Sources: IMF to offer Italy a 600 billion euro bailout via ECB funding

According to Austrian daily Der Standard, Italy is to receive a 600 billion euro bailout courtesy of the IMF. Note: the article has what I assume to be a typo, referring to 600 million euros instead of 600 billion. I have fixed that in the translation below. Also note that the ultimate source of this information is La Stampa, an Italian daily newspaper.

Translation from German:

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According to a media report, the International Monetary Fund (IMF) is preparing an assistance program with a capacity of up to 600 billion euros for heavily indebted Italy. Appropriate credit could be awarded for a period of twelve to 18 months in order to stabilize the financial situation of the country, reported the Italian newspaper "La Stampa " on Sunday, citing an IMF official. With interest rates between four and six percent, it would be much cheaper than current two-and five-year bonds with interest rates of more than seven percent.

Funding still uncertain

According to the report, the IMF may not be able to cope with the auxiliary loans from its current funding, and so different options would be considered for funding. Thus, for example, payment by the European Central Bank (ECB) is in conversation, which the IMF could guarantee. With the assumption of ECB aid under IMF control, Germany, which rejects a stronger involvement of the ECB in euro rescues and presses for the greatest possible independence of the central bank, should also be reassured, the newspaper quoted an IMF representative.

The European Union and the ECB had recently sent experts to Rome to examine Italian public finances. The IMF also wants to send their own auditors. In Italy, the debt burden is about 1.9 trillion euros. Additionally, the country is currently suffering from weak economic growth. This has led to worries in financial markets in recent weeks that Italy, like Greece, Ireland and Portugal before it, may need financial assistance. The new Prime Minister Mario Monti is under strong pressure to cut costs to make up for the failings of his retired predecessor Silvio Berlusconi.

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Source: IWF bereitet 600-Millionen-Euro-Hilfsplan für Italien vor – Der Standard

Original Source: E l’Fmi prepara una cura da 600 miliardi per l’Italia – La Stampa (hat tip Marco)

Update: Alice Cook at UK Bubble points me to this link in the Telegraph confirming that Spain is in the mix as far as the IMF deal goes: IMF drawing up £517bn package to save Italy, Spain and the euro

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21 Comments
  1. Rer says

    Killers of money. stop printing! Money is not paper! You are thieves! You steal pension ыavings people and do all by beggars to please to
    banks, adventurers and the swindlers, which not wish to pay on debts.

  2. Rer says

    Killers of money. stop printing! Money is not paper! You are thieves! You steal pension ыavings people and do all by beggars to please to
    banks, adventurers and the swindlers, which not wish to pay on debts.

  3. Marco says

    I’m Italian, I’ve just read the original article from La Stampa. It actually talks about (a maximum of) 600 *billions* euro, an amount that would actually help Italy in the bond market. Such a sum can not be afforded by the IMF with the resources it owns at the moment, so it will have to ask the ECB “special withdrawal rights”, the article says. Six hundred billions would buy Mr Monti enough time (18 months, that is) to speed up the reform process in a more relaxed environment.

    As you may know, 600 *millions* wouldn’t mean anything to Italy. Even the third cheque to Greece is several times bigger than that (8 billions).

    1. Edward Harrison says

      Marco, thanks for more on the original. Do you have a link? I may try to put this up as well. Cheers.

    2. Anonymous says

      Are eighteen months enough? The UK government dived into cuts straight away and we are still a long way from resolving the deficit. The current plans do not get a fall in the debt for three more years. That was based on actual growth in GDP, which might have to be delayed another year because of the slowdown. Italy has grown more slowly over the last decade and I cannot see any prospect for it to accelerate rapidly. Austerity will make things worse in the short term. So I still do not see an easy option for Italy.

      1. Marco says

        GDP growth and structural reforms take several years to be achieved, no doubts about that. But Mr Monti does not have a choice: eighteen months is the remaining lifetime of the current legislative session (started in 2008 with Mr Berlusconi’s new government). Once that time has passed, election will be forced on Italy, and a new government will be sworn in. So, Mr Monti won’t be able to see the results of his cabinet’s efforts: more likely, he will start the reform process and show politicians how to streamline Italy’s economy.

