Musings over the IMF

[Suff]

I was looking at the recent refusal of the IMF to join in further Greek bailouts and that the IMF has set a condition which, essentially, says the EU funds will provide assistance to Greece, indefinitely, for the future, until Greece gets out of the hole it is in. Otherwise they will not cooperate with any future bailout.

This leads to an interesting position Re: the IMF. Currently it's been Chaired by the French. But given the internal audit slating it got this year, after retaining Laguarde for another 5 years, this may change.

Indeed reading that summary then reading the MD's response...

Overall, the conclusion I draw is that the Fund’s involvement in the Euro Area crisis
programs has been a qualified success.

Tells me there's more trouble to come.

Of course nobody really wants a US person leading the IMF any time soon. But a newly emerged UK from the EU might give them a very interesting alternative. A UK seen to have no love for the EU and to be somewhat independent of the US could be a very attractive option for them.

Which would be a rather large snub for the French.....

[Workingman]

It is hard to think of anyone from the UK to be head of the IMF.

Thankfully it is not 'run' by Legarde, or any other individual, it is a collaboration of nations. They, collectively, agreed on the Greek bailout. They might have got things wrong, certainly from the Greek's perspective, but in all honesty the Greek economy is like a pimple on an elephant's bum in world, or even EU, terms.

[Suff]

Yes and no. They did not "collectively" agree the bailouts. The EU member states (including the UK), outvoted the US and the smaller members to force their hand. The only thing the other members could do was limit the size of the package and the damage with it. It is no small matter that the audit enquiry accuses the senior member states of abusing the smaller states contributions for their own ends.

This is what the report is all about. The EU and senior states endangering the fund by using it as a tool for their own political ends.

There are plenty of UK people, ex BOE MPC members, ex finance ministers, who could take on that job. Many of whom carry merit in the world. Fortunately Brown will not be on that list. But Osborne very clearly could be and would be extremely popular with the smaller countries too and with China.

Also they broke their own rules too.

[Workingman]

Of course it was collective, everyone got a chance to vote. Had the US teamed up with its NAFTA partners and Japan the deal would have died, but so too might the Euro.

The fact is that governments around the world do not want the Euro to crash because it would trash the global economy, and nobody wants that. It is one reason why other places will deal with Eurozone members even if they have ti bite their tongues to do so.

[Suff]

The complaint is that the EU countries worked on it in exclusion wit the MD and the executive then presented it as a fait accomli and hobsons choice with no engagement or review of options. Essentially the MD drove the EU chosen option and then left everyone with the choice of trashing the Euro or going along with it.

The auditors claim this was the wrong thing to do, led to a first world defaul and badly tarnished the reputation of the IMF. The auditors are right and I think steps will be taken in 2021.