The arrest in New York of International Monetary Fund Managing Director Dominique Strauss-Kahn on sexual-assault charges (to which he is expected to plead not guilty) will probably end his career at the Washington-based organization. But what will it mean for the global economy and the IMF's future?
The biggest short-term impact of Strauss-Kahn's arrest will likely be felt in the euro zone. European finance ministers are meeting today to discuss what to do aboutGreece's debt woes. Strauss-Kahn has been a key player in the often fractious attempts by Europe's leaders to resolve the zone's debt crisis, and his sudden absence will likely add more confusion to the debates over how to handleGreece. However, in my opinion, any uncertainty caused by Strauss-Kahn's arrest will be minor in comparison with the dangerous divisions between the euro zone members themselves. There is absolutely no consensus among European governments over what is best forGreece, with some preferring to extend the existing bailout to the country, and others favoring some sort of delay to Greek bond maturities (a restructuring by another name). Perhaps Strauss-Kahn could have played an “honest broker” role between the factions, but the bigger issue facing the euro zone is whether or not its members can get on the same page on how to handle its continuing debt woes.
However, from where I sit, the arrest of the IMF's chief raises more fundamental questions about that institution's role in the global economy. Here's what I mean:
Read more: http://curiouscapitalist.blogs.time.com/2011/05/16/what-strauss-kahns-arrest-means-for-the-imf/#ixzz1MVlUVUtq
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