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Posts Tagged ‘International Monetary Fund’

Why Portugal May Be the Next Greece

Posted by Admin on May 22, 2012

http://business.time.com/2012/03/27/why-portugal-may-be-the-next-greece/

Why Portugal May Be the Next Greece

The worst is over for the euro zone, the experts say. But Greece isn’t really fixed and Portugal could become a second big problem before year-end

By Michael Sivy | @MFSivy | March 27, 2012

When Greece celebrated its Independence Day on Sunday, there were scattered protests over the harsh austerity program aimed at stabilizing the country’s finances. The government reportedly removed low-hanging fruit from bitter-orange trees along the parade route, so it couldn’t be thrown by protesters. But, basically, the most recent bailout appears to be successful. As a result, worries about the European financial crisis have diminished somewhat. Indeed, European Central Bank president Mario Draghi has said that the worst is over for the euro-currency zone.

Such optimism may be premature, however. Not only does Greece remain a long-term financial concern, but in addition Portugal is on track to become a second big problem.

The dangers Greece still poses are clear. Higher taxes and government-spending cuts may reduce new borrowing, but such austerity policies also undermine a country’s ability to pay the interest on its existing debt. Unless accompanied by progrowth policies, austerity can become the financial equivalent of a medieval doctor trying to cure patients by bleeding them. In addition, the bailout plan for Greece consisted of marking down the value of much of the country’s debt held by banks and other private lenders. That means entities such as the European Central Bank now hold most of Greece’s remaining debt. And so, in the event of a default, important international institutions would suffer the greatest damage.

(MORE: Is Germany’s Euro-Crisis Strategy Actually Working?)

The net result has been to postpone the Greek financial crisis for months or even a couple of years, while raising the stakes if things go wrong. That could be seen as a considerable achievement, if you believe Greece is a unique case and that the problem has been successfully contained. The trouble is that other countries — and especially Portugal — seem to be heading down the same path. Here’s why forecasters are worried:

Portuguese interest rates haven’t come down. Because of the Greek crisis, bond yields rose to dangerous levels in several financially troubled European countries. Then after Greece was bailed out, yields fell in most of them. In Italy, yields on bonds with maturities of around 10 years dropped from more than 7.2% to around 5%; in Spain, from 6.7% to 5.4%; and in Ireland, from 9.7% to 6.9%. The notable exception was Portugal, where bond yields came down a bit but still remain above 12%. Double-digit borrowing costs are impossible for a heavily indebted country to sustain for any significant period of time. Yet Portugal’s bond yields have been above 10% for the past nine months.

Portugal’s total debt is greater than that of Greece. In one way, Greece really is unique — the country’s massive debt is largely the result of borrowing by the government rather than by the private sector (corporations and households). By contrast, Portugal, Spain and Ireland have far more private-sector debt. As a result, while government debt in Portugal is less than that of Greece, relative to GDP, total debt (including private-sector debt) is actually greater.

(MORE: The Most Important Man in Europe)

The Portuguese economy is shrinking. Portugal’s economy has been weak ever since the financial crisis began in 2008, and the country has actually been in recession for more than a year. Moreover, last month the Portuguese government projected that the country’s economy would contract by 3.3% in 2012. As Portuguese companies struggle to pay off their own massive debt, it’s hard to imagine that they will be able to help pull the country out of recession.

Thanks to a bailout last year, Portugal has enough money to make it into 2013, despite brutally high interest rates and a shrinking economy. But the markets are unlikely to wait that long to go on red alert. In the case of Greece, bond yields topped 13% in April 2011, and by September they were above 20% and heading for 35%. Portuguese yields have been above 11.9% for the past four months and have topped 13% several times. If the country follows the same timeline as Greece, Portugal could suffer a serious financial crisis before the end of the year.

There are a number of reasons such an outcome would be serious, despite the relatively small size of Portugal’s economy. First, the European Union has been operating on the assumption that Greece is a unique case, a poor country suffering from rampant tax fraud and an unusually dysfunctional government bureaucracy. If another euro-zone country experiences similar problems — and they occur partly because of private-sector debt rather than government borrowing — then the flaws in the system start looking more general, and the stability of the entire euro zone is called into question.

(LIST: The 10 Most Memorable Ads Featuring Celebrities And Their Kin)

Moreover, much of the borrowing by Portuguese companies has been financed by Spanish banks. That creates the possibility of a domino effect, whereby a financial squeeze in Portugal leads to a crunch in the Spanish banking sector. Moreover, the debt structure in both Spain and Ireland — with large amounts of private-sector borrowing — is similar to that of Portugal. Germany and the Netherlands are already balking at making further loans to Greece. And although Northern European countries could afford to bail out Portugal, their resources are limited. If a second country goes the way of Greece, several more might well follow.

Since Europe’s problems seem to have receded for the moment, U.S. investors are understandably focused on other risks — like conflict with Iran that could sharply push up oil prices, or fights over taxes and the federal budget in the run-up to the elections. But the danger of a European financial crisis has not gone away — and the ultimate costs could run to more than half a trillion dollars.

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Greek cabinet tackles austerity, rescue hopes rise

Posted by Admin on February 18, 2012

http://news.yahoo.com/more-needed-yet-elusive-greek-bailout-deal-005931736.html;_ylt=AkMlhwQqqjB3a4GMc3efm4Os0NUE;_ylu=X3oDMTNsYnRhaHM4BG1pdANUb3BTdG9yeSBGUARwa2cDN2E0ZWU3YTAtMzdlMC0zMTZkLTk1NjEtMzFhYjBlYWJiZTA5BHBvcwMxBHNlYwN0b3Bfc3RvcnkEdmVyAzMwMTljMDYwLTU5Y2MtMTFlMS05ZmVlLTM3Yzk5MWRiZTI3ZA–;_ylg=X3oDMTFvdnRqYzJoBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25zBHRlc3QD;_ylv=3

By David Stamp and George Georgiopoulos | Reuters – 4 mins 57 secs ago

ATHENS (Reuters) – Greece’s cabinet tackled on Saturday how to implement austerity demanded by the EU and IMF as a 130-billion-euro ($171-billion) rescue seemed within reach, while the euro zone considered modifying a deal with private creditors to help Athensreduce its huge debts.

After months of often acrimonious negotiations, Greek hopes were rising that euro zone finance ministers Monday will endorse the rescue which Athens needs to avoid bankruptcy next month when major debt repayments fall due.

A statement from the office of Prime Minister Lucas Papademossaid the cabinet would discuss implementing the bailout package which demands pay, pension and job cuts on top measures that have already hit many Greeks’ living standards.

The cabinet is due to approve measures that already provoked rioting on the streets of Athens last Sunday before they go into a supplementary budget due to be put to parliament next week.

“The Greek people have done everything they can and we are determined to make good on our commitments,” Public Order Minister Christos Papoutsis told reporters as he arrived. Many EU officials remain deeply skeptical of Athens’s will to reform.

