This page has been archived and commenting is disabled.
IMF Scrambles To Double Bail Out Capacity To $1.3 Trillion, May Issue Bonds
The scariest news out of the IMF overnight is not that the scandalized bailout agency telegraphed that the global sovereign debt crisis is about to get into even higher gear after the Dow Jones reported it is "exploring" ways to double its gross lending power to $1.3 trillion (which means that in addition to the EFSF's proposed $3 trillion expansion, global bailout capacity will soon hit $5 trillion), nor is it that the US middle class will soon be on the hook for tens of billions more in real European-facing exposure (over an above the hundreds of billions in USD FX swaps that the Chairman is about to unleash on the world), but that the IMF is in fact considering issuing its own bonds. The reason why this is disturbing to the G-7/8/20 is that such a move would take the SDR one step closer to being an alternative gold-backed reserve currency, an dilute the hegemony of the Western axis much to the delight of Russia and China (which however may be having problems of their own). Well, that's bad, but we take it back - just as bad is that the IMF is about to have $1.3 trillion in bailout power. And yes, they wouldn't scramble to get it if they didn't need it. What next: unlimited rescue capacity, and unlimited exposure for US taxpayers?
From Dow Jones:
The International Monetary Fund, looking to assure markets that it has the financial firepower to deal with deepening problems in Europe and also crises elsewhere, is exploring how it can have at least $1.3 trillion in lending power, according to officials involved with the discussions.
The IMF currently has about $630 billion in usable resources; about two-thirds of that could be lent under IMF rules.
Under the plan be considered, the fund would need to make permanent a $590 billion temporary lending facility that was put in place in response to the 2008 financial crisis.
The IMF is also counting on member nations to finally enact a doubling of IMF member country dues, totaling $750 billion, which have already been approved in principle. Approvals by national parliaments are expected in early 2012.
As for IMF bond issuance (unclear if it will be century bonds like Greece):
The IMF is also weighing whether to sell bonds in private markets on short notice, a move that could bolster its safety net beyond $1.3 trillion. The IMF has never sold bonds of this sort, and the U.S. and Germany among others have resisted such moves out of concern that the IMF would have too much independence from its major shareholders. It's not clear whether that opposition has lessened with the ongoing global financial turmoil.
Probably the saddest take home message from all this is that we have reached a point where nobody has any idea how to deal with the solvency crisis apart from throwing endless amounts of liquidity at it, a process that will achieve absolutely nothing in fixing the underlying cause but will make the symptoms of global default that more palatable for just a few more months. For what happens after, we urge readers to browse last night's BCG piece on precisely this topic.
»
- 2814 reads
- Printer-friendly version
- Send to friend
- advertisements -
max keiser yesterday, summing up things nicely:
Come on......let's get serious. It will take at least 500 trillion. Of course gold will be worth one million per ounce.
......which is why it's being pushed down at present.
Nothing is real anymore.........show me one thing that is.
Janet Napolitanos' boobs?
It's too early for that thought.
100 trillion sounds about right. The Great Universal Indenture Act of 2011.
Always like to hear Max's point of view.
Gold should be at $4K easy by now, given that the entire banking system is at risk again. Not due to the coming inflation, but to shear panic. So this worldwide Super TARP is going to cost between $5-100 trillion to bail out the banksters, and puts the sovereignty of most nations at risk? If that doesn't lead to WW3, I don't know what will.
Janet Napolitanos' boobs?
Would you cut it out.....Yeech!
Be not alarmed brethren, these things must happen before the coming of the great white hankie.
Comedy, Bitchez!
Bad show as having this as third comment, I know. Apologies to all - and especially Trav. I've let you down...
Take that to the bank.
As long as Bob Pisani says, "This is bulllish", I'm all-in!
Guns, Gold, Seeds/MRE's and English to Mandarin translation book...
This is getting sooo stupid now, someone please please get them to STOP, enough is enough, let the banksters fail and eat their own losses
"but that the IMF is in fact considering issuing its own bonds."
And we joked about the Universe bonds. Oh dear. Guess that's next after they issue the solar-system bonds and those poor Martians need to bailout Earthlings.
Meanwhile on a remote Spanish Island off the northwest coast of mainland Africa and 8800 earthquakes later (since July), El Hierro is accumulating more and more energy (5.3E+011J; two days ago: 3.1E+011J)
http://www.ign.es/ign/resources/volcanologia/energia_HIERRO.jpg
El Hierro eh? So there is that to look forward to. Hopefully it all ends well.*
*jk we're all finished
Someone needs to crank up the carbon credit machine.
Go Long Buck Rogers 25th Century futures Bitchez
"What next: unlimited rescue capacity, and unlimited exposure for US taxpayers?"
Let's face facts, this is already the way it is.
I've seen a juggler's act with real balls up in the air. Awesome and entertaining. The IMF is a juggler that has invented virtual "balls" made out of fiat money.
A virtual act in a real world where the irate, destitute people lock out the Troika from Greek institutions? How virtual will TPTB virtuality get before it gets horrendously real? Am I out of step with reality or is reality now the same state as virtuality? We will all become ghosts at this rate and pass through the looking glass like ALice into Wonderland!
The only people who could fund 1.3 trillion to IMF of real money is...China and the BRICS/Oil rich countries.
Are they now whole HOG into first world bailout???
Anyone else got bailout-fatigue fatigue ?
Bailout fatigue^n, n--> infinity
Not to worry. We can always impose a wealth tax to make sure the banks get bailed out.
Thank goodness. I was worried they might not be able to summer in the Hamptons next year
I don't get it
I thought they created money out of thin air????????/
this is sick think how all this money COULD have been spent
coun tires that chop down rainforests could be paid not to, oceasn could have been cleaned, coral reefs restored, clwean water for everyone, waste water treatmnety plants but no we give trillions to keep bankers alive
its a sick sick world