Douglas Carswell's Blog

The logic of our IMF policy explained

First, we decided to make Christine Lagarde head of the IMF.  This was felt to be a good thing, seeing as she is a former French finance minister - and therefore one of the Euro officials who helped make such a mess of EU finances in the first place.

France's government last ran a budget surplus in 1974.  When Christine was running France's finances deficit continued to be piled upon deficit.  The perfect person to sort out Euro debt issues, apparently.

Now we are extending billions of pounds to Christine and co to deal with the crisis in the Eurozone.  How?  By lending the massively indebted Eurozone nations even more.

How will this help prevent a sovereign default?  An IMF loan takes precedence when it comes to paying people back.  So adding more IMF-backed loans into the Eurodebt mix will increase the chance of other creditors not getting their money back.

The IMF currently has 53 different programmes in operation around the world.  In each case - bar the one's inside the Eurozone - the IMF package allows a currency devaluation as part of the policy fix. 

But sticking to the IMF's long record of successfully rescuing countries that go bust would mean encouraging the break up of the Euro.  So instead we back an IMF prepared to pour money into not fixing the problem.

Thanks to what the IMF is doing, poor countries, with per capita GDPs much lower that Europe's, are being required to lend money to a continent that has lived beyond its wealth creation base for decades.

It is almost as if you have to work inside the Treasury, or be a highly trained economist, not to see the flaws .....

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