I.M.F. Chief’s Change of Tune on Bank Capital

[Dover]

Source: NYT

Over the weekend, Christine Lagarde, the president of the International Monetary Fund, was desperately trying to back-pedal. A report had surfaced citing an internal I.M.F. document estimating that Europe’s banks were woefully short of capital — by a whopping $273.2 billion.

“Misreporting,” Ms. Lagarde insisted, before awkwardly describing the number as “tentative.” Then she went even further, saying that the number “is not a stress test that the I.M.F. conducts nor is it the global capital need for European banking institutions.” She added, “We are currently in discussions with our European partners to assess the global methodology until we reach a tentative draft. It will be published before the end of September.”

While Ms. Lagarde acted as if she was surprised by the number — and tried to play it down — she shouldn’t be. And in truth, she wasn’t.

Changing her tune seems to be a theme for Ms. Lagarde, which may explain her feigned sense of shock.
Ms. Lagarde sounded alarm bells last month about what she called the need for an “urgent recapitalization” of Europe’s banks — and was roundly criticized for it. “Developments this summer have indicated we are in a dangerous new phase,” she said then. Her refreshingly honest remarks had been so honest — apparently, too honest — that some bankers blamed her for further undermining confidence in Europe’s banks.







Read more: http://dealbook.nytimes.com/2011/09/12/i-m-f-chiefs-change-of-tune-on-bank-capital/?ref=business

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Tracking Europe's Debt Crisis

http://www.nytimes.com/interactive/business/global/european-debt-crisis-tracker.html?ref=business

[Dover]

1. Wary Investors Start to Shun European Banks

When a $225 million loan to BNP Paribas comes due Thursday at Legg Mason’s Western Asset management unit, managers at its money market funds will be exercising caution. Instead of renewing the loan as they would have as recently as two months ago, they are looking to park investors’ money elsewhere, avoiding BNP and other Continental banks in favor of institutions in Scandinavia, Canada and Britain.

http://www.nytimes.com/2011/09/13/business/global/investors-reducing-exposure-to-french-banks.html?ref=business

[sabrina 1]

2. She is hopeless, not even an economist as far as I know.

But Timmy Geithner wanted her. Strauss Kahn was against the steps she has taken and he was right. But Geithner did not like DSK's ideas that the burden should be more evenly distributed between the people and the banks. Seems they had to learn the hard way.

I have read that Greece is going to default. And will leave the Eurozone, it is only a matter of time. The only reason the IMF is still trying to find a way to prevent it is because it will have a ripple effect on other countries, like Portugal and Spain, and maybe even Italy.

They have wrecked the world. I do not know why those who did so, are still in charge. As one European writer said last week 'they don't know what they are doing, no one knows and they don't know what to do'. You can tell that Lagarde doesn't have a clue. She keeps contradicting herself.

If it were not for all the people who will be affected so badly, I would like to see the banks fail, as some of them will now anyhow, and all the European countries do what Iceland did. They are the only country whose economy is recovering.

These brutal austerity programs have totally failed as anyone with half a brain knew they would. You cannot starve people to feed your wealthy buddies. Greece just couldn't do it. Typical IMF tactics. Sad that the First World is now under their control. How did it happen?

[xchrom]

3. Any one in her position who utters the word or seems 'surprised'

Should automatically be fired - that applies to a whole host of people.

[bemildred]

4. Oooopsie, another margin call coming right up. nt