  4. Marco says

    I’m Italian, I’ve just read the original article from La Stampa. It actually talks about (a maximum of) 600 *billions* euro, an amount that would actually help Italy in the bond market. Such a sum can not be afforded by the IMF with the resources it owns at the moment, so it will have to ask the ECB “special withdrawal rights”, the article says. Six hundred billions would buy Mr Monti enough time (18 months, that is) to speed up the reform process in a more relaxed environment.

    As you may know, 600 *millions* wouldn’t mean anything to Italy. Even the third cheque to Greece is several times bigger than that (8 billions).

    1. Edward Harrison says

      Marco, thanks for more on the original. Do you have a link? I may try to put this up as well. Cheers.

      1. Marco says

        Yes, here’s the link: http://www.lastampa.it/_web/cmstp/tmplrubriche/finestrasullamerica/grubrica.asp?ID_blog=43&ID_articolo=2264
        You’re welcome!

    2. Anonymous says

      Are eighteen months enough? The UK government dived into cuts straight away and we are still a long way from resolving the deficit. The current plans do not get a fall in the debt for three more years. That was based on actual growth in GDP, which might have to be delayed another year because of the slowdown. Italy has grown more slowly over the last decade and I cannot see any prospect for it to accelerate rapidly. Austerity will make things worse in the short term. So I still do not see an easy option for Italy.

      1. Marco says

        GDP growth and structural reforms take several years to be achieved, no doubts about that. But Mr Monti does not have a choice: eighteen months is the remaining lifetime of the current legislative session (started in 2008 with Mr Berlusconi’s new government). Once that time has passed, election will be forced on Italy, and a new government will be sworn in. So, Mr Monti won’t be able to see the results of his cabinet’s efforts: more likely, he will start the reform process and show politicians how to streamline Italy’s economy.

    3. frank c says

      The Guardian is reporting that the EU poured cold water on the IMF 600 billion dollar rumor.

      http://www.guardian.co.uk/business/2011/nov/27/belgium-gets-coalition-government

  5. Rer says

    Thanks saving Greece and Italy printers of money for gasoline at the price of gold! Russian and Arabs tell thanks. Europe feeds Russia. It is eternal dream of russian Ivan and OPEC.

  6. Rer says

    Thanks saving Greece and Italy printers of money for gasoline at the price of gold! Russian and Arabs tell thanks. Europe feeds Russia. It is eternal dream of russian Ivan and OPEC.

  7. frank c says

    The now rumored $600 billion loan from the IMF to Italy undermine the alleged Sarkosy Merkel treaty proposal form the Bild. By bringing in the IMF this brings the US, Japan, China and rest of the world’s checkbook to the table thereby giving Germany and France and the ECB a hugely significantly lower contribution with less liability.None of these proposals affect the long term problem of economic growth, deficit trade accounts, wage disequilibrium nor do they reduce their debt/GDP ratios in these countries.If the IMF comes to the rescue Italy and the others will not need to grant the EU control over their budgets. Austerity will be more determined by the IMF which will be more tolerant than the Germans.If the IMF loans Italy 600 Billion, Spain will follow immediately. The Irish will come back to renegotiate their deal. Hungary and Portugal will be at the feeding trough as well. With Belgium close behind. The IMF will need in excess of 1 trillion euros. Of which the USA taxpayer will be on the hook for a minimu 17% or about $220 billion (1.32 exchange rate). Grover Norquist and the republican primary candidates will be all over this. Not to mention the Occupy Wall Street crowd. I do not beleive that the increased US contribution to the IMF can be made through the Federal Reserve Bank. I beleive this may have to come through the US congress as an appropriation. Good luck with this based on the Super committee and the pending unemployment extension and payroll tax cut extension This IMF plan not only bails out Italy, Spain, et al but now shifts to essentially bailing out France and Germany from their EU/ESFS/ECB obligations.The Brits will also not follow suit. They are not part of the Euro but are members of the EU and will not want to give their budget to be controlled by Brussels. Most importantly these future budgets would have to approved by the EU before being sent to their respective sovereign governments for vote. This would effectively neuter most politicians in all countries. And at the end of the day some aspiring politician will sue and litigate that the treaty is illegal as a lever to a stronger political base. We have already seen how the German Supreme Court rules on these matters.The only real solution for the debt/banking crisis is for certain members of the Eurozone to leave the Euro and default. They can then write their debt down by 50-70% and create a new currency that will reflect their instability and change the way institutions invest and perceive a risk free return.Or in the alternative raise taxes in these countries and sell national assets to reduce their debt. Loaning them money only kicks the can further down the road. 

