IMF turmoil unlikely to derail Euro debt talks

Bob Moon May 16, 2011
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IMF turmoil unlikely to derail Euro debt talks

Bob Moon May 16, 2011
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Kai Ryssdal: Dominique Strauss-Kahn — the head of the International Monetary Fund — is looking at five to 25 years in jail if he’s convicted of the sexual assault charges filed against him this weekend. Bail was denied at a hearing in Manhattan today.

There is no way to gracefully turn this story from the alleged crime to what the markets were thinking, but given Strauss-Kahn’s role in the global economy, that’s exactly what happened. Our senior business correspondent Bob Moon reports.


Bob Moon: Just last week, a Bloomberg survey of international investors found 85 percent expect Greece to default on its debt — that’s a stark indicator of the urgency facing the International Monetary Fund in pushing for a resolution to the ongoing crisis.

As the former finance minister of France, Dominique Strauss-Kahn’s authority on Europe’s debt crisis has been widely respected. And his political clout had moved negotiations toward agree. Now these talks face new uncertainty.

David Andrew Singer: I don’t think it’s a do-or-die situation, but I do think it’s just a terribly awkward time.

David Andrew Singer is a political science professor at MIT. He says as the world’s lender of last resort, the IMF is critical in lining up bailouts.

Singer: I think if there is a new leader, whoever that person is, is going to have to be ready to be in the spotlight from day one, and really engaging in high-level discussions with leaders, you know, because issues with the Eurozone in particular are so sort of fragile right now.

At Yale University, professor Kenneth Rogoff, a former IMF economist, expects the organization to stay the course — for now.

Kenneth Rogoff: It will be able to function, absolutely, because a lot of the decisions really had been taken already. But on the other hand, there’s a lot more to come.

European finance ministers signed off on $110 billion in loans to Portugal today. But Rogoff says the “endgame” in Europe remains a long way off.

I’m Bob Moon for Marketplace.

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