This RT interview with Michael Hudson focuses on the appalling state of the Ukraine economy and the role of the IMF, both in its policy-violating rescue package there and on a more general basis. Hudson points out that the IMF was always a vehicle of policy, and is operating as an adjunct to the Pentagon. What is left unsaid is that the IMF loan is being used as an alternative to a Congressional appropriation to fund the government in Kiev against the aspiring breakaway region in the east.
The section with Hudson starts at 13:45.
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But there is an even more serious problem with the IMF. It’s not allowed to make loans to countries that are insolvent.
If there is ever a version of Greece’s SYRIZA party there. They can say look this loan was given under illegal pretenses it is null and void under international law. We don’t have to repay a penny and by that way were retaking all of the property that they’ve given away.
Why does Greece have to repay anything then?
The only thing standing between Greece and a military coup – which will auction off the country – is the EU… ironic… but it makes sense because the EU does not want to lose Greece – it just has a funny way of showing it… and also something making sense is the new Turkey-Southstream gas line which is positioned for Greece to take advantage of all that gas transmission and no one else. And only Greece. So where is the investment Greece needs? Makes you wonder just how many American vultures are still trying to get some cheap villas and olive orchards, and how long do we have to wait till everybody is disgusted with them? Here’s a question: why do we (USA and other moth-eaten oligarch-controlled countries) have this disconnect between long term planning (ie the Turkey gasline hookup – which might even make geopolitical sense) and all the nasty little vermin, all the very rich but filthy little crumb eaters, trying to make a windfall? There is a big blob of political black matter in the heart of neoliberalism and it is eating up the universe.
it would be nice to know why
The only thing standing between Greece and a military coup – which will auction off the country – is the EU…
Susan I am not sure what you mean by the only thing standing between a military coup is the E.U?
Hudson is being a bit simplistic.
The IMF comes in as a senior lender. You default on the IMF, you’ve effectively defaulted on every one. Your credit rating goes into the toilet and you cannot borrow money at all.
And the IMF also functions on the IMF, so if you stiff the IMF, you, or at least the current political regime, won’t be able to borrow from them either, until it’s not only agreed to resume payments of the old debt but also reaffirmed the old “Memorandum of Understanding” as in “structural reforms” as in austerity program.
Greece’s credit rating is already down the toilet due to the IMF. If Greece has it’s own central bank and currency why would it need to borrow from others? At least to the extent it has from the troika. Either way I find it hard to believe there is no country out there that would lend to Greece. Especially after some sort of economy might begin to form after been released from its current shackles.
It makes no sense getting money from the IMF as it just makes your economy go backwards. Regardless of what happens the IMF the troika has to go from Greece and if Greece needs some smaller funds for something else aside from paying debt can’t it find them from countries that don’t like the IMF? Or countries not linked to the IMF.
Amen! Africa, the only example needed. The IMF in theory is completely different from the IMF in practice. Theirs is a game of development without all the hard work of sound politics (i.e. democratic process or the peoples voice) that goes along with it. Inevitably, even if there are those within the IMF that are well intentioned their attempts to “help” are half-assed at best and corrupt at worst (sometime flagrantly so as a recent example shows, http://www.telegraph.co.uk/news/worldnews/europe/france/11058608/IMF-chief-Christine-Lagarde-placed-under-investigation-in-400m-fraud-and-corruption-case.html). A tool of Euro-American (rather Amero-European) empire in all but name.
Greece is not leaving the Eurozone unless there is a real miscalculation of some sort. The costs to it would be horrific. It would go from a mere humanitarian crisis to a failed state. We have a link in Links today on how the increased energy costs alone would wreck what is left of the economy. And they’d be kicked out of the EU, which means the loss of agricultural subsidies, so their ag sector becomes uncompetitive, and Europeans would be disinclined to import even at lower (drachma) prices due to the hassle of currency volatility and dealing with border controls.
And the IMF also functions on the IMF, so if you stiff the IMF, you, or at least the current political regime, won’t be able to borrow from them either, until it’s not only agreed to resume payments of the old debt but also reaffirmed the old “Memorandum of Understanding” as in “structural reforms” as in austerity program.
Why would a sane country want to borrow from the IMF again after a default? Argentina’s experience after they defaulted to the IMF is instructive. Payments later resumed on the old IMF debt, and it was paid off in 2006. But debt & payments are what everyone wrongly focuses on. What is important is that the structural reform / austerity program – the intentional degradation, the imposition of debt-peonage did not resume.
The IMF is the only game in town. That is the problem. The only countries that have defaulted on the IMF are places like Zimbabwe and Somalia.
The IMF is the only game in town. That is the problem.
The belief that the IMF is the only game in town is the problem. It is far more powerful and destructive than anything else the IMF has ever done or could do. The most potent weapon in the hands of the oppressor is the mind of the oppressed. (Steve Biko).
The only countries that have defaulted on the IMF are places like Zimbabwe and Somalia.
This is just not true.
