• Tag Archives IMF
  • Leading The Multipolar Revolution: How Russia And China Are Creating A New World Order

    The last thirty days have shown another kind of world that is engaging in cooperation, dialogue and diplomatic efforts to resolve important issues. The meeting of the members of the Belt and Road Initiative laid the foundations for a physical and electronic connectivity among Eurasian countries, making it the backbone of sustainable and renewable trade development based on mutual cooperation. A few weeks later, the Shanghai Cooperation Organization meeting in Astana outlined the necessary conditions for the success of the Chinese project, such as securing large areas of the Eurasian block and improving dialogue and trust among member states. The following AIIB (Asian Infrastructure Investment Bank) meeting in ROK will layout the economical necessities to finance and sustain the BRI projects.
    The Shanghai Cooperation Organization (SCO) and the Chinese Belt and Road Initiative (BRI) have many common features, and in many ways seem complementary. The SCO is an organization that focuses heavily on economic, political and security issues in the region, while the BRI is a collection of infrastructure projects that incorporates three-fifths of the globe and is driven by Beijing’s economic might. In this context, the Eurasian block continues to develop the following initiatives to support both the BRI and SCO mega-projects. The Collective Security Treaty Organization (CTSO) is a Moscow-based organization focusing mainly on the fight against terrorism, while the Asian Infrastructure Investment Bank (AIIB) is a Beijing-based investment bank that is responsible for generating important funding for Beijing’s long-term initiatives along its maritime routes (ports and canals) and overland routes (road, bridges, railways, pipelines, industries, airports). The synergies between these initiatives find yet another point of convergence in the Eurasian Economic Union (EEU). Together, the SCO, BRI, CTSO, AIIB, and EEU provide a compelling indication of the direction in which humanity is headed, which is to say towards integration, cooperation and peaceful development through diplomacy.
    On the other side we have the old world order made up of the IMF, the World Bank, the European Union, the UN, NATO, the WTO, with Washington being the ringmaster at the center of this vision of a world order. It is therefore not surprising that Washington should look askance at these Eurasian initiatives that threaten to deny its central and commanding role in the global order in favor of a greater say by Moscow, Beijing, New Delhi and even Tehran.

    This post was published at Zero Hedge on Jun 21, 2017.


  • EU Reach Bailout Deal With Greece Once Again

    #IMF Managing Director Christine Lagarde to propose approval in principle of new Stand-By Arrangement for #Greece. #Eurogroup pic.twitter.com/6yfuRHRjXd
    — Manos Giakoumis (@ManosGiakoumis) June 15, 2017

    Update: it appears there isn’t really a deal, but merely a can kicking. As the WSJ adds, the Greek “agreement” merely unlocks a key disbursement of bailout fund but puts a decision on debt relief off until next year. Specifically, the agreement reached in Luxembourg among the finance ministers of the eurozone unlocks 8.5 billion for Greece and puts off a final decision on debt relief until August of next year.
    In other words, Europe agrees to pay Greece so Greece can then turn around and repay Europe the July 7 billion debt payment; meanwhile no firm, long-term deal has been reached.
    As the WSJ put its, “the creditors’ refusal to lighten the burden of Greece’s crushing debt reflects a mix of mistrust and indifference that leaves the depleted country with bleak prospects for the future and at risk of needing yet another bailout.”

    This post was published at Zero Hedge on Jun 15, 2017.


  • Mises-Influenced MP Becomes Brexit Minister

    Steve Baker, a Conservative Member of Parliament, was announced today as junior Brexit minister under fellow libertarian David Davis. Baker, who has referenced Austrian scholars such as Ludwig von Mises, Jess Huerta de Soto and F. A. Hayek in the House of Commons, has long been a Eurosceptic and seen as a ‘hardliner’ in future negotiations with the EU. Along with his opposition to the EU, Baker has been a vocal opponent of the Bank of England’s policy of quantitive easing, and the IMF.
    In his own words:
    I am afraid that the contemporary mainstream of economics is missing some vital information…
    As I explained, as Mises set out, as Hayek followed in his steps and as others have predicted, we risk a final and total catastrophe for our currency system.
    To conclude, we are in danger of simply kicking a can down. … We are looking at further credit expansion, further monetisation of debts and further socialisation of risk. Throughout the western world, we are in danger of appearing as King Canute, trying to use politics to hold back the realities of social co-operation, which we usually describe as economics. The IMF is an institutional legacy from a monetary system that failed 40 years ago, and the successor to which is even now failing as well.

