IMF Gets Ready

[HenryTo]

IMF becomes relevant again, as it readies to utilize its US$200 billion arsenal for Iceland and emerging countries (Pakistan?) in general:
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IMF readies emergency bailouts for countries
Thu Oct 9, 2008 8:13pm EDT

By Lesley Wroughton

WASHINGTON, Oct 9 (Reuters) - The International Monetary Fund said on Thursday it was ready to lend to countries hit by the global credit crunch and had activated an emergency financing mechanism first used in the 1990s Asian crisis.

The Fund already sent a mission to Iceland, where the government has seized control of its largest bank, and has warned that the worst financial crisis since the 1930s Great Depression could inflict lasting economic harm on the world.

"Yesterday I activated emergency procedures of the IMF to respond quickly," IMF Managing Director Dominique Strauss-Kahn told a news conference. "We are ready to answer any demand by countries facing problems," he said, adding that no country is immune from the crisis.

The IMF chief said the IMF was willing to provide financial assistance not only to emerging and developing nations, but also to Western countries.

"Nobody knows if some ... advanced economies will not also be in need of some help by the IMF," he said, adding that countries needing to borrow will face more streamlined conditionality than normal and funding will be made available quickly. "Very quickly means two weeks at most," he added.

After several years of no major crises in emerging economies, the move puts the IMF's board of member countries and staff on alert that the Fund will have to respond quickly if a country needs financial help.

It also puts the global financial firefighter more at the forefront of the current financial crisis following months of being on the sidelines.

Panic over toxic, illiquid U.S. mortgage loans has sapped confidence in financial institutions, forced governments to pledge hundreds of billions of dollars of taxpayer money and pushed Western and other central banks to deliver their first coordinated interest rate cut.

Speaking ahead of IMF and World Bank meetings of world finance leaders in Washington this weekend, Strauss-Kahn said the main task for policy-makers was to restore confidence and calm global markets.

Group of Seven finance ministers and central bank chiefs also meet in Washington on Friday to consider their options.

The IMF's emergency facility was created in 1995 as a way of speeding up the approval of loans to countries in peril.

It was first used in 1997 to help the Philippines, Thailand, Indonesia and South Korea end crushing runs on their currencies during the Asian financial crisis.

The IMF, which played a central role in the bailouts of countries in Asia and Latin America in the 1990s, relied on lending to fund its operations. But with fewer crises over the years, it had faced a growing income deficit, prompting an agreement in April to sell some of its gold stocks and invest profits in government and corporate bonds.

The IMF has about $200 billion immediately available to lend to countries in need but can tap other sources. This is small compared to the trillions of dollars central banks and governments have poured into the financial system over the past few weeks.

UNDER PRESSURE

Emerging markets are under pressure again after strains in the United States and Europe spread. Investors are fleeing their securities for safer assets, foreign banks are cutting lending and the countries' exporters are braced for weaker demand from Western consumers.

Strauss-Kahn renewed calls for more coordinated steps to calm panicky markets beyond the unprecedented simultaneous action of central banks on Wednesday to cut interest rates.

He said the global economy was on the cusp of recession but with quick and forceful action, the spreading crisis could be contained.

"All kinds of cooperation has to be recommended. All lonely acts have to be avoided, if not condemned," he said.

His calls for more coordination were backed by World Bank President Robert Zoellick who said he hoped a meeting of Group of Seven industrial nations on Friday will indicate they "are getting ahead of the curve."

He said while countries will take different actions, tailored for their own circumstances, they should coordinate beyond just the G7 members to target the same basic problems.

"The actions need to be coherent and reinforcing," he said, referring to Wednesday's simultaneous rate cut by central banks.

[rffrydr]

Geithner not doing us any favors with grand proclamations backed by no contributions. Guess he's learned nothing from his visits last fall.

Japanese gets the LaGarde flanking position in the group photo.
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

What we expected all along.

