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‘New IMF loan to Ukraine will go down the drain’

RT | March 11, 2015

President Poroshenko’s government is far more corrupt and less efficient than the previous one, according to Martin Sieff, columnist for the Baltimore Post-Examiner. It’s like a black hole, the more money you pour in the less you will have, he added.

The International Monetary Fund (IMF) is to decide Wednesday whether to give a $17.5 billion bailout package to Ukraine. The Ukrainian parliament has already passed a series of austerity reforms to cut pensions and increase taxes in order to meet the creditors’ conditions, but more changes are going to be needed to gain this financial aid.

RT: About $4.6 billion in credit was extended to Ukraine in 2014, but its economic performance has scarcely improved. Does that mean the aid had no effect?

Martin Sieff: Pretty much yes, it does. It had the effect on keeping Ukraine afloat in the short-term. But this is an unconstitutional government in Ukraine which was really established by a violent coup in Kiev last year which has waged an aggressive war of repression against two secessionist provinces of its own country, which doesn’t have any real social contract with its own people. Its efforts to conscript large numbers of forces for the regular army have been met with peaceful but very clear resistance. This is a very weak disorganized government, it’s a black hole. The more money you pour in, the less effect you will have. You can keep it stable for a year or two but no longer than that.

RT: The IMF has agreed on a new $17.5 billion lifeline to Ukraine. Do you think that will be enough to stabilize the country’s economy even if fully implemented?

MS: The aid went at least in theory to what it was supposed to, but no doubt there was a great deal of corruption. It’s ironic that the government of President Yanukovich was accused of corruption and incompetence. This government is far more corrupt than the previous government was and it’s infinitely more incompetent. So simply money leaches away, but the real problem is the lack of credibility of governance. This government is even purging its civil service of anyone remotely accused or suspected of being efficient and loyal to President Yanukovich and his predecessors. You cannot have an efficient and credible government under these circumstances.

RT: The IMF is requesting a package of economic and political reforms to be carried out when providing financial assistance to any country. Are we seeing it carried out in Ukraine at least judging by its economic performance?

MS: No, no way. First of all, there is still unrest and violence in the two eastern provinces and spreading into other parts of the country. The security conflict and the conflict with Russia have to be settled first by this government. And they are not yet ready to settle it on terms that would be acceptable and reassuring to Moscow, but that has to be resolved first. Secondly, we saw even last year President Yanukovich broke off his negotiations with the EU, but he recognized that the terms under which the EU was ready to grant association to Ukraine would be disastrous and ruinous for the Ukrainian economy and the Ukrainian people. A year ago, the EU didn’t have the resources by itself to lift up even a peaceful Ukraine under democratically elected governance. The prospects of doing that now under President Poroshenko and his war-government, his war junta are very much less. So this would be $17 billion down the drain. You know they are all saying from Washington DC, I’m paraphrasing a little “$17 billion here, $17 billion there and soon you are talking about real money”.

RT: When signing the IMF program Ukraine makes certain financial obligations, do you think they could be committed at all in the current state of its economy or is it going to be a black hole of international aid?

MS: There is no question about that. This is very unwise economic policy that has a political motivation. The EU itself and the US government both plunged in recklessly to topple the Yanukovich government last year and to support President Poroshenko. And now we have the dominant mythology, the dominant narrative in Washington, and in Brussels, and in London is that this is “a stable democratic government which is being under threat from evil totalitarian forces to the East.” That is not the truth even remotely, but that is almost universally believed by policymakers in London and Washington and many of them in Brussels and therefore there is a political motivation to try and prop up Ukraine. But you can’t fix what’s already broken. You are pouring good money after bad. Ukraine’s problems first of all have to be solved in the security sphere then they have to be solved in the political sphere restoring the political amity and credibility and the incompetent but nevertheless stable civil service that existed until February 2014 a year ago. It was the EU and the US that broke Ukraine and they cannot fix it now by simply pouring money into a black hole.

March 11, 2015 Posted by | Corruption, Economics | , , , , , , , , , | 1 Comment

EU’s bailout program for Greece ‘dead’ – Syriza economist

RT | January 26, 2015

The bailout program, which the outgoing Greek government signed with the EU, is dead and will be renegotiated, Yiannis Milios, chief economy policy maker at the leftist anti-austerity party Syriza said after it won the country’s parliamentary election.

European Union Finance Ministers are scheduled to meet in Davos on Monday, but Milios said that Greece’s current finance minister, Gikas Hardouvelis, will attend the gathering only to “close pending cases of technical matters.”

“This program, which was agreed by Mr. Hardouvelis as representative of Mr. Samaras, is now dead,” he explained.

Syriza won over 36 percent of the vote on Sunday, forcing New Democracy – the party of Greek prime minister – Antonis Samaras, to settle for second with 28 percent.

Celebrating the victory, the party’s leader Alexis Tsipras announced to the cheering crowd that the era of ‘Troika’ debt inspectors is “over” for Greece.

“This is a historic victory of the Greek people. A new page has turned. It is a historic moment for the entire Europe. We turn a new page in our country. The Greek people take their future into their own hands,” Milios was also cited by ANA-MPA news agency.

The majority of Greek voters entered the election angry at the Samaras’s government for agreeing to the terms of 240 billion euro EU bailout, which included the severe cuts and tax hikes.

Syriza blamed austerity for deepening Greek recession, which pushed one third of the country’s population into poverty.