    This post was published at Ludwig von Mises Institute on June 14, 2017.


  • The end of the Anglo-American order?

    There has always been a shared conceit at the heart of the special relationship between the United States and United Kingdom that global leadership is best expressed and exerted in English.
    More boastful than the Brits, successive U.S. presidents have trumpeted the notion of American exceptionalism.
    Prime ministers, in a more understated manner, have also come to believe in British exceptionalism, the idea that Westminster is the mother parliament, and that the U.K. has a governing model and liberal values that set the global standard for others to follow, not least its former colonies.
    In the post-war Anglo-American order those ideas came together. In many ways, it was the product of Anglo-American exceptionalist thinking: the “city upon a hill” meets “this sceptred isle”.
    NATO, the IMF, the World Bank and the Five Eyes intelligence community all stemmed from the Atlantic Charter signed by Franklin Delano Roosevelt and Winston Churchill in August 1941.
    The liberalised free trade system that flourished after the war is often called the Anglo-Saxon model. The post-world global architecture, diplomatic, mercantile and financial, was largely an English-speaking construct.

    This post was published at BBC


  • China’s ‘official’ gold reserves unchanged for 7th straight month — Lawrie Williams

    Latest reports from the People’s Bank of China for May indicate that the World’s No. 2 economic power has kept its official gold reserve unchanged – at 59.24 million ounces (1,842.6 tonnes) – for the seventh successive month. Indeed China’s officially reported gold reserves have remained unaltered since the Chinese renminbi (or yuan) was confirmed as an integral part of the IMF’s Special Drawing Right (SDR) back in October last year. Currently the Chinese currency accounts for 10.92% of the basket of currencies which make up the SDR – the others are the US dollar 41.73%, the Euro 30.93%, the Japanese yen 8.33% and the pound sterling at 8.09%.
    The IMF notes on its website that the SDR was created in 1969 as a supplementary international reserve asset, in the context of the Bretton Woods fixed exchange rate system. A country participating in this system needed official reserves – government or central bank holdings of gold and widely accepted foreign currencies – that could be used to purchase its domestic currency in foreign exchange markets, as required to maintain its exchange rate. But the international supply of two key reserve assets – gold and the US dollar – proved inadequate for supporting the expansion of world trade and financial flows that was taking place. Therefore it was decided to create a new international reserve asset under the auspices of the IMF.
    Although the idea was to create a new reserve currency as defined by the SDR basket, the composition of which is reviewed every five years, the inclusion of a currency in the basket does lend a degree of acceptance as a potential reserve currency in its own right, which is presumably why China was so keen for the renminbi to become part of the SDR basket. To help achieve this the Chinese central bank began to announce monthly additions to its gold reserves in the interests of transparency. Prior to that it had only announced its gold reserve increases at five or six year intervals saying that this additional gold, which it then moved into its official reserve, had been held in accounts which were outside the purview of its gold reserve reporting to the IMF.

    This post was published at Sharps Pixley


  • IMF Warns, US Economy Uncertain As China’s Credit Growth Poses A Risk – Episode 1298a

    The following video was published by X22Report on Jun 5, 2017
    Toronto’s housing bubble has exploding, houses are up for sale and there is no traffic which means there are no buyers. US productivity has stalled. Banco Popular is in trouble and the contagion is going to spread if the bank is not bailed in or bailed out, the central bankers are looking for a buyer of last resort to step in and save the bank. The IMF says that the US economy is uncertain and China credit growth poses a major risk. This is a warning that the economy is about to collapse.


