Marshall Auerback: IMF’s Predatory Policies Likely to Continue with New Leadership

Besides this article, those who want to know how the IMF forced some countries to borrow the money may want to read Simon Johnson’s (former IMF chief economist and MIT professor) excellent article in the below link.

http://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/7364/

From New Deal 2.0:

It doesn’t matter who leads the IMF when the institution is governed by ideology.

Greece and Ireland appear to have lost an important political ally with the sidelining of Dominique Strauss-Kahn as both plead for more financial assistance from European partners to avoid an early restructuring of debt. The key word is “appears,” as in truth, arsenic remains arsenic, even if it is coated in sugar by an ostensible champagne socialist like Mr. Strauss-Kahn.

It has been clear for several decades, however, that this argument is a myth, and that the promised land it envisions is a mirage. Consider the Fund’s experience with East Asia in 1997. Having praised the governments’ economic management up to just weeks before the onset in July 1997, the Fund panicked as much as the investors, intensifying the pullout. It called for the closure of insolvent finance companies and banks without seeming to worry about how uninsured depositors were treated, which triggered bank runs; and it identified fundamental problems that had to be fixed before growth could resume, sending a message that the economies were structurally unsound.

In the intervening years, the IMF has learned nothing, but still peddles the same economic myths that have done so much damage to the global economy. Ireland was an early (and eager) austerity proponent — starting to cut in early 2009. We were told that things would be improving as a result of the public cutbacks because all those tax-fearing consumers and investors were poised and ready to spend their savings – which were being earmarked to pay back the higher taxes that were going to be inevitably imposed to pay back the deficits.

This nonsense was all of the rave as mainstream economists and public finance commentators supported the Irish government’s manic decision to impose fiscal austerity on its near-ruined economy. And its misguided financial guarantees to its banks — which were vastly oversized relative to the size of the economy – significantly worsened the country’s budget deficit. That “busted the budget” and generated the current problems. In important respects, Ireland reproduced the Icelandic problem, with similar results. As we know, the people of Iceland have recently voted to undo the bank bail-out in spite of threats issued by the likes of the IMF.

Same thing in Greece. Unfortunately, the IMF supported behind this destructive economic austerity even under Strauss-Kahn.

It’s the institution that’s the problem, no matter who takes over from Strauss-Kahn, whose future public career is almost certainly shredded regardless of the ultimate outcome of this particular case. Expecting the Fund to change is akin to painting a leopard black, and thinking that this will change its predatory behavior.

http://www.newdeal20.org/2011/05/18/imfs-predatory-policies-likely-to-continue-with-new-leadership-45453