NPR, the IMF, and the Global Savings Glut

The Obama administration is having a tough time getting its request for $108 billion for the IMF through Congress. Bank bailouts are rapidly losing popularity. And bailouts of foreign banks are probably even less popular than bailouts of U.S. banks.

But, NPR is rushing to the rescue. It had a piece this morning telling listeners that it was important to get the IMF more money to help the poor countries of the world. The piece never mentions the fact that the bulk of the IMF lending at present is going to East European countries, not the developing world.

The basic problem is simple. The West European bankers proved to be every bit as stupid as the Robert Rubin-Citigroup crew in dishing out loans. The main outlet for their bad loans was Eastern Europe, where they made enormous loans denominated in euros.

It is very difficult for the countries of Eastern Europe to maintain their exchange rates against the euro without large amounts of assistance. However, if they let their currencies fall against the euro, then the default rates on the loans from Western European banks will explode.

Of course West Europe is rich enough to bail out its own banks, but the governments in countries like France and Germany know that their people will not stand for this sort of handout. In steps the IMF, with a big assist from NPR, which managed to not even mention East Europe in the piece.

NPR made one major misrepresentation that is worth noting. It referred to a "global savings glut" which it attributes to developing countries' fears that the IMF won't have enough resources to bail them out in a crisis, and therefore their need to self-insure. WRONG!!!!!!

Developing countries only began to accumulate massive amounts of foreign exchange (i.e. savings) after the East Asian financial crisis in 1997. There was no talk at the time about the IMF not having enough money. Rather, the explicit motive of most of these countries was to accumulate enough reserves that they would never need to turn to the IMF for a bailout.

The conditions that the IMF imposed on the East Asian countries, who had previously been the superstars of the developing world, were seen as being so onerous that other countries wanted to make sure that they never were forced to turn to the IMF for help. Therefore they deliberately kept their exchange rates under-valued so that they would run huge trade surpluses, which let them rapidly build reserves.

In short, the IMF's conduct was a major cause of the global imbalances that led to the current economic crisis. NPR turns history on its head in telling listeners that more support for the IMF is the solution.

Comments

[Rule Of Law]

For those in listening distance, I suggest Kpfa in Berkeley Ca. This is the original public radio station from BEFORE there was an NPR, PBS or any other alphabet soup of progressive wannabes. They've been going strong for over 50 years and have shows like Guns and Butter, Democracy Now, and Against the Grain that still try to tell the whole story.

http://www.kpfa.org/

Also available online.

[MadHeart]

No commercials on NPR? Laughable. And they're now on their second "public" fundraiser of the year, but I'm not stupid enough to give them any since the quality of programming has sunk to new levels and all the fundraising interruptions leave it unlistenable anyway.

[zaz33]

With the exception of "NOW" and "BILL MOYERS" on PBS, NPR and PBS are not much better than CNN, FOX, or BBC America.

[LoRiseAntlers]

Along with teh rest of the corporate media,I haven't heard NPR report on Russia,China and India are on the verge of overthrowing the US Dollar as the world's reserve currency,or how the IMF is sllying itself with them,nor have I heard NPR report how this willtrigger the complete financial,political and military collapse of the United States,nor have I heard NPR report how the bailout of Wall street was in reality the rich power brokers immunizing themselves against this inevitability.

[Busbydav]

Really? There was a story on the BRIC group this morning on the Marketplace Morning Report.

http://marketplace.publicradio.org/display/web/2009/06/16/am_bric/

[Javani]

NPR news, in my opinion, is more commercial than the networks. However, it is packaged in a fashion "below the radar" of is average casual listeners.

Most of the the stories posing as investigations seem to be ready-made infomercials. Crisis presented, corporate/government solution provided, fashioned to appeal to white liberal sensibilities, sometimes pumped with opposing scare quotes from the rural white other. Expertise provided handily provided by false front ngos and charities, e.g. the Pew Center on Climate Change, and their smooth spokespeople. Indeed, these fake groups also are financial contributors to NPR.

[wildflowermaven]

I didn't hear the piece, but it doesn't surprise me. I still listen to NPR, but take many of their pieces with a grain of salt, they have been infiltrated by the right-wing for years, prime example their timid pre-Iraq war coverage.

[Raphi]

Confirms my experience among the liberal educated elite, aka NPR listeners. Wear Carhartts and they cannot see something that reads, writes, and thinks. Class prejudice is so deep it seems natural.

I was a campaign manager who witnessed how the Democrats abandoned labor in the late '70s. New party run by systems analysts. Old party required organizing and mobilizing various groups which often did not like each other. Much easier to take large donations from rich liberals and corporations.

Same for NPR. What happens when money dominates? We're living with it. The economic system was not the product of some deity or nature. It's political decisions made law. Now global treaties beyond the laws of nations, benefitting the world's elite 1%.

How are working people to cope? The favorite elite answer is education. But what, for whom, how? 80% of jobs in high tech are low tech. And even grad school won't help in that highly touted "service economy."

Not the first time NPR has reflected the interests of the economic elite. Bravo to any country that serves its people and not the global economic machine.

[FoonTheElder]

NPR has turned into a typical corporate mass media outlet with a politically correct angle.

[JohnFromCensornati]

NPR is corrupted by their corporate sponsors, too.