httpv://www.youtube.com/watch?v=ppkniGDDSV4
BELOW ARE TWO MUST READ ARTICLES BY ZEROHEDGE
IMF Prepares For “Threat To International Monetary System”
Back in April 2010, before Waddell and Reed sold a few shares of ES, effectively destroying the market on news that Europe was insolvent, we made the following observation: “The IMF has just announced that it is expanding its New Arrangement to Borrow (NAB) multilateral facility from its existing $50 billion by a whopping $500 billion (SDR333.5 billion), to $550 billion.” Little did we know that our conclusion “something big must be coming” would prove spot on just a month later after Greece, then Ireland, then Portgual, and soon Spain, Italy, Belgium, and pretty much all other European countries would topple like dominoes tethered together by a flawed monetary regime. Well, based on news from Dow Jones we can now safely predict the following: “something bigger must be coming.” As if the IMF’s trillions in open lending facilities (many of which have recently been adjusted to uncapped) were not enough, we now learn that the world lender of last resort (which in theory is the Fed, but apparently Bernanke has been getting a little shy lately so is offsetting his direct lending directives to secondary organizations like the IMF, leaving the Fed with only USD liquidity swaps) is about to activate a “Special Funding Pool” – Dow Jones explains: “The International Monetary Fund is expected to soon activate a special funding pool that will boost the fund’s ability to prevent or resolve economic crises, two people familiar with the situation said Thursday. One of the people said the activation of the funding–which can only be made by a special request from the IMF managing director to the board–was in anticipation of an expected wave of new IMF programs, including the possible expansion of the Greek bailout package.” Wonderful. Global financial cataclysm rinse repeat all over again…
More from Dow Jones:
Read the rest of the post and comments by clicking HERE
Charles Plosser Speaks On The Fed’s “Exit”
Highlights from the just released speech by Philly Fed hawk Charles Plosser:
- Fed’s Plosser says would want to make explicit the Fed’s commitment to a numerical inflation objective
- Says important to communicate a systemic plan that describes where Fed is going, how it will get there
- Says his proposed strategy would tie pace of asset sales to size of interest rate increases
- Says his preferred exit strategy would raise rates, shrink balance sheet concurrently
- Says failure to exit in timely manner will have serious consequences on inflation, economic stability in future
- Says monetary policy will have to reverse course in the not too distant future
- Says consumer spending continues to expand at reasonably robust rate
- Says US economy seems to be on much firmer foundation
- Says labor market conditions are improving
In other words, an attempt to return confusion over the fate of QE3. As for the Fed existing anything…. good luck. As part of his exit proposals, Plosser proposes two exit plans (12 and 18 months) both of which sees a dramatic reduction in reserves, a hike in IOER, and asset sell offs. Should the Fed indeed proceed to do this, the market will prolapse.
Read Posser’s full statement and comments by clicking HERE