When Christine Lagarde Talks, Everyone Listens

27/09/2012

Business, Germany, Greece, News, Spain

Ayanna Nahmias, Editor-in-Chief
Last Modified: 01:14 AM EDT, 27 September 2012

Christine Lagarde Headshot, Photo by IMF

Christine Lagarde

WASHINGTON, DC – Christine Lagarde, the International Monetary Fund, Managing Director is arguably the most powerful woman in global finance next to German Chancellor Angela Merkel.

Merkel is noted for her role in trying to resolve the Eurozone debt crisis, as leader of Europe’s biggest and most robust economy. Merkel has also been named by Forbes magazine as the most powerful woman in the world.

Since the global economic slowdown, various countries have struggled to retire debt in the face of increased jobless rates, volatile financial markets, and decreased GDP.

Therefore, when Lagarde announced that the IMF is set to cut its forecast for global growth next month, the news was greeted with trepidation by the United States and other governments including China.

At issue is the growing lack of confidence in the ability of European policymakers to attack head on the crisis affecting the Euro Zone, as well as an increased unwillingness by countries with strong economic growth and low debt, like Germany, to support the bailout of countries that refuse to implement effective austerity measures.

In fact, the S&P 500 fell for a fifth straight trading day on Wednesday as protests in Spain and Greece over euro zone austerity measures raised fresh concerns over Europe’s ability to get its debt crisis under control. The possibility of countries with stronger economies defecting from the euro zone in favor of a return to their national currency also contributes to continued market instability.

When Lagarde announced that the IMF is cutting its global growth projection for 2013 to 3.9 percent although it left its 2012 forecast at 3.5 percent in July 2012, it was widely viewed as a lack of confidence in Europe’s ability to resolve the euro zone crisis.

In particular it was viewed as a tacit indictment of government officials inability to effectively address the economic downturn in their respective countries. The failure of these countries to implement austerity measures to reduce their debt has adversely affected the economies in the rest of the world.

In fact, Lagarde stated that she believes the euro zone crisis poses the greatest risk to the world economy followed by the looming U.S. fiscal cliff which she believes also presents a “serious threat.”

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About Ayanna Nahmias

Ayanna Nahmias was interviewed on Radio Netherlands Worldwide program titled 'The State We’re In,' about her life in Africa and her determination to transcend her past. She started the Nahmias Cipher Report to provide information to readers about life in emerging economies, and to provide alternative insight into the challenges faced by women and children living in these countries. The blog features stories from around the world to inspire other people to persevere and triumph in the face of great adversity. She blogs about current events in emerging economies, international politics, human rights abuses, women’s rights and child advocacy.

View all posts by Ayanna Nahmias

2 Comments on “When Christine Lagarde Talks, Everyone Listens”

  1. juwannadoright Says:

    Legarde, who has a solid grounding in capitalist economics, must be going crazy over the new French socialist government’s latest proposal to raise the maximum tax on “high wage earners” to 75%.

    Reply

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