Does The I In IMF Stand For Idiot?

Tyler Durden's picture

All morning we have been blasted with 2011 deja vu stories how the IMF panhandling effort has finally succeeded, and how Lagarde's Louis Vuitton bag is now full to the brim with $400 billion in fresh crisp US Dollars bills courtesy of BRIC nations, and other countries such as South Korea, Australia, Singapore, Japan (adding $60 billion to its total debt of Y1 quadrillion - at that point who counts) and, uhh, Poland. From Reuters: "The Group of 20 nations on Friday were poised to commit at least $400 billion to bulk up the International Monetary Fund's war chest to fight any widening of Europe's debt crisis." We say deja vu because it is a carbon copy of headlines from EcoFin meetings from the fall of 2011 in which we were "assured", "guaranteed" and presented other lies that the EFSF would surpass $1 trillion, even $1.5 trillion on occasion, any minute now. Alas, that never happened, and while we are eagerly waiting to find out just what the contribution of Argentina will be to bail out Spanish banks (just so it can expropriate even more assets from the country that rhymes with Pain), we have one simple question: does the I in the IMF stand for Idiots? Why? Because this is merely yet another example of forced capital misallocation, only this time at a global scale.

Consider that the money used to bail out European banks, and thus do nothing to solve their solvency issues, but merely plug another liquidity gap, is being forcefully taken away from trade surplus countries (i.e., BRICs and assorted hangers on) which are lucky to generate this money for one simple reason: by ordinarily recycling their trade surplus, they fund their trading partners' purchasing power, or rather the purchasing power of Joe Sixpack who wants to buy the latest and greatest iCrap, in the form of vendor financing used to buy Treasurys, primarily those of the US, and keep inflation rates low. Now, instead of money flowing to where it is most needed, the IMF, as a central planners' central planner, comes along and tells its members that going forward it will tell them what is in their best interest, and if possible to please fund a lost cause: namely Europe in its current configuration.

Where have we seen this before? Oh yes: here "How The Fed's Visible Hand Is Forcing Corporate Cash Mismanagement" in which we described in excruciating detail how yet another side effect of central planning, namely ZIRP, is forcing US corporations to misallocate capital from proper capital allocation targets like CapEx, and even M&A (with its far lower IRR), and instead to deploy it to fund dividends, which is the most short-sighted use of cash imaginable. Just because Bernanke said so.

This time around, we are starting to see precisely the same thing happen at the sovereign level, and while we do not know yet just what the global trade implications will be from international capital misallocation, we know one thing: by being forced to put money into black hole A (f/k/a Europe), the BRICs will be unable to invest cash into other projects, and/or recycle it by funding deficit countries' trade deficits. We do know that the consequences will have a dramatic ripple effect on global capital allocation, most certainly not limited to US treasury funding needs.

Because if Brazil, India, China and Russia, not to mention Japan, which recently has been the second most aggressive buyer of US paper, are unable to recycle their trade surplus back into the US (and instead have to fund another quarter's losses for UniCredit, BBVA, and other failing institutions), the one question we have is: just who will buy US Treasury paper?

And, parallel to that, does this make the NEW QE more or less probable?

And, finally, is the IMF's entire ploy merely yet another way to force Bernanke back into the reliquification parade... Because remember: the only two beneficiaries from monetization are i) banks (of course), and ii) the US Treasury, which knows it will find a buyer for its deficit funding paper come hell or high water, and thus provide yet another smokescreen for American politicians to continue their ruinous ways.

In retrospect, the I does not stand for Idiot... More like Indentured.

Finally, here is Peter Tchir with his one quick "firewall" thought:

The firewall should be helping Spanish and Italian bond yields the most, yet Spanish yields were higher across the board today, and Italian bonds 5 years and out were all weaker.  If the firewall doesn't help those bonds, why should it help the market so much? 

We saw in Greece, that switching who a country owes money to doesn't solve a problem, and in fact makes it far worse for any private sector holder silly enough to think things get better.

If a patient is given a drug to cure cancer, and the cancer isn't affected, why would you think the patient is better? 

This firewall fixes nothing.  These countries need to reduce their debt load, and sooner rather than later is better.  It will come in some form of PSI, and banks will pay the price for prior mistakes, but with ECB and EFSF support, will be given every chance to make the same mistakes again, but hopefully for their new equity investors.

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CClarity's picture

In a word "yes". IMHO. Eye think so. Aye Aye!

Unprepared's picture

I'm more interested in what the 'F' stands for.

Manthong's picture

Yeah, that works, but upon further reflection, iniquitous seems particularly well suited.

Xkwisetly Paneful's picture

Just for clarification purposes are governments that refuse to spend within their means mis allocating capital?

nahshal's picture

what is this imp ...i'm sorry i don't know what you say....

 

 

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guitar flash

 

 

 

Decolat's picture

Imaginary Monetary Fraud.

A thief is only an idiot if they're caught.

