Wednesday, April 7, 2010

IMF Expanding Its Tax Schemes Beyond the Third World

It used to be a Third World game.

As detailed in John Perkin's important book, Confessions of an Economic Hitman, consultants would fly into a country and design all kinds of grandiose public projects that were designed to fail.

The IMF would then be sent in to provide "rescue" financing. There would be strings attached, of course, in the form of higher taxes that were laid upon the people of the country who had nothing to do with the mad schemes in the first place. But the IMF "restructuring" would result in interest payments upon interest payments. The new taxes would never go away and the tax funds would end up in the hands of the global bankers.

There has been speculation that the IMF will come in to "rescue" Greece. The Greek people, rightly so, have been both suspicious and outraged.

One country that is going through the IMF treatment now, outside the Third World, is Iceland.

In a completely mad scheme, Iceland's three major banks collapsed causing losses for the country of somewhere between 4 to 6 times the GDP of the country.

The Finance Minister of Iceland, Gylfi Magnusson, is in Washington D.C. this week talking to the IMF about more funding.

Today, the Finance Minister stopped by the National Press Club to provide a briefing of how things stand. I attended, and tried to get my head around why Icelandic officials even think it is the responsibility of the Icelandic government, and ultimately the Icelandic people, to pay those in Britain who placed money with the mad Icelandic banks, operating in Britain . What exactly does this have to do with the people of Iceland?

I asked the Yale educated Finance Minister (M.A. 1991., M. Phil. 1994 and Ph.D. 1997 in Economics) if there was any specific written agreement that required the Icelandic government to bailout British investors. He said there were many agreements, but didn't seem to be able to come up with any specific one. He then finally answered the question by saying there was an EU agreement. Iceland is not a member of the EU.

After the briefing, I caught up with the Finance Minister to ask him if the IMF had recommended tax increases as part of its $5 billion loan package. He told me taxes of all kinds were raised, the personal income tax, the corporate tax, the VAT, even the liquor tax. He then told me, and he would know since he is here "negotiating" with the IMF for more money, even more tax hikes are coming for Icelanders.

I seemed to be more outraged by this than the Finance Minister. He seemed to be locked in a kind of, "I'm a sophisticated negotiator" mindset, never quite getting that he is stealing money from the wallets of his fellow Icelanders, who had nothing to do with the crazy schemes of Iceland's bankers.

Earlier, during the formal briefing, I had asked the Finance Minister who the money was mostly owed to. He said it was mostly German, Austrian and Japanese banks (aside from the U.K. debacle). And. here I stood with an Icelander who was working to design a plan to tax Icelander's so that global banksters in Germany, Austria and Japan could be paid. I even tested him on the U.K. debt and asked him what would happen if Iceland didn't pay the Brits. He seemed to indicate that this was a non-starter and would damage Iceland's reputation and the entire thing would be dragged out in the courts. Damn, I thought to myself, if I'm a decent diplomat I'm going to think of a very complex, convoluted polished way to say "No, we don't have the money for these banks and really the citizens of Iceland really had nothing to do with this."

But, the taxes will be expanded once again in the "negotiations" and Iceland's populace will pay and pay.

The lesson here, of course, is that the IMF is going to use the developing sovereign state crises to dig its claws in wherever it can. Greece, Portugal, Ireland, wherever, the people better be on alert.

And in the U.S, the crises are heating up at the state and local levels, from Detroit to L.A. From the glaciers of Alaska to the beaches of California, the fiscal crises are coming here. It won't be the IMF that will be called in, but a domestic version of the IMF that will design plans to "save" the out-of-control state and local governments, and their bond holders, by raising taxes across the entire country. It's the sophisticated thing to do.


  1. I thought the Icelanders voted down a previous IMF plan. If the finance minister can't come up with anyting better, the citizens should vote it down again and fire him.

    Wenzel - thanks for the update. The MSM seems unaware.

  2. @eFinancial

    The IMF is coming at Iceland from at least three different angles. And with guys like Magnusson "negotiating"" with the IMF, the Icelanders have no chance.

    As for MSM, they are completely clueless. The questions include, "Why the anger?" asked as if the reporter couldn't understand it at all.

    A question from a major financial newspaper asked Magnusson with a straight face after it was clear he was being raked over the coals by the IMF, "Are there lessons here for the United States?"