As the FT has just reported:
The International Monetary Fund badly missed the risks that led to the global financial crisis because of a naive admiration of light-touch US and UK financial regulation and a “groupthink” mentality, according to its watchdog.
A sharply critical report from the fund’s independent evaluation office, published on Wednesday, said that the IMF was very late to spot the severe interconnected problems in the world's advanced economies. As late as the summer of 2008, the IMF’s management was confident that “the US has avoided a hard landing” and “the worst news are [sic] behind us”, the report said.
“The IMF’s ability to correctly identify the mounting risks was hindered by a high degree of groupthink, intellectual capture, a general mindset that a major financial crisis in large advanced economies was unlikely, and incomplete analytical approaches,” the report concluded. The fund’s analysis and economic modelling focused largely on traditional macroeconomic approaches and failed to spot the huge risks building up in financial systems in countries such as the US and UK.
That wasn't "groupthink".
That was neoliberal economics.
Why not just say it didn't work?
And why not say it isn't working now, but that the banks are still pursuing it?
That would be a lot more use.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
The IMF are frightened to admit that the policies it advocates are wrong. I recently returned from the Gambia in West Africa and one of the local newspapers referred to a glowing IMF report on the country which quoted a 5 percent growth rate. But a highly placed officer at the British High Commission suggested that there was no growth in the economy. How could there be growth when tourism numbers are down by one third in two years and construction driven by the British desire for second homes is also down? Regard for the IMF, and for that matter the World Bank, in development circles is very low and the developing countries which are doing well are generally those which are not pursuing fundamentalist neoliberal policies.
In the UK we must find an alternative to this disastrous approach of neoliberalism before it completely destroys us. It has now brought us to the point that we are akin to a ‘Heavily Indebted Rich Country’being subjected to the policies which the IMF forced on the ‘Heavily Indebted Poor Countries’ of the developing world.
I agree and have said loads of times that light regulation in the UK & US played a large part in the credit crunch. Now the populations of those countries and further afield have to live with the mistakes of the politicians who had ultimate responsibility.
@John Buckles
No – blame the economists
They suggested the policy and said it was the only one available
Blame especially Thatcher – for she bears most blame of all
She bought it hook line and sinker