Transcript The IMF, the World Bank and Debt

European and global debt
crises
Key points
Key points
1) Reckless lending caused by liberalised
financial system
Key points
1) Reckless lending caused by liberalised
financial system
2) Bailout and austerity destroys lives and
maintains the crisis
Key points
1) Reckless lending a root cause of crisis,
caused by liberalised financial system
2) Bailout and austerity destroys lives and
maintains the crisis
3) European campaigners for economic justice
have to be working on the European debt
crisis
Key points
1) Reckless lending caused by liberalised
financial system
EU reckless lending
Current account balance
10
Per cent of GDP
5
Germany
0
-5
2000 2001 2002 2003 2004 2005 2006 2007
Greece
Ireland
Portugal
-10
Spain
-15
-20
Year
Global reckless lending
4.00
2.00
1.00
Current account
surpluses
-2.00
-3.00
-4.00
2010
2007
2004
2001
1998
1995
1992
1989
1986
-1.00
1983
0.00
1980
Per cent of world GDP
3.00
Current account
deficits
Global reckless lending
Net lending to countries in the South (does
not include illicit flows)
4
3.5
2.5
2
1.5
1
0.5
0
-0.5
19
75
19
78
19
81
19
84
19
87
19
90
19
93
19
96
19
99
20
02
20
05
20
08
Per cent of GDP
3
-1
History of crises
Government defaults
80
70
60
50
40
30
20
10
0
1901- 1911- 1921- 1931- 1941- 1951- 1961- 1971- 1981- 19911920 1920 1930 1940 1950 1960 1970 1980 1990 2004
Key points
1) Reckless lending caused by liberalised
financial system
2) Bailout and austerity destroys lives and
maintains the crisis
Bailouts and austerity
By start 2013, EU and IMF had lent Greece $290
billion – now accounts for 65% of foreign owed debt
Per cent of GDP
250
200
150
100
50
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Year
19
70
19
72
19
74
19
76
19
78
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
External debt as a per cent of
GDP
Bailouts and austerity
External debt in the global South
45
40
35
30
25
20
15
10
5
0
Year
Human impact
In Greece, 11 per cent of population now live
in extreme poverty; cannot afford a decent
diet and enough heating
In Spain, Red Cross helped feed 1 million
malnourished people in 2012
Impacts: In 1980s
Latin America
Population living in poverty increased from 144
million to 211 million
Africa
Population living in extreme poverty increased
from 205 million to 330 million
Key points
1) Reckless lending a root cause of crisis,
caused by liberalised financial system
2) Bailout and austerity destroys lives and
maintains the crisis
3) European campaigners for economic justice
have to be working on the European debt
crisis
We have to work on
Europe
European campaigners for economic justice
have to be working on the European debt
crisis:
• The impacts are huge
• We are irrelevant to our fellow citizens if we
don’t
• The crisis, and response to it, are a central
part of the financial system which has
dominated the world for 40 years
Final point
Capital now rushing to the global South
again, because of crisis in the North
- Some countries using capital controls, eg, Brazil
- Some taking opportunity to borrow, eg, Rwanda