PDA

View Full Version : The Game is Rigged: EU / IMF corruption


Lonewolf_50
30th Jul 2016, 00:27
I offer two links: one to the original report, and another to an article in the telegraph. The latter may not be for you a valid source, but their summary seems to capture the essence of the report.
The report (http://www.ieo-imf.org/ieo/files/completedevaluations/EAC__REPORT%20v5.PDF)

Telegraph summary (http://www.telegraph.co.uk/business/2016/07/28/imf-admits-disastrous-love-affair-with-euro-apologises-for-the-i/)

The report by the IMF’s Independent Evaluation Office (IEO) goes above the head of the managing director, Christine Lagarde. It answers solely to the board of executive directors, and those from Asia and Latin America are clearly incensed at the way European Union insiders used the fund to rescue their own rich currency union and banking system.

The three main bailouts for Greece, Portugal and Ireland were unprecedented in scale and character. The trio were each allowed to borrow over 2,000% of their allocated quota – more than three times the normal limit – and accounted for 80% of all lending by the fund between 2011 and 2014.

They had no fall-back plans on how to tackle a systemic crisis in the eurozone – or how to deal with the politics of a multinational currency union – because they had ruled out any possibility that it could happen.

Some staff members warned that the design of the euro was fundamentally flawed but they were overruled.

At root was a failure to grasp the elemental point that currency unions with no treasury or political union to back them up are inherently vulnerable to debt crises. States facing a shock no longer have sovereign tools to defend themselves. Devaluation risk is switched into bankruptcy risk.


Anyone who saw the eurozone as it developed did not need to be an economist to predict that.

If they are this inept, what reason is there for the IMF to remain?

Fairdealfrank
30th Jul 2016, 00:40
Maybe the founders of the eurozone should have taken a look at the East Caribbean Dollar, a currency union that appears to work. It's been going since 1965 and has had countries join and leave without collapsing (e.g Barbados, Guyana).

Maybe the clue is:
(1) keep it small and (2) have member countries with economies that are similar.

G0ULI
30th Jul 2016, 02:08
In order to have a viable currency union, there has to be a large vault holding gold or something of value to back up that currency. For a single currency to work, each country using that currency needs to be united, financially and politically with all others in the union. In other words these countries must be part of a federation ruled by a central government.

That ensures that all countries in the union have equal employment, equal incomes, equal taxation, laws, standards of living, etc.

The alternative is to have separate treasuries with separate financial structures and a fixed exchange rate between the common currency and the cash used to actually pay for things in the shops. We saw how well that worked out with the European Exchange Rate Mechanism.

The Euro is the reason why the EU must become a federation and also the reason why it is doomed to failure because all of the member states do not have equal resources, standards of living, laws, taxation, etc.

Kulverstukas
30th Jul 2016, 13:12
The alternative is to have separate treasuries with separate financial structures and a fixed exchange rate between the common currency and the cash used to actually pay for things in the shops.

This was tested in the Warsaw pact zone as "exchange rouble" and ended with expected result.

The Euro is the reason why the EU must become a federation and also the reason why it is doomed to failure because all of the member states do not have equal resources, standards of living, laws, taxation, etc.

This was also tested, in USSR by Gorbachev reform, when each republic was allowed for their own emission. Result was as expected again.

Fairdealfrank
30th Jul 2016, 17:22
In order to have a viable currency union, there has to be a large vault holding gold or something of value to back up that currency. For a single currency to work, each country using that currency needs to be united, financially and politically with all others in the union. In other words these countries must be part of a federation ruled by a central government.

That ensures that all countries in the union have equal employment, equal incomes, equal taxation, laws, standards of living, etc.

Not necessarily, see above, East Caribbean Dollar.

Time to face facts: the EU is incapable of creating/operating a currency union. The insistance that all countries, unsuitable or not, will ensure its demise eventually. Best to dismantle it slowly over the next few years.