Things are so dire the IMF is out of cash. Don’t take that from me, take it from Christine Lagarde, head of the IMF.

The Telegraph reports IMF may need billions in extra funding, says Lagarde

Christine Lagarde said the money available to the organisation “pales in comparison to the potential financing needs of vulnerable countries”.

In the wake of the global credit crisis, the funding of the IMF tripled and Britain’s exposure to it rose to £20 billion. This figure is poised to rise again if financial troubles engulf bigger economies such as Italy and Spain.

Yesterday, Alistair Darling, the former Labour chancellor who was in office during the previous crisis in 2008, warned that the problems facing the global economy were worse than three years ago.

“There are lessons to be learnt, and they are not being learnt by those responsible at the moment,” he said. “Lehmans [the investment bank that collapsed in September 2008] taught us one thing which is if you know there is a problem, take action, sort it out [in a way] that is more decisive than people expect if you are going to stop it.

My Dear Darling

My dear Darling, you are a complete fool (but no, I don’t love you anyway). Here are the “Lessons of Lehman”

Lessons of Lehman

  1. Lehman was overleveraged
  2. Lehman went under
  3. Lehman should have gone under
  4. The world did not end

Darling continues ….

“The problem with the Greek crisis is that it has been allowed to run on and on and on.”

I happen to agree with that Darling sentence, unfortunately I completely disagree with the context.

The smart thing to do would have been to let Greece default. It is now clear Greece is going to default anyway.

History will show the world will not end. It will also show that bailouts to date have done nothing but harm.

Mike “Mish” Shedlock
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