IMF Leadership and German Debt Problems

Europe will always have an excuse for a European should head up the IMF.   They will be reluctant to allow some one from the emerging countries take the top spot, but that day is coming. Frankly I don't think it really matters. DSK lost his last bid for French presidency. He was given the IMF as a consolation prize. Largarde will likely be out of a job next year after the French national election. This is a consolation prize for her. I think the IMF is an institution and that the variance of different MDs pales in comparison to their similarities.

For me this is yet another reason why the European integration experiment has to continue. Most of Europe is composed of small countries and if Europe as a political and institutional construct fails, what will be these small countries' role in the Pacific Century. Marginalized at best. Inconsequential at worst.

We are all concerned about the US state government and Fed gov debt. I have often pointed out the problems of Europe's local and state government debt-like the US muni market. Most of the concern is on the periphery of Europe. Yet earlier today, German finance officials acknowledged that they are considering placing 4 of its most heavily indebted states, including the city-state of Berlin under outside financial supervision.

 

This would be the first time post WWII when any of the 16 states have been placed under this 5-year supervision program. The German state of Bremen holds elections this weekend. On a per capita basis, it appears to be as indebted as Greece. I am not suggesting this is playing a role in the euro's weakness. It is simply to point out that 1) debt is a problem through out much of the industrialized world and Germany is not an exception.