IMF - Austerity Has More Negative Impact Than Previously Believed/ Update: Austerity 'appropriate' - Chopra

[C. Flower]

Stiglitz, Klein, and many others have been saying so for years. The IMF has now done research which shows that its Programmes and forecasts have radically underestimated the negative impacts of their neoliberal policies.

Link to the Examiner report, which includes a pdf of the IMF document.

http://www.irishexaminer.com/archive...ng-210285.html

The IMF has admitted it completely underestimated the effects of austerity on the Irish economy and believed the tax increases and spending cuts would not have cost so many jobs.

The revelation comes in three pages of academic analysis tucked away in the body’s annual report being released in Tokyo today where the IMF and the World Bank are holding their annual congress.

The report says the IMF believed that for every €100 of austerity through higher taxes and spending cuts, the effect on economic growth and unemployment would be the equivalent of €50.

But in reality the effect has been between double and three times that — stripping the economy of €90 to €150 for every €100 taken out in budgets agreed with the troika.

Tom McDonnell of the independent think-tank Tasc said the report called into question the Government’s budgetary strategy.

"It suggests recent budgets have actually been more damaging to the Irish economy than the Government was estimating. It would also help explain why growth has been lower over the last few years than the Government had expected — and why the vaunted ‘return to growth’ has failed to substantively materialise."

The findings show Ireland had the second highest austerity measures in the developed world in 2010 — Greece had the highest.

[Captain Con O'Sullivan]

I've never heard of any economy in history that has achieved growth through austerity. It is the economic equivalent of 'Arbeit Macht Frei' and with pretty much a similar level of credibility.

I'm sure the IMF economists will have been well aware of the disastrous attempts at austerity attempted in the US before Roosevelt's New Deal.

The IMF and ECB know damn well that what they are engaging in its an attempt to cut back the middle class and force them back into the social level of the working class who are themselves to be regarded as potential dependants and expensive ones at that.

Essentially we have a new tyrant on the block in both the US and Europe in the form of the corporate boardroom- none of whom will want to be identified individually as architects of this new enforced social downward mobility but would rather it was disguised as 'economic dynamics'.

If the IMF's economists are that poor then why are they employed at the IMF?

[MPB]

I've never heard of any economy in history that has achieved growth through austerity. It is the economic equivalent of 'Arbeit Macht Frei' and with pretty much a similar level of credibility.

I'm sure the IMF economists will have been well aware of the disastrous attempts at austerity attempted in the US before Roosevelt's New Deal.

The IMF and ECB know damn well that what they are engaging in its an attempt to cut back the middle class and force them back into the social level of the working class who are themselves to be regarded as potential dependants and expensive ones at that.

Essentially we have a new tyrant on the block in both the US and Europe in the form of the corporate boardroom- none of whom will want to be identified individually as architects of this new enforced social downward mobility but would rather it was disguised as 'economic dynamics'.

If the IMF's economists are that poor then why are they employed at the IMF?

Austerity was never meant to save economies, it was to save the private banking system.

It was designed to transfer the wealth of the many, to the few, to retain the status quo and maintain the global power structures.

For decades the economic method was for ordinary workers to only be allowed receive money from a Bank, with an interest rate attached. That way our earnings became nothing more than a form of leverage. The Govts taxed us and the Banks did exactly the same.

The debt overhang this has created is the reason recapitalising banks is pointless.

Who are they going to lend to?

[Captain Con O'Sullivan]

Basically they have succeeded in creating an entirely false economy. So they'll lend to each other.

One of the most damaging things ever to happen economically is that notion that banks, finance houses were allowed to treat their loan book as an asset and then sell derivatives based on that false notion that all loans were recoverable with interest.

There's probably a good book waiting to be written on 'long finger securitisation' which really is the art of placing an essentially false value on the future.

The south sea bubble back in the 19th century and all bubbles can be traced back to the attempt to place a false value on future transactions in my opinion. It always leads to a false market in the end.

[C. Flower]

The IMF was implementing these policies long before there was a eurocrisis or such a thing as "austerity."

It is a policy of destroying any social aspects of the economy and handing them over to private interests - and giving the private interests free reign to exploit them. It also forces weaker states to open their markets to world competition, which then destroys their local industry.

The IMF also has forced states to pour money in to defending the indefendable - over-valued currencies.

These things aren't accidental mistakes, it is a deliberate transfer of wealth from poorer to richer, from weaker to stronger.