Also on the agenda is the future of the old Athens airport, a prime seafront site that lies derelict more than a decade after the new airport opened, symbolizing the wasted opportunities which have helped to reduce Greece to its knees.

Friday German Chancellor Angela Merkel, Italian Prime Minister Mario Monti and Papademos all voiced optimism about a Greek accord during a three-way conference call, Monti’s office said in a statement.

However, Jean-Claude Juncker, who will chair Monday’s meeting of the Eurogroup in Brussels, made clear that urgent work was still needed to get a program to reduce Greece’s crippling debts back on track.

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Euro zone crisis in graphics http://r.reuters.com/hyb65p

Interactive timeline http://link.reuters.com/pys56s

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MISSING THE TARGET

At stake is a target of lowering the debt from the equivalent of 160 percent of annual Greek economic output now to a more manageable 120 percent by 2020.

“All the discussions I will have … until Sunday night will try to move the figure nearer to the target,” Juncker told reporters.

At the moment, EU and IMF officials believe that target – which assumes that Greece will run a budget surplus next year, excluding the massive cost of its debts – will be missed.

Under the main scenario of an analysis by the European Commission, the European Central Bank and the International Monetary Fund, Greek debt will fall to only 129 percent of gross domestic product in 2020, one official said.

The euro zone is therefore looking at modifying a deal negotiated over many months with private creditors under which they would accept a cut of around 70 percent in the real value of their Greek bondholdings.

Senior euro zone finance officials meet Sunday to discuss the analysis and find ways to bring the debt closer to the 120 percent target before the finance ministers gather Monday.

“If you do a number of things you can bring the 129 close to 120,” one euro zone official familiar with the document said.

These might include changes to interest accrued on privately held bonds, but the EU and its national institutions might also play their part, the official said.

Interest rates on EU loans to Greece could be cut, and those national central banks in the euro zone which hold Greek bonds might accept similar terms to the private creditors on some of their holdings.

The national central banks own an estimated 12 billion euros of Greek debt. The European Central Bank has refused to take part in the complex deal for the private creditors – involving swapping old bonds for new ones with a lower face value, lower interest rates and longer maturities – and would need to approve the national central bank decision.

Officials also are considering a cut in the cash “sweetener” which would be offered to the private creditors in return for accepting the cut in the value of their bond holdings

ROCK-BOTTOM MORALE

With Greek morale at rock bottom, the national mood darkened yet further after armed thieves looted a museum Friday in Olympia, birthplace of the Olympic Games. They stole bronze and pottery artifacts weeks after the National Gallery was burgled.

A Greek newspaper suggested the state could no longer look after the nation’s immense cultural heritage properly. “The Greek state has gone bankrupt, let’s face it,” the daily Kathimerini said.

“If the state cannot guard the country’s great cultural heritage for financial or other reasons it must find other ways to do it,” the conservative daily said.

“It could, for example, turn to large foundations and ask them to assume the cost of security at the country’s important museums in the next two to three difficult years.”

Critics say years have been wasted arguing and dithering over major national decisions. This is symbolized by the old Athens airport, which is supposed to be rebuilt as a Monte Carlo-style development of housing, tourist facilities and a marina, but remains a wasteland.

Athens opened a new airport in 2001, well in time for the 2004 Olympic games, but longstanding plans to privatize it have also yet to materialize.

(Additional reporting by Dina Kyriakidou, Angeliki Koutantou and Harry Papachristou and Jan Strupczweski in Brussels; Editing by Michael Roddy)

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Germany, France press for rapid Greek debt deal

Posted by Admin on January 24, 2012

http://news.yahoo.com/euro-zone-finmins-rule-glacial-greek-debt-talks-083938401.html

By Daniel Flynn and Gernot Heller | Reuters – 2 hrs 8 mins ago

PARIS/BERLIN (Reuters) – Germany and France pressed on Monday for a rapid deal between Greece and its private creditors that cuts its soaring debt to sustainable levels and said they were committed to a sealing a new bailout for Athens by March to avert a disastrous default.

Euro zone finance ministers met in Brussels to discuss the terms of a Greek debt restructuring and new treaties that will pave the way for tighter fiscal discipline and a new rescue fund the bloc wants in place by mid-year.

Ahead of that meeting, French Finance Minister Francois Baroinsaid an elusive deal to convince the banks and investment funds that own Greek debt to accept deep losses on their holdings appeared to be “taking shape.”

But his German counterpart Wolfgang Schaeuble warned that any deal must help Greece cut its debt mountain to “not much more than 120 percent of GDP” by the end of the decade, from roughly 160 percent today, something many economists believe will not be achieved by the existing plan.

“The negotiations will be difficult, but we want the second program for Greece to be implemented in March so that the second (bailout) tranche can be released,” Schaeuble told a news conference in Paris with Baroin and the heads of the German and French central banks.

“Greece must fulfill its commitments, it is difficult and there is already a lot of delay,” Schaeuble said.

After several rounds of talks, Greece and its private creditors are converging on a deal in which private bondholders would take a real loss of 65 to 70 percent on their Greek bonds, officials close to the negotiations say.

But some details of the debt restructuring, which will involve swapping existing Greek bonds for new, longer-term bonds are unresolved.

Charles Dallara, the Institute of International Finance chief who is negotiating on behalf of the private debt holders, left Athens over the weekend saying banks had no room to improve their offer.

Sources close to the talks told Reuters on Monday that the impasse centered on questions of whether the deal would return Greece’s debt mountain, currently over 350 billion euros, to levels that European governments believe are sustainable.

“There will likely be an updated debt sustainability analysis that will be discussed at the Eurogroup,” a banking source in Athens said, requesting anonymity. “Talks will continue this week. The aim is to have an agreement by late next Monday.”

In Brussels, European Economic and Monetary Affairs Commissioner Olli Rehn said talks had been “moving well” and expressed confidence a deal could be sealed this week.

German Chancellor Angela Merkel said there was no question of extending Greece a bridging loan if talks with the private sector dragged on further.

The euro pushed up to its highest level against the dollar in nearly three weeks on hopes Greece and the banks could overcome differences and seal a successful debt swap.

LAGARDE DEMANDS

Speaking in Berlin not far from Merkel’s Chancellery, IMF chief Christine Lagarde urged European governments to increase their financial firewall to prevent Greece’s troubles from ensnaring bigger countries like Italy and Spain.

She also called on European leaders to complement the “fiscal compact” they agreed last month with some form of financial risk-sharing, mentioning euro zone bonds or bills, or a debt redemption fund as possible options.

Berlin opposes those steps and Merkel told a news conference with the Belgian prime minister that it was not the time to debate an increase in the euro zone’s bailout funds — the European Financial Stability Facility (EFSF) and its successor, the 500 billion euro European Stability Mechanism (ESM).

“I don’t think it is right to do one new thing then do another, let’s get the ESM working,” Merkel said, reiterating that Germany was prepared to accelerate the flow of capital into the ESM ahead of its planned introduction in mid-2012.

