Money Is Power: An Inside View of the IMF's Massive Global Influence

By Klaus Brinkbäumer and Ullrich Fichtner

Part 8: Europe's Euro Challenge

It is a Tuesday in late September, the day after Strauss-Kahn addressed the United Nations in New York to advocate workplace measures and then, in a statement to the press, praised the unions once again. It looked like a campaign. He spoke earnestly about the global situation, the hardships of workers. He seemed determined; DSK does what he does with grim determination.

But what will he do? Will he leave the IMF before reaching his goal? Will he lead the French Socialists to challenge President Sarkozy in the 2012 election year? Strauss-Kahn has enough political astuteness to know the answer by heart: "I have to worry about people who do not have jobs," he says. "I'm lucky I have one." Some of his detractors in the IMF say that Strauss-Kahn's closeness to the unions is nothing but calculation on the part of a politician and economic expert.

If Strauss-Kahn runs for president, he can expect to face a smear campaign. His affair with a Hungarian IMF employee, which triggered an investigation, will be a thorn in his side, as will his reputation as a man who is now on his third marriage but who has loved many women. When asked about the internal investigation, he says: "It was a mistake. A waste of time. The price for mistakes is the waste of time."

Has he heard that Sarkozy is telling people in Paris that he warned Strauss-Kahn not to ride an elevator alone with a woman in the IMF building? No, he says. He isn't smiling any more.

Sitting in his office, surrounded by the scent of flowers, Strauss-Kahn prefers to talk about Europe's sad future. "The European institutions," he says, "were absolutely necessary and very useful for many reasons, but only in quiet times. ... The crisis exposed very clearly the way the EU is working. There is, in my view, too much concern about domestic safeguarding and domestic problems rather than concern about the EU itself. The result of that is that the recovery in Europe is lagging behind while the recovery in Asia, South America, the US and Africa is rather strong. I'm afraid that if the European countries don't take the bull by the horns, they will be the part of the world with sluggish recovery. After building the Union and creating the euro, the European Union now needs to take a third step, which is more economic policy coordination and more fiscal policy integration, and so more centralization. But the system moves very slowly."

He reaches toward the table, but there isn't any water there. Everyone at the IMF drinks too little water and too much coffee.

Then he says: "You can't have a monetary union without a reasonably coordinated fiscal policy. And you cannot make it work when neighbors make deals: If you're nice to me, I'll be nice to you -- just as France and Germany did when they exceeded the 3 percent deficit limit. Europe needs rules, surveillance and sanctions. Sanctions should not be the suspension of voting rights. Who cares about voting rights? They have to be financial sanctions -- payable not during a crisis, of course, but a few years later."

In the end, DSK raves about China, Asia, dynamism and speed.

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1. Who elected Strauss-Kahn?
lakechamplainer 10/05/2010
I found this to be a very informative article. Kudos to Klaus Brinkbaeumer and Ullrich Fichtner. I get the sense the that Strauss and the other IMFers were trying to be careful about what they said, but didn't realize how it would sound to an average person. For example, * Print * E-Mail * Feedback 10/04/2010 Money Is Power An Inside View of the IMF's Massive Global Influence By Klaus Brinkbäumer and Ullrich Fichtner Photo Gallery: 9 Photos Martin H. Simon / MHS Three years ago, the International Monetary Fund was irrelevant, an object of derision for all opponents of globalization. Under director Dominique Strauss-Kahn and as a result of the global economic crisis, the IMF has since become more influential -- governing like a global financial authority. It is also putting Europe under pressure to reform. The building that houses the headquarters of the global economy is a heavily guarded, 12-story beige structure in downtown Washington with a large glass atrium and water bubbling in fountains. The flags of the 187 member states are lined up in tight formation. Visitors walking into the office building find the cafeteria on the right, where many meetings are held. There, experts in their shirtsleeves, their jackets draped over the backs of chairs, drink lattes out of paper cups and talk countries into crises or upturns. A little farther down the hallway is the Terrace, the IMF building's upscale restaurant where the director receives official guests. On a Tuesday afternoon in late September, as the first leaves are falling from trees outside, the director, wearing a blue suit and a blue tie, is sitting on a blue couch high up in his office at the headquarters of the International Monetary Fund (IMF), outlining his idea of a new world. Some of it already exists, in the form of a new world order established in September 2008 to replace the one that was collapsing at the time. The result wasn't half bad -- but it is robust? 'The Money Is The Medicine' These are important times for humanity. The crisis has forced everyone to see many things from a new perspective. Now the IMF is preparing for its annual meeting on Oct. 8. Can it live up to expectations, and can it police the new global economic order and keep global banks in check? "You have to imagine the IMF as a doctor," says Dominique Strauss-Kahn, the 61-year-old director of the International Monetary Fund. "The money is the medicine. But the countries -- the patients -- have to change their habits if they want to recover. It doesn't work any other way." He smiles benevolently as he says these things, his eyes disappearing behind small cushions of wrinkled skin. Who elected him to anything? Who his he to say how human beings should order their societies? In Strauss-Kahn's view, the IMF should become an administrative unit of sorts for the G-20, an agency that "tries to find solutions for global and national problems," and comes up with plans and create values. "In the end we aim at much more than just the right financial and economic policies. The ultimate goal, of course, is world peace through economic stability." This is the way Strauss-Kahn views his organization, and the astonishing thing is that hardly anyone, with the exception of a lone professor in Boston, disagrees with him anymore. As an American, I don't recall a process being followed to give up sovereignty and assign it to the IMF, and to assign them control of a large chunk of my tax dollars. I certainly don't support it, and it is clearly against the US Constitution.
2.
BTraven 10/07/2010
---Quote (Originally by lakechamplainer)--- I found this to be a very informative article. Kudos to Klaus Brinkbaeumer and Ullrich Fichtner. I get the sense the that Strauss and the other IMFers were trying to be careful about what they said, but didn't realize how it would sound to an average person. ---End Quote--- Presumably the man who runs the IMF does not know that his organisation could became redundant given that most countries “helped out” by the IMF have learned its lesson, namely to stockpile as much money as possible. China does it, Brazil too, even Argentina piles lot of cash. From one extreme to another one.
3. a bee in the bonnet
esperonto 10/08/2010
Its plain to me that these old guys who want the New World Order have what is known as a "bee in their bonnets", meaning a little idea they hope to capitalize on, which is more grandiose in concept than in its true practice -- namely, that this New World Order will not pan out. It will fall apart, but perhaps before doing so, a few people will get rich, and that is all it is really about. Humanity will shirk off the stress the NWO is putting on them with all this military action, and they will relax back into normal humans and laugh at the diabolicalness of the western minds trying to push people over the edge.
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