Defying The Gods: IMF, Greece & Iceland

The Yangtze River:


The Yangtze River is rising. Man is on the roof. A traditional pigskin boat rowed along: let me get you off.

“No, Buddha will protect.”

Man is now knee-high in water. Naval boat came along: old man, let’s get you off.

“No, Buddha will protect.”

Man is now up to his neck in water. Rescue helicopter came along: let’s winch you off, stubborn old man.

“No, Buddha will protect.”

Man died and saw Buddha. “Why didn’t you come when I needed you most?”

I did, I sent pigskin boat, Naval boat and even my best helicopter, but you refused!

So first the Gods sent in Antigone:

So Antigone had a part in this tragedy too. That's ­Antigone Loudiadis of Goldman Sachs, who ­arranged a complex ­currency swap deal that helped Greece to conceal the scale of its debt, in what the Financial Times delicately calls "an optical illusion", as the country snuck into the eurozone. 

Then God showed how it could be done in Argentina: defy the I.M.F.

When the Argentine economy collapsed in December 2001, doomsday predictions abounded. Unless it adopted orthodox economic policies and quickly cut a deal with its foreign creditors, hyperinflation would surely follow, the peso would become worthless, investment and foreign reserves would vanish and any prospect of growth would be strangled.

But three years after Argentina declared a record debt default of more than $100 billion, the largest in history, the apocalypse has not arrived. Instead, the economy has grown by 8 percent for two consecutive years, exports have zoomed, the currency is stable, investors are gradually returning and unemployment has eased from record highs - all without a debt settlement or the standard measures required by the International Monetary Fund for its approval.

He even took out the head of I.M.F. just to be on the safe side.

Then came Iceland:

Unlike other disaster economies around the European periphery – economies that are trying to rehabilitate themselves through austerity and deflation — Iceland built up so much debt and found itself in such dire straits that orthodoxy was out of the question. Instead, Iceland devalued its currency massively and imposed capital controls.

And a strange thing has happened: although Iceland is generally considered to have experienced the worst financial crisis in history, its punishment has actually been substantially less than that of other nations.

For good measure Iceland’s god huffed and puffed.

 AP Photo/Brynjar Gauti

But no, the Greeks have not learned anything.

This was written last year:

Germany will agree to some form of eurozone bailout. However, it will only support the minimum needed to ­placate the gods, and only with the most astringent, Creon-like conditions being imposed on Greece. It is an ­important but ultimately secondary question whether this help comes in the form of bilateral loans, loans from the European Investment Bank, purchases of Greek government debt, EU ­spending transfers, jointly issued eurobonds or any of the other mechanisms ­suggested. EU leaders will deny that this is a ­bailout and everyone will know that it is a bailout.                                                           Guardian.

The Greeks will do well to go back to their own Gods and not the I.M.F.

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