Christine Lagarde: Two mistakes we made in the case of Greece – Only two Christine?

Christine Lagarde, 60, who is about to begin her second five-year term as head of the International Monetary Fund, talked to Bloomberg’s John Micklethwait about the two mistakes the IMF and herself made in the Greek issue. The problem is that she actually takes NO responsibility for those mistakes. Admitting it is no good for nothing. It is pointless, especially if you are still blaming the Greek politicians for not doing their job very well. Accepting responsibility means you change direction, you acknowledge the damage made and take measures to prevent more damage from happening. The IMF and Lagarde did nothing of the sort. On the contrary, they insist on more austerity, lower salaries, lower pensions – who knows maybe in a couple of years, when none of these measures will have worked, she might come out again admitting that they actually made more mistakes. But what good is in that? That would be a little too late… and no one believes that these are actual mistakes anyway. It’s their philosophy.

Read this article from June 2013. The Guardian –IMF admits: we failed to realise the damage austerity would do to Greece. So they failed to realise the damage austerity would do to Greece… and they keep on pushing for more austerity! This is an outrage of gigantic proportions!

Here is a portion of the interview she gave to Bloomberg.

JM Let’s talk about Greece. What mistakes were made by you and by the IMF?

CL We have acknowledged one mistake, which had to do with the fiscal multipliers where we—all of us, the IMF, Europeans, the ECB [European Central Bank]—underestimated the contracting impact of some of the measures that we recommended. We overestimated the ability of Greece to actually endorse and take ownership of measures that were needed, because we moved from one government to another to another to another, and it was always, “It’s not really our program, it’s not really our reforms, it’s not really our measures. It’s imposed by the Troika putting all members in the same bag.” So I think that was overestimated.

JM Where were the negotiations especially difficult for you?

CL You know, our job was to lend international money from the overall community—including from very low-income countries, even from poor euro area members—to a country that had to conduct reforms and that had misrepresented its numbers. Somebody representing the international community had the duty to say, “This is wrong. This needs to be done. This needs to be changed.” And this is an ongoing process. I see it as our duty here at the IMF to not be complacent, to assess the reality of numbers, the reality of reforms, to measure the potential output of those reforms, and to reestablish the credibility and the economic sovereignty of that country. Greece cannot just continuously tag along and expect that things will be sorted out. The Greek leaders will need to take more ownership of reestablishing their country.

JM Do you expect Greece to stay in the EU?

CL Yes, I think so. We’re not out of the Greek situation yet. And I think the present circumstances with the migration and the refugees are going to strengthen the critical role Greece is playing in the EU.

JM I wonder how the surge in populism has played a role in changing either your own personal calculations about how to deal with the euro mess, or for that matter the fund’s. Was that unexpected, and what were the consequences?

CL I think it has played a bigger role with the governments in the euro zone than it has for us. We do not play a political role, and we cannot get involved in political discussions and prognostics of which group or party will win. We have to acknowledge what’s going on, and we have to be aware of populism. But it was a big factor for the decision-making process of the European leaders.

JM You’re being charmingly technocratic.

CL That’s my job, John. I’m no longer a politician.

M When you look at populism, especially here in America with Donald Trump, what do you think? Is there a repetition of what you’ve seen with Marine Le Pen, Silvio Berlusconi, and people like that in Europe?

CL I see the same frustration or exasperation with what people regard as a sort of disconnected elite and a lack of touch and concern by politicians with their day-to-day concerns, worries, life. I think that they’re very much using that as leverage.

JM Do you worry that the kind of globalization, the multilateralism you’ve spoken about, could be undone by the fires of nationalism—the ones John Maynard Keynes once called the “serpent to this paradise”?

CL Yes, it could. I think that multilateralism—that ability to move around, to draw on and leverage the diversity of the world—is a very, very precious good that we have to cherish, secure, and maintain.

Micklethwait is the editor-in-chief of Bloomberg.