Posts Tagged ‘imf’

DISCLAIMER: All the below (as well as the title) are purely my own opinion and do not necessarily represent the actual truth. It is the conclusion that I have come to based on the information available to me at the time of writing this post. As my sources of information are to a certain extent limited and I can only access information currently in the public domain I might be completely wrong in my conclusion. Then again I might also be right…

Yesterday came with some very interesting but not surprising new revelations in the whole #DSK affair. For those who need reminding; Dominique Strauss-Kahn (#DSK) was the head of the IMF and potentially the next French president back in May this year when he was arrested at New Yorks’ JFK airport accused of raping a chambermaid at the Sofitel Hotel that he had been staying at. DSK already had a reputation as a bit of a womanizer and someone who has had several affairs and the media descended on him while the world wagged its indignant finger. DSK was arrested and put behind bars and a whole media circus went into overdrive. He was of course forced to resign as head of the IMF and his chances of becoming France’s next president (which had been good) evaporated. However in spite of all the apparent evidence of the heinous act as well as all other previous indiscretions that were dragged up during the following months, all charges against DSK were dismissed (on the prosecutions request) on October 13th. However it was no surprise that the damage done to Strauss-Kahns reputation in the intervening months was irreparable.

Personally I had said from the beginning that the whole affair stank to the high heavens. It made no sense and it was too convenient for his political opponents. Why would a man in his position rape a chambermaid? Surely it wasn’t for some depraved sexual satisfaction. Someone of his wealth could, if he was that way inclined, buy any sexual pleasure one could think of. Power was also hardly going to be a reason as he was already one of the most powerful men in the world. The whole thing just did not make sense. From DSK’s perspective anyway. It did however made perfect sense from his political opponents perspective. What better way to remove a powerful opponent than to have him accused publicly of a heinous act that would appear to be an escalation of his previous indiscretions?

The whole thing sort of died down after his release until yesterday when the FT Weekend ran a story on its cover quoting from Edward Epsteins story in the New York Review of Books. Epstein has done extensive research into what happened using information submitted by both the prosecution & defense in the case. I can strongly suggest that you read Epsteins article as it includes some simply amazing insights as well as new information which can lead to no other conclusion than that the whole alleged rape was staged as a means of discrediting Strauss-Kahn.There is the limited timeframe, 6 minutes to be exact, in which DSK according to the chambermaid “attempted to assault her both anally and vaginally, (and) forced her twice to perform fellatio”. One of the amazing bits of informations pertains to the fact that the whole rape managed to take place within those 6 minutes. This in itself would be an amazing “feat”. However it’s even more amazing when one takes into consideration the physical stature of both people involved, DSK is not exactly tall or athletic while the chambermaid is 5’10” and not exactly a frail little bird.

There is also extensive video & phone evidence as well as key-card room entry data strongly suggesting that hotel staff were acting in a very suspicious manner (to put it mildly) as well as video evidence of senior hotel staff performing a victory dance after notifying the police. Then there are also the mystery occupants in the room next to DSK’s, the long delay in reporting the manner to the police, suspicious phonecalls etc. etc.

So the big question is: Cui bono?

This can best be established by looking at the direct results of the accusations. There were 2 obvious results; Strauss-Kahn stepped down as head of the IMF and his chances to become the next French president were ruined. Let’s look at the first one; why would DSK need to be “removed” as head of the IMF? This is where a clear link to Ireland’s current dire financial state comes into play. At some point in 2010 following the Irish banking collapse it had become clear that the Irish government required a serious financial injection to prop up its financial sector. During ongoing talks with the IMF (headed by DSK) it become clear that the IMF supported a serious “haircut” for the bondholders before it was willing to reach into its coffers to help out Ireland. This meant that those bondholders would be asked to bear some of the costs as was to be expected in a free market economy. The IMF suggested to the Irish minister of finance  to haircut €30 billion of unguaranteed bonds by two-thirds on average. The Irish government was delighted as this would have represented a workable and realistic solution.

