Archive for jhgood

Debt, Tourism and Land Values

When globalization first became a word that the media bandied about in the late 1980s, many people were suspicious of the concept. Workers in North America and Europe rightly perceived that their jobs were under threat. Big corporations could save billions by moving operations to developing nations and paying $1 an hour for labor instead of $10.

Now in 2012, people just accept globalization as a part of life. The conscience of many is assuaged by buying Fair Trade and environmentally friendly products. We are told that M&S and the like go out of their way to bring extra benefits to their poorly remunerated workers.

The mechanics of globalization and the injustice it represents has become far more sophisticated and opaque over the years. Take the example of tourism. It now accounts for 30% of the export of world services.

Before places like Thong Nai Pan in Koh Phangan were a beautiful places mostly visited by backpackers. Local people and other Thais could afford to set up small businesses on the beach. They could take out small loans to pay for rent and business start up.

As outside interests realized the true value of the beaches in the area, especially Thong Nai Pan Noi they simply approached the major landlords and made them offers they couldn’t refuse. The result is a luxury tourist enclave. The small local businesses are losing custom and being pushed out the best spots. Because they couldn’t afford to buy the land there is nothing they can do about it. Those remaining are being squeezed by raising rental prices. Besides which the new tourists are being encouraged to stay around the resort pool and spend their money in the hotel.

Google is pushing out websites like that attempt to promote the small businesses in the area. They are colluding with the neo-imperialist agenda of globalization. Trip Advisor, Wikitravel etc. are filler for corporate sites selling expensive hotel rooms. The information highway is not helping small businesses. The net is dominated by reviews of hotels and expensive restaurants. It is not a level playing field. In many ways it is emulating the conditions created by the IMF and World Bank.

In 2008 we witnessed the biggest transfer of wealth in the history of the world from poor to rich. In 2012 we are witnessing the biggest hijack of the net by corporate run entities. The future is bleak and consumers are persuaded to ignore these salient points.

IMF and the Asian Financial Crisis of 1997

Another example of the reckless and damaging policies of the IMF can be seen by how they help to create and then worsen the Asian Financial Crisis that started in the summer of 1997. It was Malaysia that refused IMF assistance and ignored their advice who escaped the crisis with far less damage than Thailand, South Korea, Indonesia and the Philippines.

The Asian Financial Crisis started in Thailand and quickly spread to many other countries in Asia as traders desperately tried to pull their money out of the region.

There are numerous reasons for the meltdown in Thailand including property speculation, but the main reason was the reliance of the Thai government on high interest short-term loans and their openness to ‘hot money’. Both these foolish policies were initiated after advising with the IMF.

It is almost tempting to think that the IMF wanted the Thai currency and other currencies in the region to collapse to cause a panic so that people moved their money back into dollars.

After the crisis started, Thailand and other countries asked for IMF assistance. Despite these countries running regular budget surpluses the IMF insisted that Thailand, Indonesia etc. rein in public spending and cut funding for much needed infrastructure projects, education and social projects. The result of doing this was only to lengthen the recession in the Asian countries; cutting spending slows down an economy.

It is amazing that the Asian countries agreed to this bad advice as most of the debt was to private debtors and not to Sovereign States. They also agreed to guarantee the debts made to private banks.

Malaysia in contrast refused IMF help and instead of opening its economy imposed capital controls to stop currency speculation. Even the IMF admits that in hindsight this was a smart move as Malaysia quickly recovered.

The only plus side to the Asian Financial Crisis was that the Thai Baht, Indonesian Rupiah and Philippine Peso suddenly became very cheap and lots of tourists arrived in Phuket, Koh Samui, Khao Lak, Manila and Jakarta. People could suddenly afford to stay in boutique hotels in Bangkok and experience the many interesting things to do in Bangkok, for example.

This introduced lots of people to the joys of traveling in Thailand, Indonesia and East Asia and probably helped in making the region the thriving tourist destination it is today.

IMF Gets Rich on Gold

The International Monetary Fund completed the sale of 403.3 tons of gold on December 22nd, 2010. What a Christmas present that was for the leading bankers behind the fund. Gold prices were at historic highs. From the sale of the gold the IMF made $3.5 billion more than it had originally projected.

Out of this windfall the IMF has chosen to give a measly $900 million in low interest debts to countries struggling.

The IMF and other ‘non-governmental’ entities that are ostensibly meant to help the plight of the world’s poorest are really just institutions designed to make a profit. They are also often a way of elite groups in positions of power to use influence through the persuasive powers of offering charity with strings attached. The fact that the IMF could make such a vast amount of money from buying and selling gold clearly casts the organization in its true light – namely, a self-serving group of financiers with an agenda to get rich and grab power.

Often it is the case that developing countries in the south have stagnant and struggling economies through no fault of their own. Natural disasters and the far-reaching effects of the global financial crisis have meant that several poor nations find themselves unable to make debt repayments. It’s a story that’s been frequently covered by the world’s media but little ever seems to change. The last was on the UK, which you can access online from anywhere using this technique to stream BBC News abroad.

It is immoral that the IMF has not responded by cancelling debt, reducing interest rates and delaying payment schedules. They have set up provision for countries like Haiti to be relieved of their debt burden, but a country needs to be as severely economically devastated as Haiti is to qualify for this assistance.

IMF is far from transparent. It is very unclear who they sold the 403 tons of gold to. Moreover, since American banks are virtually insolvent it is hard to see how the IMF continues to operate, and how it continues to maintain any degree of credibility. As the commentator in the video above points out, the IMF is essentially using the debts it holds as leverage to gain control of the assets of countries like Ireland, Spain and Greece which they will then sell at an incredible profit to themselves and their friends. At the same the time, the official coffers will be empty, especially when the south asks for assistance.

The IMF and Tourism

The revenue from tourism has grown exponentially since the 1960s. The importance of tourism has been recognized by the IMF and part of what they see as a successful economy. Accordingly, the IMF has set preconditions for receiving loans. These preconditions are set out in SAPs – structural adjustment programs. SAPs are far from innocuous, and one group that have been negatively impacted are indigenous peoples.

According to the World Tourism Organization in the 1950s 25 million people traveled abroad. In the 1960s this number was 70 million and in 1997 the number of people going to a foreign country jumped to 617 million. In terms of revenue in the 1960s tourism generated revenues in the region of US$ 6.8 billion. By 1997 that number was US$448 billion.

If a developing country wants to receive a loan from the IMF it must make certain changes. These include moving from an agricultural to an industrial and service based economy, to liberalizing the economy and to removing trade barriers. The latter policy allows transnational companies to move in and buy valuable resources in developing countries. In short, to receive desperately needed financial help countries must be prepared to see their markets and resources taken over by multinationals.

In terms of tourism, SAPs stipulate that a developing country must open up its nature reserves, build hotels and promote eco-tourism.

The result is that previously unvisited areas such as the forests and savannah lands of Africa, remote parts of the Philippines and many other places in world such as the Amazon and the islands off Koh Samui and Khao Lak that were once the home to indigenous peoples are being ‘invaded’ by tourists. Even though eco-tourism promises to tread lightly it still encourages indigenous people to leave their traditional occupations and work for tourism. Moreover, the wild life is scared by the tourists. Eco tourism disrupts patterns that have persisted for many thousands of years.

The promotion of tourism by the IMF is just another example of the pernicious influence of an organization whose primary goal is to further enrich banks and other financial institutions.