Comments on: 5y default probabilities

By: jason m

jason m — Mon, 08 Feb 2010 15:00:22 +0000

thanks all…will continue to muddle through and figure this out, although Matt’s second response lit the lamp a little. That would make sense, that they use the loan to purchase goods they normally import to sustain their way of life since their trade credit is tanking. cheers,
jason

By: Matt Franko

Matt Franko — Sat, 06 Feb 2010 14:03:03 +0000

C,
I think they have no issues with domestic credit in Krona, it was their inablilty to get trade credit to purchase critical imports that are priced in USD or Euro; such as medicines, petro, aircraft parts, etc. I think it got to the point where no one would send them anything with out pay in advance. The way I look at it, without the IMF, if they wanted to buy USD items, they would have had to “print” krona to get the USD to buy medicines, etc.which would have devalued the krone to a much lower level than it ultimately fell even with the IMF credit coming in. ie I dont think they used the USD and Euro SDRs to “buy krona” to support their currency. Their prices have stayed fairly high in USD terms even after their banking wipeout. All I can easily find is restaurant prices such as here
, $US 50 for a la carte lobster dinner, still seems pretty high.

By: warren mosler

warren mosler — Sat, 06 Feb 2010 09:46:25 +0000

thanks, got it fixed sometime yesterday and i bought some anti virus service for an extra $10 per month as well which is supposed to keep it from happening again.

By: Curious

Curious — Sat, 06 Feb 2010 03:48:00 +0000

Interesting question Jason. Thanks for the link Matt.

Here is what I found: The IMF’s primary objective for the Iceland loan was to prop up the value of their currency. The loan was made in SDRs.

But aren’t SDRs just a number somewhere in the IMF’s computer? How do they use SDRs to support their currency? As a collateral to borrow USD or EUR, which they use in turn to buy the krona?

If someone understands the mechanics of an IMF bailout, please explain.

By: Richard Benson

Richard Benson — Sat, 06 Feb 2010 01:35:41 +0000

Warren this may help your IT people.

A lot of sites are being used to infect the visitors by adding iframes that link through to malicious websites.
If these iframes appear on your site this usually means the server has a securoity problem that needs to be fixed before being able to permanently remove the problem.

http://www.geekstogo.com/forum/JS-Downloader-Agent-found-my-website-t216533.html

By: Richard Benson

Richard Benson — Sat, 06 Feb 2010 01:25:56 +0000

Warren, I am getting a virus alert from the main page of this blog from my anti-virus software – can you please have IT investigate? The virus was indentified as JS/Downloader agent and my browser was being redirected to other websites. I would recommend every poster here to install anti-virus software and scan your computer, it looks like warren’s front page has been compromised. From google:

JS/Downloader.Agent is a detection for JavaScript files that may have malicious intent to download and execute additional malware onto the computer. We all may have malicious software on our machines now.

By: Matt Franko

Matt Franko — Fri, 05 Feb 2010 22:48:11 +0000

Jason,
I might suggest you use Iceland as a “case study” here. It’s a small isolated economy and the IMF went in in 2008 and has been working with them as they try to recover from their banking sector collapse.

Here’s a link to the IMF’s page on Iceland.
Resp, Lot’s of background and progress reports.

By: jason m

jason m — Fri, 05 Feb 2010 16:55:02 +0000

A little of topic, but since we are talking internationally I am wondering if Warren or someone else knowledgable in international funding can illuminate on the subject of IMF loans. I have long followed the IMF and ‘washington concensus’. The results seem clearer now of these loan arrangements – privatize your govt. more and turn yourself into an exporting nation…which of course means export your resources to the US and Europe in return for these dollar bills and poverty. My question is what exactly are these countries being loaned? If the IMF gives a loan of $30 billion, what does that mean if the country accepting the loan has its own currency, then how would a loan of say US currency help it?