As the financial crisis grows, so grows its appetite. No longer content gobbling up companies, the monster has moved on to devouring entire countries. Towards the end of last week it became clear that a growing number of countries are on such a precarious economic footing that they’ve begun to consider taking loans from the International Monetary Fund, a deeply unsettling prospect which would have been unthinkable even a week ago. The list of countries involved in talks with the I.M.F. started with Iceland, and quickly grew to include Hungary, Ukraine, Pakistan, and Belarus. Still other countries such as Brazil, South Africa, Turkey, Argentina, Estonia, Latvia, Lithuania, Romania and Bulgaria are in profound economic trouble even if they haven’t begun considering turning the I.M.F or World Bank, according to recent articles by Mark Lander in the New York Times. Countries have become deeply suspicious the I.M.F. and World Bank as they’ve watched developing countries around the world fall victim to these O.G. predatory lenders. As with many things, the I.M.F. and the World Bank started out with good intentions. They were created at the Bretton Woods summit in 1944 with the express purpose of helping finance the rebuilding of Europe following World War II. However, more recently these banks have become effective tools for shaping developing countries in the image of the West, and for leveraging countries to agree to mafia-style loan terms. In his book “Confessions of an Economic Hit Man” author John Perkins recounts his experience working as an Economic Hit Man for these institutions. Their typical business deal consists of finding a country that has something the West wants, convincing that country to take a loan to improve its infrastructure and earning potential, then when the said country can’t afford to make payments on the loan these banks start asking for favors in the way of military bases, mineral rights, and even U.N. votes. Perkins asserts that these banks already know the country won’t be able to pay back the money on time because they’ve arranged an impossible payment schedule. If the recipient country disregards the terms of the loan then American CIA teams are sometimes sent in to foment uprisings against the ruling party, and if that doesn’t work the U.S. may engage the country in all out war, as was the case with Iraq, says Perkins. “It’s a clever way for the U.S. to expand its ‘empire’ at the expense of Third World citizens,” says Perkins. Perkins isn’t the only insider with harsh criticism for these banks. “Both houses of Congress are obsolete. U.S. domestic policy is run by the Federal Reserve, and foreign policy is run by the I.M.F,” said President Clinton’s former Secretary of Labor Robert Reich. If the I.M.F. and World Bank weren’t in the business of forcefully leveraging other countries to adopt the West’s foreign policies, than why has the position of World Bank president become such a popular second act for U.S. military officials? After serving as U.S. Secretary of Defense, Robert S. McNamara became president of the World Bank from 1968 to 1981. Then Paul D. Wolfowitz who served as U.S. Deputy Secretary of Defense during the early part of the current Bush administration went on to hold the position of World Bank president from 2005 to 2007. We’ve been made to believe that this Economic Crisis has a mind of its own and that no one understands the situation in its entirety, but I have a hard time swallowing that pill. Similar to the War on Terror, the Economic Crisis becomes a license for the truly powerful to advance their agenda and to do as they please—they may not understand the problem, but they’ve got no shortage of solutions, and most of those solutions are blatantly self-serving. Billions of people around the world are losing a tremendous amount of money in this crisis while a small handful of individuals are making out like bandits.
Tune in next time when I talk about the coming U.S. dollar bubble.
Watch an interview with John Perkins the author of 'Confessions of an economic hit man'.
(Good looking out Nicky Vecki)