IMF Prepares For Global Cataclysm, Expands Backup Rescue Facility By Half A Trillion For "Contribution To Global Financial Stability"

Tyler Durden's picture

And all the pundits thought that the IMF would be on the hook for just €10 billion... The IMF has just announced that it is expanding its New Arrangement to Borrow (NAB) multilateral facility from its existing $50 billion by a whopping $500 billion (SDR333.5 billion), to $550 billion. The current lending participant group of 26 entities will be increased by 13 new members all of whom will contribute token amount of capital to the NAB. The one country most on the hook in the new and revised NAB - the United States of America, will provide over $105 billion in total commitments, or 20% of the total facility. The US is currently on the hook for just $10 billion, meaning its participation in global bail outs just increased by $95 billion. And the bulk of these bailouts will certainly be located across the Atlantic. What is most troublesome is the massive expansion of the NAR. If the IMF believes that over half a trillion in short-term funding is needed imminently, is all hell about to break loose.

Never one to present a realistic picture Dominique (or is that Mrs, Pisani?) Strauss-Khan said: "The expansion and enlargement of the NAB borrowing arrangements
provides a very strong multilateral foundation for the Fund’s efforts
in crisis prevention and resolution, as an essential back-stop to the
Fund’s quota resources.
This will help ensure that the Fund has access
to adequate resources to help members that are vulnerable to financial
crises."

If memory serves us right, the Fund's current resources give it acces to about a third of a trillion, so as of today the IMF has recourse funding to just under a trillion. Something big must be coming.

Some more details on the NAB from the just released PR:

The NAB is a standing set of credit arrangements under which
participants commit resources to IMF lending when these are needed to
supplement quota resources. The expanded NAB will become operational
when it receives formal acceptances from the required proportion of
current and potential participants, which will require legislative
backing in some cases.1

“The expansion of the NAB will make an important contribution to
global financial stability, but it is not a substitute for a general
increase in the Fund’s quota resources. The Fund is, and shall remain,
a quota-based institution. It is important now that member countries
rapidly take the necessary steps to make the increased resources
available,” Mr. Strauss-Kahn underscored.

Background

The NAB is a credit arrangement between the IMF and a group of
members and institutions to provide supplementary resources to the IMF
when these are needed to forestall or cope with an impairment of the
international monetary system. The NAB is supplementary to quota
resources, which are made up of the quota subscriptions
each country pays upon joining the Fund, broadly based on its relative
size in the world economy. IMF members’ quotas currently total SDR
217.4 billion (about US$330 billion). Like quota allocations, the NAB
is reviewed on a regular basis.

The recent unprecedented shock confronting the global economy has
led to a sharp increase in the demand for IMF financing.
To ensure that
the IMF continues to have sufficient resources to meet demand, leaders
of the G-20
agreed in April 2009 that immediate financing from members of US$250
billion would subsequently be folded into an expanded and more flexible
NAB, increased by up to $500 billion. This call was endorsed by the IMFC.
The G-20 leaders reaffirmed their commitment on September 25, 2009 to a
tripling of the resources available to the IMF, from a pre-crisis level
of about US$250 billion. At its meeting in October 2009, the IMFC
welcomed the expected agreement to expand and enhance the NAB. Pending
the entering into force of the expanded NAB, member countries have
pledged more than $300 billion in immediate bilateral financing should the Fund require additional resources for lending.

We have a few questions:

1) Just where will central banks suddenly find access to over three hundred billion in SDRs (which is what this facility is based on)? Also, we are curious just how this SDR expansion will impact dollar levels. As the dollar is the primary component in the SDR basket (17%), banks will have to sell more dollars than other currencies on a pro rata basis to increase their SDR holdings. What will happen to the DXY when $85 billion new dollars flood the market via assorted CBs but mostly the FRBNY?

2) Who came up with the expansion factor? Why is Japan's allocation increasing by 18.7x, that of the US by 10.4x, while that of the Bundesbank only by 7.2x? We thought the IMF is more of a eurocentric bailout facility? Why does it fall upon the US taxpayers to disproprtionately bailout Greece?

3) What is the joke with having Greece join the group of new participants? The IMF sure has a sick sense of humor.

4) Curious how this comes the day before Greece is supposed to auction off some ultra-short term debt. If this facility is enacted, watch for socereign credit curves to hit 60 degrees, with near-term risk disappearing, once again courtesy of Joe Sixpack. We hope you pay your taxes by the April 15 deadline.

5) Funny money will galore. At this point nobody will allow anyone or anything to fail.

