{"id":160386,"date":"2015-06-20T20:22:44","date_gmt":"2015-06-20T20:22:44","guid":{"rendered":"http:\/\/rinf.com\/alt-news\/?p=160386"},"modified":"2015-06-21T11:29:03","modified_gmt":"2015-06-21T11:29:03","slug":"imf-violates-imf-rules-to-continue-ukraine-bailouts","status":"publish","type":"post","link":"https:\/\/rinf.com\/alt-news\/editorials\/imf-violates-imf-rules-to-continue-ukraine-bailouts\/","title":{"rendered":"IMF Violates IMF Rules, to Continue Ukraine Bailouts"},"content":{"rendered":"

Eric Zuesse<\/span><\/p>\n

The IMF, whose bailout operations are absorbed by the taxpayers in the member countries whenever a particular bailed-out nation defaults,\u00a0announced on Friday,<\/span><\/a>\u00a0June 19th, that it will “continue to support Ukraine through its Lending-into-Arrears Policy even in the event that a negotiated agreement with creditors in line with the program cannot be\u00a0reached in a timely manner.\u201d Though this new \u201cLending-into-Arrears\u201d policy violates two IMF rules, it was justified by the IMF\u2019s Managing Director Christine Lagarde on the basis of the Ukrainian government\u2019s \u201ccontinued efforts to reach a collaborative agreement with all creditors.\u201d\u00a0<\/span><\/p>\n

In other words: a statement by Ukraine\u2019s government that it wants to reach an agreement with its private creditors is being used by the IMF as if it were an excuse to extend into the indefinite future the IMF\u2019s continued taxpayer-guaranteed financing of (\u2018lending\u2019 to) the Ukrainian government, despite the fact that the IMF is violating two of the IMF\u2019s own most-basic rules restricting its lending-authority \u2013 these rules are lending-restrictions whose purpose was to reduce the riskiness of the IMF\u2019s lending, and so to minimize the amount that the IMF will be taking from taxpayers to fund its losses:<\/span><\/p>\n

1: The IMF does not lend to nations at war \u2013 but Ukraine continues being at war against its former Donbass region despite the Minsk II ceasefire agreement; ceasefire violations, especially by the Ukrainian side, continue regularly.<\/span><\/p>\n

2: The IMF does not lend to nations that are likely to default \u2013 but every independent source categorizes Ukraine as being virtually certain to default, and the only actual question regarding Ukraine is: when? The IMF\u2019s answer: we\u2019ll keep lending, building Ukraine\u2019s public debt even higher, until our aim is achieved, and then we won\u2019t \u2013 and that\u2019s when the default will occur \u2013 the default will happen when we decide it will happen. It will happen when we will stop lying and saying that it won\u2019t happen.\u00a0<\/span><\/p>\n

The reasons for Ukraine\u2019s actual insolvency are obvious. As\u00a0John Helmer reported on 3 September 2014,<\/span><\/a>\u00a0“of the $3.2 billion disbursed to the Ukrainian treasury by the IMF at the start of May [in order to finance the war], $3.1 billion had disappeared offshore by the middle of August. The role\u00a0of the leading Ukrainian banks, and of the Kiev officials allied with them, in arranging this was reported\u00a0here.\u201d His \u201chere\u201d linked to his earlier report, \u201cStress Test for IMF in Ukraine \u2013 Igor Kolomoysky\u2019s PrivateBank Is the Biggest Beneficiary of the IMF\u2019s Emergency Liquidity Assistance,\u201d which article of his had also noted that, “According\u00a0to Gerry Rice …, the spokesman for the IMF\u2019s managing director, Christine Lagarde …, there\u2019s no telling how much of the IMF payments\u00a0will be transferred to the Ukrainian banks.\u201d In fact, “the NBU [National Bank of Ukraine, their central bank] said it refuses to disclose what liquidity assistance it has been paying to Privatbank because ‘information on banks or customers, collected during\u00a0banking supervision, is a bank secret’.\u201d That earlier report from Helmer, in turn, linked to Helmer\u2019s prior \u201cDniepropetrovsk Governor Igor Kolomoysky to Get IMF Bailout for PrivateBank,\u201d which had opened: “The International Monetary Fund (IMF) is preparing to release Privatbank, the largest commercial bank in Ukraine, from independent tests of its solvency\u00a0and capital adequacy, and allow a bailout of the bank with Ukrainian public funds, backed by the IMF. The Ukraine mission of the IMF has also revealed this\u00a0week that it is allowing Igor Kolomoisky …, the control shareholder of Privatbank, to direct his own audit and stress test of the bank. This is\u00a0despite independent evidence of large related-party lending in which the bank has been engaged; and despite judgements recently issued in the UK courts\u00a0that Kolomoisky presents evidence that is ‘false or materially incorrect\u2019.\u201d<\/span><\/p>\n

