IMF Scrambles To Double Bail Out Capacity To $1.3 Trillion, May Issue Bonds

Tyler Durden's picture

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.

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GeneMarchbanks's picture

Didn't like our previous comments, eh Tyler?

??'s picture

only double??

meanwhile according to Bloomy this distraction (which of course Zero was on to way ahead of the pack)

Morgan Stanley Seen as Risky as Italian Banks

Popo's picture

In other words:   The IMF is also broke.


Oh regional Indian's picture

Hah! Hardly. As long as the US is collecting IRS moniez, the IMF is just fine.

I think this is a big sip and padding for the SDR's soon to come, so so they hope. I doubt there'll be enough order in the markets once they break for that though.

We can only hope.


Hey America!!!

FEDbuster's picture

Worldwide IMF Super TARP Bonds?  Are they going to bring back Mike Milken and Bernie Madoff to sell these things to Americans?

So with panic, crisis and collapse all around us, why is gold selling at $1600.?  Gold should be $5K+ right now. 

GetZeeGold's picture

Didn't like our previous comments, eh Tyler?


Tyler's working for the man was just a matter of time.


Comments about gold are strictly forbodden now.


bankonzhongguo's picture

This started as $50 billion, then $500 billion, then around $900 billion.

Now $1.3 trillion.

Frankly, the End Game here is for the IMF to have a balance sheet equal to 2.5x that of every central bank (and their TBTF shareholders).

It will be $100 trillion for an international organization that nobody ever heard that is run by the unelected for unknown purposes.

Those "protected" will be the survivors of the Great Basel III race. Everyone else will be a check casing store.

Take it to the bank.

Panafrican Funktron Robot's picture

The increase in lending limits is less disconcerting than the issuance of bonds, which if you read the article carefully, would take them above/beyond $1.3 trillion.  Really, given the likely domestic discontent for bailouts in both the US and Germany, bond issuance by the IMF not only seems like essentially a done deal, but I think the size of the IMF balance sheet as a result will look somewhat more like double to triple that $1.3 trillion figure.  Timmy G's ultralevered ticking time bomb idea is going to happen one way or another, it's just more likely to be on the IMF's balance sheet, than contained solely in the Eurozone.

Ray745's picture

Thankfully this ridiculous news was out a couple days ago and the markets mainly ignored it.  Hopefully they continue to do so, as I imagine an increase in IMF lending would never get agreed to by the US, especially with the House of Reps we currently have.



AnAnonymous's picture

Does it mean the US will agree with it? Remember, they are the US.

Zedge Hero's picture

Sometimes you have to create your own news network, just to get the damnn word out- This weeks episode is the Greek Bailout.


Smiddywesson's picture

Do they really have any other alternative to continue to kick the can?

Hasn't everything they have done so far been designed to kick the can?

Do you see any will at all to impose fiscal conservatism, or just a lot of rhetoric?  Maybe those few billions they argued about cutting, while running deficits in the trillions, convinced you Washington is really, really, serious, I mean it serious, about spending?

Don't be ridiculous.  The can will continue to be kicked. 

rossi's picture

hey buddy,this is one of the best posts that I’ve ever seen; you may include some more ideas in the same kamagra theme. I’m still waiting for some interesting thoughts from your side in your next buy viagra post.

Bobbyrib's picture

Thanks for the heads up, I just liquidated all my PM holdings and went to cash. /sarcasm

XRAYD's picture

How much interest will have to paid on FIVE TRILLION fabricated out of thin air?


Who will pay it?


Oh wait, the same bankers and the IMF will create another "stability facility" to pay this interest, and ultimately the principle - right?


We already have too many fires. We don't need anymore "fire power" - specially of the kind the ECB/EU/IMF generals rely on: Fire, ready, aim!

Smiddywesson's picture

I disagree, but not on principal, just on timing.  The system is already lost.  We are far past the point of no return.  They are throwing everything into the fire to buy time.  They need time to buy gold and to make us all desperate enough, and poor enough to accept any solution they offer when the lid blows off.

