Look Who the IMF Blames for the Coming Crash

I borrowed $2.2 million once.

I couldn’t pay it back.

But it wasn’t my fault.

It was the coloured family down the road. They had borrowed $40,000, and couldn’t pay that back.

They ruined it for everyone. Not me.

OK. That’s not a true story. Not in the way I have told it. But there’s an even more unbelievable version. Trouble is, this particular story is true. And it’s set to have dire consequences…

Let’s place some numbers in framework.

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

That had been 313% of world GDP.

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

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

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

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

It’s typical of a Western institution. On one hand, it’s saying Traditional western nations should go further in to debt. At the same time, it places blame the developing world for the worldwide debt binge.

It’s a new take on blaming ‘foreigners’ for everything that goes completely wrong. It’s like a bad 1970s sitcom…blame the ‘darkies’ for stealing all the jobs! In this instance, it’s blaming them with regard to incurring all the debt.

In actuality, just as immigrants don’t take all of the jobs, the emerging markets haven’t incurred all the financial debt either.

IMF tries to shift the actual blame

But relative to the size of the Traditional western world’s debt, the ‘over-borrowing’ through emerging market companies is the equivalent to them borrowing an extra $40,000 while the West binges upon $2.2 million of debt.

And bear in mind the IMF has this to say of the actions of the US Federal Reserve, once again from the Age:

‘“Monetary policies in crucial advanced economies must remain accommodative and responsive,” the IMF said.

‘The report called around the US Federal Reserve to hold away on its first rate of interest hike in nine many for the authorities in the eurozone as well as Japan to continue with unparalleled stimulus measures.‘

The word ‘hypocrite’ comes to mind.

So let’s get this straight: rising market companies have borrowed $4.1 trillion more than they ought to have (according to the IMF). The IMF wants them to stop borrowing.

At the same time frame, the IMF says Western government authorities should keep pumping out debt, and Western central banks should keep buying it.

Something isn’t right.

It’s a clown show

This whole story has a certain ring into it.

Think back to the 2008 crisis. What or whom did the mainstream media as well as Wall Street blame for that crash?

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

It wasn’t the borrowers who were to blame. It had been those in government, at the main banks, retail banks, and investment banks who come up with conditions for the subprime meltdown.

Subprime debtors couldn’t get into such a mess 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 they’ll still policeman the blame.

In truth, blaming emerging market companies for the coming financial crisis is akin to accusing a rape victim to be attacked, or blaming a patient for a doctor’s malpractice, or native Africans for the barbarity of the servant trade.

The IMF is a clown show. And people running it are the greatest Bozos you’ll find within any government or financial institution.

But the latest report from the IMF confirms one thing that people already know: a major financial crash is coming, and the IMF is powerless to stop it.

In fact, it’s thanks to the IMF that the next turmoil is certain to happen.

Cheers,

Kris