  • Ray Dalio Approves Of China Crushing The Yuan Bears

    Shortly after publishing his latest blog post in which Ray Dalio, the head of the world’s biggest hedge fund Bridgewater, said he is growing increasingly worried about Donald Trump’s “pursuit of so much conflict”, adding that “the more I see Donald Trump moving toward conflict rather than cooperation, the more I worry about him harming his presidency and its effects on most of us” (we will have more to say on that momentarily), Dalio tweeted his thoughts on China’s recent mauling of Yuan shorts.
    In what may come as a surprise to free market purists, Dalio was unexpectedly supportive of China’s decision to once again intervene in the FX market and crush countless Yuan bears after the recent Moody’s downgrade, even if it set back China’s currency “liberalization” process – for which China was so richly rewarded by the IMF last year when the Yuan became a member of the SDR basket – by months if not years, for three reasons. This is what he tweeted moments ago:
    China’s policy makers’ decision to squeeze the shorts in its currency is, in my opinion, a smart move because it:
    a) demonstrates the Chinese government’s power,
    b) discourages those who would lose confidence in its currency (in turn lessening the desire to sell the yuan), which helps stabilize the balance of payments and currency, and
    c) produces a tightening that works well in conjunction with tighter monetary policies to tighten credit (which is appropriate now).
    a) demonstrates the Chinese government's power, b) discourages those who would lose confidence in its currency
    — Ray Dalio (@RayDalio) June 5, 2017

    This post was published at Zero Hedge on Jun 5, 2017.


  • One Bank’s Surprising Discovery: The Debt Party Is Finally Over

    A recurring theme on this website has been to periodically highlight the tremendous build up in US corporate debt, most recently in April when we showed that “Corporate Debt To EBITDA Hits All Time High.” The relentless debt build up is something which even the IMF recently noted, when in April it released a special report on financial stability, according to which 20% of US corporations were at risk of default should rates rise. It is also the topic of the latest piece by SocGen’s strategist Andrew Lapthorne who uses even more colorful adjectives to describe what has happened since the financial crisis, noting that “the debt build-up during this cycle has been incredible, particularly when compared to the stagnant progression of EBITDA.”
    Lapthorne calculates that S&P1500 ex financial net debt has risen by almost $2 trillion in five years, a 150% increase, but this mild in comparison to the tripling of the debt pile in the Russell 2000 in six years. He also notes, as shown he previously, that as a result of this debt surge, interest payments cost the smallest 50% of stocks in the US fully 30% of their EBIT compared with just 10% of profits for the largest 10% and states that “clearly the sensitivity to higher interest rates is then going to be with this smallest 50%, while the dominance and financial strength of the largest 10% disguises this problem in the aggregate index measures.”

    This post was published at Zero Hedge on Jun 1, 2017.


  • Economists Puzzled By Unexpected Plunge In Saudi Foreign Reserves

    The stabilization of oil prices in the $50-60/bbl range was meant to have one particular, material impact on Saudi finances: it was expected to stem the accelerating bleeding of Saudi Arabian reserves. However, according to the latest data from Saudi Arabia’s central bank, aka the Saudi Arabian Monetary Authority, that has not happened and net foreign assets inexplicably tumbled below $500 billion in April for the first time since 2011 even after accounting for the $9 billion raised from the Kingdom’s first international sale of Islamic bonds.
    As the chart below shows, according to SAMA, Saudi net foreign assets fell by $8.5 billion from the previous month to $493 billion the lowest in six years, bringing the decline this year to $36 billion. Over the past three years, Saudi foreign reserves have dropped by a third from a peak of more than $730 billion in 2014 after the plunge in oil prices, prompting the IMF to warn that the kingdom may run out of financial assets needed to support spending within five years, according to Bloomberg.
    Analysts were puzzled by the ongoing sharp decling in Saudi reserves, especially since Saudi authorities recently embarked on a very public and “unprecedented” plan to overhaul the economy and repair public finances.

    This post was published at Zero Hedge on May 29, 2017.


