Would it be too much to ask of you
What you’re doing to me
After IMF’s reform declaration, some countries on the edge of default cheered up a lot. However, IMF’s decision doesn’t change the fact of one’s bankruptcy. And IMF doesn’t promise anything as well either. Looking closer at Argentina’s long lasting story (over 20 years for now), one can make sure that anything IMF does – it does it for a very specific purpose.
So what is IMF’s decision all about?
Simply put, now no one owes nothing to nobody. At least, automatically. Now the USA will make decision (with their blocking stake) if debt has to be payed or not. In fact, in return for the opportunity not to pay, other countries will reinforce the blocking stake with their voices as well. It gives total financial control over Europe – something that USA have long lasted to have and that’s their great gain. Whenever EU tries to make any uncoordinated decision, it may now be faced with the consequences of bad debt of Greece, Portugal, Italy, Spain and other countries.
Debt market collapse in Europe
Debts in EU are an essential part of the global financial system – one will not take them at risk. So that Europe’s forced consolidation with the US is a closed issue. Especially for those who had any hopes to cooperate with EU despite all the obstacles (say, China). Now the USA don’t even have to rush with TPP – Europe is taken into tight circle between refugees and the World Bank.
Global financial collapse
Finally, that reform means the start of the financial system collapse. It won’t exist in a current state any more. China has been using it to wrest the initiative from the dollar and enhance its position. Chinese achievements were great but will now turn to ashes. They have completed all the preparatory processes like:
- Yuan received the status of a reserve currency;
- Issue of sovereign bonds was prepared and distribution implemented through the London Stock Exchange;
- Reciprocal currency swap contracts settled with the key countries;
- International banks started their work under new conditions, such as AIIB (Asian Infrastructure Investment Bank) and BRICS Development Bank.
Thus, the financial war is intensifies. Europe is now restricted to buy Chinese bonds. But such a situation may trigger a backlash from Pekin and Moscow. The gossips on their exits from Treasuries have a long history now, but may come to reality at last with whole Asia to join the process. We only hope it will not lead to a war greater than it is right now.
GrandUpheal recommends not to buy treasuries in the near future :).