IMF On The Brink of Running Out of Cash; Repeats Risk Of Great Depression

Discussion in 'Economics' started by ByLoSellHi, Feb 9, 2009.


    IMF may run out of cash to fight crisis in six months, Strauss-Khan warns

    The International Monetary Fund could run out of cash to firefight the economic crisis in as little as six months, its managing director has warned.

    By Edmund Conway, Economics Editor
    Last Updated: 7:02PM GMT 08 Feb 2009

    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.

    "Today, the IMF's resources are enough to face the situation but because we are facing a global crisis, the needs may be much bigger than previously," he said. "We have to intervene in Asia, Africa and Central Europe, Latin America, and maybe elsewhere. I can't promise that in six to eight months from now, we will have enough resources."

    The Fund is seeking pledges from nations with large current account surpluses and foreign exchange reserves to donate it cash to help bolster troubled countries. At the World Economic Forum in Davos late last month deputy head John Lipsky is understood to have spent time meeting with various heads of state and of sovereign wealth funds for precisely this purpose. Japan has already offered to add $100bn to the Fund's resources, Mr Strauss-Kahn said.

    "We need other countries to follow this generous example and provide funds with the means to address the challenges arising from this global crisis," he added.

    He warned that the economic crisis would intensify unless the financial system was repaired, saying that although he hoped the world could avoid a repeat of the Great Depression, the "worst cannot be ruled out. There's a lot of downside risk."

    The IMF recently slashed its world growth forecast to just 0.5pc - the weakest since the Second World War, and warned that the UK was facing the most severe slowdown of all developed economies. Although Mr Strauss-Kahn said that government spending packages and interest rate cuts would help, the health of the banking system was a far more important factor.

    "All this will work if, and only if, the different countries are likely to do what they have to do in terms of restructuring the banking sector," he said. "And today it's not done."

    The IMF has so far lent out $47.9bn to countries affected by the economic crisis - mostly those in Eastern Europe. Mr Strauss-Kahn said that the next victim could be Poland, which has said it does not need assistance now, but may well do in the future.
  2. dtan1e


    LOL, even the IMF is in the queue for a bailout!
  3. Is he including in their resources the huge cache of gold that the IMF holds? Perhaps they will sell it to raise cash causing a large drop in the price of gold and setting up for the run to $3,000/oz.
  4. They should allow gold to go to 10.000$ an ounce that way they have all the capital they need to bail out everyone in sight.
  5. indexer


    The world economy is deleveraging, the amount of credit is shrinking. There just is not going to be as much credit for developing countries as there was before.
  6. Haha, I kind of got the feeling their first "depression" announcement was really tainted. IMF has been openly rejected by country after country because everyone knows they are a tool of american multinationals. They are just trying to give themselves more power instead of quietly fading away.
    Let those stupid economists and consultants get laid off and rot, they're all part of the problem.
  7. mokwit


    Even better, outsource their jobs to India and China for a fraction of what they are getting from the IMF - you can get people just as incompetent as the IMF buffoons for a fraction of the price.
  8. How much Gold do they actualy have,please?
  9. The IMF holds 103.4 million ounces (3,217 metric tons) of gold at designated depositories. The IMF's total gold holdings are valued on its balance sheet at SDR 5.9 billion (about $9.3 billion) on the basis of historical cost. As of August 31, 2008, the IMF's holdings amounted to $86.2 billion (at then current market prices). A portion of these holdings were acquired since the Second Amendment of the IMF's Articles of Agreement in April 1978, amounting to 12.97 million ounces (403.3 metric tons), with a market value of $10.8 billion as of August 31, 2008. As noted below, this part of the Fund's gold holdings is not subject to restitution to members.

    Getting lazy in my old age.
  10. $100 billion is CHUMP CHANGE in this day and age.

    To put it into perspective, you could barely fund our budget deficit for 14 DAYS with $100 billion.

    The numbers are just STAGGERING anymore...
    #10     Mar 11, 2009