La Stampa reports the IMF is considering loaning Italy up to €600B to give Mario Monti's new...


La Stampa reports the IMF is considering loaning Italy up to €600B to give Mario Monti's new government a 12-18 month window with which to push through fiscal reforms. As this would put a strain on IMF resources, the report suggests assistance from the ECB, i.e. the idea previously floated of the ECB lending to the IMF which in turn lends to needy EU states.
Comments (75)
  • HiSpeed
    , contributor
    Comments (1300) | Send Message
     
    Sounds like Italy is the new Greece
    27 Nov 2011, 08:29 AM Reply Like
  • Barry Crocker
    , contributor
    Comments (450) | Send Message
     
    Yup ... question is, who will be the new Italy ?
    27 Nov 2011, 08:37 AM Reply Like
  • Stone Fox Capital
    , contributor
    Comments (9636) | Send Message
     
    How is Italy the new Greece? Greece had massive deficits that Italy doesn't have. Italy just has a lot of debt that it needs time to pay back. Greece can't pay back their debt.

     

    Big difference!
    27 Nov 2011, 12:23 PM Reply Like
  • fxmaven
    , contributor
    Comments (1469) | Send Message
     
    What is now a liquidity crisis can easily become a solvency crisis in a global double dip.

     

    You underestimate the skill of Italians to bury their wealth out of sight, and to restrict consumption. They don't care about their admittedly corrupt state because they own their homes, have small or no personal debt, and conduct their business in cash.

     

    Americans should take heed.
    27 Nov 2011, 12:28 PM Reply Like
  • Angel Martin
    , contributor
    Comments (1370) | Send Message
     
    Barry, Belgium and France are the new Italy.

     

    Belgium is already paying in excess of the 4-5 % preferential rate that Italy would supposedly get under this deal.
    27 Nov 2011, 01:00 PM Reply Like
  • Dibber
    , contributor
    Comments (1375) | Send Message
     
    IMF doesn't have that big of a balance sheet. The actual number has to be lower and/or involve partial commitments. What are the chances the IMF gets repaid?
    27 Nov 2011, 11:01 PM Reply Like
  • Tack
    , contributor
    Comments (16260) | Send Message
     
    If the countries creating and supporting the ECB won't take steps to save their own house, then, the last thing the IMF should do is step in with other people's money (mostly U.S.) and do what the recipients have inadequate conviction to do, themselves. If Europe can't or won't get its Eurozone house in order, better that it should burn to the ground, now, rather than after we add a few more floors to the structure.
    27 Nov 2011, 08:42 AM Reply Like
  • The Geoffster
    , contributor
    Comments (4291) | Send Message
     
    The U.S. contribution to the IMF consists of 40% borrowed funds. Massive printing is inevitable if deflation is to be avoided.
    27 Nov 2011, 09:33 AM Reply Like
  • spald_fr
    , contributor
    Comments (2814) | Send Message
     
    [The U.S. contribution to the IMF consists of 40% borrowed funds.]

     

    I recall USA contribution is closer to 18%.
    27 Nov 2011, 09:55 AM Reply Like
  • The Geoffster
    , contributor
    Comments (4291) | Send Message
     
    40% of that 18% is borrowed.
    27 Nov 2011, 10:14 AM Reply Like
  • Stone Fox Capital
    , contributor
    Comments (9636) | Send Message
     
    but not if the money is coming from the ECB. That wouldn't involve US money.
    27 Nov 2011, 12:28 PM Reply Like
  • EMS
    , contributor
    Comments (586) | Send Message
     
    OWS should protesteth.
    27 Nov 2011, 09:23 AM Reply Like
  • investguru
    , contributor
    Comments (27) | Send Message
     
    Well, if "La Stampa" says so then this must be the ultimate truth.

     

    The problem here is one of messaging. Merkel and other clowns need to announce a plan that is realistic and describes the endgame clearly. The plan should not include unrealistic hopes and assumptions like "assistance from China" and other such unsubstantiated nonsense. Then, no matter how harsh the plan seems, the market will absorb it and move on.

