Monday 27 October 2008

Ukraine goes to the IMF; who else is in line?


The post I did a a couple of weeks ago on RISK comes true. Now the Ukraine is seeking quite a lot of cash from the IMF to help stabilise its economy. This adds to Iceland, Hungary, Argentina and others.

As such there have been no big country casualties yet, Russia would have been but for its large FOREX reserves built up through the oil peak of the past couple of years.

The IMF has $200 billion to lend and seems to have committed roughly $30 billion so far. To me the interesting thing would be if a country such as the UK was forced to go and ask for a loan. The loan would be so enormous as to overwhelm the reserves of the IMF. Yet it also seems unlikely that this crisis will pass without some larger victims. After all, it is the banks and financiers in Western countries who drunk the sub-prime/CDO/LBO poison the most.

The IMF needs much more funding if it is to be the answer to this crisis and I am sure this is high on the agenda of the 15/9 meeting.

Also on the Risk theme, Sarkozy is running around the world declaring victory for French State-Capitalism - signing up the Asian nations in his 'war' with USA/UK 'Anglo-Capitalism.' An ideological world conflict between the advanced nations?

The outcome of all this will be most interesting, no one I meet is in favour of less financial regulation and co-ordination - but will the solution be a return to the failures of the past or a brave new world order?

9 comments:

The Ror said...

The UK? :)

Anonymous said...

no need to worry about the long term rules. every bank in the world will be beefing up it's risk departments and adjusting the way they pay bonuses - otherwise they will not survive.

Electro-Kevin said...

Yes, the YooKay ???

Unsworth said...

If the UK does go to the IMF, NuLab can kiss goodbye to everything. For that reason alone Brown will do everything he can to avoid it - including pushing up borrowing to stratospheric (and untenable) levels.

Crisis? Well, let's understand that politicians always use a crisis to their own advantage. Hence Brown preening and presenting himself as a world leader. He's nothing of the sort, of course, but it suits his book to appear 'in control', rather than what he really is - blown and buffeted about by events.

Interesting how many other 'leaders' are claiming that they personally have 'saved' capitalism. That's all bollox, of course. But 'capitalism' will settle down and we can then expect politicians of all hues and from all countries to make further claims as to their 'leadership' and 'vision'.

As to further regulation - so bleeding what? The City has always found ways of dealing with 'regulation' - and will continue to do so. In the meantime the traders will apply their ingenuity to survive and take whatever profit there is to be made. This is not going to last for ever. Give it six months and we'll see some stability creeping in. In the meantime, strap yourself to the mast.

Newmania said...

Yes and who should be heavily commited in Ukraine but Europes richest man,,,Sean Quinn currently responsible for accident cover across most of the UK`s building sites and now forced to step down from the board this w/e
I have a real story on this for you if you give me an e -mail it is an absolute shit storm about to engulf the UK Insurance Industry revolving around EU passported security and notably the vast incursion of Quinn Direct into the market


Or if I can find a way to communticate I will send you the low down.

Newmania said...

Yes and who should be heavily commited in Ukraine but Europes richest man,,,Sean Quinn currently responsible for accident cover across most of the UK`s building sites and now forced to step down from the board this w/e
I have a real story on this for you if you give me an e -mail it is an absolute shit storm about to engulf the UK Insurance Industry revolving around EU passported security and notably the vast incursion of Quinn Direct into the market


Or if I can find a way to communticate I will send you the low down.

Old BE said...

I was wondering about the size of the IMF's bank account. If the UK needed cash presumably we would be able to borrow from elsewhere? I'm sure the Chinese would lend us some cash or the Saudis... Everyone loves us, don't they?!?!?

Who does Brown think he's fooling when he says that the UK can afford to "allow" borrowing to rise? Does anyone really think that more debt is the solution to too much debt?

Mark Wadsworth said...

Ukraine dropped the 'The' when it left USSR, actually.

The British taxpayer's share of the loans to Iceland & Ukraine are £500 million, in case anybody is interested.

Elby the Beserk said...

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/3260052/Europe-on-the-brink-of-currency-crisis-meltdown.html

Telegraph agrees. Personally, I blame global fiscal diarrhoea