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View Diary: Austerity doesn't work: New IMF report details the damage (167 comments)

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  •  I don't buy the idea that the IMF is coming (0+ / 0-)

    to this conclusion now.

    The IMF's own handbook states that an internal devaluation should not even be attempted in cases when a country doesn't have its own currency. Currency devaluation is key to any internal reforms especially during a recession. In other words, the IMF never thought this was a good idea in the first place.

    Given that, we need to ask why the IMF went along with it.

    We also need to ask why Germany is pushing this since Germany knows as well that austerity didn't work in East Germany in the early 90s. You had the Treuhand policy of devaluing E. German industry, destroying E. German companies, putting 4 million people out of work. The whole policy was to make many hundreds of billions in sales of company assets (ala Gordon Gekko) and ended up with hundreds of billions of losses. 20 years later, E. Germany's unemployment rate was still at 11% while W. Germany's was 4-5%.

    So why is Germany pushing the same policy now?

    There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

    by upstate NY on Sat Jan 05, 2013 at 06:02:33 AM PST

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