Monday, April 22, 2013

IMF notices that "Growth in the euro area as a whole has yet to materialize"

The International Montetary Fund's (IMF) policy committee met this past week and released a formal statement, Communiqué of the Twenty-Seventh Meeting of the International Monetary and Financial Committee IMF Website Press Release No. 13/129 04/20/2013.

The did manage to notice, "Growth in the euro area as a whole has yet to materialize."

And they say,Where country circumstances allow, fiscal policies should avoid pro-cyclicality, focus on structural balances, and let automatic stabilizers operate fully to support growth." Which is bureaucratic IMF-speak discreetly acknowledging that stimulative fiscal policies are a good thing during a depression. That bit about "country circumstances" is presumably a reference to the fact that countries like Cyprus, Greece, Ireland, Italy, Portugal and Spain are living under the economy-destroying austerity policies insisted upon by German Chancellor Angela "Frau Fritz" Merkel and aren't going to have stimulative policies as long as Frau Fritz can prevent it.

The IMF in their immediately following sentences then stresses orthodoxy: "Credible medium-term fiscal consolidation plans remain crucial, in particular for the United States and Japan. Accommodative monetary policy is still needed to help bolster growth but needs to be accompanied by credible medium-term fiscal consolidation plans and stronger progress on financial sector and structural reforms." Meaning: for the US and Japan with modest growth, we need austerity to choke it off. Those "financial sector and structural reforms" in IMF-speak mean deregulation of financial companies and weakening organized labor and reducing workers' rights and protections. The endorse Frau Fritz' antilabor measures in Europe, of course: "Structural reforms to boost productivity and employment need to continue." But they do also endorse policies to which she is opposed, though she agrees with them in principle: "Further tangible progress is needed on core elements of an effective banking union and a stronger fiscal union, to strengthen the resilience of the monetary union."

They depart for neoliberal orthodoxy in a cautious way when it comes to capital controls for developing nations: "When dealing with macroeconomic or financial stability risks arising from large and volatile capital flows, macroeconomic policy adjustment could be supported by prudential measures and, as appropriate, capital flow management measures." But they don't want that to stand in the way of cutting wages and salaries, reducing the public sector and privatization: "Such measures should not, however, substitute for warranted macroeconomic adjustment."

Pagaina/12 reports on the IFM's latest general recommentdations in La desestabilización que vino del Norte 22.04.2013

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