The IMF: another institution we can no longer trust

Before anyone gets worried about the IMF’s Fiscal Monitor report’s questioning of the UK’s economic strategy, they should first view this clip of the IMF head Christine Lagarde in action at a Eurogroup conference:

 

Just after 3:30 minutes on the clip a journalist from the Irish Examiner asks Madame Lagarde about the IMF’s World Economic Outlook study which shows that IMF and EU Commission economic growth forecast are consistently too optimistic and that they are underestimating the negative effect on investment, economic growth and employment from fiscal consolidation aka the necessary and unavoidable debt and deficit reduction. Lagarde’s reaction and response has to be seen to be believed.

What is clear from Madame Lagarde’s response is that a) she has not read this report; b) she has not even heard of it; c) she has no idea what it means; and d) she regards the rather better informed Irish journalist like something nasty she had stepped in.

Be in no doubt: the IMF is now a political organisation marching in lock step with the Eurozone and had no regard for the facts, the correct course of action or any pesky questioning of its policies.

Comments

[John Healy]

I normally fully respect and am supportive of your pragmatic insightful views. On this occasion, however, I cannot help but feel that your disparaging comment of Lagarde's attitude in responding to the Irish Examiner question is not borne out at all by the video clip. She clearly was not familiar with the item referenced by the journalist but quite politely and constructively, I thought, offered to contact the journalist after the Q&A in order to identify precisely the item being referred to.

[MadNumismatist]

Don’t forget the Kinky leather, she must have just come from one of those IMF “Bunga Bunga” parties DSK made so popular.

[prohyp]

Are there no lengths to which these people will not go to to keep the euro afloat? Are there no boundaries to their spread of corruption?

[Lawson Macdonald]

Like the first commentator, I cannot find fault with Lagarde's reaction. She didn't fudge the response like others might. She was very polite. The article implies that Lagarde treated the journalist with disdain. Anything but.

[Terry Smith]

John Healy: We will have to agree to differ. I thought Lagarde’s response fell somewhere between clueless, defensive, and downright rude at the outset. I also don’t think it’s acceptable for the head of the IMF to have no clue about the existence of such a publication from her own organisation let alone its contents.

[Terry Smith]

Lawson Macdonald: I felt that Lagarde’s opening remarks as she responded about not knowing where the woman was from when she had said she was from the Irish Examiner and the manner in which she asked betrayed her true feeling about the question. Even if I am mistaken about her attitude, which I doubt I am having met her, is it acceptable for the head of the IMF not to have even heard about one of her own organisation’s reports which seems to have some significant findings?

[CST]

I follow your blog because I think you speak a huge amount of common sense, but on this occasion I have to agree with John Healy.
I suspect the soflty spoken Irish lilt was difficult for Ms Lagarde French ear.
However a straight talking blog should be just that and also to provoke discussion.

[Ian C Mowat]

Seemed pretty offhand to me and obviously she was completely ignorant about her own publication.
I find it more useful to watch what people do-the IMF is pro-France, not Europe, as far as I can see. Possibly Lagarde is planning to return and run for President, like her predecessor.

[commentator]

Whatever Lagarde did or did not do, her job as far as I can see consists of being political frontwoman for the European Commission, the ECB, the Fed and the US Treasury while they pull out all the stops to monetise totally unpayable mountains of debt and thereby destroy the savings and living standards of ordinary people in the process. The elite's perks and privileges will of course remain intact. One other point: all plates must be kept spinning - however precariously - until after the US Presidential election because Obama is the favoured candidate of the Eurozone and of Ben Bernanke.

[Mark BRUCE-SMITH]

As an ex resident of France it is certainly within the realms of my experience to conclude that Madame Lagarde was being somewhat sniffy but no matter as what is incredibly important is that she had no idea about this report going out in the IMF's name. The world needs more restructuring of private and public debts and more prudent accounting from the banks if economies are to have a hope of returning to proper functionality. The report is proof of that because austerity alone does not work and printing money is an Elastoplast for the banks' failings.

[Terry Smith]

It is interesting that Lagarde is now suggesting that Eurozone countries including Greece should not be required to hit their targets for so-called fiscal consolidation i.e. cutting deficits and debt. I wonder if the fact that she is French has any bearing on that stance. After all France has cast itself as one of the core Euro countries dispensing advice and policy to the peripheral PIIGS when the reality is that it has far more in common with them financially than it does with Germany. I suppose what she and her erstwhile colleagues in France have spotted is that if they continue to advocate austerity and compliance with targets for the PIIGS someone will spot that France is one of this group and is also non compliant.

[AngryMan2]

Madame Lagarde's reply is not necessarily an insight on trust at the IMF. On that matter, I would blame Dr. Stanley Fischer, known as the 'bail out merchant' for forgetting the mission of the IMF - i.e. post crisis adjustment, not pre crisis bailouts. Indeed, Fischer bailed out so many countries, that the IMF created a 'Fischer put' for emerging nations, that encouraged the global credit bubble. Today, the IMF is more political than ever, having been dragged into the Greek bailout (Euro mess) by Dr. Strauss-Kahn, thereby losing its independence altogether.

p.s. Will the IMF play hard ball and walk away from Greece, unless the ECB takes a haircut? Not likely; it's politics again!

[John pd]

Terry hi.
I've just watched a YouTube video: The Money Masters. (Rothchilds Exposed). It's a critique of central banking. It's 3 1/2 hrs & dated, (1996), but I found it an eye opener.
I'd be interested in your comments.
What is our contribution to the EU?
How many years have the EU accounts not been signed off?
Like the commonsense & informed blogs.
Any EU predictions?
Cheers.
JD.

[Terry Smith]

John pd: Thank you for the suggestion, I will watch it. I think our EU contribution is about £50m per day. Great value eh? I don’t know if you noticed, but the EU’s commissioner for health and consumer policy, John Dalli from Malta, has resigned. Snus-wet Swedish snuff- is banned in the EU but has an exemption in Sweden. A friend of Mr.Dalli, a fellow Maltese man went to see the Swedish Match company in May and put it to them that in return for payment, he might find a way to get Mr.Dalli to make the situation on snus a bit more favorable for Swedish Match. Swedish Match reported this to the EU’s anti-fraud office. The anti-fraud office has concluded thus far that Mr.Dalli was not directly involved in this but that he was certainly “aware of these events”. Swedish Match meanwhile has put out a press release saying it hopes future tobacco legislation will consider the scientific facts regarding the lower health risks of snus – as opposed to presumably the size of the brown envelope.

[John pd]

Even more bent than our own MPs.
Surprise surprise :)
Hope you enjoy the video.
JD.