IMF - Global Employment Crisis

The schizophrenic IMF has declared the world has a global jobs crisis:

AMERICA and Europe face the worst jobs crisis since the 1930s and risk ''an explosion of social unrest'', the International Monetary Fund has warned.

''The labour market is in dire straits. The Great Recession has left behind a wasteland of unemployment,'' said IMF chief Dominique Strauss-Kahn at an Oslo jobs summit with the International Labour Federation.

A joint IMF-ILO report said 30 million jobs had been lost since the crisis, three-quarters in richer economies. Global unemployment has reached 210 million. ''The Great Recession has left gaping wounds. High and long-lasting unemployment represents a risk to the stability of existing democracies,'' it said.

The study cited evidence that victims of recession in their early 20s suffer lifetime damage and lose faith in public institutions. A new twist is an apparent decline in the ''employment intensity of growth'' as rebounding output requires fewer extra workers. As such, it may be hard to re-absorb those laid off even if recovery gathers pace. The world must create 45 million jobs a year for the next decade to tread water.

How does this square the IMF demanding austerity measures, gutting employment benefits, wages and security? It doesn't.

IMF releases China Report

You might recall how China killed the release of the IMF report. Notice how China can get a report repressed, unlike most countries, or do they even try. The biggest news is how China is on track to be the world's largest economy.

Well, finally the IMF released the report.

What's frightening is how the IMF shows China's stimulus worked and then some. The difference between them and the United States? China has the jobs, they now have the world's manufacturing base.

Indeed, all of Asia (minus Japan) is experiencing a V Shaped Recovery:

ADB has upgraded its 2010 growth forecast for the 14 economies of emerging East Asia to an aggregate 8.1% from the 7.7% projected in ADB’s Asian Development Outlook 2010 published in April. The forecast for the region’s economic growth in 2011 remains at 7.2%.

The IMF is back to telling China to significantly revalue their currency. This is the elephant in the room China does not want mentioned.

Staff believe that the renminbi remains substantially below the level that is consistent with medium-term fundamentals.

Interestingly, the IMF has put China's objections in the text, instead of their own specifics. Still currency manipulation is a key finding from the IMF report.

Spanish Bank Fails, here comes the IMF

Over the weekend a Spanish bank, Cajasur, was seized. This is a large Spanish bank with $23.9 billion or 0.6% of Spain's assets.

Now the IMF is gunning for Spain and it looks like they are after.....their pension system and wages. From the IMF press release:

A dysfunctional labor market, the deflating property bubble, a large fiscal deficit, heavy private sector and external indebtedness, anemic productivity growth, weak competitiveness, and a banking sector with pockets of weakness. Ambitious fiscal consolidation is underway, recently reinforced and front-loaded. This needs to be complemented with growth-enhancing structural reforms, building on the progress made on product markets and the housing sector, especially overhauling the labor market. A bold pension reform, along the lines proposed by the government, should be quickly adopted. Consolidation and reform of the banking system needs to be accelerated.

The EU is also calling for Spain to modify it's pension system by raising the retirement age and scaling the benefits. The IMF is zeroing in on Spain's labor markets. So why exactly are they doing this and why are workers supposed to be stuck with the housing bubble and derivatives bill as sovereign nations become mired in debt?

(Yet another) Greek Bail Out - $146 Billion Dollars

Yet another Greek bail out deal was reached:

Euro region finance ministers agreed to a 110 billion-euro ($146 billion) rescue package for Greece to prevent a default and stop the worst crisis in the currency’s 11-year history from spreading through the rest of the bloc.

This is to prevent a sovereign default, which was causing contagion throughout Europe.

The New York Times is reporting larger bail out amounts of €120 billion.

Bloomberg has some horrid numbers in their report:

Greece’s main sales tax rate will rise to 23 percent from 21 percent.

28% of the European contribution is from Germany. Squishing workers:

Other measures include abolishing the 13th and 14th wage payments that civil servants get annually for workers earning more than 3,000 euros per month, he said. Payments for those earning less than that will be capped at 1,000 euros.

Bloomberg seems to be getting the details of the deal right.

IMF - "Essential" China Allow Currency to Appreciate

Currencies of a number of emerging Asian economies remain undervalued, substantially in the case of the renminbi,” the IMF said in the report. Renminbi is a name for China’s currency, a denomination of which is the yuan. It’s essential for China to address excess demand pressures by reining in credit growth and allowing exchange-rate appreciation - IMF

The above is quoted by Bloomberg in the IMF press conference on their World Economic Outlook report.

Additionally the IMF said debt laden countries should let their currencies depreciate:

All Things Greek

Greece is getting a bail out. Well, not really, because they are getting loans, oops, wait, yes really.

The Wall Street Journal notices Greece will pay more in interest than if it had gone to the IMF. According to the Wall Street Journal the two possible rates for the €30 billion in loans is 5.33%, fixed and 4.14% variable.

Either way, the IMF is way cheaper. It uses it’s own interest rate as a base, and it levies different surcharges. The fund’s rate works out to 2.71%, as of last week, for a €10 billion package.

Now Bloomberg is reporting a €45 billion loan package, €30 billion from the Euro-Zone finance ministers and €15 billion from the IMF. Bloomberg is reporting the current Greek bond yield is 6.98%.

But this thing isn't over.

China Killed IMF Report on Their Currency Manipulation

Buried in the article IMF warns wealth nations of debt is this gem:

The I.M.F.’s staff concluded in a report last summer that the renminbi was “substantially undervalued, ” and that this was contributing to China’s large trade surpluses in recent years. But China has blocked the release of that report, a prerogative of the I.M.F.’s member countries, although most allow the release of the I.M.F. staff’s reports on their economies.

China didn't like the IMF call out their currency manipulation so they bury the report? Gets even better. Be prepared for a propaganda war due to a statistical anomaly, (really, who does trust official Chinese statistics on their economy?), China will report a trade deficit:

IMF to sell 191.3 tonnes of gold

The IMF is going to sell 191.3 tonnes of gold:

Spot gold XAU= dropped about 1 percent on Thursday after the International Monetary Fund (IMF) said it would sell its remaining gold reserves, but settled in a narrow trading band as the market absorbed the news.

The IMF announced it would begin phased open-market sales of the remaining 191.3 tonnes of gold under a program launched last year to raise new resources for lending. [nN17152668]

Gold was already losing ground early on Thursday and was quoted at $1,114.00 an ounce prior to the IMF statement, which quickly erased a further $8.25 off bullion.

"This wasn't totally unexpected given what the IMF has been saying, but it was still enough to give the market a rattle," a gold dealer in Sydney said.

Spot gold was quoted at $1,108.10 an ounce at 2219 GMT.