Photograph: Xinhua/Getty Images
Intro by Ilene
Mike writes that Finance minister Christine Lagarde, front-runner to replace Dominique Strauss-Kahn at the IMF, may be great for Wall Street, bankers and bond-holders, but not so great for everyone else. She’s not a friend to labor, and not interested in any reforms, except perhaps labor reform (buzzword for "union busting").
Christine Lagarde is also under investigation for her role in intervening in a legal dispute that ended in a large out-of-court settlement payment to Bernard Tapie, stemming from his having been ripped off by Credit Lyonnais bank, whose liabilities were since taken over by the state, i.e. French taxpayers:
Lagarde, once a lawyer in Chicago, has become embroiled in the soap-opera saga of Bernard Tapie, one of the most flamboyant and controversial figures in French public life. Tapie is a maverick rags-to-riches tycoon whose CV includes a stint as head of Marseille football club, head of the Adidas sports empire, left-wing urban affairs minister under Francois Mitterrand, a seven-month jail term for match-fixing, a conviction for tax fraud and an amazing public comeback as an actor, singer, chatshow host and supporter of Nicolas Sarkozy.
For almost two decades, a battle raged through the courts after Tapie claimed he was cheated by the Credit Lyonnais bank which handled the 1993 sale of Adidas. Credit Lyonnais, once publicly owned, had been wound up and its liabilities taken over by a state-operated consortium.
In 2007, Lagarde intervened and ended the court dispute by ordering a special panel of judges to arbitrate. In 2008, they ruled that Tapie should receive €285m (£248m) in damages. The out-of-court settlement scandalised opposition politicians. The centrist Francois Bayrou said it was "unthinkable that the state dips into the taxpayers’ pocket for a private beneficiary". At the time, Lagarde tried to calm the row, saying that, after tax and debt payments, Tapie would only pocket about €30m. Later reports suggested he kept about €200m.
[…]
Lagarde denounced an attempt to sully her name, telling Le Figaro: "This is an attempt to smear me."…(Christine Lagarde under investigation over role in payments to Bernard Tapie)
"Judges will take a decision on whether to prosecute Ms Lagarde on June 10 – at a critical moment in her campaign to succeed Strauss-Kahn at the IMF." (Not a care in the world, Christine? French minister tipped as next IMF head facing prosecution over financial sleaze)
En Garde, Legarde!
Courtesy of MIKE WHITNEY at Grasping at Straws
French Finance Minster Christine Lagarde has emerged as the front-runner in the race to replace ex-IMF chief Dominique Strauss-Kahn. She is a champion swimmer, an accomplished attorney, and a competent bureaucrat. She’s also a friend of Wall Street who will ferociously defend the interests of big capital. Here’s how The Guardian summed up Lagarde’s resume:
"Christine Lagarde stands for protecting big banks…..she’s the most pro-bank bailout of the lot.
"The Americans are going to try and put in [White House adviser] David Lipton as number two. Lipton is Mr Bank Bailout. He worked for Citigroup. If they put in Lagarde and Lipton, what does that say? We are going with the total bank protection plan. That would be a disaster." ("IMF under growing pressure to appoint non-European head", The Guardian)
According to the New York Times Lagarde is not only a snappy dresser, but has plenty of friends in Washington and Wall Street. Here’s an excerpt from the NYT:
"Ms. Lagarde, the former head of the Chicago-based law firm Baker & McKenzie, lived in the United States for 25 years. Tall and stylish, with a shock of silver hair and a penchant for Chanel jackets, she is as connected and as respected in Washington and on Wall Street as in Europe." (A Favorite Emerges for Helm of I.M.F., New York Times)
Not surprisingly, Lagarde supports weaker regulations so that banks and other financial institutions can continue to rake in windfall profits while increasing the risks to the broader economy. According to Reuters:
"I see the danger that too strict regulation at the center leads to a flight to the borderlands," Lagarde said in an article published in the Friday edition of German newspaper Handelsblatt." ("Too strict regulation risks flight", Reuters)
Lagarde has also taken a hardline approach to problems in Greece and rejects the idea of debt forgiveness or restructuring. She believes that bondholders and bankers must be repaid regardless of the costs to Greek workers who have suffered through 3 years of Depression, 18% unemployment, savage cutbacks in social services, massive privatization of public assets, and a debt-to-GDP ratio that gets worse every year the belt-tightening continues. Lagarde appears to believe that the people who blew up the financial system should be rewarded for their efforts. Here’s an excerpt for the Wall Street Journal:
"French finance minister Christine Lagarde said late Monday, after a meeting with finance officials from the European Union, that a rescheduling or reprofiling of Greek debt is NOT an option….. Executing the planned austerity program, proper implementation of privatization, and commitments across the political spectrum in Greece are the key for a solution in Greece, Lagarde said." ("France’s Lagarde: Option Of Rescheduling Greek Debt Not On Table", Wall Street Journal)
So the belt-tightening will intensify under Lagarde, which is a signal to bankers that she can be trusted to protect their interests, and all the talk about "soft restructuring" or reforms a la Strauss-Kahn will end.
There will be no more talk about replacing the dollar with SDRs (Special Drawing Rights) either. Lagarde is not going to rock the boat. The only reforms she’ll be working on are "labor reforms", a familiar buzzword among the financial elite for union busting.
It’s worth noting that the normally-subdued Lagarde could hardly contain herself when Bin Laden was assassinated. She even suggested that it might help to boost sales in the US. Here’s the report from Reuters:
"French Finance Minister Christine Lagarde welcomed the killing of al Qaeda leader Osama bin Laden and said his death could bolster consumer confidence and economic growth in the United States.
"The U.S. economy is like the American people. It reacts very quickly either positively or negatively," Lagarde told France 2 television. "I wouldn’t be surprised if this event prompted a pick-up in confidence." ("France sees U.S. economic lift from bin Laden death", Reuters)
Of course, Lagarde’s enthusiasm was not tempered by the fact that international law forbids targeted assassinations of non-state actors. After all, "real" leaders are never constrained by something as trivial as the law.
So, it looks like Wall Street may have found a replacement for the mercurial Strauss Kahn. There won’t be any debt-restructuring, bondholders will be paid in full, and the dollar’s dominant role as the world’s reserve currency will go unchallenged.
Lagarde announced her candidacy on Wednesday and already she’s won the support of Washington, Wall Street, the big banks, and EU heads of state. She’s probably a shoo in.
Pic: French president Nicolas Sarkozy and his finance minister Christine Lagarde. Opposition politicians say he steered her decision [regarding controvercial payments to Bernard Tapie]: Xinhua/Getty Images
