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?