The big lesson from the Greece fiasco: Don't let the IMF meddle

[Disir]

The Greek people have delivered a resounding ‘no’ in the referendum, but the tragedy is still unfolding. It will take some time for the implications to evolve, but it’s hard to see how the vote helps achieve a resolution. The Greek people want to stay in the euro but don’t want austerity. The European negotiators and the IMF have neither the inclination nor the wiggle-room to agree. With the Greek banks closed, time is pressing. Leaving the euro would be hugely disruptive. Staying in the euro means a continuation of the failed policy of austerity. Thus Greece is in for a hard time. But how important is this for the rest of us?

Disruption in Greece doesn't help Europe's lacklustre recovery, but it's not big enough to do substantial harm – Greece is less than 2% of Europe's GDP.

.....Dominique Strauss-Kahn, the Fund Managing Director at the time the crisis began, wanted to restore the waning influence of the Fund and perhaps burnish his own political ambitions in Europe. Instead, the outcome has been to demonstrate the Fund's weaknesses:

• Its Euro-centric governance structure over-rode its own rules and precedents to achieve a support program which at the time suited Europe.
• It was unable to orchestrate a timely bail-in of excessive private-sector debt in 2010 (thus allowing the private-sector creditors to get off too lightly), or arrange a subsequent realistic restructuring of sovereign debt.
• Its forecast of Greek GDP in the face of budget austerity was, as usual with these support programs, hopelessly optimistic.
• It forgot the lessons of the disastrous Indonesian 1997-98 support program. The Fund's detailed involvement in the politically sensitive Greek pension reform seems to be on a par with its insistence on Indonesian petrol-price increases during the fraught political circumstances of 1998. The prerequisite for competitiveness reforms is reminiscent of the Fund's requirement to dismantle the Indonesian clove monopoly two decades earlier.

So much for the economics.
The big lesson from the Greece fiasco Don t let the IMF meddle

Never let the IMF in.

 

[SAYIT]

The Greek people have delivered a resounding ‘no’ in the referendum, but the tragedy is still unfolding. It will take some time for the implications to evolve, but it’s hard to see how the vote helps achieve a resolution. The Greek people want to stay in the euro but don’t want austerity. The European negotiators and the IMF have neither the inclination nor the wiggle-room to agree. With the Greek banks closed, time is pressing. Leaving the euro would be hugely disruptive. Staying in the euro means a continuation of the failed policy of austerity. Thus Greece is in for a hard time. But how important is this for the rest of us?

Disruption in Greece doesn't help Europe's lacklustre recovery, but it's not big enough to do substantial harm – Greece is less than 2% of Europe's GDP.

.....Dominique Strauss-Kahn, the Fund Managing Director at the time the crisis began, wanted to restore the waning influence of the Fund and perhaps burnish his own political ambitions in Europe. Instead, the outcome has been to demonstrate the Fund's weaknesses:

• Its Euro-centric governance structure over-rode its own rules and precedents to achieve a support program which at the time suited Europe.
• It was unable to orchestrate a timely bail-in of excessive private-sector debt in 2010 (thus allowing the private-sector creditors to get off too lightly), or arrange a subsequent realistic restructuring of sovereign debt.
• Its forecast of Greek GDP in the face of budget austerity was, as usual with these support programs, hopelessly optimistic.
• It forgot the lessons of the disastrous Indonesian 1997-98 support program. The Fund's detailed involvement in the politically sensitive Greek pension reform seems to be on a par with its insistence on Indonesian petrol-price increases during the fraught political circumstances of 1998. The prerequisite for competitiveness reforms is reminiscent of the Fund's requirement to dismantle the Indonesian clove monopoly two decades earlier.

So much for the economics.
The big lesson from the Greece fiasco Don t let the IMF meddle

Never let the IMF in.

The IMF is the lender of last resort. Borrowing from them is clear evidence of desperation. Borrowing long-term cash from the IMF to pay for current recurring expenditures is not just massively stupid, it's a recipe for disaster. Welcome to the Greek Tragedy.

 

[Disir]

The Greek people have delivered a resounding ‘no’ in the referendum, but the tragedy is still unfolding. It will take some time for the implications to evolve, but it’s hard to see how the vote helps achieve a resolution. The Greek people want to stay in the euro but don’t want austerity. The European negotiators and the IMF have neither the inclination nor the wiggle-room to agree. With the Greek banks closed, time is pressing. Leaving the euro would be hugely disruptive. Staying in the euro means a continuation of the failed policy of austerity. Thus Greece is in for a hard time. But how important is this for the rest of us?

Disruption in Greece doesn't help Europe's lacklustre recovery, but it's not big enough to do substantial harm – Greece is less than 2% of Europe's GDP.

