REPORT: The IMF Is Considering A 600 Billion Euro Bailout For Italy

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The IMF is preparing a 600 billion euro bailout for Italy in case the debt crisis worsens, Italian daily La Stampa reported citing IMF officials (via AFP).

The IMF would guarantee rates of 4 or 5 per cent on the loan, far better than borrowing costs far better than the commercial debt market where yields have reached as high as 8 per cent.

The loan is intended to give the new Mario Monti government 12 to 18 months to launch necessary reforms.

The size of the loan may require joint action with the ECB: “This scenario is because resistance from Berlin to a greater role for the ECB in helping states in difficulty — starting with Italy — could be overcome if the funds are given out under strict IMF surveillance,” the report said.

This would be the second big move from the IMF this week after unveiling a huge liquidity program on Tuesday.

At the beginning of the month, Silvio Berlusconi announced that he had refused an offer of money from the IMF. Obviously this gambit did not assuage the market and Il Cavaliere was out within days.

REMEBER: An IMF bailout means money coming from the US taxpayer.

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