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Departing IMF Economist Blasts Fund

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Although the resignation letter of Peter Doyle, who was an advisor to the IMF’s European Departments, which is running the rescue programs for Greece, Ireland, and Portugal, is more terse that Greg Smith’s resignation from Goldman via a New York Times op ed, it is no less devastating.

Doyle, a 20 year veteran, excoriates the IMF for failing to provide warnings of the Eurocrisis despite its “long gestation period”. He slams the Fund for becoming more cautious and blinkered.

And the disconcerting thing about this letter is the IMF is the least bad member of the Troika, as least as far as the Euromess is concerned. The IMF was opposed to having the Irish people being saddled with debts incurred by banks that didn’t have state guarantees, but was end run by the ECB, Geither (whose comments at on a G7 conference call seem to have had some sway) and head of Ireland’s central bank, who also happened to be on an ECB board and one might assume chose to sell out his countrymen in the hopes of improving his career standing outside Ireland. Note that contrary to what took place in Ireland, in which no bank bondholders took a hit, Spanish depositor-stuffees who were encouraged to buy preference shares, a form of equity, will see those holding wiped out, and bondholders will be crammed down.

I suggest you read this short letter in full (hat tip Philip Pilkington):

Peter Doyle Resignation Letter

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28 comments

  1. F. Beard

    Translation please? I’m happy to learn I don’t understand banker-speak very much. I’d be concerned if I did.

    “If you understood what I just said then I mispoke” Alan Greenspan, for which remark he should have been held in contempt of Congress.

    1. They didn't leave me a choice

      But beard, that would imply that something is more contemptible than congress. Is that possible?

      1. F. Beard

        Central bankers win hands down when it comes to being contemptible. But yes, if I bother to vote, I’ll vote against EVERY Congressional incumbent.

  2. Warren Celli

    Not really surprising, but it is a rather loud whistle.

    Money shots;

    • “Moreso, it is because the substantive difficulties with these crises, as with others, were identified well in advance but suppressed here.”

    • “A handicapped Fund, subject to those proximate roots of surveillance failure, is what the Executive Board prefers.”

    Sounds like an intentional creation of conflict to me.

    Deception is the strongest political force on the planet.

    1. psychohistorian

      I agree that it seems strange that after 20 years Mr. Doyle is astounded to discover that the bugs in the IMF system are in fact features.

      1. burnside

        I see nothing in the letter to suggest his insights are recent or sudden. Rather, clear disappointment and literal resignation, an honorable act under the circumstances.

        May it become as widely known as Nigel Nicolson’s departure in response to Suez. And better understood.

  3. Susan the other

    This reads like a prime example of Philip’s latest post about the intentional misuse of monetarism. What a straight-forward letter. The 2nd world reserve currency is on the brink, Christine Legarde’s professional qualifications cannot make up for how she was selected (no reference to DSK). Was that a kiss-my-ass letter or what? I guess the reference to Legarde is a jab at Geithner. A cabal of procrastinators.

  4. Psychoanalystus

    Five or ten years from now, when the collapse of the West will be complete and its “institutions” such as the IMF, WorldBank, European Comission, NATO, and other such predatory-by-design agencies will be nothing but a bad memory, we will all look back and laugh at the present arrogance and hubris exhibited today by this discredited and bankrupt West.

    Can we all just say “Rest In Peace” to the West and the hundreds of years of crime and genocide it propagated across the globe, and move on already. Really, can we move on now. We’re beating a dead horse here.

  5. Abe, NYC

    I wonder if he’s going to get a Nobel, like Joe Stiglitz did :) Another crisis, another scandalous departure of a high-profile Bretton Woods economist. One thing for sure, he’s not getting the Treasury like Larry Summers or Tim Geithner.

    Sad to see the World Bank and especially the IMF, Keynes’s brain-children, become brain-orphans…

  6. Patccmoi

    Since the Joe Stiglitz interview, I have a really hard time to see the IMF as anything even remotely beneficial. You read his 4 steps that he stated something like 10 years ago, you look at the Greece situation, and you see that they’re still doing exactly the same thing… Privatization of fundamental things like water and energy, provoque IMF riots, and buy everything dirt cheap when the country is in complete shambles, putting its population in financial slavery for generations…

  7. Jim

    Specifically, with the Eurozone, what did Peter Doyle want the IMF to do? Did he want the IMF to condition loans to Greece on Germany agreeing to a United States of Europe? Does he regret the IMF fronting money to Greece knowing that without a fiscal union the country wouldn’t be viable?