     

    Without such a plan, we are reduced to reading reports from the likes of "La Stampa" and the drip-drip of markets going lower with the constant fear of a "Lehman event" hanging like a sword over our necks.
    27 Nov 2011, 09:26 AM Reply Like
  • wyostocks
    , contributor
    Comments (9113) | Send Message
     
    Market should rally 400 points tomorrow and then fall same on Tuesday when the rumor is proven false.
    27 Nov 2011, 09:47 AM Reply Like
  • klarsolo
    , contributor
    Comments (705) | Send Message
     
    When was the last time a rumor of this magnitude turned out to be completely false?
    27 Nov 2011, 11:48 AM Reply Like
  • css1971
    , contributor
    Comments (871) | Send Message
     
    Where exactly would the IMF get 600 billion Euros?
    27 Nov 2011, 09:54 AM Reply Like
  • klarsolo
    , contributor
    Comments (705) | Send Message
     
    From the ECB,...they rather give it to the IMF who will attach strings to it than to the country directly
    27 Nov 2011, 11:32 AM Reply Like
  • JohnLocke
    , contributor
    Comments (383) | Send Message
     
    Go to Youtube and watch "MONEY AS DEBT"

     

    This explains exactly where the IMF / US FED and the ECB will get the funds...
    27 Nov 2011, 01:58 PM Reply Like
  • css1971
    , contributor
    Comments (871) | Send Message
     
    Hi, I'm aware of fractional reserve banking. My point being though the IMF is a fund, not a bank and certainly not a central bank.

     

    As such it needs to get the money from somewhere, through it's quotas... But 600 billion euros is about 3 times the existing funding from all of the existing member countries.

     

    So... Who is going to pony up 600 billion euros?
    27 Nov 2011, 04:12 PM Reply Like
  • css1971
    , contributor
    Comments (871) | Send Message
     
    The ECB can simply buy Italian bonds in the secondary market. It has been doing so already to keep the yield below 7%.

     

    27 Nov 2011, 04:29 PM Reply Like
  • JohnLocke
    , contributor
    Comments (383) | Send Message
     
    What stops the IMF from writing the check, Nothing... The money is not real as it is simply created by the creation of the debt...

     

    The IMF is not handing Italy 600 Billion in Gold so it does not actually need to have 600B. The IMF is simply going to Backstop or guarantee the debt thus allowing the Italians to "Create the Debt"

     

    To answer your question "Who is going to pony up 600 B Euro?"

     

    The answer is Nobody, The question that has to be asked is "Who is going to be responsible for the 600B in debt?"
    27 Nov 2011, 05:46 PM Reply Like
  • Tack
    , contributor
    Comments (16260) | Send Message
     
    CSS:

     

    You have hit upon why the EFSF and/or IMF are just meaningless discussion topics or smoke screens for money printing. There is no global surplus of unused credit that can be shifted to use in Europe. Somebody has to print at warp speed, so it's either the ECB, printing euros, or the Fed, printing yet more dollars, which are then transfered via IMF, or some such, to the ECB.

     

    My own position is simple. The Fed did its part to prevent a complete meltdown, with TARP, which has been repaid at a profit. If the Europeans lack sufficient motivation and cohesion to save their own experimental enterprise, the EuroZone, then, they deserve to perish and under no circumstances should they be saved from themselves with gratuitous U.S.-dollar largesse.

     

    For the Europeans, it's act or die.
    27 Nov 2011, 05:52 PM Reply Like
  • fxmaven
    , contributor
    Comments (1469) | Send Message
     
    Just like the UK, USA will have pay up, because Germans would rather watch the world collapse with Germany as the last man standing, than bailout the former US client states of Italy, Portugal and Greece.

