http://globaleconomicanalysis.blogspot.com/2012/04/imf-chief-jackass-calls-for-taxpayer.html
IMF Chief Jackass Calls for Taxpayer-Funded Bank Recapitalisations
Please consider the Financial Times article IMF sees banks deleveraging by $2.6tn
Did taxpayers force banks to make stupid loans? If not, why should taxpayers bail out the banks and bondholders?
Have the efforts to do that worked so far? Is Greece in better shape? Portugal?
Did housing prices in the US recover after US taxpayers bailed out Fannie Mae and Freddie Mac bondholders such as PIMCO?
Take a good look at Iceland. It is recovering because Iceland made banks and bondholders take a hit. Instead, the IMF wants to burden already over-burdened taxpayers so the likes of banks and bondholders (the wealthy class) can be made whole.
Supposedly this will get banks to lend. How can it? Taxpayers have seen prices rise, wages fall, and taxes go up, all of which leaves them in a much worse position to borrow and spend.
Who exactly do these jackasses represent?
The answer is obvious. The IMF is not setup to help countries or taxpayers, it was created to rob countries, rob taxpayers, and generally wreak havoc in times of trouble just so the wealthy class can be bailed out again, and again, and again, whenever the banks and bondholders get in trouble by taking on excessive risk.
Fitch Ratings has issued the clearest warning to date that Holland faces losing its AAA rating if it fails to deliver austerity cuts or lets political conflict intrude on economic management.
Tomorrow's Spanish auction is a key driver, and it's a tough call. Spain needs to be financed by another $50bn as of the balance of this year, and the key thing is, can they maintain market access?
Within the euro area, Italy is facing a particular challenge as high current debt levels interact negatively with elevated marginal funding costs (see Table 2.1 in the full report for more). Even under the complete policies scenario, the average interest rate on Italy’s public debt rises somewhat by 2016, to about 4.6pc. But it would climb to 5.3pc if current yield levels are maintained, as assumed under the current policies scenario, and exceed 5.7pc under the increase in marginal funding costs assumed under the weak policies scenario.
Like Goldilocks, the amount, the pace of deleveraging must be just right. Not too large or too much.
To try to do it all up front, the risk is [...] you're undermining the prospects for some stability in growth, some recovery in growth, and you may end up undermining and setting back the cause of reform.The financial crisis is exacting a huge price on Italian families and young people.
IMF Chief Jackass Calls for Taxpayer-Funded Bank Recapitalisations to Avoid Painful Deleveraging; Mish Says Fire the Parasites and Disband the IMF
Yesterday TrimTabs president & CEO, Charles Biderman, proposed Firing All Government Economists and Disbanding the BLS, BEA and Census Bureau
I countered with ...
"Biderman's proposal a mere down payment on what needs to happen. In addition to getting rid of the BLS, the BEA, and the census bureau, we also need to get rid of the Fed, the department of energy, student loans, crop subsidies, the small business association, Davis-Bacon, prevailing wage laws, collective bargaining, and all sorts of other programs that at best accomplish nothing at tremendous cost, and in most cases do further economic damage because of graft, inefficiencies, and bad reporting."Neither of us mentioned the ECB, central bankers in general, or the focus of this column, the IMF.
I countered with ...
"Biderman's proposal a mere down payment on what needs to happen. In addition to getting rid of the BLS, the BEA, and the census bureau, we also need to get rid of the Fed, the department of energy, student loans, crop subsidies, the small business association, Davis-Bacon, prevailing wage laws, collective bargaining, and all sorts of other programs that at best accomplish nothing at tremendous cost, and in most cases do further economic damage because of graft, inefficiencies, and bad reporting."Neither of us mentioned the ECB, central bankers in general, or the focus of this column, the IMF.
IMF Chief Jackass Calls for Taxpayer-Funded Bank Recapitalisations
Please consider the Financial Times article IMF sees banks deleveraging by $2.6tn
A drastic contraction of European bank balance sheets during the next 18 months could jeopardise financial stability and economic growth in Europe and beyond, according to forecasts from the International Monetary Fund.
