Winds sent old newsprint soaring like white kites caught in the updraft along the concrete corridors of Wall Street, in October 29, 1929. The world had just begun to feel the horrendous pain of the Great Depression. It would last for more than a decade before the monetarist would be able to steer a recovery. Leading up to Black Tuesday, the stock markets was generous to many. Young and old invested daily in stocks, a numbers’ game. Dreams of becoming wealthy played in the hearts of everyday workers that shined shoes on the corners of New York to the farmers that lovingly tended wine grapes in the vineyards in northern Italy. Around September 4, 1929, worldwide value of equity began its slide. During the course of this global financial meltdown, 50 percent of the world’s wealth was loss.
The poor were the hardest hit. Farms owned for generations lay barren and abandoned. The demand side of economics failed. Consumption of goods dropped and hardship endured for over a decade. The 1929 era marked the beginnings of a deep depression that was led by the United States. It witnessed 25 percent of unemployment for America’s population. An estimated 33 percent of Europe’s populace stood in bread lines. Once again, in November 2008, the United States faced the prospects of another financially led economic depression. Untethered by the rules or regulatory procedures legislated after the first crisis. This time safety webs formed by global monetizing organizations ensured the financial life of nations. They are the International Monetary fund or IMF and the European Central Bank or ECB. It is their job to monitor money flows and in some cases make currency. They influence the wealth of the globe and a French woman directs one, the IMF.
Stately beauty and understated elegance best describes the French woman that approached the podium at Falk Auditorium at The Brookings Institution on April 12, 2012. She is Madam Christine Lagarde, Managing Director of the International Monetary Fund (IMF). Former Finance Minister under France’s Sarkozy, her influence drives the conduct of global wealth. She replaced French Economist Dominique Strauss Khan, who stepped down as IMF chief after a series of sex scandals. A woman that practices positive thinking, Christine Lagarde’s approach to salvation in the current geo-economy is entitled “Seizing the Moment – Think beyond the Global Crisis”. Her presentation outlined current economic affairs and goals that must be set in place in order to achieve lasting geo-economic stability. Her suggestions fell in accordance to immediacy. Beginning her presentation with extraordinary candor, Madam Lagarde complemented the United States, its leadership, the European Central Bank and Mario Draghi in their efforts in achieving a tenuous recovery. She acknowledged the challenges surmounted during a time that threatened monetary collapse.
She was no stranger to economic strategy making. In addition to being the first woman to be in charge of economic policy in France, Madam Lagarde was also member of the Francois Fillon’s cabinet and featured in Andrew Sorkin’s HBO’s original work “Too Big to fail”. Her wisdom has become legendary. The liberal IMF Chief is no stranger to Washington DC as well. In 1974, she lived in Washington DC as congressional assistant to Representative William Cohen, Republican from Maine. In 1981 as a member of the Paris Bar, Madame Lagarde joined the international law firm of Baker & McKenzie with offices in Chicago Illinois. As associate, she specialized in Labor, Anti-Trust, and Mergers & Acquisitions. In 1995, her role expanded to member of the Executive Committee of the firm. Her global influence has expanded with each station in her upward climb to currently heading team IMF. Her father was a Professor of English. Her mother taught school. Divorced with two young adult sons, she lives with her partner entrepreneur Xavier Giocanti. A competitive swimmer in high school, she still swims and follows a vegan diet – never consuming alcohol. Christine Lagarde’s brilliance has enabled a life lived on her own terms.
During the Brookings Institute presentation, she smiled when sharing the revelation that the world has a rare opportunity to attain lasting geo-economic stability. Achieving success in this small window in time will require collaborative efforts, and a collective will to overcome current challenges. Social programs that assist in socioeconomic mobility for the populace are necessary for true recovery and growth. Furthermore, in order to promote healthy competition and robust national growth, education must become a priority. Science, Technology, Engineering, and Mathematics or STEM workforces are paramount to achieving global parity and socioeconomic mobility to the growing numbers of poor.
In order to attain a solid footing in creating sustainable economic growth and prosperity the wealthy must share. This is necessary to the creation of a medium and long-term growth model for economic recovery. There must be a sustainable social and monetary mechanism present to assist the poor in finding paths of upward mobility. Strong reforms and governmental financial support lessen the opportunity costs in ignoring the needs. Ignoring these mandates will result in far greater costs to remedy.
A collaborative approach among world leaders has proven to be successful. Global leaders must possess the innate ability to engage with other countries. Isolationist policies stifle competitiveness needed for global economic growth. There must be coordinated regulations that are borderless.This transformative behavior opens doors to those emerging markets that must play a bigger role in global affairs. Part of attaining success in achieving geo-economic stability is to invite new players to the G20 table, India and China. With their success in reaching parity in terms of global wealth, they have earned the right to sit in arbitration of new policies. After two decades of robust international commerce, emerging markets represent 50 percent of global growth.
She explains that we must look at how the world is already participating in collaborative efforts. One example was the announcement in December 2011, where Japan and India unveiled a new currency swap agreement that eased their short-term liquidity woes. The currency swap of yen and rupee for US dollars allowed them to tap into each other’s foreign exchange reserves. This teamwork among countries exemplifies how coordination within global leaderships can achieve geo-economic success.
Madam Lagarde explains that her suggestions for global economic stability are sovereign specific. Where some countries are lagging, others are exceling. It is clear that there must be quick and coordinated action. As a team, geopolitical leaders must act with confidence and not dwell too long on one failed solution. That same answer may be a means of rectification in a different scenario. Each resolution must be tailored to the needs of a specific country. Determinations adopted for Germany will not contain solutions easily embraced by Greek populace. Alternatively, China’s imports should begin to match its exports and raise the level of its domestic consumption.
A monetary crisis can be kept at bay when we create new economies. In closing Christine Lagarde quoted Nelson Mandela, “After climbing a great hill, one only finds that there are many more hills to climb.”
A French Woman Influences Global Wealth
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