Dominique Strauss-Kahn

IMF Eliminates Borrowing Cap On Rescue Facility In Anticipation Of Europe Crisis 2.0; US Prepares To Print Fresh Trillions In "Rescue" Linen

Back in April, when we discussed the inception of the IMF's then brand new New Arrangement to Borrow (NAB) $500 billion credit facility, we asked rhetorically, "If the IMF believes that over half a trillion in short-term funding is needed imminently, is all hell about to break loose." A month later the question was answered, as Greece lay smoldering in the ashes of insolvency, and the developed world was on the hook for almost a trillion bucks to make sure the tattered eurozone remained in one piece (leading to such grotesque abortions as Ireland, whose cost of debt is approaching 6%, funding Greek debt at 5%). Well, if that was the proverbial canary in the coalmine, today the entire flock just keeled over and died: today the IMF announced it "expanded and enhanced its
lending tools to help contain the occurrence of financial crises." As a result, the IMF has as of today extended the duration of its existing Flexible Credit Line (FCL) to two years, concurrently removing the borrowing cap on this facility, which previously stood at 1000 percent of a member’s IMF quota, in essence making the FCL a limitless credit facility, to be used to rescue whomever, at the sole discretion of the IMF's overlords. Additionally, as the FCL has some make believe acceptance criteria (and with countries such as Poland, Columbia, and Mexico having had access to it, these must certainly be sky high), the IMF is introducing a brand new credit facility, the Precautionary Credit Line (PCL), which will be geared for members with sound policies who
nevertheless may not meet the FCL’s high qualification requirements. In other words everyone. In yet other words, the IMF as of today, has a limitless facility to bail out anyone in the world, without a maximum bound in how much is lendable. One wonders who would be stupid enough to take advantage of the gullibility of IMF's biggest backers (the US), to borrow an infinite amount of money for any reason whatsoever... And just what all this means for the imminent explosion of the amount of money in circulation...Not to mention the brand new Ben Bernanke smokescreen of having a new justification to print a few trillion dollars when Europe unexpectedly collapses yet again.

Morning Gold Fix: July 19, 2010

The first Gold backed Currency was announced last week. This is the road to ruin for the Dollar as global reserve currency: Slow incremental acceptance of alternatives form seemingly meaningless areas of the world. Ranks break first where there is little to lose by change. Last in places that cannot afford it.

IMF Seeking Boost In Lending Cap By $250 Billion To $1 Trillion

In the latest sign yet that things in the world are roughly 25% worse than expected (give or take), the FT reports that the IMF will seek an imminent rise in its lending cap from $750 billion to $1 trillion to build safety nets that could prevent financial crises. “Even when not in a time of crisis, a big fund, likely to intervene massively, is something that can help prevent crises,” Dominique Strauss-Kahn, the IMF managing director told the Financial Times. “Just because the financing role decreases, doesn’t mean we don’t need to have huge firepower ... a $1,000bn fund is a correct forecast.” At this point it is glaringly obvious that without the explicit support of the various central banks and of such fake international but really US organizations as the IMF, the already prevalent liquidity crisis would simply destroy the world. The troubling theme is that instead of taking away incremental worries, we have now gotten to the point where one bailout, like a butterfly in China, merely requires 10 more down the road. Alas, instead of a virtuous Keynesian dynamic, this is anything but.

John Taylor Says The Euro Is Like A "Headless Chicken", States Prop Trading Makes Up 80% Of Goldman's Revenue

John Taylor is his usual painfully forthright, objective and candid self in this must read Capital.de interview in which he analyzes the prospects before Europe (not good), and compares the Euro to a "chicken, with a severed head running across the yard before it dies." Taylor believes that so long as Europe continues to exist in its make believe monetary never-never land, any efforts to bring some form of fiscal rationality in the form of austerity, will be underminded by the continuing lies on the monetary and financial stability fronts. This fits in with Roubini's recent admonition that Obama should finally start treating Americans as adults. Yet in light of recent evidence that Obama has taken more vacation time and golf breaks than even his predecessor, any chance for him to be taken seriously may be long gone. Furthermore, Taylor notes that instead of the ECB demonizing FX traders like himself, the bureaucrats should be thanking him, as he is one of the few voices of reason, and just like in the Asian crisis of 1997, those who listen to him ultimately prevent major capital losses (kinda like what ZH suggested to those invested in Greek bonds some time ago, to the utimate chagrin of an overly defensive RBS). Yet the most notable observation to us at least, is that Taylor confirms our previous statement that Goldman is lying about the contribution of prop trading to its top line. Of Godman's revenue, Taylor says: "80 percent of the revenues which now come from proprietary trading of the bank. No matter what happens, Goldman Sachs always profits." Compare this to our statement from December 2009: "Goldman's head of PR claims the Goldman's prop trading accounts for
only 12% of net revenue. Zero Hedge disagrees, and we would like to
pose a question to Mr. van Praag which we hope Goldman will answer for
us in order to refute our observation that Goldman may be disingenuous
in its public statements.
" Goldman's subsequent response to us did nothing to refute our allegation: "We’ve said publicly that prop trading represents approximately 10% of this year’s reported net revenue.  We generate the vast majority of our revenue in FICC by facilitating trading activity for our clients and nearly all our revenues in FICC are “due to capital at risk” (your phrase)." Shortly after this exchange, finally bringing due attention to Goldman's prop trading operations, the Volcker Rule appeared, and all else equal, will likely impose major restrictions on Goldman's top line, which could be as big as an 80% cut.

