IMF

Global Economic Growth in Low Gear Says IMF

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The IMF has released their World Economic Outlook report and projects unemployment will remain unacceptably high in advanced economies as well as the Middle East and North Africa, an area of unrest.  The IMF also warns if the U.S. debt ceiling is not promptly raised, serious damage to the global economy would probably result.

Good Economic News... If you're a Turk

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The Turkish people elected a new government in 2002. Recep Tayyip Erdoğan became Prime Minister after his AK Party gained an absolute majority in the nation's unicameral legislature. Erdoğan and AK have governed continuously from 2002 through the present.

The annual change in gross national product (Graph, Turkish Review, January 2011) developed through Turkish management of the economy.

During the critical period that included the global recession, Turkey fared better than most industrial nations. (Trading Economics)

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Negative growth hit Turkey in only three quarters, with a solid rebound starting in 2009. Forth quarter 2010 economic growth was 9.2%. Only China led Turkey during that time with 9.8% growth.

The International Monetary Fund (IMF) announced an end to its formal agreement with Turkey in 2010. In fact, the Turks ended IMF involvement with economic management in 2007 when they rejected IMF's "austerity" requirements for a stand by loan. Since that time, Turkey has paid off 75% of its IMF debt and managed the economy without IMF help.

Highlights - How they did it

Dear Portugal, You Get a Bail Out and a Recession

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Portugal is getting an IMF, EU, ECB crafted bail out of €78 billion where the austerity terms will throw them into recession.

Portugal's main opposition party met European and IMF officials on Wednesday and said they would consider whether to back a 78-billion-euro bailout after a source said the terms would propel the economy into two years of recession.

Why would the opposing party say that? The IMF is requiring Portugal to enact draconian cuts to the deficit, 9.1% to 5.9% of GDP in 2011 and less than a 3% GDP to debt ratio by 2013. The Guardian:

Health and education spending will be cut by €745m, civil service pay and pensions will be frozen, and people on state pensions above €1,500 a month will have them reduced.

Civil service staffing is to be squeezed by 1% a year in central government, while regional administrations and town halls will be told to shed 2% of their employees annually.

Banks will get €12 billion of the bail out. Earlier Banco Português de Negócios was nationalized, so the bail out requires Portugal to sell it at a greatly reduced price. In fact there is no minimum price specified.

Portugal is expected to reduce public spending by 3.4% of its GDP this year and raise an extra 1.7% of GDP by raising taxes on cars, tobacco and electricity and getting rid of income and corporation tax loopholes.

Thar Blows Portugal Straight into the IMF Austerity Plan

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Portugal is asking for a bail out.

Portugal's prime minister said Wednesday his country has asked for financing assistance from the European Union due to its high debts and difficulty raising money on international markets.

The amount is €80 billion, with the Wall Street Journal reporting €90 billion.

Germany is already backing the bail out.

Of course the help will have a catch, that infamous, vague term, austerity. So far this has been an attack on workers, wages and social safety nets.

The U.K., which has cuts social safety nets, workers will contribute £4bn to the Portugal bail out....in order to cut social safety nets, workers and wages.

The Treasury said the UK was not planning to offer bilateral assistance to Portugal in the way that it did to Ireland.

But it confirmed that Britain could be required to provide a loan of up to about £4.4bn – 13.6% of the €37.5bn remaining in the EU "disasters fund" after it was drawn upon by Ireland – as well as 4.5% of any IMF loan.

Earlier in March, Portugal voted against austerity measures and the Portugal prime minister resigned.

Seems the ECB, EU and the infamous IMF are putting together an austerity plan for Portugal which will take 2 to 3 weeks.

Greece Calls Out IMF

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Greece is growing a spine. Seems the EU and the IMF are demanding Greece sell off their public assets, and in response to these demands, Greece said:

"The behavior of the representatives of the EU, IMF and ECB during yesterday’s press conference was unacceptable,” government spokesman George Petalotis said in a statement today, referring to the European Central Bank. “The only agent responsible for these decisions is the Greek government. We take orders only from the Greek people.”

Associated Press:

It was the first time the government has publicly struck back at the IMF and the European Union, which rescued Greece from bankruptcy but at a price that many Greeks consider too harsh.

The IMF, the European Central Bank and the European Commission delegation said Greece must privatize euro50 billion ($68 billion) in state assets and speed up structural reforms in the next few months to keep the country's troubled finances afloat. The IMF representative also said some of the frequent demonstrations against the Greek government's reforms were being carried out by groups angry at losing their "unfair advantages and privileges."

Just incredible and good for Greece. The IMF is pushing their austerity program, which is privatization and reductions in pensions, social safety nets for workers, who I guess are those of unfair advantage and priviledge.

European Bail Out Brew Bubbles Over Again

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Europe's never ending sovereign debt and default problems are rearing their ugly head once again. Just a rumor hitting the rounds that Portugal is being pressed to take a bail out, even when those rumors are denied was enough to send their bonds reeling. As it was the European Central Bank has to buy Portugal's bonds.

The ECB intervened to buy government bonds on the secondary market.

"They're buying five-years and 10-years in Portugal, whatever people are offering really," one trader said.

Another trader said the ECB appeared to be buying Greek and Irish bonds too. EU sources say the central bank has not yet bought Spanish government debt.

Credit default swaps for sovereign debt jumped 11 basis points on Portugal and 26.5 basis points for Ireland.

There is a domino theory that if Portugal is the next nation to be bailed out and saved from sovereign debt, Spain will assuredly also go south. Spain is a much larger economy. Ireland & Greece have already taken bail outs. It is assumed Portugal is next in the domino falling list. Contagion is also assumed when it gets to Spain. Contagion means the PIGS sovereign debt crisis will affect the United States and other nations outside of Europe.

Ireland Goes into the "Loving Arms" of the IMF for a Bail Out

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Ireland, is getting a bail out from the IMF as well as the European Central Bank.

The bailout would be in the tens of billions of euros, he said, adding that the final figure was subject to negotiations. Analysts and politicians have suggested that the size of the package may well approach €80 billion, or $109 billion.

Perhaps €15 billion would be set aside in a fund to support the country’s banks, which have been hemorrhaging deposits. An additional €60 billion or so would be allocated to Ireland itself so as to give it the flexibility of staying out of the bond markets.

Negotiations for the terms are not finalized but the New York Times implies the deal will have Greek like austerity measures. Bend over Ireland.

Mr. Cowen has said Ireland is already putting an adequate budget-cutting plan in place, but given the size of the bailout being discussed, it would be surprising if E.U. and I.M.F. officials did not demand more cuts, accompanied by tax increases.

“There will be a lot of pain for the taxpayer and a lot of people will lose their jobs,” said Michael Noonan, the chief economic spokesman for Fine Gael, the main opposition party.

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