DK, do you want to elaborate on this:

'In the midst of all this, here is the Quadrillion dollar ATCA question, "Is Switzerland still the place to park Rolls-Royce capital in the middle of a global meltdown?" Watch the Swiss Franc'.

Dear DK,

Despite that I have totally other things on my mind at the moment, there was an article in one of our Dutch newspapers that caught my attention with regard to your essay here above.

It was about IMF and the title: IMF will soon have shortage of money. Because of what you already have written.

Conclusion of the article was that none of IMF’s measures will bring relief if the economical Super Powers – or rather the countries that have enough dollars to spare – do not cooperate. Those countries will have to agree to help a number of other countries who have encountered problems in the aftermath of this crisis.

Well, after the meeting of Asian and European government leaders last weekend, China wants to actively participate in the top meeting in Washington about a Bretton Woods II.

And no doubt India will too.

Sarkozy has already mentioned he wanted both China and India to be present in Washington.

Well, if Obama will be elected, he will be the third factor that is needed here I suppose.

Lol, all good things will come in three again.

I admit that here my wish is the ‘father’ or perhaps better ‘mother’ of my thoughts :)

Love, Mieke

The International Monetary Fund
Sizes Up
Huge Slate of Financial Rescues

D. K. Matai
Asymmetric Threats Contingency Alliance
October 27, 2008

We wish to acknowledge the extremely valuable input
of various Asymmetric Threats Contingency Alliance colleagues
in Bretton Woods institutions and the International Monetary Fund.

#######

Iceland, Ukraine, Hungary, Belarus, and Pakistan are on the brink of financial collapse, and as the lender of last resort to cash-strapped countries, the International Monetary Fund (IMF) is in the process of bailing them out. The Washington-based institution is one of the cornerstones of the Bretton Woods system, which has governed global finance since World War II. At the end of August 2008, the combined quota payments of the IMF member countries amounted to US $ .341 trillion, some of which was available as loans to countries facing financial difficulties. This impressive available loan stock may not be enough, however, and the IMF may not be able to solve the massive motorway pile-up of nation-state failures as more than thirty-five nations end up in the queue during the coming year. Even ten times the IMF reserves—that is, US $ 3 trillion to 4 trillion—also may not be enough worldwide to provide emergency financial relief during the coming few years.*

Unexpected Chain Reactions

The rising quantum of nation-state financial failures stems in part from certain large-scale, self-potentiating, and often unpredictable domino effects of the Great Unwind crisis as it spreads across the world. Failures in one nation, one sector, one aspect, or one asset class can trigger unforeseeable avalanches on multiple sides of the globe—for instance, as in the recent experience with the world’s emerging-market economies.

Capital flows to the emerging-market economies have been colossal in the last few years, leading to booming markets in property and exports. But many of these economies have small capital reserves and excessively high debt-to-GDP ratios, and in recent weeks the value of most emerging-market currencies dropped between 10 percent and 20 percent against the dollar, leading these countries to take aggressive actions to shore up their currencies. These aggressive actions struck panic into the hearts of many investors, and as a result, the world's hedge funds (three-fourths of which are dollar based) and other investment funds suddenly and nearly en masse totally bailed out of their foreign investments there and repatriated their money. As Western investors bring their money home, many emerging markets' central banks are suddenly much more limited in what they can do to shore up their economies, so they have no choice but to turn to the IMF.

Ukraine and Hungary

The IMF has just announced a US $ 16.5 billion loan for Ukraine and a "substantial" package for Hungary. This followed a US $ 2.1 billion loan to Iceland and came amid appeals for assistance from other countries, including Belarus and Pakistan. The loans would be spread over two years. As a condition for receiving the significant restoration monies being provided by the IMF to nation-states on the brink of financial failure, the recipient nations must institute, under IMF guidelines, certain economic reforms (such as, perhaps, exchange rate flexibilization, far-reaching reforms in the banking sector, and more privatization) in order to extricate themselves from the financial quagmire and to avoid becoming further entrenched in a long series of far-reaching domino effects of nation-state financial failures.

Ukraine's IMF loan is 800 times the size of its "quota," or the amount of money the country pays to be a member of the IMF. (The IMF funds itself primarily through these quotas, which are assigned to each joining country based on the size of its economy.) Ukraine's loan is small in comparison to the country's external debt, which is estimated at US $ 55 billion due this year. Ukraine stopped early withdrawals from savings accounts this month in a bid to halt a run on banks. The central bank has bailed out several banks, and the Ukrainian stock market has lost more than 70 percent of its value this year. The vast former Soviet Union country is getting much less money from its main export, steel, because of a slump in global demand for commodities and is using up foreign-currency reserves to support its currency, the hryvnia. The hryvnia has slumped by one-fifth to a record low, and the Ukrainian property boom—particularly in the capital, Kiev—has turned into a bubble on the verge of bursting. One additional problem for Ukraine is that its balance of payments is heavily influenced by the price Russia sets for Ukraine's vital imports of natural gas. These factors could lead to problems for the government in meeting budget shortfalls and in paying back some of the foreign loans that have helped boost Ukraine's economy in recent years. Furthermore, a feud between President Viktor Yushchenko and Prime Minister Yulia Tymoshenko over the president's decision to call fresh elections threatens to exacerbate the country's deep economic problems. Ukraine is facing its third parliamentary election in three years! Yet the country has promised the IMF that it will set a balanced budget and reform its banking sector in exchange for the loan. Ratings agency Standard & Poor's lowered its currency rating on Ukraine a few days ago even though it believed an IMF loan would be offered, saying a lack of internal political agreement could mean the country would not be able to implement the IMF's program to fix the economy. Given this political uncertainty, Ukraine may have to go under the IMF's total economic stewardship.

Hungary's vulnerability, in contrast, stems primarily from large budgetary and current-account deficits, a low stock of foreign reserves, a large short-term foreign-currency debt, and a somewhat overvalued currency. Facing a sharp fall in the national currency, the country's central bank decided last week to raise its key interest rate by 3 points to 11.5 percent.

------------

* Please see the following three related Asymmetric Threats Contingency Alliance analyses at http://www.mi2g.net :

1. "The Invisible One Quadrillion Dollar Equation"

2. "Why Are Markets Still Falling? The Tsunami Caused by Derivatives and Deleveraging"

3. "Bretton Woods II—The New Global Economic Architecture for the 21st Century"

---------------------------

OMG!! I magled ANOTHER one

i really have to DO something about the manic phase of my manic-depression

seems I LIKE an article, i have to FIDDLE with it, as a way of experiencing it more fully

hmmmmmmmm

maybe articles are replacing Men, in my old age

anyway, thanks for these very informational and thought-provoking articles and also apologies to our resident source of WONDERFUL and INSPIRING ideas and delicious, helpful perspective -- namely, D. K. Matai

I believe the precious man must have the patience and forbearance of an Angel..... :)