I wish we followed your opinions back when it mattered.  Now it is too late.

ElvisDog's picture

And that's the key point, XRAYD, if Greece can't pay back its loans to its current creditors how will they pay back an even bigger loan to the IMF? Presumably, the IMF assumes that they will in fact get paid back, but looking at what is going on in Greece today they must be either hopelessly out of touch or insane. All these dumb-ass Euro stability funds, IMF bailout funds, etc. do nothing to grow the Greek economies and do nothing to increase the capablity of Greece (or any other country) to repay their debts.

The only other logical conclusion is that the IMF think that Germany will backstop all these new $1.3T in loans. Good luck with that. There are growing rumors that Germany is laying the groundwork to leave the Euro.

Panafrican Funktron Robot's picture

They could pay a bigger loan on a 100 year timeline.  I initially intended that as a joke, but it wouldn't surprise me to see it actually happen.

MFL8240's picture

".....the IMF is in fact considering issuing
its own bonds".



The bonds have no buyers so they too would be buying their own debt.  Where does the bullshit end?  It used to be when there were no buyers but, now we issue and buy debt all in the same day.  And Gold is down $300 in 30 days thanks to the criminal CME.  


Implossion is coming and Gold must be owened and out of US.

Bobbyrib's picture

I suspect Bernanke may be a buyer of the bonds.

Bobbyrib's picture

Also I disagree with Peter Schiff when he says the Perth mint is a good option to hold gold out of the US. I don't think Australia would have any problems handing over US citizens' gold.

AnAnonymous's picture

Yep, made me laugh. Other traditional partners in the US world Ponzi are growing less and less apt to back up the Ponzi.

Now the US is using one of the arms in the world to grow up as a new partner in the Ponzi.

The IMF will buy the US debt which is returned will buy the IMF bonds.

No US tax payer monee involved, only commodities backed currency as other countries will be forced to accept USD and IMF schemes.

The grand robbery by the US People continues. Dont miss the next episode, same USworlder order hour, same US world order channel.

Panafrican Funktron Robot's picture

This will likely be executed as a swap facility, ie., IMF issues long dated garbage debt and uses those proceeds to buy short to mid term garbage sov. debt.  Epic can kick, take... I forgot what iteration we were on....

sudzee's picture

The IMF better hurry if they want to sell bonds into the private. There amy not be any room since just 2 corporates , HP and Intel, sold 543billion in bonds in the last 3 months as per Bloomberg.

Bobbyrib's picture

With HP's management, you would have to be insane to buy thier bonds.

Ray745's picture

That stat is completey wrong, two investment grade companies did not just issue 4x their market cap in debt in 3 months.

dognamedabu's picture

Welcome to the New World Odor.





doomandbloom's picture

Boat Bigger  need gonna

Dick Darlington's picture

SPAIN 5Y CDS 380-385 +10BPS
ITALY 5Y CDS 472-477 +20BPS

TradingJoe's picture

At least for now futures indicate some decoupling of gold/silver from markets and some shy renewed correlation to the USD?! oil going lower with markets?!
German upper house approves bailout funds expansion?! OK! next 2 weeks we'll the greatest show on earth and me got front row tickets!!!

snowball777's picture

What jackass would read a Murdoch-controlled rag like it had useful info in the first place?

anynonmous's picture

ECRI just called RECESSION*

Welcome to the club Laks


WTF * but on a technichality Lakshman Achuthan says it is not a double dip   nor a continuation of the what most here to believe the current one

pacdm's picture

Where does all this money come from, the indebted sovereign states that got us here.


Hansel's picture

Also, the IMF doesn't have a tax base to back the bonds, and the IMF has its own fairy tale currency.  Why the fuck would anyone buy an IMF bond?

doomz78's picture

I have a question.  What fueled the 1505 hour rally yesterday of the Dow Jones?  It was a 2.3% swing from the lows to a positive finish.  Did any news come out?  Earnings?  Anything?  Smells like QE stealth. 

