IMF may need to “print money” as crisis spreads

The International Monetary Fund may soon lack the money to bail out an ever growing list of countries crumbling across Eastern Europe, Latin America, Africa, and parts of Asia, raising concerns that it will have to tap taxpayers in Western countries for a capital infusion or resort to the nuclear option of printing its own money.

IMF's work in countries such as Turkey is only just beginning
IMF’s work in countries such as Turkey is only just beginning

The Fund is already close to committing a quarter of its $200bn (£130bn) reserve chest, with a loans to Iceland ($2bn), Ukraine ($16.5bn), and talks underway with Pakistan ($14.5bn), Hungary ($10bn), as well as Belarus and Serbia.

Neil Schering, emerging market strategist at Capital Economics, said the IMF’s work in the great arc of countries from the Baltic states to Turkey is only just beginning.

“When you tot up the countries across the region with external funding needs, you get to $500bn or $600bn very quickly, and that blows the IMF out of the water. The Fund may soon have to start calling on the West for additional funds,” he said.

Brad Setser, an expert on capital flows at the Council for Foreign Relations, said Russia, Mexico, Brazil and India have together spent $75bn of their reserves defending their currencies this month, and South Korea is grappling with a serious banking crisis.

“Right now the IMF is too small to meet the foreign currency liquidity needs of the larger emerging economies. We’re in a dangerous situation and there is the risk of extreme moves in the markets, as we have seen with the Brazilian real. I hope policy-makers understand how serious this is,” he said.

The IMF, led by Dominique Strauss-Kahn, has the power to raise money on the capital markets by issuing `AAA’ bonds under its own name. It has never resorted to this option, preferring to tap members states for deposits.

The nuclear option is to print money by issuing Special Drawing Rights, in effect acting as if it were the world’s central bank. This was done briefly after the fall of the Soviet Union but has never been used as systematic tool of policy to head off a global financial crisis.

“The IMF can in theory create liquidity like a central bank,” said an informed source. “There are a lot of ideas kicking around.”

Read moreIMF may need to “print money” as crisis spreads

Crisis spreads to Eastern Europe as Ukraine, Hungary and Serbia call IMF

Ukraine, Hungary, and Serbia are all in emergency talks with the International Monetary Fund, raising fears that an exodus of foreign investors will set off a systemic crisis across Eastern Europe.

A team of IMF trouble-shooters rushed to Kiev on Wednesay to draw up a possible standby loan to help Ukraine stabilize its bank after a panic run on deposits this month.

Read moreCrisis spreads to Eastern Europe as Ukraine, Hungary and Serbia call IMF

Russia warns Turkey on U.S. ships in Black Sea

Russia said U.S. ships could only stay in the Black Sea for 21 days according to the Montreux Convention, and warned if they do not leave by then Turkey would be responsible.

Russia’s deputy military chief Anatoly Nogovitsyn said the NATO warships’ entrance to the Black Sea is a “serious threat to our security,” Hurriyet daily reported on Thursday.

He said under the Montreux Convention, signed in 1936 on the status of the Turkish Straits, the warships can only stay in the Black Sea for 21 days.

“If the NATO ships continue to stay in the Black Sea after the expiration of 21 day-period, then I would like to remind you that Turkey would be responsible,” he added.

Read moreRussia warns Turkey on U.S. ships in Black Sea

NATO sends more ships into Black Sea

INSTANBUL/MOSCOW, August 23 (RIA Novosti) – NATO has sent a Polish frigate and a U.S. destroyer through the Bosporus to boost its presence in the Black Sea, where it is delivering humanitarian cargoes to Georgia, a source in the Turkish navy said.

“Two more NATO ships passed through the strait and entered the Black Sea on Friday evening,” the source told RIA Novosti.

Read moreNATO sends more ships into Black Sea

Turkey: Drought Cuts Food Production in Half

“Production has been halved to 300 kilos (661 pounds) per 1,000 square meters (250 acres), even in well-irrigated parts of the region, as rainfall declined to one-fortieth of normal levels, Referans daily said on Wednesday, citing farmers and farming associations.”

The government has selected 35 of its 81 provinces as eligible for financial assistance, Erdogan said. Farmers who have lost more than 30 percent of their harvest to drought can claim assistance and also postpone any agricultural loan payments by a year, he added.

