“Despite recent progress, the eurozone remains the main threat to the global economy. That’s the message from the International Monetary Fund today, which has warned that risks to global financial stability have risen in the last six months.” The Guardian tells us.
Now, since the IMF through its participation in the infamous Troika of IMF, EU and ECB representatives imposing the disastrous European Austerity Madness, I would say that this sudden realization is a bid hypocritical at this point.
When the crisis began, hitting the eurozone’s weakest link, after a lot of bungling and confusion it was decided to set up the so called “bail out” program, initially for Greece. Now The Frau decided that since Europe did not have the necessary know how, they would call in the IMF who knows how to do it. And what did this IMF know how consist of? Stringent Austerity and destruction of all social welfare and labour rights.
So they went ahead. Despite the recent panic from the IMF and the realization (?) that Greek debt is not sustainable, it was always Mr Poul Thomsen of the IMF and leader of the pack who was always the hardest in demanding more e cuts and more recessionary measures (and so he remains).
Now, this duplicated plan of austerity cures all, just slash away at all incomes and increase taxes has led to the only thing it could ever lead to, recession, in the case of Greece outright depression. Why, then, the panic at the IMF over the “threat to the global economy”? It was their policy that led to this situation and there was no way it would not have done so.
The Greek Debt/GDP is not sustainable. How could it have a chance in a million of becoming sustainable when your own plans, IMF that is, consisted of plunging the country into a deep recession whereby it has lost some 25% of GDP on the one hand, and piling more and more debt on the country merely to recycle these funds to the banks, on the other.
So, a simple ratio, Debt to GDP, you raise the debt level without letting one cent of these exorbitant debts go to rebooting the Greek economy and you keep lowering the GDP level, precisely because of the former condition. You don’t need matrixes or sophisticated models to realise that this is a disastrous formula.
So now here we are, ringing our hands and saying Oh! Europe must do something! But Europe has been doing precisely what you have prescribed. And Angela Merkel’s little visit to Greece underlined the fact that it has no intention of reversing this process, till everything comes crumbling down.
Mr Samaras was told that first he has to completely ruin his country through the outrageous extra austerity cuts of 13,5 billion (for now, it will go up to at least 20 before they are finished) in order to.. .Yes! Get the 31 or so billion in more debt, which again will go to the banks in an amount of 25 bn, while of the remaining 6 bn 3 have been earmarked for the payment of a bond and possibly the remaining 3 may go into the economy.
But since the Greek state already owes more than 7 bn to the market, this will hardly make a dent. No matter. The acting Greek PM Antonis Samaras was ecstatic! And okay, he may be a fool or worse, but where is the IMF and what will it do in this situation? Bow to The Frau’s wishes and bring down the global economy through this Nonsense Economics the Fund has connived in or force a complete change?
So it’s all very well for Mr Olivier Blanchard to come up with these very real assessments and dire warnings to Europe, but he would do well to accept and say so out loud, that it has been the IMF’s policies and direct involvement in Europe that has lead to this sorry state and dire prospects for the global economy and they should take responsibility at once.