  • The Golden Conspiracy

    Authored by Jim Rickards via The Daily Reckoning blog,
    Is there gold price manipulation going on? Absolutely. There’s no question about it. That’s not just an opinion.
    There is statistical evidence piling up to make the case, in addition to anecdotal evidence and forensic evidence. The evidence is very clear, in fact.
    I’ve spoken to members of Congress. I’ve spoken to people in the intelligence community, in the defense community, very senior people at the IMF. I don’t believe in making strong claims without strong evidence, and the evidence is all there.
    spoke to a PhD statistician who works for one of the biggest hedge funds in the world. I can’t mention the fund’s name but it’s a household name. You’ve probably heard of it. He looked at COMEX (the primary market for gold) opening prices and COMEX closing prices for a 10-year period. He was dumbfounded.
    He said it was is the most blatant case of manipulation he’d ever seen. He said if you went into the aftermarket, bought after the close and sold before the opening every day, you would make risk-free profits.
    He said statistically that’s impossible unless there’s manipulation occurring.

    This post was published at Zero Hedge on May 27, 2017.


  • Jim Rickards: The Golden Conspiracy

    Is there gold price manipulation going on? Absolutely. There’s no question about it. That’s not just an opinion.
    There is statistical evidence piling up to make the case, in addition to anecdotal evidence and forensic evidence. The evidence is very clear, in fact.
    I’ve spoken to members of Congress. I’ve spoken to people in the intelligence community, in the defense community, very senior people at the IMF. I don’t believe in making strong claims without strong evidence, and the evidence is all there.
    I spoke to a PhD statistician who works for one of the biggest hedge funds in the world. I can’t mention the fund’s name but it’s a household name. You’ve probably heard of it. He looked at COMEX (the primary market for gold) opening prices and COMEX closing prices for a 10-year period. He was dumbfounded.
    He said it was is the most blatant case of manipulation he’d ever seen. He said if you went into the aftermarket, bought after the close and sold before the opening every day, you would make risk-free profits. He said statistically that’s impossible unless there’s manipulation occurring.

    This post was published at Daily Reckoning


  • Greek Deal on Debt Relief Founders as Talks Stretch to June

    Euro-area finance ministers gathering in Brussels on Monday failed to break an impasse on debt relief for Greece, delaying the completion of the country’s bailout review and the disbursement of fresh loans needed to repay obligations in July.
    After nearly eight hours of talks and multiple draft compromises, Athens and its creditors couldn’t reach an accord that would ease Greece’s debt and that would convince the International Monetary Fund to agree to help finance the country’s bailout.
    ‘The Eurogroup held an in-depth discussion on the sustainability of Greece’s public debt but did not reach an overall agreement,’ said Jeroen Dijsselbloem, the Dutch finance minister who presides over meetings with his euro-area counterparts. Work will continue in the coming weeks with the aim of reaching a conclusion on June 15 at the next meeting of ministers, he said.
    The IMF has been seeking more debt relief for the country, pushing euro-area creditors to ensure the sustainability of Greece’s 315 billion ($354 billion) of obligations before it participates in the program. Some nations including Germany object to a debt restructuring while also insisting that the Washington-based fund join the program to lend credibility to the bailout.

    This post was published at bloomberg


  • Greek Debt Relief Deal Fails In Last Minute, As Germany, IMF Clash Again

    Stop us if you’ve heard this story before.
    Insolvent Greece, having last week voted itself into even more austerity in hopes of unlocking some of the money promised it by Brussels so it can then use it to repay debt maturities owed to the ECB (whether it will actually follow through with said austerity measures remains unclear, though most likely not), is dragged to the finish line of yet another Euro finance minister negotiating session with promises that this time a debt relief deal is virtually guaranteed, and then… it all falls apart.
    That’s what again happened today, when Euro-area finance ministers gathered in Brussels with hopes, at least for the Greek delegation, to come home with a signed agreement, only to fail to break the impasse on debt relief for Greece, delaying the conclusion of the country’s bailout review and the disbursement of fresh loans needed to repay obligations in July.
    ‘The Eurogroup held an in-depth discussion on the sustainability of Greece’s public debt but did not reach an overall agreement,’ said Jeroen Dijsselbloem, the Dutch finance minister who presides over meetings with his euro-area counterparts, and who again failed to reach a solution after another hardline stance by his German colleague, Wolfgang Schauble, prevented any potential concessions. As a reminder, ever since the 3rd Greek bailout in the summer of 2015, rhe IMF and Germany have been at odds over Greece’s economic outlook and the amount of debt relief required to assure economic stability: it was the same debate, that prevented a deal from being inked on Monday.

