Bank Lends to Unsecured Borrowers

Does the title sound familiar. The bank I”m writing about is the IMF. The IMF is the International Monetary Fund which is mostly funded by the US and run by the Europeans. The IMF lends money to countries. Now, with the Europeans experiencing financial difficulties and not enough money to bail themselves out they’ve looked to the IMF. Why to the IMF? Mostly because it is the only entity on this planet with enough money to bail our Europe.

The Europeans are stuck in an agreement that is called the European Common Market. Basically, they’ve banded together because there is strength – and now – weakness in numbers. Computers are as fast as their slowest component and the Europeans are as strong as their weakest link. With regards to the latter I’m speaking about Greece – maybe others in the future. So what’s a Germany that  has money to do? We can’t expect them to lend everything they have to prop up the European Union and keep those bonds our bankers have invested in solvent. The US through our Federal Reserve has already lent money to foreign banks as a bailout (Bank of Scotland) and with the US experiencing a budget crisis asking the Federal Reserve for more help is out of the question. Instead, the Europeans have turned to the IMF to bail them out.

The familiarity of this is it is similar to the way American banks lend money to homeowners that couldn’t pay back their mortgages. What’s to happen when, and if, the Europeans can’t pay back their bailout? How is this money being secured? In fact, how many people are aware that the IMF is preparing to lend Europe the bailout money?

Stay tuned as this one plays out and wreaks havoc on the stock market. First, the market will go “happy days” when the IMF lends the money and then as more problems arise in Europe, and the IMF has to spend good money after bad, the recession or depression will become even more apparent as stocks sink and only those that knew better make money on this deal.

Now the US will be tied in to the problems in Europe more intimately than we’ve ever been before.

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