IMF admits their programs in Greece did more damage

[Deleted]

No surprise, and this shows that they were just testing ideas, they had no clue what to do, yet many dumb countries still trust the IMF like they're gods.


http://www.guardian.co.uk/business/2...d-do-to-greece


The International Monetary Fund admitted it had failed to realise the damage austerity would do to Greece as the Washington-based organisation catalogued mistakes made during the bailout of the stricken eurozone country.

In an assessment of the rescue conducted jointly with the European Central Bank (ECB) and the European commission, the IMF said it had been forced to override its normal rules for providing financial assistance in order to put money into Greece.

Fund officials had severe doubts about whether Greece's debt would be sustainable even after the first bailout was provided in May 2010 and only agreed to the plan because of fears of contagion.

While it succeeded in keeping Greece in the eurozone, the report admitted the bailout included notable failures.

"Market confidence was not restored, the banking system lost 30% of its deposits and the economy encountered a much deeper than expected recession with exceptionally high unemployment."

In Athens, officials reacted with barely disguised glee to the report, saying it confirmed that the price exacted for the €110bn (£93bn) emergency package was too high for a country beset by massive debts, tax evasion and a large black economy."

Under the weight of such measures – applied across the board and hitting the poorest hardest – the economy, they said, was always bound to dive into an economic death spiral.

"For too long they [troika officials] refused to accept that the programme was simply off-target by hiding behind our failure to implement structural reforms," said one insider. "Now that reforms are being applied they've had to accept the bitter truth."

The IMF said: "The Fund approved an exceptionally large loan to Greece under an stand-by agreement in May 2010 despite having considerable misgivings about Greece's debt sustainability. The decision required the Fund to depart from its established rules on exceptional access. However, Greece came late to the Fund and the time available to negotiate the programme was short."

But having agreed that there were exceptional circumstances that warranted the biggest bailout in the Fund's history, officials were taken aback by the much bigger than expected slump in the Greek economy. The country is now in its fifth year of recession and the economy has contracted by 17%. The IMF thought it would contract by just 5.5%.

In the evaluation of the package provided in 2010, the IMF said: "Given the danger of contagion, the report judges the programme to have been a necessity, even though the Fund had misgivings about debt sustainability.

"There was, however, a tension between the need to support Greece and the concern that debt was not sustainable with high probability (a condition for exceptional access).

"In response, the exceptional access criterion was amended to lower the bar for debt sustainability in systemic cases. The baseline still showed debt to be sustainable, as is required for all Fund programmes."

In the event, the report added, the Fund was open to criticism for making economic projections that were too optimistic."

While the report says a deep recession was unavoidable, it is critical of senior officials in Brussels and European capitals who said Greece would fare better outside the euro. Concerns that Greece could be ejected from the euro and return to the drachma intensified an already febrile situation.

"Confidence was also badly affected by domestic social and political turmoil and talk of a Greek exit from the euro by European policymakers," it said.

Brussels also struggled to co-ordinate its policies with the ECB in Frankfurt, according to the report.

"The Fund made decisions in a structured fashion, while decision-making in the eurozone spanned heads of state and multiple agencies and was more fragmented."

The Greek media recently quoted IMF managing director Christine Lagarde describing 2011 as a "lost year" partly because of miscalculations by the EU and IMF.

The authoritative Kathimerini newspaper said the report identified a number of "mistakes" including the failure of creditors to agree to a restructuring of Greece's debt burden earlier – a failure that had had a disastrous effect on its macroeconomic assumptions.

"From what we understand the IMF singles out the EU for criticism in its handling of the problem more than anything else," said one well-placed official at the Greek finance ministry.

He added: "But acknowledgement of these mistakes will help us. It has already helped cut some slack and it will help us get what we really need which is a haircut on our debt next year."

[Zangeiti]

The IMF is probably why there going bankrupt. poor country and every country who still supports them

[Deleted]

Finance and economics are a strange and unpredictable beast, sadly it sometimes the experts get it wrong and the consequence are grim. Poor Greece

[oxymoronic]

Funny how having a balanced checkbook can make a country sink... oh wait.

[Nadev]

Gasp! Throwing money at the problem didn't solve things?

[Bolson13]

Everybody already knew Greece wasn't going to pay back the debt and this piece is just to warm up Joe the plumbers in Europe that all of the money lend to Greece is not going to come back. Probably now all governments in Europe will go blame the IMF so that they can get re-elected.

Back then it was a choice of lesser of two evils. Not helping them and kicking them out of the EU would have caused a shitstorm on the stockmarket because every investor would have though Italy and Spain would be next. It would have been better for Greece but then the rest of the EU would/might have flopped, along with the whole world economy so in the end it would have been bad for Greece as well.

