IMF head Christine Lagarde says "IMF credibility is at stake". She blames the US for that development, and calls on US to give more voting power to China to solve the problem.
I have a simple question: Precisely what credibility does the IMF have?
To address my simple question, please consider the ZeroHedge report This Is How The IMF "Predicted" China's Slowdown
As the following chart compiling the IMF's various quarterly economic forecasts over the past 5 years clearly shows, what the IMF had actually forecast, was a constant hockeystick rebound in China growth starting in 2011... until 2014 when the monetary fund finally gave up.
In a "credibility boosting" exercise Zerohedge comments ...
"The IMF's forecast of China's growth after the fact is now so negative, it is well below the consensus projections, as the IMF is all too happy to boast ..."
The IMF's credibility has been magically restored by impressive revisionist history. But as we see today, that credibility is once again at stake.
3 Trillion Credit Crunch Coming Up
Meanwhile, please note the IMF is concerned that a $3 Trillion Corporate Credit Crunch Looms as Debtors Face Day of Reckoning.
Governments and central banks risk tipping the world into a fresh financial crisis, the International Monetary Fund has warned, as it called time on a corporate debt binge in the developing world.
Emerging market companies have "over-borrowed" by $3 trillion in the last decade, reflecting a quadrupling of private sector debt between 2004 and 2014, found the IMF's Global Financial Stability Report.
This dangerous over-leveraging now threatens to unleash a wave of defaults that will imperil an already weak global economy, said stark findings from the IMF's twice yearly report.
Q. How did this happen?
A. The answer of course is corporations took on insane amounts of debts precisely as central banks and the IMF wanted them to do.
Q. Why did the IMF and central banks encourage this debt?
A. To help stimulate the global economy.
Q. Did it work?
A. Obviously not.
Q. So why do they think still more debt will fix a problem caused by debt?
A. You tell me.
If the IMF wants China in the name of credibility, please let them have it.
In return, I ask one simple thing: The US cuts off all IMF funding, as it should have done long ago.