|The IMF's New Lease of Life: A Bad Idea?|
The International Monetary Fund regained its relevance at the G20 Summit with a trebling of its resources for lending – but is resurrecting the IMF such a good idea considering its controversial history?
28th April 09 ~ STWR
Having gradually lost both influence and funding over recent years, the IMF was given a new lease of life with G20 countries declaring that they want to see the IMF “rebuilt” and given a stronger voice for emerging economies.
The details of how the IMF will use the suggested $750 billion fund to ease recovery from the global recession was a central topic at the IMF’s spring meeting in Washington between 25 and 26 April. Whilst the IMF’s managing director Dominique Strauss-Kahn enthuses that “The IMF is back”, the Fund’s track record is generating widespread concern over its strengthened role as the world’s ‘economic cop’.
As explained in the article below by Heather Stewart , the principal criticism of the IMF relates to the conditions which often accompany its loans. In the past the IMF has required governments to curb public spending in order to be granted loans, policies which would actually worsen the social impact of recession.
Other commentators question whether the IMF’s promises of reform, dubbed an IMF mark 2.0 by Strauss-Kahn, will go far enough to prevent a repeat of the Fund’s heavy-handed economic dealings with struggling economies.
The IMF was originally set up at the Bretton Woods Conference in 1945 to support orderly balance of payments adjustment between countries. Its function fitted into a world of fixed exchange rates, so when Nixon ‘closed the gold window’ in 1971, meaning that the dollar was no longer convertible into gold at a set price, the IMF’s role became less relevant.
In the 1980s the IMF reinvented itself as a crisis-lending institution for developing countries. To accompany this shift it also became an enforcer of the market liberalisation and privatisation policies known as the ‘Washington Consensus’, by imposing structural adjustment policies on it debtors - often so crippling that countries in Asia and Latin America vowed “never again” to use its services.
After the IMF’s latest World Economic Outlook report described the present downturn as the deepest since the Great Depression, it is clear that developing countries will bear the brunt of the crisis – with the IMF estimating that a further 85 million people will be plunged into poverty in 2009.
Many civil society organisations are concerned that richer countries will not step up to soften the impact of the recession on more vulnerable economies, and are calling for an immediate fiscal stimulus for the poorest countries along with debt relief and increased aid.
Mark Weisbrot’s article below explains how the IMF’s past mistakes have caused widespread unemployment and poverty, as exemplified in the Asian crisis and the Argentine crash. The Fund’s power structure weighted in favour of Western Europe, the US and Japan may be one reason why it has been able to impose policies which have worsened the social and economic impact of past crises on developing countries.
It is true that the IMF has introduced tentative changes to its systems of governance and lending, and global leaders such as Prime Minister Gordon Brown have confidently announced that “Laissez-faire has had its day”. But the real question is whether the thinking of the Fund has moved beyond the stale doctrine of market liberalisation and reduced social spending – policies which have brought many of its client countries in the developing world to their knees.
As Nii Akuetteh emphasises in his article Questions the IMF Must Answer, the enforcer of harsh economic policies has not yet publicly acknowledged its errors and their implications for the people of Africa, Latin America and Asia. If global leaders and IMF economists have sincerely abandoned laissez-faire ideology, what economic philosophy will they replace it with, and will it be one that finally serves the interests of the majority world?
On its 65th birthday the more relevant question may be whether it is time for the IMF to retire as an undemocratic, doctrinaire institution, and be replaced by a more cooperative financial body under the auspices of the United Nations.
26th April 09 - Heather Stewart, Observer
Dominique Strauss-Kahn, the dapper former French finance minister who runs the International Monetary Fund, is finding it hard to conceal a certain swagger in Washington this weekend. If there is one big winner from the wrenching financial crisis of the past year, and the scramble by shell-shocked governments to tackle the turmoil, it is the IMF.
At the London summit of G20 countries this month, heads of state signed up to an extraordinary tripling of the IMF's resources, handing it the responsibility of acting as a giant economic shock absorber, to prevent a string of countries falling victim to crises. As one Oxfam campaigner said at the time: "The IMF is big, it's bad and it's back".
"I think you can say that the IMF is playing its role - and that is the rationale for the tripling of resources," Strauss-Kahn said this weekend.
Gordon Brown claimed in London that leaders had banished the "Washington consensus" of neo-liberal economics promulgated by the US-dominated IMF and World Bank. Yet the IMF was handed a massive new mandate, and given until 2011 to finish crucial reforms of "quota and voice" - the power each of its member countries have in the IMF's decision-making bodies.
