On April 20, the finance chiefs and central bank governors of the Group of 20 will hold a shindig in Washington DC, at the margin of the biannual meeting of the International Monetary Fund and the World Bank. At issue is money. Bailout money for the Eurozone. The IMF wants to dig deeper into its pocket, but the amounts are skyrocketing, and … “We certainly need more resources,” explained IMF Managing Director Christine Lagarde on Tuesday.

The IMF estimated in January that it would need an additional $500 billion, on top of the $400 billion it already has. The idea of bringing its resources up to $1 trillion has been floated. Surely, after $1 trillion, there will be $2 trillion. Once it starts, it’s never enough—especially with Spain and Italy tottering, despite Italian Prime Minister Mario Monti’s assurances to the contrary.

But there has been some reluctance to handing the IMF more money, notably from the US and Japan, its top two stakeholders. Bailing out the Eurozone should be Europe’s job, they argued. And so the Eurozone countries finally pledged to put $200 billion into the IMF’s kitty and raise their bailout funds to $1.1 trillion, though every penny would have to be borrowed. That was last week. And now all eyes are on Japan.

Japan is the biggest debt sinner of all developed countries. By the end of the fiscal year on March 31, 2013, Japan’s public debt will surpass one quadrillion yen, or $14 trillion, a breathtaking 240% of GDP. Of the current budget, which hasn’t been passed yet, a mind-boggling 56% will have to be borrowed—with the help of the Bank of Japan, which announced that it would massively monetize the deficit. Budget cutting has been under way in a manner that the budget actually increased. The only real effort to address the problem is the highly unpopular increase in the consumption tax winding its way through the Diet. But if it becomes law, the first increase from 5% to 8% won’t even take effect until April 2014, and the second increase to 10% won’t take effect until October 2015.

And yet, in a sign of just how absurd the situation has become, it is precisely Japan which suddenly appears to be willing to bail out the Eurozone—where even Greece is fiscally sounder, if that word can be applied that way, than Japan.

“I believe it would be good for the markets and the global economy if we can reach a certain level of progress when we gather in Washington,” said Japanese Finance Minister Jun Azumi. Japan would be ready to play a key role because it appreciated “to some extent” the Eurozone’s increased efforts to bail itself out, he said.

A variety of proposals are already under consideration, such as a loan of $60 billion to the IMF’s general account, but Azumi remained vague. “We will decide on how we could contribute, as well as whether we would call for further efforts by Europe,” he said.

Once Japan agrees to wade even deeper into its own quagmire by sending more money to the IMF, all eyes will turn to the US, the last holdout, whose public debt now exceeds 100% of GDP, and whose budget deficits—if Congress ever passed a budget—are worse than those in the Eurozone. Convincing Congress might be a slog. But then there’s always the Fed with its unlimited power to bail out bondholders wherever they might be, and it’s already doing so via its swap lines. So the Eurozone, the G-20, and the IMF might come together to bail out Spain’s bondholders, and perhaps Italy’s bondholders, at great expense to taxpayers everywhere.

Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.