English
I want to test your perspicacity: I will hereinafter present an excerpt from a greater material, which discusses the world crisis, without quoting the source.
The challenge will be to guess the author, based on the philosophy of the text.
I"ll give you a clue: the source is very credible.
Read on.
And I"ll see you later.
"Fiscal risks have increased, especially in developed economies, due to three factors: the substratum of fiscal tendencies has continued to deteriorate, [...]; the financial markets have increasingly focused on fiscal weaknesses and the progress in defining fiscal exit strategies was slow.
In this context, while the massive loss of confidence in fiscal solvency remains a remote risk for now, its potential costs are of such a nature that the risk shouldn"t be ignored.
Even in the absence of such a dramatic development, without making any progress in approaching the fiscal sustainability problems, the high level of indebtedness could affect economic growth for years.
This edition of the Monitor presents new evidence on the connection between debt and increase: it suggests that, based on current predictions, if public debt isn"t lowered to pre-crisis levels, then the potential growth in advanced economies could fall by more than 0.5% a year, which would have a significant effect over a few years."
You"ve read it.
Who could the author be?
In my opinion, the text sounds like it was written by an antiglobalist, one of those who take to the street to protest, whenever the governors of the central banks of the world meet.
The man has education - you find this type of people among libertarians - and has the guts to refer to the inhibitive ratio between a country"s debt (compared to its GDP) and its economic growth ratio (a relationship which other theorists have been trying to determine statistically, but without much success, failing to explain why it doesn"t apply all the time).
In short, the author says that debts are toxic and warns that there is something so dreadful waiting for us, that he doesn"t even describe it.
So the author must be some libertarian "prophet" proclaiming financial "Armageddon", some shock-headed lunatic with glasses, an alarmist willing to throw eggs at the limo of the IMF.
Surprise!
The author of the text isn"t throwing eggs at the limo of the IMF, because he is already sitting inside it.
The text comes from the IMF itself, and the text is found on page 5, of the "Fiscal monitor", which the IMF published one year ago, on May 14th, 2010.
Actually, you could have figured that out yourself, by the use of the "bankee" jargon, by their style and the perspective of the approach.
The IMF isn"t saying that businesses and the population can no longer take taxes, but that the "substratum of the fiscal tendencies has continued to deteriorate".
The IMF explains the fall of the stock markets, by the fact that "the financial markets have increasingly focused on fiscal weaknesses".
The IMF can"t afford to say that there is no solution to exit the crisis, it only says that "the progress in defining fiscal exit strategies was slow".
What does it mean, slow?
So, all those finance scientists, bankers, fiscal experts and politicians that we have in this world - they have all been lazy?
No, that"s not what it means.
Then, it was slow compared to what?
Of course, it isn"t saying it, but it is hinting at: the solutions to the crisis are overcome by the violence and the speed at which the crisis is expanding.
And here comes the good part: "the massive loss of confidence in the fiscal solvency remains a remote risk for now".
This text is 14 months old.
But the sovereign debt crisis has already been going on for seven months.
No bank would consider six months as "remote": it would be considered a "short terms loan", in any bank.
When one looks at Greece, it makes them exclaim just like in the trailer to a horror movie: "You"ve seen the signs, now it"s happening!"
When one looks at the United States, one doesn"t say anything anymore: they are left stupefied.
Well, the IMF was warning last year that we shouldn"t be ignoring the potential costs of what was then called "a remote risk", but which is now actually happening.
"The dramatic development" went from being absent to being very much present.
Friday"s dramatic fall of the stock markets represents the expression of the "massive loss of confidence in the fiscal solvency", as the "financial markets have increasingly focused on the fiscal weaknesses", and "the progress in defining fiscal exit strategies was slow".
I will hereby present another quote from this crazed libertarian prophet that is the IMF itself:
"The USA needs to speed up the adoption of credible measures to lower debts".
This one wasn"t said last year.
It"s from 2011.
Page X, of the Fiscal Monitor of the IMF, of April 2011.
So.
The US has raised its debt ceiling, twelve hours before going into default.
The IMF says that the US needs to lower its debt, and the USA actually raises it, setting a world record.
Sounds great, doesn"t it?!
If they hadn"t raised that ceiling, all the continents would have been swallowed by a black hole (except for Africa).
We are now having a black hole that swallows all the continents (except for Africa).
Big difference!
Well... "progress in defining fiscal exit strategies was slow", what the hell!
We"re people ...
Here are the observations of the protester called IMF, for this year:
"The US needs to accelerate the adoption of credible measures to lower the level of debt.
In Japan, when the overall estimated fiscal cost of the natural disaster will flatten and reconstruction will become possible, it will be necessary to incorporate them into medium term fiscal adjustment plans, supported by measures identified more clearly than in the past.
In the Eurozone, where fiscal consolidation followed the plans to a greater extent, the progress towards identifying a comprehensive pan-European approach for the management of the crisis is welcome, but the important details still need to be agreed upon.
[...] For most of the advanced economies, the pressure on medium and long term expenditures on pensions and in particular on healthcare remain to be solved."
(IMF/World Economic and Financial Surveys/April 2011/Fiscal Monitor/pag.X)
I see.
Pensions and healthcare.
This is just delicate wording in "bankee", which once translated, means: "seniors and the sick will die quicker".
Quicker than what?
Why, quicker than the "progress in defining some fiscal exit strategies" can be achieved.
By the time they will have defined their exit strategy, you young folks will be dead as well.
What can you do!, it"s a crisis, nothing you can do about it.
I was just about to end my article, when, what do you know!, I"ve had a strange question pop into my head: does the IMF have anything to do with the global indebtedness process?
No, no.
It doesn"t.
It couldn"t have.
If it did, how could it protest against debts?
What a stupid question!
• POST SCRIPTUM
The publication of Fiscal Monitors is a recent initiative of the IMF, which began in 2009, the year when the IMF excused itself for not warning the governments of the world against the world financial crisis, and acknowledged that its experts have repeatedly warned the management of the IMF about it, and on time.
Besides, even now, the IMF has to take responsibility for the points of view expressed in its Monitors, warning, in a cowardly manner, that they responsibility lies with the authors.
The IMF seems to be ignoring the fact that the current sovereign debt crisis is a direct consequence of the global financial crisis, which it admitted it didn"t warn us about, even though it knew about it.
However, for the IMF, cowardice is a guiding principle: let"s remember that this international organization, which has an international influence, does not have a president to represent it.
The IMF has an executive manager.
When he is not getting involved in sexual assault scandals, what is the responsibility of the executive director?
Well, he just executes orders.
And there"s nothing anyone can do about it.
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