Two years ago, the IMF, set up in the aftermath of the second world war, seemed to have lost its mojo. Before the credit crunch, during the calm years that became known as the "great moderation", the IMF's twin jobs, of emergency lender to hard-pressed countries and guardian of the global system, were both in abeyance. And as lending declined, its key source of income, from interest payments, fell away.
The IMF periodically issued warnings about the risks of the "global imbalances" in the international economy - live-now-pay-later consumption in the US and over-sized trade surpluses and vast foreign currency reserves in rapidly expanding emerging countries such as China. But plenty of thinktanks offered their own analyses of the world economy without the need for the IMF's considerable staff and resources, and governments - including Britain's - felt free to disregard its advice.
In the past 12 months, as a little local difficulty in the US mortgage markets spiralled into a worldwide recession, and with the global economy now expected to shrink in 2009 for the first time in 60 years, the IMF has been triumphantly reborn. Iceland was the first desperate country to call on it for help - and the first developed country to borrow from it since the UK, in 1976. Several others, including the Ukraine and Latvia, soon joined the club; more, including Turkey, are in fraught negotiations with IMF staff.
Strauss-Kahn arrived at the IMF in the autumn of 2007 determined to rescue it from irrelevance, but it was the credit crunch that really gave it back its job, as what he this weekend called the world's "fire-fighter".
Even the most ardent campaigners for reform agree he has made a number of key reforms. "You have to say things are changing faster than they have before - but it's still at a snail's pace," says Peter Chowla, of the Bretton Woods Project, a UK thinktank that monitors the IMF. "A lot of the credit goes to Strauss-Kahn for pushing changes through."
Nevertheless, there is profound concern about the IMF's new, beefed-up role, especially among those with long memories. During the Asian crisis of the late 1990s, it imposed stringent conditions on many countries that came to it for help, forcing them to target unrealistically low inflation rates and implement what economists call "pro-cyclical" policies - spending cuts and interest rate rises that can exacerbate a downturn, instead of helping. It used its financial leverage to impose the Washington consensus recipe of financial liberalisation, privatisation and tight budgets; in many cases, the results were catastrophic.
The IMF's own independent evaluation office admitted that, in the case of Indonesia, for example, "the depth of the collapse makes it difficult to argue that things would have been worse without the IMF".
The 21st-century IMF would argue it has learned its lessons. Strauss-Kahn stressed this weekend that countries receiving its loans today are not required to sign up to a lengthy list of specific policy conditions. He also published a paper saying that the IMF would give countries additional leeway, to ensure they are not forced to cut back on social spending to meet arbitrary macroeconomic targets. "I have insisted that we're focusing on core conditions, not spending too much time on things that may be good for the country, but have nothing to do with the current situation," he said.
But an analysis of the new wave of loans, by Mark Weisbrot and colleagues from the Washington-based Centre for Economic Policy Research (CEPR), finds that every one contains pro-cyclical policies. While the IMF has led the argument for large-scale fiscal stimulus in the rich world to kick-start economic growth, at the same time, the CEPR argues it is still forcing the countries that come to it for emergency loans to cut back on spending and reduce budget deficits.
For example, Pakistan had to promise to cut its deficit from 7.4% of GDP last year to 4.2% this year. "While this might be a desirable goal, it is questionable whether this reduction should all be done this year, when the economy is suffering from a number of external shocks that are reducing private demand," Weisbrot and his co-authors say.
After examining each new crisis loan, they warn that, "the re-establishment of the IMF as a major power in economic and decision making in low- and middle-income countries, with little or no voice for these countries in the IMF's decision-making, could have long-term implications for growth, development, and social indicators in many countries".
Duncan Green, head of research at Oxfam, says that whatever the message from HQ in Washington, IMF staff on the ground can't help handing out tough medicine: "It's in their DNA."
The IMF's heavy-handed tactics during the Asian crisis arguably played a role in the chain of events that created the credit crunch. It was their determination to avoid being forced into the arms of the IMF again that prompted many Asian countries to pile up huge cushions of foreign currency reserves, deliberately running large trade surpluses.
This "savings glut", as it became known, is one side of the so-called global imbalances that left the world economy dangerously out-of-kilter over recent years. Having all these savings sloshing around encouraged the world's financial system to become increasingly innovative in finding ways of investing it - including in sliced-and-diced sub-prime mortgages and the full range of other toxic assets at the heart of the financial crisis.
