IMF has honed its skills most notably in Argentina in how to crash an economy and reap the rewards afterwards. Adrian Salbuchi had this to say about the decade the IMF ran Argentina.

Clearly,this was a massive banker-orchestrated, government-backed robbery of the assets and savings of 40 million Argentinians.Half our population quickly fell below the poverty line, GDP contracted by almost 40% in 2002, millions lost their jobs, their savings, their homes to foreclosures, their livelihoods and yet… not one single bank folded or collapsed!

Argentina was used as a testing ground by the global power elite to learn how a full-scale financial, monetary, banking and economic collapse can be controlled and its social consequences suitably engineered to ensure that, with time: (a) the bankers came out unharmed, (b) “democratic order” is re-instated and the new government imposes another sovereign debt mega-swap, balance their numbers, and calm the people down (or else!), and (c) put big smiles back on bankster faces…Business as usual!

The lessons learned in Argentina in 2001/3 are today being used in Greece, Ireland, Spain, Italy, Iceland, the UK and the US.

The last sentence sums it up and you can directly see its results in Ireland today as the economy gradually declines and unemployment rises. The tradition in Ireland with a population of 4.5 million is to emigrate when unemployment rises. In the bad times in the 80’s about 50,000 per year were leaving, now we have seen 76,oo0 emigrated this year alone with stories every day of more to go. After 4 years of austerity and new taxes, its clear that economically the situation has deteriorated.

Costas Douzinas recently documented how the IMF blames the failure of its growth predictions, and austerity measures, on the impact of Greek public resistance. Yet in well-behaved not-Greece, the same bad medicine has resulted in a rising deficit, stagnant growth, sustained emigration, and unemployment at about 15%. In its latest quarterly report, the IMF praised Ireland’s “exceptional” efforts to meet its targets, but this praise comes at a time when the fiction of a reward for good behaviour is falling apart.

The technocrats from the EU have taken their opportunity well to introduce a “fiscal compact”.

It is clear that “austerity” primarily involves rapidly socializing as much bondholder debt as possible, in advance of a possible default. The recent European council summit meeting may result in making permanent much of the current framework of external oversight of the Irish public finances. The fiscal compact, if passed into law, would constitute the most revolutionary development in the Irish economic landscape in the history of the state. The strengthening of budgetary surveillance by the European authorities, the balanced budget amendment, and the inclusion of automatic, treaty-prescribed sanctions for transgression, could condemn Ireland and other eurozone countries to lengthy periods of economic stagnation.

But Ireland does have a chance to get its own back by withdrawing from the constraints of the Euro which clearly has been a disaster for the economy. Without the ability to control its interest rates which would have stopped the massive borrowings which got Ireland into the situation its in, it also doesn’t have the ability to devalue its currency which would help to reduce quickly its debt and improve competitiveness.

The far-reaching implications of the fiscal compact will surely outweigh political anxiety about volatile public opinion, and result in a referendum. Should the government decide otherwise, it is almost certain that a constitutional challenge will be made, though it remains far from certain that the supreme court would demand that the fiscal compact be ratified by referendum, rather than parliamentary statute.

A referendum would constitute a major political event – both for Ireland and the EU. Referendums may be blunt instruments for agreeing and ratifying complex policy choices, but the government has already framed any such event as an existential social choice – a referendum on Ireland staying in the euro or departing to a dystopian future. Be that as it may, what Ireland needs more than anything is that long postponed public conversation. In particular, we need to ask not just what kind of society we want, but what will be left of society if the latest neoliberal mutation is signed into law.

Source: The Guardian, Adrian Salbuchi