The IMF’s Managing Director, Christine Lagarde
This morning – for reasons best known to itself – the Financial Times (£) donated a huge OpEd piece to the IMF’s Managing Director, Christine Lagarde. I use the verb to donate because, given the content of the piece, it was a truly charitable act for the FT to give it such a prominent position…..or indeed, to agree to give it house-room in the first place.
Here we are, a Chinese inflationary runaway train threatening Asian stability, totally stalled EU growth against a backdrop of horrendous debt and hopeless denial, the Americans finally grasping the near-certainty of their insolvency, the British with no Treasury Funds to use QE stimulation, and the Australians dangerously overdependent on continuing Chinese raw material consumption. In turn, the US is busy turning a suicidal money supply roundabout, while the Europeans have an ECB behaving more like a German Treasury in 1925. Yet somehow – and we’ll perhaps never get to the bottom of exactly how – an if nothing else experienced and intelligent IMF boss has been replaced by a person whose sole fiscal achievement to date was to allow the French government debt to spiral out of control, and oversee an EU banking stress test that nobody believed.
For those who know of her shortcomings, this Christine Lagarde FT piece – ‘Don’t let fiscal brakes stall the global recovery’ – doesn’t disappoint. It is, from start to finish, a stream of cliche, generality and superficial observation, the point of which one can only guess to have been a calming of nervous disbelief in the sovereign credit and banking sectors. It is, in short, excruciatingly lightweight.
The article starts with a degree of promise which is never realised – a metaphor, perhaps, for globalism in general and G20 summits in particular over the last decade. Lagarde writes that the current impasse has
‘….prompted many to conclude all policy options have been exhausted. That impression is wrong….’.
Aha, we think, Chrissie has an idea up her haute coutured sleeve. She continues:
‘The situation today is different from 2008. Then, uncertainty came from the poor health of financial institutions. Now, it comes from doubts about the health of sovereigns and the tricky feedback loop to banks…’
Er…the two aren’t mutually exclusive, chuck. And let’s face it, the fact that you lot did diddly-squat to deleverage the banks in the three years since then might have something to do with the strong sense of deja vu at the minute. But at this point, Mme Lagarde unveils the Big Idea:
‘What is needed is a dual focus on medium-term consolidation and short-term support for growth and jobs.’
Crikey. We hadn’t thought of that. But, um, QE’s been tried twice in the States and once in the UK – and hasn’t worked. Also if, like Britain and the USA, the priority is to cut a debt mountain that’s halfway to the Moon, how can one do both things at once? Pardon me Christine but, duurgh, isn’t this why your own approach along these lines gave France the fastest growing debt in the EU? But Lagarde is presumably undeterred by such petty criticism. Kop this gem for perhaps the most condescending sentence I’ve read so far about the self-destructive part of global bourse free-market capitalism:
‘We should remember that markets can be of two minds: while they dislike high public debt – and may applaud sharp fiscal consolidation – as we saw last week they dislike low or negative growth even more.’
No! Really? Do you know what CL, mon petit choux-fleur, I’d be willing to wager – call me wacky – that their win-win ideal would be no debts and mega-growth…am I right? Whereas what they seem to be getting – at least in the West – is burgeoning public debt and slump. Hmm. How utterly unreasonable of them, then, to jump to the conclusion that folks like your good self are probably lacking the skills required to tie shoelaces in the correct manner. But the A,B,C primer picture book of Finance for Dummies continues with this:
‘Nor will spending cuts alone do the trick – revenues also must increase, and the first choice must be measures that have the lowest effect on demand.’
It was at this point that the article ceased to be funny for me, and the cringe-worthy factor kicked in. George Osborne – who two months ago told the biggest lie of his career to date by referring to Lagarde as ‘a hugely talented financial thinker’ – must’ve read that and wondered whether puerile, patronising piffle could be made any more perfect. But before the reader could pause for a discreet vomit, the authoress reverted to a stab at banal generality that was almost beyond belief in a serious business news medium:
‘If the global recovery falters, the burden will be borne far and wide. If policymakers can act boldly, act together and act now on these priorities, confidence can be restored and the recovery sustained.’
Where to start? There has been no recovery beyond the minute rally created by trillions of Dollars of taxpayer money. There is no bold action, no sign of anything except a sort of mildly catatonic intercontinental bickering, not so much as a scintilla of evidence in favour of confidence….and sustaining ethereal mists of imagined recovery is a 4-dimensional operation at best. As such, the same thing that defeated Einstein is very likely to rout the likes of Obama, Osborne, Sarkozy and Merkel.
But above all, Christine Lagarde’s piece is as empty as the French Treasury, because it begins by saying there are lots of action options left – and then confirms what all sane and fully awake people know: not only are there no realistic options left, she and her ilk have not the remotest clue how to come up with any new ones. Her sole contribution to the debate – ‘a dual focus on medium-term consolidation and short-term support for growth and jobs’ – is so risibly out of kilter with market realities, the former French finances minister could’ve done everyone a favour (including herself) by simply getting a good night’s sleep instead of blagging the Financial Times into printing this rubbish.
While I recognise that Mme Lagarde is a target so large at which to aim it is almost bad sportsmanship to shoot at it, I am making a very serious point here. We are way, way past the point where this sort of vacuous bollocks can even begin to cut it; and the fact of its appearance in a globally opinion-leading press title should be a matter of profound concern for everyone trying to see a way towards sorting out the mess.