The International Monetary Fund a/k/a the IMF is not exactly a radical, extremist left wing organization. It is deeply embedded in the current global economic and financial establishment (and responsible in part for the mess we are in now).
Yet even the Milton Friedman and Ayn Rand lovers at the IMF are scared by the financial services monsters they helped enable, those large multinational financial institutions that the twin gospels of “globalization” and “de-regulation” birthed. Even the IMF is now warning that financial reform to eliminate the systemic risk that still exists in our global financial system, and which if not dealt with son may lead to the next financial collapse, one that this time we may not be able to prevent from turning into a global Great Depression:
Time is running out for governments to overhaul regulation of global banks that have become bigger and more powerful since the start of the financial meltdown three years ago, the International Monetary Fund warned today.
In its half-yearly health check on the financial sector, the Washington-based fund said there was an urgent need for international co-operation to tackle the systemic risks posed by banks deemed “too big to fail”.
“The future financial regulatory reform agenda is still a work in progress, but will need to move forward with at least the main ingredients soon”, the IMF said in its Global Financial Stability Review. “The window of opportunity for dealing with too-important-to-fail institutions may be closing and should not be squandered, all the more so because some of these institutions have become bigger and more dominant than before the crisis erupted.
“Policymakers need to give serious thought about what makes these institutions systemically important and how risks to the financial system can be mitigated.”
These aren’t a group of Marxist-Socialist-Fascists making these warnings. This is the premier international organization created after WWII to re-establish the wrecked economies of war torn countries and spread capitalism around the globe. It is also an organization that is less diverse and more mainstream than any other international organization. And by mainstream I mean the IMF has always followed the c=dominant thinking of the leading economists of the day. This is “who they are:
The bulk of IMF analysis has always been
mainstream and centrist, viewed from the perspective of the dominant strain of Anglo-Saxon economics. The leading universities of North America, the United Kingdom, and Australia have been the main training grounds for much of its professional staff. Martha Finnemore, a political scientist who has studied a number of large organizations, has even claimed that the Pentagon displays more intellectual diversity than the IMF. […]
These are the people that Nobel prize winning economist Joseph Stiglitz once referred to as outdated in their thinking and patronizing in their approach to transformation of the global economy:
The mathematical models the IMF uses are frequently flawed or out-of-date. Critics accuse the institution of taking a cookie-cutter approach to economics, and they’re right. Country teams have been known to compose draft reports before visiting. I heard stories of one unfortunate incident when team members copied large parts of the text for one country’s report and transferred them wholesale to another. They might have gotten away with it, except the “search and replace” function on the word processor didn’t work properly, leaving the original country’s name in a few places. Oops.
It’s not fair to say that IMF economists don’t care about the citizens of developing nations. But the older men who staff the fund–and they are overwhelmingly older men–act as if they are shouldering Rudyard Kipling’s white man’s burden. IMF experts believe they are brighter, more educated, and less politically motivated than the economists in the countries they visit.
So these are not hot headed communists seeking to destroy our freedoms. Far from it. If they had their preference they would all be still be worshiping at the twin altars of Milton Friedman and the “Free Market” to solve all of our current economic problems. Unfortunately for them, even they now realize that government has a role to play in harmonizing and stabilizing the financial markets, and that bigger is not always better in the world of finance, even if that was the ultimate result of the policies they promoted and in which they put their trust and faith.
When even the IMF turns against the Mega Banks and Wall Street Gangsters (Hello there Goldman Sachs!) who are fighting tooth and nail to derail financial reform with their “friends” in both parties (but especially the Republicans led by Mitch McConnell) it behooves us, especially those indoctrinated in the faith that unfettered free markets solve all problems, to take their warnings seriously.
Twenty years ago these were the people who supported the policies of globalization, the free flow of capital around the world and financial de-regulation by governments inn order to allow the financial markets to expand exponentially. These were the people who supported the growth of large, integrated financial institutions that could do everything from selling stocks and bonds, to investment banking, to commercial and residential loans, to providing insurance.
The IMF staff may never come right out and say that they were wrong, but in effect that is what this most recent report urging immediate reform and re-regulation of the multinational megalithic financial institutions represents: an admission that what they thought they knew about macroeconomic was seriously flawed. It’s time that those on the right who still believe reasonable regulation of banks and Wall Street is an infringement on “their freedoms” reach the same conclusion.
