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IMF To Use Public’s Money To Shore Up Financial Sector?

This is getting more and more interesting (and frightening) the more I read about it…

From The Financial Times:

Governments might have to intervene with taxpayers’ money to shore up the financial system and prevent a “downward credit spiral” from taking hold, the International Monetary Fund said yesterday. John Lipsky, the IMF’s first deputy managing director, said: “We must keep all options on the table, including the potential use of public funds to safeguard the financial system.”

Registration is required to read the rest of the article, but here are some snippets if you don’t have an account there:

He urged policymakers to “think the unthinkable” and prepare now for what they would do if the worst case scenarios materialised and “low probability but high impact events” threatened to jeopardise global financial stability.

and

He said this crisis was different from recent past crises because both the financial markets and the banking system “have faltered simultaneously”. The first priority had to be to reverse the “spreading strains” in global financial markets and restore the functioning of the financial system in advanced economies.

This is just getting to be fun, no? When my own grandmother told me today that this all looks very similar to the events leading up to the Depression, you have to wonder…


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Comments (1)

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  1. fathersez says:

    Wow!

    This is a very different line of thinking for the IMF. In 1997/1998, during the Asian Financial Crisis, they took a very different stand and insisted that market forces should have their way.

    Looks like my previous Prime Minister for all his warts, was 10 years ahead in his thinking, as compared to all the so called financial wizards of the IMF.

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