Note to George: the IMF doesn't always get it right

Ireland and Indonesia should make Osborne think again.

Samuel Longhorn Clemens, advised the young to "be respectful to your superiors, if you have any". The phrase comes to mind following the nice pat on the head and doggy discuit following the release of the International Monetary Fund's annual summary report on the UK economy:

The UK economy is on the mend. Economic recovery is underway, unemployment has stabilized, and financial sector health has improved. The government's strong and credible multi-year fiscal deficit reduction plan is essential to ensure debt sustainability. The plan greatly reduces the risk of a costly loss of confidence in public finances and supports a balanced recovery.

The Chancellor, and the right-leaning press junket, has been duly respectful. But does the IMF's exercise the kind of superior judgment Twain would have us respect? Let's examine two recent cases.

Ireland, 2007 - 2010

BEFORE

As late as 25 September 2007 (ten days after the run on Northern Rock, a micro model of the entire Irish economy of the time) , the IMF:

commended Ireland's continued impressive economic performance, characterized by one of the highest growth rates of GNP per capita among advanced countries and one of the lowest unemployment rates. This performance has been underpinned by outward-oriented policies, prudent fiscal policy, low taxes, and labor market flexibility.

and congratulated Ireland on her "very strong" growth, "supported by sound policies". They branded the country's ruinuously overleveraged banking system "well-capitalized, profitable, and liquid".

AFTER

The IMF's 2009 report on the Irish government's subsequent swingeing cuts was nicely summarised here:

Our main message to the Irish authorities is not on the course which they are taking, which support and we agree with, but on the need to sustain this over an extended period of time.

The goverment has indeed sustained the IMF-endorsed approach. The result is government bond yields are exploding, and will continue to do so now government debt has been downgraded to one notch above junk. Unemployment has been consistently rising to 13.8 percent, and is still

In July this year, the IMF recommended Ireland stay the course.

Indonesia, 1996 - 1998

BEFORE

The IMF was at the head of the pack in lauding the Asian Miracle of the 1990's. Michel Camdessus, the then managing director of the IMF, speaking in Jakarta on November 7, 1996 welcomed:

high and sustainable rates of growth and, equally important, the kind of "high-quality growth" that also fosters human development, promotes equity, safeguards the environment, and allows an enhancement of the cultural values of your countries.

However, as predicted by some, the ASEAN area and Indonesia in particular were in dire economic straits by July 2007.

AFTER

In August the IMF heartily recommended Indonesia float the rupiah:

The management of the IMF welcomes the timely decision of the Indonesian authorities. The floating of the rupiah, in combination with Indonesia's strong fundamentals, supported by prudent fiscal and monetary policies, will allow its economy to continue its impressive economic performance of the last several years.

The promise of continued impressive performance was what Huck Finn would call a "stretcher". Indonesia, under Suharto was intimate with the IMF for years, and so the rupiah floated. Suharto also took the recommended fiscal tightening measures, including the cancelation of food subsidies to the poor.

As a result, the rupiah fell by 83.2 percent against the dollar. Indonesia's national debt rose from 3 per cent in 1968 to 129 per cent. The regime collapsed after widespread and deadly food riots. Suharto was forced to resign on 21 May. The recovery since then has been slow, and chiefly centered around the profusion of manufacturing in textiles and other low-paid industries with the attendant sweat-shop suffering and indignities.

Notably, in a recent interview with Charlie Rose, George Osborne cited Indonesia as one of the economic success stories of the last 30 years.

Back to Blighty

So, is the IMF's endorsement a prescient, objective, reassuring one? I think not, and I'm in good company. Back to Twain:

In religion and politics, people's beliefs and convictions are in almost every case gotten at second-hand, and without examination, from authorities who have not themselves examined the questions at issue, but have taken them at second-hand from other non-examiners, whose opinions about them were not worth a brass farthing.

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Manchester united: "A minority of absolute idiots are trying to break us apart"

At the vigil, one man's T-shirt read: "The only thing that's allowed to be separated by colour is the laundry."

A day after one of the worst atrocities in the history of the city, Manchester's people were keen to show the world the resilience of the Mancunian spirit.