Italian Prime Minister Mario Monti, who has complained openly that his reform efforts have not been recognized by the markets, is reportedly pushing for the rescue fund to be doubled to 1 trillion euros. Lagarde stopped short of advocating that, saying: “I am not saying double it.”

But she did speak out in favor of folding funds from the EFSF into the ESM to give it more firepower.

The more immediate worry is Greece. Without the second bailout from the euro zone and the International Monetary Fund, Athens will not be able to pay back 14.5 billion euros in maturing bonds in March, triggering a messy default that would hurt the entire euro zone and send tremors beyond the 13-year old single currency bloc.

DETERIORATION

Euro zone leaders agreed in October that the second bailout would total 130 billion euros, if private bondholders forgave half of what Greece owes them in nominal terms.

But Greek economic prospects have deteriorated since then, which means either euro zone governments or investors will have to contribute more than thought.

A key sticking point is the coupon, or interest rate, the new Greek bonds would carry. Officials said the new bonds are likely to be 30 years in maturity and carry a progressively higher coupon, which would average out at around 4 percent.

Progress will be presented to the Eurogroup, the euro zone ministers, by Greek Finance Minister Evangelos Venizelos.

“We will listen to the Greek finance minister to hear what models there are,” said Austrian Finance Minister Maria Fekter as the talks got under way. “It is important to have a long-term model so that Greece has time … We know that the banks are not overly happy, but a crash is far more expensive than such a long-term plan.”

After dealing with Greece, euro zone ministers will choose a replacement for European Central Bank Board member Jose Manuel Gonzales Paramo, whose term ends in May.

The 17 ministers of the euro zone will then be joined by 10 ministers from the other European Union countries to finalize a treaty setting up the euro zone’s permanent bailout fund, the

ESM.

The 27 EU finance ministers will also prepare the final draft of another treaty to sharply tighten fiscal discipline in the euro zone, called the “fiscal compact,” that is designed to ensure another sovereign debt crisis cannot happen in future.

EU leaders are to sign off on both treaties at a summit on January 30, allowing the ESM to become operational in July.

(Additional reporting by Stephen Brown and Alexandra Hudson in Berlin, Leigh Thomas in Paris, Lefteris Papadimas and Ingrid Melander in Athens; Writing by Noah Barkin and Jan Strupczewski, editing by Mike Peacock/Jeremy Gaunt)

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Vatican Calls for a Central World Bank

Posted by Admin on October 28, 2011

http://vigilantcitizen.com/latestnews/vatican-calls-for-a-central-world-bank/

By  | October 25th, 2011 | Category: Latest News | 161 comments


Enough about Jesus. Now listen to my economic policies!

On October 24th, the Pope officially gave his support to Occupy Wall Street and, like Gorbachev, proposed a solution that goes EXACTLY at the opposite of the protester’s demands: an international organization regulating economy. In other words, a Central World Bank. In other other words, a New World Order.

Thank you Vatican for your input. Jesus was indeed a big advocate of international banking. He also preached about a world financial system that would only benefit the elite. Yup, that’s what he did alright (sorry for the extreme sarcasm).

Here’s an article about the Vatican pushing for the same international system as the Rockefellers and others.

Vatican Calls for Oversight of the World’s Finances

The Vatican called on Monday for an overhaul of the world’s financial systems, and again proposed establishment of a supranational authority to oversee the global economy, calling it necessary to bring more democratic and ethical principles to a marketplace run amok.

In a report issued by the Pontifical Council for Justice and Peace, the Vatican argued that “politics — which is responsible for the common good” must be given primacy over the economy and finance, and that existing institutions like the International Monetary Fund had not been responding adequately to global economic problems.

The document grows out of the Roman Catholic Church’s concerns about economic instability and widening inequality of income and wealth around the world, issues that transcend the power of national governments to address on their own.

“The time has come to conceive of institutions with universal competence, now that vital goods shared by the entire human family are at stake, goods which the individual states cannot promote and protect by themselves,” Cardinal Peter Kodwo Appiah Turkson, the president of the pontifical council, said as he presented the report on Monday. “That is what pushed us.”

The language in the document, which the Vatican refers to as a note, is distinctively strong. “We should not be afraid to propose new ideas, even if they might destabilize pre-existing balances of power that prevail over the weakest,” the document states.

The message prompted comparisons with the rallying cries of protest movements that have been challenging the financial world order, like the indignados in Madrid and the Occupy Wall Street protesters in New York City. Still, Vatican officials said the document was not a manifesto for disaffected dissidents.

“The document proposes ideas that seem to be in line with those proposed by the indignados, but really we are in line with the Magisterium of the church,” said Bishop Mario Toso, secretary to the pontifical council, referring to the church’s teaching authority. “It is a coincidence that we share some views. But after all, these are proposals that are based on reasonableness.”

The document is a reminder that the Catholic Church, without getting involved in policymaking, still seeks to shape its principles. “To function correctly the economy needs ethics; and not just of any kind, but one that is people-centered,” the document states, paraphrasing an encyclical that Pope Benedict XVI issued in 2009 calling for greater social responsibility in the economy.

In the United States, the report was embraced by politically liberal Catholics who are concerned about the widening gap between rich and poor. Vincent J. Miller, a professor of Catholic theology and culture at the University of Dayton, wrote, “It’s clear the Vatican stands with the Occupy Wall Street protesters and others struggling to return ethics and good governance to a financial sector grown out of control after 30 years of deregulation.”

John Gehring of Faith in Public Life, a liberal advocacy group in Washington, said, “In the next Republican presidential debate, someone should ask Newt Gingrich and Rick Santorum, both proudly Catholic, whether they support the Vatican’s call for more robust financial reform.”

Politically conservative Catholics, meanwhile, hastened to assure their camp that the document does not carry the full force of church teaching, since it was produced by a Vatican office, not by the pope himself. And some dismissed the report as nothing new, or simply misinformed.

Writing in the National Review, Samuel Gregg of the Acton Institute, which promotes free-market economic policies, said of the document: “It reflects rather conventional contemporary economic thinking. Unfortunately, given the uselessness of much present-day economics, that’s not likely to make it especially helpful.”

– New York Times, Vatican Calls for Oversight of the World’s Finances

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The Ideological Crisis of Western Capitalism

Posted by Admin on July 10, 2011

http://www.truth-out.org/ideological-crisis-western-capitalism/1310127895

 

(Photo: emperley3)

Just a few years ago, a powerful ideology – the belief in free and unfettered markets – brought the world to the brink of ruin. Even in its hey-day, from the early 1980’s until 2007, American-style deregulated capitalism brought greater material well-being only to the very richest in the richest country of the world. Indeed, over the course of this ideology’s 30-year ascendance, most Americans saw their incomes decline or stagnate year after year.

Moreover, output growth in the United States was not economically sustainable. With so much of US national income going to so few, growth could continue only through consumption financed by a mounting pile of debt.