In its Global Financial Stability Report, published on Wednesday, the fund warned that European banks looked set to shrink their balance sheets by $2.6tn (€2tn) over that period. Unless officials improved their policy response, the IMF said, European banks would dump almost 7 per cent of their assets by the end of next year.
José Viñals, director of the monetary and capital markets department at the fund, said: “The key is to recapitalise, restructure and resolve.”
The warning comes a day after Olivier Blanchard, the fund’s chiefFire the Parasites and Disband the IMFeconomistjackass, called for taxpayer-funded bank recapitalisations to be put back on the policy agenda to counter the risk of a painful deleveraging.
Did taxpayers force banks to make stupid loans? If not, why should taxpayers bail out the banks and bondholders?
Have the efforts to do that worked so far? Is Greece in better shape? Portugal?
Did housing prices in the US recover after US taxpayers bailed out Fannie Mae and Freddie Mac bondholders such as PIMCO?
Take a good look at Iceland. It is recovering because Iceland made banks and bondholders take a hit. Instead, the IMF wants to burden already over-burdened taxpayers so the likes of banks and bondholders (the wealthy class) can be made whole.
Supposedly this will get banks to lend. How can it? Taxpayers have seen prices rise, wages fall, and taxes go up, all of which leaves them in a much worse position to borrow and spend.
Who exactly do these jackasses represent?
The answer is obvious. The IMF is not setup to help countries or taxpayers, it was created to rob countries, rob taxpayers, and generally wreak havoc in times of trouble just so the wealthy class can be bailed out again, and again, and again, whenever the banks and bondholders get in trouble by taking on excessive risk.
and......
http://www.telegraph.co.uk/finance/financialcrisis/9211744/IMF-fears-3.8-trillion-forced-asset-sale-by-eurozone-banks.html
IMF fears $3.8 trillion forced asset sale by eurozone banks
An escalation of the eurozone debt crisis could force European banks to sell assets worth up to $3.8 trillion (£2.4 trillion) by the end of 2013 and trigger a fresh credit crunch, the International Monetary Fund has warned.
9:00PM BST 18 Apr 2012
70 CommentsThe IMF's spring Global Financial Stability Report said that should markets lose faith in the effectiveness of eurozone policies, rising funding costs and increased stresses within the banking system could force banks to rapidly reduce their balance sheets to raise capital buffers.
Under the scenario, the supply of eurozone credit would fall by 4.4pc and growth in the region would be cut by 1.4pc.
The sell-off among 58 of the biggest banks in the European Union included in the IMF's analysis would be equivalent to 10pc of total assets, and the balance sheet adjustment would also involve a significant reduction in bank lending, it said.
The UK banks involved in the study were state-backed Royal Bank of Scotland and Lloyds Banking Group, as well as HSBC and Barclays.
A second global credit crunch would make it more difficult still for UK households and businesses to borrow from banks.
"Such a large-scale deleveraging would have consequences well beyond the euro area. The fire sale of bank assets could have a significant impact on asset prices and market liquidity," the IMF said.
José Viñals, director of Monetary and Capital Markets at the IMF, said that while policy actions in the eurozone had eased the sense of crisis, risks remained.
"Policy actions have brought gains but current efforts are not enough to bring lasting stability. It is too soon to say we have exited the crisis. Pressures on European banks remain."
He said that while some deleveraging was desirable where it increased banks' capital positions and reduced the reliance on wholesale funding, the pace and nature must be correct.
The IMF said that banks would prioritise the disposal of non-core and foreign assets before moving onto home markets and lending reduction the higher the stress.
To achieve lasting global financial stability, the IMF said swift fiscal integration was needed in the eurozone, close regulation of banks, continued loose monetary policy, and a gradual withdrawal of fiscal support where possible.
"We need a vision of 'more and better' Europe," said Mr Viñals. Even though it may be politically difficult to achieve, "a consensus needs to be agreed now," he said.