Argentina Defaults on $3 Billion I.M.F. Debt
Varoufakis has explained why Greece cannot emulate Argentina. Note that Argentina is generally not considered to be a developed economy, but it is admittedly arguable whether Greece is. More important, Varoufakis rejects stiffing the IMF (he has repeatedly stated that Greece will meet IMF payments; he is arguing over the less senior ECB payments due over the summer) for very specific reasons:
There are two arguments against the recommendation that Greece and Argentina are similar enough to warrant an Argentinian road for Greece. There are those, like the Cato Institute and IMF diehards, who never forgave Argentina for having successfully escaped the clutches of the poisonous austerity (and internal devaluation) that the IMF had imposed upon the country so as to sacrifice a whole people’s prosperity in the interest of creditors, rentiers and assorted speculators who had flooded the country with dollars (during the era of the currency board). Believe me when I say that I am not one of them. Indeed, I salute the Argentinian people for having toppled a regime, and more than one government, that tried so desperately to sacrifice a proud people on the altar of IMF-led austerity. No, my criticism of the idea that Greece can ‘do’ an Argentina today stems from the view that the circumstances Greece is facing today are genuinely different to those of Argentina a decade ago.
The differences between the two cases, which render the analogy redundant, are three:
1st difference: The potential of exports to act as shock absorbers…
2nd difference: Greece has no peg with the euro. It has the euro!….
3rd difference: Greece is perfectly capable of poisoning the water it is swimming in (Europe)…
http://yanisvaroufakis.eu/2012/05/16/weisbrot-and-krugman-are-wrong-greece-cannot-pull-off-an-argentina/
It is Varoufakis who is “profoundly wrong” here and making unsound, ill-grounded and tendentious arguments towards far-fetched conclusions. Weisbrot, Lapavitsas, Flassbeck, Mosler, Auerback and MMT thinkers and associates in general do not agree with Varoufakis here and they have more careful and grounded thinking on their side. Grexit, whether forced or unforced should have substantial, continued positive consequences after a short transition. The worst thing would be endless austerity within the EZ – as Varoufakis has said to his credit.
Mosler trolling Varoufakis with damn good arguments is Warren Mosler’s criticism of that post by Varoufakis. Just some brief points now to add to Mosler’s:
1st difference: The potential of exports to act as shock absorbers…
Obsession with the foreign sector. Hardly a word about domestic sector – which is what sensible people care about.
There is more sound economics in FDR’s
than Varoufakis’s post. Or in many books “on” international economics: which often amount to nothing but worship of some “fetish of so-called international bankers” founded on “basic economic errors” to use more of FDR’s words. The same incoherent ideas that Robert Eisner later called an “obsession” with foreign exchange, the foreign sector.
2nd difference: Greece has no peg with the euro. It has the euro!….
This may betray conceptual confusion. “The euro” is a “peg with the euro”. “The euro” is just a measuring unit of credit-debt relations. This is like saying “Greece has no peg with the meter. Greece has the meter!”….WTF?
3rd difference: Greece is perfectly capable of poisoning the water it is swimming in (Europe)…
Mosler may have forgotten the point he made in an article with Pilkington here a few years ago – that this “poisoning the water” can, should easily work to Greece’s benefit, even if the EU decides to have a crisis and depression. This is the general historical experience of leaving currency unions, metal standards etc. The first out the door benefits more, not less, though all benefit.
The Eurocrats, the IMF, the oppressors are hell-bent on imposing unsound internal economic systems on their victims. That’s what it’s all about. They don’t really give a damn about the debt. What they want is the peonage!
Of course the skeptics are going to say that RT is a Russian production, and what can you expect from Russia. I guess you can answer that our Lame Stream Media is an Oligarchic production and what can you expect them to hide.
I guess there are no more objective facts in the world if there ever were any.
So will the death spiral continue with a few parasites and predators surviving a chaotic unravelling of “the economy, or is it getting to be time to do a more structured reset under the category of “Jubilee?”
Can confirm what he says about young Ukrainians fleeing west. Hearing noticeably more Ukrainian on the streets all the way over here in western Poland.
They are not alone. Ukrainians are fleeing the country in record numbers: since February 2014, 600,000 Ukrainians have sought asylum or other forms of legal stay in neighboring countries, and thousands more have moved to the U.S. and the European Union. Others have fled illegally: Poland reported a 100 percent increase in the number of detentions of illegal Ukrainian immigrants last year.
But the emigrants are not only asylum seekers. They are the Western-leaning intelligentsia, the professional classes with relatives abroad, and the students of the Maidan who first organized protests against former President Viktor Yanukovych’s kleptocratic and violent government in November 2013.
http://www.vice.com/read/the-heroes-of-the-euromaidan-revolution-are-leaving-ukraine-979
Interesting long comment at that article by one of the people interviewed for the article..
part of which was
“yeah, well, the only thing which they conveniently left out, is that everybody in this article decided to leave long ago before the revolution.”
The other interesting part of that comment is that she knows the author of the article and that her quotes were taken out of context.
Not exactly a great article to link.
Ukraine was bad-off when the USSR collapsed. In 1917 it was Russia’s breadbasket; in 1990 it was a bunch of crumbling old misssile factories and disgruntled ex-communists and fascists. The best thing for Ukraine would be autarky. It can support its own population; become an agricultural powerhouse (not gmo shit but good old fashioned agriculture); develop environmental remediation technology for water and soil; and blahblabla. There is no lack of need to be filled and Ukraine could do it. Only a lack of vision.