This has to be one of the most ridiculous pronouncements made by a governmental body in some time, not because it is inaccurate, but because they’ve apparently just now taken notice. YahooNews is reporting that the IMF’s worried about the global economy, and it’s new head, Christine Lagarde is pointing out the problem as a “crisis in confidence in public debt.” No, really, she said this. (For her next trick, Lagarde will likely tell you the sky is blue and that the sun rises in the East, while she’s giving out revolutionary information.) What Lagarde doesn’t mention is the IMF’s role in all of this, and the fact that the grotesque amounts of public debt have been augmented by loans from the IMF itself, in propping up all of these nations. This is much in keeping with the failed policies that have threatened the world economy, but rather than re-think the strategy that has only deepened our troubles, Lagarde criticized nations that seek to shore up their own economies and financial markets, and while she didn’t name names, it’s clear that she’s talking primarily about the British. She offered this:
Part of the problem, she said, has been national calls for protectionism, making it “difficult to put in place international coalition strategies against it.”
Lagarde added: “National parliaments grumble at using public money or the guarantee of their state to support other countries. Protectionism is in the debate, and everyone for themselves is winning ground.”
Let me translated Lagarde’s lament: Politicians in much of the world (excepting perhaps only the US) are beginning to heed the voices of their people, who are beginning to demand that their politicians begin to look out for their own nations first, before worrying about the sovereign debt crises of others. So Britain, for instance, that is doing the smart thing and walking back its relations with the European Union and its failing currency is a bad country, while we in the US who continue to shovel dollars into the IMF via the Federal Reserve are “smart” and “thoughtful,” and the rest of that patronizing tripe that only works on liberals and statists. Meanwhile, those of us who live in Realityville, USA, are beginning to understand that this crisis is largely the result of bad ideas promulgated by statists the likes of Christine Lagarde.
This announcement is an insult to every thinking person on the globe, and it show just how far these people will go in order to prop up a lousy idea, or a whole play-book full of them. As if this wasn’t bad enough on its face, Lagarde offers still worse advice by way of a warning:
Emerging countries, which had been growth engines for the world economy before the crisis, have also been affected, said Lagarde, citing China, Brazil and Russia.
“These countries, which were the engines, will suffer from instability factors,” she told the newspaper.
In other words, these countries that have all seen burgeoning exports are now beginning to contract because general consumer demand is down in the importing nations, including the US and the EU. In short, Lagarde doesn’t want you to notice that she’s making an admission about the future prospect of the EU, with its currency in turmoil, and the US, where currency in large amounts has been sent to prop up this entire mess. What she doesn’t say directly, and dares not admit, is that the coming collapse is already beginning in a more serious way, measured in the GDP of what had been the leading growth engines prior to the onset of the financial crisis.
In short, Lagarde is asking, or even chiding countries to continue a policy that is nothing short of suicidal, all on the basis of the proposal that the IMF be provided more money to loan to nations already deeply indebted. This is both the financial and moral equivalent of urging the family with twice their annual income in short term debt to apply for another credit card or two. What she is pretending is that the situation can be repaired by some notion of restored confidence among investors and consumers who now [rightly] fear that nothing but collapse lays along this road.
They’re right to doubt, and the people of Britain and every other nation are right to worry as what Lagarde seems to be suggesting to European politicians, but indeed politicians everywhere, is that they should take one for the team, not as politicians, but as sovereign nations. Britain would be right to reject her words as the ravings of a con artist, selling the same old Ponzi scheme again and again. We in the US could only improve our position by following the British lead away from the EU, and the Euro, but our current financial and political leadership is instead tying us more closely to it.
It’s time to face reality: The Euro was a doomed currency from the outset, and inviting in those nations with questionable currency and dishonest fiscal policies was never going to make anything but a disaster, but the people of Europe were suckered into it, and now the US is going along. Their shrill warnings of dire collapses if we don’t go along are merely a postponement of a greater crisis with each subsequent delay. It’s time to face the music, and as the old saying goes, we must refuse to put even more good money after bad. So bad is it now that it would be more accurate to say that we are putting bad money after even worse.
The only way to prevent a global collapse is to cut our losses now. Stern fiscal policies must prevail, and money must grow tighter. At this very moment, at the US Treasury and the Federal Reserve, they’re concocting plans to export your future wealth to Europe in order to buttress a currency that won’t be saved, and each dollar they pour into the effort only devalues the ones in your pockets. It’s time to put a stop to all of this, and if we’re to save our country, we must start here, and we must start now, and short-run extensions of payroll tax-cuts won’t get it done. We need real, drastic spending cuts that sharply curtail our budget deficit, something on the order of what Ron Paul is proposing, in the realm of one trillion dollars or more in spending cuts immediately. If you want sound currency, it has to start at home, and whatever else you may think of Ron Paul, he’s right about this.