Reply #51: Marshall Auerback: IMF’s Predatory Policies Likely to Continue with New Leadership [View All]

[Demeter]

http://www.nakedcapitalism.com/2011/05/marshall-auerback-imf%E2%80%99s-predatory-policies-likely-to-continue-with-new-leadership.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

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.

The reality is far more brutal for all of Europe. The IMF is bank-centric. Its standard requirement is that any recipient of its “aid” maintain a primary budget surplus, which amounts to a prohibition against fighting recession by increasing domestic demand via fiscal stimulus. The rationalization behind all IMF programs is that countries that follow “sound” financial policies — balanced budgets, tight money, deregulation, and privatization of capital assets — will be rewarded with a stamp of creditworthiness. They should then benefit by being able to borrow from private capital markets on favorable terms, relative to their own histories and the record of countries which are deemed less responsible. In principle this should mean they can run deficits on their trade accounts, loan-finance the purchase of capital goods imports to support development, and maintain high levels of economic growth and job creation. They should be able to do all of this and still attract inflows of direct foreign capital investment...