Tag Archives: International Monetary Fund

I.M.F. meeting concludes with dire economic outlook and pleas to the U.S.

IMF Managing Director Christine Lagarde

In a comuniqué from the I.M.F. at the conclusion of it’s twenty-sixth meeting, the International Financial and Monetary Committee (IFMC) said that global growth is slowing and “substantial downside risks remain” while pleading with U.S. leadership to resolve it’s debt crisis sooner, rather than later.

The policy-setting body of the I.M.F., the I.F.M.C, said that while central bank measures so far have made improvements, more is needed “to secure a sustained recovery from the crisis.”

In a direct plea to the United States the committee begged U.S. leadership to resolve fiscal disagreements that might lead to the “fiscal cliff” which would trigger huge budget cuts and tax increases on top of those already going into effect within Obamacare. The current inability of the President to lead Congress in compromise on the budget has garnered international attention and created uncertainty in the global economy.

While Democrats decry candidate Mitt Romney’s framework approach to fiscal reform as “lacking details”, it may well be the only way to end the divisiveness in Washington that has been a feature of the current administration and give the global economy the foundation it needs to recover from years of recession.

The I.F.M.C. noted that emerging economies are suffering due to weak external demand and called on the international community to “provide broader support” for the Arab region.

The committee announced that it has been using windfall profits from gold sales to bolster low-income nations during the recession and expects to continue to be able to do so. A total of $3.8 billion in gold profits is expected to be used to fund poorer countries.

Member nations have pledged large amounts of money to the fund to bolster its finances. More than $461 billion in total borrowing has been offered to the IMF by member nations.

Loans to needy nations are based on a controversial concept called “conditionality.” Receivers are not required to provide collateral against the loan, but instead required to make policy changes to bolster their financial systems or risk having the money withheld. Conditionality may give the I.M.F. power over receiver nations to impact policy in a way that differs from the country’s desired social and economic direction.

The I.M.F. describes itself as “an organization of 188 countries working to foster global monetary cooperation” and is headquarter in Washington, D.C.

Europe Won’t Work in America

Spain’s economy is under such duress that the country is prepared to request a 40 billion Euro cash injection from the Euro zone this weekend. The request comes after Fitch Ratings reduced Spain’s credit by three notches on Thursday. This move will make Spain the fourth country to need a bailout since the European debt crisis began. The Spanish banking sector’s weakness and contagion from Greece’s debt crisis have put Spain’s economy in such a precarious position that the International Monetary Fund reported a need for 90 billion Euros to entirely cleanse Spain’s banking sector.

Much has been said about the problems of Greece and how those problems will impact the Eurozone. However, the size of Spain’s economy is over four times that of Greece’s. Spain’s 11.5% share of the Euro zone’s GDP has a far greater impact on European finances than does Greece’s 2.5%.

What the world is witnessing is the collapse of the European socialist economic model; the failure of government dependency. As more people become dependent on government, fewer people are left to pay the cost.

But it goes beyond simply spending other people’s money. The socialist entitlement mentality makes people less productive. As more and more people become less and less productive, an ever-smaller minority of productive people become responsible for shouldering the burdens of a completely lopsided, unfair system. When a tiny number of productive people are required to deprive themselves of the fruits of their own labor in order to finance the lives of the remaining population, where is the incentive for them to produce?

If that is not enough, reliance on a big government nanny state makes people less responsible for themselves, less self-reliant. That is the antithesis of the American way of life.

When European settlers colonized the New World, they left the security of Europe behind in favor of North America’s unknown wilderness. They left homes, family, friends and country behind in exchange for an opportunity to build better lives for themselves. They were freed from the constraints of Europe’s restrictive class system. They openly rejected the European way by leaving.

When the British Monarchy deemed to re-impose that system on Britain’s thirteen North American Colonies, that attempt was adamantly and thoroughly rejected. Hence the Declaration of Independence, the American Revolution and the founding of the United States of America.

When America’s pioneers ventured west to traverse the Great Plains and cross the Rocky Mountains they were completely self reliant. They took care of themselves. They didn’t have, want, or need a big nanny state government to take care of them from cradle to grave.

This is the stuff of which America is made.

Because it gives them control over “the masses”, “progressives” have long sought to fashion America after the European socialist model, to make Americans more government dependent. There was FDR with the New Deal and Social Security. LBJ gave America the Great Society, Welfare Programs and Medicare. Now obama forces upon an unwilling America the crown jewel of European style socialism; government controlled medicine.

Every time obama holds a press conference he sounds exactly the way he has always sounded: he inherited the worst economic crisis since the Great Depression. his policies are working, but need more time. Congress needs to quit stalling and enact more of his policies. The private sector is doing fine but to grow the economy government needs to spend more money to create more government jobs at the state and local level.

Coming as it does on the heels of the Wisconsin recall election, where such policies were rejected, this shows precisely how out of touch obama is with the private sector, how the economy works, American history and the nature of America’s people…and with reality.

Europe won’t work in America. Neither will an out of touch narcissist who insists on imposing a long rejected European system upon America.

obama, you are fired.