IMF tries to coax markets off ledge - Soros says crisis worse than post-Lehman

IMF tries to coax markets off ledge - Soros says crisis worse than post-Lehman in 2008
24 September 2011, by Greg Robb - Washington (MarketWatch)
http://www.marketwatch.com/story/imf-tries-to-coax-markets-off-ledge-2011-09-24

Excerpt:

Global economic policy-makers, gathered Saturday for the annual meeting of the International Monetary Fund, tried to sound united and engaged in their latest effort to assuage financial market concerns about European sovereign debt and the region’s fragile banks.

“Today we agreed to act decisively to tackle the dangers confronting the global economy,” the leaders said in their latest effort, a communique from the IMFC, the IMF’s governing body.

The leaders said that Europe would do “whatever is necessary” to resolve the crisis.

Billionaire investor George Soros, speaking on the sidelines of the IMF meeting, said that the crisis is worse than the global financial crisis in the wake of the collapse of Lehman Brothers in the fall of 2008.

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Rehn said that European parliaments would ratify plans to give new powers to Europe’s bailout fund, the European Financial Stability Fund, by mid-October.

Other G-20 countries want Europe to increase the size of the 440 billion euro fund.

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Soros said that Europe has to create a Treasury Department.

He said the EFSF was an “embryo” of such an agency, but said it still lacks basic powers.

“It doesn’t have the authority to spend the funds, and that is what is lacking.”

Soros said it was “almost inevitable” that Europe will have to pass another treaty.

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He said that Europe was facing a fiscal crunch and a credit crunch.

European banks have been lending to emerging markets in dollars and borrowing in dollars from money market funds in the United States.

The U.S. funds are now unwilling to lend to the banks and are “calling their lines.”

This has caused the sudden jump in the dollar’s value in foreign exchange markets and created a serious credit crunch globally.