     

    Germans might even actually enjoy the massacism of a deflationary debt collapse, but Amis will collpase like a bad souffle.
    27 Nov 2011, 05:58 PM Reply Like
  • WMARKW
    , contributor
    Comments (10786) | Send Message
     
    So....it's just the old shell game. None of these banksters has money to lend. They all have to "create" it to lend it. Funny, seems, at least in the case of the US, that at least re: fiscal stimulus, the Fed has to have the cooperation of the government to "Create".
    27 Nov 2011, 06:35 PM Reply Like
  • wyostocks
    , contributor
    Comments (9113) | Send Message
     
    "Loaning" 600B; would be more believable if written "giving" 600B.
    27 Nov 2011, 10:58 AM Reply Like
  • klarsolo
    , contributor
    Comments (705) | Send Message
     
    It can get it from the ECB
    27 Nov 2011, 11:21 AM Reply Like
  • lowemoran
    , contributor
    Comments (130) | Send Message
     
    We are the police of the world, we are the show of the world, now what? The piggy bank for irresponsible and reckless countries?
    27 Nov 2011, 11:14 AM Reply Like
  • fxmaven
    , contributor
    Comments (1469) | Send Message
     
    looks like a nice easy play to buy /tf at 665 and sell at 695 (and short around 730 or so). thanks amis
    27 Nov 2011, 11:20 AM Reply Like
  • untrusting investor
    , contributor
    Comments (9903) | Send Message
     
    More talk from Europe. Will only matter if something concrete that makes sense is actually done.
    27 Nov 2011, 11:46 AM Reply Like
  • fxmaven
    , contributor
    Comments (1469) | Send Message
     
    The phrase is "buy on the rumor, sell on the news".

     

    Whether true or not, markets do not go up or down in a straight line, so ES is due for a 20/40 pt short covering/hope rally, after which you only go more short.

     

    As evidenced by the past, it doesn't matter what's true or what's false, more truth in the market reaction than the fundamentals.
    27 Nov 2011, 12:02 PM Reply Like
  • klarsolo
    , contributor
    Comments (705) | Send Message
     
    If they do this for Italy, they will also have to do it for Spain
    27 Nov 2011, 12:15 PM Reply Like
  • Eric Stalee
    , contributor
    Comments (88) | Send Message
     
    And Belgium, and Ireland, and Portugal, and Hungary, and Slovenia, and...etc.
    27 Nov 2011, 12:19 PM Reply Like
  • klarsolo
    , contributor
    Comments (705) | Send Message
     
    Sure, if they all want IMF oversight
    27 Nov 2011, 12:24 PM Reply Like
  • Eric Stalee
    , contributor
    Comments (88) | Send Message
     
    My point is the IMF has no hopes of ever raising that much capital to support all the EZ nations that are going to need it in the coming months.
    27 Nov 2011, 12:27 PM Reply Like
  • klarsolo
    , contributor
    Comments (705) | Send Message
     
    They don't need to raise it when the ECB can just print it
    27 Nov 2011, 12:28 PM Reply Like
  • Eric Stalee
    , contributor
    Comments (88) | Send Message
     
    You're forgetting about Merkel. And even without her I doubt the EZ would approve printing trillions of Euros.
    27 Nov 2011, 12:30 PM Reply Like
  • Stone Fox Capital
    , contributor
    Comments (9636) | Send Message
     
    Ireland is already on the rebound. Belgium doesn't need help. The others won't matter if Italy and Spain are under control. The only issue has always been that Greece and Portugal lead to contagion for Italy and Spain. If the IMF takes care of them, then the others can't be dealt with as appropriate w/o fears of a EU collapse.
    27 Nov 2011, 12:33 PM Reply Like
  • klarsolo
    , contributor
    Comments (705) | Send Message
     
    Do you really think Merkel will stand by and watch everything go up in flames? She already admitted that losing Italy would be the end of the euro zone. Do you really think she wants that to be credited to her? The ECB is an easy solution and all that's necessary is for some people to change their mind. If you think this crisis cannot do that EVER then please short all you can.
    27 Nov 2011, 12:34 PM Reply Like
  • fxmaven
    , contributor
    Comments (1469) | Send Message
     
    An end around would be to have the US print trillions and lend through IMF. This would keep USD weak and Europe solvent, just what the Wizard of OZ wants.

