Douglas Carswell's Blog

Cuts at home, £9.2 Billion hike in IMF subscription for Eurozone

Today Christine Lagarde formally takes the helm at the IMF.  I can't help thinking it's a little bit like putting an arsonist in charge of the fire brigade.   

Just as it is becoming clear that bailouts - of both banks and countries - do not work, the IMF is now led by someone seemingly fixated with the idea of yet more.   

For most of its history, the IMF has had a pretty good record of helping countries that have needed rescuing.  It has done so by following the 3 D script; a) Devalue the currency;  b) Default (aka "restructure") on the debts; and finally, c) Downsize the bloated public sector.  In other words, historically the IMF has done the things it needs to do to reduce debt. 

Today in Greece and the Eurozone it is not sticking to this tried and tested formula.  Because Euro membership preclude a) and b), all the pressure on poor Greece is on c).  As a consequence, the IMF is left in the absurd position of presiding over a Greek "rescue" that actually increases the amount of Greek debt. 

It is against this background that a Commons committee will meet in Committee Room 14 at 10:30am to approve a £9.2 Billion hike in the UK's IMF subscription.  This is all just a "contingent liability", they will no doubt tell us.  It's looking less contingent by the day. Britain will have to pay up by the beginning of next year - presumably in time to enable the IMF to further push Greece into the red. 

This is the first bailout in history that has involved ladling water into the boat.

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