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Page added on July 7, 2013
41 IMF Bailouts And Counting – How Long Before The Entire System Collapses?
Broke nations are bailing out other broke nations with borrowed money. Round and round we go – where we stop nobody knows. As of April, 41 different countries had active financial “arrangements” with the IMF.
IMF Loans (in thousands of SDRs)
Sometimes they are called “bailouts” and sometimes they are called other things, but in every single case they involve loans. And most of the time, these loans come with very stringent conditions. It is a form of “global governance” that most people don’t even know about.
For decades, the IMF has been able to use money as a way to force developing nations to do what it wants them to do. But up until fairly recently, this had mostly only been done with poor nations. But now an increasing number of wealthy nations are turning to the IMF for help. We have already seen Greece, Portugal, Ireland and Cyprus receive bailouts which were partly funded by the IMF, Spain has received a bailout for its banking sector, and as I noted yesterday, it is being projected that Italy will need a major bailout within six months. How long can this go on before the entire system collapses?
Well, that would depend on how much money the lender has.
And so where does the IMF get their money?
The IMF gets their money from a bunch of nations that are absolutely drowning in debt themselves.
The IMF is funded by “wealthy” nations that dominate the global economy. The following is how Wikipedia describes the IMF’s quota system…
The IMF’s quota system was created to raise funds for loans. Each IMF member country is assigned a quota, or contribution, that reflects the country’s relative size in the global economy. Each member’s quota also determines its relative voting power. Thus, financial contributions from member governments are linked to voting power in the organization.
These are the five largest contributors to IMF funding…
- United States – 16.75%
- Japan – 6.23%
- Germany – 5.81%
- France – 4.29%
- UK – 4.29%
But those countries are in trouble themselves. The U.S. has a debt to GDP ratio of over 100%. Japan has a debt to GDP ratio of over 200%.
The truth is that these countries are funding the IMF with borrowed money.
So what happens when the contributors run out of money and can’t contribute anymore?
All over the globe, an increasing number of countries are reaching out to the IMF for help. For example, on Thursday we learned that Pakistan is getting a new bailout from the IMF…
Pakistan and the International Monetary Fund have reached an initial agreement on a bailout of at least $5.3 billion.
Pakistani Finance Minister Muhammad Ishaq Dar and IMF mission chief Jeffrey Franks announced the agreement at a press conference Thursday.
And the new government in Egypt is hoping that the revolution that just occurred will not stop the flow of IMF funds…
In recent months, a handful of neighboring countries such as Qatar have been keeping Egypt’s economy afloat by loaning the country’s central bank cash. That has bought Morsi government time to delay implementing the politically-sensitive measures the IMF has sought as a precondition before it gives Cairo a $4.8 billion credit line. In particular, the IMF had said that Egypt must raise taxes and begin phasing out fuel subsidies.
It’s not the only cash at stake. Other international donors have vowed another $9.7 billion for the country once the IMF program is in place. Roughly $1.55 billion in bilateral aid from Washington could also be held up: under U.S. law, the administration can’t loan money to countries where the military is involved in an unconstitutional change in government.
But what often happens with these bailouts is that the “conditions” that are imposed prove extremely difficult to meet. For example, Greece has not implemented all of the “reforms” that they were ordered to implement, and so the flow of future funds may be threatened…
As Greece looks set to miss a key reform deadline set by international lenders, which could jeopardize further financial aid, a Greek government minister said it wasn’t Greece’s fault that it couldn’t live up to the demands of a flawed bailout program.
“There are failures [by Greece],but you assume that the program that has been effectively imposed on us is perfect, which is far from the case,” Nikos Dendias, minister of Public Order and Citizen Protection, told CNBC on Thursday.
His comments come after Greek finance ministry officials said on Wednesday that Greece would not meet targets on reforming its public sector by the deadline set by international lenders, putting further financial aid in jeopardy.
Once a nation gets hooked on bailout money from the IMF or from other international sources, it can be very hard to get off of it. But that is what these globalist organizations like – they want to be able to use money as a form of control.
As we saw with Greece, sometimes a nation will need bailout after bailout. And it appears that is also going to be the case with Portugal. The Portuguese government is on the verge of collapsing and their financial situation is being described as “very fragile”…
Portugal had been held up as an example of a bailout country doing all the right things to get its economy back in shape. That reputation is now harder to sustain and even before this latest crisis, the International Monetary Fund reported last month that Lisbon’s debt position was “very fragile”.
Coming soon after the near-collapse of the Greek government, which has been given until Monday to show it can meet the demands of its own EU-IMF bailout, the euro zone may be on the brink of falling back into full-on crisis.
Right now, Portuguese bond yields are absolutely soaring and the Portuguese economy is rapidly heading into depression.
Portugal is going to desperately need the assistance of the IMF.
But what happens when the nations that primarily fund the IMF start failing themselves?
The U.S. is a complete and total financial disaster and so is Japan. Much of Europe is already experiencing a full-blown economic depression and even China is showing signs of trouble.
So if the “wealthy” nations fail, who is going to be there to help the “poor” nations?
11 Comments on "41 IMF Bailouts And Counting – How Long Before The Entire System Collapses?"
BillT on Sun, 7th Jul 2013 2:33 pm
When it all collapses the poor nations will just not pay their debts. Simple.
The IMF does not ‘help’ the poor nations, it rapes them for the wealthy. They will be better of without any WB or IMF ‘vampires’.
Arthur on Sun, 7th Jul 2013 2:36 pm
“But what happens when the nations that primarily fund the IMF start failing themselves?”
