Global finance community prepares for a potential shift at the IMF
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JEREMY HOBSON: Now let’s get to the big story involving the head of the IMF — Dominique Strauss-Kahn. He’s in court today in New York after being arrested over the weekend for allegedly sexually assaulting a maid at a Manhattan Hotel.
Strauss-Kahn has been a key player in bailout negotiations in Europe. And there are questions now about what the charges he now faces could mean for countries like Greece and Portugal.
For answers, let’s bring in Julia Coronado. She’s chief economist with the investment bank BNP Paribas. She’s with us live as she is each Monday from New York. Good morning Julia.
JULIA CORONADO: Good morning.
HOBSON: Well, will this have an impact on the European debt crisis?
CORONADO: Well, it’s possible. This person was a very very strong leader, a strong advocate for finding solutions and crafting packages to address the problems of the weaker, peripheral European countries so he was such a key player in the whole negotiation process and the actual resolutions that it’s possible that this could have an impact. We’ll just have to see who steps into the void and whether the leadership is there.
HOBSON: And it seems like it’s coming at a very important time in the European debt crisis. There are new questions about Greece and also obviously they’re trying to figure out Portugal’s bailout.
CORONADO: Absolutely. There’s been active negotiations around the Greek rescue package. He was on his way to go meet with Chancellor Angela Merkel of Germany to discuss this issue. And there’s been a lot of nervousness in markets around the Greek situation and the possibility of a default. So the timing couldn’t be worse.
HOBSON: And remind us again Julia why the European Debt crisis matters to the U.S. economy.
CORONADO: Well, we’ve seen the European debt crisis and the renewal of worries around it contribute to a lot of worries in global financial markets, so we’ve seen equity markets go a little soft, and that could then potentially hurt consumers wealth, their 401k balances and possibly their confidence. But one of the benefits, which is potentially greater has been that this risk aversion, this nervousness in global markets has also lead to a huge sell of in commodities, and so now we have oil prices back below $100 a barrel, which if they stay there could lead to falling gas prices and that could actually be a huge benefit to consumers as we move through the summer driving months.
HOBSON: Julia Coronado, chief economist with the investment bank BNP Paribas, thanks as always.
CORONADO: My pleasure.
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