IMF: Our Greek bailout was full of 'notable failures'… The International Monetary Fund has published a scathing internal self-assessment of its bailout of Greece three years ago. It isn't pretty. The IMF underestimated the damage that fiscal austerity would do to the Greek economy in its earliest rescue of the nation in 2010. It was too slow to promote a write-down of the nation's debts to more sustainable levels. And it was compromised by a sometimes unwieldy partnership with major European institutions in what became known as the "troika." The IMF could have handled its 2010 bailout of Greece quite a bit better, a staff review found. – Washington Post
Dominant Social Theme: Wow, we just realized we made some mistakes.
Free-Market Analysis: Who believes this stuff anymore? The point of the IMF's attack on Greece, so far as we can tell, was to show the rest of Europe that the arm of Brussels was long and strong.
The unbreakable will of the Eurocrats was to be on full display and those who were to challenge the IMF were to think again. But a funny thing happened on the way to a more perfect union.
In both Greece and Spain, and other countries as well, the unemployment figures kept going up, the markets kept going down and even the mainstream media seemed to notice that things weren't working out.
Could it be that a climb-down has commenced?
That's how it seems to us, anyway. The implacable rigor has subsided. The blow back from a fracturing
Europe seems to have tamed German bankers and cowed Eurocrats. And now the IMF, too. Here's more.
The result of these "notable failures," enumerated in an "Ex-post evaluation" that the IMF published Wednesday, is the depression-stricken nation that is Greece today. The nation's unemployment rate is 27 percent and economic activity remains well below its levels of half a decade ago. "Market confidence was not restored, the banking system lost 30 percent of its deposits, and the economy encountered a much-deeper-than-expected recession with exceptionally high unemployment."
Public debt remained too high, Greece waited too long to restructure its debt, and "structural reforms stalled and productivity gains proved elusive." The newly released document is an after-action report of sorts, an attempt by IMF staff to grapple with the lessons from Greece.
It focuses in the initial Greek rescue package, approved in May 2010, which has since been reworked multiple times. The staff review argues that there was no avoiding a steep economic contraction, given the excesses of Greek government borrowing and spending in the years before the crisis. "A deep recession was unavoidable," the report concludes. But it also holds that a series of decisions by the IMF and the other members of the troika made it worse than it otherwise might have been.
If the Eurocrats behind this climb-down want to cure Europe of its many problems, all they have to do is scuttle the euro. But this they will never do.
The IMF apparently doesn't even consider it and Eurocrats are on the record in the past as saying that a financial crisis was necessary to deepen a political union.
Everyone who studies these issues honestly and with an open mind must come to the conclusion that the EU has been built with an empire rather than a trade union in mind and that from the very beginning, EU officials and those who stood behind them were not honest about the true goals of the union.
This IMF self-critique must be seen within this context. Little ever takes place when it comes to the EU that is either transparent or honest.
There is no reason to believe this IMF document is any more honest than what has gone before or what is yet to come. If top officials with the EU are engaging in self-flagellation, it is only because they are afraid of losing control of the EU project and of further alienating the support of Europeans generally.
It may be too late?