At some point somewhere the Great Default will begin, cascading over the planet, with the result that all ‘savings’ are going to be wiped out, which is bad news first and foremost for pensioners.
“So if the “wealthy” nations fail, who is going to be there to help the “poor” nations?”
Nobody.
It simply means we have to start all over again, from scatch. The temptation will be for many to say: “see, capitalism failed” and socialism will get a second chance. All property is going to be collectivised, people are allowed to stay where they are, but gradually will be forced to pay rent, even for the homes they used to own. In the beginnning everything will be rationed.
Paulo on Sun, 7th Jul 2013 3:27 pm
Arthur:
re: “All property is going to be collectivised, people are allowed to stay where they are, but gradually will be forced to pay rent, even for the homes they used to own.”
Good luck with that idea. The day someone tells me my land is forfeit (land I spent my whole life’s work paying for)my guns will have long since been loaded. I suspect many others will do the same. It might happen in some places, but….
Regards….Paulo
Stephen on Sun, 7th Jul 2013 3:28 pm
I see a case of Hyper Deflation happening at some point in the future. I don’t know if a capitalism / socialism conversion will happen or not, but for sure I see a lot of banks failing.
I see Kevyn Orr’s model of finance for Detroit may be a model for how this situation could play out, in which Detroit defaulted on its debt to rebuild its infrastructure. Money that would have gone to interest, got redirected to other projects. Some of its creditors are getting pennies on the dollar.
If some of the third world countries end up defaulting on IMF debt, this would lead to them having more money for their own people due to cuts to interest.
Personally I think it is time for a GLOBAL DEBT JUBILEE:
* All countries cancel each others debts to each other
* Cancel all credit card debts
* Cancel all student loan debts
* Cancel all mortgage debt and revoke all liens on all houses, cars, etc and award the owners clear title immediately
* Issue a global cease and desist to all debt collection activity
* Abolish Experian, Equifax, Trans Union, et all and all future credit reporting
* DO NOT print a lot more money. This will prevent inflation, while reduce the ACTUAL COST OF LIVING FOR PEOPLE, while INCREASING THE PERCENTAGE OF DISPOSABLE INCOME (as debt service would be eliminated). In fact, it will likely make the currency STRONGER, not weaker, perhaps much stronger.
CAM on Sun, 7th Jul 2013 4:37 pm
The plain and simple truth is that nobody knows what will happen. And, when it does happen nobody will like it!
GregT on Sun, 7th Jul 2013 5:36 pm
The Seven Deadly Sins:
Lust: The intense desire of money, fame, power, or sexual deeds.
Gluttony: The over-indulgence and over-consumption of anything to the point of waste.
Greed: A very excessive or rapacious desire and pursuit of material possessions.
Sloth: Failing to develop spiritually is key to becoming guilty of sloth.
Wrath: Self-destructiveness, violence, and hate that may provoke feuds that can go on for centuries.
Money as the root of all evil:
1 Timothy 6:10 For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced
themselves through with many sorrows.
Cam is correct, and I sadly suspect that Paulo is correct as well.
Plantagenet on Sun, 7th Jul 2013 5:51 pm
Incompetent and mainly socialist leaders in countries as far flung as Argentina, Cyprus, Greece and Antigua put their countries so deep into debt that they can no longer borrow on the open market. The IMF steps into help.
What is wrong with that?
Dmyers on Sun, 7th Jul 2013 5:53 pm
What we need here is some audio in the background playing Jackson Browne’s 70’s classic, “Running On Empty.”
Michael Snyder should put out the internet video sequel, “Living in the Red”, with Gerald Celente, Peter Schiff, and Marc Faber (aka “The Doomsters”) singing backup. The Country Music genre would work nicely.
There is more than one way to get the message across, and this would give us all something to sing together while holding hands and going down with the ship.
“♫Living in the red..♫” (lead vocal)
[“♫…can’t get ahead…♫”] (backup)
“♫..Got the bailout blues now..♫”
[“♫ in the red,..can’t get ahead..♫”]
“♫…just one more trill-yuhun!..♫”
[ “♫..in the red..♫”]
“♫ Come on now!..♫”
[“♫..can’t get ahead….♫”]
“♫..Ber Ber Ber Bernankee hee!♫”
[“..♫ in the red..,owe to the Fed…♫”]
“..♫.just dump some on me-hee..♫”
Anyway you get the idea. Hope some aspiring country music writer in Nashville, TN will finish it up and put it on a music score. I think Michael Snyder and the Doomsters would be the perfect act for this tune, but if someone else picks it up and runs with it first, I’m still not going to be looking for any royalties.
p.s. I’m all for the global debt jubilee idea.
Wheeldog on Sun, 7th Jul 2013 7:43 pm
When (not “if”) the IMF implodes it will likely be the straw that crushes the camel’s back and sets off a chain reaction of economic chaos across the globe. We are skating on very thin ice. As long as the world economy is able to keep moving ahead the ice can just barely support the weight. However, once the progress slows and then stops the economic ice will fail, and we will all get a thorough drenching – or worse.
DC on Sun, 7th Jul 2013 9:19 pm
Incompetent and mainly welfare capitalist leaders in countries as far flung as the United States, Britain, Italy and Japan put their countries so deep into debt that they can no longer borrow on the open market except by printing more money. The IMF steps into help.
Nope nothing wrong with that…
jmm.peters on Sun, 7th Jul 2013 9:46 pm
en wat zijn de eisen.!!!
een bank neemt je huis in beslag….
imF neemt een land in beslag……
wat dacht U daar van…..
hoe word ik snel rijk….