If Asia is supposed to be where most of the global growth is, why have the markets there been more volatile than their U.S. counterparts recently?
Let's take the 3rd quarter (July-September) and compare. FULL POST
In the opulence of probably the world’s most luxurious hotel, finance ministers from more than 20 Arab countries have gathered to examine the state of the global economy. They are also calculating the impact the debt crisis in Europe and the slowdown in the United States could have at the crossroads of East and West, the Middle East.
But nearly nine months into the Arab Spring, the finance ministers who are in charge of regional economies without the benefit of huge oil and gas reserves have expressed deep concerns about funding transitions in Egypt and Tunisia and potentially in Syria and Yemen.
The Chairman of the Arab Monetary Fund Jassim Al Mannai painted a picture of a prolonged period of economic uncertainty: "The fear is that economies of countries whether those that witnessed political shifts or those that are still witnessing political unrest today, will take a long time before they recover and go back to normal.”
We know the causes of this latest crisis - fear, worry and concern. Three uncomfortable bedfellows that have wreaked havoc on the world's financial markets. What pushed everyone over the edge was the debt ceiling debacle and the downgrading of U.S. debt by ratings agency Standard & Poor’s, that was followed by a 630 point fall in the Dow Jones index.
The markets are basically saying that they are unhappy with the wider economic situation - and with good cause. Manufacturing numbers in the U.S., UK and Germany were all weak last month. Unemployment remains high. Inflation is creeping up in some countries. And the debt situation in Europe is not getting any better.
What the markets are seeking is leadership, and for the moment they believe it is lacking. Take Monday's speech by U.S. President Barack Obama. The Dow had been trading down around 150-200 points until the president started speaking. It was in the hours after his speech the market saw its biggest losses.
In April, 1993, I was a young Canadian reporter covering politics and finance, trying daily to make sense of debt-to-GDP ratios, a falling Canadian dollar, and a good old fashioned free-for-all in Canadian politics. The political debate of the time was rife with the same threadbare arguments we hear today, from among the Keynesians who wanted to spend their way to prosperity, and the hackers-and-slashers who felt that deep cuts were the only way to save the tanking Loony and stem the rising Canadian unemployment rate.
So forgive me for wanting to crawl back into bed as I stumbled home from a vacation week of relaxing and fishing in my former homeland directly into my first day back at work in the United Sates and a 600-plus point freefall on the Dow Jones. This was not what I had in mind.
She may be the Duchess of Cambridge but she's also the queen of Britain's shops.
The girl once called Kate Middleton is undeniably a fashion icon with huge influence – and now she's got cash tills ringing at retailers right across the United Kingdom.
Economists credit the 29-year-old with helping to boost consumer confidence figures, released in the UK Friday, while April retail sales also grew as women across the nation scrambled to get the Kate look. Everything she wears - seemingly everything - is scrutinized, analyzed and promptly sells out within hours. It’s a dream come true for the sales department but a nightmare in terms of I.T.
Like the royal wedding that preceded it, the visit of President Barack Obama to Britain has been orchestrated well. Beyond discussions of the essential relationship, the U.S. president went out of his way both in his speech before both chambers of the British parliament and in his news conference with Prime Minister David Cameron to support what he calls the emerging democracies of the Middle East.
At the front of the queue are the two countries that sparked the uprisings, one of the least populated, Tunisia, and the most populated in the region, Egypt. There has been criticism from many camps that the U.S. president has been dragging his feet in supporting the North African states who overthrew Zine El Abedine Ben Ali and Hosni Mubarak.
‘I have decided to present my candidacy. I did this after an agreement with the President and Prime Minister of France. I have received a number of phone calls from countries supporting my candidacy.’
It took Christine Lagarde seconds to deliver these three sentences.
In doing so, she solved a puzzle that had press and politicians occupied for days: would she run to replace disgraced compatriot Dominique Strauss-Kahn as managing director of the International Monetary Fund?
But Lagarde’s decision to throw her hat into the ring raises more questions than it answers. It has also unleashed a ‘Battle Royale’ between ‘old and new world’ superpowers for control of the institution charged with managing the global economy.
Europe and the United States have traditionally dominated the top positions at the IMF and the World Bank. France has provided 4 of the 10 past MDs at the IMF, since its founding in 1945.
Editor’s Note: CNN's Nina dos Santos has obtained a copy of Dominique Strauss-Kahn’s farewell e-mail to the staff at the International Monetary Fund following his resignation last week.
Sent: Sunday, May 22, 2011 6:01 PM
Subject: Message from the Acting Managing Director, John Lipsky
As I mentioned in our recent Town Hall, the former Managing Director regrets that he is not going to be able to address us in person, but expressed his desire to send a message to Fund staff as soon as it was feasible.
I have just received the following letter from him, and I wanted to share it with you as quickly as possible.