     

    US needs EUR military help in Middle East and Afghanistan, this a possible agreement by the weltoligarchs. Notice Russia is flexing its muscles again.
    27 Nov 2011, 12:37 PM Reply Like
  • Eric Stalee
    , contributor
    Comments (88) | Send Message
     
    Dexia.
    Ireland is hardly in a rebound. It's just muddling through right now, just like the U.S. (although I think the U.S. is going to stop muddling pretty soon, according to ECRI).
    http://bit.ly/vp77fS
    27 Nov 2011, 12:38 PM Reply Like
  • wyostocks
    , contributor
    Comments (9113) | Send Message
     
    fx:
    As Rham Emanual said, never let a crisis go to waste. Russia sees the opportunity and knows the U.S. will do nothing to prevent them from doing whatever they please in Europe.
    27 Nov 2011, 12:41 PM Reply Like
  • fxmaven
    , contributor
    Comments (1469) | Send Message
     
    Does that extend to providing air cover for Assad?

     

    Tensions in Syria are just a proxy war between West/Saudi Arabia and Iran, Iran enjoys using Syria to lean on Israel and Turkey.

     

    Apart from the geopolitical sparring, I am interested in this because I see Crude Oil Futures as the Big Short, given the increasingly likely global double dip recession.
    27 Nov 2011, 01:03 PM Reply Like
  • BooGP
    , contributor
    Comments (50) | Send Message
     
    I think it is going to take changing the German people's minds in order to change Merkel's mind. Maybe German bonds rising some more will start to scare them a little.
    27 Nov 2011, 01:09 PM Reply Like
  • JohnLocke
    , contributor
    Comments (383) | Send Message
     
    You hit the nail on the head FX...
    27 Nov 2011, 02:01 PM Reply Like
  • Canary Cash
    , contributor
    Comments (470) | Send Message
     
    Bingo
    27 Nov 2011, 08:15 PM Reply Like
  • Canary Cash
    , contributor
    Comments (470) | Send Message
     
    Hmm, what if EU resolves in a big (unsustainable) print and Oil price brings on the DD? Still a big short?
    27 Nov 2011, 08:26 PM Reply Like
  • fxmaven
    , contributor
    Comments (1469) | Send Message
     
    /qm quoting $98.35 for the january contract as we speak - i'm looking for a move (re-test) to $103 before initiating shorts.

     

    stay in touch
    27 Nov 2011, 08:27 PM Reply Like
  • fxmaven
    , contributor
    Comments (1469) | Send Message
     
    Not necessarily - Greece, Spain, Portugal may already be slated to leave the Eurozone, they are small enough. Italy would bring the whole Euro banking system thing down. Italy is Lehman/AIG X 50
    27 Nov 2011, 12:19 PM Reply Like
  • Hypnos7
    , contributor
    Comments (137) | Send Message
     
    Spain's GDP is 70% of that of Italy -- so wouldn't Spain be Lehman/AIG X 35 ?
    27 Nov 2011, 12:26 PM Reply Like
  • fxmaven
    , contributor
    Comments (1469) | Send Message
     
    Perhaps but Italy's rollover schedule is front loaded, and Spain is sitting on huge unrealized real estate losses, Italian banks are heavily exposed to sovereign debt.

     

    I don't have the data, but I believe Spainish debt is more widely held .
    27 Nov 2011, 12:42 PM Reply Like
  • cynic2011
    , contributor
    Comments (660) | Send Message
     
    The gringos ride to the rescue,again.
    27 Nov 2011, 12:25 PM Reply Like
  • fxmaven
    , contributor
    Comments (1469) | Send Message
     
    just acting out of their own self interest, again. US needs a weak dollar, so printing USD and buying EUR is the answer.

     

    Merkel/ECB won't print, so the next alternative is to use the US proxy, IMF, as the vehicle.

     

    the situation is muddled because chinese and arabs don't trust US and USD anymore as a reserve currency. Arabs/Russia are the current marginal buyer on the FX markets, that's why I will start buying eur/usd at 1.3.

