blog of bile » IMF

Lord Keynes would be proud: Federal Reserve System acting as world central bank to foreign central banks

bile — Tue, 17 Mar 2009 17:21:04 +0000

http://www.huffingtonpost.com/…

For more than a year, the U.S. Federal Reserve System has been increasingly acting as the world’s central bank, injecting hundreds of billions of dollars into foreign government treasuries in an effort to increase liquidity in those countries.

The foreign central banks have used the U.S. currency to bail out financial institutions within their borders. The Fed program links its balance sheet directly to the fates of foreign central banks at a time when they’re on the ropes.

The program has so far gone unreported in the mainstream media and is a major expansion of Federal Reserve involvement in the global economy. It represents a stark break from the prior role of the Fed, moving it into territory more traditionally occupied by the International Monetary Fund (IMF).

The program puts both the Fed and the foreign central banks at increased risk. If the bailed-out banks can’t repay the loans, the foreign central bank is still on the hook to the Fed. It would have to raise the money by selling debt — which most Europeans are finding difficult today — or raise taxes or cut spending, actions that further exacerbate the economic crisis. Or, the foreign central bank could default, leaving the U.S. holding a bag of foreign currency of plummeting value.

Alex Jones on the Obama worship

bile — Tue, 20 Jan 2009 20:59:22 +0000

Too funny.

Icelanders demand PM resignation, clash with police

beetlbumjl — Mon, 24 Nov 2008 13:57:44 +0000

In a sign of the times, Icelanders take it to the streets.

REYKJAVIK, Nov 22 (Reuters) – Thousands of Icelanders demonstrated in Reykjavik on Saturday demanding the resignation of Prime Minister Geir Haarde and Central Bank Governor David Oddsson for failing to stop a financial meltdown in the country.

It was the latest in a series of protests in the capital since the financial meltdown that crippled the island’s economy.

Hordur Torfason, a well-known troubadour in Iceland and the main organiser of the protests, said the protests would continue until the government stepped down.

“They don’t have our trust and they are no longer legitimate,” Torfason said as the crowds gathered in the drizzle before the Althing, the Icelandic parliament.

A separate group of 200-300 people gathered in front of the city’s main police station demanding the release of a young protester being held there, Icelandic media reported.

Police in riot gear used pepper spray to drive back an attempt to free the protester during which several windows at the police station were shattered. The protester was later released after a fine he had been sentenced to pay was paid.

Iceland’s three biggest banks — Kaupthing, Landsbanki and Glitnir — collapsed under the weight of billions of dollars of debts accumulated in an aggressive overseas expansion, shattering the currency and forcing Iceland to seek aid from the International Monetary Fund (IMF).

This week, the North Atlantic island nation of 320,000 secured a package of more than $10 billion in loans from the IMF and several European countries to help it rebuild its shattered financial system.

Despite the loans, Iceland faces a sharp economic contraction and surging unemployment while many Icelanders also risk losing their homes and life savings.

A young man climbed onto the balcony of the Althing building, where the president appears upon inauguration and on Iceland’s national day, and hung a banner reading: “Iceland for Sale – $2.100.000.000″, the amount of the loan Iceland is getting from the IMF.

The rally lasted less than one hour and as daylight began to wane, demonstrators drifted away into the nearby coffee shops where the price of a cup of coffee has shot up to 300 kronas in the last few weeks, up by about one third from before the crisis struck, as the currency has tumbled.

Opposition parties tabled a no-confidence motion in the government on Friday over its handling of the crisis, but the motion carries little chance of toppling the ruling coalition which has a solid parliamentary majority.

“I’ve just had enough of this whole thing,” said Gudrun Jonsdottir, a 36-year-old office worker.

“I don’t trust the government, I don’t trust the banks, I don’t trust the political parties, and I don’t trust the IMF. We had a good country here and they’ve ruined it.”

After more Google News searching, it appears that the protests have been regular and violent since the financial crisis started.

Der Spiegel on The Shrinking Influence of the US Federal Reserve

beetlbumjl — Wed, 02 Jul 2008 15:28:57 +0000

Gabor Steingart reports from the Spiegel’s Washington DC bureau:

Humiliation for Mr. Dollar: Ben Bernanke, the chairman of the United States Federal Reserve Bank, faces a general investigation by the International Monetary Fund. Just one more example of the Fed losing its power.

The United States Federal Reserve Bank, or Fed, seems as much a part of America as Coca-Cola or Pizza Hut. But at least one difference has become apparent in recent days. While the pizza chain and soft-drink maker are likely to expand their scope of influence in the age of globalization, the US central bank is finding that its power is shrinking.

[snip parts explaining the doom and gloom of the current financial situation]

Under its bylaws, the IMF is charged with the supervision of the international monetary system. Roughly two-thirds of IMF members — but never the United States — have already endured this painful procedure.

For seven years, US President George W. Bush refused to allow the IMF to conduct its assessment. Even now, he has only given the IMF board his consent under one important condition. The review can begin in Bush’s last year in office, but it may not be completed until he has left the White House. This is bad news for the Fed chairman.

When the final report on the risks of the US financial system is released in 2010 — and it is likely to cause a stir internationally — only one of the people in positions of responsiblity today will still be in office: Ben Bernanke.

Poor Ben. Reaction to the this article can be found on The Age (an Australian news website). Liberty Maven discusses the dilemma in which the IMF puts Ron Paul supporters:

We are against the IMF and federal style regulation over markets at all levels, yet we painfully yearn for more transparency from the Federal Reserve. If we aren’t yearning for more transparency from the Fed we are advocating abolishing it outright.

So the question is then, do we support the IMF investigating the hated Federal Reserve because it conveniently supports our anti-Fed sentiments? Or are we truly and purely against the IMF and it’s authority to perform such investigations?