IMF – world banks in trouble with $3.6 trillion in debts which need to be repaid in two years

[Anna Sergijenko, Chartered Journalist (MCIoJ) Financial News Contributor]

The Daily Telegraph: The International Monetary Fund came recently out with exact figures of banks’ debts worldwide – its $3.6 trillion in debts which will need to be repaid pretty soon – in two years’ time from now. If that isn’t done, the world economy, even with ex-UK prime minister, Gordon Brown at the helm of the IMF, will face a Fukushima-type meltdown.

In the report, the most ‘unfortunate’ of the bunch of world banks were found to be Irish and German banks. Government debts, too, were recognized to be undesirably high in many wealthy countries, and most of all in the USA and Japan, who got an official IMF ‘red card’ warning.

However, notwithstanding the wide-spread debt problems, IMF officials also warned world governments against reducing public spending and other costs.   According Strauss-Kahn, the IMF’s current head: Fiscal tightening can lower growth in the short term, and this can even increase long-term unemployment, turning a cyclical into a structural problem……the bottom line is that fiscal adjustment must be done with an eye kept keenly on growth.’

In general, though, global markets were now more stable. However, as regards the most ‘suffering’  market – the EU – there is some good news for the future. The European Central Bank is planning to do a series of stress tests, which according to the IMF will see what the future holds for the Eurozone despite the EU’s buoyancy that it is ‘mission accomplished’ for the saving of the Euro.

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