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    The Pimps from the IMF

    Posted by Ivo Cerckel on May 17th, 2009

    the issuer of a currency needs gold reserves to determine the value of the currency

    Los Angeles and Citibank are broke.
    The IMF pimps can no longer test any bank’s stress.
    Nobody, except the Saudi Gazette and the Los Angeles mayor, seems to be aware of the gravity of the drama.

    While the city of Los Angeles will be running out of cash between November and February (1)
    and while the financial system is about to collapse this week with Citibank group’s collapse  (2) (3),
    the International Monetary Fund,
    which has no more reason to exist since 15 August 1971 when US of A president Nixon broke the Bretton Woods Agreements,
    urges Europe to follow the US of A in conducting stress tests on individual banks, as it warns that economic recovery in the region next year depended on bolder and more forceful policy action. (4)

    Without firm financial guv’mintal measures, no economic recovery can occur says the IMF.  (5)

    The IMF knows that no guv’mint is afraid to take such measures. The IMF managing director, Dominique Strauss-Kahn, is therefore not afraid to argue that the global economy will “almost certainly” avoid a crisis as severe of the 1930s Great Depression because of the co-ordinated action taken by world “leaders”. (6)

    Peer Steinbrück, Germany’s finance minister, sees stress tests as pointless because their results have been altered before publication. (7)

    Now that Citibank is going to collapse,
    how can the IMF pimps argue against Steinbrück?

    How much stress does a dead man, euhr dead IMF-pimped financial system, experience?

    “The GRAVITY of the fiscal emergency that we face is enormous,” Los Angeles Mayor Antonio Villaraigosa is saying. (1, again)

    In order to provide an adequate response to this gravity, the Saudi Gazette correctly reports this Sunday morning that gold’s relevance as a monetary asset is being re-ignited. (8)

    But Emirates Business 24/7 reports this Sunday morning that a central bank needs capital to generate confidence in the markets and strengthen monetary policy in the face of crises. (9)

    Meanwhile, Dr Mohamed A. Ramady writes in The National in Abu Dhabi that the main argument for pegging the Gulf Co-operation Council single currency to a basket of currencies, instead of to the US of A dollar alone, is that this will afford members of the bloc some degree of independence in setting their own monetary policies to deal with local inflationary or deflationary conditions, rather than being tied to the policies of the US of A Federal Reserve.  (10)

    Emirates Business 27/7 nor Dr Ramady seem to realise that the issuer of a currency does not need capital to generate confidence in the markets and strengthen monetary policy in the face of crises, but that the issuer of a currency needs reserves in order to determine the value of that currency.

    A distinction should be made between the gold (hiding in oil) reserves and the forex (foreign exchange) reserves of the issuer of the currency.

    Forex reserves consisting of worthless paper money can only possibly be used for intervention on forex markets. Such reserves are worthless, no, useless, to determine the value of a currency.

    Only gold (hiding in oil) reserves can determine the value of a currency.

    The IMF pimps can no longer test any bank’s stress.
    Nobody, except the Saudi Gazette and the Los Angeles mayor, seems to be aware of the gravity of the drama.

    Ivo Cerckel
    ivocerckel@siquijor.wsw

    NOTES

    (1)
    Mayor Villaraigosa wants council to declare emergency and calls for layoffs
    1:36 PM | May 12, 2009
    http://latimesblogs.latimes.com/lanow/2009/05/my-entry-3.html
    SNIP
    Citing a $529-million budget deficit, Mayor Antonio Villaraigosa urged the City Council on Tuesday to declare a fiscal emergency and called for mandatory work furloughs and layoffs targeting 1,000 city employees.
    “The gravity of the fiscal emergency that we face is enormous,” Villaraigosa said. “Unless we act with urgency, the city will face a cash flow crisis, raising the prospect of running out of cash between November and February.

    (2)
    Rumors: Imminent collapse of a large bank
    May 14, 2009 by Khaled
    http://chartsandnumbers.com/2009/05/14/rumors-imminent-collapse-of-a-large-bank/
    SNIPS
    A newsletter has published that a potential imminent big bank failure is expected to hit the financial markets hard. The news announcement stated that a ‘reliable source’ with ‘an excellent track record’ has revealed that a large overnight money market transaction had defaulted on May 13, 2009.
    +
    If this rumor turns to be true expect a ripple effect to cause a massive wave of defaults across all time zones.