The deal was torpedoed from an unexpected direction. At a conference call with the G7 finance ministers, the haircut was vetoed by US treasury secretary Timothy Geithner who, as his payment of $13 billion from government-owned AIG to Goldman Sachs showed, believes that bankers take priority over taxpayers.

For those of you who do not know who Geithner is:  he’s an American economist, central banker, and civil servant. He is the 75th and current United States Secretary of the Treasury, serving under President Barack Obama. He was previously the president of the Federal Reserve Bank of New York. He has extremey strong links to private sector financial institutions. I strongly suggest reading up on his career-path and connections here.

So there is your reason,DSK was a supporter of “burning the bondholders” while Geithner with the might of corrupt politicians and Goldman Sachs behind him wanted otherwise. DSK had to be removed and preferably as quickly as possible. Not only should he no longer be in charge of the IMF he should certainly, under no circumstances, be allowed to become the next French president of France. France after all, together with Germany, decides what happens in the EU. You only need to look at how the Greek & Italian presidents were forced to step down under French & German pressure recently to see how absolute the German-Franco power is within the EU.

Enter Christine Lagarde, long time “friend” of Nick Sarkozy, as the candidate to take over DSK’s post at the IMF. Not surprisingly Lagarde’s candidacy is strongly supported by Geithner. Lagarde does not support haircuts for bondholders and strongly support so-called bailouts where in the end the taxpayers end up paying for losses willfully incurred by private sector institutions. As proof of the pudding all charges against DSK are dropped within days of Lagardes official appointment as head of the IMF.

So there you go, Geithners almighty rule is safe, the IMF is in banker-friendly hands, DSK’s hopes for Frances presidency are dashed and Ireland is truly to only real rape victim.

All about banks and mortgages…

Posted: March 3, 2011 in news
Tags: , , , ,

While driving my kids to school this morning I listened to David McWilliams talking on Newstalk radio. David was talking about the ECB/IMF “bailout” and about the growing mortgage crisis in Ireland. Now I have always respected David for his frankness and clearcut analysis. However this morning I disagreed with the duality in his argument.

Here’s why:

On the ECB/IMF “bailout” he argued that this was not a bailout and that we as a population could never repay this loan. The interest payments would eat up 10% of our GDP and anyone considering this as something that would constitute a solution to our problems was wrong. He went on to state that a default was coming down the line and that it would be better to enter into a structured default now rather than have a systemic collapse further down the line when everything spins out of control and we have no choice in what happens. Furthermore the bondholders, who are the ones who benefit from this bailout, wilfully & knowingly bought these bonds hoping to make a high profit. They were also aware of the risks associated, or they should have been, and now it was time for them to be made face the risks of this type of business.

So far I agree with him.

He then went on to say that the best way to deal with the impending mortgage crisis is to create some sort of “debt forgiveness” scheme. One where people with negative equity would somehow not be held responsible for the chunk of money owed above the value of their house. People could not and should not be forced to pay their mortgages in full.

That’s where I disagree. Compare the first argument to the second;

  1. I am a bondholder and I buy quantities of bonds in a risky market hoping on a high return. The market goes the other way and I now have to face the truth that I am losing money.
  2. I have bought a house on a mortgage, as the value of my house increased I re-mortgaged it counting on the value to go up and up. Now reality has struck and the value of my house has plummeted (to a realistic value) and the amount of money that I owe is more than the property is worth. Or even better; I have bought a string of properties, all on a mortgage, have rented them out and was counting on the rent to pay the mortgage. I now have no tenants or tenants at a greatly reduced rent and owe more on the properties than that they are worth.

In McWilliams argument the party in the 1st argument should be forced to face the flip-side of their actions while the party in the 2nd argument should not be made to face the results of my risk and should get a huge chunk of my debt written off.

Not exactly fair in my opinion……