The I.M.F. represents a contingent liability to taxpayer sin the United States – much as the Federal National Mortgage Association (known as Fannie Mae) and Freddie Mac (formerly the Federal Home Loan Mortgage Corporation) have in the past — and as too-big-to-fail mega-banks do now.
Read it at The Baseline Scenario
American Taxpayer Liabilities Just Went Up, Again – Why Isn’t Congress Paying Attention?
By Simon Johnson
The IMF’s funding, similar to public corporations, comes through both equity and debt financing. By ratcheting up debt financing through recent commitments, the IMF is effectively increasing leverage and the risks to equity holders, of which the US is the largest. Although IMF loans remain senior to practically all other liabilities, the underlying reality is that these decisions further add to systemic risk in the global financial system. As global finances become more intertwined and built on leverage, the potential for unexpected events to end in really bad outcomes grows.
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