HelluvaEngineer's picture

Looked like BS, but someone I was listening to pointed out that the bots keep bouncing us off of the various moving averages.  Might go on until we get some serious good/bad news.

Smiddywesson's picture

I have a question.  What fueled the 1505 hour rally yesterday of the Dow Jones?  It was a 2.3% swing from the lows to a positive finish. 

It's the end of the quarter and the tug-o-war team has been dragged to the edge of the mud pit.  They need to erase as much of the losses as possible.

Wait until next week.  Look out below!!!!!!!!!!!

BigDuke6's picture

Why do many so called 'educated' people think the IMF and UN are benign, beneficial useful organisations?

Spending the US taxpayers money like a drunken sailor and telling western countries to fill up with islam.

Because the main stream media in the usa is useless and in collusion with the wall str banks.

Could there be a connenction?

rwe2late's picture

 The UN and the IMF are both servants of the US government. They were established to do just that. The US controls both, has veto power over both, and both support US policies.

The same elite club that rules the US government, rules the UN and IMF.

Neither the UN nor the IMF operate as independent "conspiracies" designing to take over the US.

If anything, the UN and the IMF are just additional global institutions, along with global corporations and the global Pentagon, that are all used to solidify power by what is now a global elite centered in the US.

DosZap's picture

Big Duke 6,

They can THINK their spending OUR money, since we're broke as a dead dik dog,it's pie n the sky.As we are broke also.

If they think they are going to lay this one the backs of the taxpayers what's left of us, they will have projectiles ..................In vast quanities headed their way.

You heard of going Postal?.

I believe this would give new meaning to it called going Global.

Welcome to WW III.

Anyone in our gub stupid enough to start taking funds for this from US taxpayers will be hanging from lamp poles.

donsluck's picture

Islam forbids lending for profit.

Dick Darlington's picture


BlackholeDivestment's picture

...something big is about to happen, Iran Israel? city nuke? or something ...and that will ''change'' the whole picture. What ever goes down it will be used to put all the nations in line ( which is now happening) with the whole new world order U.N. ''peace'' plan and global ''single'' market debt mark (already upon this generation) ''final Solution''. Everything is in place for some kind of global tax (happen now) to be spread out among the nations so that labor is marked by debt and thereby under the new world order thumb, just in time for the 2012 new age. Pretty wild to have Palestine and Jerusalem talk in the U.N. as the so called Arab Spring is happening etc...

kahunabear's picture

What does all this shuffling of paper even mean anymore? How many new ways can fiat be sliced diced and levered? It has gone beyond the absurd. Shouldn't money be backed by something real? Production? Assets maybe?

Mentaliusanything's picture

You all must remember that Governments do not have any money of their own. They produce nothing, they only can distribute monies. Those monies are from the pockets wallet and savings of working people gleaned through taxation excise or fines.

They are now offering to spend whatever is left of your money to bail out those who spent like drunken sailors.

Socialism is great .... until you run out of other peoples money. and they have.

This is the greatest theft in history all for Vanity . Just plain old Vanity.

They have Lied through their Teeth - Bank stress test showing well capitalised Bank now needing Billions when the tide made them Naked. They Lied, they Kicked the Can,They lied and laughed at you.

If you allow this ...they will take it ALL.. through stealth, taxation and fees to pay the bill thats now due. That means you will be poorer, very much poorer as they drain you of your hard earned cash and assets.

They Lie to protect a Lie which has been found to be a Lie.


The recession they bring down upon our heads through their actions will be catastophic

Bobbyrib's picture

They're going to have to institute a wealth tax, because there will be loads more people unemployed when this eventually all blows up.

ElvisDog's picture

They're going to have to institute a middle-class/small business owner asset stripping tax

I fixed it for you. There is no way Buffett/Dimon/Fuld or any of the other billionaire ass clowns will pay a wealth tax. They will have right of correction to any such bill that gets proposed.