While we have long been mocking any rumors representing formal attempts to get the IMF's funding to higher level, due to the need for a congressional approval over and beyond what is currently permitted which means any such plan is DOA, one loophole always has been the private bank known as the Federal Reserve, which may, as permitted by its charter since its charter allows it to do pretty much anything even buy Greek and EFSF, not to mention Italian, bonds, lend to the IMF at will. And just as last week demonstrated, when push comes to shove the Fed will always bail out Europe, so tonight German paper Die Welt (which has about the same success rate as Thomas Stolper at predicting the future) had put two and two together and come up with the latest rumor, namely that Ben Bernanke is about to directly bail out Europe using the IMF as an intermediary. Via Reuters, "The Federal Reserve, along with the 17 euro zone national central banks, may help provide the International Monetary Fund with funds that could be used to aid debt-ridden states, a German newspaper said. Die Welt cited sources close to the negotiations as saying the euro zone central banks could pay at least 100 billion euros ($134.2 billion) into a special fund that could be used for programs for nations struggling to control their debts. "Also other central banks, for example the U.S. Federal Reserve, are apparently prepared to finance a part of the costs," the paper said in an advance copy of an article to appear on Monday." That there is not an iota of truth in this article is a given, yet the market will latch on to this latest rumor like a rabid pitbull... until it realizes that by having to resort to such grotesquely made up stories it means that the ECB, which is the only real short-term rescue mechanism for Europe, is nowhere near close agreeing to do what the bulk of Europe's bankers (but not Goldman) demand it do - print.

More:

Treasury Secretary Timothy Geithner may discuss the idea in the coming weeks when he visits Europe, the paper said. Officials had said on Saturday that talks on the size of loans from euro zone central banks were starting at a technical level after finance ministers from the currency union gave the go-ahead to explore the idea. The idea is for the IMF to be able to match the new firepower of the euro zone bailout fund, which is being leveraged. One senior euro zone official has said that no amount had been discussed at the political level. The euro zone wants to boost the IMF's resources so the fund could provide a credible backstop if Spain and Italy were to need an emergency loan program. Geithner is to hold talks with several European leaders in the coming week and is set to urge them to take decisive action at an EU summit aimed at preventing the euro zone debt crisis spiraling out of control.

Of course, in the 0.01% chance this latest baseless speculation is true, it once again confirms that the traditional mechanism of governance, once which involves popular representation and the associated bells and whistles is completely dead, and has been replaced with one in which a private bank with 10 central planners effectively rules the world, with the simple goal of never seeing even one bank's "assets" be impaired, something which Germany also alluded to earlier when it announced it would let banks not suffer Greek debt haircuts if only they were to agree to the "Neu Anschluss" just that little bit faster.

Germany is prepared to soften language in the euro zone's permanent bailout mechanism compelling bondholders to accept losses in exchange for much stricter budget rules, four sources have told Reuters. The shift would not completely remove the possibility of private bondholders having to accept losses in the future, but it would align the statutes of the European Stability Mechanism more closely with IMF rules, creating a more-level playing field for private buyers of euro zone sovereign debt. The hope is that will reassure private bondholders that they are not being singled out for losses by European policymakers, bolstering their confidence in buying euro zone bonds - and potentially helping Italy and other under-pressure borrowers.

Yet there is one difference: whereas Germany is appealing to Europe's people to voluntarily hand over their freedom and sovereignty to Merkel, the Fed is acting on the assumption that it already has these in hand. Luckily, none of this matters as there is football night... then Dancing with the Stars night... then Jersey Shore night... then rinse and repeat.