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U.S. needs to review the IMF standards for national bailouts

The U.S. represents approximately 17% of the International Monetary Fund, which is somewhat like a global credit union that financially rescues countries such as Greece and others from default or loans them money to bolster the country’s reserves.

It isn’t bad enough that the U.S. can’t bail themselves out of debt, but we use taxpayer’s money to give to foreign nations, which have lived beyond their means and who also believe that you solve your debt problems by spending more to stimulate the economy.

Apparently, you can’t teach an old socialist new tricks, but there should be financial standards established by the IMF based on these countries credit history and their willingness to take financial steps to prevent these monetary calamities from recurring.

Now, Pakistan has reached a deal with the IMF for a bailout of at least $5.3B dollars to help shore up the country’s rapidly diminishing foreign reserves.

However, the deal may not be too popular with the Pakistanis because the deal mandates economic reforms. Pakistan has held out their hand before to – guess who – the IMF of course.

Excerpt:

The agreement comes less than six years after Pakistan’s last IMF bailout, and the driving need for the money this time was to repay the institution nearly $5 billion that Islamabad still owes.

So the IMF, including the U.S., is loaning money to the Pakistanis to repay money they previously borrowed from the IMF? OMG!

Excerpt:

Pakistan’s previous government failed to implement many of the requirements of the last loan, including reducing the deficit and improving tax collection, and ended the program early.

That left the new government, which took over at the beginning of June, with the difficult task of convincing the IMF that this time would be different.

The IMF mission director in Pakistan, Jeffrey Franks, acknowledged Islamabad’s checkered history, but said the institution would not punish the country for the failure of its predecessors.

Director Franks said that the IMF “is not going to turn a country down because previous governments did not do what they had promised to do.” Not when they have taxpayers funding the loans.

Pakistan will have 14 years to repay the money. It looks like the IMF has learned their financial acumen from Fannie May and Freddie Mac – loaning money to people who can’t afford to borrow it and have not paid it back in the past.

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