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Arguments for socialism :: Banks
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The International Monetary Fund, evangel of austerity, has come out against austerity to pay for Covid-19!
The fund's chief of 'fiscal affairs' (state spending and taxation) declared: "Policymakers that have a choice would be well-advised to be very gradual and to maintain fiscal support." This flies in the face of the IMF stance on the 2007-09 Great Recession: "Many countries face large retrenchment needs going forward" - translation: massive cutbacks.
But the new advice relies on what the Financial Times calls "a strong bounceback in economic growth after the pandemic." There was no economic space for such growth even before the coronavirus! Really the IMF is feeling the heat of mass anger, and fears more austerity will bring mass movements down on the capitalists.
And the advice doesn't apply to everyone. Poorer, neocolonial nations have "binding financial constraints" so should tighten their belts. However, the World Bank's chief economist says poorer nations have no choice but to borrow to solve the pandemic crisis!
She also warns this will worsen a gathering, huge global debt crisis. "In terms of the coverage, of which countries will be engulfed, we are at levels not seen even in the 1930s. This is why we are talking about debt write-offs."
Even capitalism's top strategists aren't sure how bad things are. "Many loan contracts have non-disclosure agreements so they are not known about." This will even force governments to "capitalise their banks and take them over, and that is already in the making."
The World Bank lends to 'develop' poorer economies; the IMF lends to 'stabilise' currency crises. Both are components of the United Nations, dominated by the leading imperialist powers. Both therefore attach strings - austerity, privatisation, slanted 'free markets' - to benefit the bosses in the richest nations. Both are now terrified.
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Article dated 21 October 2020
The Socialist, weekly newspaper of the Socialist Party
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