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The IMF Proudly Presents.... "Threat To The International Monetary System" Part Three
It's that time again when the IMF has just telegraphed something very big and very bad is about to happen. But let's back up, and paraphrase our post from March: "Back in April 2010, before Waddell and Reed sold a few shares of ES, effectively destroying the market on news that Europe was insolvent, we made the following observation: "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." Little did we know that our conclusion "something big must be coming" would prove spot on just a month later after Greece, then Ireland, then Portgual, and soon Spain, Italy, Belgium, and pretty much all other European countries would topple like dominoes tethered together by a flawed monetary regime. Well, based on news from Dow Jones we can now safely predict the following: "something bigger must be coming." The specific reason for this prediction was the following: "the International Monetary Fund is expected to soon activate a special funding pool that will boost the fund's ability to prevent or resolve economic crises." Sure enough something bigger came, and then some: Greece received its second bailout package about 4 months later, only to see the entire Eurozone hang by a thread following the political fallout that has since ensued. Well, it is time to shift from the comparative to the superlative: "something biggest must be coming."
According to Dow Jones the "International Monetary Fund will likely re-activate a $580 billion resource pool in coming weeks to ensure it has funds to help cover Europe's worsening sovereign-debt crisis, according to several people close to the matter." Why is this a big flashing red light? "According to the IMF, the pool of supplementary resources are only to be activated when "needed to forestall or cope with a threat to the international monetary system." So it is settled: just like on the previous two occasions, the biggest load of feces yet is about to hit the fan. The only real question is: how many trillions will the real global backstopper, China, be forced to match this massive expansion of the former world rescuer with... Also, what comes after "biggest"?
From Dow Jones:
The IMF activated the so-called New Arrangements to Borrow in April of this year for a six-month period. The IMF's board, which met informally on the issue late Friday afternoon, would have to approve re-activation of the resource pool if the fund wants to tap it beyond September.
"A large majority of the board members are in favor of re-activating the NAB," as a precautionary measure, one of the people said. The board is scheduled to formally approve activation next Friday, the person said.
David Lipton, first deputy managing director at the IMF, said recently in a private meeting that keeping the NAB available may be necessary in coming months given Europe's debt meltdown, people familiar with the matter said. The crisis is entering a dangerous new phase as the risk of Greece defaulting rises and Italy and Spain's sovereign debt has come under attack.
Lipton didn't specify whether the facility needed to be tapped for a specific country, the people said. The IMF declined to comment.
According to the IMF, the pool of supplementary resources are only to be activated when "needed to forestall or cope with a threat to the international monetary system." The pool can only be activated by the board after IMF managing director makes a special request.
And while America is guaranteed to foot the bill once again (with China below the US in terms of priority payments despite its much higher cost basis and implicit investment into Europe), it will do so only on a provisional basis - none of the biggest IMF contributors have enacted the formal quota increase. Which means that the US will be stuck in legal limbo when Europe pulls a Greece, collects American cash, and then finds it has no collateral to pay back with.
So far, the IMF has already allocated nearly $7 billion from the NAB. In total, the NAB can provide up to about $580 billion in supplemental resources to the IMF, but only around $331 billion is currently available for use. Based on how much cash the fund can commit to within the next year--around $394 billion--without the special kitty, the IMF would only have around $60 billion on hand.
The special resource base, funded through bilateral loans from countries such as the U.S. and China, was designed as a temporary measure. It is expected to be largely replaced by an agreement late last year by the fund's board of directors to increase quotas, the share of contributions that each member must give to fund IMF lending.
The board of governors agreed in December to roughly double quotas from around $375 billion to around $750 billion. But out of the 187 member countries, only 17 have legally accepted the increase, including Japan, the U.K. and Korea. Most of the countries with the biggest quotas, such as the U.S., China and Germany, haven't yet gone through the legal process, such as parliamentary or congressional approval, need to hand over their promised dues.
There is little we can add here that was not said during one of the two prior massive IMF intervention attepts, both of which predicted a huge global shake up within months.
Which is why we will end this post with the same words we ended the previous iteration in the IMF global rescue series:
"US taxpayers: our condolences."
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Why should USA taxpayers worry? Barry & the Repugnicans are cutting taxes and just printing more greenbacks.
No worries Mon.
Murdoch encrypts attempt to post link.
See Barron’s on-line 9/08/11 :
“Is Plaza Accord 2.0 coming?”
By RANDALL W. FORSYTH
“Morgan Stanley suggests internationally coordinated monetary easing as in 1985 could lie ahead.”
Dissention may scuffle this weekend; but G - 20 meets for 3 days starting immediately (9/22) after FOMC.
Damn - they wont let me make an honest living being short these markets!