I was among those who hoped that, somehow, the financial crisis would teach Americans (and others) a lesson about the need for greater equality, stronger regulation, and a better balance between the market and government. Alas, that has not been the case. On the contrary, a resurgence of right-wing economics, driven, as always, by ideology and special interests, once again threatens the global economy – or at least the economies of Europe and America, where these ideas continue to flourish.

In the US, this right-wing resurgence, whose adherents evidently seek to repeal the basic laws of math and economics, is threatening to force a default on the national debt. If Congress mandates expenditures that exceed revenues, there will be a deficit, and that deficit has to be financed. Rather than carefully balancing the benefits of each government expenditure program with the costs of raising taxes to finance those benefits, the right seeks to use a sledgehammer – not allowing the national debt to increase forces expenditures to be limited to taxes.

This leaves open the question of which expenditures get priority – and if expenditures to pay interest on the national debt do not, a default is inevitable. Moreover, to cut back expenditures now, in the midst of an ongoing crisis brought on by free-market ideology, would inevitably simply prolong the downturn.

A decade ago, in the midst of an economic boom, the US faced a surplus so large that it threatened to eliminate the national debt. Unaffordable tax cuts and wars, a major recession, and soaring health-care costs – fueled in part by the commitment of George W. Bush’s administration to giving drug companies free rein in setting prices, even with government money at stake – quickly transformed a huge surplus into record peacetime deficits.

The remedies to the US deficit follow immediately from this diagnosis: put America back to work by stimulating the economy; end the mindless wars; rein in military and drug costs; and raise taxes, at least on the very rich. But the right will have none of this, and instead is pushing for even more tax cuts for corporations and the wealthy, together with expenditure cuts in investments and social protection that put the future of the US economy in peril and that shred what remains of the social contract. Meanwhile, the US financial sector has been lobbying hard to free itself of regulations, so that it can return to its previous, disastrously carefree, ways.

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But matters are little better in Europe. As Greece and others face crises, the medicine du jour is simply timeworn austerity packages and privatization, which will merely leave the countries that embrace them poorer and more vulnerable. This medicine failed in East Asia, Latin America, and elsewhere, and it will fail in Europe this time around, too. Indeed, it has already failed in Ireland, Latvia, and Greece.

There is an alternative: an economic-growth strategy supported by the European Union and the International Monetary Fund. Growth would restore confidence that Greece could repay its debts, causing interest rates to fall and leaving more fiscal room for further growth-enhancing investments. Growth itself increases tax revenues and reduces the need for social expenditures, such as unemployment benefits. And the confidence that this engenders leads to still further growth.

Regrettably, the financial markets and right-wing economists have gotten the problem exactly backwards: they believe that austerity produces confidence, and that confidence will produce growth. But austerity undermines growth, worsening the government’s fiscal position, or at least yielding less improvement than austerity’s advocates promise. On both counts, confidence is undermined, and a downward spiral is set in motion.

Do we really need another costly experiment with ideas that have failed repeatedly? We shouldn’t, but increasingly it appears that we will have to endure another one nonetheless. A failure of either Europe or the US to return to robust growth would be bad for the global economy. A failure in both would be disastrous – even if the major emerging-market countries have attained self-sustaining growth. Unfortunately, unless wiser heads prevail, that is the way the world is heading.

For a podcast of this commentary in English, please use thislink.

Copyright: Project Syndicate, 2011.

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JOSEPH E. STIGLITZ

Joseph E. Stiglitz is University Professor at Columbia University, a Nobel laureate in Economics, and the author of Freefall: Free Markets and the Sinking of the Global Economy.

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BREAKING NEWS: Mounting Evidence that Dominique Strauss Kahn was Framed

Posted by Admin on July 10, 2011

http://www.globalresearch.ca/index.php?context=va&aid=25533

Global Research, July 7, 2011
While the media has gone to arms length to obfuscate the matter, there is mounting evidence that Dominique Strauss Kahnwas framed.

According to media reports, the 32-year-old Guinean Sofitel housemaid received the modest sum of 100,000 dollars paid into her bank account. The New York Times acknowledges the payment but fails to analyze the source of these payments. In an utterly confused statement, the NYT suggests that the money was deposited in the housemaid’s account by her Guinean boy friend who is serving time in a high security prison:

According to the two officials, the woman had a phone conversation with an incarcerated man within a day of her encounter with Mr. Strauss-Kahn in which she discussed the possible benefits of pursuing the charges against him. The conversation was recorded.

That man, the investigators learned, had been arrested on charges of possessing 400 pounds of marijuana. He is among a number of individuals who made multiple cash deposits, totaling around $100,000, into the woman’s bank account over the last two years. The deposits were made in Arizona, Georgia, New York and Pennsylvania.

The investigators also learned that she was paying hundreds of dollars every month in phone charges to five companies. The woman had insisted she had only one phone and said she knew nothing about the deposits except that they were made by a man she described as her fiancé and his friends. (NYT, July 1, 2011, emphasis added)

The bank records of the housemaid, not to mention the record of her telephone calls, are known to police investigators, yet both the media and the prosecutors have failed to reveal the identity of the persons who instigated these money transfers.

The reports suggest that they may be “drug related”, thereby casually dismissing the likelihood that the money could have been part of the framing of DSK. The reports also mention that the money deposits were made “over the last two years”, thereby conveying  the impression that they bear no relationship to the DSK affair.

The exact timing of these money transfers including the identity of  senders are known to police investigators. Why has this information not been released?

If the 100,000 dollars had indeed been deposited into her bank account in the course of the last two years, why on earth would she be working as a housemaid?

Regime change at the IMF

Why was the substance of the housemaid’s false accusations not released at an earlier stage?  Who was protecting her?

Why did the media wait to reveal information which confirms DSK’s innocence.

This information was known to the prosecutors at an early stage of the investigation, yet it was only released after the appointment of France’s Finance Minister Christine Lagarde as Managing Director of the IMF.

Lagarde’s candidacy was confirmed and accepted on June 26th. Her mandate was confirmed on June 28th following a decision of the IMF’s 24 member executive board.

Lagarde is an appointee of Wall Street and the US banking establishment. Her candidacy had been approved by U.S. Treasury Secretary Timothy Geithner on the 28th of June:

“I am pleased to announce our decision to support Christine Lagarde to head the IMF,” Geithner said in a statement hours before the 24-member IMF executive board was expected to select her as its managing director.

Careful timing. In a bitter irony, the report from the prosecutor proving DSK’s innocence was released on the day following the IMF’s executive board decision instating Lagarde as Managing Director of IMF for a five year term.

The frame-up has visibly succeeded. Who instructed prosecutors not to release this information until after the appointment of Lagarde as IMF Chief?

If this information had been revealed a few days earlier, Lagarde’s candidacy as IMF chief might have been questioned.

Regime change at the IMF has been speedily implemented, not to mention the implications of the DSK affair in relation to the French presidential elections.

