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•Joseph Stiglitz demonstrates that a suspension of payment of the debt can be beneficial for a country and its population
•The German model and the offensive against social rights
•Thomas Piketty and public debt
•Africa: the drop in the price of raw materials can lead to a new debt crisis

Series: 70 years of Bretton Woods, the World Bank and the IMF (part 5)

Why the Marshall Plan?

August 5, 2014 by Eric Toussaint

The World Bank, as its original name suggests (International Bank for reconstruction and development), had two main objectives:
1. to contribute to the financing of the reconstruction of the destroyed country during World War II.
2 loans for the development of the backward countries (it is a commonly used expression before enters the vocabulary of developing countries). The United States that set the tone at the World Bank and on the international stage decide to dispense with the World Bank for the reconstruction of Europe mission and unilaterally implement a broad financial programme to rehabilitate the European productive unit in their area of influence. The Marshall Plan substitutes for action by the World Bank as the United States have come to the conclusion that donations to Europe in reconstruction will be more efficient and cost-effective for them than loans. This bilateral policy is the strengthening of the capitalist Western bloc dominated by Washington against the dominated Eastern bloc by the USSR.

The authorities of the United States draw lessons from mistakes made in the 1920-1930s, AH!YEAH!BEN, looks like not!

At the end of the first world war, with the Treaty of Versailles, the winners require Germany amounts very important to repay as reparations and war debts.1. Very soon, the Germany struggling to repay and the social discontent rises. The Wall Street crash occurs in 1929, a global economic crisis snaps. The United States drastically reduce capital flows outwards. The Germany stops repayments in France, in Belgium, in Great Britain, which in turn their debts to the United States. The industrialized world is sinking in the recession and mass unemployment settled. International trade fall.

In anticipation of the end of the second world war, Washington authorities decide to adopt a radically different from that adopted at the end of the first world war until the early 1930s. They opt for the establishment of the Bretton Woods institutions and of the United Nations. This is the international institutional part.

It is now analyze what bilateral economic policy advocated by the authorities in Washington.

Offer money rather that lend

The concern of the Government of the United States at the end of the second world war is to maintain full employment achieved him through the colossal war effort. He also wants to secure a trade surplus in the relations of the United States with the rest of the world.2. However the major industrialized countries to import goods from the United States are literally penniless. For European countries to buy American products, must provide dollars in large quantities.

But in what form? For donations or loans?

Simply put, the reasoning of the United States is as follows: « if we pay to the Europeans who are in our camp money they are going to use to buy what they need to rebuild their economy, with what will reimburse us? Dollars that we lent them, they do have more since they have used them to make their purchases from us. Therefore there are only three possibilities. First possibility: they repay in kind. Second possibility: they pay in dollars. Third possibility: we give them money time they recover in the saddle. »

Take the first option: « if they repay in kind rather than in dollars, their products will compete with ours on our internal market, full employment will be threatened with us, the profits of our companies will drop. This is not a good solution. »

Take the second option: « they pay in dollars. The dollars that we lent them, they already used them to buy our products. As a result, so they can pay back us, we must lend them a second time the same amount (need us), plus interest. The risk of exiting in an uncontrollable cycle of debt (blocking or slowing down again the good business market) combines with the risk referred to in the first possibility. If Europeans try to not to accumulate debts to us, they come and sell their products on our market competing businesses. So they will get a portion of the dollars needed to repay us. But it is not enough to get out of debt them. In addition, it will reduce employment among us.3|. »

There is the third possibility: « rather than massively lend money to Europeans (via the World Bank or otherwise), should give them the amount of dollars needed for the reconstruction of their economies, in a relatively short period.  » The Europeans will use dollars received for goods and services provided by the United States. This will ensure an outlet for American exports and, therefore, full employment. Once the reconstruction is carried out, the Europeans not indebted will be able to foot the Bill for what they will buy. »

The authorities of the United States draw the conclusion that it is better to proceed by donations and they launched the Marshall Plan .