There is nothing wrong with fiat money because money is a creature of the law, not a commodity nor debt/credit as all the ignoramuses believe today. The thing that is wrong with our current financial system is that our governments handed over the supernal prerogative any sovereign can exercise, viz. the power to create and control the money supply, to a bunch of private banks/privately owned central banks.
Do we really expect greedy individuals not to abuse the most powerful of powers for their own benefit?
Actually there is something wrong with fiat currency, it is a debt instrument and nothing more. A dollar bill is a treasury with a zero coupon. Handing over the right to print the currency to a private bank was an attempt to prevent the debasing which inevitably occurs. As we can see the private bank does not prevent the debasing, it may change the timeline. See, for example, Monetary Regimes and Inflation by Bernholz or Fiat Paper Money by Foster. History is unequivocal. Fiat currencies inevitably become instruments of policy and then lose the capacity to stores wealth, or work. Many hard currencies are debased too, but that is self-correcting and does not result in hyper-inflation.
The illusion that fiat currency is not the problem is prevalent I think because of the timeline. A well-managed pure fiat currency seems to max out at about 60 years, enough for people to forget. That in fact may be why it lasts 60 years, we proceed down the forgotten road again.
Good answer DonutBoy. One very scary question is, how can people have such unbelievably stupid things, and not see problems and corruption that is as clear as day?
"something biggest must be coming" Thats what she said bitchezzzzz.
Nothing comes. Last few times, the IMF apparently saved the system with its emergency reserves, so they will do this time again. Don't see any troubles. Merry Christmas.
The "something bigger" will eventually come alright
Revelation 13:16 And he causeth all, both small and great, rich and poor, free and bond, to receive a mark IN their right hand, or IN their foreheads:
Revelation 13:17 And that no man might BUY or SELL, save he that had the mark, or the name of the beast, or the number of his name.
LewRockwell.com weekend…
Celente Forecasts Winter of Discontent; October Will Be Month of the Big Unraveling
by Mac Slavo
SHTF Plan
Recently by Mac Slavo: John Williams Forecasts: 'Catastrophe Ahead'
Leading trend forecaster Gerald Celente, of the Trends Research Institute, discusses a host of issues and topics with Infowars Nightly News host Alex Jones. Among other things, Celente says he’s never seen a summer like 2011, and warns that this Winter will not be a good one for Americans.
Gerald Celente On Collapse and Depression: When is it going to collapse? As I’ve said, I’ve never seen a summer like this. I think we’re going to see the Winter of Discontent… You’re going to start seeing an unraveling more and more every day as you watch the news. So, October is my month, and it’s only a guesstimate, that we’re going to see the big unraveling. …
Look at housing. How many times did they say the real estate market is turning around. It’s worse. It’s worse than it was during the Great Depression, and it’s only going to get worse.…
We’re seeing a collapse happening. It’s an economic collapse worldwide.
China’s not going to make it out of it, Brazil’s not going to. That old saying ‘when America sneezes the world catches a cold’ – we’re the largest consumers hands down. We and Europe are going under.
What we’re telling people is, know where your money is, because we’re going to see bank failures one after another.
?Even if it doesn’t happen in October, because you don’t know what phony schemes they’re going to come up with, it’s going to happen eventually. And, that’s why I’m fully invested in gold…
On Civil Unrest:
Look what’s going on in the UK. Look at the riots – they called them hooligans and criminals. It’s the same thing that’s happening around the world. And it’s going to happen here in the U.S.
You know my saying, ‘when people lose everything, and they have nothing left to lose, they lose.’ And they’re losing it.
Use the UK as your model. They’re taking away all civil liberties.
What happens is, the more the government loses control, the harder they are going to crack down on us.
So, when you see a society where so many young people have no education, they can’t get jobs, they’re wacked out on drugs… you think you’re going to see a lot more violence?
…The response is going to be ‘we gotta crack down on crime.’ The worse crime becomes, the harder they’re going to crack down on us.
They’ll use it… just as the United States used 9/11 to rape us of our Constitutional rights.
On Fear and Hysteria:
Look for a false flag attack – be it terror, or something along the line of fear and hysteria. Things are going to get very ugly. Crime is going to escalate at levels we’ve never seen before. The presstitutes are going to keep coming out with these phony figures, just like they do with inflation, just like they do with unemployment. They’re going to come out with them in crime.
On SHTF Planning:
You better learn how to protect yourself. Gerald Celente’s three G’s. Gold, Guns and a Getaway Plan. Because it’s not going to be nice.
Watch the full two-part interview:
http://www.lewrockwell.com/slavo/slavo56.1.html
Did you see the Longshoreman's riot this week?
The violence inherent in the system/unions was very evident.
I read about it yesterday on Nathan’s Economic Edge. Here’s how Nate put it:
And thus it’s safe to say that “other events” are coming. Are you scared? The boogyman ghost of 9/11 is threatening you know! Better spend a few hundred billion more that you don’t have. Maybe a few more false pretense wars for good measure, yeah, that’ll save us all.
