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>   On Thu, Oct 23, 2008 at 9:51 AM, Scott wrote:
>   And now a rumor that the IMF is putting together a $1 Trillion assistance
>   package for EM

Thanks, IMF USD lending is functionally the same as Fed lending via swap lines.

This is on track to go the full route of a classic emerging market debt crisis.


2 Responses

  1. Warren,

    Not sure if I understand currency swaps fully but…

    Is there a point where the currency swaps have to stop?

    Does the US then liquidate the euro to recover its dollars putting even more downward pressure on the euro?

    Since exports have been supporting the US economy due to the low dollar, does the rising dollar, along with general economic malaise cause our export market to dry up?

  2. no, but there usually comes a point where the fed will decide to stop it, should the numbers continue to grow. like lending to any emerging market nation- they will take all you want to lend. it’s the lender who cuts them off

    yes, that would be the option.

    and that’s why the fed doesn’t want to do that. kinda puts them in a bind.

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