IMF may need to “print money”, act as “world’s central bank” as crisis spreads
Looks like it’s time to bet your last few chips. Still in the game? The house is winning.
Ambrose Evans-Pritchard, The Telegraph
October 28, 2008
 |
| IMF’s work in countries such as Turkey is only just beginning |
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.
Source | See Also under New World Order: Draft letter calls on IMF to play critical role in financial crisis | ‘Stick together or sink together’: European Commission president invokes ‘global governance’ | UN announces green ‘New Deal’ plan to rescue world economies | Global financial summit set for Nov. 15 in Washington | History: How the US Government Was Overthrown In Three Easy Steps | Globalists Exploit Financial Meltdown In Move Towards One World Currency | Wanted: a new financial order | EU leaders to meet Bush and plan “refoundation of capitalism” | Bush outlines radical plan to part-nationalise banks | World needs new Bretton Woods, says Brown | IMF prescribes state regulation of ‘global financial order’ | Behind the panic: Financial warfare over the future of global bank power | G7 finance officials pledge action to end financial crisis | Global markets plummet in growing stock sell-off | Brown wants ‘global’ bank support | US considers following British example of taking stakes in banks | New World Order: Global co-operation, nationalisation and state intervention – all in one day | Calls For New EU Financial Order Increase As Total Meltdown Becomes Likely | Paul Martin calls for ‘global solution’ | Private Federal Reserve Makes Power Grab as Bush, McCain Urge Congress to Approve Plan | Towards a new world order: Canada-EU trade proposal rivals scope of NAFTA | Bank of Canada piles on in global inflationary swindle | Central banks continue inflating global economy | Central Banks Move to Transfer Wealth from Taxpayers to Banks | Russia’s defiance in the Caucasus has brought down the curtain on Bush senior’s new world order | Paul Martin promoting a new League of Nations on the road | US must share power in new world order, says Turkey’s controversial president | Global ‘liberalization’ illusion under threat. Economist calls for world economic regime, Keynesian saviour. Irony? | Federal Reserve cites global stakes in Fannie and Freddie rescue | Financial ’super cop’ role for Fed | The Resurgent Idea of World Government | What Really Killed Bear Stearns? | Soros points out regulated markets fail to operate on market fundamentals, calls for more regulation | Competition study calls for lowered barriers to foreign ownership, bank mergers | Massive overhaul urged on foreign investment in airlines, media, and banks | Bilderberg Seeks Bank Centralization Agenda | Secretive Bilderberg Group Reverses Policy, Releases Press Release and Attendance List | Actually, it’s time to imagine a new world order | Banks face “new world order,” consolidation: report
October 31st, 2008 at 3:34 pm
[...] | See also: IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Draft letter calls on IMF to play critical role in financial crisis | Ottawa to guarantee [...]
November 4th, 2008 at 3:49 pm
[...] Comments statism watch » Blog Archive » IMF may need to “print money”, act as “… on Soros points out regulated markets fail to operate on market fundamentals, calls for more [...]
November 5th, 2008 at 3:25 pm
[...] more than a slogan | The Bush gang’s parting gift: a final, frantic looting of public wealth | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Draft letter calls on IMF to play critical role in financial crisis | ‘Stick together or sink [...]
November 9th, 2008 at 8:45 pm
[...] more than a slogan | The Bush gang’s parting gift: a final, frantic looting of public wealth | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Draft letter calls on IMF to play critical role in financial crisis | ‘Stick together or sink [...]
November 10th, 2008 at 2:49 pm
[...] more than a slogan | The Bush gang’s parting gift: a final, frantic looting of public wealth | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Draft letter calls on IMF to play critical role in financial crisis | ‘Stick together or sink [...]
November 11th, 2008 at 1:39 pm
[...] of Economic Collapse? | The Bush gang’s parting gift: a final, frantic looting of public wealth | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Morgan Chase Exec Brags Bailout Is for Takeovers, Restructuring, Not Lending | Draft letter calls [...]
November 12th, 2008 at 12:34 pm
[...] of Economic Collapse? | The Bush gang’s parting gift: a final, frantic looting of public wealth | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Morgan Chase Exec Brags Bailout Is for Takeovers, Restructuring, Not Lending | Draft letter calls [...]
November 12th, 2008 at 12:58 pm
[...] more than a slogan | The Bush gang’s parting gift: a final, frantic looting of public wealth | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Draft letter calls on IMF to play critical role in financial crisis | ‘Stick together or sink [...]
November 13th, 2008 at 2:20 pm
[...] of Economic Collapse? | The Bush gang’s parting gift: a final, frantic looting of public wealth | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Morgan Chase Exec Brags Bailout Is for Takeovers, Restructuring, Not Lending | Draft letter calls [...]
November 13th, 2008 at 6:25 pm
[...] of Economic Collapse? | The Bush gang’s parting gift: a final, frantic looting of public wealth | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Morgan Chase Exec Brags Bailout Is for Takeovers, Restructuring, Not Lending | Draft letter calls [...]