The IMF also suggested eurozone countries should further increase its combined bailout funds to increase confidence in the region's ability to deal with further shocks.
The European Financial Stability Facility and European Stability Mechanism have a total firepower of €740bn (£606bn).
The Washington-based fund singled out the US and Japan for criticism, arguing those countries posed "a latent threat to financial stability" because they had so far failed to adequately address their large deficits.
and....
http://www.telegraph.co.uk/finance/debt-crisis-live/9210401/Debt-crisis-as-it-happened-April-18-2012.html
20.40 The next eurozone country to lose its AAA rating could come from the northern European heartland, so far regarded as far safer than the 'Club Med' nations which are already struggling - it could be theNetherlands, according to Ambrose Evans-Pritchard.
He writes:
Fitch Ratings has issued the clearest warning to date that Holland faces losing its AAA rating if it fails to deliver austerity cuts or lets political conflict intrude on economic management."The Dutch are on the edge of a negative rating action," said Chris Pryce, Fitch’s expert on the Netherlands. The first move is likely to be a switch from stable to negative outlook rather than a full downgrade.
"We will hold a rating committee meeting in June. They run risks if they keep letting debt rise: a cautious approach would be advisable," he told the Telegraph.
The warning comes as Dutch property tips into deeper slump, with the inventory of unsold homes nearing South European levels. Household debt is the eurozone’s highest at 249pc of income, compared with 202pc in Ireland, 149pc in the UK, 124pc in Spain, 90pc in Germany, 78pc in France and 66pc in Italy - according to Eurostat data from 2010.
20.25 Hmm... A spanner in the works for Christine Lagarde's fundraising mission at this week's IMF meeting in Washington.
Canada has said it won't make a commitment to increasing the IMF's resources to tackle the eurozone crisis.
An official from the finance minstry told Reuters that Europe already has significant resources to deal with its own problems.
As you may recall, the Telegraph reported on Monday that George Osborne was willing to commit another £10bn to the IMF as long as all the major non-eurozone nations, apart from the US, agreed to do so.
That would be the UK, Canada, Japan, Australia, China and India. Japan has already put its hand in its pocket, but with Canada ruling itself out, we shall see what this means for Britain...
19.55 The euro has fallen against the pound and the dollar today, as concerns about Spain's ability to borrow at an affordable rate increased.
The country is due to auction €2.5bn of two-year and ten-year government bonds tomorrow, and the cost it pays to rase the money will give a clear picture of investor sentiment.
Tomorrow's Spanish auction is a key driver, and it's a tough call. Spain needs to be financed by another $50bn as of the balance of this year, and the key thing is, can they maintain market access?19.35 The total value of financial support for Greece, provided by EU nations and the IMF, will be €380bn, according to Jose Manuel Barroso, head of the European Commission.
Statistics fans, that equates to €33,600 for every one of Greece's 11m-strong population, and 177pc of the country's GDP. We'll let those figures speak for themselves...
The €380bn is made up of €40bn of routine EU finance from 2007-2013, €100bn by way of private-sector debt written off by investors and €240bn in special bailout loans and aid from eurozone or EU partners and the IMF.
18.25 Two big political events are coming up which could whip up the eurozone crisis even further - the election in France and the election inGreece.
Polls are still showing that Nicolas Sarkozy is likely to lose to Socialist contender Francois Hollande in France, but Greece looks in danger of failing to elect a majority winner.
The latest poll from Greece shows the two main parties in the present ruling coalition could carry on ruling together with a very small majority.
The conservative New Democracy and the Socialist PASOK party, who have both backed the short-term government of technocrat Lucas Papademos, would still jointly win 40.1pc of the vote or 158 of the country's 300 parliamentary seats - a result which would allow them to renew their coalition, according to a survey by pollster Marc for theEthnos newspaper.
17.50 Some good news for Ireland - the state-owned property agency, set up to take more than €70bn of risky land and real estate loans off the books of the country's troubled banks, will make a €1bn profit this year.
