Mike “Mish” Shedlock: IMF will screw citizens, bail out bondholders


From Mike “Mish” Shedlock at Global Economic Analysis:

Storm Trooper head

We come in Peace - Shoot to Kill

Can the IMF “Help” Anyone?

…”help” goes to the creditor nations who would otherwise bear the risk of a default by the debtors…

the IMF will not help Ireland. Instead, the

IMF would screw the citizens of Ireland while bailing out the bondholders. Who are those bondholders?

The answer of course is banks in Britain, Germany, the United States and France…

Bondholders should suffer losses down to the last penny. If they are wiped out, so be it.

The citizens of Ireland should not be responsible for those losses. In short, they should tell the IMF to “Go to Hell”. The simple way to do that is default.


Inquiring minds are asking “Can the IMF Help Anyone?”

That’s a good question. Mish readers may be shocked by my answer: “Yes It Can!”

The irony is no country in its right mind should ever accept “help” from the IMF.

This apparent paradox can be explained by the fact that “help” from the IMF is akin to tossing an anchor to a struggling swimmer.

Help does not go to the country accepting the offer of help. Rather “help” goes to the creditor nations who would otherwise bear the risk of a default by the debtors.

In this case, the IMF will not help Ireland. Instead, the

IMF would screw the citizens of Ireland while bailing out the bondholders. Who are those bondholders?

The answer of course is banks in Britain, Germany, the United States and France…

Reject Phony Offer of Help

Irish voters, if they have a chance, should reject this phony offer of “help” from the IMF, the EU or whoever. Merkel has it ALMOST correct when she said “any future EU bailouts to come with new rules requiring bondholders to absorb some losses.”

I say “almost” because the future is now. In addition, I say “almost” because “some of the losses” is inadequate. Bondholders should suffer losses down to the last penny. If they are wiped out, so be it.

The citizens of Ireland should not be responsible for those losses. In short, they should tell the IMF to “Go to Hell”. The simple way to do that is default.

To get its economy functioning again, Ireland will still need austerity measures, public sector reforms, bank reforms and other initiatives, but it certainly does not need any anchors from the IMF. Ireland has enough problems already.

Mr. Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management.

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