Food fight over the new IMF leader between China and EU

05-20-2011 Saidani

Meanwhile, the Japanese are the 2nd larger funder of the IMF.  Why isn’t Japan in the running? (Answer below)

From Zero Hedge:

There’s a funny thing about the New World Order: it eventually gets too big and bites the hand the feeds it. Enter the PBoC: “The new IMF leadership needs to reflect changes in the world economic order and be more representative of emerging market economies, Chinese central bank governor Zhou Xiaochuan said Thursday in his first public comments since the arrest of Dominique Strauss-Kahn. “The senior management team of the IMF should better reflect changes in world economic patterns and should be more representative of emerging market economies.” Translation – no more European or American cronies. It is also probably safe to say that Lagarde’s odds of pulling the white smoke out of the conclave bag have just plunged. It is also safe to say that with China now unofficially Europe’s backstopper (and there were those wondering why China is buying all those Spanish and Portuguese bonds), what China wants, China gets.

From Market News:

Zhou also said he regretted Strauss-Kahn’s decision to resign as the Managing Director of IMF.

“The current world economy is recovering slowly from the financial crisis and the European sovereign debt crisis is at a key stage. A powerful IMF support is needed to overcome current difficulties facing Europe and ensure world economic developments are on a robust, sustainable and balanced track,” Zhou added.

German Chancellor Angela Merkel reiterated earlier today that the next head of the International Monetary Fund should be a European again.

And so the stage is set for the next big geopolitical theater: Germany vs China over the largely symbolic issue of who gets to scare the Sofitel maids next.

So what makes the Europeans more appropriate than the Chinese?  Well, they are the ones needing all of the bailouts which means they don’t want it those bailouts to stop.

When one goes to a beauty shop, one does not get her hair done by the person with the best hairdo.  Instead, they go to the person who made that best hairdo.  That’s just common sense.  And so it should be with the person who controls all of the IMF funds.  The leader should not come from the people who need bailouts, but from those who have managed their economies efficiently and don’t need bailouts.

That said then, the new IMF leader should not come from either the EU or China.  Nor the US or most other countries.  Let’s give it to Iceland which told the IMF to pound sand when offered a bailout and are actually making a recovery.

As for Japan?  Please, they haven’t been able to run an efficient economy there for decades.  And the fact that they are the 2nd biggest contributor to the fund while getting few, if any, benefits from it only provides more evidence of their ineptness.

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