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| Last Updated: Aug 15th, 2008 - 11:26:43 |
Newsletters
:
2007 Newsletters
:
18 May 2007
Thought for the Day
TELSTRACLEAR HAS HAD A LOCAL INTERNET OUTAGE FOR 36 HOURS - SORRY ABOUT THE DELAY OF THE NEWSLETTER.
The International Monetary Fund is running short of money to pay for increasing staff. From their recent report:
"8. With regard to climate change — another subject that I know is of interest to the Committee — we are building up our capacity to assess the macroeconomic significance of climate change and of policy efforts to mitigate it. This work will be important for our efforts to understand long-term macroeconomic challenges to the global economy, and will provide a basis for our policy advice to member countries, helping us contribute to the international efforts to deal with this challenge."
The last person I heard talking about "building capacity" was Michael Cullen. He was talking about government as we were leaving the meeting and I was not sure what he meant. I realised later that it meant to enlarge the bureaucracy and he has certainly done that. More bureaucrats results in less useful output!
So how is the IMF going to pay for more bureaucrats to give us a "sustainable climate"?
They are proposing to sell off 12.5% of their gold bars. Interesting, eh! Their report goes on to say:
"IMF Finances
21. If the Fund is to remain effective and legitimate, it must be properly financed. Our current financing model, which relies heavily on income from loans, does not adequately reflect the many different jobs that the IMF does, in the areas of surveillance and technical assistance as well as lending. These public goods must be financed, and financing through loan income alone is likely to be neither sufficient nor appropriate. Even if there were to be large new loans from the Fund, as a result of new crises, the Fund's legitimacy would be undermined if the borrowers were relied on to pay the costs of all of the institution's work.
22. Putting the Fund's finances on a sustainable footing is therefore a central element of the Medium-Term Strategy. Last year I appointed a committee of persons with high standing in the international financial system to study this important issue. Andrew Crockett, a former head of the BIS, chaired this committee, and the other committee members were Alan Greenspan, Mohamed El-Erian (President and CEO of Harvard Management Company), and Tito Mboweni, Guillermo Ortiz, Hamad Al-Sayari, Jean-Claude Trichet, and Zhou Xiaochuan (Governors of the central banks of South Africa, Mexico, Saudi Arabia, the euro area, and China, respectively).
23. The committee examined this issue very carefully, and they have produced a strong report. Their central recommendation is that the Fund adopt a new income model to sustain its activities for the long term. They recommend a package of measures to diversify the Fund's income, including:
• broadening the range of the Fund's investments, and investing a portion of the Fund's quota resources, which currently can only be used to finance lending;
• selling a fraction of the Fund's gold reserves — 400 metric tons, which is equivalent to one-eighth of total Fund holdings of gold — and investing the proceeds;
• consider charging for services, such as technical assistance, provided to individual members; and
• re-establishing the practice of the PRGF Trust reimbursing the Fund for the administrative costs of concessional lending.
This report has now been considered by the Board and by the IMFC, and reflecting members' views I will make specific proposals based on the report over the next few months."
The quotes are from a recent speech by Rodrigo de Rato, Managing Director of the International Monetary Fund.
Why does the IMF hold gold bars?
May 15, 2007, 13:16
Newsletters
:
2007 Newsletters
:
18 May 2007
Putting the Gold in Golden Years
The IMF is moving out of gold but what are the "gold-bugs" saying? They are worried about the US's ability to fund its debts from wars and and a burgeoning bureaucracy - not to mention its promises for health care to its citizens.
Is the USA in trouble? Will this affect us?
May 1, 2007, 12:05
Newsletters
:
2007 Newsletters
:
18 May 2007
The Debasement of World Currency: It Is Inflation, But Not As We Know It.
This article was written in 2001 and gives us a sense of what is happening in the world of money. Central Banks have been steadily debasing their currencies by 10% or more (NZ by 16% in 2006) for some time now and we are having trouble working out the true value of our dollars. In terms of buying a house they have halved in value over the last seven years. How can we measure our economic growth rate if the value of the measure is constantly diminishing?
Can the powers that be hold everything together or must we have a recession? More interesting thoughts from the world of high finance.
Apr 30, 2007, 11:01
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