Dom's, an Italian restaurant, is in walking distance from Manchester Arena, where 22 people lost their lives to a suicide bomber the night before. On Tuesday, the staff were giving out free coffee, tea and pizza to anyone who needed it. On a table outside, there was a condolences book, and teary passersby left RIP messages to those who perished. Under a bright blue sky, the community seemed more united than ever, the goodwill pouring out of everyone I met. But the general mood was sombre. 

"We need to make space for healing and for building up our community again, and just getting people to feel comfortable in their own city," the Dean of Manchester, Rogers Govendor, told me.

The terrorist has been named as Salman Ramadan Abedi, a 22-year-old Mancunian of Libyan descent. But with a population of 600,000, Manchester is a cosmopolitan hub, and proud of it. Throughout the day I encountered people of all skin shades and religions. On one of the roads off Albert Square, a couple of Orthodox Jewish boys set up a little stand, where people could grab a bottle of water and, if they so desired, hold hands and pray.

On the night of the tragedy, Muslim and Sikh cab drivers turned off the meter and made their way to Manchester Arena to offer free rides to anyone - many of them injured - who trying to escape the mayhem and reach safety. "It's what we do around here," my taxi driver said with a thick Arabic accent.

The dissonance between the increasingly frantic debate on social media and what was discussed on the streets was stark. I spoke, on and off the record, with about two dozen residents, eavesdropped on a number of conversations, and not once did I hear anyone speaking out against the cultural melting pot that Manchester is today. If anything, people were more eager than ever to highlight it. 

"Manchester has always been hugely multicultural, and people always pull together at times of trouble and need," said Andrew Hicklin. "They are not going to change our society and who we are as people. We live free lives."

It was also a day where political divisions were put aside. Theresa May and Jeremy Corbyn agreed to suspend their campaigns. For the next few days there will be no Labour vs Tory, no Brexiteer vs Remainer, at least not in this part of the country. This city has closed ranks and nothing will be allowed to come between that cohesion.

"I don't demonise anyone," said Dennis Bolster, who stopped by to sign the condolences book outside Dom's. "I just know a small minority of absolute idiots, driven by whatever they think they are driven by, are the people who are trying to break us apart."

Later in the day, as people were getting off work, thousands flocked to Albert Square to show their respects to the victims. Members of the Sikh community entered the square carrying "I love MCR" signs. The crowd promptly applauded. A middle-aged man wore a T-shirt which said: "The only thing that's allowed to be separated by colour is the laundry." A moment of silent was observed. It was eerie, at times overwhelmingly sad. But it was also moving and inspiring.

Local poet Tony Walsh brought brief respite from the pain when he recited "This is the Place", his ode to the city and its people. The first verse went:

This is the place In the north-west of England. It’s ace, it’s the best

And the songs that we sing from the stands, from our bands

Set the whole planet shaking.

Our inventions are legends. There’s nowt we can’t make, and so we make brilliant music

We make brilliant bands

We make goals that make souls leap from seats in the stands

On stage, everyday political foes became temporary allies. Labour leader Jeremy Corbyn, home secretary Amber Rudd, Lib Dem leader Tim Farron, Mayor of Greater Manchester Andy Burnham and house speaker John Bercow all brushed shoulders. Their message was clear: "we are Manchester too."

The vigil lasted a little over half an hour. On other occasions, a crowd this size in the centre of Manchester would give authorities reason for concern. But not this time. Everyone was in their best behaviour. Only a few were drinking. 

As Mancunians made their way home, I went over to a family that had been standing not far from me during the vigil. The two children, a boy and a girl, both not older than 10, were clutching their parents' hands the whole time. I asked dad if he will give them a few extra hugs and kisses as he tucks them in tonight. "Oh, absolutely," he said. "Some parents whose children went to the concert last night won't ever get to do that again. It's heartbreaking."

Felipe Araujo is a freelance journalist based in London. He writes about race, culture and sports. He covered the Rio Olympics and Paralympics on the ground for the New Statesman. He tweets @felipethejourno.

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