Die Welt Exposes IMF Expropriation Paper
June 26, 2014 • 5:47AM

Die Welt on the afternoon of June 25 reported an International Monetary Fund paper released June 22, in which the IMF again calls for taking the money of "savers" in bail-in policies to handle unpayable sovereign debts. "IMF Plans a New Round of Expropriations for Savers" was the Die Welt headline. Its report begins: "A plan of the International Monetary Fund envisages that debt write-downs will be faster and more radically implemented in the future. Those affected would be, above all, owners of life insurance policies or [pension] funds."

While the newspaper overconfidently presents the IMF's published plan as one which "will be referenced when the next debt crisis hits during the next decade," it makes the core of this latest IMF bail-in plan clear. "The IMF presents in this plan, the way debt crises will be handled in the future. Its fundamental statement is that more flexible action will be taken. That sounds good at first. But it has the specific consequence that in the future, creditors will be pulled in sooner and will be forced to waive claims. In Europe, however, these creditors are primarily holders of life insurance policies or other forms of retirement pensions."

Die Welt makes clear that the IMF plan is not just "normal debt restructuring" as in the past. "We say in German: If a country can get investors money only by giving horrendous interest rates, and its debt status can scarcely be sustained any longer, then the old creditors should be partially expropriated. The method of choice here should be, first, a compulsory extension of the term of the loans, whose nominal value, and thus the amount of the claim and the interest rate, should normally not be reduced. However, this cannot be ruled out. And only if it is done, will the IMF be ready to provide financial help in the future."...

"Also interesting is a passage of the IMF paper, which says that the constantly aggravated contagion danger that a debt write-down in one country could spread, will in the future no longer be a valid argument if it has been determined that the debt condition of a country no longer appears bearable. This argument, that other countries could be infected, prevented the Greek debt restructuring for a long time."

Die Welt rather pathetically advises "savers" to save themselves by investing in debt of corporations, which supposedly face "higher hurdles" to bailing in their creditors; but it admits, that the "savers" can do little about the IMF's intention to expropriate the assets in which their pension funds, and their life insurers, have invested.