In the 13 July Links comments section, reader flora linked to the following long essay from 2009 by the former chief economis for the IMF, around the tail end of the acute phase of the global financial crisis. Lots of good stuff in there, but I was surprised to not see any readers note several crucial lies of omission in the piece:
Simon Johnson: The Quiet Coup – The Atlantic
The Atlantic nowadays is about as establishment-propagandistic as it gets, but it seems back then they still published an occasional piece containing actual “speak truth to power” content. The opening nicely captures the essence:
The GFC of course was caused by Wall Street having “successfully” turned housing into a huge speculative-asset class with the generous help of the Federal Reserve and paid-to-be-asleep-at-the-wheel financial regulators:
“The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.”
At the time the article appeared, May 2009, “recovery” was underway, in the sense that stock markets were rebounding smartly (on their way to a new, even-bigger bubbliciousness, which makes another crash inevitable) thanks to the Obama administration firehosing $trillions at the crooked bank cartels, proving that beholdenness to Wall Street is a thoroughly bipartisan thing.
And the truly evil-genius part of the decades-long financialization of everything program is that thanks to the Fed’s having relentlessly suppressed interest rates (meaning the ones one might earn on non-risky assets like cash accounts and CDs), everyone who wants to try to build any kind of financial nest egg and not get robbed blind by inflation is forced to participate in the casino and effectively cheer on the market-bubble-blowing, even though the tiny insider-oligarchy at the very top always wins in the end, boom or bust. Even when they make a bad bet, they get bailed out, the cost always eventually being borne by the rest of us in one form or another.
One notable omission by the author – here the key passage:
“…to IMF officials, all of these crises looked depressingly similar. Each country, of course, needed a loan, but more than that, each needed to make big changes so that the loan could really work. Almost always, countries in crisis need to learn to live within their means after a period of excess—exports must be increased, and imports cut—and the goal is to do this without the most horrible of recessions. Naturally, the fund’s economists spend time figuring out the policies—budget, money supply, and the like—that make sense in this context. Yet the economic solution is seldom very hard to work out.”
The IMF is well-known as an instrument of US and Western foreign policy. They have a long history of working hand-in-glove with the same looter elite in the various “emerging market” countries to help pauperize the economy, in terms of growing and extracting things to enrich Western multinational corporations, at the same time making the target countries dependent on imports, i.e. the very opposite of self-sufficient. Classical example of this sort of thing is not directly in form of an IMF loan package, but the strategy is the same: the NAFTA agreement of 1994. Prior to NAFTA, Mexico was largely self-sufficient in terms of growing staple crops like corn, of which it had many distinct regional varieties. NAFTA opened Mexico to a flood of low-priced US-government-subsidized corn, driving many Mexiacn corn farmers out of business or into the arms of big agribusiness. Fast-foraard 3 decades, and Mexico now imports much of its corn, with much of the remaining domestically-grown being of the expensive and environmentally toxic GMO-seed variety (I’m looking at you, Monsanto). So now we read headlines like this, in the same day’s Links:
Prepare for the worst: corn supplies may have serious repercussions for Mexico | Mexico News Daily
The author’s version of “the economic solution” is reining in the oligarchs, in many cases the very same ones the IMF loan programs helped to make so filthy rich at the expense of the general populace. And the part of the invariable solution he omits is “austerity for the masses” in terms of gutting of social safety nets and further privatization of the commons, i.e. more looting. And when only a devastated poverty-wracked shell of a nation remains, the IMF and “global investors” move on to another one.
