Astute observation:
Riley Says Greek IMF Growth Program Doesn’t Seem to Be Working
Jan. 10 (Bloomberg) — David Riley, head of sovereign ratings at Fitch Ratings, said the International Monetary Fund’s program for Greece may not be working.
“The IMF program at the moment doesn’t seem to be working,” he said at a conference in London today. “The economy is contracting” while the point of the program was to promote growth.
“the point of the program was to promote growth” indeed…
What a freaking surprise;I’m speechless at this news.
“We’ve been diligently starving the Greeks, but surprisingly they are getting no fatter.”
@Dan Kervick, Another shocker !!
Even the Dem Con’s in the UK vaguely get that austerity is anti-growth?
Add in Ireland, Spain and all the rest!
The IMF Greece growth program doesn’t seem to be working, along with most of the Greek population.
@MamMoTh,
If only they weren’t so lazy. 😉
Is this the first post-Bretton Woods IMF emergency program that doesn’t involve some form of currency devaluation? If so, it seems even less likely to “work” than their traditional poison.
Clearly, the austerity measures are not severe enough and must be strengthened immediately.
@Jim Thomson,
Cut spending to icrease spending, cut jobs to create jobs, reduce income to increase income, contract economic activity to expand economy. If all these measures still seem to contradict your goals, then think about the confidence you are creating!
This could be the explanation – (American) hedge funds vs EU/IMF (Godzilla vs. Destoroyah.
“It is the 22nd installment in the Godzilla series of films and the seventh and last of the Heisei series. The film is the last in the Heisei series to feature Godzilla, who is nearing a nuclear meltdown which threatens the Earth.” (from Wikipedia)
If my understanding is correct, hedge funds want to force Christine Lagarde’s IMF (effectively ECB and in the Merkozy’s imagination, the Prusso-Frankisch taxpayer) to underwrite Greek debt otherwise they threaten with triggering a disorderly default.
“(Reuters) – Hedge funds are taking on the powerful International Monetary Fund over its plan to slash Greece’s towering debt burden as time runs out on the talks that could sway the future of Europe’s single currency.
The funds have built up such a powerful positions in Greek bonds that they could derail Europe’s tactic of getting banks and other bondholders to share the burden of reducing the country’s debt on a voluntary basis.
Bondholders need to give up some 100 billion euros ($130 billion) of their investment in the planned bond swap, drawn up in October, but many hedge funds plan to stay out of it.
They either prefer letting the country go under, which would trigger the credit insurance they have bought, or hope to get paid out in full if enough others sign up. That puts them in direct conflict with the IMF, which wants to force Greece’s cost of financing down to an affordable level.”
http://www.reuters.com/article/2012/01/10/us-greece-psi-funds-idUSTRE8091G420120110
Bring it on! I would like both mutants to go to hell the sooner the better.
@Adam (ak),
Wait. As an expert in all ares of monsters wearing rubber suits, or “mutants” as you refer to them, I don’t subscribe to the disparaging analogy made between Godzilla and hedge funds (especially American ones).
The best I can do for you is offer up Gamera, whose “inner-workings”, at least, are more in line with those of a hedge fund manager:
“Considering that Gamera never needs to refuel, we must assume he is organic and not mechanical. Therefore, the jet blasts come not from burning petrol, but from the byproducts of organic material…Yes, Gamera is powered by farts.”
@Adam (ak),
ECB could (in theory if not in law) put the entire conflict to rest rather easily.
Might be more constructive for the hedgies if they pushed for Mosler bonds instead.
Europe can fix all of it’s economic problems if only the Europeans are willing to take some some lessons from the brilliant mainstream macroeconomic theorists here in the US:
Clearly what is called for is another round of qualitative easing. Europeans just need to boost the broad supply of wishful thinking. The ECB should immediately manufacture a large supply of wishful thoughts and swap them in broken market operations for comparable amounts of toxic pipe dreams and government fond hopes. Even though the disinterest rate on wishful thinking is already at the zero bound, surely if the ECB pushes hard enough on the string, and floods the wanking system with excess reserves of wishful thoughts, the commercial wankers will finally overcome the quiddity trap and lend their hordes of thought reserves. It all comes down to providing quiddity! Look it up!
