European Central Bank President: IMF Aid "Very, Very Bad"

There have been reports in the past that the dire straits of the euro are really no different from the challenges faced by the states within America’s borders. Today, we’d have to disagree.

For a variety of reasons we’ve covered here before, the euro’s been dragging close to ten-month lows. Today, it found new reason to sink as ECB President Jean-Claude Trichet indicated that financing support from outside of the euro area, including the IMF, is “very, very bad.”

According to Bloomberg:

“The market doesn’t care that ‘France and Germany are saying they have the framework to a plan to support Greece including the IMF,’ said John Curran, a Toronto-based senior vice president at CanadianForex Ltd. ‘It’s like ‘Yeah, OK, great, I have a plan for winning the lottery, too.’ Show us something that works’…

“Trichet, in an interview on France’s Public Senat television, said, ‘If the IMF or any other authority exercises any responsibility instead of the euro group, instead of the governments, this would clearly be very, very bad.'”

Even Goldman is regretting a bet the euro could rise:

“Goldman Sachs Group Inc. exited a bet that the euro would strengthen against the dollar after the trade lost 2.8 percent.

“’We have clearly underestimated the impact on the euro from the European sovereign crisis and perhaps also from the broader macroadjustment that it portends,’ five Goldman analysts including Thomas Stolper, a London-based economist, wrote in an e-mail message to Bloomberg News today. ‘These political headwinds currently matter far more for the euro than the cyclical factors.'” 

As broke as the US states are, and despite their budgets in disarray, we would expect little to no bickering over here as to which deserve federal support. Things seem much less clear across the pond.

Read more of the details in Bloomberg’s coverage of how the euro is trading near a ten-month low as Trichet says that IMF aid is “bad.”


Rocky Vega,
The Daily Reckoning

The Daily Reckoning