It is partly this harsh lesson that has prompted one of the IMF's most important innovations - a new lending arrangement called the Flexible Credit Line (FCL), which can effectively act as an overdraft for countries the IMF believes have generally sound policies.
In the past, borrowing from the IMF under its traditional "stand-by arrangements" has immediately been interpreted by financial markets - and voters - as a sign of deep distress, but the new facility is meant to remove that stigma. Mexico, Poland and Colombia have already signed up and others are soon expected to follow.
Jim O'Neill, chief economist of Goldman Sachs, says the FCL is aimed partly at providing countries with an insurance policy so that they no longer feel they have to accumulate such large foreign currency reserves at home by keeping their currencies cheap and running giant trade surpluses.
"To the extent that the FCL and similar facilities will induce emerging markets to rely less on external demand as the main driver of growth, this should boost consumption and imports in emerging market economies, and help rebalance the global economy," he says.
Marita Hutjes, senior policy adviser at Oxfam, agrees that it's a good thing for governments that qualify, reducing the specific conditions they face on loans. But she argues that it still leaves a large number of the poorest economies out in the cold.
"We do think there are serious issues, and countries need access to funds, but it needs to be broader, or something else needs to be available for the poorer countries," she says. "The IMF constantly says financial stimulus is the right thing to do for those countries that can afford it, so it's never for the poorest countries, because there's the assumption that they can't pay for it."
Donald Kaberuka, head of the African Development Bank, who was invited to the London summit, told a press conference at the IMF that efforts to protect the poorest countries from the credit crunch have so far been "timid". He warned: "They're either debt-creating, not adequate, or not likely to be effective within the time frame that's needed. We don't see how an international crisis of this magnitude can be resolved by ignoring 900 million people in Africa."
Sir Bob Geldof, who was in Washington this weekend to press a plan for the IMF to devote more resources from proposed sales of its gold reserves to the poorest countries, let loose a furious outburst about the perils of ignoring the plight of Africa in the credit crunch.
"All those arguments the activists and the politicians had for many years about aid, or debt cancellation, we can lay them to rest, because we're all begging for aid, we just call it fiscal stimulus. And we're all begging for debt relief, we just call it disposing of toxic assets," he said.
In the depths of the worst financial and economic crisis for 60 years, rich countries have so many problems to fix at home - and among their crisis-ridden neighbours, in eastern Europe, for example - there is a risk that many millions of others are still unable to make their voices heard.
Brown had hoped to reach a grand bargain on the future of the Washington financial institutions at the G20 - indeed, in the early planning stages, the London summit was envisaged as a new Bretton Woods, echoing the gathering after the second world war that set up the IMF and the World Bank. Britain was optimistic that emerging economic powers, especially China, with its huge foreign currency reserves, could be persuaded to stump up more cash for development in exchange for more influence in decision-making.
What emerged was a giant sticking plaster. There was little new up-front money: much of the trumpeted trebling of IMF resources is still to be found, and the inevitable arguments about influence at the table in Washington were left to another day. China and Russia said they wanted to see a serious examination of the problems caused by the dominance of the dollar - and by implication the US - over the world economy; everyone else quietly ignored them.
In fact, the G20 gave Brown himself the job of coming up with sealing the next stage in the process. He has promised to "consult widely in an inclusive process and report back to the next meeting with proposals for further reforms to improve the responsiveness and adaptability" of the Bank and the IMF.
Chowla says the IMF's future will be mapped out over the next 12 months, as developing countries battle for control over its decision making, and a new generation of desperate governments are thrown into its clutches. "It's all to play for," he says.
One thing Britain could do to help seal a reform deal is offer to give up its own seat, and some of its voice, at the IMF, along with France, Belgium and others. But the more mischievous among the NGOs say that Brown is just as likely to lay the groundwork for a new posting for himself in Washington should the next general election not go Labour's way.
Strauss-Kahn is clear that he has more plans for radical reform over the next few months. Referring to a recent magazine article that summed up the reforms he has instituted as building "IMF 2.0", he insisted: "We will go further than that: we will have IMF 3.0."
It may be many years before it is clear whether Brown is right and the old Washington consensus has been supplanted by a kinder economic system - or if unleashing the mighty power of a reinvigorated IMF is laying the groundwork for Credit Crunch 2.0.
24th April 09 - Mark Weisbrot, New York Times
The International Monetary Fund turns 65 this year. Until the current economic crisis, it had reduced its workload drastically to a near-retirement level — its total loan portfolio plummeted by 92 percent in four years. But like many senior citizens, the Fund has kept working past retirement age — and is now expanding its responsibilities.