Here is the full table of old and existing contributors. Congrats US - you are once again leading the charge in the world bailout.

h/t Fueks_Me

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market cynic's picture

From the opening scene of Gladiator, this seems appropriate here....

Roman General Quintus (glaring across the battlefield at the rebellious, surrender-refusing, horde about to be butchered by his legions):

 

"People should know when they're conquered."

 

 

Grappa's picture

"Would you know when you're conquered Quintus?"

...Or more interestingly would you still go on if you really knew?

market cynic's picture

The actual reply from Maximus to Quintus was:  "Would you, Quintus....would I?"

 

Of course not.

We do know, and we will still go on until imperial Rome butchers every last one of us.

 

Strength and Honor!

 

 

JW n FL's picture

http://www.youtube.com/watch?v=331clHFsnpY

3 weeks from now I will be in green fields... imagine it and it will be so...

Visualization, thats all the 11k market is....

I can see it now...

God's work indeed!

SofaPapa's picture

So basically, money doesn't really exist anymore I suppose.  A Trillion here and a Trillion there and before long it's all just a fun game.  You see there are no debts really.  Just numbers in a ledger.  Isn't this a fun game?  As someone posted above, until food or oil are at stake they can keep this running.  Once prices for those two items become real, there's going to be hell to pay.  Tomorrow maybe?  I'm joining the Silver camp and buying as much as I can as soon as I can.

JW n FL's picture

Buy Ammo! http://www.google.com/#hl=en&q=.223+ammo+for+sale&aq=0&aqi=g3g-m7&aql=&oq=.223+ammo+for&gs_rfai=&fp=95b809f9b4e151b1

 

You will notice there are a lot of out of stock items... large quantity .223... Oops? not all the silver and gold in the world and / or cash... can buy what is not on the shelves...

 

People say Gold... I say Ammo and if you want to know what trumps what in the real world if there is a melt down???? It wont be spinning rims on your caddy... it wont be bling.... it will not be little shinny pieces of metal, unless of course the shinny metal is brass.

 

Ammo, Food and then whatever you think you should buy into... but cover your bases first and recover them again before you buy shinny, bling or spinning rimms for your car..

 

Sincerely, JW

trav7777's picture

What do you plan to do with that ammo?

Defend yourself from a drug gang wishing to use your nice property as a meth lab?  ROTFL.

Everybody has guns and everybody has ammo.  Don't you ever do paintball in a confined arena?  Those who are not shooting are the ones who make it to the end.

wyosteven's picture

World, meet your new masters -- same as the old, but now they are trying to "blend in" by seeking bailouts from many baskets of sovereign debt.

Never transparency, only obfuscation through complexity. 

The bad guys really are going to get away in Oceans 2010

Southern Belle's picture

Here's a Bible verse for your contemplation:

James 5: 1-6 NIV translation:

Now listen, you rich people, weep and wail because of the misery that is coming upon you. Your wealth has rotted, and moths have eaten your clothes. Your gold and silver are corroded. Their corrosion will testify against you and eat your flesh like fire. You have hoarded wealth in the last days. Look! The wages you failed to pay the workmen who mowed your fields are crying out against you.The cries of the harvesters have reached the ears of the Lord Almighty. You have lived on earth in luxury and self indulgence. You have fattened yourselves in the day of slaughter. You have condemed and murdered innocent men, who were not opposing you.

Things will not go according to their plans. Read Revelation 18 for more details. Here's a preview Revelaton 18:19

In one hour she (Babylon) has been brought to ruin.     

wyosteven's picture

James goes on to say "...Religion that God our Father accepts as pure and faultless is this: to look after orphans and widows in their distress and to keep oneself from being polluted by the world."  (1:27)

A lesson in principle?

Are we close to people throwing pies, yet? 

Oh regional Indian's picture

Greetings,

Allow me to create a little allegorical/analogical scenario:

This could be the English Premier League (Man U Vs. Liveherpool)/NFL (CowherBoys Vs. WhyKings)/Sharks Vs. Wings, SOx Vs. Yanks, India Vs. Pakistasn..... take your pick.

Basically a bunch of overpaid thugs (broad brush) playing a rigged game in front of Joe/Mary 12 pack and their extended brood. The thugs on-field know the game is fixed (it always is, in case you naively thought otherwise). Meanwhile the crowd bays (for a goal, a hit, blood....anything) All soaked in the "great" history of their team (pop and mom and gramps were dyed in the wool fans too), the seeming halo-istic un-touchability by "normal" of their "heroes (sic sic sick)" and soaked of course to their gills in whichever brand of alcohol (mostly beer, that curse upon humanity, sorry if you are a conniscrewer of fine ales, bud/dud/ice/hein, all causes of decline/decline/decline).

