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How the IMF withdrew its shock-horror number on UK toxic debt

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Paul Mason | 08:54 UK time, Wednesday, 22 April 2009

The IMF Global Financial Stability Report, issued yesterday, was always going to have a top-line horror story on toxic debt. Instead of a $2 trillion write off the world is facing a $4 trillion write off. Fingers hovering above the keyboard and fighting off jet lag I was preparing to wade through this to see if they could put a figure on the UK's toxic debt bill.

The Treasury was "not steering us away" from the FT's proposed price tag of £60bn - although indicating that this was "cautious" ie high and even musing privately that Britain would not lose any money at all on its bank bailout insurance scheme.

The Conservatives, acting fast, found the number and did the sums. 13.4% of Britain's GDP would be needed to cover the fiscal cost of the bailouts. That's £200bn said the Tories and hit the airwaves.

There was a slight problem: these were not like for like figures. The IMF's figure included not just losses on insuring toxic debt, but also actions like Northern Rock and even proposed losses on Bank of England operations to shore up the credit markets.

However that did not invalidate the Tories' point. The £200bn figure is a massive hit to the UK taxpayer, much bigger than the coy briefings received by the FT and pretty annoying if you are a taxpayer. That was the story at 5pm as we finished filming our Newsnight pre-budget piece.

At 9pm I finally got the Treasury to respond to the Conservatives' press release and the IMF report. The figure is wrong, they told me. They had raised this with the IMF and the IMF would be withdrawing the figure. It should be in a range between 6-13% of GDP said the Treasury. The word "bonkers" came up in the conversation, I seem to remember.

I phoned the IMF. They tried to put me through to an economist dealing with the case but nobody ever returned my voicemail request for clarification. I started hitting the refresh button on the PDF file of the report and, lo, at around 9.45 pm, discovered that it was still there but with the relevant table missing and covered by the words "Under Embargo". Now embargo is a term for holding back information you have not yet released, not withdrawing information you have already released. This latter is called a U-turn not an embargo, or as they say in Private Eye, a reverse-ferret.

The IMF's new version of the report (see p44 here, the erroneous original has disappeared into that memory tube Winston Smith uses in Nineteen Eighty Four) states that the cost will be 9.1% of GDP will be needed to cover bailouts, which is apparently £130bn. But weirdly the new list of countries mentioned is shorter than the old one. And Britain's figure is not "in a range" between 6-13% but almost exactly halfway along that range.

So maybe there is an interesting explanation of why the original list got made, why it was so much worse for the UK, why Ireland was on it and is now not on it, and why it got pulled. Unfortunately I do not have time to find out because it is Budget Day. There you go.


  • Comment number 1.

    Dodgy figures all round.

    There's a thing. Go figure.

    Pulling stuff retroactively in a sneaky way... the very idea. Good catch.

    So, in fact, (all together now) 'things are not as bad as they may seem!'.

    If there's a plot, it was lost long ago.

  • Comment number 2.


    Why are we still discussing money when the leader of this country has posted (on You Tube) a surreal video that would not go amiss on Britain's Got (no) Talent?

    As if his 'Max Headroom' wagging and jerking were not enough, there is STILL the 'smile' and an attempt to say that MPs are good people who just don't understand rules (let alone morality).


    Weep Britain.

  • Comment number 3.

    so, Paul since you love a good conspiracy, dare I ask who you think shot JFK?

  • Comment number 4.

    At G20, it was agreed that the IMF (and similar acronyms) will rule the world. How many of the people who work there will be ex-Wall St and the City?
    Please tell us who has been paid all these billions so far - and what are they doing with the money?
    If the banks lost 4 trillion, who gained the money?

  • Comment number 5.

    Off topic but whilst we are on the subject of the IMF....

    I think a large part of the problem with the media today is the level of subservience they show to the government of the day and politicians in general.

    The former chief economist to the IMF, Simon Johnson, is stating that our problems are a direct result of the immoral stitching up of our economies by the financial and politicial elite. Basically the bankers own the politicians. Look at what the politicians have done over the past ten/twenty years, and its obvious that statement is true. Simon Johnson likened us to a banana republic, or a thoroughly corrupt developing nation.

    The current head of the IMF is hinting at the same thing without being too direct.

    The mainstream media, and I put the BBC very much at the heart of that, are too scared to call it - but maybe thats understandable, who is brave enough to risk their job in todays climate?

    But i think its time to keep the faith. After all, the information is out there, and many people are talking about it. Hopefully, new people are waking up to the truth every day - there is much evidence of this online.

    Maintenance of the status quo is becoming almost too much for our economies to bear. Holding back the destructive economic forces - that true capitalists believe in - cannot last forever. Viva la revolution!!

  • Comment number 6.


    Quick bring back Damian mcbride, he would never have allowed the prime minister of this great country to expose himself as being on the verge of mental collapse, he would have stopped the 'u'' tube video calmed Gordon down and replaced the story with Gordon meeting a reality TV star.