.....Dominique Strauss-Kahn, the Fund Managing Director at the time the crisis began, wanted to restore the waning influence of the Fund and perhaps burnish his own political ambitions in Europe. Instead, the outcome has been to demonstrate the Fund's weaknesses:

• Its Euro-centric governance structure over-rode its own rules and precedents to achieve a support program which at the time suited Europe.
• It was unable to orchestrate a timely bail-in of excessive private-sector debt in 2010 (thus allowing the private-sector creditors to get off too lightly), or arrange a subsequent realistic restructuring of sovereign debt.
• Its forecast of Greek GDP in the face of budget austerity was, as usual with these support programs, hopelessly optimistic.
• It forgot the lessons of the disastrous Indonesian 1997-98 support program. The Fund's detailed involvement in the politically sensitive Greek pension reform seems to be on a par with its insistence on Indonesian petrol-price increases during the fraught political circumstances of 1998. The prerequisite for competitiveness reforms is reminiscent of the Fund's requirement to dismantle the Indonesian clove monopoly two decades earlier.

So much for the economics.
The big lesson from the Greece fiasco Don t let the IMF meddle

Never let the IMF in.

The IMF is the lender of last resort. Borrowing from them is clear evidence of desperation. Borrowing long-term cash from the IMF to pay for current recurring expenditures is not just massively stupid, it's a recipe for disaster. Welcome to the Greek Tragedy.

Unfortunately, they are the first in line. They fail and then backtrack, fail and then backtrack, fail and then backtrack. Then when the damage is already done they kick out a mini-confession of their mistakes.

 

[SAYIT]

The Greek people have delivered a resounding ‘no’ in the referendum, but the tragedy is still unfolding. It will take some time for the implications to evolve, but it’s hard to see how the vote helps achieve a resolution. The Greek people want to stay in the euro but don’t want austerity. The European negotiators and the IMF have neither the inclination nor the wiggle-room to agree. With the Greek banks closed, time is pressing. Leaving the euro would be hugely disruptive. Staying in the euro means a continuation of the failed policy of austerity. Thus Greece is in for a hard time. But how important is this for the rest of us?

Disruption in Greece doesn't help Europe's lacklustre recovery, but it's not big enough to do substantial harm – Greece is less than 2% of Europe's GDP.

.....Dominique Strauss-Kahn, the Fund Managing Director at the time the crisis began, wanted to restore the waning influence of the Fund and perhaps burnish his own political ambitions in Europe. Instead, the outcome has been to demonstrate the Fund's weaknesses:

• Its Euro-centric governance structure over-rode its own rules and precedents to achieve a support program which at the time suited Europe.
• It was unable to orchestrate a timely bail-in of excessive private-sector debt in 2010 (thus allowing the private-sector creditors to get off too lightly), or arrange a subsequent realistic restructuring of sovereign debt.
• Its forecast of Greek GDP in the face of budget austerity was, as usual with these support programs, hopelessly optimistic.
• It forgot the lessons of the disastrous Indonesian 1997-98 support program. The Fund's detailed involvement in the politically sensitive Greek pension reform seems to be on a par with its insistence on Indonesian petrol-price increases during the fraught political circumstances of 1998. The prerequisite for competitiveness reforms is reminiscent of the Fund's requirement to dismantle the Indonesian clove monopoly two decades earlier.

So much for the economics.
The big lesson from the Greece fiasco Don t let the IMF meddle

Never let the IMF in.

The IMF is the lender of last resort. Borrowing from them is clear evidence of desperation. Borrowing long-term cash from the IMF to pay for current recurring expenditures is not just massively stupid, it's a recipe for disaster. Welcome to the Greek Tragedy.

Unfortunately, they are the first in line. They fail and then backtrack, fail and then backtrack, fail and then backtrack. Then when the damage is already done they kick out a mini-confession of their mistakes.

Even if your assessment were true (and it isn't) where would nations (like Greece) get desperately needed cash once they had exhausted all other options? If there was no demand for what the IMF provides, there would be no IMF.

 

[Disir]

The Greek people have delivered a resounding ‘no’ in the referendum, but the tragedy is still unfolding. It will take some time for the implications to evolve, but it’s hard to see how the vote helps achieve a resolution. The Greek people want to stay in the euro but don’t want austerity. The European negotiators and the IMF have neither the inclination nor the wiggle-room to agree. With the Greek banks closed, time is pressing. Leaving the euro would be hugely disruptive. Staying in the euro means a continuation of the failed policy of austerity. Thus Greece is in for a hard time. But how important is this for the rest of us?

Disruption in Greece doesn't help Europe's lacklustre recovery, but it's not big enough to do substantial harm – Greece is less than 2% of Europe's GDP.

