IMF: a large scale production of cheap apologies

15 April 2014 by Leonidas Vatikiotis

Reports released by the IMF Independent Evaluation Office on 18 March assessed projections for 103 countries over the period 1990-2011 and found, as its detractors had been telling them for decades, that the overall estimates were too optimistic. The Greek case was so blatant that together with Argentina in 2000 and the Asian crisis it appeared among the three biggest IMF forecast mistakes, occupying a special position at the top of this list of technocratic errors. The Evaluation Office thus recommended putting greater emphasis on cooperation with national authorities. In other words, to listen to “the Natives” a bit more, with whom it allegedly collaborates on an equal basis showing mutual respect and heeding their experience.

The report of the Evaluation Office is an absurdity. Aimed at answering criticism, refuting accusations of opacity and an incapacity to learn from its mistakes, and this took four years to elaborate. The report suggests that the IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.
has sufficient maturity to face reality and its own failures. So there is no problem!

To believe a source in the IMF, the “apology industry” is either very naive or must have some material benefit . It suffices to take a closer look at the alleged “errors” to understand that these were not mistakes but deliberate distortions of reality, blinding the world with the science of multi page executive reports! To recall the climate of spring 2010, the goal of the George Papandreou government was to alleviate the concerns of the world over the suffering that the despised organization was about to produce. Even though Greek society wasn’t fully aware of the economic crimes of the IMF in Africa, Asia and Latin America it could see what would follow and was quite suspicious of the government’s policies. The ministers of Giorgos Papandreou (Loverdos Petalotis, Papakonstantinou, Diamantopoulou, Reppas, Ragkousis and many others), brushed over this saying that the necessary structural adjustments were like a bitter medicine that the sooner you drink it down the sooner it’s over and the illness is cured. Anyone talking about shock therapy was scoffed at as a conspiracy theorist. Anyone invoking the crimes in Asia and Latin America committed by IMF economic “Hit Men” was strictly criticized as it was assumed that “the IMF had changed”. This was the only discourse taught in the seminars organized in Athens by a known advertising company with the participation of many well-known journalists and parroted in the columns of the mainstream press or in the 8’ o clock news.

Conscious deception of society

Let us imagine that if in April or May 2010 the first Troika Troika Troika: IMF, European Commission and European Central Bank, which together impose austerity measures through the conditions tied to loans to countries in difficulty.

program announced that unemployment will skyrocket to 28%, that Greece will be mired in recession through 2014, record a drop in GDP GDP
Gross Domestic Product
Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another.
of more than 21% (a percentage superior than the fall recorded in the crisis of the 30s in America) and that Greece would have still greater debt, if, in other words, they told the truth. Then the whole business of whittling away the reactions and the objections would collapse like a house of cards. Employees, pensioners and unemployed people would react ignoring the cost. The errors therefore of the IMF which as a common feature had the devaluation Devaluation A lowering of the exchange rate of one currency as regards others. risk and the beautification of the situation (we never observed an inverse error!) was a conscious effort at misleading society. It was intentional, and not a technical, failure serving a broader geopolitical agenda.

The same conclusion follows from the handling, by the IMF, of the Asian and Argentinian situations. The crisis that Indonesia, Malaysia and Thailand endured was a cyclical crisis, it was the IMF, as lender of last resort, that turned it into an unprecedented and devastating recession that led to the deaths of thousands of people by starvation and suicide. The insufferable organization imposed rising interest rates Interest rates When A lends money to B, B repays the amount lent by A (the capital) as well as a supplementary sum known as interest, so that A has an interest in agreeing to this financial operation. The interest is determined by the interest rate, which may be high or low. To take a very simple example: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the first year he will repay a tenth of the capital initially borrowed (10 million dollars) plus 5% of the capital owed, i.e. 5 million dollars, that is a total of 15 million dollars. In the second year, he will again repay 10% of the capital borrowed, but the 5% now only applies to the remaining 90 million dollars still due, i.e. 4.5 million dollars, or a total of 14.5 million dollars. And so on, until the tenth year when he will repay the last 10 million dollars, plus 5% of that remaining 10 million dollars, i.e. 0.5 million dollars, giving a total of 10.5 million dollars. Over 10 years, the total amount repaid will come to 127.5 million dollars. The repayment of the capital is not usually made in equal instalments. In the initial years, the repayment concerns mainly the interest, and the proportion of capital repaid increases over the years. In this case, if repayments are stopped, the capital still due is higher…

The nominal interest rate is the rate at which the loan is contracted. The real interest rate is the nominal rate reduced by the rate of inflation.
and a sharp decline in public spending as non negotiable conditions for lending. This was also the case of Argentina. Under the stress of the painful social effects, we lose from our perspective that the prime issue for the IMF is to rescue the banks and to impose draconian austerity programs. Greece is being made to run the same gantlet.

The problem therefore is not so much that the first program predicted unemployment in 2012 at 14.8 % in 2013 at 14.3 % in 2014 at 14.1 % in 2015 at 13.4 % or GDP growth in 2012 to be 1.1 %, 2.1 % in 2013 and 2014 and 2.7 % in 2015, or exit the markets in 2012 . The problem is that the IMF is the most “lethal weapon” used by today’s, totalitarian capitalism in its effort to demolish the social conquests of the 20th century, to impose flexibility in labor relations and to generalize poverty.

In Greece the IMF had additional reasons to blur the situation and to present a false, idyllic picture. It became clear from a recently published IMF classified document, dated 10 May 2010, describing the minutes of an internal discussion concerning the risk of liquidating Greek bonds from French, German and Dutch banks that were significantly exposed to Greek debt. The risk had been stressed by the delegations of Argentina, Brazil and other countries and had been denied! On the third page in the second paragraph it says: “The Dutch, French and German chairs conveyed to the Board the commitments of their commercial banks to support Greece and to maintain their exposure"! We know very well what happened: over the next two years From May 2010 until February 2012, European banks, with the help of the SMP (Security Market Program), unloaded their bonds to the ECB ECB
European Central Bank
The European Central Bank is a European institution based in Frankfurt, founded in 1998, to which the countries of the Eurozone have transferred their monetary powers. Its official role is to ensure price stability by combating inflation within that Zone. Its three decision-making organs (the Executive Board, the Governing Council and the General Council) are composed of governors of the central banks of the member states and/or recognized specialists. According to its statutes, it is politically ‘independent’ but it is directly influenced by the world of finance.
. Greek banks and pension funds Pension Fund
Pension Funds
Pension funds: investment funds that manage capitalized retirement schemes, they are funded by the employees of one or several companies paying-into the scheme which, often, is also partially funded by the employers. The objective is to pay the pensions of the employees that take part in the scheme. They manage very big amounts of money that are usually invested on the stock markets or financial markets.
exploited the period of grace having secured the first loan of 110 billion euro. They then gave the green light for the haircut bond Bond A bond is a stake in a debt issued by a company or governmental body. The holder of the bond, the creditor, is entitled to interest and reimbursement of the principal. If the company is listed, the holder can also sell the bond on a stock-exchange. of March 2012. Therefore, the problem with the IMF is not only in its unreliable forecasts of macroeconomic indexes. The large northern European countries have known how to use IMF pressure, means and loans to impose their neoliberal agenda on the other countries in order to save own banks and financial elites to the detriment of the populations.



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