So they chant their songs (so much power in the word), wearing their club logo (Logo, logos.... ever stopped to think about that one???), with all the power of the symbol.

Meanwhile, time is up (let us take the Man/Liver game here). No final whistle. Scores tied. The thugs know the deal, the owners know the deal (AIG, too funny), the financiers know the deal. All about the merchandise and the Gate. Screw the crowd.

The baying gets louder.It's getting restive, who was injured that badly? Injury times rolls on. The thugs are indefatigable, they run and pass and do their thing. Still no whistle. The baying grows louder. The referee smirks, looks at his clock and says "Play On".

Did FIFA change the rules on the fly? Maybe, only the ref knows. Anything is possible. Can the game go on? Maybe, the thugs are stoked on their millions and the adulation and will run and run till they die (they are of course as expendable as the proletariat in the stands). And yet the game goes on.

Beer is running out, crowd is getting restive. Screaming now, railing against the railing, wanting to get at the Blues, the reds the pinks on the other side, forget the game. Split a head, kick some (ones) balls. It's all about the gratification of innate, TV/gaming induced violence anyways. Now they couldn't care less, game is tied and still going on.

Suddenly a railing gives. Are the thugs safe? Of course. Owners in their box with high security are safe too. The financiers could not care less about anyone or anything, least of all the Beautiful game, plus they set up this opium (now crack) for the unwashed anyways.

So the reds and the blues start going at each other, ready to kill, not knowing for whom or what or why, just dazed and crazed and programmed to kill (literally or figuratively) , drink, F##k, repeat.

Now the unrest spreads, but only amongst the crowds, the thugs play on, the ref smirks some more....

How do you think this will end and who is really calling the shots?

The parallels at every fractal level, including our (intelligentsia's) sins of omission, commission or participation, vicarious or otherwise should be clear to see and give you a pause next time you peer in your one too many mirrors....

More in a bit.....

ExistentialSkeptic's picture

 

*clap*

Have you consided writing novels?  Your attempt at postmodern Joyce isn't bad. 

Having been at a few football games I have to disagree with the analogy, though -- modern spectators are just that: spectators.  I really can't imagine that crowd reacting in the way you describe.

market cynic's picture

 Yeah, the prose was 3 pointer.

 

 

 

Oh regional Indian's picture

Thanks ES, I knew someone on ZH would read it through. Postmodern Joyce I take as a big compliment.

Novel's ready, the world is not! Will announce.

And Soccer hooliganism is really bad, almost as bad as I made it sound. Sadly!

tip e. canoe's picture

dig the allegory.  football is indeed the world game, for better and for worse.  curious to know how the world cup will play out this year, especially with the sneaky sneaky way France got in to the tournament.

(and yes, AIG still sponsoring ManU is the ultimate FukU to the colonists.)

Catullus's picture

Bluff. This is like saying the FDIC backs up anything. Countries don't go to the IMF until it's too late because they don't understand that a global bank run is going to be instantaneous. Is that $500 billion going to buy out any interest rate or fx swaps and are they going to know which ones to buy? No way.

TooBearish's picture

Tyler, it apprears Greek bill auctions go off sub 5% handle, 7x over subscribed....

JW n FL's picture

Shut up and buy Gold Bitch!

Crime of the Century's picture

What is most troublesome is the massive expansion of the NAR.

Little help here, please. I don't see this acronym defined, and if the IMF is releasing more realtors on the world, heaven help us all...

Highrev's picture

3) What is the joke with having Greece join the group of new participants?

 

It's the ultimate shell game. Sovereigns bailing out themselves.

 

.

WmWallace's picture

The silent Coup d’ etat of the United States of America
The silent Coup d’ etat of the United States of America is nearly complete. Congress is giving nearly unlimited authority to the private Federal Reserve Bank ("Fed"), owned by the big banks, to regulate themselves. They are then giving the Fed authority over most every publicly traded company with the simultaneous unconstitutional authority to print money to be used to purchase trillions of dollars of stocks and to monetize the Debt of the United States government. They are also working to subordinate the Fed and Congressional authority to the globalist/fascist International Monetary Fund. Once this occurs which is happening in Congress, the Coup will be done. The international globalist fascist bankers will have conquered the United States of America and the ultimate act of treason will have been performed in plain sight of an unsuspecting dumbed down American public....