November 14th, 2008 at 1:05 pm
[...] more than a slogan | The Bush gang’s parting gift: a final, frantic looting of public wealth | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Draft letter calls on IMF to play critical role in financial crisis | ‘Stick together or sink [...]
November 17th, 2008 at 3:48 pm
[...] more than a slogan | The Bush gang’s parting gift: a final, frantic looting of public wealth | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Draft letter calls on IMF to play critical role in financial crisis | ‘Stick together or sink [...]
November 17th, 2008 at 5:15 pm
[...] of Economic Collapse? | The Bush gang’s parting gift: a final, frantic looting of public wealth | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Morgan Chase Exec Brags Bailout Is for Takeovers, Restructuring, Not Lending | Draft letter calls [...]
November 18th, 2008 at 3:12 pm
[...] Credit Wallets | New credit cards may shift unauthorized-transaction liabilities to the holder | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Morgan Chase Exec Brags Bailout Is for Takeovers, Restructuring, Not Lending | Globalists Exploit [...]
November 18th, 2008 at 3:27 pm
[...] Credit Wallets | New credit cards may shift unauthorized-transaction liabilities to the holder | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Morgan Chase Exec Brags Bailout Is for Takeovers, Restructuring, Not Lending | Globalists Exploit [...]
November 22nd, 2008 at 5:14 am
[...] | TILMA interprovincial “trade pact” represents further centralization of political power | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Homeland Security Assuming Broad Powers, Turning Swaths of U.S. into “Constitution-Free Zone” [...]
November 27th, 2008 at 11:48 pm
[...] of Economic Collapse? | The Bush gang’s parting gift: a final, frantic looting of public wealth | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Morgan Chase Exec Brags Bailout Is for Takeovers, Restructuring, Not Lending | Draft letter calls [...]
December 6th, 2008 at 5:22 pm
[...] new World Order | New credit cards may shift unauthorized-transaction liabilities to the holder | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Greenspan tells Congress he’s shocked by credit crunch | Ottawa to guarantee interbank lending [...]
December 9th, 2008 at 11:40 am
[...] be more than a slogan | The Bush gang’s parting gift: a final, frantic looting of public wealth | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Draft letter calls on IMF to play critical role in financial crisis | ‘Stick together or sink [...]
December 16th, 2008 at 4:44 pm
[...] of Economic Collapse? | The Bush gang’s parting gift: a final, frantic looting of public wealth | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Morgan Chase Exec Brags Bailout Is for Takeovers, Restructuring, Not Lending | Draft letter calls [...]
December 18th, 2008 at 6:08 am
[...] be more than a slogan | The Bush gang’s parting gift: a final, frantic looting of public wealth | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Draft letter calls on IMF to play critical role in financial crisis | ‘Stick together or sink [...]
January 8th, 2009 at 5:20 pm
[...] be more than a slogan | The Bush gang’s parting gift: a final, frantic looting of public wealth | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Draft letter calls on IMF to play critical role in financial crisis | ‘Stick together or sink [...]
January 12th, 2009 at 9:32 am
[...] of Economic Collapse? | The Bush gang’s parting gift: a final, frantic looting of public wealth | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Morgan Chase Exec Brags Bailout Is for Takeovers, Restructuring, Not Lending | Draft letter calls [...]
January 13th, 2009 at 2:58 pm
[...] easier for Flaherty to report back to the IMF. He has made it quite clear that he supports handing oversight of Canada’s financial affairs over to that unelected international body. One should hope we won’t be subjected to the [...]
January 14th, 2009 at 4:07 pm
[...] | TILMA interprovincial “trade pact” represents further centralization of political power | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | History: How the US Government Was Overthrown In Three Easy Steps | Harper, Sarkozy vow to work [...]
January 16th, 2009 at 4:09 pm
[...] of Economic Collapse? | The Bush gang’s parting gift: a final, frantic looting of public wealth | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Morgan Chase Exec Brags Bailout Is for Takeovers, Restructuring, Not Lending | Draft letter calls [...]
January 16th, 2009 at 4:40 pm
[...] new World Order | New credit cards may shift unauthorized-transaction liabilities to the holder | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Greenspan tells Congress he’s shocked by credit crunch | Ottawa to guarantee interbank lending [...]
January 28th, 2009 at 5:53 pm
[...] new World Order | New credit cards may shift unauthorized-transaction liabilities to the holder | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Greenspan tells Congress he’s shocked by credit crunch | Ottawa to guarantee interbank lending [...]
January 29th, 2009 at 12:31 pm
[...] intent on the part of the Conservatives. All this money will do little more than buy time for some hierarchal international regulatory scheme to be set in [...]
January 30th, 2009 at 4:08 am
[...] scheme based on investor confidence and the ability to print money – can be knocked to zero, and pegged to a foreign currency, if consumer and investor confidence in your country evaporate. There’s going to be a lot of [...]
February 5th, 2009 at 12:02 am
[...] of Economic Collapse? | The Bush gang’s parting gift: a final, frantic looting of public wealth | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Morgan Chase Exec Brags Bailout Is for Takeovers, Restructuring, Not Lending | Draft letter calls [...]