The I.M.F. has a track record that seems to have been almost completely ignored in discussions of a proposed $750 billion increase in its resources. Nearly 12 years ago, a financial crisis hit Thailand, South Korea, Indonesia, the Philippines and Malaysia. The word “contagion” became part of the financial reporting lexicon as the crisis spread to Russia, Brazil, Argentina and other countries.
The I.M.F.’s response was roundly criticized at the time. Jeffrey Sachs, then at the Harvard Institute for International Development, called the Fund “the Typhoid Mary of emerging markets, spreading recessions in country after country.”
In the Asian crisis, the I.M.F. failed to provide desperately needed foreign exchange when it was most needed; it then imposed policies that worsened the downturn. It did the same in Argentina, and lent tens of billions of dollars to prop up an unsustainable exchange rate, which inevitably collapsed along with a record sovereign debt default. After that experience, many middle-income countries piled up reserves so that they would never have to depend on the Fund again.
No one at the I.M.F. was held accountable for the mistakes that caused so much unnecessary unemployment, lost output and poverty. Nor were any major reforms introduced. The Fund has 185 member countries, but a handful of rich members — mostly the U.S., Europe and Japan — have a solid majority, and the U.S. Treasury is the Fund’s principal overseer.
The I.M.F. claims that it has changed. But a look at nine “standby arrangements” — its basic short-term loan agreement — negotiated since last September reveals some of the same mistakes it made in the last crisis. All the agreements provide for spending cuts, despite the I.M.F.’s avowed commitment to a worldwide fiscal stimulus.
El Salvador has signed an agreement with the I.M.F. that prevents it from using expansionary fiscal policy — as the United States is now doing — to counter a downturn. Since El Salvador uses the U.S. dollar as its currency, fiscal policy — increased spending or lower taxes — is practically the only tool it has to fight a recession that is practically inevitable as the U.S. economy continues to shrink.
Pakistan has agreed to significant spending cuts, as well as raising interest rates, despite negative demand shocks to the economy. Ukraine also has had to battle with the Fund over public spending cuts, despite the fact that G.D.P. is falling by 9 percent this year and the country has a low public debt.
These and other examples indicate that in spite of the world recession, the I.M.F. is willing to sacrifice employment, and increase poverty, in pursuit of other goals. A country can always reduce a trade deficit by shrinking its economy, since that causes households and businesses to import less.
The main purpose of I.M.F. lending in the current crisis should be to enable low- and middle-income countries to do more of what the rich countries are doing: adopt stimulus packages that counter the downturn. Most countries can do this if they do not run into balance-of-payments problems.
Governments should not commit more money to the I.M.F. without requiring that it revisit its recently negotiated agreements and adopt serious reforms that will require accountability and changes in policy.
22nd April 09 - Nii Akuetteh, Pambazuka News
Many aspects of today’s global economic crisis are yet to be understood and require research and debate.
Among serious people, however, a few other critical aspects are clear enough to permit vital intervention. In particular, two tentative conclusions must be spared fruitless debate that will wreck, if not snuff out, lives in places like Africa by delaying much needed action.
The first conclusion is that this economic tsunami is very dangerous – big, damaging, and worsening fast.
The other is that it is manmade – a failure born of consequential human errors. What just failed is a very specific ideology, a slim bundle of certain precise notions and recommendations for running countries politically, economically and therefore socially.
After flying high for at least 40 years, that ideology’s crash became undeniable in the US in September 2008, just as Senators McCain and Obama turned in for the presidential race's homestretch. In its rise and sudden fall, the ideology mimicked the sub-prime loans that triggered the fall: wildly popular for a while then unmasked as toxic.
Rooted in political economy, the ideas tap into legitimate public frustration with bureaucracy and politicians. The result is that the ideology's intense hostility toward the state – that is, toward government – is unmistakable. In the UK and the US these notions took off thanks to two eloquent and gifted politicians, Margaret Thatcher and Ronald Reagan.
What made the dogma especially popular was Thatcher's and Reagan's pithy, bumper-sticker phrasing: 'Government is the problem. Keep it small, out of our lives and out of the market. Give private enterprise a free hand. End all deficits. Deregulate. Privatise. Cut taxes. Cut spending.'
This ideas-package has many names. Neoliberalism, the Washington consensus and laissez-faire capitalism are three. With their views coloured by the ancient but still consequential Paris–London hyper-rivalry, the French and other sceptical western Europeans love calling it the Anglo-Saxon model of capitalism.
