Good to hear the IMF is doing its best to help shift the West into second gear (No Armstrong pun intended although I wonder if Virgin Active will be moving out its Livestrong cycles from my gym very soon?).
Well it's not really, is it?. The continual moaning of the IMF's "something must be done" is starting to fall on deaf ears. And about time too.
During the rampaging debt loving early noughties, the IMF were as silent as a BBC executive working with Jimmy Savile. Today it's all "told you so" and "get those debt levels down and growth up" and "sort yourselves out" without any clear solutions.
Capitalism is always a bit slow to correct downturns but usually quite speedy on the up turn. Unfortunately the IMF and non revenue earning non profit organisations who have never made a bean in their lives are hindering the upturn by sending out conflicting messages, colluding with market distorting regulators and other busy bodies in making the situation a whole lot worse.
When you are over geared, these are the options:
Push your head in the ground.
Pay it off.
Pay some of it off.
Refinance for a better deal.
Throw in the towel and start over.
Stall and pray for inflation.
Take Spain. It cannot print money so cannot pay its debts, refinance or wait for inflation. Its only option is to put its head in the ground and wait until its yanked out by the rioting unemployed or a CRA with a big stick bashing its backside. If it cuts, unemployment goes up, growth falls; it all seems so horribly wrong. But it's not. This is how it works. Cleansing for the future. Getting that body fat down.
The IMF wants the EU and US to follow the same growth path. Why? We are not all one happy family and we shouldn't be. Homogeneity equals dullness equals Brave New World. The UK is the best in the world when it comes to Advertising. Why should it want to share this business with the US who leads the world in technology? The Greeks produce the best olives - why would it hand over its expertise and land to the French who make the best wine? International trade is what makes our lives better but sometimes the rules of engagement have to change. China is slave labour and yet we are happy to buy another land fill iPhone. When China decides to put its wages up (oops they are going up), Apple will have to find slaves elsewhere. Capitalism is tough but then so is life. Let it get on. [Ed: Enough ranting].
The key to sovereign success is this:
Slash labor costs (reduce taxes like NI, red tape, working practice restrictions, minimum wages). Cheaper Labor means lower production costs.
Slash monopolies and state owned monoliths.
Refocus education and training onto the core skills a country has.
Provide tax incentives for foreigners.
And then you shall grow strong.
And guess which countries are doing or in the process of doing this?
Greece, Italy even Spain. For while the sick men of Europe are the PIGS, thanks to the IMF et al and other liberal do gooders, these countries could emerge as the powerhouses on the world in years to come. They are being cleansed. It happened to Germany and Japan after WW2 when the West poured billions into helping these countries out and look where they ended?
In the year 2030 the headlines will read:
"Greece refuses to bail out Germany"
"Spain enters into a Marshall Plan with the French"
"Northern Ireland joins Eire and closes doors to migrant Brits"
IMF moans again (bloomberg)
IMF says more debt needed to solve the crisis (reuters)
IMF says banks need to sell something (zerohedge)
Fintag to win his 8-1 bet on Romney being the next president.