PROBLEMS FOR THE INTERNATIONAL MONETARY FUND.

PROBLEMS FOR THE INTERNATIONAL FUND. Kids, I always find sports events more interesting if I know somebody who’s involved (just as with your soccer games). The same holds true for politics and economics. Your Uncle Tom (Tom Hockin) is involved with issues that are going to be on the front pages for months to come. He is now one of the 24 directors of the IMF, the International Monetary Fund, representing Canada and Ireland. Here is an article in the Wall Street Journal which describes some of the issues that the IMF is facing. The authors are Simon Johnson and Peter Boone. Simon Johnson was formerly the chief economist for the IMF so the article carries a lot of authority. The article is about the Greek debt crisis. Greece has a large public debt, and the markets evidence fear that Greece can’t repay it. The authors say: “Investors naturally flew from Greek debt—Greece’s debt yields rose, and its banking system verged near collapse as investors and savers ran from the country.” The following points from the article present some of the issues for the IMF:
1. “The International Monetary Fund is supposed to lend to countries in trouble, to cushion the blow of crisis and to offer a form of international circuit breaker when everything looks fragile.”
2. “‘Going to the IMF'” brings with it a great deal of stigma; just ask the Asian countries that had to borrow from the fund during their crises of the 1990s.”
3. Europeans think of the IMF as an “American-influenced institution.”
4. The head of the IMF, Dominique Strauss-Kahn, has said that the IMF stands ready to help Greece. However, M. Strauss-Kahn is a “serious potential challenger” to President Sarkozy in future elections.

The stakes are high. The article says: “One possibility is to recognize that the current euro zone might not make sense.”
Think about that. The Euro is threatened by this crisis. In personal terms, kids, you have had euros in your wallets.

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2 Responses to PROBLEMS FOR THE INTERNATIONAL MONETARY FUND.

  1. Pingback: THE IMPORTANCE OF THE GREEK DEBT CRISIS. | Pater Familias

  2. Pingback: A 25 % CHANCE OF A EURO DEFAULT? | Pater Familias

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