I had previously reported about Kolomoysky, on 18 May 2014, which was two weeks after hundreds of opponents of the overthrow<\/span><\/a> of Ukraine\u2019s democratically elected President in February 2014 were\u00a0burned alive, shot, and clubbed to death,<\/span><\/a>\u00a0in and around Odessa\u2019s Trade Unions Building, and I headlined,\u00a0“The Key Man Behind the May 2nd Odessa Ukraine Trade Unions Building Massacre: His Many\u00a0Connections to the White House.\u201d<\/span><\/a>\u00a0Kolomoysky had largely funded the U.S.-supported massacre in Odessa.<\/span><\/p>\n

Moreover, as the Helmer report on 3 September 2014 (the one that I linked to) noted also: “Christine Lagarde (4), managing director of the Fund, is in other trouble. She is under investigation for a \u00e2\u201a\u00ac400 million French government heist several\u00a0years ago. So far she hasn\u2019t been obliged to make public her alibi.\u201d<\/span><\/p>\n

Consequently, the IMF\u2019s rules are highly flexible. Those rules actually became even more flexible soon after the U.S. Administration of President Barack Obama succeeded at overthrowing in February 2014 Ukraine\u2019s President Viktor Yanukovych<\/span><\/a>. On 23 June 2014, Brett House at QZ headlined, \u201cA great new way for the IMF to help debt-laden countries without forcing them to default,”<\/span><\/a> and he reported that, \u201cThe International Monetary Fund (IMF) is considering a big shift in its lending rules.\u201d it would permit the IMF to allow \u201creprofiling instead of restructuring\u201d for countries that the IMF is determined to keep going. \u201cCreditors would be asked to defer or \u2018reprofile\u2019 their debt-service payments for a number of years, in the expectation that the country\u2019s adjustment program would enable it to return to growth and pick up these payments at a later date.\u201d (A subsequent IMF study<\/span><\/a> showed that almost invariably, such an \u201cexpectation\u201d turns out to have been wrong; yet the IMF continues with it. That type of \u201cexpectation\u201d is the usual basis for \u201cfiscal consolidation,\u201d otherwise known as \u201causterity\u201d economics.) This change would enable the IMF to continue lending to the country, so that IMF member-nation taxpayers would share the burden along with private investors. Then, after default happens, those private investors will, essentially, be handed any Ukrainian public asset that wouldn\u2019t already have been sold off in order to help fund Ukraine\u2019s war against its former Donbass region. The defaulted government bonds become instead shares of stock in Ukrainian government assets that are sold off at pennies on the dollar. Investors are protected, while taxpayers get scalped. (Mr. House supported the change, using this argument: \u201cThe beauty of an IMF-supported debt reprofiling is that it takes the final assessment of sustainability away from the IMF staff and hangs it on the ability of a country\u2019s reformers to convince financial markets that their public finances are sound. That\u2019s a change worth making.\u201d He favored anything that expedites privatizing government assets. However, Christine Lagarde\u2019s statement that was now being issued, a year later, on June 19th, showed what a sham that argument was, because \u201cthe ability of\u201d this \u201ccountry\u2019s \u2018reformers\u2019 to convince financial markets that their public finances are sound\u201d turned out to be of no real concern to the IMF: Lagarde now says, \u201cThis is important since this means that the Fund will be able to continue to support Ukraine through its Lending-into-Arrears Policy even in the event that a negotiated agreement with creditors in line with the program cannot be reached in a timely manner.\u201d The public agents for the aristocracy are all fakes. That\u2019s why they got their jobs \u2013 to carry out con-jobs.)<\/span><\/p>\n

