IMF Calls for Huge New Round of Bank Bailouts

Politics / Credit Crisis Bailouts Oct 08, 2010 - 08:54 AM

By: Washingtons_Blog

The IMF is calling for a huge new round of bank bailouts.

As the Telegraph noted yesterday: http://www.telegraph.co.uk/finance/econ ... s-IMF.html


Lenders across Europe and the US are facing a $4 trillion refinancing hurdle in the coming 24 months and many still need to recapitalise, the Washington-based organisation said in its Global Financial Stability Report. Governments will have to inject fresh equity into banks – particularly in Spain, Germany and the US – as well as prop up their funding structures by extending emergency support.

Prop up their funding structures?

Virtually all leading independent economists have said that the too big to fails must be broken up, or the economy won't be able to recover, and that smaller banks actually lend more into the economy than the mega-banks (and see this).

And the leading monetary economist told the Wall Street Journal that this was not a liquidity crisis, but an insolvency crisis. She said that Bernanke is fighting the last war, and is taking the wrong approach. Nobel economist Paul Krugman and leading economist James Galbraith largely agree.

The Telegraph continues:

“Progress toward global financial stability has experienced a setback since April ... [due to] the recent turmoil in sovereign debt markets,â€