Is the International Monetary Fund (IMF) inserting itself into U.S. political affairs and potentially setting up a conflict over U.S. sovereignty?
After a speech last week at the Brookings Institution on the financial crisis, IMF Managing Director Christine Lagarde took questions from the audience, including one from U.S. Bureau of Economic Analysis economist Garth Trinkl. Trinkl wanted to know if a massive mortgage bailout — funded by taxpayers — was in the offing and what Lagarde and the IMF thought about it.
Asked Trinkl, “Is this a time where there could be some debt restructuring within the older [advanced] countries to add to aggregate demand in the U.S.? And could this expand beyond just foreclosures so that there could be — now that the financial sector has had a boost — the middle class in the OECD could have its own boost?”
“A matter of urgency”
Lagarde responded to Trinkl’s question, saying, “This is something the IMF has had a long-standing position on. The housing problem is something that needs to be addressed as a matter of urgency.”
But what business is it of the IMF’s? Is Lagarde joining the Obama reelection campaign to push for his policies? Taxpayers in part pay for her salary. Is this what they’re paying for?
The only thing Congress should be “urgently considering” is withdrawing the $165 billion of U.S. taxpayer funds from the IMF. Because of the IMF, we are on the hook for tens of billions of debt owed by bankrupt countries in Europe and elsewhere.
This is a very dangerous precedent. The IMF — along with the European Union — is already making demands on the sovereignty of countries like Greece, Ireland, and Portugal that have been forced to accept bailout refinance loans for their sovereign debt.
Now, Lagarde is inserting herself and the IMF directly into the economic decisions of the United States. She is proving the worse fears of many that the IMF intends to dictate economic terms to every nation in the world. By inserting herself into the already highly charged domestic political debate over mortgage bailouts, Legarde has lite a fuse that could explode at any time.
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