Is the IMF Preparing for an Impending Crisis?

[amborin]

Is the IMF preparing for an approaching crisis?

"The IMF has been making a lot of noise recently, but their biggest move almost managed to slip through completely unnoticed."










The Executive Board of the International Monetary Fund (IMF) today approved a ten-fold expansion of the Fund’s New Arrangements to Borrow (NAB) and the transformation of the Fund’s premier standing credit arrangement into a more flexible and effective tool of crisis management. The NAB will be increased by SDR 333.5 billion (about US$500 billion) to SDR 367.5 billion (about US$550 billion), representing a major increase in the resources available for the Fund’s lending to its members.
This IMF program didn't even exist until a year ago, when the IMF began issuing SDRs for the first time since the 1970's. The IMF has only sold SDRs in times of global financial stress.
It makes a person wonder "Why now?" Why is the IMF suddenly tripling its lending facilities? What do they know that we don't?
To answer that, let's look at the announcements of the past few weeks.

The IMF has been busy issuing warnings over the past couple weeks. If this massive expansion of lending resources is a direct reaction to their recent statements, then we are looking at a severe financial shock in the near future.
Two weeks ago the monetary fund’s chief, Dominique Strauss-Kahn, said that Europe needed a "Fire Brigade" to deal with any potential banking crisis.
“What I think is needed is a European Resolution Authority, armed with the mandate and the tools to deal cost-effectively with failing cross-border banks,” the monetary fund’s chief, Dominique Strauss-Kahn, said in the text of a speech delivered to a conference on banking supervision in Brussels.
The weakness of the European banking sector is not a secret. German banks are unable to lend. High unemployment in Spain is threatening their banking system. Sweden's banks were overextended in the Baltics. Britain's banks came within just three hours of total collapse. Ireland's banks require another round of bailouts. Austrian banks are overexposed to eastern Europe.

snip

A few days ago Dominique Strauss-Kahn warned about public debt levels. However, that wasn't the announcement that needed attention. The really scary report came from the Bank of International Settlements a week ago.

"The aftermath of the financial crisis is poised to bring a simmering fiscal problem in industrial economies to the boiling point", said the Swiss-based bank for central bankers -- the oldest and most venerable of the world's financial watchdogs. Drastic austerity measures will be needed to head off a compound interest spiral, if it is not already too late for some.
Official debt figures in the West are "very misleading" since they fail to take in account the contingent liabilities and pension debts that have mushroomed over recent years. "Rapidly ageing populations present a number of countries with the prospect of enormous future costs that are not wholly recognised in current budget projections. The size of these future obligations is anybody's guess," said the report. The BIS lamented the lack of any systematic data on the scale of unfunded IOUs that care-free politicians have handed out like confetti.
Britain emerges in the BIS paper as an arch-sinner. The country may have entered the crisis with a low public debt but this shock absorber has already been used up, exposing the underlying rot in the UK's public accounts.

snip

That's where the SDR comes it. They simply swap out their dollar-based debt for SDRs.
It should be noted that SDR is merely a ledger entry. Its is a composite of major reserve currencies, rather than a new currency by itself, but it does help diversify.
The reason for the IMF rolling this out now might be two-fold: 1) an approaching financial crisis that the IMF needs to build up its reserves to prepare for, and b) the demands of Asian creditors to diversify their holdings in order to help avoid the impact of that coming financial crisis...."



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http://www.economicpopulist.org/content/imf-preparing-approaching-crisis

[ZeitgeistObserver]

1. I certainly hope so.

Greece is only one step higher than junk status.

[Name removed]

2. Deleted message

Message removed by moderator. Click here to review the message board rules.

[HughMoran]

3. you sure hope so!

:D

[amborin]

4. is that the best you can do?

:eyes:

[HughMoran]

6. et tu?

:eyes:

[Subdivisions]

8. delete. wrong place! n/t

[DJ13]

5. I think your link tells why the IMF is doing this

"To put it another way, our political and financial leaders have a problem with deficit spending in ways that benefit taxpayers. They don't have a problem with deficit spending in ways that benefits banks and large corporations because its "necessary".
Saving the multi-million dollar bonus of a Wall Street bank executive is necessary, but helping out the 107,000 homeless veterans on any given night is a luxury we can do without."


If the IMF can declare a crisis they can force governments into austerity programs that will end many programs that benefit the poor and elderly.

Its no coincidence that even the administration has used the code phrase "austerity" when Obama announced his "deficit commission" even after Congress voted the idea down.

There seems to be a worldwide body of influential people operating in the shadows that are determined to squeeze every last bit of prosperity out of the worlds poor, and they dont give two shits if people die as a result.

[amborin]

7. yep, in a nutshell:

from economicpopulist.org