These thieves still run free.

palmereldritch's picture

It's all good.

In light of the current bad press they will soon be re-branding and riding the AAPL wave as a smartphone App:

iMF

I think that says it all.

vmromk's picture

No, it stands for INSANELY INCOMPETENT.

Only Bernanke is "graceful" enough to carry the moniker IDIOT.

 

Stuck on Zero's picture

How is it that the "idiots", "incompetents", "fools" etc. that run the Federal Reserve, World Bank, IMF, and so on are insanely rich and you guys are all poor?

YesWeKahn's picture

IMF: Idiot mother fu cker

ECB: Extreme con bitch

FED: fu cking elegant dick

BlueCollaredOne's picture

No need to breakup the word FUCK.  This is fight club, free speech is observed

John Wilmot's picture

International Mother Fuckers

Entitled Continental Bitchez

Bend Over Japan

Bend Over England

Fuck 'Em Discretely

Just Pay Me

 

 

 

 

 

Element's picture

ICBM  = Inter Continental Bitchez Meeting

 

G20

 

AlaricBalth's picture

IMF - Incompetent Monetary Fraud

Zero Govt's picture

Incompetent is almost saying the same thing as Idiot M.F.

...both work in this context

I've a feeling Louis Vitton is going to sponsor the village idiots (global bankers) meeting in Davos next year after Christine Lagarde waved her empty one about the other day ...that'll be sooo funny ..the village idiots may not get the joke though

 

Turin Turambar's picture

I prefer IMF = International Monetary Fraud

CClarity's picture

IMF - I Must Finance, I M Fatal, I M Flawed   BBBB Bail Bad Busted Banks

battle axe's picture

The "I" should be replaced with a "$", because they never seem to have enough of it, they need more and more and more....

randomdrift's picture

IMF --- Self-identified Mother F-er 

hedgeless_horseman's picture

 

 

Profits schmoffits.  Why are the other fins selling BAC today?  This is not the agreement.  A circle jerk only works when...

sabra1's picture

peter, the IMF was created to increase the debt loads of countries. the pleebs will gladly pay all kinds of taxes to rectify this problem!

Ted Baker's picture

NOT TYLER IT STANDS FOR INSOLVENCY AS DOLLARS IN TODAY'S WORLD ECONOMY ARE WORTHLESS

Ted Baker's picture

SOON WE WILL SEE LAGARDE SWITCHING FROM CARRYING A LOUIS VUITON BAG TO A LOUIS VUITON TRUCK TO CARRY ON MORE AND MORE DOLLARS

Bag Of Meat's picture

WHAAT?? I CAN'T HEAR YOU SPEAK UP

Whiner's picture

Illusory Money Fun. Keep stacking for your children, Bichez

SheepDog-One's picture

Hell I just think theyre completely out of ideas at this point.

Dr. Engali's picture

No they have one more... just have the ECB write themselves a check for 4 trillion dollars the debt will be wiped out and their balance sheet will be back to zero. Then they can start all over again. Come on SheepDog you need to get with the times on modern monetary theory.

 

And if that doesn't work buy 450 million rounds of bullets for "target practice"

SheepDog-One's picture

$4 trillion? Well hell why not just write a check for $500 trillion then?

Dr. Engali's picture

Now you're just being silly. Didn't you read a few posts back where professor Karl Whelan said if the Euro broke up then the Bundesbank would just right themselves a check and wipe out the debt? And to top it off there would be no inflation or no cost to the tax payer.

SheepDog-One's picture

Yep, theres always more fake money available to extend and pretend.

davood's picture

Don't know what the "I" in IMF stands for, but IMF = "I aM Fucked".

wisefool's picture

snarc: Timmay says the IMF loans are backed by IMF gold. Timmay says IMF gold might also be UST gold. Timmay says some UST gold might still be in the ground. The ground might not nessecarily be US ground. Timmay says ground wires are made from Copper. But with technology, they make wires out of aluminum in china for free. Timmay likes to use hypothesis like a smart scientist.

Dick Darlington's picture

Poland giving 8 billion, just can't stop laughing. Huge budget and current account deficits, LARGEST net receiver of EU funds (Greece used to be the chosen one) and they have USD 30 billion credit line from IMF themselves.

http://www.imf.org/external/np/sec/pr/2011/pr1115.htm

Deep79's picture

Do not worry my friend. I believe the market is at the beggining stages of FINALLY reliazing all this smoke and mirrors will not work and punish the central banks.

You can only lie for so long, and 3 years is pretty damn long. 

SheepDog-One's picture

Lies are worthless when theres no one left to believe them.

NotApplicable's picture

Wanna bet Benron loaned it to them? (and many of the others)

Dr. Engali's picture

 

Does The I In IMF Stand For Idiot?

 

Do we really need to ask that question?

optimator's picture

And I'm "poised" to get an interest free loan from the Fed for me to play with.

Perhaps the "I" in IMF stands for the one IMF nation that doesn't contribute, Israel.