Christine Lagarde commenced her five year term as IMF Managing Director on July 5th at the height of Greece’s debt crisis.

Sofar, the likely hypothesis of a frame-up directed against DSK is not being touched upon by the mainstream media.

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Former Head of IMF Dominique Strauss-Kahn accuses Vladimir Putin of Being Part of a Plot to Have him Fired from his Post

Posted by Admin on May 24, 2011

Global Research, May 23, 2011

The former chief of the International Monetary Fund, Dominique Strauss-Kahn, has reportedly accused the Russian prime minister, Vladimir Putin, of being part of a plot to have him fired from his post.

­The British Daily Mail newspaper has claimed that before his arrest on sexual abuse charges, Strauss-Kahn voiced concerns that he could fall victim to a conspiracy.

In an interview with a French TV channel, Strauss-Kahn’s colleague, Claude Bartolone, said the ex-IMF chief told him that Russia and France were trying to stop him running for the French presidency.

“He had to watch out and be careful. They could have tapped the phone. He said the Russians, and notably Putin had allied themselves with France to try to have him fired from the IMF, to stop him running for the presidency. He said that by not leaving the IMF ‘cleanly’ he would no longer be able to announce his candidacy,” Bartolone told BFMTV on April 29.

Vladimir Putin’s press secretary, Dmitry Peskov, has called the accusations entirely baseless.

“I’ve been secretary to Prime Minister Putin for the last three years and I’ve never heard such weird, such crazy, allegations that simply don’t have any sense in the background,” he stressed.

Peskov added that Bartolone’s confession had failed to become big news in France and now after one British had paper picked it up, he doesn’t believe that the story will have any continuation because “it’s something that has nothing to do even with a sense of humor.”

Dominique Strauss-Kahn is currently awaiting trial in New York.

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Does America have a Culture?

Posted by Admin on May 24, 2011

Global Research, May 24, 2011

The culture of the United States is said to be a youth culture, which is defined in terms of entertainment: sex, rock music or its current equivalent, violent video games, sports, and TV reality shows. This culture has transformed the country and appears on the verge of transforming the rest of the world. There are even indications that secularized Arab and Iranian youth can’t wait to be liberated and to partake of this culture of porn-rock.

America’s former culture–accountable government, rule of law and presumption of innocence, respect for others and for principles, and manners–has gone by the wayside. Many Americans, especially younger ones, are not aware of what they have lost, because they don’t know what they had.

This was brought home to me yet again by some reader responses to my recent columns in which I pointed out that Strauss-Kahn, the IMF director (now former) accused of sexually assaulting a hotel maid, was denied the presumption of innocence. I pointed out that the legal principle of innocent until proven guilty was violated by the police and media, and that Strauss-Kahn was convicted in the media not only prior to trial but also prior to his indictment.

From readers’ responses I learned that there are people who do not know that a suspect is innocent until proven guilty by evidence in a public trial. As one wrote, “if he wasn’t guilty, he wouldn’t be charged.” Some thought that by “presumption of innocence” I was saying that Strauss-Kahn was innocent. I was accused of being a woman-hater and received feminist lectures. Some American women are more familiar with feminist mantras than they are with the legal principles that are the foundation of our society.

Many males also confused my defense of the presumption of innocence with a defense of Strauss-Kahn, or if they knew about “innocent until proven guilty,” didn’t care. Right-wingers wanted Strauss-Kahn out of the picture because he was the socialist party candidate likely to defeat the American puppet, Sarkozy, in the French presidential election. With Sarkozy, Washington finally has a French president who has abandoned all interest in an independent or semi-independent French foreign policy. Didn’t I realize that if we lost Sarkozy, the French might revert to not going along with our invasions, as they refused to do when we had to get Saddam Hussein? With Sarkozy, the French are doing our bidding in Libya. Why in the world did I think Strauss-Kahn and some silly doctrine like the presumption of innocence were more important than French support for our wars?

Many left-wingers were just as indifferent to a legal principle that protects the innocent. They wanted Strauss-Kahn’s blood, because he is a rich member of the establishment and as IMF director had made the poor in Greece, Ireland, and Spain pay for the mistakes of the rich. What did I mean, “presumption of innocence”? How could any member of the ruling establishment be innocent? One left-winger even wrote that I had “reverted to type,” and that my babbling about presumption of innocence proved that I was still a Reaganite defending the rich from the consequences of their crimes.

It evidently did not cause the feminist, the right-wing or the left-wing to wonder that if such a powerful member of the establishment, as they regard Strauss-Kahn to be, can be denied the presumption of innocence, what would be their fate?

Independent thought is not a concept with which very many Americans are familiar or comfortable. Most want to have their emotions stroked, to be told what they want to hear. They already know what they think. A writer’s job is to validate it, and if the writer doesn’t, he is, depending on the ideology of the reader, a misogynist, a pinko-liberal commie, or an operative for the fascist establishment. All will agree that he is a no good SOB.

As I wrote a while back, respect for truth has fallen and taken everything down with it.

Paul Craig Roberts is a frequent contributor to Global Research.  Global Research Articles by Paul Craig Roberts

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Regime Change at the IMF: The Frame-Up of Dominique Strauss-Kahn?

Posted by Admin on May 24, 2011

by Prof. Michel Chossudovsky

Global Research, May 19, 2011

[Forward this article on Facebook or twitter, click above. This article is available in several foreign languages,Chinese ]

The arrest of IMF Managing Director Dominique Strauss-Kahn has all the appearances of a frame-up ordered by powerful members of the financial establishment, in liaison with France’s Nicolas Sarkozy, whose presidency has served the interests of the US at the expense of those of France and the European Union. While there is for the moment no proof of a plot, the unusual circumstances of his arrest and imprisonment require careful examination.

Immediately following Strauss Kahn’s arrest, pressures were exerted by Washington to speed up his replacement as Managing Director of the IMF preferably by a non-European, an American or a handpicked candidate from an “emerging market economy” or a developing country.

Since the founding of the Bretton Woods institutions in 1945, the World Bank has been headed by an American whereas the IMF has been under the helm of a (Western) European.

Strauss-Kahn is a member of elite groups who meet behind closed doors. He belongs to the Bildeberger. Categorized as one of the world’s most influential persons, he is an academic and politician rather than a banker. In contrast to his predecessors at the IMF, he has no direct affiliation to a banking or financial institution.

But at the same time he is the fall guy. His “gaffe” was to confront the Washington-Wall Street Consensus and push for reforms within the IMF, which challenged America’s overriding role within the organization.

The demise of Strauss-Kahn potentially serves to strengthen the hegemony of the US and its control over the IMF at the expense of what former Defense Secretary Donald Rumsfeld called “Old Europe”.

Blocking Strauss-Kahn, the Presidential Candidate

In recent years, a major shift has occurred in Europe’s political landscape. Pro-American governments have been elected in both France and Germany. Social Democracy has been weakened.

