In 2013, Hungary did what few other countries have managed to do: it figured out how to rid itself of the IMF. It’s no small feat. The IMF lends to countries on the verge of bankruptcy. For the country with their debt servitude becoming too much, all too many times will they find themselves coerced into prickly political demands that the IMF, or big corporations see fit. John Perkins, a whistle-blower who used to work for the government wrote a book called Confessions of an Economic Hitman. It describes just how predictable the IMF’s modus operandi is, and why it is no longer quite so surprising when indebted countries fail.
From Zero Hedge:
“John Perkins is no stranger to making confessions. His well-known book, Confessions of an Economic Hit Man, revealed how international organizations such as the International Monetary Fund (IMF) and the World Bank, while publicly professing to “save” suffering countries and economies, instead pull a bait-and-switch on their governments: promising startling growth, gleaming new infrastructure projects and a future of economic prosperity – all of which would occur if those countries borrow huge loans from those organizations. Far from achieving runaway economic growth and success, however, these countries instead fall victim to a crippling and unsustainable debt burden.
That’s where the “economic hit men” come in: seemingly ordinary men, with ordinary backgrounds, who travel to these countries and impose the harsh austerity policies prescribed by the IMF and World Bank as “solutions” to the economic hardship they are now experiencing. Men like Perkins were trained to squeeze every last drop of wealth and resources from these sputtering economies, and continue to do so to this day.”
In July of that year it had announced that it planned on repaying the IMF’s bailout. By August, it had managed to pay off its debt through borrowing from the world market at a low interest rate, refinancing the debt under entities that don’t interfere quite so much with their policies.
Hungary had originally borrowed 20 billion Euros to stave off bankruptcy in 2008, and followed in the footsteps of such luminaries as Russia in 2005, and Iceland in 2014. Data collected from the IMF website suggest that a total of 79 countries owed a staggering 68.82 billion in SDRs (special drawing rights) as on May 31 this year, so what these three nations have achieved, makes them a rare breed indeed.
In 1998, Russia faced the so-called Ruble Crisis and was deep in debt. It ran high fiscal deficits, faced low productivity and was affected by the Asian Financial Crisis in 1997. 22.6 billion dollars was provided by the IMF and World Bank. Russia decided to keep its exchange rate fairly strong, despite assertions by “economists” (such as George Soros… HAHAHA, the dude’s still sore about getting kicked out of Russia, seeing what he’s done to fund the Soros-signature-style-color-Ukrainian revolution ) that the best way forward was to print money and suppress the value of all of its resources and the savings of its own people.
Oil prices led the way for an “unexpectedly” quick recovery that allowed them to pay off the loan and give George Soros’s cronies the boot, and a middle finger. Of note, in 2006, Russia also paid off the long-standing debt it had incurred from the collapse of the Soviet Union during the Cold War. Another remarkable achievement.
In order to quickly pay off its IMF burden, Iceland did the near exact opposite of what the IMF told it to do: it began by not bailing out its failing banks. It pushed the burden of debt away from its own people and back into the hands of bondholders. And finally, it prosecuted bankers that were responsible – even the prime minister, at the time. When Iceland recovered quickly, rather than implode, this was seen as a “surprising” event for the mainstream media.
Iceland did impose significant levels of austerity by increasing taxes across the board, but this was probably necessary seeing as its first objective was to completely pay off its IMF debt, and expel the serpents which it HAD to repay – or face an Economic Hitman.
“Where everyone else bailed out the bankers and made the public pay the price, Iceland let the banks go bust and actually expanded its social safety net,” noted Paul Krugman, admiringly. Iceland, he found, had demonstrated the “case for letting creditors of private banks gone wild eat the losses”. – The Guardian
That’s probably the only time I would agree with Krugman. His Keynesian belief that spending stacks of money, keeping rates low and borrowing tons of money that cannot be repaid, are the solutions for faltering economies.
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