14 Jan 2012

European citizens should refuse all IMF and EFSF bailouts

This sounds odd. Why should European Citizens refuse to take bailout money from the International Monetary Fund and the European Financial Stability Facility?

At a first glance, the EFSF sound great. Here's how Wikipedia describes it:
"The European Financial Stability Facility (EFSF) is a special purpose vehicle financed by members of the eurozone to combat the European sovereign debt crisis. It was agreed by the 27 member states of the European Union on 9 May 2010, aiming at preserving financial stability in Europe by providing financial assistance to eurozone states in economic difficulty."
Don't they sound nice?  They are obviously doing their very best, working hard to help the poor hard-pressed european citizens, right?

Wrong! The problem is that if they only provide  enough financial assistance to allow struggling governments to pay their interest payments on their debts, they are not helping citizens at all. The only people they are helping are the bankers.

Consider Greece, a country that currently owes €340 billion to various banks and other institutions. The long-term interest rates that they are having to pay have just gone up from 17.92% in November 2012 to 21.14% in December. A hike of 3.2% in one month. That means that they are having to pay something like 69.5 billion euros per year in interest alone - 30.6% of their GDP.

Suppose that the nice people at the EFSF or the IMF generously lend the Greek Government 70 billion euros, would that help the Greeks? The answer is clearly no, because all the money would go straight to the Banks. Not a cent would go to the Greek population, who will continue to suffer from massive austerity.

No, the Greeks should refuse any such aid unless it actually allows them to get of the hook of the loan shark bond markets. And that will only happen if they are loaned enough money to cancel out the entire debt.

Unfortutely, there are some very powerful people around who number one motivation is to keep the gravy train on the rails for as long as they can. I would include many of the people currently running financial authorities like the ECB, but also many journalists and politicians. It is time for citizens to stand up to these crooks.

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