Monday, Feb 09, 2009
The world is bankrupt! Oh well, we'll need a new system then.
Telegraph: IMF may run out of cash to fight crisis in six months, Strauss-Khan warns
Dominique Strauss-Kahn said the Fund needed an urgent cash infusion if it was to continue bailing out troubled economies in the future. Mr Strauss-Kahn also indicated that the world's advanced economies were now tipping from recession into full-blown depression, cementing fears about the scale of the economic slump in rich nations.
The IMF head made the comments in Kuala Lumpur in Malaysia over the weekend, where he is attending a meeting of central bankers from Southeast Asia. The Fund has bailed out a number of countries including Iceland, Latvia and Pakistan but Mr Strauss-Kahn said there would be many others in need of help in the months ahead.
Posted by flintster1994 @ 11:37 AM (844 views) Add Comment
14 Comments
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1. paul said...
So the IMF is currently bailing out the advanced economies and Japan is bailing out the IMF?
Ew dear.
2. paul said...
Oh, just a quick note on the IMF's forecasts.
I distinctly remember the IMF predicting some time in late 2006 that "the UK had a 5-10% probability of falling into recession". I conclude that the IMF have an unwavering track record of making mostly poor predictions.
3. penbat1 said...
Surely rather than go bust the IMF will sell off its considerable gold reserves to save itself. Has anyone got a convincing reason why they wouldnt ?
4. titaniccaptain said...
@penbat1.....................that would not be good for gold
5. mountain goat said...
"I can't promise that in six to eight months from now, we will have enough resources."
GB better get a move on if he doesn't bankrupt us in 6 months it will be too late!
6. mountain goat said...
penbat1 - Surely rather than go bust the IMF will sell off its considerable gold reserves to save itself. Has anyone got a convincing reason why they wouldnt ?
The IMF or a central bank which sells its gold is like a farmer who sells his land.
7. penbat1 said...
Mountain goat - yes but unlike land, gold does not generate any income by simply holding it. Anyway after doing a bit of googling the IMF do sell off some of their gold from time to time (it also has to be approved by other authorities) and may well sell some of it in the future. But it shouldnt be enough to make the gold price tank.
8. mountain goat said...
penbat1 - after I wrote it I realised I should have said "The IMF or a central bank which sells its gold or foreign reserves is like a farmer who sells his land."
What I meant was it would only sell off reserves, gold or FX, if it was being wound down.
9. stillthinking said...
http://www.marketoracle.co.uk/Article3752.html
Most of the IMF gold actually belongs to the contributing countries. They apparently swizzed Brazil and Argentina out of 400 tonnes worth though.
10. mark wadsworth said...
The IMF is just a pooled fund - the members and contributors are all major economies, roughly proportional to the size of their economy. So while the IMF works fine if just one or two countries are in a mess, these countries cannot all bail each other out.
The IMF is a joke anyway, and is one of the organisations from which England will withdraw once I'm PM, along with UN, NATO, UK, EU, G8 etc etc etc.
11. 51ck-6-51x said...
paul - "I distinctly remember the IMF predicting some time in late 2006 that 'the UK had a 5-10% probability of falling into recession' "
There is no way to say this is a bad prediction. If one could repeat the experiment many times then we can comment - maybe the chance was exactly 7.5% and it just so happens that this reality was in the unlucky* 7.5% of realities. People generally don't understand probability.
* or even lucky - who knows what would happen in the alternative!
mark wadsworth
"these countries cannot all bail each other out."
For some reason when I read this I heard it like a punch a judy line, to which the audience of politicians all scream "Oh yes we can!"
12. titaniccaptain said...
Wadsworth PM eh??????
could do alot worse....can I be defence minister?
13. paul said...
51ck, at the time, we and a few economics commentators considered that only a 5-10% risk was unrealistically optimistic - the FSA's six factors that caused the crisis detailed here are:
a rapid extension of credit and falling credit standards;
a property boom;
an under-estimation of bank and market liquidity risk;
the increased complexity of the securitised credit market;
increased leverage in the banking and shadow banking system;
and a self-reinforcing cycle of irrational exuberance.
which all existed at the time the IMF made the prediction. That's why it was unrealistic.
14. greytornado said...
Re Mountain Goats' post - I have concluded that some states - certainly the US and the UK do not like citizens owning gold and both have a history of legislating against ownership & confiscation. The trouble is, if citizens are allowed to own gold, they are in control of their own destiny and by a bit of advance planning, they are outside the 'system'. It is a widespread view that the current problems will before long cause the price of gold to climb to high levels. I believe $3000 an ounce is very likely. Some commentators are talking of $10,000 an ounce. Whatever happens, there is an opportunity for some to make money, a lot of it. I don't think any bank or institution is likely to be offloading gold now. They are working out that the future stable currency after this mess, will somehow be pegged to gold.