Greek “Bail Out” is an Absurd Piece of Theatre

The “bail out” fro the IMF is completely backwards and is in no way designed to help the Greek economy and I will tell you why

Even to someone with no clue about anything the answer to a 450billion Euro debt problem is not an additional 150 billion Euro loan.

Indeed, some might say that would be complete madness.

Given the economic upheavel that would follow a default, surely it would be a better situation for Greece to recieve financial aid after the default, NOT before it, at least that way the Greek people would receive some benefit because as it stands, the Greek people receive next to no long term benefit.

But it was interesting to read the Economists’ article about the Argentina default and how the IMF insisted that it got it’s money back before any of the other creditors and that it received a 100cents in the dollar and not a haircut like the other creditors.

And given that the IMF is a creation of private banks it seems that by giving Greece such loans it is in fact securing loan repayments for international financial institutions in an indirect manner. ie if Greece can’t service it debts and defaults, it will end up paying the IMF instead which amounts to the same thing. Either way the private banks get their money.

Reading the wikipedia article it highlights this quote “When the IMF arrives in a country, they are interested in only one thing. How do we make sure the banks and financial institutions are paid?… It is the IMF that keeps the [financial] speculators in business. They’re not interested in development, or what helps a country to get out of poverty.”
—Joseph Stiglitz[30

I didn’t realise that a former chief economist at the IMF had actually said this but the actions in Greece at the moment completely reflect this philosophy. As I have said many many times before.

So perhaps Papandreou is working for the IMF first and foremost and the Greek people second.

In Ghana, the IMF insisted the government introduce fees for going to school – and the number of rural families who could afford to send their kids crashed by two-thirds. In Zambia, the IMF insisted they slash health spending – and the number of babies who died doubled. Amazingly enough, it turns out that shoveling your country’s money to foreign bankers, rather than your own people, isn’t a great development strategy.

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