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| IMF, Washington, DC. (credit: Wikipedia) |
had no idea what it would lead to.” The Greek population is dying. The Irish population is emigrating en masse. Spaniards and Portuguese are likewise leaving, scavenging in trash bins, their death rates have jumped up and their birth rates fallen, and public self-immolations like those in Greece have started in Spain. Underlying the absurdity of the situation, a top official in Portugal’s Ministry of Health, issued a call on Dec. 28 for Portuguese citizens not to fall ill, because it will help bankrupt the National Health Care System!
Now, the IMF’s chief economist Olivier Blanchard, along with Fund economist Daniel Leigh, have issued a report saying that the Fund formulated, demanded, and imposed this deadly austerity on Greece in error, without understanding what its results would be. The Washington Post on Jan. 4 called it "a mea culpa submerged in a deep pool of calculus and regression analysis.”
In working out the first bailout package in 2010, the IMF economists thought Greece could “cut deeply into government spending and pretty quicky bounce back to economic growth and rising employment.” Instead, 30 months later, the economy is contracting at an 8% annual rate, and government debt has ballooned to 175% of GDP.
“Forecasters significantly underestimated the increase in unemployment and the decline in domestic demand associated with fiscal consolidation,” write Blanchard and Leigh. Indeed, they incorporated in their forecasts -- without explaining why -- that cuts amounting to 1% of GDP imposed on a country would produce a 0.5% contraction in GDP. Instead, “the circumstances of the European economy” made this contraction
at least 1.5%, and not 0.5%, producing the deadly “debt spiral” racking these countries since 2010.
The cuts have created a humanitarian catastrophe in Greece, for example, with the IMF’s chief Christine Lagarde adding demands for new “adjustment packages” and new, brutally regressive taxes at every stage, while infamously chiding the Greeks for not paying their taxes. The so-called memoranda created mass emigration from Greece, destroyed labor rights under the euphemism of productivity but in reality to pay unpayable debts. They have killed unknown thousands and threaten the lives of millions in a country of less than 10 million people.
The crimes which the IMF is now calling accidental include the reduction of Greek public sector salaries by 25-50%, and similar cuts in the private sector, while the minimum wage has been reduced by up to 50% and pensions cut by 25-50%. Officia unemployment is at 26%, reaching 58% among young people, discounting the hundreds of thousands who emigrated to find work. There have been massive tax increases with no exemptions for the poor. Increased taxes on heating oil has made it more expensive than high-performance diesel leading to an 80% drop in purchases of heating oil. Burning wood has caused a 400% increase in air pollution in large cities such as Athens, multiplying health dangers.
While suicides have increased dramatically, by at least 50%, the real killing has been the destruction of the health care system entirely, where funding has been slashed by 30%. The government has not reimbursed pharmacies for prescriptions, forcing patients to pay cash, which virtually denies pensioners, unemployed and most employed the heart, cancer and other expensive drugs they need. In many cases, international pharmaceutical companies have stopped selling to Greece. And despite a hiring freeze over the least three years, the new memorandum signed in December demands another 10% reduction in the number of doctors.
E.I.R. Strategic Alert - www.eir.de
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