[rffrydr]

....It's a given that we will take the shame rather than contribute anything. For china, this face will be much harder to resist. I wouldn't close the door on a US contribution after this either.
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Game changer as Japan provides US$60 billion in funding to the IMF.

http://www.bloomberg.com/news/2012-04-17/japan-will-provide-60-billion-to-expand-imf-s-resources-1-.html

[HenryTo]

IMF also pushing for the ability to lend directly to European banks.
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Lagarde eyes trimmed $400 billion rise in IMF funds

MILAN (Reuters) - The International Monetary Fund hopes to gain governments' agreement this week to raise its funds by more than $400 billion, around two thirds of the amount it said it would need three months ago, fund managing director Christine Lagarde signaled on Tuesday.

Lagarde, who had already signaled the fund would need less than previously thought, said the success of some countries in raising funds on financial markets in the first quarter had eased the pressure on its crisis-fighting resources.

In an interview in Tuesday's Il Sole 24 Ore, she praised reform efforts by Italy's government and said market confidence had improved since Rome agreed to enhanced surveillance by the IMF. She also saw progress in Spain.

"I really hope this week we'll reach the critical mass of more than $400 billion. We are determined to do all we can," she was quoted as telling Italy's main financial newspaper, though she also said finally sealing the funds might take a bit longer.

Finance chiefs meet in Washington on April 20-21.

"I am ready to leave the matter open for a few weeks: some countries need a little bit more time for parliamentary approval," she added.

In January, the IMF estimated it would need $600 billion in new resources. Officials from the Group of 20 nations told Reuters last week the world's major economies were likely to agree to provide the IMF with somewhere between $400 billion and $500 billion.

In the interview, Lagarde said credit crunch risks had receded.

"The overall risk evaluation is unchanged, but it's April now and some countries have already raised on the markets more than half of what they need for 2012, so our estimate has shrunk."

"In some countries, for small and medium enterprises, for households, credit may be more costly and difficult, but it is not as serious a threat as we feared in December."

Lagarde said the IMF would keep pressing for the euro zone's rescue funds to be allowed to lend directly to banks, in order to address the link between lenders and sovereign risk.

"I put the idea forward in July, it was not accepted. We insist."

Lagarde said Spain must continue on its reform path after improvements achieved so far and praised Italy's "enormous chapter of changes, with more to come."

She said budget consolidation measures Rome had announced so far were sufficient. But parliament had to make sure the final version of a labor market reform now being discussed would tackle the dualism between protected and unprotected workers and remove uncertainties on lay-offs.

"We fully agree with what the government is doing," she said, adding the IMF respected Italy's "political" choice of relying more on revenues than spending cuts in its budget adjustment.

[HenryTo]

IMF seeks Euro bailout money from China and Japan.

http://www.bloomberg.com/news/2012-04-07/japan-china-to-consult-closely-on-support-for-imf-azumi-says.html

[HenryTo]

Obama makes it clear: No more US contributions to the IMF for a Euro bailout.

http://news.yahoo.com/us-not-help-pay-europes-debt-woes-202103993.html

[rffrydr]

....just another in an unseemly line of Hedge Fund plants.

Funny thing is that this will keep buyers OUT of this rally.....
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Rumors of an IMF-led bailout for Italy dispelled.

http://www.bloomberg.com/news/2011-11-28/imf-says-no-talks-under-way-with-italy.html

[HenryTo]

How could the IMF be preparing an $800 billion loan to Italy when it only has $400 billion in lending capacity? This makes no sense unless it could get China and Brazil to contribute in a hurry.

http://www.bloomberg.com/news/2011-11-28/imf-s-lagarde-seeks-latin-america-help-in-historic-about-turn-.html

http://www.imf.org/external/np/tre/activity/2011/111711.htm

[HenryTo]

It's official.

[HenryTo]

Final selection of IMF Managing Director now down to final stage:
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Carstens questions European leading the IMF
Carstens says putting a European in charge of the IMF could create conflicts of interest

WASHINGTON (AP) -- Mexican central banker Agustin Carstens said Monday that the next leader of the International Monetary Fund should not be European because those nations are borrowing heavily from the lending organization. But he also acknowledged that his own bid was a long shot.

