IMF Chief Christine LaGarde, replacement for Dominique Strauss Kahn (who seemed to be busier chasing tail than focusing on his job), has advocated for a capital injection into European banks and states that ‘decoupling’ EU states from the monetary union is a myth. She has argued for capital injections into European banks, solutions to the US mortgage crisis as well as deficit reduction while simultaneously raising taxes. She claims the world economy is entering a ‘dangerous new phase’ and that leadership from the politicians in beleaguered countries is needed. Without capital injections into European banks from the European Financial Stablity Facility, LaGarde warns that economic weakness could spread to the core countries of the EU like France and Germany. LaGarde also addressed China’s unwillingness to allow the yuan to appreciate and the Chinese central government’s failure to stimulate domestic demand.

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