Friday, 4 November 2011

Err, bit puzzled here.........

According to the Evening Standard:
"This tension will be at the heart of the debate when British MPs vote on an increase in the IMF contribution. A big Tory rebellion is inevitable."
Cameron is quoted by the BBC:
"(the last vote had) allowed for some extra headroom and what we would anticipate doing would be within that headroom."
Ergo, if the last vote contained sufficient 'headroom' to allow Cameron to increase funding to the IMF, how can there be any further debate or vote in Parliament? Even Douglas Carswell appears to be slightly confused here, where he intimates that a vote will be forthcoming on any increase in the UK's contribution to the IMF.

Just saying.............


Edward Spalton said...

"Headroom"?, "Haircut"? ,"Kicking the can down the road"?
These are all nice homely words used to cover extremely sharp practices. They conceal rather than convey meaning.

Does anybody remember "The Snake" and "The Corset" applied to moetary matters?

I suppose they are better than the more pompous "Quantitative Easing" which actually means "Debasing the currency".

Then there are all the initials and acronyms of which most people have a less than clear idea - ranging from our old friend EMU (Economic and Monetary Union) through EMS, ERM and so on ad infinitem which recently got as far as EFSF.

The people who give the Plain Language Awards should start to persecute and shame all official financial SPIVs into clarity of language which might lead to clarity of thought.

A SPIV, by the way, is a Special Investment Vehicle by which, it is hoped ,that those nice Chinese will be persuaded to prop up the Euro, thus
"leveraging" and multiplying the effect of the funds actually guaranteed by the EFSF.

Ain't that dandy? Now you know.

Edward Spalton said...

A second though has occurred to me.

I heard Cameron say that he would be advancing money to the IMF which might support the eurozone along with other economies and here are his words

Does that mean that he thinks direct loans to eurozone are too risky and are likely to become gifts?

As Cameron will have to borrow the money before he can lend it because the government is till running a thumping deficit, will he be able to charge the IMF more interest than the treasury has to pay?

If so, why would the IMF come to him for a loan and not borrow from the same source as the British treasury? They could cut out the middle man - that's us and hoo blooming ray, if they did!

I only want to know.

Sue said...

Does that mean he using the assumption that it was already passed retrospectively during the last vote?

Here's your post for it. I'm confused too!

Bill said...

The Chinese aren't stupid. They politely declined the Spiv Sakozy's offer of Spivs and bought the Port of Piraeus instead!

Even better they see the 'European' as a lazy oaf who deserves what he is about to get!

john in cheshire said...

When Mr Strauss-Kahn was caught with his pants down, there was an ideal opportunity to disband the IMF. That it is still in existence is yet more evidence of the inherent corruption at the heart of world politics.
To paraphrase someone - where is an honest man?
From a personal perspective, I would be appalled if after my death, I was remembered only as a liar, cheat, bully, traitor and thief.

PeterCharles said...

I assume Cameron means that the amount currently pledged is well short of the £20 billion cap they last voted to approve, doubling our commitment from £10 to £20 billion. Thus any further pledges will not require parliamentary approval until that £20 billion cap is breached in actual cash terms. Another interesting question is which currency are they going to lend out, $US or €? If you are interested, current currency reserves are in the order of £30 billion and the government has budgeted to raise this by £6 billion a year through the life of this parliament, probably so they can meet their IMF pledge while maintaining a prudent reserve.

ES asks a very valid question, just how much is the interest we get and over what time frame? The actual cash is taken from the currency reserve so in central bank terms it is not newly borrowed and when it is lent it is still counted as cash in the reserve so it has no impact on the 'books' as it were, did you ever notice how it is that governments can get away with mafia accounting that would see a private individual or business man getting a gaol sentence while they don't even have the decency to blush? Nor do they mention those planned increases in foreign currency reserves are to be largely raised from bond sales although this will be done using swaps which presumably means that once a bond has reached maturity and they have issued a new bond to pay the original off they will issue yet another bond to boost the reserve.

The pretend excuse/intention is, of course, that the maturing bond will not need to be replaced because the deficit will be reducing so the new bond for the reserves is not 'extra' borrowing. Talk about cloud cuckoo land economics.

WitteringsfromWitney said...

ES & PC: I am extracting your comments as a post and trust you don't mind......? Anyway, bit late now.....!

Sue: See PC's post below in response to your question. Should answer your question.....?

Bill: True!

jic: Re your last paragraph, most certainly agree!