This video will show you exactly how this evil was performed in Argentina in 2001 and is being performed on Greece and Europe right now
Argentina's Economic Collapse
http://video.google.com/videoplay?docid=4353655982817317115#

6 steps to accomplishing the coup...

Step 1 - Create a Crisis

fantastic articles and links here....read more...
http://www.facebook.com/note.php?saved&&suggest&note_id=385633773339

sweet ebony diamond's picture

they should have done this stuff at the beginning of the game.

add in a little bit of self control

and the world would be a better place.

instead we have to listen to bachmann palin overdrive.

vomit.

market cynic's picture

"instead we have to listen to bachmann palin overdrive.

vomit."

 

Ah yes.....the Twisted Sisters.  

Stalin and Hitler reincarnated as women.

junkyard dog's picture

Ben is protecting someone big in this country with this increase in IMF funds; could be himself. A big chunk of Ben's bossess' money must be tied up in Euros and Ben has been told not to let it go to zero; but Ben knows it is going to zero and he cannot stop it. What will he do after it does go to zero? The obvious, try to stop the USD from going to zero. But it is to late. Once you pull the trigger, the bullet is on its way.

 

Renfield's picture

OK, so here's a little on-the-ground view from a small-time forex watcher:

After that IMF news broke, Tokyo and Sydney basically sold off the USD and euro all day, ferociously for them - usually the market moves are milder than they were today.

Then when Frankfurt opened, they picked up the euro and ran with it. London opened, picked up the GBP and ran - after a fairly good balance of trade report, the GBP went stratospheric and never looked back, which was odd to me. (Usually it retraces a bit after such a gigantic rise. This however seemed as natural as a 80-year-old with too much viagra.)

Now we've had a quite positive CAD balance of trade report, and a rather negative US one - and New York yawns. No USD/CAD selloff, which I would normally expect.

Basically it's just a strange, strange market day for me - it looks to me like the IMF countries are pretty much supporting the IMF currencies, after Asia shed them for the yen. And all most emphatically doing so. Europe's getting bailed out and so their currencies are UP, for the IMF traders altho not the Asian ones, balance of trade reports be damned.

Luckily I traded that way today, ignoring the reports that *should* have motivated the markets opposite to the way I played it; trading as if the IMF countries were making sure certain currencies don't fall too far, celebrating a bailout. Bet Asia sells them off again tomorrow.

Just an observation from a small timer, to say that I blame the IMF for essentially creating a forex Alice-in-Wonderland day. Maybe I'm just a newbie who got lucky today and it's nothing but coincidence - I'm open to that. But FWIW, trading the markets opposite to what I would think they *should* have been (according to the reports or any fundamentals) really worked out on the heels of this IMF thing. If that makes any sense at all...

Madcow's picture

But where does the IMF get that kind of money.  And where does that money come from??

Hephasteus's picture

If it's used for something thats trackable it comes from the member states who loan the IMF money for Special Dicking Rights. If it's not something the want tracked it comes from drug sales, counterfeiting etc.

JW n FL's picture
by Madcow
on Tue, 04/13/2010 - 07:53
#297931

But where does the IMF get that kind of money.  And where does that money come from??

 

Madcow,

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/paulson/IMF%20bailout%204.12.jpg

Sincerely, JW

JacksWastedLife's picture

It is just a business. Money lending. They lend money and earn interest rate. They even dictates rules, how bailed economy should be adjusted to be sure the money will be paid back. And it seems like no one wants to default against IMF. Even savage Russia have paid back the debt of USSR.

JW n FL's picture

Shut up and buy Gold Bitch!

george22's picture

Hmmm... when I was a kid I was told not to be a PIIGS... but apparently being a PIIGS is a great thing, as you can bail your ass out with empty promisses. Just wait a little longer and you'll even see PIIGS fly. Greece had gone FUBAR because it has too much debt. And what did these geniuses do? They "stabilized" Greece by allowing it to take even more debt. The best and the brightest at work, I tell ya! Hold on to your pants folks, the God of Arithmetic will evenetualy come back and when it does, your cornhole will be sore for at least a generation.
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doublethink's picture

 

This is the perfect opportunity for China to sell USDs for SDRs, ridding itself of an increasingly worthless currency and stocking up on what may become the future reserve currency. And better yet, as more pledges are sought by the IMF from member countries, the greater the role played by China and the other BRICs. This is not about money; it's about power.

