Showing posts with label imf. Show all posts
Showing posts with label imf. Show all posts

Monday, May 10, 2010

We're from the IMF and we are here to help you.

Before the PIIGS (Portugal, Italy, Ireland, Greece, Spain) of Europe breathe a deep sigh of relief as their funding problems are 'fixed' there's a few items to mention:

Assuming the money arrives you still have to deal with the IMF which has a usual gameplan of:

  • Devalue the currency
  • Raise taxes
  • Cut government spending
Item 1 is out the door as countries use the Euro
Raising taxes and cutting government spending is not a mix that encourages GDP growth.  Consider that when making your investments.   Don't forget that during this period of IMF induced austerity debt / GDP levels will continue to rise.  This is the mother of all 'kicking the cans down the road'.

The wad of money (nearly a $US Trillion!) will be used to allow countries to roll their debts, not stimulus.  The French banks are breathing a deep sigh of relief right now.  Everyone else should rethink what this all means.

Here's a video with my favorite hedge fund agitator explaining the situation.  This interview occured before the announcement but it still holds true.



(ht Zerohedge)