Two Distractions With One DSK
Tyler Durden
From William Buckler's latest edition of The Privateer:
Osama Bin Laden was simply “taken out” by US armed forces. That’s the official line anyway. IMF head Dominique Strauss-Kahn did not suffer so terminal a fate. He was simply stung, hauled off to jail and removed from his post. As with the Bin Laden episode, the timing could not have been improved upon. Strauss-Kahn was removed just as he was on his way to a meeting with European Union (EU) and Euro zone officials to “deal with” the latest flare up of the Greek debt drama. Presto, the Greek debt drama duly worsened, commodity prices fell some more (for a few days), the US Dollar rebounded and the Treasury’s debt limit was hit without a tremor.
As to Mr Strass-Kahn’s “indiscretion”, the entire thing is peurile in the extreme. In what has been called the “honey trap”, it had little to do with removing him as a potential rival to President Sarkosy of France in the next French elections. The whole idea was to put the IMF in disarray. This served and serves two purposes. First, it removes the “international” aspect of the moves the EU is making to damp down the ongoing Greek (and others) debt crisis. That turns the “sovereign debt crisis” into a strictly European problem and makes sure the headlines keep coming. Second, the stoush of who the next IMF head will be is now predicted to last until (at least) June 30. This takes the spotlight off the winding down of the Fed’s QE2, which is scheduled to end on - that’s right - June 30.
The IMF is usually portrayed in the mainstream media as a “Washington-based” international financial organisation. It is. There is only one nation which has enough voting power within the IMF to torpedo ANY major decision it makes all by itself. That nation is the US. Substantial IMF policy actions call for an 85 percent “approval” vote amongst the member nations. The US voting “quota” is 17 percent.
The only substantial IMF change would be a change in these voting quotas. The US quota has not changed. When the “emerging nations” won an increased vote, they won it from Europe, not the US.
Any questions?