Disgraced former Fed Chairman Alan Greenspan came on the Sunday talk shows to shill for the IMF and said flat out we need to roll back all of the Bush tax cuts and eliminate all of the loopholes. Raise taxes on the rich, how could that be a bad thing? Because he said “all of” and this is where you see that Alan hasn’t seen the error of his ways and is still an Ayn Rand worshiper.
When the Bush tax cuts were enacted they had almost zero effect on the middle class whose rates didn’t change but in the interim inflation has pushed many of those who still have a job into a much higher tax bracket if the Bush cuts were simply repealed. In fact the big cut in taxes for the rich that came from Bush were from capital gains and dividends being taxed at a top rate of 15% and he didn’t mention changing that, that would be “anti-business”. When he says eliminate the loopholes he means take away tax credits that go to the poor and middleclass.
If you did this it would bring in a lot of money to the Treasury but it would depress the economy further while the parasitic rich would continue to suck the wealth out of everybody else. But this is the regime the IMF imposes on anybody unlucky enough to fall into one of their austerity traps. Great Britain is reeling from cuts to the middle class while the rich and corporations offshore their incomes to avoid taxes.
Portugal is the current target as the crooked rating agencies are downgrading their debt so that Wall Street can drive up interest rates on Portugal’s bond issues. Now forced to go to the IMF for current financing they will be forced to dismantle their safety net and make cuts to everything that makes a middle class possible.
The right wing calls Portugal one of the PIGS countries (Portugal, Ireland, Greece and Spain) because they are “socialist“. (this means they have a middle class) In fact Portugal has no economic crisis, they didn’t have a housing bubble because they didn’t allow the predator banks to move into the market. They have full employment, their economy is doing very well compared to the rest of the world. But the bond vampires have moved in on them and they can’t refinance their debt.
You see bonds are sold at a discount because in effect the interest is paid up front. A one year bond that pays 5% only brings in 95 cents on the dollar when sold (not exactly but you get the idea). If you dramatically increase the interest rate by paying a crooked bond rating agency to downgrade the country’s credit rating then they must sell a great deal more debt to bring the same amount of money (remember existing debt is constantly refinanced and that‘s the trick to it). This in turn is used to downgrade the credit rating further and round and round until you have a debt crisis.
In fact if you can drive down their rating far enough then institutions like pension funds who can’t hold “bad” or low rated bonds must dump them onto the market all at once and the sharks can really feed. Just the threat of this can drive a country into the merciless hands of the IMF for a “bailout”.
An IMF “bailout” amounts to wholesale corporate looting, it’s the sort of thing that pirates and barbarians used to do to isolated towns and lets be clear, I’m referring to the IMF, they aren’t the good guys, they are the pirates. They want to do the same thing here in the US and unless enough people catch on they will.