by iMFdirect
The IMF’s managing director Christine Lagarde gave her first press conference today, in which she outlined three focal issues for the institution:
Our analysis of the connections between and among countries’ economies and financial sectors
The credibility of our analysis to countries must be candid and evenhanded
A comprehensive approach to our work that includes employment and social issues to help create stable economies.
Lagarde told the assembled reporters she had arrived in Washington soon after her selection because “there are many issues to address that cannot wait for a summer holiday.”
In an interview the day before, Lagarde said sovereign debt and capital flows were two of the main challenges facing the global economy.
Have a look:
Filed under: IMF, International Monetary Fund Tagged: | capital flows, Christine Lagarde, employment, financial sector, global economy, IMF, International Monetary Fund, social issues, sovereign debt, youtube
Given rising probability of a second slump, a closer look into banks’ Level-3 assets seems advisable.
My head hurts… http://bilbo.economicoutlook.net/blog/?p=15312
@Christine Lagarde “Let us not forget that we are just coming out of one of the biggest financial crises in centuries.”
Yes, but now, three years later, what is really scary is that the regulators have yet not been able to understand, and much less acknowledge, the monstrous mistake they did when defining capital requirements for banks based on the credit ratings being right, instead of taking the precautions to safeguard the financial system for when these ratings would be wrong.
Never ever has so much pro-cyclicality been introduced and, to top it up, they are now awarding some systemic important financial institutions “too-big-to-fail” franchises, paid for with some minor capital increases in comfortable installments, and de-facto leaving all “systemic un-important and irrelevant financial institutions” hanging in the air.
We cannot but hope that “the largest, biggest, and most powerful brain power assembled together under one roof” starts functioning better. Good luck Mme Christine Lagarde, it behooves us all you have tons of it.
Per,
If you have not read it, the attached early 2007 paper by Mason and Rosner is defrinitely informative in re. rating agencies and RMBS and CDO.
Where Did the Risk Go? How Misapplied
Bond Ratings Cause Mortgage Backed
Securities and Collateralized Debt Obligation
Market Disruptions
http://www.riskandinsurance.com/userpdfs/MasonRosner2.pdf [PDF]
I recall that it was often dismissed but certainly helped me see ‘around the corner’ into 2008′s problems.
Regards
AJS
I do not really have a problem with the credit ratings… the raters are human and fallible, and, if you allow for Heisenberg´s uncertainty principle to come into play, then the more precise you try to measure the creditworthiness of a borrower the more you might affect that same creditworthiness.
But I sure have a problem with regulators that should know that their only real concern is when credit ratings are wrong and that they have no problem whatsoever when the credit ratings are right, and still they ordain capital requirements for banks that are based on the ratings being right. I just do not want regulators of that sort looking over our banks, and especially those who when regulating have not even defined the purpose of our banks.