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Friday, November 09, 2012 12:55 AM


Economic Zealots Endanger Global Economy; IMF Hypocrites Urge Permanent US Can Kicking, Fiscal Stimulus, and Enormous Deficits


One thing sure to raise my ire is a group of mindless hypocrites who say one thing and do another, while pretending they have a clue. In this case I am talking about the IMF.

As part of the Troika, the IMF helped ruin Greece. The country is now in a never ending depression with the youth jobless rate at 58 percent, and overall unemployment at 25.4%. Every step of the way the IMF demanded more austerity measures, as did the ECB, EU, and Germany.

And every step of the way Greece spiraled further and further behind. It's not that austerity was unneeded, rather austerity could only really work in conjunction with a eurozone exit and work rule reform.

The IMF has lowered economic forecasts on Greece too many times to count. What was a €40 billion problem several years ago when I urged Greece to default is now a €240 billion problem.

Yes, the Troika threw €200 billion at a €40 billion problem. The reason is stubborn arrogance coupled with what amounts to religious fanaticism to save the euro project no matter who is destroyed in the process.

Eventually there is going to be a €240 billion haircut when Greece comes to its senses, tells the Troika to go to hell, and defaults on the entire mess.

IMF Hypocrites Urge Permanent US Can Kicking, Fiscal Stimulus, Enormous Deficits

While preaching round after round of austerity for Greece, Spain, Portugal, and Ireland, austerity is the last thing the IMF wants for the US.

Please consider IMF urges permanent fix to U.S. 'fiscal cliff'

The International Monetary Fund on Thursday urged the United States to quickly reach an agreement on a permanent fix to avoid automatic tax hikes and spending cuts early next year, saying a stop-gap solution could be harmful to the global economy.

In a report prepared for the Group of 20 finance ministers' meeting in Mexico on November 4-5 and published on Thursday, the IMF warned that the euro zone crisis and the threat of a political impasse in Washington over the looming fiscal cliff posed the biggest risks to the world economy.

The IMF has estimated that the tax increases and spending cuts amount to $700 billion in 2013. Unless avoided, this could contract U.S. gross domestic product by around 4.5 percent.

"A last-minute deal that relies on suboptimal fixes or largely 'kicks the can down the road' may ultimately prove harmful," the IMF said in the report.
For some reason it is OK for the US to run trillion dollar deficits year after year but no one else. Yes indeed, the IMF is literally asking the US to spend the world out of recession.

Reckless spending is what got Greece and Spain into trouble but reckless spending is OK for the US.

The IMF would have you believe the "permanent fix" to the fiscal cliff is "permanent trillion deficits".

Anyone with a 7th grade education and a bit of common sense would realize you cannot spend your way out of a debt problem but that is exactly what the IMF is asking the US to do.

Economic Zealots Endanger Global Economy

Consider the brilliant tirade by Ambrose Evans-Pritchard who asks Who will stop the Sado-Monetarists as jobless youth hits 58pc in Greece?
Greek unemployment rose to 25.4pc in August. Youth unemployment rose to 58pc.

Under the official forecast, the economy will contract by a further 4.5pc next year, so it fair to assume that lots more people are going to lose their jobs. It is certainly not going to improve in any meaningful way for years to come.

This is what happens when you lock into the wrong currency and block the escape routes – or join a "burning building with no exits" in the words of William Hague.

Even if the EMU machine succeeds in keeping Greece in the system, is this any longer a remotely desirable goal? Has it not become a vicious and immoral policy in itself?

Premier Antonis Samaras issued hysterical warnings before the vote of what would happen if parliament refused to obey the EU-IMF Troika, talking of catastrophe and a collapse of Greek society.

The ideologues running monetary union cannot bring themselves to contemplate any step back in the Project, just as they would not admit yesterday in the Commission’s economic report that they have gravely misjudged the effects of fiscal tightening (the fiscal multiplier) and have therefore miscrafted their entire austerity strategy.

We are not dealing with rational people. We are dealing with a religious order, and these monks are becoming an increasing danger to Europe’s societies and democracies.
Religious zealots (religion being the almighty euro project), have destroyed Greece to save the project. They will destroy, Spain, Portugal, and Italy as well.

In the US, my fear is not of the fiscal cliff. Rather, my fear is the US listens to the IMF illiterates and continues deficit spending until it blows up in our face too.

Heart-to-Heart Talk Needed

It's long overdue for the president Obama to have a heart-to-heart talk with the nation, telling everyone we are on an unsustainable path of military and entitlement spending, and that massive cuts in both are long overdue.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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