When Christine Lagarde Talks, Everyone Listens

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Ayanna Nahmias, Editor-in-ChiefLast Modified: 01:14 AM EDT, 27 September 2012

Christine Lagarde Headshot, Photo by IMF

WASHINGTON, DC - Christine Lagarde, the International Monetary Fund, Managing Director is arguably the most powerful woman in global finance next to German Chancellor Angela Merkel.

Merkel is noted for her role in trying to resolve the Eurozone debt crisis, as leader of Europe's biggest and most robust economy. Merkel has also been named by Forbes magazine as the most powerful woman in the world.

Since the global economic slowdown, various countries have struggled to retire debt in the face of increased jobless rates, volatile financial markets, and decreased GDP.

Therefore, when Lagarde announced that the IMF is set to cut its forecast for global growth next month, the news was greeted with trepidation by the United States and other governments including China.

At issue is the growing lack of confidence in the ability of European policymakers to attack head on the crisis affecting the Euro Zone, as well as an increased unwillingness by countries with strong economic growth and low debt, like Germany, to support the bailout of countries that refuse to implement effective austerity measures.

In fact, the S&P 500 fell for a fifth straight trading day on Wednesday as protests in Spain and Greece over euro zone austerity measures raised fresh concerns over Europe's ability to get its debt crisis under control. The possibility of countries with stronger economies defecting from the euro zone in favor of a return to their national currency also contributes to continued market instability.

When Lagarde announced that the IMF is cutting its global growth projection for 2013 to 3.9 percent although it left its 2012 forecast at 3.5 percent in July 2012, it was widely viewed as a lack of confidence in Europe's ability to resolve the euro zone crisis.

In particular it was viewed as a tacit indictment of government officials inability to effectively address the economic downturn in their respective countries. The failure of these countries to implement austerity measures to reduce their debt has adversely affected the economies in the rest of the world.

In fact, Lagarde stated that she believes the euro zone crisis poses the greatest risk to the world economy followed by the looming U.S. fiscal cliff which she believes also presents a "serious threat."

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Published: 27 September 2012 (Page 2 of 2)

"We continue to project a gradual recovery, but global growth will likely be a bit weaker than we had anticipated even in July, and our forecast has trended downward over the last 12 months," Christine Lagarde said.

"Markets briefly rallied after the European Central Bank's decision to launch a conditional bond-buying program for troubled states. ECB President Mario Draghi introduced a program to buy European nations' debt on a potentially unlimited scale — with major conditions. The most important at the moment is that a country must formally request the assistance and agree to financial conditions from the international lenders." (Source: Seattle Times)

This model is similar to the U.S. Troubled Asset Relief Program which was enacted by President George W. Bush in 2008. The TARP program purchased assets and equity from financial institutions to strengthen the financial sector and stave off a severe financial downturn unseen since the Great Depression. However, it remains to be seen if the ECB’s approach will prevent the euro zone from slipping into deeper recession.

Lagarde said that the IMF supports Europe moving to a banking union which will prevent nations from being dragged down by sickly banks. The euro zone is currently weighed down by the faltering economies of Portugal, Greece, and Spain; and in the case of the latter, Lagarde believes that it appears headed toward a bailout like the one that Ireland received after rescuing its banks.

Despite this, Legarde does support the idea of giving Spain and Portugal more time to implement budget and other reforms. But she also expressed caution and was wary of Italy and France, two of Europe’s biggest economies, sincerity in charting a path to substantive economic and budget reforms.

Lagarde said structural reforms and fiscal adjustments are going to be unavoidable in crisis-hit euro zone countries, and that continued austerity measures must be more steadfastly enforced as a prerequisite for receiving future bailout funds.

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German Thalidomide Manufacturer Apologizes

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Ayanna Nahmias, Editor-in-ChiefLast Modified: 00:25 AM EDT, 2 September 2012

Thalomid Birth Defect Prothesis, Photo by Gaetan LeeLONDON: Nearly 50 years ago an estimated 10,000 children worldwide were born with birth defects that left its victims limbless or with flipper like appendages.

The cause of these gross malformations was a drug called Thalidomide which was manufactured by the German company Grunenthal GmbH.

The drug was originally manufactured and sold to treat morning sickness in pregnant women during the 1950s and 1960s. However, the women who took the drug gave birth to disabled children who, if lucky to survive infancy, lived challenging lives with severe disabilities.

Thalidomide was sold in 46 countries but never gained FDA approval in the United States. An estimated 40 babies were born with thalidomide-related deformities in the United States, according to the New York Times until it was pulled from the shelves in 1961.

On Friday, 1 September 2012, Grunenthal CEO Harald Stock apologized at the unveiling of a statue for the drug's birth defect victims in Stolberg, Germany. He made the apology on behalf of the company for its culpability in manufacturing the drug without adequately testing its safety for use by pregnant women, as well as its lack of response to victims of the drugs over the last 50 years.

"We apologize for the fact that we have not found the way to address you person to person for almost 50 years. Instead, we have been silent and we are sorry for that. We had no reason to imagine that it could seriously harm their unborn children.”

For the victims of the drug this apology is too little and too late. Some even feel that the apology is an insult to those who have lived with the effects of thalidomide for the past 50 years without redress. Despite the controversy surrounding the drug and its obvious detrimental effect, the drug is still in use.

