Dominique Strauss-Kahn, the once popular chief of the International Monetary Fund (IMF), was taken off a plane and arrested for the attack and attempted rape of a chambermaid in a hotel in New York.
This incidence left the political and media landscape stunned. Not only has Mr Strauss-Kahn been central to the difficult bailout discussions in Europe, he also was widely rumored to be the Socialist Party’s candidate to run for France’s presidency next year.
The IMF oversees the international monetary systems and monitors the financial and economic policies of it’s members. It provides loans to countries to help them establish macroeconomic stability, it is helping to balance currencies and kickstart economies.
The purpose of the IMF is to oversee the monetary system and by doing so, it is reflecting the interests and ideology of the Western financial community. Financial aid provided by the IMF is usually bound to “structural adjustment programs”, to bring the country in line with the objectives of the market economy. The IMF advocates austerity programs to reduce budget deficits and economic targets as a condition to the loan. For weak economies, this is causing a challenge through induced budget restrictions, which undercuts the government’s ability to sustain infrastructure, like health, education and security. The IMF also spearheads privatisation of vital national resources ( like postal services, public transportation or natural resources), which often times leads to high prices and disastrous services (think of the British railway system, for example).
The consequences are catastrophic economic crises as we have seen in Argentina, that had a sustained and negative domino effect on the South American economy. The politics and policies of the IMF are said to have a widespread impact on the access of food, public health and the environment. The issue is not, that their action are not well-intended or appropriate, but they serve the problem, they are trying to solve. Now as we face a global economic and financial meltdown, the IMF does find itself between a rock and a hard place, trying to restore financial stability and economic growth, basically with the same methods they used in times of prosperity and growth.
The IMF has been working with the European Union to manage and fund the recent bailouts for Ireland, Portugal and Greece, and the arrest complicates another bailout meeting with Greece next week. Greece has experienced strikes and protest in reaction to the austerity measures amounting to nearly $ 40 billion USD over the next five years with wide-ranging effect on healthcare, public spending, education etc.
I am far from a financial expert, but even I can see the clear and present danger of what is going on. Excessive national debt, a stalling economy and an explosion of money flooding the markets. With all the ingredients for hyperinflation present, the mistakes of 1937 are simply being repeated.
What is however so interesting is that everything is in clear sight. There is no doubt that we are looking at the last days of capitalism, with frantic administrators and regulators pretending to find the solution in the problem.
What we see is the death struggle of the monetary system as we have know it. The current market economy, postulating an ever growing demand for goods, as well as the monetary market, relying on the increase of money while the value remains stable, even tough the growth is mostly generated by speculation and interest on debt, are bound to come to a halt now.
So it is going to be interesting what is happening at the bailout talks for Greece this week, that Mr Strauss -Kahn is going to miss. While the news of Mr. Strauss-Kahn’s arrest is unlikely to have an immediate effect on the talks, it will presumably add to the sense of unease and worry.
Greek officials have warned their counterparts that on top of the sharp decline in the economy — growth is forecast to shrink by as much as 4 percent this year — more pernicious has been what they call the headline effect. Newspapers in Athens have been full of stories on credit ratings downgrades, debt restructuring and even unfounded rumors that Greece might be forced to leave the euro zone.
Whatever will happen, it is clear that the old, tried and trusted measures are not going to help Greece, Europe or the world. Either true leadership and wisdom prevails, or the cradle of civilisation will once more – after Egypt – play a pivotal role in shaping the destiny of the world.
Business has come to a standstill and Greeks continue to take their deposits out of local banks this year, after 40 billion euros in deposits were withdrawn last year. All of this is pushing Greece toward destruction. The government is trying its best, but the market does not seem to appreciate its efforts.
So on one hand we have the ” common suspects” of interest groups fighting to keep the status quo, on the other hand we see inequality, insecurity, destabilisation, inflation, unemployment, a starved out public sector and growing discontent. We see overwhelmed politicians, nervous regulators, baffled financial experts and clueless economic advisors – and we see many pretending to be blissfully ignorant regarding the fundamental changes of the political, economic and fiscal landscape.
Whatever happened in Mr Strauss-Kahn’s suite, if it was a set-up, an entrapment over political and economic interest, or he has lost it due to pressure and unconscious fears, time and evidence will tell. But the story of a servant, a maid, a woman being sexually assaulted by a powerful man in his own right and the standard of the world, is rich in symbolism of today’s preeminent imbalance: the overpowering of the unprotected, unarmed and seemingly defenseless – and yet has the power to overthrow everything. This all on a symbolic level is representing the natural and hence unavoidable principle of change. It is the fear of the dominant male life force of the transformative power of the so called feminine principle, touting the need of change, return, yield, letting go and surrender. The ultimate fear of male dominance is the loss of power. And yet, the collapse of old male power structures is unstoppable, together with the disappearance of their economic stake stake and political influence, that is by now all but disappearing.
As it has happened for Dominique Strauss-Kahn.