Monday, August 30, 2010

You Know You Are In Trouble When Supersizing A Backup Rescue Facility By Half A Trillion $ Isn´t Enough 4 Month After The Introduction....IMF Version

In April i wrote at the beginning of the Greece / € Crisis
No wonder the IMF has just SuperzisedTheir "Backup Rescue Facility" By Half A Trillion ( no typo ) for "Contribution To Global Financial Stability"......
Im April im Angesicht der Griechenland und € Krise schrieb ich
Kein Wunder das "vorsorglich" der IMF die Mittel zur "Stabilisierung" der Sorgenkinder mal eben still und heimlich auf 500 Mrd $ verzehnfacht hat ( kein Tipfehler )....
Fast forward to August...... I´m not sure how credible the 1 trillion $ number is but the fact that the IMF is implementing / modifying another credit facility on top of all the existing ones does at least raise eyebrows..... Looks like even "Shock & Awe" isn´t able to stop the flooding.....

Hat ja immerhin einige Monate gereicht...... Ich habe keine Ahnung wie "belastbar" die genannte Summe von 1 Billion $ für die neuen "Rettungsschirme ist....Wenn man aber bedenkt das bereits wenige Monate nach dem letzten Programm bereits wieder Bedarf an neuen Rettungsschirmen besteht muß man befürchten das besonders im Hinblick auf die Zukunft diese Summe nicht zu hoch gegriffen ist....Schon erstaunlich das selbst diese "aberwitzigen Summen" anscheinend nicht mehr ausreichen zumindest mittelfristig die ständig größer werdenden Problemzonen zu überdecken.....

IMF Changes, Expands Crisis-Prevention Credit Lines Bloomberg
Talks are ongoing with member countries to raise the IMF lending capacity to $1 trillion as part of G-20 discussions.

John Lipsky, IMF first deputy managing director, told reporters on a conference call today that the institution has enough money to fund the new credit lines. At the same time, he said he is confident that member countries will continue to demonstrate a commitment for the IMF to have the resources to make the new credit lines “credible and usable.”
IMF Eliminates Borrowing Cap On Rescue Facility In Anticipation Of Europe Crisis 2.0; US Prepares To Print Fresh Trillions In "Rescue" Linen ZH

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 [which just happen to need an unlimited source of rescue funding] who nevertheless may not meet the FCL’s high qualification requirements." In other words everyone.

Lastly, for those lazy readers who always scroll to the very bottom looking for a video clip summarizing all previously said, you are in luck. Here is the IMF's Reza Moghadam condescending, and blatantly lying to all who care, as to what the purpose of tonight's "Crisis Prevention Toolkit" expansion is.

IMF Expands Loan Options to Developing Countries WSJ
WASHINGTON—The International Monetary Fund said Monday it would broaden the kinds of loans it offers to encourage a large swath of developing countries to get financial help before they are engulfed in crisis.

Under a new "precautionary credit line," the IMF said it would lend a substantial amount of money to countries whose policies it generally endorses, before those nations run into trouble. The loan would operate like a line of credit, so a country wouldn't have to use the money, and rack up interest charges, unless it needed the financing.

The program would offer loans of as much as five times a country's quota, meaning its financial stake in the IMF, with the possibility of doubling that after a year. Indonesia, for instance, has a $3.1 billion quota, so it could be eligible for a credit line of up to $31 billion. ....

The IMF is working on yet another new loan, the "global stabilization mechanism," which would be available for groups of countries, as a way to overcome the stigma of borrowing from the IMF. The IMF is even considering approving countries for such loans without them having to apply for the money.

Among issues still being debated is whether to simply allow existing credit lines to be more broadly deployed or come up with a new facility that would provide short-term liquidity, he said.

The IMF devises a new way to lend to vulnerable countries before they suffer from financial crises Economist

IMF Sees G7 Net Debt At 200% Of GDP By 2030; 441% By 2050 ZH

Got GOLD ? ;-)

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Blogger jmf said...

Credit Writedowns

The IMF remains supportive of Romania and its USD17.1 bln Stand-By Arrangement (part of the USD26.4 bln total international aid package), and just this month approved the fifth review under the program

4:06 AM  

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