February 17th, 2009 at 12:12 pm
[...] He and Rudd also want [to] allocate additional special drawing rights (SDRs) to the IMF’s newer members, as agreed in 1997, so giving them access to foreign exchange. SDRs are an official international reserve asset issued by the IMF to its members, who can exchange them for freely useable currency. Strauss-Kahn has called for the IMF’s resources to be doubled $500bn. Brown is also interested in the IMF supporting – through expertise and financing – the creation of a network of national “bad banks” to take on toxic assets. [Ed. Note: This ties into the previously stated desire to allow the IMF to print money.] [...]
February 19th, 2009 at 2:36 pm
[...] | TILMA interprovincial “trade pact” represents further centralization of political power | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | History: How the US Government Was Overthrown In Three Easy Steps | Harper, Sarkozy vow to work [...]
February 20th, 2009 at 2:10 am
[...] of Economic Collapse? | The Bush gang’s parting gift: a final, frantic looting of public wealth | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Morgan Chase Exec Brags Bailout Is for Takeovers, Restructuring, Not Lending | Draft letter calls [...]
February 22nd, 2009 at 8:34 am
[...] be more than a slogan | The Bush gang’s parting gift: a final, frantic looting of public wealth | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Draft letter calls on IMF to play critical role in financial crisis | ‘Stick together or sink [...]
March 15th, 2009 at 10:58 am
[...] Flashback: IMF emergency fund is doubled to $500bn, Northern Rock bank granted $14bn bailout | Gordon Brown seeks sweeping reforms to give IMF global ’surveillance role’ | Kissinger Calls For New International System Out Of World Crises | Jim Flaherty Urging Greater Federal, International Control over Canadian economy | IMF may need to “print money”, act as “world’s central bank” as crisis spreads [...]
March 26th, 2009 at 12:40 pm
[...] [...]
March 26th, 2009 at 12:49 pm
[...] [...]
March 27th, 2009 at 8:04 pm
[...] Flashback: IMF may need to “print money”, act as “world’s central bank” as crisis spreads [...]
March 27th, 2009 at 8:41 pm
[...] should ditch dollar | IMF poised to print billions of dollars in ‘global quantitative easing’ | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | History: How the US Government Was Overthrown In Three Easy Steps | Bilderberg Seeks Bank [...]
March 27th, 2009 at 11:37 pm
[...] be more than a slogan | The Bush gang’s parting gift: a final, frantic looting of public wealth | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Draft letter calls on IMF to play critical role in financial crisis | ‘Stick together or sink [...]
April 2nd, 2009 at 7:48 am
[...] [...]
April 21st, 2009 at 2:01 pm
[...] | TILMA interprovincial “trade pact” represents further centralization of political power | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | ‘Stick together or sink together’: European Commission president invokes ‘global [...]
April 23rd, 2009 at 3:49 pm
[...] new World Order | New credit cards may shift unauthorized-transaction liabilities to the holder | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Greenspan tells Congress he’s shocked by credit crunch | Ottawa to guarantee interbank lending [...]
January 8th, 2010 at 4:48 pm
[...] easing’ | Gordon Brown seeks sweeping reforms to give IMF global ’surveillance role’ | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Globalists Exploit Financial Meltdown In Move Towards One World Currency | World needs new [...]
January 29th, 2010 at 7:51 am
[...] easing’ | Gordon Brown seeks sweeping reforms to give IMF global ’surveillance role’ | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Globalists Exploit Financial Meltdown In Move Towards One World Currency | World needs new [...]
February 12th, 2010 at 1:36 pm
[...] easing’ | Gordon Brown seeks sweeping reforms to give IMF global ’surveillance role’ | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Globalists Exploit Financial Meltdown In Move Towards One World Currency | World needs new [...]
March 13th, 2010 at 8:40 am
[...] easing’ | Gordon Brown seeks sweeping reforms to give IMF global ’surveillance role’ | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Globalists Exploit Financial Meltdown In Move Towards One World Currency | World needs new [...]
April 23rd, 2010 at 4:21 am
[...] bonuses, at “earliest time” possible | Which Banks Will Rule? | Wall Street’s Big Takeover | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Behind the panic: Financial warfare over the future of global bank power | Goldman-Sachs Alumni [...]
June 8th, 2010 at 4:31 pm
[...] bonuses, at “earliest time” possible | Which Banks Will Rule? | Wall Street’s Big Takeover | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Behind the panic: Financial warfare over the future of global bank power | Goldman-Sachs Alumni [...]
June 15th, 2010 at 7:23 am
[...] easing’ | Gordon Brown seeks sweeping reforms to give IMF global ’surveillance role’ | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Globalists Exploit Financial Meltdown In Move Towards One World Currency | World needs new [...]
June 18th, 2010 at 2:19 pm
[...] easing’ | Gordon Brown seeks sweeping reforms to give IMF global ’surveillance role’ | IMF may need to “print money”, act as “world’s central bank” as crisis spreads | Globalists Exploit Financial Meltdown In Move Towards One World Currency | World needs new [...]