ECONOMY: EU looks to bolster crisis fund as IMF pledges action

Like a never ending game of "Ring-Around-the-Rosie", European leaders switch from one poor funding idea, to another, to another, around in an endless circle of dead-end propositions then back where they started. The "posie" is now back in the IMF's pocket.

Politicians never give up on bad idea except by death or removal from office. In spite of obvious failures to leverage the EFSF fund (still without rules as to how the thing even works), French president Nicolas Sarkozy is back at it, hoping to create a three-fold expansion of the EFSF via tradeable insurance certificates with guarantees on as much as 30 percent of the bonds.

WASHINGTON — The International Monetary Fund said Friday that substantial risks still loom for the Cypriot economy even after a multi-billion dollar international bailout aimed at averting a debt default. A new IMF report predicted a deep recession in Cyprus this year and next and said there is a danger that the downturn could be even more severe if authorities do not adhere strictly to conditions imposed as part of the US$13-billion bailout deal.

The executive committee of the International Monetary Fund vow that world leaders will take collective action to bolster the global economy and prevent the euro crisis from escalating.