Read moreTurkey: Drought Cuts Food Production in Half

Turkey, Syria eye nuclear energy cooperation: agency

ISTANBUL (Reuters) – Turkey and Syria are considering setting up a joint energy company and could build joint nuclear power plants for electricity, Syria’s oil minister was quoted as saying on Friday.

Turkey’s state-run Antolian agency quoted Oil Minister Sufian Alao as saying that the two countries will announce the establishment of a joint energy company in the coming days, which could explore for oil in Turkey, Syria and in third countries.

“We could also enter into cooperation in the nuclear field. I spoke to (Turkish Energy Minister Hilmi Guler) Mr. Guler on cooperation. In the future we could found joint nuclear power plants for electricity production,” he was quoted as saying.

Washington released intelligence in April which it said showed Syria secretly built an atomic reactor with North Korean help. Damascus, a U.S. foe and ally of Iran, denies any covert nuclear activity and has said it would cooperate with a U.N. investigation into the allegations.

Turkey, a NATO ally of the United States, is already under pressure from Washington because of its natural gas cooperation with Iran, whose secretive uranium enrichment program has been under scrutiny since 2003.

The general director of Turkish state energy firm TPAO, Mehmet Uysal, was also quoted as saying the two countries had decided to set up a joint energy company and that a deal could be signed by the end of the year, but did not mention cooperation on nuclear energy.

(So what now? Bomb them all? -The Infinite Unknown)

Fri Jun 13, 10:57 AM ET

Source: Reuters

Middle East: Beating the Drums of War

“In a regional war scenario, Israel will deal mainly with Lebanon and Syria while the U.S. and Britain will deal mainly with Iran. [51] The help of Turkey and NATO will definitely be needed by Israel, America, and Britain in such a war. Ankara and NATO will also be involved in both fronts. [52]

NATO has already built a presence on the western borders of Syria and Lebanon and inside Afghanistan on the eastern borders of Iran with forward positions. Israeli officials such as Shaul Mofaz have also stated, in no uncertain terms, that if they launch an attack on Iran, the U.S. and NATO will come to the aid of Tel Aviv.”

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Israel, Syria, and Lebanon Prepare the “Home Fronts”


The Levant could be the starting point of a major international conflict with global ramifications and which could quickly spin out of control. Such a conflict could even involve the use of Israeli or American nuclear weapons against Iran and Syria. Syria has additionally declared that it is preparing for an inevitable war with Israel despite the fact that it believes that the chances of a war in 2008 are slim. (They are not slim at all. – The Infinite Unknown)

Read moreMiddle East: Beating the Drums of War

Source: U.S. Strike on Iran Nearing

Contrary to some claims that the Bush administration will allow diplomacy to handle Iran’s nuclear weapons program, a leading member of America’s Jewish community tells Newsmax that a military strike is not only on the table – but likely.

“Israel is preparing for heavy casualties,” the source said, suggesting that although Israel will not take part in the strike, it is expecting to be the target of Iranian retribution.

“Look at Dick Cheney’s recent trip through the Middle East as preparation for the U.S. attack,” the source said.

Cheney’s hastily arranged 9-day visit to the region, which began on March 16, included stops in Israel, Saudi Arabia, Iraq, Oman, Turkey, and the Palestinian territories.

Tensions in the region have been rising.

While Israel was conducting the largest homefront military exercises in its history last week, Israel’s National Infrastructure Minister Binyamin Ben-Eliezer warned Tehran about expected attacks on the Jewish state.

“An Iranian attack will prompt a severe reaction from Israel, which will destroy the Iranian nation,” he said.

He predicted that in a future war, “hundreds of missiles will rain on Israel,” but added that Iran “is definitely aware of our strength.”

Read moreSource: U.S. Strike on Iran Nearing

Sarkozy and Merkel draft agreement detailing role of nations on EU’s southern border

BRUSSELS: President Nicolas Sarkozy of France and Chancellor Angela Merkel of Germany will end months of wrangling Thursday by presenting a joint plan to strengthen Europe’s ties with countries on its southern borders.

Read moreSarkozy and Merkel draft agreement detailing role of nations on EU’s southern border