The International Monetary Fund operates primarily as a banker bailout machine. They cajole and tempt and confuse and threaten the leaders of governments worldwide to pay off the failed bets of the big bankers using the taxpayer funds of their countries. This has been going on a long time, at least since the early 1980s.
Thus, I am not in the teeniest bit surprised that the same thing is happening today in Iceland and Latvia.
This article by Michael Hudson has some of the details:
For the past decade Iceland has been a kind of controlled experiment, an extreme test case of neoliberal free-market ideology. ... Is there a limit, a point at which government will draw a line against taking on public responsibility for private debts beyond any reasonable capacity to pay without drastically slashing public spending on education, health care and other basic services? ...
The European Union and International Monetary Fund have told them to replace private debts with public obligations, and to pay by raising taxes, slashing public spending and obliging citizens to deplete their savings. Resentment is growing not only toward those who ran up these debts -- Iceland's bankrupt Kaupthing and Landsbanki with its Icesave accounts, and heavily debt-leveraged property owners and privatizers in the Baltics and Central Europe -- but also toward the neoliberal foreign advisors and creditors who pressured these governments to sell off the banks and public infrastructure to insiders.
What is supposed to happen here is: they take their losses. There was no government guarantee. Why should someone with no relation to this business deal have to pay off their losses just because they happen to live in Iceland?
The government of Iceland may not actually have the money to pay this off. They would have to borrow it. When the IMF makes a "rescue loan" to a government, the money spends no time in Iceland or Latvia. It goes directly to the foreign creditors, in places like New York and London.
However, the debts remain, to be paid off by the taxpayers of Iceland. Taxes rise, which just makes a bad economic situation worse. Valuable and important services are cut -- precisely when they are most needed. Then, the IMF "advisors" come in and start to make a lot of demands.
For example, they may demand that the government sell off "public infrastructure" and the assets of failed banks (which still have considerable value) to pay off the loans which were used to bail out the bankers in New York and London. Who buys this "public infrastructure"?
Typically, it's the bankers in New York and London! Normally, at very good prices -- very, very good prices. Extraordinarily good prices.
Prices for assets in a crisis are normally very low. But, a government that can be coerced into bailing out the bankers can also usually be coerced into selling off state assets at values that no private owner would accept.
Hudson calls this "neoliberal free-market ideology." Of course, it has nothing to do with the principles of capitalism. You could call it a form of fascist imperialism. I think John Perkins, author of Confessions of an Economic Hit Man and The History of the American Empire, would agree with this terminology.
It is hard to tempt and cajole and confuse world leaders when you use unpleasant terms like "fascist imperialism." That's why these proposals are camouflaged with labels like "neoliberal free-market principles," when they have nothing to do with free-market principles.
It's not about "conservative" and "liberal." It's about us against the banker imperialists.
The IMF should be abolished.
That's what the IMF does best.
Soon the international investors will be coming after America. Too bad the traitors in our midst are selling us out.
The USA is undergoing the same process now, it will just take a bit longer as stealing trillions takes more time than stealing billions. Too bad Americans are still tranquilized by fast food and prescription drugs, hypnotized by American Idol, and polaized by what they mistake as a two party system (instead of one corporate party).
I would suggest a re-read of the paragraph starting with: The European Union and International Monetary Fund have told them to replace private debts with public obligations... as a starting point
:-)
“A single clause in Point 19 of the communiqué issued by the G20 leaders amounts to revolution in the global financial order,” noted Ambrose Evans-Pritchard in Britain’s Telegraph. “In effect, the G20 leaders have activated the IMF’s power to create money and begin global ‘quantitative easing.’ In doing so, they are putting a de facto world currency into play. It is outside the control of any sovereign body.”
President Obama’s non-stop spending, which will hasten the implosion of the dollar, and his funding proposal for the IMF’s new powers are undoubtedly aimed at consolidating this profound revolution."
A de facto WORLD CURRENCY...
So even if we stuff every mattress in the house with our worthless federal reserve notes, when our currency is recalled and the new one released, the money we thought we'd protected will be worth whatever they decide to pay us.
And I believe a more accurate name for this process, other than "fascist-imperialism," is one that either Hudson or Chossudovsky has used in the past--the New Feudalism.
Because what we face is definitely Imperial in nature, and the power that's concentrating in the hands of a few Oligarchs may well end up dividing the world into fiefdoms ruled by the ultra wealthy and worked by the new serf class. In this new system there will be no participatory democracy of any kind. Even the Magna Carta will be set aside in favor of iron fisted totalitarian rule. Some call it the new world order, but it is a return to the very old days of Kings and peasants.
http://www.kpfa.org/archive/id/49073
have been making the case for an organized (crime...) cartel led by the international banks as the cause of the cleverly manufactured economic crisis we currently face. The impact on jobs, home ownership, savings, health, and personal political power is far reaching and ominous.
Their manipulations don't affect just countries, like Iceland--where if you read the news carefully over the last year, you might have seen a few foreign news items about the interference of the international banks, that quickly disappeared--they affect the people least able to defend against them in ways that quickly can destroy a society.
Chossudovsky states; Iceland and many other IMF impacted countries are a dry run for what will happen here once the so called bail outs have run their ineffectual course. I fully expect that at some future point, the IMF will come knocking on OUR door, offering to lend us--are you ready for this?--our OWN money back that Obama just gave them to reconstitute their power. And the terms of the loan will be the most stringent ever imposed on any 3rd world country.
The privatization of the gambling debts run up by Wall Street have caused us to run the largest deficits in history. Those derivatives are still unresolved. The banks should have been forced to take their losses--instead they became ours. Welcome to the United States of Iceland.
Some names really jump out--Kissinger, Rice Paulson Powell...
All sold out to the banksters. Do we really need to wonder any more who runs the country?