.....Dominique Strauss-Kahn, the Fund Managing Director at the time the crisis began, wanted to restore the waning influence of the Fund and perhaps burnish his own political ambitions in Europe. Instead, the outcome has been to demonstrate the Fund's weaknesses:

• Its Euro-centric governance structure over-rode its own rules and precedents to achieve a support program which at the time suited Europe.
• It was unable to orchestrate a timely bail-in of excessive private-sector debt in 2010 (thus allowing the private-sector creditors to get off too lightly), or arrange a subsequent realistic restructuring of sovereign debt.
• Its forecast of Greek GDP in the face of budget austerity was, as usual with these support programs, hopelessly optimistic.
• It forgot the lessons of the disastrous Indonesian 1997-98 support program. The Fund's detailed involvement in the politically sensitive Greek pension reform seems to be on a par with its insistence on Indonesian petrol-price increases during the fraught political circumstances of 1998. The prerequisite for competitiveness reforms is reminiscent of the Fund's requirement to dismantle the Indonesian clove monopoly two decades earlier.

So much for the economics.
The big lesson from the Greece fiasco Don t let the IMF meddle

Never let the IMF in.

The IMF is the lender of last resort. Borrowing from them is clear evidence of desperation. Borrowing long-term cash from the IMF to pay for current recurring expenditures is not just massively stupid, it's a recipe for disaster. Welcome to the Greek Tragedy.

Unfortunately, they are the first in line. They fail and then backtrack, fail and then backtrack, fail and then backtrack. Then when the damage is already done they kick out a mini-confession of their mistakes.

Even if your assessment were true (and it isn't) where would nations (like Greece) get desperately needed cash once they had exhausted all other options? If there was no demand for what the IMF provides, there would be no IMF.

The IMF backtracked on austerity and they backtracked on Unions. The IMF forces the nation states to privatize and then doesn't understand or claims to not understand the ramifications. Further, they have a bias towards the US and Europe. And that leads us to alternatives:BRICS.
Time will tell on this one.

 

[SAYIT]

The Greek people have delivered a resounding ‘no’ in the referendum, but the tragedy is still unfolding. It will take some time for the implications to evolve, but it’s hard to see how the vote helps achieve a resolution. The Greek people want to stay in the euro but don’t want austerity. The European negotiators and the IMF have neither the inclination nor the wiggle-room to agree. With the Greek banks closed, time is pressing. Leaving the euro would be hugely disruptive. Staying in the euro means a continuation of the failed policy of austerity. Thus Greece is in for a hard time. But how important is this for the rest of us?

Disruption in Greece doesn't help Europe's lacklustre recovery, but it's not big enough to do substantial harm – Greece is less than 2% of Europe's GDP.

.....Dominique Strauss-Kahn, the Fund Managing Director at the time the crisis began, wanted to restore the waning influence of the Fund and perhaps burnish his own political ambitions in Europe. Instead, the outcome has been to demonstrate the Fund's weaknesses:

• Its Euro-centric governance structure over-rode its own rules and precedents to achieve a support program which at the time suited Europe.
• It was unable to orchestrate a timely bail-in of excessive private-sector debt in 2010 (thus allowing the private-sector creditors to get off too lightly), or arrange a subsequent realistic restructuring of sovereign debt.
• Its forecast of Greek GDP in the face of budget austerity was, as usual with these support programs, hopelessly optimistic.
• It forgot the lessons of the disastrous Indonesian 1997-98 support program. The Fund's detailed involvement in the politically sensitive Greek pension reform seems to be on a par with its insistence on Indonesian petrol-price increases during the fraught political circumstances of 1998. The prerequisite for competitiveness reforms is reminiscent of the Fund's requirement to dismantle the Indonesian clove monopoly two decades earlier.

So much for the economics.
The big lesson from the Greece fiasco Don t let the IMF meddle

Never let the IMF in.

The IMF is the lender of last resort. Borrowing from them is clear evidence of desperation. Borrowing long-term cash from the IMF to pay for current recurring expenditures is not just massively stupid, it's a recipe for disaster. Welcome to the Greek Tragedy.

Unfortunately, they are the first in line. They fail and then backtrack, fail and then backtrack, fail and then backtrack. Then when the damage is already done they kick out a mini-confession of their mistakes.

Even if your assessment were true (and it isn't) where would nations (like Greece) get desperately needed cash once they had exhausted all other options? If there was no demand for what the IMF provides, there would be no IMF.

The IMF backtracked on austerity and they backtracked on Unions. The IMF forces the nation states to privatize and then doesn't understand or claims to not understand the ramifications. Further, they have a bias towards the US and Europe. And that leads us to alternatives:BRICS.
Time will tell on this one.

Not true. Greece AGREED to certain measures in return for IMF funds then made little or no effort to live up to their obligations.

 

[montelatici]

Greece implemented the measures, unfortunately the measures resulted in reduced economic activity which made it even less likely that Greece could pay any interest due, much less the principle.