If it has many names, neoliberalism has even more critics. Recently, the critics' diagnosis of the crisis’s causality was explained, quite brilliantly, by Mikhail Gorbachev. The critics’ take on laissez-faire? Snake oil. Fraudulent dogma.
Whether snake oil, Anglo-Saxon conspiracy or something altogether wonderful, laissez-faire roared out London and Washington (especially after the Soviet Union disappeared in 1989 and socialism was sent reeling) to dominate most of the globe – China, Africa, south-east Asia, Latin America and the Caribbean, eastern Europe and Russia.
In China, Deng Xiaoping's government in 1978 made a deliberate, voluntary and sovereign decision to embrace neoliberalism.
Africa’s embrace, in contrast, has been anything but voluntary or sovereign. Rather, the Washington consensus has been forcefully rammed down screaming African throats by the continent’s self-described 'development partners'. The force-feeding and protests reached a crescendo in the 1980s once Reagan arrived in the White House.
In this African ramming, the head of the ramrod has been none other than the IMF. It, among Africa’s development partners, has been the most relentless in demanding the adoption of laissez-faire. (It has peddled the snake oil most heavy-handedly, if you like).
Exhibit A is the fund’s ruthless war on budgets for free education, an unambiguous investment, across Africa. One predictable result? The street children swarming African cities today.
Consider Ghana. For just under 20 years beginning in 1981, Jerry Rawlings ruled Ghana with an iron hand. After an initial fruitless flirtation with Cuba and the Soviets, he turned to the West. The asking price was that he swallow neoliberalism, hook, line and sinker. Education in particular was devastated.
When University of Ghana students protested, troops and
police assaulted them and closed the campus, and Blaine Harden, a
Washington Post reporter, lambasted the students. The IMF's reaction?
It dubbed Rawling's Ghana its 'star pupil'. Today, the African city
most overrun by street children may well be Accra, Ghana’s capital.
One could produce many more exhibits showcasing policies – on water, healthcare, investment regimes, free trade, imports, exports, currency devaluation, debt and taxes – that the IMF dictated across Africa and the protests they unleashed, but you get the picture.
And that picture is crystal clear: the IMF has been the most ardent, true believer in (and the most uncompromising imposer of) laissez-faire, the dogma whose catastrophic failure is roiling Africa and the globe right now.
Since today’s crisis resulted from human mistakes, the solution must lie in learning, acknowledging, re-thinking and swiftly correcting the errors.
Commendably, major global players have started down this road and are publicly recognising failure. While attending the 2 April London G20 summit, French President Nicolas Sarkozy observed: 'Since Bretton Woods, the world has been living on a financial model, the Anglo-Saxon model… Clearly, today, a page has been turned.'
Two weeks earlier, his host, Prime Minister Gordon Brown had made the same point: 'Laissez-faire has had its day. People on the centre-left and the progressive agenda should be confident enough to say that the old idea that the markets were efficient and could work things out by themselves are gone.'
And serious American leaders have kept pace with the Europeans and others. In his most authoritative speech, the 20 January inaugural address, President Barack Obama announced a new ideological era: 'The question we ask today is not whether our government is too big or too small, but whether it works.'
Nor is it just politicians. In October 2008, Alan Greenspan, arguably America’s most celebrated central banker, confessed publicly to Congress: 'Yes, I’ve found a flaw [in laissez-faire]… I’ve been very distressed by that fact.'
On his part, staunch conservative economist, Professor Gary Becker, the 1992 Nobel economics laureate, wrote in March 2009: 'The failure of financial innovations such as securities backed by subprime mortgages, problems caused by risk models that ignored the potential for steep falls in house prices and the overload of systemic risk represent clear market failures.'
And with the 7 April speech in Washington, D.C., by Lloyd Blankfein, the head of Goldman Sachs, even Wall Street financial gurus have begun inching toward contrition and confession.
What about corrective measurers in the US? The $750 billion TARP (Troubled Asset Relief Program) was the first step in what seems a long, open-ended American retreat from laissez-faire dogma. With TARP, the US administration decisively violated the laissez-faire taboos of 'no government economic role' and 'no deficit spending' and began rescuing distressed financial corporations.
The rationale is compelling. Saving the financial system prevents the collapse of America’s economy, and with it, the entire socio-political system. The president who committed this giant heresy? None other than Mr Dead Certain, George W. Bush, the self-described 'ideological son of Reagan'.
