The Politics of Bailout

According to a Bloomberg story EU officials are fighting hard to keep the top IMF job in the EU. In doing so they have tipped their hand. They are looking to distribute the sovereign losses to taxpayers around the World via more IMF bailouts.

I failed to understand why the arrest of DSK was such a big deal to markets, but it is now making sense to me. If the IMF does not pitch in than the EU is left alone to bail out their own countries. It is becoming politically difficult to sell bailouts in many EU countries. On balance the risks of a default in Europe have increased.

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