Here<\/a><\/span> is an excellent discussion of the way the economics of this actually works. It\u2019s by Michael Hudson, who was one of only 29 economists in the world who had predicted, years in advance, the crash of 2008, and who accurately explained the crash even before it occurred. He discusses there the IMF\u2019s duplicity by their violating their own lending-rules in order to enable aristocrats to rip off Ukrainian state assets at bottom dollar. These mega-scams are not rocket science; he presents the matter in clear terms.<\/span><\/p>\n

So: the IMF\u2019s rules are, indeed, highly flexible, and one must look to whom the controlling force in the IMF is, in order to understand the IMF\u2019s bailouts, not just in Greece but in Ukraine and elsewhere. That controlling force is the President of the United States. The IMF\u2019s Managing Director always receives his or her appointment only with the approval of the U.S. President. That\u2019s the way the IMF was set up: the President has a veto, at the IMF, just as he does at Congress. And this is the reason why the IMF has always served as a handmaiden to U.S. foreign policies and priorities.<\/span><\/p>\n

Here<\/a><\/span>\u00a0is a highly informative video about how U.S. President Barack Obama installed the present regime in Ukraine. Subsequent confirmatory evidence about how the coup was done is presented in text with links to sources,\u00a0here<\/span><\/a>\u00a0and\u00a0here<\/span><\/a>\u00a0and\u00a0here<\/span><\/a>. Obviously, therefore, in order for Ms. Lagarde to be able to keep her job (and its retirement perks), she must continue to please her real boss.\u00a0And, in turn, Obama\u2019s real boss is the U.S. aristocracy<\/span><\/a>, Wall Street\u2019s megabanks and the controlling interests in America\u2019s international mega-corporations.<\/span><\/p>\n

Those are some of the reasons why the founder of the \u2018private CIA\u2019 firm Stratfor said that the overthrow of Viktor Yanukovych in Kiev in February 2014 had been\u00a0\u201cthe most blatant coup in history.\u201d<\/span><\/a><\/span><\/p>\n

The massacre by Kolomoysky and the U.S.-installed Ukrainian regime, on 2 May 2014, was likewise in furtherance of that longstanding U.S. Government objective, of\u00a0conquering Russia<\/span><\/a>.\u00a0<\/span><\/p>\n

This is the reason why the IMF has by now made unequivocally clear that, no matter how bad things get in Ukraine, its government will continue to be propped up by the West, unless and until its government violates the will of the U.S. President, as reflected and supported (whenever necessary) by the U.S. Congress.<\/span><\/p>\n

On June 12th, Christine Lagarde issued to the press a statement<\/span><\/a>: “The Ukrainian authorities have embarked on an ambitious economic program for 2015-18 aiming at deep-reaching macroeconomic\u00a0adjustment and structural reforms. It includes a\u00a0substantial fiscal consolidation.\u201d The IMF always \u2018recommends\u2019 what it calls \u201cfiscal consolidation.”<\/span><\/p>\n

That phrase \u201cfiscal consolidation\u201d is economist-speak for what is commonly called \u201causterity,\u201d or cuts to a government\u2019s spending for infrastructure, public health, income redistribution downward, progressive taxation-rates, and help for the poor. The IMF already knew that what they call \u201cfiscal consolidation\u201d flops in every way, unless the goal is simply to increase the maldistribution of wealth (so that wealth will flow from the many to the extremely few. A\u00a0massive empirical analysis of the world\u2019s economic data going back decades and published by the IMF in January 2013<\/span><\/a>\u00a0had already shown that, “We find that forecasters [including the IMF\u2019s] significantly underestimated the increase in\u00a0unemployment and the decline in private consumption and investment\u00a0associated with fiscal consolidation.\u201d Since this finding contradicted standard IMF policy, the IMF\u2019s management commissioned another study, by different ones of its empirical economists, and the resulting report was published just this month,\u00a0June 2015,<\/span><\/a>\u00a0and it not only reconfirms the earlier one, but it goes even farther, by asserting that:<\/span><\/p>\n

