The IMF is ready, willing, and able to “Help” Ireland according Dominique Strauss-Kahn, the IMF Managing Director.
Please consider Strauss-Kahn Says IMF Can Help Ireland’s ‘Difficult’ Situation
The International Monetary Fund stands ready to help Ireland if needed, its managing director said, as market concern about the country’s debt crisis continues.
“Everybody knows that the situation with Ireland, it’s a difficult situation,” IMF Managing Director Dominique Strauss-Kahn told reporters today in Yokohama, Japan. “So far I haven’t received any kind of request. I think they can manage well. If at one point in time, tomorrow, in two months or two years, the Irish want support from the IMF, we will be ready.”
Bailing out Ireland’s financial system could cost as much as 50 billion euros under a “stress case” scenario compiled by the Finance Ministry and central bank. The country’s gross funding need for 2011 will be 23.5 billion euros, falling to 18.6 billion euros in 2014, the nation’s debt agency said yesterday.
Can the IMF “Help” Anyone?
Inquiring minds are asking “Can the IMF Help Anyone?”
That’s a good question. Mish readers may be shocked by my answer: “Yes It Can!”
The irony is no country in its right mind should ever accept “help” from the IMF.
This apparent paradox can be explained by the fact that “help” from the IMF is akin to tossing an anchor to a struggling swimmer.
Help does not go to the country accepting the offer of help. Rather “help” goes to the creditor nations who would otherwise bear the risk of a default by the debtors.
In this case, the IMF will not help Ireland. Instead, the IMF would screw the citizens of Ireland while bailing out the bondholders. Who are those bondholders?
The answer of course is banks in Britain, Germany, the United States and France.
Irish banks, bonds hit as EU eyes survival plan
Please consider Irish banks, bonds hit as EU eyes survival plan
Shares in Ireland’s banks hit record lows and national borrowing costs reached new euro-era highs Monday as the government presented its latest plans for financial survival to the European Union’s economic commissioner, who has the power to order changes.
The interest rates charged on the treasuries of Ireland, as well as fellow indebted euro-zone members Portugal and Spain, have been rising ever since German Chancellor Angela Merkel last month said she expected any future EU bailouts to come with new rules requiring bondholders to absorb some losses.
But Ireland is experiencing by far the greatest skepticism from would-be lenders, who look with horror at Ireland’s projected deficit of 32 percent of GDP, a modern European record.
Bank of Ireland and Allied Irish have received billions in state aid to cover their dud loans to bankrupt construction tycoons, while Irish Life & Permanent has received no bailout help but is most exposed to Ireland’s depressed market for residential property.
Traders said a widely read article in the Irish Times by University College Dublin economics Professor Morgan Kelly – known in Ireland as “Dr. Doom” because of his accurate forecasts of the death of the Celtic Tiger economy – added to the gloom.
Kelly forecast that state support for banks would cost taxpayers an extra euro30 billion beyond the euro45 billion to euro50 billion declared last month by Lenihan. He accused the government of maintaining “a dreary and mendacious charade” on the true scale of property-based losses in the pipeline.
Kelly called the current deficit-fighting push “an exercise in futility” and rated Ireland’s financial fate alongside that of the Titanic. He said there was no point trying to cut billions from the budget “when the iceberg of bank losses is going to sink us anyway.”
“We are no longer a sovereign nation in any meaningful sense of that term. From here on, for better or worse, we can only rely on the kindness of strangers,” Kelly concluded.
As the traditional owners of Irish treasuries – chiefly banks in Britain, Germany, the United States and France – seek to dump them because of their falling value and increased perceived risk, new sellers can be attracted only by offering higher yields.
Traders say the main buyer of Irish bonds in recent weeks has been the European Central Bank.
Reject Phony Offer of Help
Irish voters, if they have a chance, should reject this phony offer of “help” from the IMF, the EU or whoever. Merkel has it ALMOST correct when she said “any future EU bailouts to come with new rules requiring bondholders to absorb some losses.”
I say “almost” because the future is now. In addition, I say “almost” because “some of the losses” is inadequate. Bondholders should suffer losses down to the last penny. If they are wiped out, so be it.
The citizens of Ireland should not be responsible for those losses. In short, they should tell the IMF to “Go to Hell”. The simple way to do that is default.
To get its economy functioning again, Ireland will still need austerity measures, public sector reforms, bank reforms and other initiatives, but it certainly does not need any anchors from the IMF. Ireland has enough problems already.
Mike “Mish” Shedlock