THE IMF’S MID-LIFE CRISIS - May 19, 2010
Irene Grabel, Professor of International Finance at the University of Denver on www.therealnews.com
Part 1
http://www.therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=5116 Part 2
http://www.therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=5123 After the Asian crisis, the IMF became irrelevant. Many countries turned away and the IMF portfolio changed. Turkey became the largest beneficiary. The IMF and the World Bank forced drastic cuts and opened countries to foreign capital, a great blow to the sovereignty of countries.
The IMF seeks a new image but has one set of policies for rich countries and another for poor countries. The G20 gave it a new role, to respond to the financial crisis. The IMF promoted stimulus for the rich and cutbacks for the poor and is still committed to pro-cyclical policies, cutbacks.
The IMF has long been opposed to capital controls and punished countries. Now the IMF is wrestling with this issue. Exchange rate stabilization should be a priority in the context of unraveling economies. There are some signs of rethinking; the crisis has caught the mainstream by surprise.
Neoliberalism gave rise to a massive shift of wealth from the poor to the rich. Countries like Greece are forced to cut wages and benefits. The IMF now proposes two taxes on banks, a flat tax and a tax on compensations. The funds are intended to bail out banks in bad times. The IMF will be meeting in Toronto in June 2010.