BREAKING ANALYSIS: The full story on why Christine Lagarde is pointing her cannons at the EU creditors


A majority of informed folk accept that the IMF is a thinly-disguised agent of US foreign policy.

But the IMF actions taken over the last five days don’t fit that picture. So this makes my nose for a story twitch: why does Washington seem to be firing scud missiles at its own State Department by letting Christine Lagarde carpet-bomb the EG/ECB creditors in the media?

It is giving me nasal twitch at the same time as another aspect of the IMF/EU interface about which I tweeted somewhat ironically on Monday and yesterday: Greece is now in cast-iron double-default on its IMF loans, but there doesn’t seem to be any panic about insurance and derivatives. I do know why (all the private banking and Hedgie creditors walked off with their profits a long time ago…what’s left now is central bank/IMF/QE funny-munny) but as Troika2 has been trying to obfuscate that fact in recent times, why is it suddenly relaxed about it becoming obvious?

I suppose one would say, “because the game’s over and the eurogroupe has its victory in the bag, so they don’t care”. I’d say that’s careless: next time around, the Italian Tsipras is going to play a much smarter game given that public knowledge.

The eurogroupe in general and the Germans in particular are, predictably, letting things go to their heads. After the facing out of Italy, it’s probably going to be France’s turn to face the wheelchair-powered ball of bile. Sources close to the eurogroupe have been mouthing off for some weeks now about how much Schäuble took pleasure in refusing to countenance French mercy pleas on behalf of the Greeks. Last week, an EC-based British source told The Slog that the German finance minister’s primary motivation for crushing Tsipras was to ensure that France got the message: you’ve taken the piss for thirty years, but now it’s over.

Christine Lagarde is, of course, French.

There is already bad blood between Schäuble and Lagarde: in 2012, the German lied to her about making Greek repayment sustainability the focus of EU fiscal policy: she has watched as this unpleasant and perfidious man has done the opposite. The latest demands upon Greece – spearheaded by Berlin – seem to have convinced her of his real intentions.

If Schäuble decides to go all out for France, then Lagarde will be in the Dock: for she was Sarkozy’s economics Minister at a time when Wolfie was already muttering in private that there was no sign at all of the promised French austerity. As a Frenchwoman, she can discern the attempt to finally reduce France to an also-ran player in a German run EU. And as a dictatorial control freak, Schäuble will be given the opportunity to humiliate a lending player he never wanted in the ClubMed subjugation championships anyway.

There is but one other threat that both Schäuble (and Weidemann at the Bundesbank) detest in terms of his QE-style approach to solving the eurozone problem: the man at the top of the heap, ECB boss Mario Draghi. When Italy’s turn in the tumbril comes – almost certainly before France – Wolfgang Schäuble will get his opportunity to flush out some of Mario’s darker secrets about Italian fiscal lies and Monte Del Peische when he was heading up the Italian Central Bank.

Frankfurt and Berlin have never forgiven Draghi for the way he pushed every German fiscal opinion out of his way four years ago. Wolfie will have his revenge…he hopes.

It is the way this spiteful US-vassal spy both works and thinks: all the people in the way of his sole control of a German dominated FiskalUnion must be smeared and removed. The US and Berlin did everything in their power to keep the neoliberal Sarkozy in position…and they will do anything to ensure the one European State they own lock stock and barrel calls the shots on their geopolitical behalf.

DSK was fitted up, Hollande’s debt yields were bombed, and next it will be Draghi’s turn to fall from grace. After that, Lagarde will be buried under a mountain of fiscal and lending incompetence both in the Elysée and at the IMF.

Or at least, this is how the course pans out in Herr Schäuble’s vindictive little mind: a Europe controlled by an American-run Germany, an ECB run by Jens Weidemann, and the purse strings power all in Wolfie’s own grasping hands.

This is why Christine Lagarde has declared war on the eurogroupe creditors. She is a devious and divisive airhead, but I can’t help wishing her luck. How appallingly depraved the world is when she is my best bet for a howitzer hit on the Berlin tank. But even that depends on whether she has the confidence of a lame-duck US President who once promised so much.