Those who know what’s real and what’s not are not scared. They do not participate in the criminal’s “markets.” They don’t hang out on Wall Street. But those nasty “other events” can and will affect us all, that’s why in the end it will pay for those who got real.
Those “other events” are well in motion if you are paying attention. Of courses Europe is crumbling with “other events” spinning out of their impossible math tornado, and as I look at my local county newspaper this morning, it is running a headline that reads “Officials chase unconfirmed al-Qaeda bomb plot.” Not only that, but there’s another article discussing how 500 Longshoremen in Longview, Washington are resorting to their own “other events.”
When was the last time you heard of wildcat strikes that included kidnapping guards? Evidently this storming of the facility was in response to seeing their labor union leader being hauled off by police who are doing the dirty work of management – and don’t even realize how they are being used. Sounds kind of like the 1930s, doesn’t it? There are a lot of parallels, only this time it’s far worse – the math was fixable then, it is no longer, at least not within the central banker box that we’ve all lived our lives in. A new box is coming. (END)
http://economicedge.blogspot.com/
"something biggest must be coming."............... must be real bad, like Obummer winning in 2012!!
It's about time all this idiotic bullshit started to implode. Fuck the IMF RAW!
Who are these people... Disband the IMF now
Money isn't money any more. It is just bits and bytes of information about who would own it if it did exist. Money is just a subset of Information.
Assets are increasingly intangible, dependent on Information wholly or in part to give them marketplace value. Entire industries exist with only minor tangible assets underlying massive intangible assets (Google, Microsoft and Apple come to mind). Their value is almost solely based on Information organized into its useful form, Knowledge.
Even tangible assets like real estate are not marketable without Information to back them up. A good example is the loans Fannie and Freddy are suing the big mortgage originators over - the legal documents are valid and binding but the "chain of title" was broken when they were securitized. Without that Information, the assets themselves are not marketable and therefore worthless. Losing the information not only left the GSEs holding the bag, it clouds the title of the collateral. Without information, there is no asset in the traditional sense.
The point of all this is that the global financial system is in transition. The old rules and accounting are no longer valid. New rules and accounting have not developed. It is a chaotic time.
So how does a person 1) survive and 2) prosper in chaos?
My GUESS - The new world that grows up through the rubble of the old world will be based on Information synthesized into Knowledge. The winners will be those who can separate Sense from Nonsense by adding new information and discarding invalid information at lights speed. The new rulers will be those who can transform Information into Knowledge and keep it current as the underlying information changes.
The government and central banks cannot do this because the situation changes faster than they can make decisions. They are years behind the curve and losing ground every minute. That is why they look so foolish applying decades old solutions to situations that change in nanoseconds.
The world has moved on.
Cordially,
TwoHoot
PS - Just to piss of the gold bugs, information about who has gold and where it is may be more valuable than the gold itself. (My day isn't complete until I have pissed of a large number of people)
"Money" has always been information. It is not a commodity or a resource--it is a theoretical abstraction we use to REPRESENT a commodity or resource.
If it's "real"--something like gold or wheat--it's not "money." It's a commodity we're bartering with.
As to what's going to happen--this is no time for Sci-Fi speculation. It should pretty obvious that the current economic structure has made government obsolete.
We smash the state or we smash the global financial system. They are foundationally incompatible.
To thrive, just bet on BOTH of them collapsing and you'll do very well.
After we smash the state, we keep chaos from overwhelming everything by.... I forget what comes next next.
The modern versions of six-shooters.
Yikes. "Something Biggest This way Comes." And at Halloween, no less.
Will it be the IMF in a frightening balance sheet with holes to see out of ? corroded Gold? the Swiss franc and the euro jumping off the Matterhorn hand in hand?, rancid PIIGS in a blanket? The Dow's severed head and shoulder top? Bloody margin requirements? Bernanke's pirate costume? bankster vampires? Monster QEs? Scary but invisible M3?
Or will the 4th Reich, instead of conquering the world, just not save it?
What's the Biggest scare, biggest threat?
Can I say Peak Oil?
Can that be considered a threat to the International Monetary System? Or am I just trolling?
#14 Stephane Deo, Paul Donovan, and Larry Hatheway of Swiss banking giant UBS: "Member states would be economically better off if they had never joined. European monetary union was generally mis-sold to the population of the Europe."
http://theeconomiccollapseblog.com/archives/20-quotes-from-european-lead...
wonderful
Updated SP500 monthly chart at blog.
My long term indicators continue to warn of significant USD strength and AUD / NZD / EUR etc weakness and these signals have increased since 2009.
Unfortunately the March 2009 equity lows eventually will be breached.
http://stockmarket618.wordpress.com