Look Who the IMF Blames for the Coming Crash

I borrowed $2.2 million once.

I couldnt pay it back.

But it wasnt my fault.

It had been the coloured family down the road. They had borrowed $40,000, and couldnt pay that back.

They ruined it for everyone. Not me personally.

OK. Thats not a true story. Not really in the way Ive told it. But theres an even more unbelievable version. The issue here is, this story is true. As well as its set to have dire consequences

Lets put some numbers in framework.

By 2013, total world debt was US$223.3 trillion.

That was 313% of world GDP.

Of which, US$157 trillion was Western debt. US$66.3 trillion was rising market debt.

Keep those numbers in mind as you take in this particular comment from the International Financial Fund (IMF), as reported within the Age:

Governments and central banks danger sparking a fresh global financial crisis, the actual International Monetary Fund has stated, as it called time on a corporate debt binge within the developing world.

Emerging market companies possess over-borrowed by an estimated $US3 trillion ($4.Two trillion) in the last decade, threatening to trigger a sharp capital crunch and capital outflows within economies that have already been hit hard by low commodity prices, the fund cautioned on Wednesday in its newest Global Financial Stability Report.

Its typical of a Western establishment. On one hand, its saying Western countries should go further into debt. At the same time, it blames the developing world for the global debt binge.

Its a new take on accusing foreigners for everything that goes wrong. Its like a bad 1970s sitcomblame the darkies with regard to stealing all the jobs! In this instance, its blaming them for taking on all the debt.

In reality, just as immigrants dont take all the jobs, the emerging markets havent incurred all the debt either.

IMF attempts to shift the blame

But relative to how big the Western worlds debt, the actual over-borrowing by emerging market businesses is the equivalent to them borrowing an extra $40,000 while the Western binges on $2.2 million of debt.

And bear in mind the IMF has this particular to say about the actions of the US Fed, again from the Age:

Monetary policies in key advanced economies must remain accommodative and responsive, the actual IMF said.

The report called on the US Federal Reserve to hold off on its first interest rate hike in nine many for the authorities in the eurozone and Japan to continue with unparalleled stimulus measures.

The word hypocrite one thinks of.

So lets get this straight: emerging marketplace companies have borrowed $4.1 trillion more than they should possess (according to the IMF). The IMF wants these to stop borrowing.

At the same time, the IMF says Western governments should keep pumping out debt, as well as Western central banks should keep buying it.

Something aint right.

Its the clown show

This whole story has a particular ring to it.

Think back to the actual 2008 meltdown. What or whom did the popular media and Wall Street blame for that crash?

They blamed subprime mortgage borrowers. Many of who lived paycheque to paycheque. But the banking institutions told them they could afford multi-hundred thousand-dollar mortgages.

It wasnt the borrowers who were to blame. It was those in government, in the central banks, retail banking institutions, and investment banks who created the conditions for the subprime meltdown.

Subprime borrowers couldnt get into such a chaos on their own. They needed the facilitator. The facilitator had been Wall Street.

Subprime borrowers had been the victims of the last turmoil. Emerging market companies will be the victims of the next turmoil. But theyll still cop the culprit.

In truth, blaming emerging market companies for the coming financial crisis is akin to blaming a rape victim for being assaulted, or blaming a patient for any doctors malpractice, or native Africans for that barbarity of the slave trade.

The IMF is really a clown show. And those running it are the biggest Bozos youll find inside any government or lender.

But the latest report from the IMF confirms one thing that we already know: a significant financial crash is coming, and also the IMF is powerless to stop this.

In fact, its thanks to the IMF that the next crisis is certain to happen.

Cheers,

Kris