     

    China is in real trouble with a possible future trade DEFICIT and f'd banking system. No more money to recycle.
    27 Nov 2011, 01:11 PM Reply Like
  • Hypnos7
    , contributor
    Comments (137) | Send Message
     
    Any connection? http://bit.ly/v0ahuy
    27 Nov 2011, 01:53 PM Reply Like
  • Tack
    , contributor
    Comments (16260) | Send Message
     
    In view of the many comments above, I'd like to repeat one assertion I have made elsewhere and hold to be inviolate:

     

    There is no European solution from the ECB, EFSF, IMF or any other acronym that involved "moving" capital or debt from one locale or body to another. The entirety of world debt is too large and already allocated for any European solution to involve reallocation of existing debt or "credit lines." The singular --I mean ONLY-- solution that has any chance to avoid a massive, deflationary contraction of European debt (and, perhaps, elsewhere, by extension) is the literal creation of new currency by the ECB.

     

    It serves no purpose to make feeble attempts to disguise this as "loans" or capital moves from other sources or markets; it's the unabashed creation of money. Any inflation feared from this must be overcome and tolerated because the alternative massive deflation will prove decidedly worse.
    27 Nov 2011, 01:51 PM Reply Like
  • klarsolo
    , contributor
    Comments (705) | Send Message
     
    How did you arrive at the conclusion that the entirety of debt globally is too much to be ever paid back? Did you do some actual math to arrive there or did this insight come to you in a dream?
    27 Nov 2011, 02:59 PM Reply Like
  • Eric Stalee
    , contributor
    Comments (88) | Send Message
     
    Hmm...let's see here. Simple example. Italy's outstanding debt is currently at 1.6 trillion I believe. The IMF with this new rumor will be able to lend approximately 600 to 700 billion in order to take care of Italy's debt that will be due in 2012. The bailout is dependent on growth in Italy's GDP. If growth remains stagnant or turns negative (which Austerity measures will encourage), Italy will need another bailout. Oh and this magical 600 billion figure? Yeah, the U.S. congress, China, and Japan to mention a few out of the remaining 160 member countries who have not legally approved this measure still have to approve this. We've seen some real stellar performance out of Congress lately.
    27 Nov 2011, 03:06 PM Reply Like
  • Hypnos7
    , contributor
    Comments (137) | Send Message
     
    See for yourself: http://econ.st/pL0vot
    27 Nov 2011, 03:07 PM Reply Like
  • klarsolo
    , contributor
    Comments (705) | Send Message
     
    Governments also own assets, not just debt. Is that reflected in these charts?
    27 Nov 2011, 03:35 PM Reply Like
  • Wyatt Junker
    , contributor
    Comments (4498) | Send Message
     
    I think its pretty obvious. You don't need to run it through a calculator or ask Stephen Hawking to run some numbers. Tack is right. Its either inflation or dog food dinners.

     

    Neither solution is good but I think I know which way the lever is eventually moved.
    27 Nov 2011, 05:03 PM Reply Like
  • klarsolo
    , contributor
    Comments (705) | Send Message
     
    No, no need to calculate anything. Just go with your gut when it comes to entire countries at stake.
    27 Nov 2011, 05:12 PM Reply Like
  • Tack
    , contributor
    Comments (16260) | Send Message
     
    klar:

     

    I'm not talking about being "paid back." There is no outstanding unused credit available on a global basis that can be extended to the Europeans. It would have to be created, but there's not a sufficient worldwide capital base to lever up even more credit in some bailout of the ECB.

     

    In essence, new money must be created out of whole cloth. That's the job of the Fed's and ECB's of the world, assuming that Europe really wants a genuine central-banking authority to deal with continental monetary issues. If they just want a pretend union, but no central monetary authority with TARP-like capabilities, then, it's time to disband the charade and go back to marks and francs.

     

    It's that simple.
    27 Nov 2011, 05:57 PM Reply Like
  • klarsolo
    , contributor
    Comments (705) | Send Message
     
    Well, it sounds like they are now moving closer to the "United States of Europe" concept, so eventually we will have an ECB that's similar to the Fed.
    27 Nov 2011, 06:43 PM Reply Like
  • investguru
    , contributor
    Comments (27) | Send Message
     
    Before we get too far in this lightning round, I'd like to point out that TARP wasn't printed money. It was actual tax payer money that was paid back. Separately Fed has 'printed' ~$2Tr in buying up RMBS and Treasuries which it still holds on its books and hence has not recouped..
    27 Nov 2011, 08:28 PM Reply Like
  • fxmaven
    , contributor
    Comments (1469) | Send Message
     
    Agreed, but if the political game is such that ECB refuses to act /cannot act, Fed/IMF will have do something.