    Then he says, “the second reserve currency is on the brink”. Why doesn’t he ask if its in the best interest of Greeks and Germans to share this “second global reserve currency”.

    1. foppe

      Of course he’s blinkered, that’s not the point.. The only way to discredit institutions is by coming up with proof of bad management or accountability failures, as that’s the only thing that matters in today’s tick-box mentality when it comes to “doing the right thing”. So long as the box it’s ticked, it was legal/accounted for, and therefore not wrong (and we don’t talk about the rules).
      Bureaucratization is dangerous.

      1. Jim Haygood

        ‘Bureaucratization is dangerous.’

        Doyle’s letter condensed to three words — well done!

        Having worked in some large organizations (though not the IMF!), by substituting different names and issues, I could have written a similar letter about any of them.

        Bureaucracies don’t reward individual talent (except for a favored few), and management has its own agendas which fail to serve either the organization or its customers. So what’s new?

        The takeaway: ‘Small is beautiful.’

        Bro, can you spare an SDR for a cuppa coffee?

        1. craazyman

          So true. So true.

          But the worrying thing is, is that it’s getting truer and truer and truer.

          It’s like a plague, expanding. Even to places you thought might be immune. My hero the shoe salesman wrote about this in THE PLAGUE, but I frankly confess I could not finish the book, I just crapped out and couldn’t finish it. Not sure if it was the translation or what. I prefer Ionescu’s RHINOCEROS on this one. It’s sort of apropos, tangentially.

  8. psychohistorian

    I want to speculate about the comments at the end starting with: “There are good salty people here.”

    It that a reference to freshwater/saltwater schools of economic thought?

    If so, then what more does it say about the purge of saltwater opinions from the IMF?

    I wonder if Mr Doyle has read The Shock Doctrine? He might have time to now.

    Who tells the IMF what to do? I bet it is the global inherited rich and their first and second reserve currency monetary systems that provide primary control.

    1. Bill Clay

      This is your third recent comment that cites Klein’s Shock Doctrine, which I’m just now reading (I’ve gotten as far as Russia’s conversion to oligarchy and am trying to work up the courage to read about Bush II in Iraq).

      I admit I haven’t verified her primary sources, but I find Klein’s documentation overwhelming and her thesis to be the most credible, comprehensive, and self-consistent explanation I’ve seen of global history for the last four decades.

      Has anyone convincingly debunked her thesis?

      If not, somebody needs to publish “Shock Doctrine for Dummies” — or a Cliff’s Notes version — and give away a few hundred million copies. It would do a lot more good than the Gideon Bibles you find in hotel rooms. Maybe George Soros could do it as penance for his earlier support of Jeffrey Sachs?

      1. Jackrabbit

        To me, it just meant seasoned people who know what the f* they are doing and can get the job done.

        (And mentioning them hints that he is not the only one that is disturbed by political interference.)

    2. Warren Celli

      “There are good salty people here.”

      The “good salty people” would be the good old fashioned parasitic Vanilla Greed for Profit faction (Evilism) that keeps the host victim alive to exploit another day, as opposed to; the newer more Pernicious Greed for Destruction faction (Xtrevilism) that intentionally cripples and destroys the host victim in a herd thinning effort.

      Deception is the strongest political force on the planet.

      1. F. Beard

        …that keeps the host victim alive to exploit another day, as opposed to; the newer more Pernicious Greed for Destruction faction … Warren Celli

        Ironically, the later may be more idealistic – true believers of a sort.

          1. craazyman

            “The man that striketh his servant, even he will find favor. But the man who slayeth his servant and bury him not, yeah, he will be exalted.” — Contumnelations, VIII i-vii

  9. Jackrabbit

    It seems fairly straightforward to me.

    He indicates that the growing crisis was identified long ago but the European elites that control the IMF and other Institutions have allowed the crisis to continue instead of taking the necessary action to contain/control/ameliorate disaster.

    Why would they act this way? Did they relinquish their responsibility to serve ‘special interests’ that want to protect corporate profits and ensure debt repayment? Did they see an opportunity to accelerate unification? Both?

    There is plenty of blame to go around but Doyle has added a new dimension.

  10. Ed

    The Exiled Online had the most appropriate headline for this story (exact quote): “It took this IMF economist a mere twenty fucking years to figure out what the IMF does…”

    1. Jackrabbit

      He’s not complaining about what the IMF does. He’s complaining about decisions that were made and the governing structure that allowed/caused them to be made that way.

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