Weekend Economists Ring in the New! New Year 2015

[Demeter]

20. Guess Which Loan-Sharking Enterprise Helped the 1% Loot Europe After the Global Economic Crisis

http://www.alternet.org/world/how-imf-helped-1-loot-europe-after-global-economic-crisis?akid=12639.227380.M30cpM&rd=1&src=newsletter1029578&t=25

The International Monetary Fund is probably the world’s greatest loan sharking enterprise. People in the developing world have known this for decades. As Naomi Klein noted in a 2002 article for the Globe and Mail, the IMF swooped in during Argentina’s financial crisis and forced the country to sell off most of its financial assets, enact deep cuts in public services and drastically reduce its social safety nets. The IMF’s policies transferred much of the country’s wealth to private investors while Argentineans saw their wages and living standards plummet.

The IMF reacted no differently to the Euro crises, which in many ways were caused by reckless investment practices that caused a collapse of the global economy. The IMF, supported by northern European countries like Germany, forced deep austerity measures in Spain, Greece, Portugal and Italy, allowing wealthy hedge funds and investment banks to buy up Europe’s debt and infrastructure at rock-bottom prices.

The austerity measures cut the welfare programs that would have benefited the poor. Meanwhile, the IMF encouraged European central banks to engage in one of the greatest “welfare” programs in history: bank bailouts. They flooded the financial markets with money by loaning at record-low interest rates and purchasing toxic debt.

Recently, the IMF admitted that it was a mistake to recommend austerity at the height of the European crisis. A report issued by the Independent Evaluation Office (IEO), the IMF’s research division, concluded that the IMF’s “advocacy of fiscal consolidation proved to be premature for major advanced economies, as growth projections turned out to be optimistic.”

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