IMF's Four Steps to Damnation
Gregory Palast, an American journalist, abandoned his native land of America when the mainstream press declined to publish his ground breaking, hard-hitting exposes, known for stripping bare abuses of power. The Mirror calls him "The Liar" and Prime Minister Tony Blair says his reports contain, "Not one shred of evidence." Gregory Palast's undercover investigations of corruption within the Blair Government for Britain's Observer have made him, "New Labor's Public Enemy Number One" (Harper & Queen). Nevertheless, Palast has won the Financial Times David Thomas Prize (1997), investigative story of the Year (1998, Indus. Society), was nominated by the UK Press Association as Business Writer of the Year (1999), and for 2000, Salon.com selected his report on the US elections as political story of the year.
Palast has begun a series of investigative reports for BBC-TV's premier news broadcast where, as "Newsnight's own Sam Spade," he is required to wear a trilby and a raincoat that look like something cast off by Lt. Columbo. Palast's column, "Inside Corporate America" appears fortnightly in The Observer (UK), Foro Prohibido (Bolivia, in Spanish) and the Sunday Times (S. Africa).
In the US, Palast directed government investigations of fraud and racketeering, including the successful civil prosecution of the builders of the Shoreham nuclear plant (New York) and, for the Chugach Natives of Alaska, investigation of fraud in the grounding of the Exxon Valdez. As an advisor to trade unions in Latin America, Palast helped found three organizations to protect the rights of utility workers and consumers (in Chicago, Brazil and Britain). His lectures on public control of private industry (University of Sao Paolo, London School of Economics, Cambridge University Department of Applied Economics) form the basis of his book, REGULATION AND DEMOCRACY, to be published this year by the United Nations International Labor Organization.
Here is why Greg's report makes so much sense. In 1998, on the thirtieth anniversary of my international career, we issued a special report reviewing the global economy over the last thirty years. That report noted how the driving conflict of this era had been communism versus capitalism. After the Cold War ended, the new drive became the struggle between rich and the poor. The rich versus poor within nations and the rich nations versus the poor. The institutions that fought this war on behalf of the Western World were the IMF, World Bank and the Breton Woods Agreement which essentially tried to mold every nation into a capitalistic democracy of the US.
The two problems the report noted were first that the world did not have infinite resources and could not support every nation operating in the model. We do not have enough wood, timber, air and gas so everyone can have two cars, three TVs. A house, two computers and all the other junk so many of us carry around. In other words, the Western world is selling (and coercing) the globe on a goal it cannot currently have.
The second problem is even worse. The model does not work. The Western world is not a happier place because of its material success. Suicides are not down. Illness has not gone away. Life spans have not leaped. Quality of life, happiness, joy bliss is not growing. We are not reducing our enemies and increasing our friends!
That's the downside. But do not despair!!! Good is coming from this because the old models that are being replaced were not good either and as all this muddle takes place, the energy of the dream society is growing. Plus in the industrialized world the death of demand is taking place. This why making do and flexibility is so important. For exceptional financial education and strategy planning, contact Patricia Winston at 360.882.0838 or send a blank email to firstname.lastname@example.org
We can through our international businesses help make the world a better place, at least a little, in spite of this broken system. Time and the resiliency of nature and humanity will take care of the rest.
Here is the article Palast wrote:
IMF'S FOUR STEPS TO DAMNATION
How crises, failures, and suffering finally drove a Presidential adviser to the wrong side of the barricades. Gregory Palast-The Observer
It was like a scene out of Le Carré: the brilliant agent comes in from the cold and, in hours of debriefing, empties his memory of horrors committed in the name of an ideology gone rotten.
But this was a far bigger catch than some used-up Cold War spy. The former apparatchik was Joseph Stiglitz, ex-chief economist of the World Bank. The new world economic order was his theory come to life.
He was in Washington for the big confab of the World Bank and International Monetary Fund. But instead of chairing meetings of ministers and central bankers, he was outside the police cordons. The World Bank fired Stiglitz two years ago. He was not allowed a quiet retirement: he was excommunicated purely for expressing mild dissent from globalisation World Bank-style.
Here in Washington we conducted exclusive interviews with Stiglitz, for The Observer and Newsnight, about the inside workings of the IMF, the World Bank and the bank's 51% owner, the US Treasury.
And here, from sources unnamable (not Stiglitz), we obtained a cache of documents marked, 'confidential' and 'restricted'.
Stiglitz helped translate one, a 'country assistance strategy'. There's an assistance strategy for every poorer nation, designed, says the World Bank, after careful in-country investigation.
