The IMF, led by Dominique Strauss-Kahn, has the power to raise money on the capital markets by issuing `AAA’ bonds under its own name. It has never resorted to this option, preferring to tap members states for deposits.The nuclear option is to print money by issuing Special Drawing Rights, in effect acting as if it were the world’s central bank. This was done briefly after the fall of the Soviet Union but has never been used as systematic tool of policy to head off a global financial crisis.“The IMF can in theory create liquidity like a central bank,” said an informed source. “There are a lot of ideas kicking around.”
Some would say history is repeating itself. I say that a tried-and-proven scam is being employed yet again.
Compare: 1913 with 2008. In 1913 a financial crisis was created by financial elites (JP Morgan, Warburg, et al), and that was used to establish the Federal Reserve, the privately owned Central Bank of the US. Ever since then the Fed has controlled the US economy and America has gotten further and further into debt to the owners of the Fed.
Again in 2008 a financial crisis has been created by financial elites, symbolized by Henry Paulson, and the IMF is sneaking into the role of Global Central Bank as it brings bankrupt governments into its web of debt, imposing stringent conditions as it does so. Already the idea is being considered for the IMF to print its own money, as we see in this article.
What this means is that the IMF, at no expense, prints pieces of paper that need to be paid back plus interest with real money. The IMF contributes nothing, and the whole world becomes its debt slave. This is what banking elites have been dreaming about, and scheming about, for centuries.
Consider also that leaders like Sarkozy and Gordon Brown are calling for a new ‘global solution’ to the financial crisis. Meanwhile, with its raids in Syria and Pakistan, the US is openly challenging the very concept of national sovereignty.
All of this means that the One World Government Project is in its final stages.
IMF may need to “print money” as crisis spreads
By Ambrose Evans-Pritchard
The International Monetary Fund may soon lack the money to bail out an ever growing list of countries crumbling across Eastern Europe, Latin America, Africa, and parts of Asia, raising concerns that it will have to tap taxpayers in Western countries for a capital infusion or resort to the nuclear option of printing its own money.
The Fund is already close to committing a quarter of its $200bn (£130bn) reserve chest, with a loans to Iceland ($2bn), Ukraine ($16.5bn), and talks underway with Pakistan ($14.5bn), Hungary ($10bn), as well as Belarus and Serbia.
Neil Schering, emerging market strategist at Capital Economics, said the IMF’s work in the great arc of countries from the Baltic states to Turkey is only just beginning.
“When you tot up the countries across the region with external funding needs, you get to $500bn or $600bn very quickly, and that blows the IMF out of the water. The Fund may soon have to start calling on the West for additional funds,” he said.
Brad Setser, an expert on capital flows at the Council for Foreign Relations, said Russia, Mexico, Brazil and India have together spent $75bn of their reserves defending their currencies this month, and South Korea is grappling with a serious banking crisis.
“Right now the IMF is too small to meet the foreign currency liquidity needs of the larger emerging economies. We’re in a dangerous situation and there is the risk of extreme moves in the markets, as we have seen with the Brazilian real. I hope policy-makers understand how serious this is,” he said.
The IMF, led by Dominique Strauss-Kahn, has the power to raise money on the capital markets by issuing `AAA’ bonds under its own name. It has never resorted to this option, preferring to tap members states for deposits.
The nuclear option is to print money by issuing Special Drawing Rights, in effect acting as if it were the world’s central bank. This was done briefly after the fall of the Soviet Union but has never been used as systematic tool of policy to head off a global financial crisis.
“The IMF can in theory create liquidity like a central bank,” said an informed source. “There are a lot of ideas kicking around.”
For now, Eastern Europe is the epicentre of the crisis. Lars Christensen, a strategist at Danske Bank, said the lighting speed and size of Ukraine’s bail-out suggest the IMF is worried about the geo-strategic risk in the Black Sea region, as well as the imminent risk a financial pandemic. “The IMF clearly fears a domino effect in Eastern Europe where a collapse in one country automatically leads to a collapse in another,” he said.
Mr Christensen said investor sentiment towards the region has reached the point of revulsion. The Budapest bourse plunged 10pc yesterday despite the proximity of an IMF deal Meanwhile, Standard & Poor’s issued a blitz of fresh warnings, downgrading Romania’s debt to junk status, and axing the ratings Poland, Latvia, Lithuania, and Croatia.
The agency said Romania was “vulnerable to a sudden-stop scenario where capital inflows dry up or even reverese”, leaving the country unable to cover a current account deficit of 14pc of GDP.
Romania’s central bank has taken drastic steps to defend the leu, squeezing liquidity so violently that overnight rates shot up to 900pc. But there are growing doubts whether this sort of shock therapy can obscure the fact that economic booms are now turning to bust across the region.
Merrill Lynch has advised to clients to take “short” positions against the leu. “The fundamental picture suggests that Romania may face a currency crisis in the near term, similar to what Hungary has gone through over the last week,” it said. The bank also warned that Turkey and the Philippines are vulnerable.
Hungary was forced to raise interest rates last week by 3 percentage points to 11.5pc to defend its currency. Even Denmark has had to tighten by a half point to keep within its Exchange Rate Mechanism, raising fears that every country on the fringes of the eurozone will have resort to a deflationary squeeze.
The root problem is that Eastern Europe and Russia have together borrowed $1,600bn from foreign banks in euros and dollars to fund their catch-up growth spurt over the last five years, according to data from the Bank for International Settlements. These loans are now coming due at an alarming pace. Even rock-solid companies are having trouble rolling over debts.
Mr Schering said Turkey was likely to join the queue for bail-outs very soon. “Their external liabilities have reached $186bn, and a lot of this is short-term debt that has to be rolled over in coming months,” he said.
Turkey’s prime minister Recep Tayyip Erdogan said over the weekend that his country would not “darken its future by bowing to the wishes of the IMF”, but it is unclear how long Ankara can maintain its defiant stand as capital flight drains reserves.
Pakistan – now facing imminent bankruptcy – has also raised political hackles, balking at IMF demands for deep cuts in military spending as a condition for a standby loan. Diplomats say it is unlikely that the West will let the nuclear-armed Islamic state slip into chaos.
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