There are no easy answers. ... slamming on the brakes too quickly will hurt the recovery ... what is needed is a dual focus ... that may sound contradictory ...Forgive me, but this sounds like the doctor in Molière prescribing la vertu dormitive, except in this case she's prescribing la vertu stimulative, mais pas trop. And how about naming names? "Some countries" indeed. Is Mme Lagarde out of her depth?
Will the markets buy such an approach? In some countries, they seem to be pushing for sharp fiscal adjustments. And some policymakers have decided that is the road to follow. But in many countries a short-term focus would be wrong. We should remember that markets can be of two minds: while they dislike high public debt – and may applaud sharp fiscal consolidation – as we saw last week they dislike low or negative growth even more.
Monday, August 15, 2011
Lagarde Indulges in Newspeak
Christine Lagarde, at last liberated from Nicolas Sarkozy's tutelle, should be finding her own voice, but if today's pronouncement from the IMF director is any indication, she's singing falsetto, and the lyrics are in Newspeak: