Has the US become a 3rd World Country?

Has the US become a Third World Country? The IMF thinks so. If not then why is the IMF demanding that the US undergo a financial audit? Why indeed. And if this startling fact is true, then why haven't you heard about it? Shouldn't this be big news? It certainly should and it most certainly will. That's why I call my blog Future News Today (FNT).

You are probably wondering how I came across this information. It all started with an exchange of comments regarding an article that was posted on Digg. The article was titled "Fed Now Asking For $40 Billion From The U.S. Treasury". In the comments I began by questioning the confidence in the World Markets in the almighty Dollar. Here's my comment.

The article says that the interest rate on Treasuries has fallen to 0.23% and says this is due to demand. Could it actually be that this is because the markets are beginning to realize that the US Dollar is not a solid investment anymore?

After being challenged on this statement, I reformulated my comment as follows.

What would happen if the US Treasury were to fail? I guess that is the question I was trying to ask. Treasuries are just loans issued by the US government. How much money can the Federal Government borrow before it is no longer able to pay it back? This is not just a theoretical question. In the past 3rd world countries have been through this. But it has never happened to the US before. Would China then be able to dictate terms on the US the way we currently dictate terms to 3rd world countries? Is the US becoming a 3rd world country?

I became interested in this topic and began Googling. Could it be that somehow China could dictate the kind of terms on the US that the US has dictated on so many Third World Countries in the past? Could we end up with an Austerity Plan imposed by the IMF? But we control the IMF, so that's ludicrous isn't it? Finally I came across an article that mentioned something called an IMF FSAP. 

In response to these ongoing crises, the International Monetary Fund is undertaking an audit of the U.S. Financial System. The IMF’s Board of Directors has ruled that a Financial Sector Assessment Program (FSAP) is to be carried out in the USA.

Wow! Here was what I had been looking for, but I needed more detail. I continued Googling. I thought something like this would be fairly big news and that it would show up in Google news, but I was having a hard time corroborating this statement. And I couldn't accept a statement like this based on one source alone. I needed an article from a MSM source to confirm this information. Finally I found 2 articles that provided some additional information. Interestingly, neither was from the US MSM. One was from Spiegel, a major German publication, and the other from Economic Times of India. And here are some quotes from those articles.

Excerpts from "The Shrinking Influence of the US Federal Reserve" from Spiegel.

Officials with the International Monetary Fund (IMF) have informed Bernanke about a plan that would have been unheard-of in the past: a general examination of the US financial system. The IMF's board of directors has ruled that a so-called Financial Sector Assessment Program (FSAP) is to be carried out in the United States. It is nothing less than an X-ray of the entire US financial system.

For seven years, US President George W. Bush refused to allow the IMF to conduct its assessment. Even now, he has only given the IMF board his consent under one important condition. The review can begin in Bush's last year in office, but it may not be completed until he has left the White House. This is bad news for the Fed chairman.

When the final report on the risks of the US financial system is released in 2010 -- and it is likely to cause a stir internationally -- only one of the people in positions of responsiblity today will still be in office: Ben Bernanke.

Excerpts from "IMF must boost developed world oversight after crisis: G24" from the Economic Times

The G24 countries, who account for majority of the IMF's membership but have only a small voice in its operations, said that since the crisis has its roots in the developed countries, the IMF should take them to task.

"Ministers stressed that the IMF needs to urgently improve its surveillance of advanced economies," the G24, which includes powerhouses Brazil, China and India, said in a statement.

"The IMF also needs to extend its vulnerability exercise to advanced economies in order to provide early warning signals of emerging risks."

IMF oversight and rescue programs for developing countries in trouble, as during the the 1998 Asian financial crisis, have sometimes been resented as obtrusive and humiliating, observers said.

"What is interesting is that until a few weeks ago the United States did refuse to have the FSAP in their country," he [The IMF Director] said.

Here's my summary as I expressed it in a comment on Digg recently.

The IMF is getting ready to audit the US at the insistence of China, India and Brazil. Bush agreed only if the report would not be issued until he was out of office. The report will be issued in 2010. Asian countries are pissed that when they had a similar crisis recently, the IMF insisted that they let the bad businesses fail before providing credit. The US is going to get the 3rd world treatment from the IMF.