Ok. Let me see if I understand this. We are giving Wall Street 1.5 trillion dollars so that they can begin lending money again. But, I thought the problem was caused by giving loans to people who could not repay them so how is giving Wall Street more money so that they can begin handing out loans again goint to help when all that money is simply going to go to those who other wise couldn’t presently get a loan which mean that they become people who can not repay loans and I thought that was how we got into this mess in the first place.
Btw, you know how this economic crisis has affected me? My gas is now 1.65$. Why would I want to fix that?
President-elect Barrack Obama today announced the nomination of Timothy F. Geithner for Treasury Secretary.
Well let’s see what Mr. Geithner has been up to lately:
Wow. That’s a lot of pockets to have your hands in. And now Mr. Geithner has control over our nation’s wealth. Is a change really gonna come?
Overview of International Monetary Fund
International Monetary Fund has a near-global membership of 185 countries, the IMF is uniquely placed to help member governments take advantage of the opportunities—and manage the challenges—posed by globalization. The IMF tracks global economic trends and performance, alerts its member countries when it sees problems on the horizon, provides a forum for policy dialogue, and passes on know-how to governments on how to tackle economic difficulties.
The IMF supports its membership by providing:
- policy advice to governments and central banks based on analysis of economic trends and cross-country experiences;
- research, statistics, forecasts, and analysis based on tracking of global, regional, and individual economies and markets;
- loans to help countries overcome economic difficulties;
- concessional loans to fight poverty in developing countries; and
- technical assistance and training to help countries improve the management of their economies.
Each member of the IMF is assigned a quota, based broadly on its relative size in the world economy, which determines its maximum contribution to the IMF’s financial resources. Upon joining the IMF, a country normally pays up to one-quarter of its quota in the form of widely accepted foreign currencies (such as the U.S. dollar, euro, yen, or pound sterling) or Special Drawing Rights (SDR’s). The remaining three-quarters is paid in the country’s own currency. Quotas are reviewed at least every five years. (source)
Establishment of International Monetary Fund
In 1944, the US currency was still backed by gold, to the tune of $35 to the ounce, and was seen as the strongest currency in the world.
“At bottom, the Bretton Woods system rested on one simple assumption — that economic policy in the United States would be stabilizing,” writes Benjamin Cohen, a professor of international political economy at the University of California in Santa Barbara.
The Bretton Woods agreement also set up the International Monetary Fund (IMF) and the predecessor of the World Bank to carry out the agreement and regulate the international monetary system.
While the IMF and World Bank continue to operate, the fixed currency system fell apart as the US increased its deficit spending during the Vietnam War and Great Society years of social outlays of the 1960s.
It became ever clearer that the US could no longer back the dollar with gold, and Washington suspended the gold standard in 1971 to allow it to float to its own level. By 1973, industrialized countries agreed to let their currencies also float free. (source)
Conditionality of Loans
When a country borrows from the IMF, its government makes commitments on economic and financial policies—a requirement known as conditionality. Conditionality is a way for the IMF to monitor that its loan is being used effectively in resolving the borrower’s economic difficulties, so that the country will be able to repay promptly, and make the funds available to other members in need. In recent years, the IMF has worked to focus and streamline conditionality, in order to promote national ownership of strong and effective policies. (source)
Board of Directors
Dominiqu Strauss-Kahn, Executive Director , IMF: Dominique Strauss-Kahn was born on 25 April 1949 to a Jewish family from mixed Askhenazi and Sephardi origins, in the wealthy Paris suburb of Neuilly-sur-Seine. He spent part of his childhood in Agadir, Morocco, which he left after the 1960 earthquake to go to Monaco.
In high school, he earned top grades and entered the prestigious school Hautes Études Commerciales (HEC) and then studied political science at Sciences Po. Furthermore, he obtained a degree in public law, as well as a Ph.D and an agrégation in economics.Strauss-Kahn sought the nomination for the Socialist candidacy in the 2007 presidential election On October 18, 2008, the IMF announced it would conduct an investigation into an allegation reported by a long-standing governing board member, Shakour Shaalan of Egypt, that Strauss-Kahn had an affair with Piroska Nagy, a Hungarian-born senior economist at the IMF who subsequently left the IMF with a severance package. [12] On October 25, 2008, the IMF Board issued the findings of the investigation. While noting that the affair was “regrettable and reflected a serious error of judgment on the part of the managing director,” the Board cleared Strauss-Kahn of harassment, favoritism or abuse of power, and indicated that he would remain in his post.
John Lipsky, First Deputy Managing Director, IMF: Before coming to the Fund, Mr. Lipsky was Vice Chairman of the JPMorgan Investment Bank. In this position, he advised the firm’s principal market risk takers, published independent research on the principal forces shaping global financial markets, was actively engaged with JPMorgan’s key clients, and represented the firm around the world with senior public and financial sector decision makers.
Previously, Mr. Lipsky served as JPMorgan’s Chief Economist, and as Chase Manhattan Bank’s Chief Economist and Director of Research. He served as Chief Economist of Salomon Brothers, Inc. from 1992 until 1997. From 1989 to 1992, Mr. Lipsky was based in London, where he dir
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