2011 Triennial Surveillance Review – External Study – An Evaluation of IMF Surveillance of the Euro Area

The report is available here.

The articles by Joe Stiglitz and Martin Wolf on the IMF’s surveillance role are also interesting.

15 replies on “2011 Triennial Surveillance Review – External Study – An Evaluation of IMF Surveillance of the Euro Area”

There must be a few heads over at the IMF on valium. They come across as principled and have suggested a number of steps to resolve the crisis- resolution scheme, recap, some form of insurance for the future, that sort of thing and nobody’s listening.

@ seafóid, n’ all

I’ve only read the Stiglitz one so far and its absolutly fascinating.

When the ‘troika’ came to town there was plently of gallows humour and expectation that the red in tooth and claw free marketeers of the IMF would soon be laying waste to all around – and it has been a constant surprise to find oneself nodding away at the IMF, whilst the EU/ECB go for old-school if ain’t hurting it ain’t working – oh, wait it’s only hurting.

To the extent that it seems better to have had just the IMF, such as in plucky Iceland. Burn the bank bondholders? Why of course. Keep your social security? Yes, what else is a safety net for? 50/50 tax to cuts ratio? Sounds good to us. Employment and growth your immediate priority? Very sensible.

This paper gives a good insight as to how this is so.

The problem for Stiglitz is that he seems to be politely arguing that it was right to ignore advice from the IMF up to a few years ago, but it’s wrong to ignore them now they, hmm, essentialy agree with him.

And, as usual, and he does try to deal with this, the issue of making non-democratic bodies like the IMF accountable for the advice they give – when then want to make governments listen to them – is a thorny one.

The Martin Wolf summary is excellent

“The fifth requirement is to dare to speak the truth, as the Fund perceives it, however unpopular.”

Not so easy for the newspapers in Japan


“The simplest way to try to escape ignorance is to assume away complexity. In the case of economics, there exists a way of simplifying reality that is particularly attractive, both intellectually and politically: it is to assume that liberalized markets cannot go wrong.”

David Orr describes “a system haphazardly
created in the dim light of an incomplete understanding of reality”.

“Unfortunately, as the crisis has shown, it is extremely hard to make such surveillance effective. It is vital to understand why that should be so. I will analyse those reasons in terms of what I shall call the six “I”s – ignorance, ideology, insularity, incentives, intimidation and impotence.”


Eventually, reality intrudes. Then the backlash comes. The “experts” are upended. We see the cost of not having an honest, open argument, whether about Pentagon strategy or about how the banking system really works, and the media feel embarrassed: “How did we miss that?” In Washington, and elsewhere, the answers are often the same. It comes down to unspoken deals between powerful people, and smiling faces telling fairytales

On a scan of all three – looks like reality and pragmatism … which is great to read. In fact, these three should be required reading on all 1st year 3rd level programmes for all disciplines – and an optional essay on either Stiglitz or Wolf would be real on the Leaving Cert Economics and Business and History syllabi …. present and future citizens need education on this stuff …

The IMF has been consistent in ‘signalling’ its unease with the terms of the Irish ‘loan agreement’ and the implications of the ‘foolish’ guaranteee of late 2008; i.e. its considered opinion that present Irish position is unsustainable.

@Mario Draghi

I wish you luck in your first day on the job.

By declaring UDI at the ECB, exceptional circumstances etc., you could have all of this sorted out by close of business today.

I don’t get this Martin Wolf hero worship on this site – until the crap hit the fan he was a perfect free market hypothesis type of guy which for a man of his intellect knowing how money is created is simply incredulous.
As for Stiglitz – I remember reading his roaring ninthies book some years ago and at the time I thought it was impressive – but it only skirts around the terrible twins in the White house (Rubin & Summers) and looking back at it now he did not get into the meat of the issue.

They are both deeply compromised establishment figures – up to their tits in slurry.

I see the word surveillance everywhere in the Stiglitz piece – the IMF church are regulating a post Breton woods system that is deeply dysfunctional with NO RULES.
Post war these rules favoured the US but there was rules to the game.
Its a completly ad hoc off the cuff system now – any policey recommendations are absurd in such a chaotic envoirment.
If they do come up with a new system it would predictably be a even bigger more powerful church.
World Trade is just too screwed up now – they should get out of the surveillance game or indeed any game – 40 years of observing this train wreck is enough for anyone.

I detect a proposition coming on … the more serious, substantive and technical the thread the lower the response rate.

Or have we all simply run out of time to sit back and read … ? … and more importantly … think?

I read the early paper by Stiglitz and his co-author on the three trillion war a few yrs ago … didn’t know he had a book on it. Will see if I can find the link to the paper – it was very impressive …


The book was published in 2006 or 2007.

P 125- the fed looked the other way on war borrowing. And what followed ?

p 186 – the agency problem when interests do not coincide. For a classic of the genre look at this . The US is pulling the plug on UNESCO because of Israel and threatening its participation in some UN intellectual property organisation


Get your war on is another good source on the Iraq mess. Which is so similar to the Eurozone car crash.


like that mnftiu … double_bush really done all of us in …. the great kon of the neo-kons – what a disastrous period

I found bilmes/stiglitz most impressive on how they costed the human cost of all those thousands of poor sods returing home maimed for life – and afterwards finding out just how poorly they are treated …

course the so called ‘war on terror’ wasn’t generating enough sales – so they engineered a glut of whatever tools you want in north africa … camel trains in the sahel packed with them … must keep certain m-industrial complexes in motion … be interesting to see the figs for franco-german arms sales to greece and to libya prior to the nikki malvinas moment … crazy ol world alrite …

good link on ealier thread to that sane pragmatic US ambassador – could do with a few more of them; so could Bahrain.

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