Let’s face it, many of the biggest members of the IMF weren’t exactly models of fiscal prudence in recent years. Isn’t it time to look beyond Europe and the U.S. for a leader?
If you make a habit of reading market commentators, you know that they come in a number of forms. First, there are the cheerleaders. Hugh Johnson of First Albany used to serve this purpose. Second, the intellectuals. James Grant of Grant’s Interest Rate Observer comes to mind. He’s been wrong as often as he’s been right, but he’s a damn good read in either case.
Third, the deliverers of harsh medicine. (Grant is also included in this category, of course.) My favorite of all: Christopher Wood, author of the Greed & Fear newsletter for Asia-Pacific brokerage CLSA. Wood, a former journalist, writes with a narrative flair that’s perennially lacking on Wall Street. Not only does he put the news in proper context, he also suggests good storylines when they’re needed. His latest? That in the wake of Dominique Strauss-Kahn’s scandalous resignation, the new head of the International Monetary Fund shouldn’t come from one of the West’s “developed” nations, but from one of the countries likely to be one of our lenders in the near future.
I’ll let Wood say it for himself: “GREED & fear has to admit that Dominique Strauss-Kahn has proved extraordinarily successful in re-inventing the IMF by using the recent financial crisis in the West to re-invent the role of the IMF, an institution which had outlived its raison d’être. Still recent events have reminded GREED & fear of the equally extraordinary conflict of interest posed by a leading French presidential candidate heading the IMF at a time when the institution has been so heavily involved in negotiating politically sensitive bailouts in the European periphery. The reality is that for the foreseeable future IMF bailouts are likely to be taking place primarily in the debt-infested West. For that reason alone it makes sense for the head of the institution to hail from the ’emerging’ world.”
Look, I’m no self-hating American. I just became one a few years back after marrying the love of my life and pledging allegiance to the flag. But Wood is right — neither the U.S. nor its European pals is in any position to lecture the rest of the world on how to manage one’s finances these days.
Christine Lagarde, the finance minister of France, is reportedly the leading candidate to take DSK’s post. I assume that’s because France is such a perennial economic powerhouse. Gordon Brown also says he wants a chance at that action. Based, of course, on the fact that Britain is hitting on all economic cylinders these days.
German Chancellor Angela Merkel thinks the next president of the IMF should be European. (As do a number of other Europeans. Quelle surprise!) That is, of course, because Europe has so demonstratively shown that they know how to manage their own affairs, including the Euro and the welshers known as the Greeks, the Portugese, and the Irish. Hey – don’t get me wrong, I can understand the aftermath of irrational exuberance when I see it, but I certainly don’t normally run around nominating people who drained the community coffers as head of the finance committee. Since the 1950s, we’ve had a Belgian, a Dutchman, a few Swedes, a handful of Frenchmen, a German, a Spaniard, and some Americans.
What about Brazil? Or some of the stronger African states? Or are they just kneeling at the feet of our wisdom of profligacy? More to the point, what about someone from China? Zhou Xiaochaun, head of the People’s Bank of China, thinks that candidates from the emerging world should be considered. You can watch Tim Geithner and President Obama talk the strong talk about our currency all day long, but you know it’s all because they’re faced with the sad state of being outflanked by a Chinese economic engine that didn’t overdose on bogus real estate assets. Truth? Among major powers, the Chinese are pretty much the only ones in the world who didn’t choke on their own crap in 2007/2008. So what would be so bad about some Eastern learning at a time like this?