Unfortunately, it wrecks economies, impoverishes people and destabilises societies.

[eanach1]

Kind of related- What do people think of an unsecured personal debt default movement? So that those putting a lot of their crappy wages/benefit, etc into repayments. could actually start spending again and get our economy going since the banks still refuse to lend or help people by giving them consolidation loans, etc.

Would this fly?

[MPB]

The IMF was implementing these policies long before there was a eurocrisis or such a thing as "austerity."

It is a policy of destroying any social aspects of the economy and handing them over to private interests - and giving the private interests free reign to exploit them. It also forces weaker states to open their markets to world competition, which then destroys their local industry.

The IMF also has forced states to pour money in to defending the indefendable - over-valued currencies.

These things aren't accidental mistakes, it is a deliberate transfer of wealth from poorer to richer, from weaker to stronger.

Unfortunately, it wrecks economies, impoverishes people and destabilises societies.

It helps the IMF when they have economic imbeciles like Enda Kenny running a country.

Today he stood up in the Dail and stated that it was alright for AIB to hike up variable rate interset rates, because the Banks had to return to profitability and if they were prevented from hiking the interest rate, the state would have to recapitalise them.

Totally forgetting the fact that his Govt are on record as saying that the Banks have been over capitalised by the State.

The fact is that AIB is insolvent.

Endas, wierd and wonderful take on economics is that the State borrows to recapitalise banks and then reduces service supply, cuts employment, increases social welfare spend and increases taxes on citizens to help pay this newly acquired debt.

It then allows the Banks to tax those very same citizens in order to recapitalise themselves further.

The end result of this will be recapitalised banks and no economy to lend to.

The stupidity of this Govt is of mega proportions and we are fast reaching the point when a change of Govt should come about by massive street protest, refusal to repay mortgages and a refusal to pay taxes.

It is unfortunate, but elections don,t seem to be working and the permanent Govt in the Civil Service are as much a part of the problem as the Bankers and Politicians.

[Ephilant]

I think that many people are missing the real purpose of "austerity". Austerity will never even assist in lifting a country out of a recession.
Roughly the top 5% of the richest people in the world are the ones who are being protected by all these austerity policies. Their wealth is not invested in one source, like an (overvalued) house as with most ordinary people. The "My home is my castle" mentality so to speak.
The vast bulk of their wealth is potential wealth, the potential of which is locked in debt. Obviously, that wealth will only materialize if the debt it's locked into gets paid.
The admission by the IMF of austerity not working is not an admission of it not working because Joe Soap suffers. It's an admission of austerity not working because it raises the real possibility of loss of wealth through an accelerated economic collapse, triggered by too draconian austerity measures.
The trick is finding the right dose of austerity, the dose that allows the top 5% to bleed Joe Soap dry over a long enough period to realize the potential of their debt-investment. After that, they couldn't care less. Their goal then will be to find other, probably even sicker ways of satisfying their insatiable desire for even more money. We might even get a good old fashioned war thrown in to literally clear the decks if that's whats deemed necessary. I believe it has happened before...

[Apjp]

Basically they have succeeded in creating an entirely false economy. So they'll lend to each other.

One of the most damaging things ever to happen economically is that notion that banks, finance houses were allowed to treat their loan book as an asset and then sell derivatives based on that false notion that all loans were recoverable with interest.

There's probably a good book waiting to be written on 'long finger securitisation' which really is the art of placing an essentially false value on the future.

The south sea bubble back in the 19th century and all bubbles can be traced back to the attempt to place a false value on future transactions in my opinion. It always leads to a false market in the end.

http://www.historic-uk.com/HistoryUK...th-Sea-Bubble/ 18th century capt.

[Dr. FIVE]

nevermind

http://www.reuters.com/article/2012/...89J09I20121020

"The pace of consolidation under the program has struck an appropriate balance and continues to do so for the period ahead, enabling Ireland to make steady progress," Ajai Chopra, the IMF's deputy director for Europe said in a statement.

"Although there is uncertainty around any estimate of fiscal multipliers, there is no compelling evidence that a higher multiplier was at work in Ireland than the one assumed under the program.

"With overburdened bank, household and SME balance sheets, and weak growth in trading partners, a number of factors besides fiscal consolidation have been a drag on growth in Ireland."

[Apjp]

I would wager a lot of people in this country do not even understand they are being ruled by absentee landlords and an even greater number of them could not care less.