Friday, 20 September 2013

IMF Around the World this Week (week ending 20 September 2013)

Below is the list of the matters the global inflationist IMF dealt with this week according to their websiteClick each link for details. 

The number of flights this week by the IMF will not please environmentalists. But being a global inflationist flying to all corners of the world is an unfortunate but necessary evil... Lagarde delivered yet another speech this week packed with the usual gibberish. Good to see she only mentioned Draghi's favorite word "subdued" (another word for poor) only once. "Debt", the elephant in the room, was however only mentioned twice. That's a remarkable achievement in a speech focused on "economics" (of course, it's not really about economics) with 2,607 words! Here are a few of "highlights",
Indeed, the fundamentals of the U.S. economy have been improving gradually. Households are in better shape—they have lowered their debt and benefited from the recovery in house prices and the strong performance of the stock market. The housing sector is looking brighter, with ample potential for construction activity to pick up further.
So Fed fueled increases in house prices and the U.S. stock market (which has been booming this year!) is a good thing for the economy according to Lagarde, 2008 long forgotten. 
It is the interplay between the global economy and the U.S. economy on which I would like to focus today. In a world of increasing economic interconnections, the challenges facing the United States—and all of us—are greater; but so too are the opportunities. The question is how we can best come together—business leaders, labor groups, policymakers and others—to find the solutions that we need to secure a lasting, balanced, and widely shared recovery.
Hello, the IMF has played a role in "increasing economic interconnections"! She explains this a few paragraphs later,
This brings me to my final point: the role of the IMF in the global economy—and why an effective IMF is important for our global membership and for the United States.
and
The IMF’s founders—an Englishman, John Maynard Keynes, and an American, Harry Dexter White—had a plan. A vision of a global economic “club” where countries could cooperate with a clear objective: global economic and financial stability.
Like a credit union for the world, the IMF’s member countries pool resources that can provide a lifeline to members in need. In fact, the first country to draw on IMF assistance was my home country, France.
A couple of decades later, the IMF helped the newly independent countries during decolonization. When the Berlin Wall fell, the Fund supported Eastern Europe’s efforts to transform from centrally-planned economies into market economies. In between, the IMF has helped its members to overcome economic crises—in Latin America in the 1980s, Asia in the 1990s and, most recently, in the Eurozone. 
and in her concluding remarks,
What I have tried to describe today is a journey. A journey that the United States and the IMF have taken hand-in-hand. As our leading shareholder and steadfast partner for nearly 70 years, we have worked together for a mutual goal of global stability and shared prosperity. 
The IMF is a central planner, and central planning does not work. Howden sums up the problems with IMFs global operations nicely in his article The IMF needs to Cease and Desist
In its search to remain relevant through the crisis, the IMF has expanded its scope of operations to give it an aura of indispensability. Managing director Christine Lagarde recently signaled that the IMF stood ready to aid any government in need of financing, though it needed a further increase in the scope of its policy tools and operations to do so. Indeed, as the Financial Times reports, “The IMF has a range of precautionary tools that will fund governments if they lose the ability to borrow from markets… Setting them up in advance of a crisis is intended to stop a crisis from happening.”
Actually, setting these tools up in advance will only increase the odds that a crisis will occur. As governments and investors realize the implicit, if not explicit, guarantee that the IMF provides, they will be less weary of lending money to profligate countries. This has been a common underlying theme in the lead up to the current crisis, as I have documented in Iceland, and also Ireland and Greece, among others.
The more risk the IMF tries to eliminate from the financial system, the more it creates. Sustainable finances can only happen when investors can assess the true risk inherent in borrowing, free from the interference of international consortia disrupting risk perceptions.
Bottom line: We suggest Lagarde resigns and instead attempts a comeback in synchronized swimming. Then shut down the IMF.


September 20, 2013 
September 19, 2013 
September 19, 2013 
September 19, 2013 
September 18, 2013 
September 18, 2013 
September 18, 2013 
September 18, 2013 
September 17, 2013 
September 17, 2013 
September 17, 2013 
September 17, 2013 
September 16, 2013 
September 16, 2013 
September 16, 2013 
September 14, 2013 

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