     

    Fed already acted as the global central bank in 2008/2009, and it may be disguised as an IMF action, we all know the wizard of OZ is behind the curtain.
    27 Nov 2011, 01:59 PM Reply Like
  • Sleestakk
    , contributor
    Comments (127) | Send Message
     
    I am afraid this next attempt to kick the can a little further is going to result in a lot of broken toes. What happens when this newest plan unravels. There is no way out of this massive debt bubble but haircuts and nobody wants to take them. Everyone wants someone else to pick up the tab. Sounds like a Mexican Standoff to me.
    27 Nov 2011, 02:54 PM Reply Like
  • lowemoran
    , contributor
    Comments (130) | Send Message
     
    Euro rallying....shorts are toasted, at least for this week....
    27 Nov 2011, 03:14 PM Reply Like
  • ltsgt1
    , contributor
    Comments (1630) | Send Message
     
    From Zero Hedge:

     

    ........ IMF which currently is massively underfunded and is why the organization was forced to create two new liquidity facilities: a Precautionary and Liquidity Credit line, since it is unable to fund its New Arrangements to Borrow, have to go through US Congress when it comes to expanding funding capacity. The US House of Representatives, where unless everyone is short Italian CDS, this will never pass. In other words: this rumor is dead in the water.

     

    http://bit.ly/rFTTeS
    27 Nov 2011, 03:38 PM Reply Like
  • klarsolo
    , contributor
    Comments (705) | Send Message
     
    Anybody who bases his trades on Zero Hedge opinions doesn't want to make money
    27 Nov 2011, 03:52 PM Reply Like
  • ltsgt1
    , contributor
    Comments (1630) | Send Message
     
    Based on the above opinions, I bought 3000 shares of FAZ at $48.6 and just sold it for $50.
    28 Nov 2011, 01:09 PM Reply Like
  • fxmaven
    , contributor
    Comments (1469) | Send Message
     
    zero hedge does provide valuable info - i.e. this will be another hopium rally. IMF does not have any connections with Santa and his Elves, and it looks quite plausable that Ben will have to print to keep stock markets/ euro afloat and right wing USA puppets Sarkozy/Merkel in power.
    27 Nov 2011, 05:34 PM Reply Like
  • klarsolo
    , contributor
    Comments (705) | Send Message
     
    Zero Hedge has information, and sometimes they have it first, but when it comes to trading on it I'm not sure it's valuable.
    27 Nov 2011, 05:43 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9903) | Send Message
     
    per ZH. Not much chance of IMF getting any increased funding real soon.

     

    The IMF board of governors agreed December [2010] to roughly double quotas from around $375 billion to around $750 billion. But out of the 187 member countries, only 17 have legally accepted the increase, including Japan, the U.K. and Korea. Most of the countries with the biggest quotas, such as the U.S., China and Germany, haven't yet gone through the legal process, such as parliamentary or congressional approval, need to hand over their promised dues.
    28 Nov 2011, 02:20 AM Reply Like
  • JohnLocke
    , contributor
    Comments (383) | Send Message
     
    I can't wait to see how Italy handles itself when it comes time for austerity measures...LOL

     

    The last time I was in italy all of the garbage men were on strike so the people let it stack / stink up in the streets until the government got tired of the smell and gave into the demands so I can only imagine how they will bray when an outsider asks anything of them.

     

    An Italian two handed salute to all of them (place both hands over your head in the position of surrender:-)
    27 Nov 2011, 06:15 PM Reply Like
  • Ocean Man
    , contributor
    Comments (647) | Send Message
     
    The last set of Italian austerity measures included raising the retirement age..... effective 2026. If that wasn't bad enough, they made the retirement age increase for women effective 10 years earlier.
    27 Nov 2011, 07:27 PM Reply Like
  • cynic2011
    , contributor
    Comments (660) | Send Message
     
    Apparently someone likes it. Dow futures are up 197pts at 8:55 pm et
    27 Nov 2011, 08:55 PM Reply Like
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