http://uk.ibtimes.com/articles/146235/20110516/dominique-strauss-kahn-undergoing-tests-over-sex-assault-charges.htmThere must be something in the water across Europe as the continent appears to be re-enacting its 2,500-year history on multiple fronts, comfortably compressed for the modern television audience into just a few months.
Even as the Greeks are busy dismantling the remnants of their modern civilization through the mechanism of massive irresponsibility at all levels of society, the Romans are busy bringing in the memories of Caligula and Nero through the offices of their political leaders. The Spanish are back to the fast-forward mode of destroying their economy through the instrument of debasing their monetary system.
Alongside, the French appear to be attempting a curious mix of Richelieu and Napoleon on their neighbors, while the Germans fret between the models of Bismarck and a potential emergence of the Weimar Republic that could yet unleash a new Hitler. The minor republics across the periphery all fret about the sheer complexity of the political system that runs them today.
Those staying out of the euro, like the British and the Swiss, have apparently gone back to dreaming of a time when they didn't have to deal with noisy neighbors across the continent.
The arrest of Dominique Strauss-Kahn (DSK), managing director of the International Monetary Fund (IMF) late on Saturday in New York, to be subsequently charged with attempted rape and unlawful imprisonment, stands out at first like yet another sordid story comparable with those that have involved senior political figures around the world.
A friend joked that Monsieur Strauss-Kahn was attempting to rehearse for his role as president of France (before the scandal it was widely expected in France that he would trump the incumbent President Nicolas Sarkozy in next year's elections) so as to secure adequate respect from compatriots like the over-sexed Silvio Berlusconi of Italy and the apparently asexual Angela Merkel of Germany.
It is possible that DSK was set up by the French establishment - economist Nouriel Roubini has hinted as much in his Twitter posts - although the key problem with that theory is also that DSK would be considered as much part of the establishment as Sarkozy. In any event, a basic analysis of the news points to a simple explanation; in all fairness that is not the point of this article.
The ugly sistersMany moons ago, I wrote an article tongue in cheek "
A good use for the IMF - bail out America" (Asia Times Online, March 17, 2007), whose proposal has since actually become official policy at least for IMF actions in regards to Europe, supposedly the superior economy to America at the time I wrote the article.
From their inception in the post-World War II period, the IMF and the World Bank were designed as tools of Western intervention in emerging markets that could be padded as neutral, multilateral efforts rather than overtly of the capitalist powers in the charged environment of the Cold War.
Part of that arrangement was to ensure that the heads of the World Bank would always be from the United States while the IMF would be led by the Europeans, so that pesky questions about policy could always be avoided: hence their moniker in the minds of independent economists, as the "ugly sisters".
For those reasons alone, the IMF and World Bank indulged in orthodox lending practices that could keep economies in straitjackets while the interests of creditors (denominated in US dollars) were paramount. They were talking shops that encouraged the saving nations across Asia and the Middle East to invest their hard-earned revenues in "hard" currencies while diminishing the role and importance of the Asian and Middle East local bond markets and currencies.
Within the organizations, the ugly sisters operate as any organization with exclusive powers but no real accountability would be expected to - in other words, with utter irresponsibility. It is not a coincidence in my mind that people heading these organizations appear to come out of them with what looks like psychological trauma. We have already seen in 2007 a scandal involving then World Bank president Paul Wolfowitz and a companion who worked at the bank.
The DSK case appears to show a similar lack of judgement, preceded as it was by a very similar case involving an affair with a married woman inside the IMF. Interestingly, the ugly sisters appear to be equal opportunity offenders - in the sense that Wolfowitz was widely recognized as a neo-conservative, while DSK was the archetypal French socialist.
My pet theory is that the people working in these places have an "achievement deficit" - in the sense that any work they do cannot be visibly attributed to anything useful in the outside world. For a range of successful men (sexual offenders at these agencies seem to be all men) perhaps there just wasn't the required gravitas that comes with a job well done. Hence the minds wander to more base pursuits. A theory for sure, but also a plausible one.
Any number of economists trained by the ugly sisters went on to important roles across emerging nations - Asia, the Middle East and Latin America. Go ahead and read the bio section of any number of central bankers and finance ministry professionals around the world and the magic words "xyz previously worked as a policy director/economist/credit officer/research assistant (pick your spot) at the IMF/WB (pick one or both)". This is exactly the kind of mind-control that led Asian central bankers down the path of what I called "The New Imperialism", ie to over-invest their reserves in the debt issued by governments across the US and Europe as a measure of safety.
The other over-arching aspect of the IMF is to be seen as a credible partner to governments across the world. From that need arises the seeming contradiction in its reports - as recently highlighted in my article "
With friends like these..." (Asia Times Online, April 22, 2011). where the bullish tone in its executive summary stands in stark contrast to the more guarded tone of the actual report.
Declining EuropeWhen he was detained by police, DSK was apparently aboard a plane destined for Europe, specifically to secure an agreement with key European leaders like Merkel ahead of a planned announcement of new deal with Greece over the extension and fresh facilities for the country's debt, even as it failed to meet the admittedly loose targets on fiscal consolidation set by the IMF.
Double-speak isn't anything new at the IMF, so that bit of accounting skullduggery on Greece wasn't newsworthy by itself. What was newsworthy was the likely extension of the Greek aid program ad infinitum (in other words a second bailout), as long as allegations of an outright default could be avoided, as that would be inconvenient for the IMF and the European Union to explain properly after throwing a number of billions of euros at the problem.
Then there was the question of the 78 billion euros (US$110 billion) or so that had to be agreed for Portugal as a bailout. Also on the agenda of Strauss-Kahn was an agreement on the appropriate statements that politicians would make on with (or more pertinently, against) the increasingly shrill statements coming out of the European Central Bank that appeared to espouse a course of action that hadn't been quite antagonistic to the debtor-friendly policies that politicians appeared to endorse.
Reluctant participants included Finland (which recently voted against any new bailouts) and the United Kingdom (which has its own debt problems and has recently decided against helping any European country that requests a second bailout).
Historians have debated long and hard about the actual event that caused or at the very least showcased the decline of the Roman civilization; indeed more recently much confusion and arguments persist on the events that actually caused World War I.
In my view though, the
casus belli for the present day decline of Europe would be the mere fact that a decrepit borrower (Greece) threatened to leave the common currency and was hastily stopped by its lenders across the continent. If that doesn't show the rot at the heart of Europe, what else does?
In that wider context, the detention of the IMF chief at the weekend is almost a postscript for everyone except the New York hotel chamber maid who has leveled accusations against him.
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