Barack Obama has not only continued Bush’s TARP, he has added on three other humongous market interventions of his own: stimulus, a bank bailout and financial re-regulation. Here is the most astonishing aspect of Washington's decisive rejection of neoliberalism: the American people approve.
As a result, Reagan’s disciples and heirs have not convincingly argued against, much less blocked, these swift federal government interventions. And intervening has increased President Obama's popularity.
To my mind, the words and actions of all these global political and economic leaders combine to deliver one simple lesson: in finding solutions to the crisis, a change of heart, the discarding of a stale ideology and fresh thinking are what is required.
This point is vital so I will rephrase for emphasis: if one is serious about weathering our manmade economic tsunami, one must start in the mind, by recanting and discarding those discredited economic dogmas that got us in trouble.
Has the IMF done such recanting? Has the enforcer of failed laissez-faire dogma across Africa acknowledged, re-thought and began swiftly correcting its errors?
The public evidence says it has not. Specifically, the Fund has not admitted mistakes and has not done any soul searching in public. It most certainly has not publicly rejected toxic neoliberal ideology.
This failure to recant publicly is why the 2 April decision by the G20 to triple the IMF’s finances is so dangerous, especially for Africa.
'When in a bad hole, stop digging.' This aphorism, beloved in Washington, is appropriate here. Africa is in a terrible neoliberal hole dug for decades by the IMF. Yet the G20 seems to be asking the fund to dig three times more furiously. Why not stop digging?
There is a second way to visualise the danger Africa faces. Think of the fund as a vehicle loaded with a vital cargo of, among others, African economies and therefore lives. The G20 has just decided to triple the vehicle's engine power. However, the fund is still headed down the same wrong laissez-faire path.
This is a boulder-strewn path ending at the bottom of a steep ravine. And it is the very path that Bush, Obama and Congress have all scrambled to turn the US economic vehicle away from. A question though: what prevents the IMF from doing three times the damage that decades of its force-fed policies have already done to Africa?
Some might answer thus: 'Last month, March 2009, in Washington, the fund adopted important changes.' My response: 'True enough.' But though welcome, those reforms were confined to governance and the marginal easing of harsh loan conditionalities. As the fund's own 24 March report noted: 'Governance reforms are necessary but not sufficient to enhance the Fund's legitimacy, effectiveness and accountability.'
It is therefore astounding that the three extra sets of reforms that the report called for – quota adjustments, a financial resources increase and enhanced expertise – made no mention of rethinking the Washington consensus. Clearly, the changes already made, as well as the new ones requested, do not approach the deep IMF philosophy change that we actually need.
A second answer might claim that the fund abandoned laissez-faire before last month's governance reforms. If so, other questions gush out. Precisely when and where did the IMF discard the Washington consensus? Why? What reasons were adduced? What economic philosophy has replaced neoliberalism within the IMF? How, by whom and through what process was this new ideology arrived at? And what input did the street children and other poor Africans have?
These questions are matters of life and death for Accra’s street children – especially its pubescent girls – and for a billion poor Africans. I am convinced they would have demanded straight answers, had they had a voice in London on 2 April. But they did not. So the G20 did not get them the needed answers.
Consequently, they must now look to Capitol Hill. That is where Congress will hold hearings on giving the IMF America’s share, a US$100 billion line of credit. This places special responsibility on New York Congressperson Gregory Meeks, who will chair the initial subcommittee hearings. He and a few other colleagues (John Boehner, Steny Hoyer and Barney Frank) have an unprecedented opportunity to help Africa by extracting straight, unambiguous answers from the IMF.
Should Congress too fail, President Obama would become Africa's last hope in making the IMF talk straight.
So Mr President, respectfully, before letting the IMF get the US$100 billion line of credit, please consider saying to the fund: 'I do believe in capitalism. And I did call Reagan consequential. Even so, I have turned away from Reagan-initiated, laissez-faire neoliberal capitalism. Witness my stimulus, my bank rescue plan and my re-regulation of the financial system.
As I said in Denver and elsewhere, those stale dogmas have landed America and the world in a very bad place. Why then are you still wedded to laissez-faire? You are not? Great, what have you replaced it with? What economic philosophy do you believe in now?'
Those few words of yours, Mr President, would become strong rope ladders, sooner rather than later. And I guarantee you many, many street kids now languishing in Kibera, in Accra and elsewhere would use them to climb out of their African slums. They (and I, who very narrowly missed becoming a street kid) would be eternally grateful. Many thanks.
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