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The IMF Sees European Spring
It's Not Your Father's IMF
The October 2012 IMF World Economic Outlook made a gloomy prognosis on the Global Economy. The loss in economic momentum that appeared in August looked set to continue.
Commentators were quick to observe that this current IMF is not the same as those that have gone before. Under Christine Lagarde, the IMF seems to be much more pro-growth and less fiscally austere; for certain selected economies. The economies selected for pro-growth suggestions; are in general the large economies that drive the Global Economy. Small economies, such as Greece, which have an insignificant contribution to global GDP, are still advised to apply austerity to get their fiscal houses in order however.
Despite the pro-growth warm feel of the lastest IMF behaviour; there is a hint of cold steel remaining beneath the surface. The infamous "Lagarde List" of corrupt European elites, has been circulated in the European capitals; and some of the transgressors have already taken the Hemlock. It would seem that in order to justify the shared commitment to European solidarity and transfer payments from North to South, that heads of those associated with the fiscal corruption of the past must roll. European fiscal and political union is easier to sell to voters, when they can see that those associated with its negative connotations are being locked up.
European and Arab Spring
The most alarming signals in the report came in relation to Europe. The IMF believes that the probability of recession in Europe is the highest in the Global Economy. In addition, European Unemployment is expected to escalate higher to the level seen in the Middle East North Africa (MENA) region. This compare and contrast statistic, with the MENA region, is an economic study with ominous political undertones. When one considers that the "Arab Spring" was projected against a background of high unemployment, especially amongst young males, the political undertone becomes clear. Looking through the data, one can see that European unemployment has a strong male youth dynamic. In addition, it is highest amongst male immigrant communities, many of them Muslim. The combination of male indigenous and immigrant youth employment is a volatile combination. Thus far, this volatility has been exploited by Far Right political parties and Religious Extremists.
"European Spring", if and when it comes, will have its own idiosyncrasies; based upon the volatile combination of indigenous and immigrant male youth unemployment. It may become impossible to distinguish between "European Spring" and "Arab Spring"; during the Fog of War, especially in nations that border the Mediterranean.
"European Spring" has already begun with the Witch Hunt of those on the "Lagarde List". Unemployed male youths may enjoy watching this spectacle. However if it does not deliver jobs, the public spectacle will be short-lived; and soon replaced with something violent made locally.
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The scandal may be on the verge of blowing up.
- IMF Shakes Austerity Orthodoxy for New Pragmatism - Bloomberg
Five years ago, the International Monetary Fund was looking for a role. Thanks to the global recession and its aftermath, it has one.