It is currently used in a limited capacity in the United States for treating multiple myeloma (a cancer that starts in the bone marrow). When prescribed as a course of treatment for women, they must be menopausal for at least two years or have had a hysterectomy.

Even then, they are informed that according to the National Institutes of Health severe birth defects can result from a single dose of thalidomide and thus are subjected to regular pregnancy tests while taking the drug.

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Muslims & Jews Unite Against German Circumcision Ban

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Ayanna Nahmias, Editor-in-ChiefLast Modified: 22:58 PM EDT, 13 July 2012

Circumcision Day For Muslim Boy, Istanbul, Turkey, Photo by Patrino IoCOLOGNE, Germany - On 29 June 2012 a doctor in Cologne circumcised a 4-year old Muslim boy at the behest of his parents. His family is part of a community of 120,000 Muslims who inhabit the region and practice Khitan, the Islamic rite of circumcision.

A few days later the boy was taken to the hospital because he was still bleeding which resulted in the doctor who performed the procedure being charged with causing the boy grievous bodily harm.

Male circumcision is a 3,800-year old practice that is the bedrock of Judaism and Islam, and within these two faiths it is a physical demonstration of an individual's covenant with God.

Jewish boys must be circumcised on the eighth day following their births, and many Muslims boys must also be circumcised though the age at which the procedure occurs varies according to family, country and branch of Islam.

The Cologne Regional Court’s ruling prohibiting non-medical circumcision has subsequently raised a furor among German Jews, Muslims, and some Christians. Leaders of all three faiths are outraged by the government’s interference in religious practices, and it is seen by many as the first step in the erosion of the separation between church and state.

Many believe that these challenges to religious and cultural practices are being instigated by anti-immigrant sympathizers. In April 2011 France banned the Muslim practice of full-face covering headscarves, and on 6 July 2012 the French MP urged the government to ban Muslim headscarves for female soccer players despite the fact that the International Football Association Board (IFAB) ruled that hijabs could be worn.

While many may disagree with the practice, if circumcision is outlawed, it will not eradicate the practice and most likely will increase the number of injuries suffered by young boys because the procedures would then be performed in secret by unskilled practitioners in unsanitary conditions.

The Cologne court’s ruling is reminiscent of the criminalization of abortion in the United States. Prior to 1973 many women died because it was illegal in most states for them to receive an abortion in clean and sterile environments by trained medical personnel. This didn’t change until 1973 when the U.S. Supreme Court ruled that abortion is legal because it falls under the right to privacy.

According to Reuters, a spokeswoman for Chancellor Angela Merkel stated that “Everyone in the government is absolutely clear that we want to have Jewish and Muslim religious life in Germany. If circumcision is carried out in a responsible manner it must be allowed in this country without punishment."

In an era where there is increasing hostility between Muslims and Jews, this ruling has resulted in European rabbis and Muslim clerics banding together to vociferously denounce this decision. Europe is increasingly secular and these continued assaults on religious freedoms have become the catalysts for unlikely alliances as former adversaries adopt the stance of ‘the enemy of my enemy is my friend.’

[youtube=http://www.youtube.com/watch?v=W7btIrMVWPk]

Legarde's IMF Jenga Gambit

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Ayanna Nahmias, Editor-in-ChiefLast Modified: 00:49 AM EDT, 22 February 2012

FRANCE, Paris - In the latest Greek Tragedy, aka the 'Greek Deal,' the Troika seems determined to ignore the adage of “not pouring good money after bad.”

Greece, Ireland and Portugal are the first three countries in the euro zone to agree to ‘bailout’ plans with the so-called Troika consisting of the European commission, the European Central Bank (ECB) and the International Monetary Fund (IMF) which place them under the direct tutelage of their creditors.

Although exact figures haven’t been publicly disclosed, it is believed that after this second bailout Greece will owe a total of €50 billion to the IMF, and according to German Finance Minister Wolfgang Schaeuble, bailout No. 2 for Greece will be roughly €23 billion.

The IMF, ECB and European Commission have concluded that Greece's debt could hit 160% of GDP by 2020.  Even with recently implemented austerity measures which many claim are not substantive enough, Christine Legarde, the IMF’s managing director, seems poised to infuse additional capital into Greece’s foundering economy.

On Tuesday, Legarde issued the following statement, “The combination of ambitious and broad policy efforts by Greece, and substantial and long-term financial contributions by the official and private sectors, will create the space needed to secure improvements in debt sustainability and competitiveness.”

The obfuscated motivation behind the IMF’s desire to hurriedly conclude months of bailout negotiations despite Greece’s reticence and its likely inability to repay anything close to 100 cents on the drachma, has some questioning the deal.

According to financial news sources, this infusion has less to do with Greece and more to do with the rescue of the rest of Europe in an effort to prevent massive defaults and/or an exodus from the euro. Despite deep criticism, Legarde is faced with the same dilemma President Barak Obama wrestled with early in his presidency – capital infusion via bailouts or risk the total collapse of the economic system.

Legarde, as the IMF managing director is gambling that these measures will ensure the preservation of a 17-nation euro zone. Though many would argue that this is not central to the IMF's core mission, the global economies are so interdependent that like the game of Jenga, without careful positioning and risky calculations, it could all come tumbling down.

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