… you must be an executive with Goldman Sachs. No, wait, I take that back. You must be Tim Geithner and Ben Bernanke. No wait you must be Hank Paulson and Alan Greenspan. Yeah, that’s who you would have to be to believe this little story:
Greece’s financial crisis is unlikely to spread to other eurozone countries with high debt levels, the head of the International Monetary Fund has said.
IMF managing director Dominique Strauss-Kahn said “there’s no reason” to expect that Spain and Portugal would also need to call for external support.
Because all the geniuses on Wall Street, and at the Federal Reserve, the IMF, the “City of London” are always right about their predictions which never contradict each other. Hmm, just for fun, I wonder what the IMF was saying about the global economy roughly 2½ years ago back in November 2007:
The International Monetary Fund is predicting continued and steady growth for the world economy in 2007 and 2008, despite a slow down in the US economy caused by problems in its housing market.
The IMF expects global economic growth in the coming two years will approach five percent. The European economy is expected to pick up even more while China and India will continue to lead the global pack.
Guess they sure called that one right on the money, eh?
But Steven, you say. Aren’t you cherry picking here? Well, maybe. The again, maybe not. Look at this article in Huffington Post about the prescience of the IMF from last summer:
The International Monetary Fund has made the cautiously optimistic prediction that the global recession is coming to an end. Given the organization’s history of poor predictions, that just might mean the world should prepare for even worse times ahead. […]
In 2003, the General Accounting Office put out a report declaring that IMF’s primary forecasting tool, its “World Economic Outlook,” had a poor track record of forecasting global financial crises. The IMF, the congressional auditors said, had only been able to predict 15 of the 134 recessions that had occurred in 87 developing countries from 1991 through 2001 successfully. That makes for an 11 percent success rate.
Eleven freaking percent? That’s the IMF’s success rate at predicting future economic outcomes around the world? You and I can do better picking American football games against the point spread by just flipping a coin. Maybe the IMF economists and financial experts should give that method a shot. I will tell you this. If I were a betting man I’d bet against European stocks today. Especially financial ones.
Not that I’m very sanguine about the future of the American economy right now, based on what Elisabeth Warren, head of the Congressional Oversight Committee investigating the financial crisis, had to say recently to Charlie Rose:
Enron taught us a few years back, you remember, in fact that the books are dirty, that there is one set of books put out in front for everyone to see, but there are effectively off the book transactions that nobody can see that reflect the real risks that your enterprise has taken. […]
… You’ve really got to make these things transparent and you’ve got to make them honest. They’ve got to be on the books. You’ve got to reflect on the books of the business what kind of risks it’s actually taking. […]
… 2,988 banks … by the terms of their own regulators are too concentrated in commercial real estate. These are the medium size banks. By the end of this year, half of all commercial real estate loans will be underwater, and they are coming in ‘11, ‘12 and ‘13. […]
[N]early 3,000 banks out of a total of 8,000 — it’s the very banks that do small business lending who are about to get socked in the nose on real estate, commercial real estate losses. […]
We’re seeing banks that don’t want to lend because
they see every dollar that comes in the door and say I’ve got to hold on to it to try to fill my commercial real estate hole or else I will be gone. […]I am afraid. I’m afraid because of what I see in the real economy. I’m afraid because I don’t see books that are clean, balance sheets that have been cleaned up. I’m afraid because in October of 2008, Secretary Paulson came to the American people and he said the problem is toxic assets on the books of the banks, and they’re still there. […]
I’m afraid because Secretary Paulson said there’s too much concentration in the banking industry, and here’s even more concentration today than there was …
[W]e’ve got concentrated risk and that’s what creates too big to fail, and that’s creating distortions throughout our economy.
We haven’t yet put our feet on solid ground and … begun to rebuild an economy we can believe in.
And yet, who are the people in charge of managing this mess, of getting the Banks to end their lack of transparency and dishonesty, of creating a stable basis for an economy in which “too big to fail” doesn’t have to exist anymore and where Goldman Sachs and its fellow travelers don’t gut the Middle Class and destroy economies around the world in pursuit of ever expanding bonus payments for their senior executives?
Tim Geithner and Ben Bernanke and the IMF.
Tim Geithner, Secretary of the Treasury, who formerly worked for the IMF during the same period they were consistently wrong about the global economy, and who recently was the head of the Federal Reserve Bank of New York.
The list of powerful organizations of which he is a member includes the Center for Global Development, Council on Foreign Relations, Economic Club of New York (of which he is a trustee, the Bank for International Settlements, Committee on payment and settlement systems (he was its chairman from 2005-2009) and the Bilderberg Group.
And guess who was his first significant employer: Kissinger Associates. That’s right, he worked for Henry Kissinger, Nixon and Ford’s former Secretary of State, and the man who turned down heading up the 911 Commission because he didn’t want to have to disclose all his business dealing with the Saudis and other Middle Eastern Potentates.
In other words, Geithner’s about as connected to the movers and shakers who created the current economic catastrophe as any man can get.
Then we have the current head of the US Federal Reserve System, Ben Bernanke. He was a member of the Federal Reserves’ Board of Governors from 2002-2005 whereupon he left to become the head of President George W. Bush’s Council of Economic Advisers which lasted for one year before Bush appointed him as head of the Federal reserve. In short, he was at the center of economic power in this country at the very time that economy was being pillaged by his buddies on Wall Street.
Yet Geithner is still Obama’s treasury secretary and Bernanke is still head of the Federal Reserve, having been recently appointed to a second tern by — president Obama. And we still have no effective regulation of the “too big to fail” institutions who have laid waste to our economy and the economies of much of the world.
No wonder Elisabeth Warren is afraid of further economic tsunamis headed our way. She, you and I have reason to be. As Joseph Stiglitz, Nobel Prize Laureate in Economics, and one of the few economists who foresaw, years in advance, the disaster that was created by Wall Street’s binge on mortgage backed securities and unregulated derivative trading, the very things he warned about that finally crashed our economy, recently stated regarding the lack of vision by the Obama administration’s economic team:
The lack of vision that I’m critical of is particularly evidenced in the financial sector. My approach is to say, “Lets have a view of what the financial sector is supposed to do, and lets see if they’re doing it, and how they need to change.”
Also, small businesses are having trouble getting credit. These type of companies tend to borrow on the basis of collateral. Collateral is usually the value of their mortgages. That’s gone down, and now they can’t borrow. That’s an area where things seem to be keep getting worse.
What we should have done is identified the banking institutions that are lending, we should have given them more money and given them money on the condition that they lend.
When we had our welfare reform of 1996 [when Stiglitz was in the Clinton administration], we made welfare conditional. That is to say, you got welfare payments but you had to go to training and look for a job.
We put the banks on welfare, but we didn’t put any conditions. We said, “You can spend the money you gave them on a Florida vacation.” It’s ironic that we were more “strict” with our poor than our banks.
No Professor Stiglitz, the disparity between the manner in which we treated the rich and the poor in America wasn’t ironic. It was planned that way.
And many Americans bought the snake oil from the propagandists for globalization and “free trade” and unregulated markets for our “Masters of the Universe.” Even today they continue to believe that the corporate welfare which benefited Enron and Big Oil and Big Pharma and Big Insurance companies and Big Banks, ad nauseam, was the best thing for all of us poor ordinary slobs — nay, that it’s proof that we are (or were until that Kenyan usurper finagled his way into the Oval office) the best and freest nation on earth, and that anyone who thought differently must be a pinko commie liberal fascist socialist supporter of tyranny.
Now that’s ironic.