Carstens pressed his candidacy to head the IMF during a speech at the Peterson Institute for International Economics, a Washington think tank.

European officials have closed ranks behind French Finance Minister Christine Lagarde, who has emerged as the front-runner. Carstens acknowledged the steep challenge he faces, saying the chances of Lagarde winning the job are "quite high."

Carstens he said it was important for developing countries to have a choice in the election. He made the point that Lagarde's candidacy would create "conflicts of interest" because Greece, Ireland and Portugal are borrowing heavily from the Fund. And while he may not succeed, he said he hoped his candidacy would pave the way for emerging market candidates in the future.

"If we want to have an open and unbiased process, we need to present candidates," he told an audience of more than 100 policymakers and economists. He also met with Treasury Secretary Timothy Geithner earlier in the day, but said Geithner did not endorse his candidacy.

A European has traditionally headed the IMF and an American has led its sister organization, the World Bank. Developing countries have long complained about the arrangement, which dates back to the end of World War II.

The IMF, which lends money to countries in financial difficulty, is seeking a new managing director to replace Dominique Strauss-Kahn. He resigned last month after his arrest on sexual assault charges. Strauss-Kahn has pleaded not guilty. The Fund's 24-member executive board plans to make its selection by June 30.

Lagarde consolidated her lead over the weekend by receiving endorsements from Indonesia and Egypt, a sign that her support extends beyond Europe. Carstens is far behind.

A press release issued Monday by the IMF said the selection process is down to two candidates, Lagarde and Carstens. It did not mention Stanley Fischer, an Israeli central banker who declared his candidacy for the top job on Saturday.

Fischer said in a statement Tuesday that he was disqualified because of his age -- two years above the age limit of 65 that the IMF had set for an incoming managing director. He expressed regret that the IMF board decided not to change its rules to allow him to run, calling his age "a negligible detail compared with the need to choose the most suitable candidate to lead the fund."

Still, Fischer's disqualification doesn't appear to make Carstens' campaign any easier.

"The writing is on the wall," said Eswar Prasad, an economist at Cornell University and former IMF official. "I don't see any plausible scenario where Carstens can rally enough support to get the job."

In fact, some speculate that Carstens could be laying the groundwork for a future run at the job, or another top position.

"A credible run ... would certainly raise his profile in global policy circles and improve his chances of heading other major international institutions," Prasad said.

China, India and Brazil, three of the fastest growing nations in the world, have also complained that the IMF process for choosing its leader should be more open. Still, none of those countries is backing Carstens.

In fact, China, India and Brazil have declined to publicly endorse any candidate so far. Analysts say cite several reasons why the three developing nations have resisted.

China and India are historical rivals and are without many common interests, even though they are at similar stages of development.

And Brazil is vying to be an alternative to the United States and regards Mexico as a close U.S. ally, said Domenico Lombardi, a senior fellow at the Brookings Institution and former IMF official.

"Emerging countries have failed to coalesce as a unified group behind a candidate," Lombardi said.

Many have accepted that Lagarde will win and instead are looking to extract promises from her in exchange for their votes, he added.

For example, China would like to see one of its officials, Zhu Min, appointed as a top deputy at the Fund. Min is currently a special adviser to the IMF managing director. Lagarde expressed support for giving Min a leading role during a visit to Beijing last week.

[nodoodahs]

Waiting for the movie: The Wrath of Strauss-Kahn !
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I haven’t seen a beatin’ like that since somebody stuck a banana in my pants and turned a monkey loose.

[HenryTo]

DSK finally resigns. Good example of how quickly one could fall from the throne if one has no solid foundation. Still waiting for higher prices to short the market.

http://www.bloomberg.com/news/2011-05-19/imf-says-strauss-kahn-resigns-effective-immediately-after-arrest.html

[rffrydr]

Animal spirits?
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Today is the Tomorrow you worried about Yesterday!