What’s a few billion between friends?
by Alex Hutchins
This past Friday (4-20-12), the largest world economies (known as the G20) pledged $430 billion in new funding (according to Reuter) for the International Monetary Fund, more than doubling its lending power in a bid to protect the global economy from the euro-zone debt crisis."This is extremely important, necessary, an expression of collective resolve," IMF Managing Director Christine Lagarde said. "Given the increase that has just taken place, we are north of a trillion dollars actually. So I was a bit mesmerized by the amount."
|Christine Lagarde, |
Managing Director, IMF
This War Chest would enable the IMF to help any country in financial need, like Greece, Ireland, and Portugal, 3 countries already receiving financial aid. Interestingly, China has indicated that it would participate but did not say in what amount.
Woman of the Season
But, will these monies be enough if these countries do not change the way they are doing business in their respective countries? Christine Lagarde says “yes,” but the head of the IMF's steering committee, the Singapore finance minister Tharman Shanmugaratnam, was more cautious. "Whether Europe has done enough to build up its firewall depends really on its reforms," he said, speaking alongside Lagarde. "If its reforms lose credibility, if its reforms lose momentum, then quite frankly the firewall is not enough. So it depends entirely on the commitment to reform."
Click here to read entire article.
What is the IMF?IMF stands for International Monetary Fund and was established in 1944 as a part of the United Nations system, the IMF's primary purpose is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries and their citizens to buy goods and services from each other. This is essential for sustainable economic growth and rising living standards.
To maintain stability and prevent crises in the international monetary system, the IMF conducts surveillance of national, regional, and global economic and financial developments. It provides advice to its 187 member countries, encouraging them to adopt policies that foster economic stability, reduce their vulnerability to economic and financial crises, and raise living standards. The IMF also serves as a forum where its global membership can discuss the national, regional, and global consequences of their policies. To read more about the IMF, click here.
meeting in Washington, DC
Who is Christine Lagarde?
Christine Lagarde joined the French government in June 2005 as Minister for Foreign Trade. After a brief stint as Minister for Agriculture and Fisheries, in June 2007 she became the first woman to hold the post of Finance and Economy Minister of a G-7 country. From July to December 2008, she also chaired the ECOFIN Council, which brings together Economics and Finance Ministers of the European Union.
In 2009, Christine Lagarde was ranked the 17th most influential woman in the world by Forbes magazine, the 5th best European executive woman by The Wall Street Journal Europe, and became one of Time magazine’s top-100 world leaders. The Financial Times named her European Finance Minister of 2009.
Why is Global Financial Stability Important?
Unlike global conflicts and wars, global financial instability does not kill or take lives but like war it devastates countries preventing them from growing economically and improving their quality of life. And, since the world is inextricably tied together financially, then what happens in one country impacts the financial security in another country, very similar, if not identical to what happens between States in this country.
For example, if gasoline prices increase, then transportation costs increase and when that occurs, our costs for blue jeans increase and we buy less which means the store must lay off workers which means those workers reduce their spending, etc. While this is happening, Americans stop buying as much gasoline as they did before which reduces the revenue that the country selling its oil receives, and that country in turn stops buying goods and services from Europe and as those countries in Europe receive less money they offer less services to their citizens or the businesses that sell to the oil countries have less revenue so they lay off workers, just like what happens in this country.
Most people do not care about any of this until something happens to them and do not even think about much less care about what’s happening in the rest of the world and how that may impact our lives here in America.
AND, THIS IS THE REAL CRISIS . . .
. . . that the dance of the IMF and the G20 is trying to stabilize and correct so we can drink our coffees, lattes, and cappuccinos in the morning without any fears.