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Economy

Who Is The Real Christine Lagarde?

Op-Ed: Is the former French Finance Minister and current head of the IMF a Euro-booster or Euro-skeptic? The truth is that the question is misplaced. Lagarde’s recent alarmist speech about European banks is a reminder that her first objective should be so

Christine Lagarde at the 2011 e-G8 Forum
Christine Lagarde at the 2011 e-G8 Forum
François Vidal

PARIS - Which Christine Lagarde is to be believed?

The Lagarde at French Finance Ministry headquarters less than three months ago who was putting up a reassuring face about the health of European banks; or the Lagarde who, as head of the International Monetary Fund, was declaring this past weekend that immediate measures were needed to recapitalize those same banks, by force if necessary.

One thing is for sure: the new IMF chief's alarmist speech only adds fuel to the fire of the financial crisis. The fact that this woman, who was one of the strongest supporters of the bank "stress tests' when she was still in France, has now clearly sided with the "Euroskeptics," can only undermine the already shaky trust in the stability of the banking sector.

Indeed, her words give the feeling that Christine Lagarde is now finally at liberty to talk freely. Now that she is in Washington, she might finally tell the truth and lead the way towards a financial and economic recovery.

This feeling, however, is both wrong and misleading. Wrong, because in substance, the recapitalization of the banks has already started. European banks have raised 60 billion euros between January and June 2011. Whether they did it with their own means or via public support, it is happening right now. The recent announcement of two major Greek banks merging proves it.

Admittedly, the attempt is not very well spread out among the different "actors," and is undoubtedly too slow. Still, everyone is now convinced that the basic share of stockholder equity must be increased. And not only in Europe.

And it is also misleading because Christine Lagarde's words -- and the words of all those who campaign for a forced recapitalization of the banks -- can lead some to believe that this piling up of stockholder equity is the singular solution to the crisis, a kind of barrier against which speculators' attacks will finally be broken.

This is of course a fantasy. When the markets begin to wonder whether France would be able to pay off its debt, we suspect that the banks may never have enough shares to absorb a major run on government bonds. Today the urgency is to find a political solution to the sovereign debt crisis. This can be handled by better governance on both sides of the Atlantic, which must include an end to inopportune declarations.

Read the original article in French

Photo - Roebot

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Society

Parenthood And The Pressure Of Always Having To Be Doing Better

As a father myself, I'm now better able to understand the pressures my own dad faced. It's helped me face my own internal demands to constantly be more productive and do better.

Photo of a father with a son on his shoulders

Father and son in the streets of Madrid, Spain

Ignacio Pereyra*

-Essay-

When I was a child — I must have been around eight or so — whenever we headed with my mom and grandma to my aunt's country house in Don Torcuato, outside of Buenos Aires, there was the joy of summer plans. Spending the day outdoors, playing soccer in the field, being in the swimming pool and eating delicious food.

But when I focus on the moment, something like a painful thorn appears in the background: from the back window of the car I see my dad standing on the sidewalk waving us goodbye. Sometimes he would stay at home. “I have to work” was the line he used.

Maybe one of my older siblings would also stay behind with him, but I'm sure there were no children left around because we were all enthusiastic about going to my aunt’s. For a long time in his life, for my old man, those summer days must have been the closest he came to being alone, in silence (which he liked so much) and in calm, considering that he was the father of seven. But I can only see this and say it out loud today.

Over the years, the scene repeated itself: the destination changed — it could be a birthday or a family reunion. The thorn was no longer invisible but began to be uncomfortable as, being older, my interpretation of the events changed. When words were absent, I started to guess what might be happening — and we know how random guessing can be.

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