Franco-American relations have been redefined, with Washington playing a significant role in grooming a new generation of European politicians.

The presidency of Nicolas Sarkozy has, in many regards, become a de facto US “client regime”, broadly supportive of US corporate interests in the EU and closely aligned with US foreign policy.

There are two overlapping and interrelated issues in the DSK frame-up hypothesis.

The first pertains to regime change at the IMF, the second to Strauss-Kahn as a candidate in France’s forthcoming presidential elections.

Both these processes are tied into the clash between competing US and European economic interests including control over the euro-currency system.

Strauss-Khan as a favorite of the Socialist Party, would have won the presidential elections leading to the demise of “Our Man in Paris” Nicolas Sarkozy. As documented by Thierry Meyssan, the CIA played a central undercover role in destabilizing the Gaullist party and supporting the election of Nicolas Sarkozy (See Operation Sarkozy: How the CIA placed one of its agents at the presidency of the French Republic, Reseau Voltaire, September 4, 2008)

A Strauss-Kahn presidency and a “Socialist” government would have been a serious setback for Washington, contributing to a major shift in Franco-American relations.

It would have contributed to weakening Washington’s role on the European political chessboard, leading to a shift in the balance of power between America and “Old Europe” (namely the Franco-German alliance).

It would have had repercussions on the internal structure of the Atlantic Alliance and the hegemonic role of the US within NATO.

The Eurozone monetary system as well as Wall Street’s resolve to exert a decisive influence on the European monetary architecture are also at stake.

The Frame-Up?

Fifty-seven percent of France’s population, according to a May 17 poll, believe that Strauss-Kahn was framed, victim of a set-up. He was detained on alleged sexual assault and rape charges based on scanty evidence. He was detained based on a complaint filed by the Sofitel hotel where he was staying, on behalf of the alleged victim, an unnamed hotel chamber-maid:

The 32-year-old maid told authorities that she entered his suite early Saturday afternoon and he attacked her, New York Police Department spokesman Paul J. Browne. She said she had been told to clean the spacious $3,000-a-night suite, which she thought was empty.

According to an account the woman provided to police, Strauss-Kahn emerged from the bathroom naked, chased her down a hallway and pulled her into a bedroom, where he began to sexually assault her. She said she fought him off, then he dragged her into the bathroom, where he forced her to perform oral sex on him and tried to remove her underwear. The woman was able to break free again and escaped the room and told hotel staff what had happened, authorities said. They called police.

http://www.chron.com/disp/story.mpl/business/7565485.html#ixzz1MfFWFlnY

Wednesday CFR.org Roundup: U.S. pressures Strauss-Kahn to resign

Challenging the Washington Consensus

What is at stake in the immediate wake of Strauss Kahn’s demise is “regime change” at the IMF.

The Obama administration has demanded his replacement by a more compliant individual. U.S. Treasury Secretary Timothy Geithner, former CEO of the New York Federal Reserve Bank is pushing for the replacement of Dominique Strauss-Kahn, “suggesting he can no longer perform his duties” as IMF Managing director.

“Geithner called for greater formal recognition by the IMF board that John Lipsky, the fund’s second-in-command, will continue serving as temporary managing director for an interim period. Although Strauss-Kahn has yet to resign, sources say the IMF is in touch with his legal counsel to discuss his future at the organization.”

What lies behind the frame-up scenario? What powerful interests are involved? Geithner had a close personal relationship with Strauss-Kahn.

On the floor of the US Senate (May 18), Senator Mark Kirk of Illinois, called for the resignation of DSK while calling upon the IMF’s deputy managing director John Lipsky to “assume full responsibility of the IMF” as interim managing director. The process of “permanent replacement should “commence at once,” he said. John Lipsky is a well connected Wall Street banker, a former Vice Chairman at JPMorgan Investment Bank.

While the IMF is in theory an intergovernmental organization, it has historically been controlled by Wall Street and the US Treasury. The IMF’s “bitter economic medicine”, the so-called Structural Adjustment Program (SAP), imposed on countless developing countries, essentially serves the interests of creditor banks and multinational corporations.

The IMF is not the main architect of these devastating economic reforms which have served to impoverish millions of people, while creating a “favorable environment” for foreign investors in Third World  low wage economies.

The creditor banks call the shots. The IMF is a bureaucratic entity. Its role is to implement and enforce those economic policies on behalf of dominant economic interests.

Strauss Kahn’s proposed reforms while providing a “human face” to the IMF did not constitute a shift in direction. They were formulated within the realm of neoliberalism. They modified but they did not undermine the central role of IMF “economic medicine”. The socially devastating impacts of IMF “shock treatment” under Strauss-Kahn’s leadership have largely prevailed.

Dominique Strauss Kahn arrived at the helm of the IMF in November 2007, less than a year prior to September-October 2008 financial meltdown on Wall Street. The structural adjustment program (SAP) was not modified. Under DSK, IMF “shock treatment” which historically had been limited to developing countries was  imposed on Greece, Ireland and Portugal.

Under the helm of DSK as Managing Director, the IMF demanded that developing countries remove food and fuel subsidies at a time of rising commodity prices on the New York and Chicago Mercantile exchanges.

The hikes in food and fuel prices, which preceded the September-October 2008 Wall Street crash, were in large part the result of market manipulation. Grain prices were boosted artificially by large scale speculative operations. Instead of taming the speculators and containing the rise in food and fuel prices, the IMF’s role was to ensure that the governments of indebted developing countries would not in any way interfere in the “free market”, by preventing these prices from going up.

These hikes in food prices, which are the result of outright manipulation (rather than scarcity) have served to impoverish people Worldwide. The surge in food prices constitutes a new phase of the process of global impoverishment.

DSK was complicit in this process of market manipulation. The removal of food and fuel subsidies in Tunisia and Egypt had been demanded by the IMF. Food and fuel prices skyrocketed, people were impoverished, paving the way towards the January 2011 social protest movement:

Fiscal prudence remains an overarching priority for the [Tunisian] authorities, who also see the need for maintaining a supportive fiscal policy in 2010 in the current international environment. Efforts in the last decade to bring down the public debt ratio significantly should not be jeopardized by a too lax fiscal policy. The authorities are committed to firmly control current expenditure, including subsidies,… (IMF Tunisia: 2010 Article IV Consultation – Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Tunisia)

“[The IMF] encouraged the [Egyptian] authorities to press further with food and fuel subsidy reforms, and welcomed their intention to improve the efficiency and targeting of food subsidy programs. [meaning the selective elimination of food subsidies].

“Consideration should be given to introducing automatic adjustment mechanisms for domestic fuel prices to minimize distortions [meaning dramatic increases in fuel prices without State interference], while strengthening cash-based social programs to protect vulnerable groups. (IMF Executive Board Concludes 2008 Article IV Consultation with the Arab Republic of Egypt Public Information Notice, PIN  No. 09/04, January 15, 2009)

Under the helm of DSK, the IMF also imposed sweeping austerity measures on Egypt in 2008, while supporting Hosni Mubarak’s “efforts to broaden the privatization program”.(Ibid)

The Frank G. Wisner Nicolas Sarkozy Connection 

Strauss-Kahn was refused bail by Judge Melissa Jackson, an appointee and protégé of Michael Bloomberg, who in addition to his role as Mayor is a powerful figure on Wall Street.

