En (La)Garde Against Deflation

Said Lagarde, of a threat that dismayed 'er:
"There's a danger that prices may crater. 
We're conditioned to fear
That things become dear
But deflation's the risk that is greater."

"With deflation, the instinct is human
To save and cut back on consumin',
But though disciplined ways
Are worthy of praise,
They prevent the economy's boomin'."

"To all of those countries who plan
To avoid the malaise of Japan:
Forget all the rules
Of conventional tools,
And stimulate now, while you can!"

IMF MD to EU

"If the euro would founder and fester
From the wounds that beset and distressed 'er,
Ideology marred
The chance," said Lagarde,
"Of avoiding zees awful deezester."

IMF Managing Director Christine Lagarde, speaking in Berlin, sounded the euro-alarm as never before: "It is about avoiding a 1930s moment, in which inaction, insularity, and rigid ideology combine to cause a collapse in global demand," she said before the German Council on Foreign Relations; "A moment, ultimately, leading to a downward spiral that could engulf the entire world." The IMF managing director would like Germany, France, the ECB and other key players to strengthen their support of the eurozone's liquidity and financial stability, to avoid an Italian meltdown in particular. As Mme Lagarde expresses so dramatically, such a development would not be confined to Europe.

Overheard at the IMF Meeting

"I conclude, after carefully thinking,
That the options for action are shrinking;
If we take evr'y pail out
We still cannot bail out
The deadbeats whose dinghies are sinking."

This weekend was the annual meeting of the International Monetary Fund member states. No doubt many are asking the urgent question: could the IMF take bold action to save the troubled economies of Europe? Simon Johnson, in his Baseline Scenario blog, puts it in perspective: the IMF's entire lending capacity equals only 15% of the public debt of Italy. Says Johnson: "The world does not really need saving, at least in a short-term macroeconomic sense.  If the problems do escalate, the IMF does not have enough money to make a difference."

L'Affaire DSK, Revised

An aging Parisian roué,
In New York in a suite for a stay,
Though glad that the maid
Would have him get laid,
Was much too high-minded to pay.

So... many (including Dr. Goose) had joined in the fun of rushing to judgment against Dominique Strauss-Kahn, because of --

1. His reputation as a cad or, if you will, "Le Grand Seducteur;"
2. The fact that boorish behavior toward hotel staff is a real and acknowledged problem;
3. The fact that they indisputably had sex, which couldn't possibly be consensual unless...

Well, it seems now that "l'affaire" was not so much consensual as transactional, at least in the view of the other party, who is said to have become insistent when the first party declined to compensate her, and by the forensic evidence he did so rather roughly.  A downgrade from a felony to a misdemeanor?  While better than rape, this hardly counts as a moral victory for the man who would be president of France.

Overheard at the Chinese Finance Ministry

"With the IMF head in ignominy,
His replacement is just what I wanna be,
Since, with all due regard
To Madame Lagarde,
We're the world's up-and-coming economy."

Now that Dominique Strauss-Kahn has resigned in disgrace as head of the International Monetary Fund, his countrywoman, French finance minister Christine Lagarde, has moved into the spotlight as the European favorite for a position traditionally held by an Old World banker. However, China and India have seized on this moment to challenge the tradition and assert their growing weight in global business and financial affairs.  Notwithstanding the Greek debt crisis, the calls for an emerging market successor to DSK are growing.

L'Affaire DSK

A maid whose hotel greatly trusted her
Once confronted a sight that disgusted her,
And beat a retreat
From a luxury suite,
When an IMF package was thrust at her.

In a case that recalls the feudal practice of droit de seigneur, in which the lord of the manor was entitled to the favors of his female serfs, the worlds of politics and finance were rocked on the weekend by the news that Dominique Strauss-Kahn, head of the International Monetary Fund and a front-runner in the upcoming French presidential race, was arrested in the first class cabin of an Air France jet at JFK airport for the attempted rape of a chambermaid at the Sofitel New York. In a stroke, this development has roiled not only French politics, but also the negotiations over the bailouts of Greece and Ireland as well as the leadership of the IMF itself.

A Non-Stimulating Argument

A program of fiscal austerity 
Is historically really a rarity; 
Though it brings, some maintain, 
Fiscal gain without pain, 
They perhaps overlook its severity.  

Harvard economics professor Greg Mankiw's blog contains links to both sides of this debate.

Forint Affairs

Those liquidity problems  of Hungary's
Shook the Eurocrats down to their dungarees;
Said the IMF head:
"Zees 'ungarian dread
Ees more fright'ning than George Bush ze younger ees."

A Soft Spot in his Heart

Said the IMF head, Dominique:
"While Athens' finances are bleak,
As a good European,
I regard the Aegean
As the cradle of l'Europe Antique."

Crunch Time in Kiev

When Ukraine, with a dread that was sickening,
Awoke to find bankruptcy beckoning,
They tried to postpone
With an IMF loan
Their day of Malthusian reckoning.