Quote:
Originally Posted by automaton 3
It is about as black and white as it can get. They are asking us to lend them money. They are currently a lousy credit risk. As lenders we set terms that provide us with a comfort level with respect to our risk and the likelihood of repayment. As it stands we don't like how they run their business, which has a direct impact on repayment.
If they don't like our terms, they are free to shop around and ask someone else.
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It's not black and white at all actually. We aren't being asked to loan directly to insolvent governments. We're being asked to up the contribution to a reserve fund in case of a cascading bank run in one of the big economies. The IMF is a key institution in the international monetary system to maintain stability.
Your approach is the cut of my nose to spite my face policy. Sure we can act indignant and not help out to build a fund that could overwhelm a national banking system with liquidity or we can recognize that a banking collapse in a big EU country would be bad for everyone.
This has nothing to do with bailing out profligate governments. This is to avert a banking collapse spurned by political and economic uncertainty.