Manhattan District Attorney Cyrus Vance Jr. charged (using scanty evidence) Strauss-Kahn “with seven crimes, including attempted rape, sexual abuse, forcible touching and unlawful imprisonment”.

Who is Cyrus Vance Jr.?

He is the son of the late Cyrus Vance who served as Secretary of State in the Carter administration.

But there is more than meets the eye. Nicolas Sarkozy’s step father Frank G. Wisner II, a prominent CIA official who married his step mother Christine de Ganay in 1977 served as Deputy Executive Secretary of State under the helm of Cyrus Vance Senior, father of District Attorney Cyrus Vance Junior.

Is it relevant?

The Vance and Wisner families had close personal ties. In turn Nicolas Sarkozy had close family ties with his step father Frank Wisner (and his half brothers and sisters in the US and one member of the Wisner family was involved in Sarkozy’s election campaign).

It is also worth noting that Frank G. Wisner II was the son of one of America’s most notorious spies, the late Frank Gardiner Wisner (1909- 1965), the mastermind behind the CIA sponsored coup which toppled the government of Mohammed Mossadegh in Iran in 1953. Wisner Jr. is also trustee of the Rockefeller Brothers Trust.

While these various personal ties do not prove that Strauss-Kahn was the object of a set-up, the matter of Sarkozy’s ties to the CIA via his step father, not to mention the ties of Frank G. Wisner II to the Cyrus Vance family are certainly worth investigating. Frank G, Wisner also played a key role as Obama’s special intelligence envoy to Egypt at the height of the January 2011 protest movement.

Did the CIA play a role?

Was Strauss-Kahn framed by people in his immediate political entourage including President Obama and Secretary of the Treasury Tim Geithner?

District Attorney Cyrus Vance Junior, son of the late Cyrus Vance, Secretary of State in the Carter administration

Sarkozy’s Step Father Frank G Wisner II, Deputy Executive Secretary of State (1976-79)
under Cyrus Vance Senior during the Carter administration

In this courtroom drawing, Dominique Strauss-Khan, centre, stands next to his lawyer Benjamin Brafman, in front of Criminal Court Judge Melissa Jackson during his arraignment at the Manhattan Criminal Court for the alleged attack on a maid at his penthouse suite of a hotel in New York. Photo: AP

In this courtroom drawing, Dominique Strauss-Khan, next to his lawyer 

Benjamin Brafman, in front of Criminal Court Judge Melissa Jackson during his arraignment at the Manhattan Criminal Court (AP)

File:Strauss-Kahn, Geithner (IMF 2009).jpg

DSK and Timothy Geithner

DSK and Timothy Geithner


Fair Trial?

Innocent before proven guilty? The US media has already cast its verdict. Will the court procedures be manipulated?

One would expect that Strauss-Kahn be granted a fair trial, namely the same treatment as that granted to thousands of arrests on alleged sexual aggression charges in New York City.

How many similar or comparable alleged sexual aggressions occur on a monthly basis in New York City?  What is the underlying pattern? How many of these are reported to the police?  How many are the object of police follow-up once a complaint has been filed?

What is the percent of complaints submitted to police which are the object of police arrest? How many of these arrests lead to a judicial procedure? What are the delays in court procedures?

How many of these arrests lead to release without a judicial procedure?

How many of the cases submitted to a judicial procedure are dismissed by the presiding judge?

How many of the cases which are not dismissed are refused bail outright by the presiding judge? What is the basis for refusing bail?

How many are granted bail?  What is the average amount of bail?

How many are imprisoned without bail based on scanty and incomplete evidence?

How many of those who are refused bail are sent to an infamous maximum security prison on Rikers Island on the orders of  Michael Bloomberg.

Diplomatic Immunity

Press reports state that full diplomatic immunity does not apply to officials of the United Nations and the Bretton Woods institutions, namely that the US did not ratify the protocol.

“U.N. convention on privileges and immunities for international agencies that most countries have ratified. It gives the heads of U.N. agencies broad immunity in the countries where they are based. But the U.S. government never became a party to that treaty. Employees of international agencies are covered by a U.S. statute that gives only limited immunity.”

The relevant question is how has this limited immunity provision been applied in practice?  Namely how many people with limited immunity (UN officials, officials of the Bretton Woods institutions) have been arrested and sent to a high security prison?

Has Strauss Kahn been given the same treatment as those arrested under the provisions of “limited immunity”?

Does the Strauss Kahn arrest fit the pattern? Or is Strauss Kahn being treated in a way which does not correspond to the normal (average) pattern of police and judicial procedures applied in the numerous cases of persons arrested on alleged sexual assault charges?

Without a frame-up instrumented by very powerful people acting in the background, the head of the IMF would have been treated in an entirely different way. The mayor of New York Michael Bloomberg and Timothy Geithner would have come to his rescue.  The matter would have been hushed up with a view to protecting the reputation of a powerful public figure. But that did not happen.


Rikers Island Prison where DSK was imprisoned.

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IMF’s Dominique Strauss-Kahn faces sex charge

Posted by Admin on May 15, 2011

http://news.yahoo.com/s/nm/20110515/wl_nm/us_strausskahn_arrest

NEW YORK/PARIS (Reuters) – IMF chief Dominique Strauss-Kahn was arrested and charged on Sunday with sexually assaulting a New York hotel maid, in a scandal that appeared to wreck his hopes of running for president of France.

The charges threatened to create a leadership vacuum at the IMF, overseer of the global economic system, and threw wide open the French presidential election next April, for which opinion polls had made Strauss-Kahn the front-runner.

One of his lawyers, Benjamin Brafman, told Reuters that his client “will plead not guilty.”

The 62-year-old Socialist, a key player in the response to the 2007-9 global financial meltdown and in Europe’s debt crisis, was taken off an Air France plane about to leave for Paris from John F Kennedy International Airport on Saturday.

The news caused shock and disbelief in France, where a government spokesman called for caution and respect for the presumption of innocence. [nPISFGE7NF]

“The news we received from New York last night struck like a thunderbolt,” said Socialist leader Martine Aubry, appealing for party unity.

Francois Bayrou, a centrist opponent of Strauss-Kahn, said: “All this is completely astounding, immensely troubling and distressing. If the facts prove true … it’s something degrading for all women. It’s terrible for the image of France.”

Far-right leader Marine Le Pen said her rival’s presidential hopes had been crushed. Strauss-Kahn and Le Pen have led recent opinion polls ahead of conservative President Nicolas Sarkozy, even though the chief of the International Monetary Fund had yet to declare his candidacy.