So they just loaned them a bunch of money that they can never pay back. And the debt will eventually be marked off. It has already happened in part and it will happen in steps again. It is just a matter of "how can we package it so not all voters walk away".

Greece was used a a puppet for the rest (which in all fairness, they did bring on themselves).



And there are a few more countries that had a bailout which will probably not be paying back the full amount. Just so you know now already, that way you won't get shocked in the next few years

[Rukentuts]

Gasp! Throwing money at the problem didn't solve things?

We're not talking about throwing money, we're talking about austerity.

[Olo]

Gasp! Throwing money at the problem didn't solve things?

Blindly throwing money at em would have probably worked better than what they actually did.

[Beazy]

Wow, so first it was a tin foil hat conspiracy, lol and now they are admitting it. Epic. /popcorn this is going to get gooooooood.

[Olo]

Wow, so first it was a tin foil hat conspiracy, lol and now they are admitting it. Epic. /popcorn this is going to get gooooooood.

How is bad economic policy a conspiracy?

[Wells]

Gasp! Throwing money at the problem didn't solve things?

.....You don't really know what happened do you.

The beatings will continue until morality improves!

[Pitkanen]

Who would have thought that forcing the government to lay off a ton of people would result in an economic slow down / slowed recovery
...
wait4it
...
every economist, the us military (talking about US austerity), every school district (talking about the massive state cuts in 2008-2009), every other smaller gov agency/group that got cut in US austerity

Though really, european unemployment should really put things in perspective for US unemployment number qq'ers.

[Hyve]

Anyone with a E in GCSE Maths could tell their financial systems in Greece was appalling and detrimental.

You can not ever cut funds, and expect growth. Growth only comes from creating the right conditions. Sure, I agree they (as many nations do) needed to cut wasteful spending, but the best way to do that is to stop silly spending sprees, cut all ministerial wages, stop benefits to the rich who can support themselves, but ensure you provide a suitable location for businesses to thrive.

If you increase taxes, business will leave, not flood in. Lower taxes, spread the debt out as much as possible over a longer time span, encourage investment and growth in the country through deals and bribes if you need too!

You can't take a flower, and only give it just enough water to survive, and expect it to blossom and produce a lovely flower. Give it plenty of Water & Sun, and it'll do that. Same goes for a nations economy. Give it the conditions it needs to thrive, and it will.

[Reeve]

Gasp! Throwing money at the problem didn't solve things?

Ummmm, do you have any idea what happened with the IMF and Greece?

[Rukh]

Maybe people will start to realize conservative monetary policy is just propaganda handed down by the rich few to further enrich themselves and has very real and very negative consequences for the rest of us.

[Revik]

Really all this tells me that their economy was too reliant on government/public sector when it should be more private sector.

The slow down is unfortunate but necessary. People advocating that Greece continue to do business as usual with out of control size of government is digging the hole deeper. In the short term yeah it's not going to be painless but in the long term Greece is setting itself up for future prosperity.

Frankly, government in the US has gotten way out of control for a long time now. I imagine that once we hit rock-bottom the transition is going to be much more painful than what Greece is experiencing now.

People are so hooked up on the short term that they can't see that we need to take one step back to take 2 steps forward.

[Fahrenheit]

Austerity is bad. Shocking, I know...

[Cybran]

Austerity is bad. Shocking, I know...

It wasn't just austerity. They hacked away the most vital programs and their smear campaign destroyed confidence in Greece for years to come.

http://theprodigalgreek.wordpress.co...nk-the-greeks/

Greek society has paid a heavy price for the flaws in the design of the first program. The IMF admits that an early debt restructuring would have eased the burden of adjustment on Greece and most importantly would have contributed towards a less dramatic blow on the economy, employment, the prospects of the Greek youth and the purpose of many others.

A Greek politician in the early days of the program said that the Memorandum with the troika was a “blessing” for the country. Indeed a blessing it was but primarily for the eurozone. It is time to return the favour soon.

The Troika lended Greece money so that they could save their own western banks while restructuring the debt. Helping the Greek people was never part of the plan.

[Daelak]

Gasp! Throwing money at the problem didn't solve things?

No, they did the exact opposite. They refused to stimulate the local economy and banks, the Greek government has a long-standing tradition of lax tax enforcement, creating a culture of tax evasion.

[Deleted]

Everybody in Greece didnt want the imf.But the american-breed prime minister Papandreou forced them to us.When we were saying they are using us as guinea pig all the outsiders were saying pay ur taxes(which we were paying-only the extremely rich werent). The only thing u should rly know about the crisis in greece is that in 3 years we have 4.500 suicides because of the austerity measures(usually ppl who lost their homes)Not even in war we wouldnt have 4500 casualties but the media are hiding all this