The Marshall Plan |4|

Between 1948 and 1951, the United States spend more than 13 billion dollars of the time (including eleven billion in donations) to the restoration of seventeen European countries within the European Organisation of economic cooperation (OEEC, today theOECD). The total amount of the assistance corresponds to about 120 billion dollars by 2013. The United States asked for States accepting aid several counterparties: firstly that the European countries coordinate expenditures for reconstruction within the OEEC. To strengthen the bloc opposed to the Soviet bloc, the Americans have thus contributed to European cooperation, prelude to the construction of Europe. Then, the United States require that money be used to buy products of American industry.

General expenses of the Marshall plan
Economic assistance, from April 3, 1948, to June 30, 1952 (in millions of $).
Country

Total

Donations

Loans
Total for all countries

$13 325.8

$11 820,7

$1 505.1

Austria

677.8

677.8

Belgium-Luxembourg

559.3

491.3

68.0 has

Denmark

273.0

239.7

33.3

France

2 713,6

2 488.0

225.6

Germany (FRG)

1 390.6

1 173.7

216.9

Greece

706,7

706,7

Iceland

29.3

24.0

5.3

Ireland

147.5

19.3

128.2

Italy (including Trieste)

1 508.8

1 413,2

95.6

Netherlands (* Indonesia) b

1 083,5

916,8

166.7

Norway

255.3

216.1

39.2

Portugal

51.2

15.1

36.1

Sweden

107.3

86.9

20.4

Turkey

225.1

140.1

85.0

United Kingdom

3 189.8

2 805

384.8

Regional c

407.0

407.0-

Notes:
a. total of the loan include 65 million for the Belgium and $ 3 million for the Luxembourg.
b. aid from the Marshall plan to the Dutch East Indies (Indonesia) extended to the Netherlands before the transfer of sovereignty from December 30, 1949.
c. includes the contribution of the United States to the permanent European social fund of the unions (UPR): 361.4 million. This financial windfall was mainly intended to strengthen trade unions acting against communist influence.

In addition to the gifts provided under the Marshall Plan, must be added the partial annulment in 1946 by the debt of France against the United States (cancelled $ 2 billion). Similarly the Belgium benefits from the part of the United States of a debt reduction to compensate for the supplied uranium for the production of the two first American atomic bombs dropped over the Japanese cities of Hiroshima and Nagasaki, is causing the first nuclear holocaust. The uranium came from the mine of Shinkolobwe (near Likasi ex-Jadotville) located in the province of Katanga in the Belgian Congo. First Act, the Belgium enjoys a cancellation of debt thanks to its colony which it exploits the natural resources. Second Act, some fifteen years later, she bequeathed to the independent Congo debts to the World Bank to exploit its natural resources and its people (see odious loans colonial cities, in http://cadtm.org/La-Banque-mondiale… ) ).

Conclusion:

At the end of the second world war and until today, the major powers have refused to implement a Marshall plan for developing countries (with the exception of the South Korea and Taiwan, see below). Interest loans constituted the fundamental instrument for supposedly finance the development of the third world. To deny them a Marshall plan indicates that creditors do not seriously want that these countries grow and be désendettent. The major powers believe that they have interest in maintaining the largest possible number of developing countries in debt standing so as to draw a maximum income in the form of the payment of the debt. This also allows especially impose policies consistent with the interests of the creditors and to ensure their bid within international institutions.

What the United States realize towards the industrialized countries destroyed by the war through the Marshall Plan was granted in an exceptional way to the Taiwan and South Korea, two countries allied to the United States occupying a strategic position on the edges of the Soviet Union and the China. The United States granted in grants of amounts much superiors to those loaned by the World Bank to the rest of the PED. This is particularly the case of the Korea South and Taiwan receiving crucial assistance which will be one of the ingredients for their success from the 1950s.