    1. big A says

      the big question for me is: can the Fed make the loan, or does it have to go through Congress? If the Fed can do it, then it will happen. There is no way such a loan would make it through Congress.

  8. frank c says

    The now rumored $600 billion loan from the IMF to Italy undermine the alleged Sarkosy Merkel treaty proposal form the Bild. By bringing in the IMF this brings the US, Japan, China and rest of the world’s checkbook to the table thereby giving Germany and France and the ECB a hugely significantly lower contribution with less liability.None of these proposals affect the long term problem of economic growth, deficit trade accounts, wage disequilibrium nor do they reduce their debt/GDP ratios in these countries.If the IMF comes to the rescue Italy and the others will not need to grant the EU control over their budgets. Austerity will be more determined by the IMF which will be more tolerant than the Germans.If the IMF loans Italy 600 Billion, Spain will follow immediately. The Irish will come back to renegotiate their deal. Hungary and Portugal will be at the feeding trough as well. With Belgium close behind. The IMF will need in excess of 1 trillion euros. Of which the USA taxpayer will be on the hook for a minimu 17% or about $220 billion (1.32 exchange rate). Grover Norquist and the republican primary candidates will be all over this. Not to mention the Occupy Wall Street crowd. I do not beleive that the increased US contribution to the IMF can be made through the Federal Reserve Bank. I beleive this may have to come through the US congress as an appropriation. Good luck with this based on the Super committee and the pending unemployment extension and payroll tax cut extension This IMF plan not only bails out Italy, Spain, et al but now shifts to essentially bailing out France and Germany from their EU/ESFS/ECB obligations.The Brits will also not follow suit. They are not part of the Euro but are members of the EU and will not want to give their budget to be controlled by Brussels. Most importantly these future budgets would have to approved by the EU before being sent to their respective sovereign governments for vote. This would effectively neuter most politicians in all countries. And at the end of the day some aspiring politician will sue and litigate that the treaty is illegal as a lever to a stronger political base. We have already seen how the German Supreme Court rules on these matters.The only real solution for the debt/banking crisis is for certain members of the Eurozone to leave the Euro and default. They can then write their debt down by 50-70% and create a new currency that will reflect their instability and change the way institutions invest and perceive a risk free return.Or in the alternative raise taxes in these countries and sell national assets to reduce their debt. Loaning them money only kicks the can further down the road. 

    1. big A says

      the big question for me is: can the Fed make the loan, or does it have to go through Congress? If the Fed can do it, then it will happen. There is no way such a loan would make it through Congress.

  9. Ronald Pires says

    Is it time yet to start worrying about the “subtle” change to the IMF’s ‘preferred creditor’ status that eurozone finance ministers cooked up last June? [ http://www.debtonation.org/2011/06/eu-diverting-funds-from-taxpayers-to-bankers/ ] Or should we just get out the K-Y and prepare for the next taxpayer draining?

  10. RA says

    The IMF comes to the rescue!! A collection of international banks on the hook for Italy are going to loan Italy more. No problem though because the U.S. can bail them out. I knew the U.S. would back it up one way or another eventually.

  11. RA says

    The IMF comes to the rescue!! A collection of international banks on the hook for Italy are going to loan Italy more. No problem though because the U.S. can bail them out. I knew the U.S. would back it up one way or another eventually.

  12. Smchr says

    can the imf guarantee ecb loans?  what allows it to do so and would this need to be voted on by the imf members?

