(BN) IMF Said to Seek $1 Trillion Resource-Boost Amid Euro Crisis

This is starting to be more and more like a bad Austin Powers movie.

Why should this group of unelected, many appointed based more on their political connections than their qualifications deserve so much money?

This was a cute and slightly prestigious entity when it helped channel the charity of big rich nations into small developing countries.  Whatever their mandate was, this is now getting ridiculous.  On the other hand, I will admit that at least they attempt to do their job with diligence as opposed to the IIF which has to be the entity with the least credibility (usefulness) that has somehow found itself thrust in the middle of developing plans.

The list of countries the IMF wants money from is almost comical.  Japan is right up there.  Of any country listed that may at some point need their own bailout, Japan is front and center.  The bears are lining up to take a poke at JGB’s.  Most have been burned from time to time over the past 20 years shorting JGB’s, but the stars do seem to be aligning for a shot.

Yesterday we rallied on news that China remains weak enough to need stimulus, yet here they are on the list of countries expected to make the IMF savior of the world (technically, they can’t save the world until they create their own central bank, but how far off can that be?).

Brazil, Russia, and India all see to have enough of their own issues that stepping up their IMF contributions seems unlikely.

I assume the oil-exporting nations we are asking are the ones that we aren’t going to embargo in 6 months (or just as soon as we don’t need to buy their oil)?  Or maybe it is the countries where the rulers (not really leaders) buy private jets with hot tubs, yet many of their people have a standard of living that most Europeans would consider appalling.

On the other hand, the market is either too long, too mature, or just realizes the likelihood of this happening (nil) that it couldn’t even bother to jack up stock futures much.  Kind of dull when a good old-fashioned trillion-dollar rumor can’t cause much of a spike.

If 2011 was the year of “broken” markets, then 2012 is shaping up to be the year of “apathetic” markets.

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IMF Said to Seek $1 Trillion Resource-Boost Amid Euro Crisis (1)

2012-01-18 11:00:46.70 GMT

     (Adds U.S. position in eighth paragraph. See EXT4for

more on Europe’s debt crisis.)

 

By Simon Kennedy

     Jan. 18 (Bloomberg) — The International Monetary Fund is

proposing a $1 trillion expansion of its lending resources to

insulate the global economy against any worsening of Europe’s

debt crisis, according to an official at a Group of 20 nation.

     The Washington-based lender is pushing China, Brazil,

Russia, India, Japan and oil-exporting nations to be the top

contributors, according to the official, who spoke on condition

of anonymity because the talks are private. The fund wants the

agreement struck at the Feb. 25-26 meeting of G-20 finance

ministers and central bankers in Mexico City, the official said.

     IMF Managing Director Christine Lagarde said yesterday her

staff are studying options to increase the fund’s war-chest

beyond the current $385 billion. While euro-region nations have

already pledged to contribute 150 billion euros ($192 billion),

the U.S. has said it has no plans to make new bilateral loans

and G-20 leaders ended last year at odds over the issue.

     “The biggest challenge is to respond to the crisis in an

adequate manner and many executive directors stressed the

necessity and urgency of collective efforts to contain the debt

crisis in the euro area and protect economies around the

world,” Lagarde said yesterday in an e-mailed statement

following a discussion among her institution’s board of

directors.

 

                           Euro Gains

 

     The push for more money by the IMF may extend this month’s

rally in investor sentiment toward European debt markets on

speculation the region is enjoying a respite from its two-year

debt turmoil and that any euro-area recession may be shallow.

The euro today extended its gains and European stocks rose.

     The euro climbed 0.8 percent to $1.2832 as of 10:38 a.m. in

London. The Stoxx Europe 600 Index erased losses to trade 0.1

percent higher.

     A fillip for the IMF is likely to be discussed by G-20

deputy finance chiefs, scheduled to meet this week in Mexico. At

a November summit in the French resort of Cannes, G-20 leaders

balked at writing fresh checks for the IMF, demanding that

Europe’s governments do more to fix their crisis while saying

they would ensure the IMF “continues to have resources to play

its systemic role.”

     A U.S. official reiterated that stance last month, saying

President Barack Obama’s administration won’t stump up more cash

for the IMF and that a solution to the turmoil must be led by

Europe.

     Russia’s government won’t decide on any contribution before

March presidential elections, First Deputy Prime Minister Igor

Shuvalov said in an interview in Moscow today.

     Options for bolstering the IMF’s resources include opening

a trust fund or not rolling back a 2009 increase. Officials have

also discussed increasing the amount of the fund’s Special

Drawing Rights.

 

For Related News and Information:

European crisis monitor: CRISIS <GO>

Sovereign credit ratings: CSDR

Credit-default swaps: GCDS

European Union news: NI EU BN <GO>

Economic indicator watch: ECOW EU

Global currencies: WCRS

Greece/Germany 10-year spread:

GDBR10 Index GGGB10YR Index HS D

 

–With assistance from Toru Fujioka in Tokyo and Sandrine

Rastello in Washington. Editors: Chris Anstey, Craig Stirling

 

To contact the reporter on this story:

Simon Kennedy in London at +44-20-7330-7086 or

skennedy4@bloomberg.net

 

To contact the editor responsible for this story:

Craig Stirling at +44-20-7673-2841 or cstirling1@bloomberg.net