It’s DSKja-Vu all over again: IMF Christine Lagarde Head Formally Charged In Fraud Probe.

IMF Christine Lagarde Head Formally Charged In Fraud Probe.

Ah the joys of a long timeline; those who predict the worst will invariable be proved correct. Cost you mind back about three years to when a scandal erupted over the behaviour of International monetary fund (IMF) chief Demonique Dominique Strauss Khan who, accused of sexually assaulting a chamber main in his New York hotel was revealed in the subsequent kerfuffle to have been spending taxpayer’s money on hiring prostitutes a busload at a time for private sex parties.

Until then Strauss Khan had been front runner to take over the French Presidency from Nicolas Sarkozy. Did Francoise Hollande’s Socialists have anything to do with tipping off the media about DSK’s like peccadillos? You may say that, I could not possibly comment. In the end however, no amount of whitewash could save Strauss Khan.

French politics looks, to an outsider, much more fun than ours. They get prostitutes by the dozen, what do we get? Paedophile allegations not properly followed up, paedophile activity given a free pass, government ministers hiring illegal immigrant nannies and a taxpayer funded Duck Island.

By the time DSK’s successor, the elegant elitist socialist Christine Legarde had been appointed, Boggart Blog had already predicted that in the era of new media, with the credibility of mainstream news evaporating rapidly and the blogosphere always ready to shine a light on the corruption and self interest endemic in modern politics, more and more scandal would be exposed and rumours circulating about banker Legarde’s associations with shady figures in French business such as Bernard Tapie, her own demise was inevitable.

legardedominique strauss khan
Christine Legarde and DSK

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In the end it was only a day after President Hollande appointed a new government (the third this year) that the person who so eagerly stepped in after DSK’s infamous and some say choreographed fall from grace, Christine Lagarde is about to be DSKed herself after “someone” clearly has set their sights on the former French finance minister who was rumoured to have Presidential ambitions of her own.

When news broke that a French court had placed Mme. Lagarde, head of the International Monetary Fund, under a formal probe for negligence in a corruption investigation dating back to her days as finance minister it was hardly a shock. Just over a year ago banner headlines in the French press screamed “IMF’s Lagarde Flat Raided Over French ‘Payout’ Probe”, further damaging head of the IMF already suffering loss of credibility from numerous allegations of impropriety involving the Tapie matter.

Until now, such rumours were below the radar, and thus stayed largely in French domestic news. It now appears Madame’s turn for Andy Warhol’s promised fifteen minutes of fame, even if Lagarde hasn’t grasped it just yet.

from The Wall Street Journal:

Ms. Lagarde confirmed the decision in a statement but said it was “without basis,” adding she would challenge it with a higher court. She said she was heading back to Washington Wednesday and would brief the IMF board about the latest development.

The investigation is part of a complex, drawn-out probe into the alleged misuse of state funds. The case stems from a decision in the 2008 to use arbitration to settle a dispute with business tycoon Bernard Tapie. The arbitration panel awarded €420 million to Mr. Tapie.

“The magistrates of the court of justice of the Republic have decided to place me under formal investigation,” Ms. Lagarde said in statement. “After three years of procedure, the sole surviving allegation is that through inadvertence or inattention I may have failed to intervene to block the arbitration that brought to an end the longstanding Tapie litigation,” she added.

Given the ability of organisations from all around the globe to close ranks and cover up the malfeasance of managers the question now is who was angered by her policies over the past three years and why.

And we think we know.

Only yesterday Boggart Blog was reporting on the US led cover up of an official report on the downing of Flight MH17 Today we report the imminent appointment of MMe. Legarge avec MMe. Guillotine (careerwise anyway). And tomorrow?

… A broad-based tax cut, for example, accommodated by a program of open-market purchases to alleviate any tendency for interest rates to increase, would almost certainly be an effective stimulant to consumption and hence to prices. Even if households decided not to increase consumption but instead re-balanced their portfolios by using their extra cash to acquire real and financial assets, the resulting increase in asset values would lower the cost of capital and improve the balance sheet positions of potential borrowers. – Ben Bernanke, Chairman of the US Federal Exchange.

Legarde has been blocking this idea and here’s why.

Stripped of financial jargon, The Fed is saying that in a world drowning in debt, there are only two options to extinguish said debt: inflate it away or default. Anything else is kicking the can while making the problem even worse.

In the last phase before complete collapse the Keynesian economics academe has no choice but to gamble “all in” with the last and only bluff it had left before admitting the economic system it created, one which has borrowed so extensively from the future to fund the present that there is no future left, has failed.

The remedy for this proposed by Bernanke and the Obama Administration is to modify the failed policy of Quantitative Easing by cutting out the middle man. While governments run a systemic deficit they must borrow each month to fund their financial obligations. The means of borrowing is by selling bonds on which the taxpayers’ pay interest. US Treasury Bonds pay 3.1% interest, UK bonds cost us 3.5%. Now while interest rates on money loaned by governments has been held at between 0% and 0.5% the banks have been borrowing from governments at those rates and lending the money straight back by buying bonds that pay over three percent.

because that has failed, the Fed (and you can be sure The Bank Of England and The European Central bank will not be far behind) plan to stimulate their economies by cutting taxes or possibly introducing negative income tax to encourage us punters to start spending again.

It could only end in disaster as governments would have to borrow more money to fund the tax cuts.

RELATED POSTS:

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