  13. Smchr says

    can the imf guarantee ecb loans?  what allows it to do so and would this need to be voted on by the imf members?

  14. Dissavowed UK says

    The IMF is a destructive crisis generating organisation.

    Possibly the most evil institution on the planet.

    Think of it this way:

    The IMF have just struck a deal with Italy, to lend them 600 Billion Euros.

    But for that loan, the Italians have had to sign a contract which includes the following:

    They have had to pledge to the IMF, as collateral, every single asset in the entire country……Absolutely Everything……

    The IMF did the same thing with Greece in May 2010. The Parthenon, the
    Islands, etc, Petroleum, Gas, all assets, absolutely everything…..

    So these nations have given up their sovereign rights over everything. Tangible and Intangible.

    Including the Human Beings. They are in fact, no longer a sovereign nation.

    ‘Greece’ no longer exists

    ‘Italy’ no longer exists

    ……..Just think about that for a minute..

    [And it was The governments of these countries, who allowed the Banks,
    who the IMF represent, to create this debt out of thin air in the first
    place]

    These Countries have also had to agree to never attempt to borrow any money in the future from anywhere else except the IMF.

    It is also in the contract, that the IMF have the RIGHT, to enter any of
    these countries, and confiscate EVERYTHING they want, if those
    countries fall back on payments.

    This is of course completely illegal, because the people of those nations, would never have agreed to it.

    Of Course ALL of the Corporate controlled Mainstream Media in Italy have
    been doing exactly the same as what the Corporate Controlled Media in
    Greece did.

    Repeatedly telling the MASSES of sheeple, that Italy would be BANKRUPT
    if not for the kindness, and generosity, of the heaven sent loans of the
    IMF…………………..

    But History tells a different story.

    In 1939 Greece was facing Default.

    But Greece refused to pay, because to pay back the debt would cause unneccesary hardship for the people.

    So the Bankers took Greece to the International Court of Justice.

    The International Court of Justice ruled in favour of Greece, and
    against the bankers, stating that it was the DUTY of Greece [and any
    country] to cover the needs of its own people, rather than pay back
    anything at all to the Bankers.

    This set a precedent that would presumably still stand today. Greece
    defaulted on its debts and recovered. Then continued on, keeping its
    sovereignity.

    The only difference between then and now, is that the politicians have
    been bought, and thats why they are putting ex bankers in the Key
    parliamentary/political positions in Italy and in Greece.

    These countries have been hijacked. The bankers need to ensure that default is not an option.

    The ONLY way to stop this is open revolution.

    1. Marco says

      The world has changed since 1939. Back then, Italy was even kind of autartik. Nowadays, we are all connected to each other. A lot of rich countries hold Italy’s both debt and assets to a certain extent (France has one of the biggest share). Being the eighth biggest economy in the world, an Italian default would make european banks and governments collapse, destroying EU and the single market, triggering a major depression all over the rich world (the USA wouldn’t be spared). Unemployment and poverty would raise dramatically.
      Are you sure it’s the best option?

  15. Dissavowed UK says

    The IMF is a destructive crisis generating organisation.

    Possibly the most evil institution on the planet.

    Think of it this way:

    The IMF have just struck a deal with Italy, to lend them 600 Billion Euros.

    But for that loan, the Italians have had to sign a contract which includes the following:

    They have had to pledge to the IMF, as collateral, every single asset in the entire country……Absolutely Everything……

    The IMF did the same thing with Greece in May 2010. The Parthenon, the
    Islands, etc, Petroleum, Gas, all assets, absolutely everything…..

    So these nations have given up their sovereign rights over everything. Tangible and Intangible.

    Including the Human Beings. They are in fact, no longer a sovereign nation.

    ‘Greece’ no longer exists

    ‘Italy’ no longer exists

    ……..Just think about that for a minute..

    [And it was The governments of these countries, who allowed the Banks,
    who the IMF represent, to create this debt out of thin air in the first
    place]

    These Countries have also had to agree to never attempt to borrow any money in the future from anywhere else except the IMF.