    Pauls story ties in quite nicely with the views expressed by Simon Johnson and hinted at by
    Dominique Strauss-Kahn and the rumour leaking about the 'stress testing' at US banks.

    I wonder how much longer they will be able to keep the lid on this?

    I really dont think it would take much digging by a respected news organisation to expose the underlying economic truth.

    Perhaps somebody should tot up the grand total of the trade imbalance over the last 10 years maybe and see what that number looks like so we can see how much we must have borrowed from the east in terms of oil and products and recycled savings as loans to pay for our extravegent lifestyle based on their products and commodoties over that period.

    Would that not give a rough idea of how much we owe?

    Obviously it cant possibly be that simple or I would be an economist.


  • Comment number 7.

    BBC3 is tonight showing the George Clooney film 'The Perfect Storm'.

    Enough said.

  • Comment number 8.

    You cant forecast your debt away.

    Stephen Major's comments on PM tonight warrant close attention: the cost of borrowing is rising. If it was not for the Bank of England purchasing Government bonds, the rates at which the Government would have to sell its bonds would already be higher.

    The problem was exacerbated when the current chancellor gave a stupidly unrealistic figure for growth (resuming quickly at 3.5% next year) and he declined to provide anything but general macro economic figures hinting at how to pay off the national debt.

    I want more deal from either side on our finances, to demonstrate to all that UK is in safe hands. Perception of a country's creditworthiness changes direction like a supertanker and UK Ltd edged closer to the rocks today.

  • Comment number 9.

    I did enjoy your piece last night. Nothing like a good chuckle before bed. It ensures a good rest.

    This is all rather like modern day accusations of terrorism. Now you see them and now you don't.

    Something is very badly wrong.

  • Comment number 10.


    Are you sure it was not hysteria?


    Everybody knows it was Elvis


    No way are we a AAA rated economy with 200billion worth of guilts to sell to a market that is already acting like Mr creosault in the last scene of Monty Pythons ' meaning of life'. '' another wafer thin mint ( 40 year guilt) sir''

    They dare not rate us down because of the consequnces and the domino effect of doing so.

    To use your analogy the super tanker is already on the rocks but the coastguard has not called it in yet, in the meantime its tanks are leaking all over the place and will wash up on the beaches and nature reserves soon.

    Crikey, I just read that back..I must stay off the red wine, but it is Labour's last budget day and the beginning of the end of one of the most foolish chapters in our history.

    One has to make hay while the sun shines now.



  • Comment number 11.

    Unfortunately the IMF seems determined to confirm that it is part of the problem not of the solution! It has been, and continues to be, incompetent; wedded to a (structural adjustment) model which is out of date and fiscally flawed. Even worse, it does not recognise that its performance in the run-up to the credit crunch was unsuitable for purpose!

    Regrettably, as the owner of the global infra-structure, it is at the heart of the proposed G20 solutions. Let us hope that the G20 brings it to heel.

  • Comment number 12.

    For full commentary on the Budget and insight on the financial crisis please visit: "Financial crisis? It's a pyramid, stupid" at

  • Comment number 13.

    So like Mad Max the chancellor crawls from the flaming wreckage of the old (last of the fuel injected V8 interceptors ) to face a post apocalyptic low carbon future. ( Fuelled ironically by coal ) ?

    Should he invest his scrappage token in a more frugal French model ? Maybe not while there is still 600bn in outstanding HP to pay on the written off old banger.

    However before he opts for a Chinese bicycle maybe he should read this - the argument why oil will remain cheap forever :

  • Comment number 14.

    tawse57 (#7) "Enough said."


  • Comment number 15.

    I think that it is finally dawning on many of us, the "Good Old British Public" that our Democracy is a sham, our Education and Value systems in terms of being law abiding, responsible savers looking to our future and that of our children- is one Sick Joke.

    We have been well and truly had, shafted and toasted by the Political Elite and their Masters- The Big Money Players and the City.

    Not only have our rights and ancient Constitution been over ridden by EU Laws, our own futures have now been pawned. Our savings gain us 0.5% which is useless to live on and our houses will be grabbed by the State when we need funds or care in Old Age. What FOOLS we have been to expect that our so called Leaders would be honourable Men and Women who put Country first. As our Soldiers die in foreign fields ( for what? ) the British Nation is being decimated by false prophets and those who only love POWER.

    I genuinely feel that there is a 50% chance of a Revolution here in my lifetime, it will not be peaceful either, blown up by very angry men! China is going to come through all this much stronger than the West. It is a Country which would execute those who have brought us to our knees, yet we do nothing? The only reason today for the pound to remain steady against the dollar, was that the USA is in an even bigger mess than us. darling really has no idea of the huge numbers he throws about, nor the consequences of his growth by year end just not happening.


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