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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

Category: International Monetary Fund
August 30, 2012 at 10:00 AM

Five things to watch for this fall

Europe is back from vacation, American economic growth remains weak and the presidential campaign will suck all the oxygen from the room. Here are five things to watch for in the economy in the weeks ahead:

1. The European recession and political crisis will get worse. It begins with the need for the Greek parliament to approve another 11.5 billion euros in spending cuts or risk losing its lifeline from the European Central Bank and International Monetary Fund. As I’ve written before, the only real answer is an “orderly” exit mechanism for the euro or a complete write-down of the debt.

2. Europe’s recession will spread. The EU accounts for 20 percent of U.S. trade and is a huge trading partner with Asia. The slowdown there is already affecting global commerce. The big unknown: The danger to “counterparty” U.S. banks (Mr. Dimon, call your office).

2. The danger of a new bubble popping. Will it be student loans or food futures?

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Comments | More in China economy and business, Debt, Debt ceiling debate, Deficit, Eurozone, Income/living standards, International Monetary Fund, Jobs/Unemployment, Trade

May 16, 2011 at 10:00 AM

Fallout from IMF chief scandal could go in unexpected directions

Aside from the universal magnet of a Special Victims Unit sex scandal, what does the arrest of International Monetary Fund Managing Director Dominique Strauss-Kahn have to do with Seattle and the Northwest? As a world trade center, we should be concerned about anything that injects instability into the markets. As a region facing Asia, we should take note of what happens with China and the Fund.

China is now one of the top shareholders of the IMF (the U.S. being the largest). The top job at the IMF has historically gone to a European. But pressure has been growing to select a managing director from among the developing world, particularly the BRICS (Brazil, Russia, India, China and South Africa). Strauss-Kahn has already announced he would be leaving the job, and it has been widely anticipated he would run for the French presidency. The allegations of sexual assault in New York, even if Strauss-Kahn is found not guilty, will wreck his career. They do nothing to help the institutional credibility of yet another bulwark of the global economy.

The IMF was founded after World War II as one of the American-conceived institutions to promote currency stability and economic liberalization, avoiding the kind of economic crises that helped give rise to the Nazis. It has money and power — the IMF is one of the critical players in the bailouts of wounded European economies right now. It’s also been criticized for its heavy-handed conditions on poor nations that get in trouble and need an IMF rescue. It’s been successful, sometimes at a heavy cost to average people in developing countries. Too close to Wall Street and free-market dogma? Probably.

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Comments | More in Global economy, International economy, International Monetary Fund, Trade