You have seen my letter of resignation as Managing Director of the Fund—one of the most difficult communications of my life. I wanted very much to be in touch with you, personally and directly, to express my profound sadness and frustration in having to leave under these circumstances. I am doing so because I believe it to be in the best interests of the institution that I care about so much, and of you, the staff, whom I deeply appreciate and admire.
The past days have been extremely painful for me and my family, as I know they have been for everyone at the Fund. I am very sorry that this has been the case. I deny in the strongest possible terms the allegations which I now face; I am confident that the truth will come out and I will be exonerated. In the meantime, I cannot accept that the Fund—and you dear colleagues—should in any way have to share my own personal nightmare. So, I had to go.
As Christine Lagarde prepares to take the reins at the International Monetary Fund, her cool head in a crisis and capability in negotiating consensus will stand her in good stead.
I first met Madame Lagarde in 2007, shortly after she was appointed France’s Finance Minister – the first woman to hold such a role among the world’s eight most industrialized nations.
I remember being transfixed by two things: her imposing stature (standing six-feet tall versus my five-foot nothing) and considerable self assurance. Yet Lagarde’s “Iron Lady” ego and Thatcheresque looks belie a more deadly weapon to those who stand in her way. For Ms Lagarde is, above all, charming.
At a meeting of EU finance chiefs in the South of France a year later, I watched Lagarde’s male counterparts both cower and drool as she delivered a powerful pre-dinner speech in the garden of a Riviera villa. She was wearing a suit that meant business and satin stilettos that said cocktail time.
The evening was warm, the champagne flowed and with Lagarde on the stage, the credit crunch seemed a distant memory even though Europe was already lurching into a recession.
Lagarde, whose country was now halfway through its rotating EU presidency, was on top form even if the financial sector was not. You see, part of Lagarde’s charm is that she embodies contradictions.
But that gathering was France entertaining its clubby eurozone neighbors and now Lagarde will soon be playing to a larger audience with more power, more money. Those who have met her more than once over the years, like me, have no doubt she will rise to the challenge.
In fact, while some eurozone colleagues may shrink behind the weight of their hefty responsibilities (see Greece) Lagarde shines when given a tough job to do.
Soon after becoming France's Finance Minister, with the onset of the credit crunch well and truly apparent, I remember Lagarde summoned the heads of all of the country's banks and made them be brutally honest with her about their finances.
Looking back on those days in a recent interview for the documentary 'Too Big to Fail,' the French Finance Minister admitted with candour that the first time she found out about the collapse of Lehman Brothers was 'after the event.'
She certainly won't be able to say the same about Greece – if or when (according to an increasing number of analysts) – it defaults.
At first glance Lagarde seems as Gallic as they come. She always makes time during her busy schedule to have a proper lunch – le dejeuner is in fact something of a ritual on the sixth floor of number 139 Rue de Bercy, the seat of the finance ministry in Paris.
So far so French… yet what makes Lagarde properly palatable to politicians across the Pond is that she has spent many years in the United States, reaching the top of Baker & McKenzie, one of the country’s biggest law firms, as its first female chairman. Lagarde’s time in the U.S. has left her with impeccable English and fluent in the language of finance, making her one of the most lucid and respected politicians in Europe.
Her pulling power extends to the media as well. Last year Forbes magazine rated her the world’s 43rd most powerful woman and she was voted best European finance minister by the Financial Times in 2009.
But for Lagarde, being European –or indeed French – may prove to be a double-edged sword. France has dominated the top positions at the fund since its inception in 1945, providing four out of its past 11 managing directors. And while emerging markets have stoked debate about opening up the field, experts say it’s unlikely European countries will relinquish control anytime soon with bailouts for Greece, Portugal and Ireland to consider. So, with a new European MD at the fund Ms Lagarde will have to choose her moves wisely-lest she attract accusations of 'Old World' favoritism.
For the 24-member executive committee making the appointment this week, things couldn't have turned out better, as Agustin Carstens, the Mexican Central Bank Governor, would make an ideal fit to replace John Lipsky as Deputy MD.
Such an appointment would also appease growing calls for more developing world representation among the top tiers at the IMF.
Christine Lagarde is a woman with many facets but her laser-sharp focus is what marks her out most. The mother of two once represented her country’s hopes in synchronised swimming. Her hair may be silver but make no mistake she's going for gold. Whether the IMF and the eurozone will have any left when they've finished bailing out Greece is another matter.
The Europeans are in a tricky position. They desperately want to keep the top job at the IMF, but they can’t be seen to be nakedly saying “it’s ours by right.”
So leaders from European Commission President Jose Manuel Barroso to finance ministers from Austria, Sweden and Denmark, (in fact just about anyone from Europe who has opened their mouth on the subject), are turning linguistic cartwheels to promote a European solution.
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