    This post was published at Zero Hedge on May 22, 2017.


  • Key Events In The Coming Week: FOMC Minutes, GDP, BOC, OPEC And More

    The key highlights in the coming week are the Fed minutes, the Eurogroup meeting on Greece, the OPEC meeting and Bank of Canada rate decision. We also get GDP releases in the US, Eurozone, and UK, while a murder (or gaggle) of Fed speaker will highlight virtually every single day, starting with 4 today. Also there will be monetary policy meetings in Colombia, South Africa, Korea, Hungary, Thailand and Ukraine. Ratings in Kuwait&Qatar
    In the US, key economic releases this week are the durable goods report and Q1 GDP revision on Friday. The minutes of the May FOMC statement will be released on Wednesday at 2PM. In addition, there are several scheduled speaking engagements by Fed officials this week
    Detailed event breakdown:
    Looking for dovish signs in the Fed minutes? The minutes on the May statement will be closely watched as the market tries to assess the potential of a communication tweak. The last statement dismissed the impact of weak 1Q GDP and March consumer inflation. With recent data being on the weak side, a dovish sign in the minutes may put emphasis on downside risks. Also watch for Eurogroup meeting on Greece and OPEC: A Eurogroup meeting is scheduled for 22 May. All eyes will be on the outcome because of Greece. Markets are optimistic that a compromise can be reached on Greece – we remain sceptical. Red lines around debt relief and IMF participation are the same and there is potential for complications in the run-up to the summer redemptions. Our commodity strategists cover the likely outcome at next week’s OPEC meeting. We think that Saudi, Russia, and most OPEC members will try sending the oil price forward curve in backwardation/ensuring no further drops in spot oil prices. Staying the course with ongoing cuts remains the most likely course of action as OPEC meets.

    This post was published at Zero Hedge on May 22, 2017.


  • Venezuela’s Oil Production On The Brink Of Collapse

    Desperation is spreading in Venezuela as violent protests continue to paralyze the country, further damaging the country’s shattered economy. Venezuela’s already-decrepit oil industry is deteriorating by the day, and an outright implosion is no longer out of the question.
    The inflation rate, according to the IMF, will balloon to 720 percent this year. Food shortages have been common for quite some time, but are deepening and wearing down the population. Three out of four people surveyed by the WSJ reported involuntary weight loss last year. Hospitals have completely broken down.
    Venezuela has been crippled by protests since late March, with more than three dozen people having been killed over the past two months, and there is no sign of improvement. This meltdown is taking a toll on Venezuela’s oil production, the last thing keeping the country from becoming a failed state. Venezuela’s oil production has been declining for more than a decade, mainly because oil revenues are used to finance the government, leaving little for state-owned PDVSA to reinvest in its operations.

    This post was published at Zero Hedge on May 18, 2017.


  • World Money: Five Hidden Signals From The IMF

    Less than a month ago a handful of the world’s policy makers gathered in Washington at the International Monetary Fund (IMF), no surprising headlines were run – but an obscure meeting and a discreet report launched exclusive signals for the next global economic crisis.
    The panel, which included five of the most elite global bankers, was held during the IMF’s spring meetings to discuss the special drawing rights (SDR) 50th anniversary. On the surface the panel was a snoozefest, but reading beyond the jargon offers critical takeaways.
    The discussion revealed what global central banks are planning for a future crisis and how the IMF is orchestrating policy for financial bubbles, currency shocks and institutional failures.
    Why the urgency from the financial elites?
    In theApril 2017 ‘Global Financial Stability Report,’ IMF researchers targeted the U. S corporate debt market and how extreme changes in its equity market has left the global economy at risk. While the report may have been missed by major financial news outlets, it was enough to give major concern to those paying attention. The IMF research report noted:
    ‘The [U. S.] corporate sector has tended to favor debt financing, with $7.8 trillion in debt and other liabilities added since 2010…’
    In another segment the IMF report said:
    ‘Corporate credit fundamentals have started to weaken, creating conditions that have historically preceded a credit cycle downturn. Asset quality – measured, for example, by the share of deals with weaker covenants – has deteriorated.’