Actually, all it will take to get things moving is a credible statement from the ECB president that he is expecting a higher rate of conflation this year, and that he stands ready to provide whatever amount of quiddity is needed to achieve that higher target conflation rate. In line with the irrational expectations model, a mere statement from the ECB will be enough to boost market expectations of increased conflation in 2012. The wanking system will finally stop hording its wishful thoughts, and start lending its wishes out to the private sector. Once the Europeans get higher conflation, the ECB can then push the real disinterest rate down below the zero bound.
It has also been conclusively established from first macroeconomic principles that the credibility of the central wanker’s statements is considerably enhanced if he wears funny hats and uses strobe lights while making them. Performing a rain dance is also highly credible.
Easier conditions in the wishful thinking markets engineered by this aggressive program of qualitative easing will drive down the yields on fond hopes by European governments and end the sovereign debt refantasizing crisis. These governments will then be able to stabilize the hopes and fantasies market, and carry forward with their destructional adjustment programs and costerity measures.
But don’t try to accomplish these goals with fiscal measures. Lord no! Our American macroeconomists have proven that you can only boost aggregate remand through the central wanking channel. The theorists of Retardian Equivalence have conclusively demonstrated that direct government expenditures of wishful thinking will have no effect on the economy, because people have already drawn on their irrational expectations to calculate in future government withdrawals of wishful thinking. Also wishful thoughts issued by government only crowd out private sector wishful thinking. So the aggregate effect of fiscal wishing on wishes, pipe dreams, fantasies, delusions and chimeras nets to zero. Every first year student in Greg Mankiw’s Econ 10 class understands these matters! Wake up Europe!
Europeans, listen to American economists. They have won the lion’s share of Ignoble Prizes. Just do more qualitative easing and get Europe wanking again!
@Dan Kervick,
very poetic 🙂
@Gary, Thanks Gary,
This gibberish was brought to you by the American Society Of Mainstream Economists.
Bring in more monkey’s with dartboards!
How did you find Riley’s remark “Can the euro be saved without more active engagement from the ECB? Quite frankly we think no” ?
he’s been reading this blog? or at least that part of it…
@WARREN MOSLER,
This is the core issue. Why do you think that these people who peddle lies and delusions (e.g. work for rating agencies) believe in them? Mr Riley’s assistant may read all your blogs. They also probably read Marx. So what? I dare to say they don’t really care about reforming the economy but some of your ideas may be useful. Their job is to represent and advance certain interests – of the so-called “1%”. One may say that the Chinese propagandist who claims that all the Tibetans love CCP and hate Dalai Lama is a corrupt individual. I disagree. He is a cog. He may be a perfectly normal person no more morally corrupt than the real estate agent working in my suburb who peddles oversized houses for 3 times the price they would get in the US in a similar area after the bubble has burst there. Mr Riley is also a cog but in another machinery. He is a very prominent cog. He may also be a charming individual – I don’t know that. But his job is to advance the interests of a certain group of people (“investors”).
Today the message is ” deliver austerity or we’ll bankrupt you”. Tomorrow it will be “why aren’t you printing more money for us”? The truth is not only relative but has been fully commercialised in our post-modern era.
That’s why I am so pessimistic. Nothing serious will ever change because of the actions of the group of enthusiasts willing to reform financial capitalism by exposing economic myths (MMT scholars) I am afraid.
One day I may come up with a proposal how to build an alternative society net shunning all (or the most of) this mainstream “reality”, the “System”, how to remain sane among crazy and deluded people. But I started thinking about this idea more than 20 years ago and it is still not ready… may never be.
The only thing I have discovered for sure is that Christianity and Buddhism are to some extent correct – as long as an individual is committed to acquiring material gains by tricking the others to work for him/her, becoming a celebrity and hoarding individual wealth, he/she is enslaved slave owner and very little can be done. He/she is a cog.
Anyway time to fire up my $3000 car and go to work to feel like a cog.
Who would have said?
http://www.bbc.co.uk/news/magazine-16472310