    (3)
    Breaking News: Imminent Big Bank Failure on Overnight Bank Loan Failure
    May 13, 2009 – 10:19 AM
    By: Nadeem_Walayat
    http://www.marketoracle.co.uk/Article10639.html
    SNIPS:
    “just got word from a reliable source with an excellent track record
    he calls me every several weeks when he has something very critical to share
    he wants me to put the word out and to see what comes back to confirm or add to the story

    an extremely large overnight bank transaction loan failed last night, gathering major attention…

    …so be on the lookout
    in February, this source said that in May/June timeframe, foreign creditors will put the screws to the US bankers, who are recognized as totally corrupt foreigner big bankers want to remove some power levers from US control”

    (4)
    IMF urges stress tests on European banks
    By Scheherazade Daneshkhu in Paris, Tony Barber in Brussels and Peter Thal Larsen in London
    Published: May 12 2009 15:15 | Last updated: May 12 2009 19:00
    http://www.ft.com/cms/s/0/36084216-3ef5-11de-ae4f-00144feabdc0.html
    SNIP
    Europe should follow the US in conducting stress tests on individual banks, the International Monetary Fund said on Tuesday as it warned that economic recovery in the region next year depended on bolder and more forceful policy action.

    (5)
    Europe recovery in 2010 with tough measures
    IMF sees Europe recovery in 2010 with tough measures
    AFP
    http://ae.zawya.com/story.cfm/sidANA20090512T142919ZEMD10/IMF%20sees%20Europe%20recovery%20in%202010%20with%20tough%20measures
    SNIP
    PARIS, May 12, 2009 (AFP) – The IMF forecast an economic recovery in Europe next year provided governments enact firm financial measures as the EU Tuesday said some of its banks will undergo “stress tests” like their US counterparts.

    (6)
    Europe in deepest recession since War as Germany suffers
    German economic policy is “bankrupt”, economists have said.
    By Edmund Conway and Angela Monaghan
    Last Updated: 7:34PM BST 15 May 2009
    http://www.telegraph.co.uk/finance/economics/5331129/Europe-in-deepest-recession-since-War-as-Germany-suffers.html

    (7)
    Steinbrück sees stress tests as pointless
    By Bertrand Benoit in Berlin and Scheherazade Daneshkhu in Paris
    Published: May 13 2009 21:10 | Last updated: May 13 2009 21:10
    http://www.ft.com/cms/s/f4cf25a0-3ff6-11de-9ced-00144feabdc0,s01=1.html
    SNIP
    Peer Steinbrück, Germany’s finance minister, on Wednesday attacked proposals to conduct stress tests on individual European banks and labelled the financing checks of US institutions “worthless”.
    The outspoken minister’s comments came after the International Monetary Fund on Tuesday called for Europe to conduct stress tests of its banks based on the US model.\
    In the most vocal expression of Berlin’s long-standing scepticism about the wisdom of individual stress tests, Mr Steinbrück called the testing of 19 US banks pointless because their results had been altered before publication.

    (8)
    China key to boost global gold trade
    By Saudi Gazette Staff
    http://www.saudigazette.com.sa/index.cfm?method=home.regcon&contentID=2009051738180
    SNIP
    RIYADH – The growing significance of China in boosting the global gold trade was acknowledged by industry experts at a recently concluded industry conference organized by Dubai Multi Commodities Centre (DMCC) in Dubai.
    Participants in the inaugural “DMCC Gold Convention 2009: Year of the Bull or Bear?” highlighted that China’s gold reserves, which rose rapidly to reach 1,054 tons this year, will re-ignite gold’s relevance as a monetary asset.

    (9)
    Central Bank capital must be raised to Dh20 billion
    Abdel Hai Mohamed  on Sunday, May 17, 2009
    http://www.business24-7.ae/Articles/2009/5/Pages/17052009/05172009_95291854ba4b4c148e8213eb768dbb27.aspx
    SNIP
    The capital of the country’s Central Bank should be increased to Dh20 billion, a UAE financial expert said.
    Ridha Muslim, Director-General of Truth Economic Consultants and former financial adviser at the Ministry of Finance, said the increase has become necessary as it will generate confidence in the markets and strengthen monetary policy in the face of crises.

    (10)
    The long road ahead to GCC monetary union
    Dr Mohamed A Ramady
    Last Updated: May 16. 2009 7:40PM UAE / May 16. 2009 3:40PM GMT
    http://www.thenational.ae/article/20090516/BUSINESS/705169934/1058&template=columnists
    SNIP
    Will the common currency be pegged solely to the US dollar or to a basket of currencies? Will the pegged rate be within a narrow or wider band – the first causing the currency to be overvalued in times of oil trade surpluses, the latter inviting speculative pressures in exchange markets?
    These issues are more important than trying to guess what name the common currency might carry, which is presumably the next [Gulf Co-operation Council]  GCC milestone. And these are the issues Saudi Arabia must take the lead on, now that it has been established as the headquarters for the central bank.
    The main argument for pegging to a basket of currencies is that this will afford members of the bloc some degree of independence in setting their own monetary policies to deal with local inflationary or deflationary conditions, rather than being tied to the policies of the US Federal Reserve. Saudi Arabia has already come out strongly to state that SAMA will continue to support a dollar peg, which might put it at odds with others in the GCC.

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