    This post was published at Zero Hedge on May 18, 2017.


  • 18/7/17: Greece in Recession. Again.

    Per recent data release, Greece is now back in an official recession, with 1Q 2017 growth coming in at -0.1%, following 4Q 2016 contraction of 1.2%. Worse, on seasonally-adjusted basis, Greek economy tanked 0.5% in 1Q 2017. The news shaved off some 0.9 percentage terms from 2017 FY growth outlook by the Government (from 2.7% to 1.8%), with EU Commission May forecasting growth of 2.1% and the IMF April forecast of 2.15%, down from October forecast of 2.77%.
    Greece has been hammered by a combination of severe fiscal contractions (austerity), rounds of botched debt restructuring, and extreme fiscal and economic policy uncertainty since 2010, having previously fallen into a deep recession starting with 2008. Structural problems with the economy and demographics come on top of this and, at this stage in the game, are secondary to the above-listed factors in terms of driving down the country growth.

    This post was published at True Economics on Thursday, May 18, 2017.


  • State Department memo explains U.S. policy to drive gold out of the financial system

    A long memorandum written in March 1974 by a U.S. State Department official for Secretary of State Henry Kissinger and copied to future Federal Reserve Chairman Paul Volcker, then the Treasury Department’s undersecretary for monetary affairs, describes the desire of the United States and its options to prevent European countries from increasing the use of gold in the international financial system.
    The memo, titled “Gold and the Monetary System: Potential U.S.-E.C. Conflict,” was recently discovered in the State Department archive by GoldMoney Vice President John Butler and brought to GATA’s attention this week by GoldMoney research chief Alasdair Macleod. It emphasizes the longstanding U.S. government policy of subverting gold as a reserve currency in favor of the Special Drawing Rights issued by the International Monetary Fund, an agency then and now largely controlled by the United States.
    The memo’s author, Sidney Weintraub, deputy assistant secretary of state for international finance and development, wrote:
    “To encourage and facilitate the eventual demonetization of gold, our position is to keep the present gold price, maintain the present Bretton Woods agreement ban against official gold purchases at above the official price, and encourage the gradual disposition of monetary gold through sales in the private market.”
    “An alternative route to demonetization could involve a substitution of SDRs for gold with the IMF, with the latter selling the gold gradually on the private market, and allocating the profits on such sales either to the original gold holders or by other agreement.”

    This post was published at GATA


  • Can Puerto Rico Escape Disaster?

    In early May, Puerto Rico filed for bankruptcy in federal court to stave off lawsuits, under a law Congress passed last year, to help the island cut its debt and escape financial disaster. The saga now heads to federal court, where the struggle between Puerto Rico and its creditors will be decided.

    The Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) law set up a federal oversight board to handle the territory’s debt negotiations and the financial obligations it owes.
    Article III of PROMESA provides temporary protection from litigation, which expired last week. Puerto Rico has no way to pay the $123 billion in bonds and pension debt it owes, which includes more than $49 billion in pension liabilities.
    PROMESA requires good-faith negotiations toward an out-of-court deal before any filing, as well as to establish ‘procedures necessary to deliver’ audited financial statements for any entity entering bankruptcy.
    Some Puerto Rican agencies still have not published such statements, and creditors have complained for a while that the oversight board has not done enough to encourage compromises outside of court.
    Is Puerto Rico like Greece?
    Well no. Public lenders, such as the Eurozone and the International Monetary Fund (IMF), mostly hold Greece’s debt. Puerto Rico’s debt is in the hands of private investors, like hedge funds, mutual funds, and individuals.

    This post was published at FinancialSense on 05/15/2017.