Reprinted from Counterpunch
The International Monetary Fund has finally admitted that it was wrong to recommend austerity as early as it did in 2010-2011. The IMF now agrees that it should have waited until the US and EU economies were on a sustainable growth-path before advising them to trim their budget deficits and reduce public spending. According to a report issued by the IMF's research division, the Independent Evaluation Office (IEO): "IMF advocacy of fiscal consolidation proved to be premature for major advanced economies, as growth projections turned out to be optimistic...This policy mix was less than fully effective in promoting recovery and exacerbated adverse spillovers."
Now there's an understatement.
What's so disingenuous about the IMF's apology, is that the bank knew exactly what the effects of its policy would be, but stuck with its recommendations to reward its constituents. That's what really happened. The only reason it's trying to distance itself from those decisions now, is to make the public think it was all just a big mistake.
But it wasn't a mistake. It was deliberate and here's the chart that proves it:
(Democrats Reap What They Sowed, Rob Urie, CounterPunch)
There it is, six years of policy in one lousy picture. And don't kid yourself, the IMF played a critical role in this wealth-shifting fiasco. It's job was to push for less public spending and deeper fiscal cuts while the Central Banks flooded the financial markets with liquidity (QE). The results are obvious, in fact, one of the Fed's own officials, Andrew Huszar, admitted that QE was a massive bailout for the rich. "I've come to recognize the program for what it really is," said Huszar who actually worked on the program, "the greatest backdoor Wall Street bailout of all time." There it is, straight from the horse's mouth.
So now the IMF wants to throw a little dust in everyone's eyes by making it look like it was a big goof-up by well-meaning but misguided bankers. And the media is helping them by its omissions.
Let me explain: Of the more than 455 articles on Google News covering the IMF's mea culpa, not one piece refers to the man who was the IMF's Managing Director at the time in question. Doesn't that strike you as a bit odd?
Why would the media scrub any mention of Dominique Strauss-Kahn from its coverage? Could it be that (according to NPR):
"The IMF's managing director wanted to give Greece, Portugal and Ireland the time needed to put their accounts in order, and he also argued for softening the austerity measures associated with the bailouts for those countries.- Advertisement -
Greek economists say that under Strauss-Kahn's leadership, the IMF was a counterbalance to the strict austerity policies favored by northern European leaders. In fact, according to the daily Le Monde, Strauss-Kahn is fond of calling those who argue for tighter austerity 'fous furieux,' which roughly translates as 'mad men.'
"Strauss-Kahn's view is that shock-therapy measures imposed on Greece and other European countries with sovereign debt crises will lead only to economic recession and severe social unrest.
"Several commentators pointed out Monday that at a time of turmoil in the eurozone and division among European leaders, it was the IMF, under Strauss-Kahn's leadership, that kept the eurozone's rescue strategy on track.
"The Financial Times said that the IMF's single most important influence in the resolution of the eurozone crisis was political -- amid a lack of political leadership, the paper said, the IMF filled a vacuum."
(IMF Chief's Arrest Renews Euro Debt Crisis Fears, NPR)
Ah-ha! So Strauss-Kahn wasn't on board with the IMF's shock doctrine prescription. In fact, he was opposed to it. So there were voices for sanity within the IMF, they just didn't prevail in the policy debate.