Plans to boost the capacity of the IMF have been fraught with rumors all day. Initially Bloomberg reported that the fund would attempt to raise $1 trillion. Enthusiasm faded after the initial number was cut in half.
The fact that this money will come from European sovereigns themselves severely diminishes the usefulness of the plan. While few expected that the U.S. would agree to provide more funding, this confirms that Europe will be expected to bail itself out, an effort troubled countries like Italy and Spain will have difficulty taking part in.
