The IMF: Leading the Way to Financial Ruin
Nothing much to write about in the markets. Dow up 56 points yesterday. Oil flat. Gold plus $16.
Moody’s downgraded Portuguese debt to junk status. The IMF says it will still take the debt as collateral until all four rating agencies downgrade it. Then, the banks holding it are out of luck. They won’t be able to borrow against it. The credits won’t be good. Not even at the IMF.
The prestigious IMF was run by Dominique Strauss-Kahn…until the man was accused of rape by a New York hotel maid. The judicial system panicked and put DSK in jail. And the whole US press corps leaped to point the finger and give a he-had-it-coming scowl.
On network news…
“Finally, one brave woman has stood up,” or words to that affect, said Diane Sawyer, approvingly.
But at least here at The Daily Reckoning we kept our heads. We take for granted that DSK is a cad and a bounder. But a rapist? Not likely.
And now the hotel maid has been revealed as a liar. It doesn’t mean she’s lying about the “affair DSK,” but it is a rare district attorney who will want to put a woman like that in front of a jury.
Soon, DSK will be a free man again…and now, another frog is at the head of the IMF, Christine Lagarde. She knows nothing about banking or money either. But at least she has a nice smile and is less likely to be accused of rape.
She’ll have to face the same problems. Only, now they’re worse. While her predecessor may or may not be a menace to the female part of the human race, he was surely a menace to its money. Lending at the IMF increased 10 times under DSK. Guess where that money went? That’s right – to borrowers who can’t pay it back. Such as Greece. And Portugal.
Meanwhile, America’s central bank, under the direction of Ben Bernanke, has taken the same approach. Got a problem? Lend it more money!
The authorities in Europe and in America face more or less the same situation. They are facing up to it in more or less the same way too – either by pretending it doesn’t exist…or hoping it will go away…and/or lending more money.
And for the moment, they’re having some success. Not success at fixing the problem…but success at pretending! For the moment, they can still finance their own debts…and still bailout others…at very low interest rates.