    It is also in the contract, that the IMF have the RIGHT, to enter any of
    these countries, and confiscate EVERYTHING they want, if those
    countries fall back on payments.

    This is of course completely illegal, because the people of those nations, would never have agreed to it.

    Of Course ALL of the Corporate controlled Mainstream Media in Italy have
    been doing exactly the same as what the Corporate Controlled Media in
    Greece did.

    Repeatedly telling the MASSES of sheeple, that Italy would be BANKRUPT
    if not for the kindness, and generosity, of the heaven sent loans of the
    IMF…………………..

    But History tells a different story.

    In 1939 Greece was facing Default.

    But Greece refused to pay, because to pay back the debt would cause unneccesary hardship for the people.

    So the Bankers took Greece to the International Court of Justice.

    The International Court of Justice ruled in favour of Greece, and
    against the bankers, stating that it was the DUTY of Greece [and any
    country] to cover the needs of its own people, rather than pay back
    anything at all to the Bankers.

    This set a precedent that would presumably still stand today. Greece
    defaulted on its debts and recovered. Then continued on, keeping its
    sovereignity.

    The only difference between then and now, is that the politicians have
    been bought, and thats why they are putting ex bankers in the Key
    parliamentary/political positions in Italy and in Greece.

    These countries have been hijacked. The bankers need to ensure that default is not an option.

    The ONLY way to stop this is open revolution.

    1. Marco says

      The world has changed since 1939. Back then, Italy was even kind of autartik. Nowadays, we are all connected to each other. A lot of rich countries hold Italy’s both debt and assets to a certain extent (France has one of the biggest share). Being the eighth biggest economy in the world, an Italian default would make european banks and governments collapse, destroying EU and the single market, triggering a major depression all over the rich world (the USA wouldn’t be spared). Unemployment and poverty would raise dramatically.
      Are you sure it’s the best option?

  16. frank c says

    If it wasn’t bad enough that the IMF (17% capitalized by the US) bailout out the Eurozone now there is call for the Federal Reserve to buy Eurobonds and bailout europe.

    http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8918784/Should-the-Fed-save-Europe-from-disaster.html

    The amazing thing is that Helicopter Ben and Little Timmy G would probably go along with this. Talk about contagion. Pray that these two guys don’t go along with that plan.

    But  in reality the Fed has already been lending to the European Banks. Much like after Lehman we won’t be told the extent until 2 year laters and someone sues the Fed under the Freedom of Information Act.

    Let the Europeans and the ECB do their own quantative easing. The Fed needs some balls like Angela Merkel. Man up and tell them to lube their printing presses instead. Afterall the German’s invented the printing press.

  17. frank c says

    If it wasn’t bad enough that the IMF (17% capitalized by the US) bailout out the Eurozone now there is call for the Federal Reserve to buy Eurobonds and bailout europe.

    http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8918784/Should-the-Fed-save-Europe-from-disaster.html

    The amazing thing is that Helicopter Ben and Little Timmy G would probably go along with this. Talk about contagion. Pray that these two guys don’t go along with that plan.

    But  in reality the Fed has already been lending to the European Banks. Much like after Lehman we won’t be told the extent until 2 year laters and someone sues the Fed under the Freedom of Information Act.

    Let the Europeans and the ECB do their own quantative easing. The Fed needs some balls like Angela Merkel. Man up and tell them to lube their printing presses instead. Afterall the German’s invented the printing press.

  18. big A says

    the big question for me is: can the Fed make the loan, or does it have to go through Congress? If the Fed can do it, then it will happen. There is no way such a loan would make it through Congress.

  19. big A says

    the big question for me is: can the Fed make the loan, or does it have to go through Congress? If the Fed can do it, then it will happen. There is no way such a loan would make it through Congress.

  20. frank c says

    http://online.wsj.com/article/BT-CO-20111127-706560.html

    Wall Street Journal says reports of IMF loan are not credible.

  21. frank c says

    http://online.wsj.com/article/BT-CO-20111127-706560.html

    Wall Street Journal says reports of IMF loan are not credible.

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