Whitewashing the IMF’s Destructive Role in Greece

[Disir]

This autumn may see anti-austerity coalitions gain power in Portugal, Spain and Italy, while Marine le Pen’s National Front in France presses for outright withdrawal from the eurozone. These countries face a common problem: how to resist the economic devastation that the European Central Bank (ECB), European Council and IMF “troika” has inflicted on Greece and is now intending to do the same to southern Europe.

To resist the depression and debt deflation that the troika seeks to deepen, one needs to bear in mind the dynamics that make the IMF un-reformable. Its destructive role in Greece provides an object lesson for how southern Europe must shun its horde of ideologues, as Third World countries learned to avoid it by May 2013, the year that Turkey capped the world’s extrication from IMF “advice.” Already in 2008, Turkey’s prime minister Recep Tayyip Erdogan announced: “We cannot darken our future by bowing to the wishes of the IMF.”[1] Greek voters have now said the same thing.

To soften resistance to the IMF’s austerity demands, a public relations drive is being mounted to rehabilitate the myth that the Fund can act as an honest broker mediating between anti-labor finance ministers and the PIIGS – Portugal, Italy, Ireland, Greece and Spain. On Friday, August 28, three Reuters reporters published a long “think piece” trying to show that the IMF is changing and that its head, Christine Lagarde, has seen the light and seeks to promote real debt relief.[2]

The timing of this report seems significant. The IMF got “back in business” in 2010 when its head, Dominique Strauss-Kahn, overrode its staff and many Board members in order to join the troika and shift the country’s bad debt from French and German bankers onto the Greek people. That is the story I tell in Killing the Host, which CounterPunch published in an e-version last week. (The hard-print and Kindle versions are now available on Amazon.)
Whitewashing the IMF’s Destructive Role in Greece

The IMF is another organization that people need to tell to get bent.

 

[RoccoR]

Disir, et al,

I'm not sure that the IMF analysis is wrong. How much does Greece owe in debt to whom?

This autumn may see anti-austerity coalitions gain power in Portugal, Spain and Italy, while Marine le Pen’s National Front in France presses for outright withdrawal from the eurozone. These countries face a common problem: how to resist the economic devastation that the European Central Bank (ECB), European Council and IMF “troika” has inflicted on Greece and is now intending to do the same to southern Europe.

To resist the depression and debt deflation that the troika seeks to deepen, one needs to bear in mind the dynamics that make the IMF un-reformable. Its destructive role in Greece provides an object lesson for how southern Europe must shun its horde of ideologues, as Third World countries learned to avoid it by May 2013, the year that Turkey capped the world’s extrication from IMF “advice.” Already in 2008, Turkey’s prime minister Recep Tayyip Erdogan announced: “We cannot darken our future by bowing to the wishes of the IMF.”[1] Greek voters have now said the same thing.

To soften resistance to the IMF’s austerity demands, a public relations drive is being mounted to rehabilitate the myth that the Fund can act as an honest broker mediating between anti-labor finance ministers and the PIIGS – Portugal, Italy, Ireland, Greece and Spain. On Friday, August 28, three Reuters reporters published a long “think piece” trying to show that the IMF is changing and that its head, Christine Lagarde, has seen the light and seeks to promote real debt relief.[2]

The timing of this report seems significant. The IMF got “back in business” in 2010 when its head, Dominique Strauss-Kahn, overrode its staff and many Board members in order to join the troika and shift the country’s bad debt from French and German bankers onto the Greek people. That is the story I tell in Killing the Host, which CounterPunch published in an e-version last week. (The hard-print and Kindle versions are now available on Amazon.)
Whitewashing the IMF’s Destructive Role in Greece

The IMF is another organization that people need to tell to get bent.

(COMMENT)

The so-called "Troika" [The European Central Bank (ECB), European Council (Heads of State), and International Monetary Fund (IMF)] have cause to be concerned over the €233 Billion that Greece owes them. After all, Greece is being considered for a third-bailout. What the IMF is saying is that if the Greece has borrowed so much money, the debt payment are unsustainable and putting Greece in a never-ending cycle of borrowing-collapse-bailout --- borrowing-borrowing-collapse-bailout --- borrowing-collapse-bailout --- borrowing-collapse-bailout --- etc UNLESS there is a bit of debt forgiveness and a reduction in Greek liabilities (some method of reduction in Greece's debt burden) which it is unsustainable. The European Stability Mechanism (ESM) seems to think that the IMF will rise to the occasion and participate in this, yet third bailout.

For the first time in its history, a developed nation has defaulted on a debt payment to the IMF. In the last decade, the IMF has assisted the EU Members more than all the other nations of the world combined. The EU members are the biggest users of IMF services. And Germany is Greece's biggest creditor. But it is not JUST the IMF that has a poor outlook on the Greek debt situation. "The European Central Bank expanded its emergency liquidity to Greek banks, calming investor nerves and probably even those of Greeks waiting in bank lines. But the Greek debt load — €310 billion ($339 billion) – is unpayable, unsustainable and needs to be restructured, writes Krishna Memani, Chief Investment Officer (CIO) at Oppenheimer Funds.

And CIO Memani didn’t stop there. He thinks the euro (€) itself cannot survive without a Greek debt restructuring.

“Debt write-down is the only humane mechanism available to bring countries closer together when you have a currency union without a fiscal union, and a diverse group of economies at different levels of productivity and debt load.”​

I should think that we might reconsider shooting the IMF as the bearer of bad news. I'm not understanding which particular policies the IMF is accused of adversely affecting the Greek stability potential. While I'm not a big fan of the IMF --- I generally understand the implication of their policies.

(QUESTION)

What specifically did the IMF do that created this crisis?

Most Respectfully,
R

 

[Tehon]

(QUESTION)

What specifically did the IMF do that created this crisis?

Most Respectfully,
R

They bailed out the private bond holders that were overexposed to Greece.