Sunday, May 24, 2009

IMF to Get $108 Billion from the US Government

One of the news links I have goes to "The International Forecaster" by Bob Chapman. Mr. Chapman makes part of his subscription newsletters available for browsing on his site, and I've been reading them for some time. You can say he may be way over the top; compared to him, so-called Dr. Doom (I don't know who holds the title now - Roubini? Marc Faber?) sounds like an unbridled "green shoot" optinist.

However, he's been right on on the deterioration of the US economy and where it's heading, and I often see snippets of information which I don't see (or remember seeing, I should say) anywhere else. Here's one of several from his May 20 letter:

"The Treasury is going to try to get $108 billion for the IMF by sneaking it through as a supplement to funding for Afghanistan, Iraq, and Pakistan."

WHAT IS HE TALKING ABOUT? So I googled the sentence and came up with this:

Senate Approves $91 Billion for Iraq, Afghan Wars - Bloomberg, Thursday May 21:

"The U.S. Senate approved a $91 billion spending bill that includes funding for President Barack Obama’s troop buildup in Afghanistan after endorsing his request to boost aid to the International Monetary Fund.

"The chamber voted 86-3 today to approve the legislation, setting up negotiations with the House over a compromise plan. Democrats aim to send Obama a final bill early next month after returning from a week-long Memorial Day recess. "

But this $91 billion bill indeed had a supplemental bill. (emphasis mine)

"The Senate earlier today rejected, 64-30, an attempt to strip provisions for the U.S. to provide $108 billion in aid to the IMF. Critics of the request said it was unaffordable at a time of spiraling budget deficits.

"The administration’s request, which for accounting reasons amounted to $5 billion in the legislation, came after leaders of the world’s advanced and emerging economies agreed last month to boost the bank’s resources to $750 billion in order to fight the global financial crisis. "

So the attempt to block it was failed. Now the government will give the IMF $8 billion (or $5 billion for whatever accounting reasons), and give $100 billion line of credit that the IMF can draw on.

When we are talking about $1.7 trillion budget deficit, $100 billion feels like a chump change.


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