IMF Admits Lying About Greek Debt Crisis

According to the Financial Times, the International Monetary Fund (IMF) has published a report in which it admits miscalculations about Greece’s first €110bn bailout. In particular, their economic forecasts were too optimistic. On top of that, it appears that the IMF wasn’t alone, but that the troika (members the European Commission and the European Central Bank) were all conscious of the miscalculations.

FT writes: “The study says that the rescue went ahead even though Greece did not meet one of the IMF’s four criteria for such a huge programme – a good chance of debt sustainability in the medium term – and may have failed two of the others as well.”

Specifically, several bailouts were granted by European troika, resulting in higher debts for Greece.  The objectives to meet the bailout conditions were calculdated by the IMF. They were too far from reality as appears from the following figures:

  • The IMF forecasted 5.5% decline in Greek economic output for 2009 to 2012. In reality, however, Greece lost 17% real gross domestic output.
  • The IMF forecasted 15% unemployment in 2012. The real decline in unemployment was 25 percent.

The objectives were unrealistic but the IMF and the troika were well aware of that.

Huffingtonpost comments on this by saing that the IMF’s reports reveals that the wider Eurozone benefited from the Greek bailouts, not Greece. Banks didn’t have to bear losses on Greek debt that could not be repaid. Rather, the troika insisted on increasing the indebtedness on failing countries in order to support the Eurozone’s failing banks.

It is a fact that the IMF and troika prefer to lie and have innocent people literally suffer just to pretend that the banking system in the Eurozone is all right. This news only confirms what we have been advocating for a long time. The debt crisis is much worse than most of us believe. It is very likely that we have reached a systemic tipping point in the debt and credit based economic model.

This news is also the justification for owning gold in physical allocated form. As we have shown for instance here, the reports which call for the end of the gold bull market do not take into account the real implications of the debt crisis. We believe that’s a big fallacy. Undoubtedly, similar news will accumulate over time.

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