Before the vote, the leftist party’s leader, Alexis Tsipras, said that the terms of the bailout program must be renegotiated to give Greek economy more breathing space.

According to Milios, Syriza will form “the government of national salvation, is the government that will promote, defend and consolidate the interests of social majority but, at the same time, it is not just a message.”

Syriza has become the first anti-austerity party to form a government in Europe, with a Syriza economist saying that “it is the beginning of a major change for the entire” continent.

“Europe cannot continue with the deflation, recession, the rising unemployment and excessive debt. Greece leads the way, our country, our people are the pioneers of a huge change. We are all very emotional and happy,” he added.

READ MORE:

Greece’s anti-austerity Syriza party officially wins parliamentary elections

January 25, 2015 Posted by | Economics | , , , | 2 Comments

Wall Street wins again: Bank of America settlement with US government is insufficient, critics say

RT | August 22, 2014

While the US government touted its “record” settlement reached this week with Bank of America for mortgage fraud that helped fuel the 2008 recession, the details of the agreement indicate yet another light punishment for an offending Wall Street titan.

Bank of America agreed to a $16.65 billion settlement with federal authorities for selling toxic mortgages and misleading investors, the US Justice Department announced Thursday.

“This historic resolution – the largest such settlement on record – goes far beyond ‘the cost of doing business,’” Attorney General Eric Holder said in a statement.

“Under the terms of this settlement, the bank has agreed to pay $7 billion in relief to struggling homeowners, borrowers, and communities affected by the bank’s conduct. This is appropriate given the size and scope of the wrongdoing at issue,” Holder added.

Yet the $7 billion in “relief” is considered a “soft money” fine, in which the bank will reduce some homeowners’ mortgages. Very few homeowners are eligible for the refinancing pursuant to the settlement, AP reported. Those who are eligible may need to wait years to see any settlement aid, as payouts will be ongoing through 2018.

Those already in the hole following a lost home due to foreclosure or a short sale – when a lender takes less money for a home than what the borrower owes – are unlikely to benefit from the terms of the settlement.

Outside of the $7 billion for consumers, the Bank of America settlement includes a $5 billion cash penalty and $4.6 billion in remediation payments. Large portions of the deal will be eligible to claim as business expenses, allowing the mega bank to treat them as tax write-offs.

The Bank of America settlement includes the appointment of an independent monitor to review the consumer relief portion of the agreement. It is yet to be determined when the monitor will be named.

The deal echoes similar agreements the government reached with other Wall Street players, like JPMorgan Chase and Citigroup, for crimes committed surrounding the recent economic recession.

JPMorgan Chase came to a $13 billion settlement in November. The $4 billion supposedly offered to homeowner relief has yet to benefit many in need, according to the advocacy group Home Defenders League. Citigroup reached a $7 billion deal with the government.

Critics of these deals have blasted the US government for its ongoing, lax attitude regarding mass crimes committed by powerful banks that, they say, are not adequately punished for wrongdoing.

“[T]he latest round of settlements deals with misconduct that even though the banks are getting off on the cheap again, the underlying abuses don’t strike at the heart of the too big to fail mortgage securitization complex,” said Yves Smith at Naked Capitalism.

“So the [Obama] Administration can feign being a little more bloody-minded. Even so, the greater and greater proportion in recent deals of funny money relative to real dough show that this is simply another variant of an exercise in optics.”

No major bank executive has faced criminal charges following the mortgage crisis. Without significant retribution for banks and executives that knowingly passed off fraudulent mortgages, Wall Street players will continue to act with impunity, argued Dean Baker, economist and director of the Center for Economic & Policy Research.

“Knowingly packaging and selling fraudulent mortgages is fraud. It is a serious crime that could be punished by years in jail,” Baker wrote. “The risk of jail time is likely to discourage bankers from engaging in this sort of behavior.”

William D. Cohan, a former senior mergers and acquisitions banker, wrote in the New York Times that, not only has the government barely punished those on the hook for Wall Street crimes, the Justice Department has also offered “sanitized” versions of events that led up to the crimes in its accounts given to the public following investigations.

“The American people are deprived of knowing precisely how bad things got inside these banks in the years leading up to the financial crisis, and the banks, knowing they will be saved the humiliation caused by the public airing of a trove of emails and documents, will no doubt soon be repeating their callous and indifferent behavior,” Cohan wrote.

Bank of America resisted the settlement at first, claiming nearly all bad mortgage securities under scrutiny came from Countrywide and Merrill Lynch. Both firms were purchased by Bank of America amid the 2008 financial crisis.

A federal judge in Manhattan ruled in a separate case that Bank of America was liable for the pre-merger mortgages, issuing a penalty of $1.3 billion. The ruling pushed the bank to agree to the settlement. Bank of America CEO Brian Moynihan said Thursday that the deal is “in the best interests of our shareholders and allows us to continue to focus on the future.”

Meanwhile, consumers advocates said the faulty mortgages will continue to haunt homeowners and their own vision of the future.

“It is hard to see how these settlements provide relief commensurate with the harm caused,” said Kevin Stein, associate director of the California Reinvestment Coalition, according to AP. “Countless families and communities have been devastated by predatory loans that should not have been made.”

Following the Thursday announcement of the settlement, Bank of America’s stock rose more than 4 percent.

August 22, 2014 Posted by | Corruption, Deception, Economics | , , , , , , , , , , , , | Leave a comment