 

JW n FL's picture

http://www.imf.org/external/np/tre/activity/2010/040810.htm

The role of the SDR

The SDR was created by the IMF in 1969 to support the Bretton Woods fixed exchange rate system. A country participating in this system needed official reserves—government or central bank holdings of gold and widely accepted foreign currencies—that could be used to purchase the domestic currency in foreign exchange markets, as required to maintain its exchange rate. But the international supply of two key reserve assets—gold and the U.S. dollar—proved inadequate for supporting the expansion of world trade and financial development that was taking place. Therefore, the international community decided to create a new international reserve asset under the auspices of the IMF.

http://www.imf.org/external/np/exr/facts/sdr.htm

LongShortSally's picture

When the heck is Goldman gonna pay for it's role in this mess?  Tired of my tax dollars going to preserve Goldman's bonuses.

JW n FL's picture

Bend over and take it like a man.

Quantum Noise's picture

Hmmm... when I was a kid I was told not to be a PIIGS... but apparently being a PIIGS is a great thing, as you can bail your ass out with empty promisses. Just wait a little longer and you'll even see PIIGS fly. Greece had gone FUBAR because it has too much debt. And what did these geniuses do? They "stabilized" Greece by allowing it to take even more debt. The best and the brightest at work, I tell ya! Hold on to your pants folks, the God of Arithmetic will evenetualy come back and when it does, your cornhole will be sore for at least a generation.

trav7777's picture

IMF = lend them money to lend it back to you.

DOUBLE PLUS GOOD HAPPYFUNJOY

Observer's picture

The countries that need assistance should just write IOUs to themselves and use them as internal payments for local production that can used internally and exported as well. the hard currency generated can then be used to pay off debts. This will ofcourse mean that the citizens of these countries can't travel abroad for a few years because a large proportion of hard currency will be used to pay off debts and pay for imports but it is certainly better than starving.

JW n FL's picture

by Observer
on Tue, 04/13/2010 - 13:37
#298562

 

The countries that need assistance should just write IOUs to themselves and use them as internal payments for local production that can used internally and exported as well. The hard currency generated can then be used to pay off debts. This will of course mean that the citizens of these countries can't travel abroad for a few years because a large proportion of hard currency will be used to pay off debts and pay for imports but it is certainly better than starving.

 

Observer,

                         As wonderfully logical the thought is… The real problem with this protectionist point of view is that minus Global Trade… we lose the New World Order which was created to be profitable, thusly anti-war for the big boys any way… Think G-20. Sell the little guys arms to let them undermine themselves and thusly maintain market share… Global Trade is Global peace… the one BLARRING! Issue is the old market models don’t work, the cost of transportation is now a real issue. So the Trade imbalances are rooted in transpo costs… It is not Peak Oil… there is lots of oil in lots of places (to quote a really fucking kool Canadian Jew) http://www.youtube.com/watch?v=wYuLjGQQ-jg&feature=PlayList&p=C1B06538A32767DF&playnext_from=PL&index=132

And then watch this one…. http://www.youtube.com/watch?v=JaF-fq2Zn7I&feature=PlayList&p=C1B06538A32767DF&playnext_from=PL&index=161

 

And then read… http://www.zerohedge.com/article/us-military-warns-oil-shortages-2015-significant-economic-and-political-impact-especially-we make sure you read the JOE report for 2010.. the pdf at the bottom of Tyler’s BRILLIANT work.

And then ponder this…

 Utility Output Slows the Increase in Industrial Production

http://www.realclearmarkets.com/blog/Industrial%2520Production%2520March%25202010.pdf

 

Cold people use heat… so what doesn’t add up for you? Anything bothering you? Did you like the thought of understanding what you considered to be the real issue more than you like the thoughts of the true issue?

Be well, JW

              

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shawnlee's picture

I don't want to alarm anybody, but there's a bunch of red on the Asian indices right now. Not sure what it means, and I'm sure it will clear up by morning, but it might bear watching. I'm sure its nothing to worry about though. With those massive long call positions on the big US financials, I can't imagine anything going anywhere but up into this Friday.

Not bad

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shawnlee's picture

I don't want to alarm anybody, but there's a bunch of red on the Asian indices right now. Not sure what it means, and I'm sure it will clear up by morning, but it might bear watching. I'm sure its nothing to worry about though. With those massive long call positions on the big US financials, I can't imagine anything going anywhere but up into this Friday.

Not bad
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george22's picture

Laws do not apply to the elite or the rulers. Whether it be Tedd Kennedy and Mary Jo Kopechne or Congress passing a tax law they call health care and then not having to abide by it - ever. i agree,Laws do not apply to the elite or the rulers. Whether it be Tedd Kennedy and Mary Jo Kopechne or Congress passing a tax law they call health care and then not having to abide by it - ever. i agree,AC Condenser

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