Todd Harrison Muses On The Rise of the East and the Downgrade of the West

Earnings season has arrived and the eyes of the world are on corporate America as they share their fare on the state of affairs. After a tenuous second quarter stretch -- one that could have been entirely worse given the sovereign situation -- the market slapped on a brave face for reporting season, rallying 7% since the third quarter began and inching within a kitten’s whisker of the flat line. As analysts sharpen their #2’s and investors wait with bated breath, the other side of the world stirred this week when China’s leading credit agency stripped America, Britain, Germany, and France of their AAA ratings, accusing Anglo-Saxon competitors of ideological bias in favor of the west, according to the Telegraph UK. So what, you say? Could this be a one-off rant? Au contraire Mon frére, Dominique Strauss-Kahn, chief of the IMF, validated the view by offering, “Asia’s time has come.” - Todd Harrison

IMF Preparing For Bailout Cataclysm Part 2

From Bloomberg: "IMF is working to develop a precautionary credit line, MD Dominique Strauss-Kahn said." Last time they did the same with the New Arrangements to Borrow (discussed here), on April 12, a $1 trillion bailout followed. Get ready folks. Europe bailout two is coming.

smartknowledgeu's picture

Without getting into the politics of who’s right and who’s wrong in the Thailand conflict, let’s investigate an extremely important and underlying current of this conflict and every major economic conflict that is occurring in the world today - how a fraudulent global monetary system so significantly contributes to conditions of oppression and class division warfare.

Evans-Pritchard Reacts To The Passage Of The Cornyn Amendment For Blocking Indiscriminate IMF Bailouts

Yesterday we highlighted the passage of the Cornyn Amendment to FinReg which essentially makes US participation in IMF loans to countries which have greater debt than GDP very difficult if not impossible. The amendment has received little if any press, until this morning, when Telegraph's Evans-Pritchard savages what it means for a now partially defunct Europe. "This is obviously aimed at Greece, which will have a debt of 130 per cent by the end of this year. The debt will rise to 150 per cent by the end of its the rescue/death package, leaving Greece in a worse position than before. The IMF share of the Greek bail-out is 30 times quota, more than double any other rescue in the history of the Fund. There is a very strong suspicion in Washington that the IMF is being misused by French chief Dominique Strauss-Kahn – French presidential candidate in waiting – to support ideological purposes regardless of economic logic or sanity. This can (and in my view most likely will) destroy the credibility of the Fund itself unless the US and Asians can wrench the institution back from the Europeans." As more people realize the ramifications of this Amendment, we expect the IMF to increasingly lose credibility as a backstop to any upcoming European risk flareouts.

Germany, IMF, OECD, World Bank, WTO, ILO Joint Press Release On Ponzi Perpetuation

Well, if the Senate can say it, so can we - this shit is now beyond ridiculous and has hit accelerated Goldman prop selling dimensions. Below is a joint press release by German Chancellor Angela Merkel, OECD Secretary-General Angel Gurria, WTO Director-General Pascal Lamy, ILO Director-General Juan Somavia, IMF Managing Director Dominique Strauss-Kahn and World Bank President Robert Zoellick. For the most this bureaucratic essay is worse even than overflowing fecal matter, but this particular statement from the pathological Keynesianites gets a 10 even from the French judgein both hypocrisy and braindeath: "Only a sustainable global economy can continue to guarantee growing wealth without jeopardizing the chance for future generations to meet their own needs." And how do we sustain it? Why, by having the developed world issue half a trillion in debt each and every month.

Deutsche Bank: "Greece Will Need To Activate Both IMF And EMU Packages Within The Next Month"

And here we were thinking that a $2 billion successful Bills auction, (not really) backstopped by everyone and the kitchen sink would sound the all clear on the country with the 16% budget deficit. Alas, with the 10 Year still at 350 bps over Bunds nothing at all has changed for Greece. And here comes Deutsche Bank, which has billions at risk among the PIIGS, saying Greece will very likely be forced to protect its creditors asap, or within the next month, whatever comes first if it has no market access. Alas, as real Greek bonds are still trading just south of 7%, this pretty much means the market doesn't care about the country's long-term prospects, which in our books is equivalent to "absent market access" to anything more than oilve oil and Ouzo. And the cherry on top: several European governments will be forced to have a parliament vote to approve the bail out. It appears the market still has not figured this virtually certain collapse trigger to the rescue package. When it does, the end game for Greece will truly be there.

Meet Greece's New Saviour

Many have asked why all the consternation about the IMF bailing out Greece. After all, as Bob Pisani claims, it is headed by some woman called Dominique Strauss-Kahn? That name sure doesn't sound like it came from Alabama. So what is the big deal?