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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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Geopolitics

Why The 'Perfect Storm' Of Iran's Protests May Be Unstoppable

The latest round of anti-regime protests in Iran is different than other in the 40 years of the Islamic Republic: for its universality and boldness, the level of public fury and grief, and the role of women and social media. The target is not some policy or the economy, but the regime itself.

A woman holds a lock of her hair during a London rally to protest the murder of Mahsa Amini in London

Roshanak Astaraki

-Analysis-

The death of 22-year-old Mahsa Amini in Tehran on Sept. 16, after a possible beating at a police station, has sparked outrage and mass protests in Iran and abroad. There have been demonstrations and a violent attempt to suppress them in more than 100 districts in every province of Iran.

These protests may look like others since 2017, and back even to 1999 — yet we may be facing an unprecedented turning point in Iranians' opposition to the Islamic Republic. Indeed newly installed conservative President Ibrahim Raisi could not have expected such momentum when he set off for a quick trip to New York and back for a meeting of the UN General Assembly.

For one of the mistakes of a regime that takes pride in dismissing the national traditions of Iran is to have overlooked the power of grief among our people.

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