\u201cEarlier IMF work\u00a0has shown that income inequality matters for growth and its sustainability. Our analysis suggests\u00a0that the income distribution itself matters for growth as well. Specifically, if the income share of the\u00a0top 20 percent (the rich) increases, then GDP growth actually declines over the medium term,\u00a0suggesting that the benefits do not trickle down. In contrast, an increase in the income share of the\u00a0bottom 20 percent (the poor) is associated with higher GDP growth.\u201d<\/i><\/span><\/p>\n

This finding is the exact opposite of IMF policy (such as regarding both Greece and Ukraine).\u00a0<\/span><\/p>\n

In other words: the West, led by the U.S. government, is committed to economic policies that redistribute wealth from\u00a0the many poor to the few rich,<\/span><\/a>\u00a0regardless of the empirically proven falseness of the underlying theory that weath trickles down instead of percolates up. Any politician who so much as merely hints at trickle-down as being a \u2018justification\u2019 for his policies is nothing more than a liar for hire \u2013 a peddler of the worst, for the worst (such as for the people who impose upon the IMF leaders whose policies are exactly contradictory to the findings even by the IMF\u2019s own empirical economists).<\/span><\/p>\n

Whoever controls the West, and especially the U.S. federal government, pursues these policies \u2013 wealth-redistribution from the many poor to the few rich \u2013 regardless of what the empirical data show, and regardless of the rhetoric of political leaders in \u2018democratic\u2019 countries (such as the United States) that\u00a0\u201creducing inequality\u201d<\/span><\/a>\u00a0of both wealth and income is a goal (of the U.S. government). It\u2019s not a goal; to the exact contrary: the enormous loading up on debt by the U.S. Treasury and U.S. Federal Reserve and ultimately by U.S. taxpayers, for the benefit of Wall Street and their counter-parties and the international corporations they control, is part of the U.S. government\u2019s plan; it\u2019s a feature, not a bug, of our federal government; and such debt-buildup even finances things like the\u00a0ethnic cleansing that Ukraine is perpetrating against its former Donbass region<\/span><\/a>\u00a0to get rid of the residents there,\u00a090%+ of the voters there having voted for the man whom Obama overthrew and replaced.<\/span><\/a><\/span><\/p>\n

U.S. foreign policy is not in the interests of the American public. (The State Department aren\u2019t. The \u2018Defense\u2019 Department aren\u2019t. The CIA aren\u2019t.) It\u2019s a private matter, controlled by the aristocrats<\/span><\/a> who, as a result of their private deals, place their \u2018public servants\u2019 in office, in their \u2018democracy,\u2019 dictating to the entire world (excepting perhaps Russia, China, and the other BRICS countries).<\/span><\/p>\n

———-<\/span><\/p>\n

Investigative historian Eric Zuesse is the author, most recently, of They\u2019re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010<\/i><\/span><\/a>,<\/i> and of \u00a0<\/i>CHRIST\u2019S VENTRILOQUISTS: The Event that Created Christianity<\/i><\/span><\/a>, and\u00a0of \u00a0Feudalism, Fascism, Libertarianism and Economics<\/i><\/span><\/a>.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Eric Zuesse The IMF, whose bailout operations are absorbed by the taxpayers in the member countries whenever a particular bailed-out nation defaults,\u00a0announced on Friday,\u00a0June 19th, that it will “continue to support Ukraine through its Lending-into-Arrears Policy even in the event that a negotiated agreement with creditors in line with the program cannot be\u00a0reached in a […]<\/p>\n","protected":false},"author":1254,"featured_media":160387,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[461,1622],"tags":[115,30,1892,32,96,535,841,59,526,543,524,49,76,40,1024],"class_list":{"0":"post-160386","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-editorials","8":"category-featured","9":"tag-barack-obama","10":"tag-big-brother","11":"tag-christine-lagarde","12":"tag-cia","13":"tag-cover-up","14":"tag-global-news","15":"tag-imf","16":"tag-military","17":"tag-propaganda","18":"tag-putin","19":"tag-russia","20":"tag-usa-news","21":"tag-warfare","22":"tag-white-house","23":"tag-ww3"},"_links":{"self":[{"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/160386","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/users\/1254"}],"replies":[{"embeddable":true,"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/comments?post=160386"}],"version-history":[{"count":0,"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/160386\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/media\/160387"}],"wp:attachment":[{"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/media?parent=160386"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/categories?post=160386"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/tags?post=160386"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}