To give an idea: between 1954 and 1961, South Korea has received grants from the United States a sum greater than the total loans granted by the World Bank in the independent countries of the third world (India, Pakistan, Mexico, Brazil, including Nigeria). South Korea has received grants from the United States more than 2,500 million dollars between 1953 and 1961 while loans granted by the Bank to all independent developing countries during the same period amounted to $ 323 million. Donations to Taiwan amounted to nearly 800 million dollars during this period.5. Because she occupied a strategic position facing China and the USSR, the agrarian South Korea small inhabited by fewer than 20 million people received the favor of the United States. In terms of economic policy, the Bank and the United States condoned in Korea and Taiwan that they refused the Argentina, the Brazil or the Mexico. Thats what I developed in the article on the Korea of the South between 1945 and the mid-1990s (see Éric Toussaint, ‘ South Korea: miracle unmasked « , published in March 2006, http://cadtm.org/Coree-du-Sud-le-miracle-demasque )).

|1. John Maynard Keynes, employed by the British Treasury, had participated actively in the negotiations of the Treaty of Versailles (1919), which concludes the first world war. Opposed to the extent of repairs required by the Germany, he resigned from the British delegation and later published a book entitled the economic impact of peace (Keynes, 1919), see full text: http://classiques.uqac.ca/classiques/keynes_john_maynard/consequences_paix_1/keynes_consequences_paix.pdf

|2. This is what happened: the trade balance of the United States which was deficit remained positive until 1971. In other words, the United States exported more than they import.

|3. « Opposition to a refund in the form of imports is a constant of that country on the grounds that this causes a competition for domestic producers and contributes to unemployment » Randolph E. Paul.  » 1947 taxation for Prosperity, Bobbs-Merrill, Indianapolis, quoted by pay, Cheryl.1991 ibid., p.20.

|4. Information and table from the encyclopedia: http://fr.wikipedia.org/wiki/Plan_Marshall

|5. Author’s calculations. Source: 1) annual reports of the BM 1954-1961, 2) US Overseas Loans and Grants (Greenbook) http://qesdb.cdie.org/gbk/index.html

USA: Janet Yellen criticized Congress for having denounced the inequality
Washington – President of Reserve Federal American (EDF) Janet Yellen vigorously defended itself any bias political in its denunciation social inequalities in the United States, facing accusations of several Republican elected to Congress Wednesday.

In testimony before the Committee on financial services of the House of representatives, Ms. Yellen has been criticized by conservative politicians of giving in October a speech denouncing inequities in the U.S. tax, two weeks before the Congressional elections.

I have mentioned a significant problem affecting the American society. I haven’t taken a political stance, defended Ms. Yellen, a Democrat. I did offer a political recommendation, I have taken note of trends, she added.

The patron saint of the Fed had, last October during an economic conference in Boston (Massachusetts), devoted a long speech to the digging of the inequalities in the country, indicating that the widening gap between rich and poor in the United States concern much. It was asked if this trend was in agreement with values rooted in the history of the country.

Accused Wednesday by the Republicans elect Sean Duffy (Wisconsin) and Scott Garrett (NJ) including for mentioning this theme under the influence of the Democratic Party shortly before the November elections, Ms. Yellen replied that inequalities were a problem that should concern the elected representatives of the two parties. This is an issue that should concern all of the elect in this piece, she said.

A movement of Republican elected officials (Audit the Fed) currently calls for a stronger control of the U.S. Federal Reserve which opposes Ms. Yellen who says that a Central Bank is most effective when it is independent of political power.

You put your nose in matters which do not look you!, launched at the address to the patron saint of the Fed another conservative, Mick Mulvaney (South Carolina), blaming the Central Bank to worry long term for example unemployment.

In the November elections, the Republican Party had strengthened its majority in the House and won a majority in the Senate.

As the Federal Reserve, which Ms. Yellen took the reins a year ago exactly, in February 2014, this is the first time since Paul Volcker in 1987 that it is led by a clearly identified head as democratic.

During his testimony Wednesday to the House, which lasted three hours, Ms. Yellen also estimated that a stronger increase in wages would be beneficial for the U.S. economy. The Fed expects that wages rise (…) and it is something we would like to see, she said

Were are one
Langue source

La Banque mondiale et le FMI en Indonésie : une intervention emblématique

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