The Fund said in a statement on its website that it “remains fully functioning and operational,” and had no comment on the case.

MAID’S ACCOUNT

New York police spokesman Paul Browne said Strauss-Kahn was arrested at 2:15 a.m. EDT on Sunday on charges of a criminal sexual act, attempted rape and unlawful imprisonment.

“We must wait until things settle and see if it’s true or a provocation, one of Strauss-Kahn’s French-based lawyers, Leon Lef Forster, said. “We must be especially careful not to get into a media circus and we must wait until things are clear.”

A 32-year-old maid filed a sexual assault complaint after fleeing the $3,000-a-night hotel suite at the Sofitel in Times Square where the alleged incident occurred around 1 p.m. EDT on Saturday, Browne said.

Strauss-Kahn appeared to have fled the hotel after the incident, the police spokesman said.

Browne told Reuters: “She told detectives he came out of the bathroom naked, ran down a hallway to the foyer where she was, pulled her into a bedroom and began to sexually assault her, according to her account.

“She pulled away from him and he dragged her down a hallway into the bathroom where he engaged in a criminal sexual act, according to her account to detectives. He tried to lock her into the hotel room.”

Strauss-Kahn does not have diplomatic immunity, Browne said. He is expected to be brought before a state court on Sunday.

According to New York state law, a criminal sexual act carries a potential sentence of 15-20 years, the same as attempted rape. Unlawful imprisonment carries a potential sentence of three to five years.

The allegation is a major embarrassment to the IMF, which has authorized billions of dollars of lending to troubled countries and played a major role in the euro zone debt crisis.

It follows a statement on Thursday that the IMF’s No. 2, John Lipsky, plans to step down in August when his term ends.

A crisis of leadership at the Fund would especially worry European countries, given Strauss-Kahn’s pivotal role in brokering bailouts for Iceland, Hungary, Greece, Ireland and Portugal.

FRANCE IN SHOCK

Popularly known by his initials DSK, the IMF managing director had been expected to declare by late June if he would run for president of France. The latest opinion polls ranked him as a clear winner over conservative incumbent Sarkozy.

“The case and the charges … mark the end of his campaign and pre-campaign for the presidency and will most likely prompt the IMF to ask him to leave his post,” National Front leader Le Pen told i-Tele television.

Conservative Trade Minister Pierre Lellouche said: “I think we have to grant DSK the presumption of innocence. If all this were true it would be damning.”

Even Strauss-Kahn’s political allies were pessimistic.

“The most likely outcome is that this case will stick and even if he pleads not guilty, which he may be, he won’t be able to be candidate for the Socialist primary for the presidency and he won’t be able to stay at the IMF,” said prominent Socialist Jacques Attali.

If Strauss-Kahn were out of the race, leading candidates for the Socialist presidential ticket include party leader Aubry, left-wing veteran Francois Hollande and Segolene Royal, the candidate beaten by Sarkozy in 2007.

PLANE HELD AT JFK

In New York, police spokesman Browne said: “The NYPD realized he had fled, he had left his cell phone behind. We learned he was on an Air France plane. They held the plane and he was taken off and is now being held in police custody for questioning.”

The woman, who has not been named, was treated in hospital for minor injuries, Browne said.

Strauss-Kahn was on his way to Europe for a meeting on Sunday with German Chancellor Angela Merkel to discuss the European debt crisis, and then was to attend a euro zone finance ministers meeting in Brussels on Monday.

Strauss-Kahn took over the IMF in November 2007 for a five-year term scheduled to end next year. Before that, he was a French finance minister, member of the French National Assembly and a professor of economics.

He has faced controversy before. In 2008, he apologized for “an error of judgment” after an affair with a female IMF economist who was his subordinate. An inquiry cleared him of harassment and abuse of power, but he was warned by the fund’s board of member countries against further improper conduct.

Strauss-Kahn apologized to the woman, Piroska Nagy, and his wife, French television personality Anne Sinclair, as well as to IMF employees for the trouble he had caused.

Since taking over the Fund, he has won praise for putting it at the center of efforts to tackle the global financial meltdown. He introduced sweeping changes to ensure that countries swamped by the crisis had access to emergency loans.

He has overseen changes that have given emerging market countries, such as China, India and Brazil, greater voting power in the IMF, and weighed into thornier issues by urging China to let its currency rise in a dispute with the United States.

(Additional reporting by Lesley Wroughton, Noeleen Walder, Catherine Bremer and John Irish; Writing by Mark Trevelyan; Editing by Peter Millership)

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IMF chief to activate crisis fund next week

Posted by Admin on March 27, 2011

http://in.finance.yahoo.com/news/IMF-chief-activate-crisis-reuters-2530807212.html

On Friday 25 March 2011, 5:01 AM

 

By Lesley Wroughton

WASHINGTON (Reuters) – The head of the International Monetary Fund will seek to activate a $580 billion crisis fund next week, a confidence-building step at a time of heightened global uncertainty.

“The biggest worry is the high risk of contagion from Portugal and general global uncertainty will trigger a new wave of borrowing from the fund,” a source familiar with the plan said. Two other sources also said economic worry spots were behind the expected move.

The IMF confirmed that IMF chief Dominique Strauss-Kahn would seek to activate the fund — New Arrangements to Borrow — but said it was a “natural consequence of ratification of NAB on March 11, which was previously announced.”

Still, the global worry list has expanded in recent weeks because of Japan’s earthquake and nuclear crisis, as well as unrest spreading in the oil-producing Middle East and North Africa.

Concerns about Portugal’s debt crisis increased on Wednesday after the sudden departure of its prime minister made it likely that the country may not avoid turning to the European Union and IMF for financial help.

Sources emphasized that Portugal had not requested IMF bailout money and insists it is adamantly opposed to requesting IMF help. The country first has to request IMF help to trigger formal discussions on a rescue loan and program.

So far, Portugal has managed to finance itself in capital markets although government borrowing costs spiked on Thursday and rating agency Fitch cut Portugal’s credit rating by two notches to A- saying risks to the country had risen after parliament failed to pass fiscal consolidation measures.

The concern is that Portugal’s debt woes has wider repercussions, with neighboring Spain holding about one-third of Portuguese public debt.

In a statement on March 11 announcing the NAB had taken effect, the IMF called it a tool to “provide supplementary resources to the IMF when these are needed to forestall or cope with a threat to the international monetary system.”

The NAB was expanded ten-fold from $53 billion last year to include 13 new contributors, among them large emerging market economies like China, Brazil, India, Russia and Mexico.

The United States is the largest contributor to the fund through a $100 billion credit agreement approved by President Barack Obama in 2009.

The move was in response to a call by the Group of 20 leading economies in 2009 to triple the IMF’s lending resources to shore up confidence in its ability to respond to crises.

The IMF has been at the center of the response to the financial meltdown and recession as the global lender of last resort, recently approving emergency loans to Ireland and Greece.

(Editing by Dan Grebler, Bernard Orr)

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