But according to insider Stiglitz, the Bank's 'investigation' involves little more than close inspection of five-star hotels. It concludes with a meeting with a begging finance minister, who is handed a 'restructuring agreement' pre-drafted for 'voluntary' signature.
Each nation's economy is analysed, says Stiglitz, then the Bank hands every minister the same four-step programme.
Step One is privatisation. Stiglitz said that rather than objecting to the sell-offs of state industries, some politicians - using the World Bank's demands to silence local critics - happily flogged their electricity and water companies. 'You could see their eyes widen' at the possibility of commissions for shaving a few billion off the sale price.
And the US government knew it, charges Stiglitz, at least in the case of the biggest privatisation of all, the 1995 Russian sell-off. 'The US Treasury view was: "This was great, as we wanted Yeltsin re-elected. We DON'T CARE if it's a corrupt election." '
Stiglitz cannot simply be dismissed as a conspiracy nutter. The man was inside the game - a member of Bill Clinton's cabinet, chairman of the President's council of economic advisers.
Most sick-making for Stiglitz is that the US-backed oligarchs stripped Russia's industrial assets, with the effect that national output was cut nearly in half.
After privatisation, Step Two is capital market liberalisation. In theory this allows investment capital to flow in and out. Unfortunately, as in Indonesia and Brazil, the money often simply flows out.
Stiglitz calls this the 'hot money' cycle. Cash comes in for speculation in real estate and currency, then flees at the first whiff of trouble. A nation's reserves can drain in days.
And when that happens, to seduce speculators into returning a nation's own capital funds, the IMF demands these nations raise interest rates to 30%, 50% and 80%.
'The result was predictable,' said Stiglitz. Higher interest rates demolish property values, savage industrial production and drain national treasuries.
At this point, according to Stiglitz, the IMF drags the gasping nation to Step Three: market-based pricing - a fancy term for raising prices on food, water and cooking gas. This leads, predictably, to Step-Three-and-a-Half: what Stiglitz calls 'the IMF riot'.
The IMF riot is painfully predictable. When a nation is, 'down and out, [the IMF] squeezes the last drop of blood out of them. They turn up the heat until, finally, the whole cauldron blows up,' - as when the IMF eliminated food and fuel subsidies for the poor in Indonesia in 1998. Indonesia exploded into riots.
There are other examples - the Bolivian riots over water prices last year and, this February, the riots in Ecuador over the rise in cooking gas prices imposed by the World Bank. You'd almost believe the riot was expected.
And it is. What Stiglitz did not know is that Newsnight obtained several documents from inside the World Bank. In one, last year's Interim Country Assistance Strategy for Ecuador, the Bank several times suggests - with cold accuracy - that the plans could be expected to spark 'social unrest'.
That's not surprising. The secret report notes that the plan to make the US dollar Ecuador's currency has pushed 51% of the population below the poverty line.
The IMF riots (and by riots I mean peaceful demonstrations dispersed by bullets, tanks and tear gas) cause new flights of capital and government bankruptcies. This economic arson has its bright side - for foreigners, who can then pick off remaining assets at fire sale prices.
A pattern emerges. There are lots of losers but the clear winners seem to be the western banks and US Treasury.
Now we arrive at Step Four: free trade. This is free trade by the rules of the World Trade Organisation and the World Bank, which Stiglitz likens to the Opium Wars. 'That too was about "opening markets",' he said. As in the nineteenth century, Europeans and Americans today are kicking down barriers to sales in Asia, Latin American and Africa while barricading our own markets against the Third World 's agriculture.
In the Opium Wars, the West used military blockades. Today, the World Bank can order a financial blockade, which is just as effective and sometimes just as deadly.
Stiglitz has two concerns about the IMF/World Bank plans. First, he says, because the plans are devised in secrecy and driven by an absolutist ideology, never open for discourse or dissent, they 'undermine democracy'. Second, they don't work. Under the guiding hand of IMF structural 'assistance' Africa's income dropped by 23%.
Did any nation avoid this fate? Yes, said Stiglitz, Botswana. Their trick? 'They told the IMF to go packing.' Stiglitz proposes radical land reform: an attack on the 50% crop rents charged by the propertied oligarchies worldwide.
Why didn't the World Bank and IMF follow his advice?
'If you challenge [land ownership], that would be a change in the power of the elites. That's not high on their agenda.'
Ultimately, what drove him to put his job on the line was the failure of the banks and US Treasury to change course when confronted with the crises, failures, and suffering perpetrated by their four-step monetarist mambo.
'It's a little like the Middle Ages,' says the economist, 'When the patient died they would say well, we stopped the bloodletting too soon, he still had a little blood in him.'
Maybe it's time to remove the bloodsuckers.
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