached $473 billion. Interest payment grew from $6.4 billion to $18.3 billion. That’s how debt entrapment works.
Worker livelihoods, health and welfare suffer. Those likely enough to have jobs endure low-income to sub-poverty wages. Foreign predators profit enormously. They do so on human misery.
IMF diktats facilitate it. Pain replaces prosperity. Nations are strip-mined for profit. Millions of jobs are lost. Western brands replace local ones.
IMF policy statements don’t explain. They perpetuate the myth about helping as a lender of last resort. Loans come with strings. Force-fed austerity follows.
Debt service matters most. Banker bottom line priorities override national sovereignty. Worker gains disappear. Ordinary people suffer hugely.
Human welfare and economies are sacrificed on the alter of paying bankers first. That’s how predatory IMF diktats work. Don’t expect New York Times editors to explain.
According to Paul Craig Roberts, IMF loans don’t help world economies. They shield “private banks from their own mistakes at the expense of the world economy.”
IMF policy mandates stabilizing exchange rates linked to the dollar and bridging temporary payment imbalances. Article I of its Articles of Agreement says it lends:
to give confidence to members by making the general resources of the Fund temporarily available to them under adequate safeguards, thus providing them with opportunity to correct maladjustments in their balance of payments without resorting to measures destructive of national or international prosperity.
It claims it provides loans to reduce poverty and increase economic development. “In difficult economic times,” it says, it “helps countries to protect the most vulnerable in a crisis.”
It never operated as mandated. Its policies are polar opposite. They’re ruthlessly exploitative. They’ve been that way from inception.
During the 1997 Asian financial crisis, Pat Buchanan urged “No more Bailouts – Abolish the IMF.”
Asia’s crisis was “man-made, the work of corrupt and incompetent political elites, crony capitalists and idiot-investors who deserted their own countries to chase hot profits in Asia.”
IMF bailouts “put Western taxpayers on the hook for $100 billion.”
“The Global Economy is like a high-stakes poker game, where the big players pocket their winnings, while the “house” – i.e., the taxpayers – makes good their losses at the end of a bad night.”
“(A)bolish the IMF.”
Conservative economist Steve Hanke agrees. IMF “policies don’t generate prosperity or alleviate poverty,” he says.
“The only cure for the IMF’s ills is to pull the plug on that international bureaucracy.”
Global Exchange co-founder Kevin Danaher urges abolishing the IMF and World Bank. His book 10 Reasons to Abolish the IMF & World Bankexplains why.
It covers “globalization for dummies.” It exposes common myths. It urges ending decades of predatory injustice. It gives 10 reasons why.
(1) Mandates were violated. Promises made were broken. The “rising tide that (lifts) all boats” never happened. Free-market diktats “demonstrably and significantly increased inequality.”
(2) GDP inaccurately measures economic wellbeing. People matter more. Their needs are ignored. IMF/WB diktats mandate it.
(3) Free-trade isn’t fair. Unelected technocrats run things. Government officials are pressured, bullied and bribed to go along. They do so for benefits they derive.
(4) Unelected IMF/WB/WTO policy makers are interlinked. Conflicts of interest corrupt them. Monied interests control them. Checks and balances are absent. Public scrutiny’s avoided.
(5) Force-fed austerity causes enormous harm. No “success stories” exist.
(6) Real ones “achieved relatively high economic growth through extensive state involvement….”
Measures include “land reform, tight control of trade, state enterprises, government-funded research and infrastructure, high tariff barriers to protect infant industries from foreign competition, and favoring certain sectors of the economy through subsidies and state-directed investment.”
(7) Predatory capitalism’s environmentally destructive. Ecological sustainability becomes impossible.
(8) Wealthy nations lose out. America “suffered the decimation of our manufacturing sector, declining average wages, growing inequality, an increase in the average work week, a ballooning deficit in the US balance of trade, and a growing mountain of debt (government debt, consumer debt, corporate debt).”
(9) Predatory capitalism’s “ethically bankrupt.” Profits alone matter. Human needs go begging.
(10) Popular resistance shows promise. Global justice supporters demand change. Responsible alternatives exist. It’s high time mass activism demanded them.
It’s way past time predatory international lending agencies were abolished. Saving humanity depends on it.