An International Monetary Fund economist, Peter Doyle, who said he is leaving the institution after twenty years of service, has written that he is “ashamed” of being associated with the fund and accused it of having failed to address the deep challenges facing Europe:
“The consequences include suffering — and risk of worse to come — for many including Greece, that the second global reserve currency is on the brink, and that the fund for the past two years has been playing catch-up and reactive roles in the last-ditch efforts to save it.”
Doyle was a division chief in the European department, overseeing Denmark, Sweden and Israel. His June 18 letter was addressed to a senior member of the IMF board, Shakour Shaalan, as well as to IMF and government officials and Bank of Israel Governor Stanley Fischer; CNN first reported about his letter.
“Tainted” is how Doyle describes Christine Lagarde, the managing director of the IMF, as “neither her gender, integrity, or elan can make up for the fundamental illegitimacy of the selection process.”
Like her predecessor, disgraced politician Dominique Strauss-Kahn, Lagarde is French. During deliberations about who would be the IMF chief after Strauss-Kahn resigned when Nafissatou Diallo, a New York City hotel maid, accused him of rape in May of 2011, the possibility of an individual from a developing nation had been raised. But a “tacit agreement” between the US and Europe has meant that the IMF head is a European and the head of the World Bank, an American, notes Agency France-Presse (via Raw Story).
Certainly the ongoing debt crisis in the euro zone has consumed the IMF’s energies, at the expense of other nations including Egypt, whose economy has floundered after last year’s revolution.
The human toll of the debt crisis becomes more apparent every day, with every news report. Thousands of jobless Spaniards, some of whom had marched 500 kilometers (about 310 miles), filled the streets of Madrid this Saturday to protest 65 billion euros ($80 billion) more in austerity measures — including cuts to wages and unemployment benefits — announced on July 17 by Prime Minister Mariano Rajoy:
“They pee on us and tell us it’s raining,” read one yellow sign waved by the jobless protestors on Saturday.
“I can’t tighten my belt and drop my trousers at the same time,” read another.
While euro zone finance ministers approved a 100 billion fund to rescue Spain’s failing banks on Friday, the euro still fell to new lows. Also indicative of a vote of no confidence in the euro bailout bid was a resulting rise in Spain’s borrowing costs, to above 7.2 percent. Credit ratings agency Egan Jones downgraded Spanish bonds to junk status after which the Madrid stock market experienced its biggest one day fall in two years.
Spanish officials had predicted the GDP would rise 0.4 percent in 2013 but are now saying this projection was too optimistic and the economy will instead contract by 0.5 percent.
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Photo taken in Madrid on July 21, 2012, by Popicinio_01