The Shock Doctrine

I have to admit that when it comes to finance or economics, I am simply as ignorant as can be. And every time I tried to change that fact, I just failed cause I could not understand anything of what the "experts" said or wrote. As a matter of fact, the harder I tried, the more confused I got. So, I just took it for granted that my brain was just not meant to understand money matters.

Well, I am glad to announce that this has recently changed. I finally discovered that I was not getting what the (so called) "experts" said simply because it did not make any sense, and not because I was (God forbid) stupid.

So when I read the following news bulletin:

Following their recent visit to Egypt, IMF staff issued this concluding statement:

"For the medium-term, reducing fiscal vulnerabilities is be a precondition for achieving Egypt’s growth potential. Sustained high fiscal deficits and public debt could undermine investors’ confidence and put upward pressure on the yield curve, with attendant risks to government financing costs, economic activity and the exchange rate. Government plans to resume medium-term fiscal consolidation as the global economy rebounds are well-placed. The authorities are aware that a credible fiscal consolidation strategy will be crucial to support investor confidence and foster private sector-led growth. This should be supported by policy actions to: strengthen revenues through introduction of a full-fledged VAT; and increase the efficiency and control of government spending with further rationalization of subsidies and decisive progress with financial management reforms. As plans for pension and health care reforms are finalized, it would be important to ensure that the potential fiscal impact is controlled."

instead of simply shrugging my shoulders and assuming that the IMF "experts" knew what they were talking about, I honestly panicked!!

Why? Because this recipe for "boosting" Egypt's economy is nothing but the same "Washington Consensus"; a term coined by John Williamson to describe a set of ten specific economic policy prescriptions that he considered should constitute the "standard" reform package promoted for crisis-wracked developing countries by Washington DC-based institutions such as the International Monetary Fund, World Bank and the US Treasury Department who mercilessly forced those polices on people of South Africa, and the Asian Tigers following the rumored crash of the nineties.

Those set of policies are in complete sync with the "Shock Therapy" policies pioneered by Milton Friedman and his "Chicago Boys" who applied those policies in Chile, Argentina, & China. The "Berkeley Mafia" did the same thing in Indonesia. And Jeffery Sachs applied more or less the same policies in Bolivia, Poland, and then in Russia.............. (well this is all I know for now).

The good news is that the "Disaster Capitalism" policies had extremely positive results to the multinational corporations, Wall Street, the richie-rich, and most of the time, the leaders of those countries. The bad news is that the same policies came at an extremely high cost to the majority of the people of those countries.

OK, I do apologize for showing off, but I couldn't resist it.

The reason I understand world economy & finance better now is that I am currently reading "The Shock Doctrine" by Naomi Klein. This book finally confirmed what I suspected all along. To find what that is, please read this book. I am sure that you will have as many "Oh My GOD!!" moments as I did.

If you are Egyptian, then you have to read this excellent book by Naomi Klein so you can formulate an educated opinion regarding Businessmen getting into bed with the government, the on-going privatization of Egypt public sector, the reductions in subsidies, and other so called "reform" policies.

Until you do, don't be surprised if I ignore you or even pretend that I don't know you. I refuse to talk to or socialize with people who are as ignorant as I was four days ago!!