Christine Lagarde of France was chosen as the new head of the International Monetary Fund today. It was a done deal when Treasury Secretary Tim Geithner said the U.S. would endorse her over the other candidate for the job, Mexico’s central bank governor.
So the general rule of international finance prevails: Europe gets the IMF, the U.S. gets the World Bank. The developing world is put on hold.
So now that Lagarde, the soon-to-be former French finance minister, has the job. Here is one of the first things she’s going to have to deal with:
This is Athens on Tuesday, when Greek Unions called a general strike against the austerity measures being proposed to keep the country out of bankruptcy. The Greek Parliament is calling for wage cuts, tax hikes and selling public companies to the private sectors. If that doesn’t happen, foreign lenders, specifically the European Union and the IMF, won’t lend Greece the money it needs to avoid default.
As you can see, the people are not happy. It’s pretty much expected the measures will pass. And you can pretty much expect the demonstrations are going to be more violent. And even if Greece gets the money, chances are it still won’t get out of trouble.
And Greece isn’t the only western European country on the verge of collapse. Keep an eye on Portugal, Ireland, Italy and Spain when the Greek plan fails. So Lagarde is going to be extremely busy and will be under a lot of pressure to make things right. Given the situation, it’s doubtful anyone can succeed here.
(Oh, and here’s the obligatory “Lagarde is the first woman to head the IMF” line, which is kind of ironic since the previous IMF chief, Dominique Strauss-Kahn, is awaiting a rape trial in New York.)
- Christine Lagarde is new IMF chief – and good news for UK says George Osborne (mirror.co.uk)
- Is Christine Lagarde Right for the IMF? (businessweek.com)
- Christine Lagarde Is New IMF Chief (thedailybeast.com)
- IMF Press Release: IMF Executive Board Selects Christine Lagarde as Managing Director (currencynewshound.wordpress.com)