Finance minister Michael Noonan said the National Asset Management Agency (NAMA) will beat an earlier estimate of €600m for profit before impairments for 2011.
The impairment charge is expected to come in at around €810m, taking net profit down to €200m. NAMA is counted as a liability for the Irish government, so its results are closely watched because any loss would push up Ireland's national debt, expected to peak at 119pc of GDP next year.
15.20 Another interesting graph from the IMF report suggests that in four years time, Italy will be in a worse position than Spain in terms of the amount it has to pay to service its debt, even if funding conditions improve. More from the report:
Within the euro area, Italy is facing a particular challenge as high current debt levels interact negatively with elevated marginal funding costs (see Table 2.1 in the full report for more). Even under the complete policies scenario, the average interest rate on Italy’s public debt rises somewhat by 2016, to about 4.6pc. But it would climb to 5.3pc if current yield levels are maintained, as assumed under the current policies scenario, and exceed 5.7pc under the increase in marginal funding costs assumed under the weak policies scenario.Spain’s debt dynamics are also challenging, though for different reasons: the country starts from relatively low levels of indebtedness, but unlike Italy continues to run sizable primary deficits, which push up debt levels even if interest rates remain contained.
Benchmark 10-year borrowing costs are currently at 5.48pc for Italy, and 5.8pc for Spain.
The "adverse" risk scenario assumes that an interest rate shock, averaged over all bond maturities under consideration, is (in basis points), for Belgium, 85; France, 88; Germany, 95; Italy, 93; Japan, 34; Spain, 98; United Kingdom, 102; United States, 114 (Source: IMF)
15.00 Mr Vinals, director of the IMF's monetary and capital markets, said he is "not aware" of any discussions between the IMF and the EU about an injection of capital for Spain's banks.
Folllowing the remarks from the German finance ministry (see 13.08 post) earlier today, saying there was no discussion of a bailout for Spain underway, it looks like there's no reason to expect imminent action to improve Spain's finances.
14.40 The IMF's global financial stability report is out, and it finds that European banks have plenty of work to do.
Banks are under pressure to preserve capital, and are therefore likely to cut back on lending over the next two years, dragging down growth in the region even further.
Large banks based in the EU may have to sell up to $3.8 trillion of assets by the end of 2013, equivalent to 10pc of their total assets.
The IMF said some "deleveraging" or reduction in credit made available, is necessary, but Jose Vinals of the fund said:
Like Goldilocks, the amount, the pace of deleveraging must be just right. Not too large or too much.14.17 The road to recovery requires an important balance between growth and austerity, according to Timothy Geithner, US treasury secretary. He told an audience at the Brookings Institution:
To try to do it all up front, the risk is [...] you're undermining the prospects for some stability in growth, some recovery in growth, and you may end up undermining and setting back the cause of reform.14.03 Italy has cut its 2012 economic growth forecast and moved the goalposts on its balanced budget rule.
The Italian economy is now expected to contract by 1.2pc this year from 0.4pc previously, The revision was largely expected, following a series of leaked reports in the media.
The Italian government, which had vowed to balance the budget in 2013, now expects a shortfall of 0.5pc of GDP next year, and a balanced budget in 2014. In a statement, the Italian government said:
Despite the progress made, there is still a long way to go in a context that is more favourable but still characterised by elements of uncertainty.
PM Mario Monti added:
The financial crisis is exacting a huge price on Italian families and young people.Italian PM Mario Monti addresses the media on Wednesday (Photo: EPA)
13.52 You can watch EC president Jose Manuel Barroso deliver his speech on jobs and growth in Greece here.
13.39 A 42-page report compiled by the European Commission onGreece has been leaked to the Greek media.
at the European Parliament shortly and obtained by Athens News, recommends an overhaul of the wage-setting system, including a cut in unit labour costs by 15pc, a reduction in red tape, and privatisation of the country's remaining state-owned gas and electricity companies.
It outlines a 30, yes, THIRTY point plan which "if implemented by Greek authorities by the end of 2012, with our support, should quickly unblock growth".
