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Tag Archive: international monetary fund


In his first official act as the new governor of the Reserve Bank of India (RBI), Raghuram Rajan raised the benchmark interest rate blogfrom 7.25 to 7.5%, causing a ripple of surprise in financial circles and eliciting protests from various business representatives. But for people who know the current condition of emerging markets and Rajan’s professional trajectory, this was not surprising, at all.

Rajan has no qualms about staging such challenges. In 2005, Rajan was chief economist of the International Monetary Fund and attended the top central bankers’ get together in Jackson Hole, Wyoming, to present a paper on how the financial sector had evolved during Alan Greenspan’s era. As Rajan later described the meeting, which was to be Greenspan’s last, in his book Fault Lines: “Some of the papers in the conference, in keeping with the Greenspan-era theme, focused on whether Alan Greenspan was the best central banker in history, or just among the best.”  Continue reading

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Reading between the lines from the  Bank of Italy  , Back to 2012 in the month of July Mario Draghi, on the verge of yet another Eurozone 813530collapse, promised the world that he would do literally “whatever it takes” to defend the Euro, banks in the insolvent continent took his promise seriously, and ramped up their participation in the most epic Ponzi scheme conceived in Europe to a whole new level. The scheme, of course, was one where banks would buy sovereign bonds issued by their host country (most notably Spain and Italy), and subsequently repo them back to the ECB for near full cash (net of a minuscule haircut) collateral.

The IMF also published a crucial paragraph doing the spillover analysis indicates that a shock from Italy could have a marked impact on the Europe and beyond through trade and financials channels. Continue reading

Many have said that not all is not solved in the Euro-Zone. In fact, despite the ongoing rhetoric from the ECB that they stand ready to “do anything,” in reality they have done little to this point other than just talk the markets higher. While that has worked to a large degree to suppress rising interest rates on debt burdened Euro-Zone countries there has been no progress on the“unification” of the Euro-Zone or a resolution to its mounting debt problems.

Three Problems That Still Exist

There are still three major problems with the Euro-zone that, without fixing, will lead to the next chapter in the ongoing Euro-zone saga. Continue reading

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