Greek Bailout Money Is In Jeopardy As The IMF's Departing John Lipsky, Former JPM Chief Economist, Is In Temporary Command

Tyler Durden's picture

It turns out that the meeting that DSK was rushing to (in just a bit of a rush, without his cell phone), was a critical one for the future of Greece. Per the AP: "The arrest of IMF chief Dominique Strauss-Kahn means a key participant
will be missing at a European meeting considering whether to give Greece
billions more in financial help
." Does this mean that all Greek bailout talk is put on hold? As a result the headless (no pun intended) IMF is forced to promote its second in command, John Lipsky, previously chief economist of JP Morgan, to the rank of acting managing director, even as "separately, spokeswoman Caroline Atkinson said the fund remains fully functioning and operational despite the arrest of the fund's chief executive." What is funny is that it was just yesterday that Lipsky announced he was stepping down in August. What happens to the world's pseudo-bailout organization come September, when its top two officers are gone, is anyone's guess.

From AP:

Strauss-Kahn was to hold talks Sunday with German Chancellor Angela Merkel and join European finance ministers on Monday in Brussels. That won't be happening since he was arrested in New York City this weekend on suspicion of sexual assault on a hotel maid.

Ministers from the 17 countries that use the common euro currency are talking about whether they have to give Greece more help in paying its debts. Greece already received a euro110 billion ($157 billion) bailout package from the European Union and the IMF last year.

The International Monetary Fund says it "remains fully functional" despite the arrest.

And from Dow Jones:

John Lipsky is currently acting managing director of the International Monetary Fund, as the current head, Dominique Strauss-Kahn, is in police custody in New York following his arrest on attempted rape charges, a fund official said Sunday.

Separately, spokeswoman Caroline Atkinson said the fund remains fully functioning and operational despite the arrest of the fund's chief executive.

Lipsky, technically the first deputy managing director, was effectively put in the role when the fund chief went to New York on private business, the first official said.

The fund said early Sunday morning by email that Strauss-Kahn had retained his own private lawyer to deal with the case.

"The IMF has no comment on the case; all inquiries will be referred to his personal lawyer and to the local authorities," spokeswoman Caroline Atkinson said.


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uno's picture

from the front page of the regarding the rapist:

"The IMF remains fully functioning and operational."


uno's picture

also from their website

John Lipsky, an American, has been First Deputy Managing Director since September 2006. Before coming to the IMF, he worked for JPMorgan Investment Bank.

goldfish1's picture

IMF is forced to promote its second in command, John Lipsky, previously chief economist of JP Morgan

Motive enough.

anynonmous's picture

not so fast

from last month

"FRANKFURT (MNI) - From the view point of the International Monetary Fund, the bailout program for Greece could be extended beyond 2013, IMF Deputy Director John Lipsky said in an interview published Friday."

rsi1's picture

Lipsky? nah, just making room for Draghi..

asdasmos's picture

Indeed, the IMF is now flaccid.

digalert's picture

Lipsky? This stuff can't be made up...can it?

Xibalba's picture

"IMF is forced to promote its second in command, John Lipsky, previously chief economist of JP Morgan, to the rank of acting managing director" --- NOW it all makes sense. 

A Man without Qualities's picture

The funny thing is to trace Lipsky's career further back.  He was actually in Chase Manhattan Bank prior to the merger and before that, he was one of the IMF/ CIA/ Rockerfeller Chase economic hitmen in Chile.  DSK was never more than an interloper...

ThisIsBob's picture

It is unclear tio me how $3,000 a night hotel roms and first class seats on Air France (of which US taxpayers front 17%) is of substantial assistance to Greece.

Arius's picture

the bailout money is not going to greece either...its for banks in france and germany...greeks will just pay a higher interest...

duncecap rack's picture

Article says he was in NY on personal business.

ZeroPower's picture

Air France is pretty shitty though...just throwing it out there

CynicLaureate's picture

Not as I recall... in First Class on a Transatlantic Air France flight not only does the seat turn into a flat bed, they also provide complementary pajamas.  Nicest flight I ever took to Europe.



sgorem's picture

they also have very pretty stewardesses, dressed in cute little maids uniforms. They come around and "fluff your pillow up" for more HEAD room, and it's for free.........

bugs_'s picture

sacrebleu! sounds like oui are running out of heads at ze I.M.F.

Glasgow Gary's picture

This is precisely the kind of news event that traders will use to press a EUR short bet, only to discover that the effects last all of 6 hours. I expect the EUR to be rallying hard again by Tuesday afternoon.

Caviar Emptor's picture

hehe this sets the Fed agenda way back. They knocked down crude oil a bit through political maneuvering (twisting arms to get margins increased), and now the dollar will go sky high again. Both are deflationary and exactly the opposite of their stated goal from last autumn to create inflation. Earnings at big multinationals are now in jeopardy from a growing list of causes. Real interest rates are super negative. Housing jobs and incomes are still deflating. They're gonna have a fun summer!

Glasgow Gary's picture

But let's consider the pattern: all super-negative EuroZone scares the past year have resulted in further EUR strength after a short spike down. And, all USD rally hopers have been blown out after similar brief USD spikes. Just sayin'. What's more , the USD rallies are getting successively weaker, and shorter. That's been especially true this spring.

EUR sags tonight into tomorrow morning, then rallies hard starting tomorrow night or Tuesday morning as late traders once again think "news" is a cause to drive the EUR lower. They will be sitting on losses by Tuesday afternoon.

Caviar Emptor's picture

Agree. But my point is the anti-infaltionary forces are mounting against the Fed's little experiment. They're back flat on their arses with nothing to show for their trillions in diminishing returns. 

duncecap rack's picture

Wouldn't the fed be the winner if they were allowed to monetize the US debt with impunity? If they could print all they wanted with no loss to the purchasing power of the dollar it seems like win-win for the US gov. and the fed.

Caviar Emptor's picture

Ahh but you're missing the point: there can be deflation AND inflation simultaneously (biflation). It's very retro of the Fed to see it all in linear, 2-dimentional terms when reality is more polynomial and 4-dimentional. The real economy is deflating (incomes, jobs, real estate, corporate and tax revenues) while they continue to print trillions, weakening the dollar and causing hard asset inflation around the world. So no, there is no impunity. The more they print, the worse the US economy will get and they'll also jeopardize faith in the dollar possibly to the point where there's a global rush out (which is slowly gaining momentum already)

Rynak's picture

I'm still perplexed why the currency markets are still as strong as they are, especialy europe... i mean, its not like its underground news that the EMU is in big trouble. Shouldn't in such a scenario other more exotic but stable currencies go up?

DeadFred's picture

Your confusion is because you believe the markets still respond to news. If you look at the news that supposedly moved the FX markets what was really there? Last year the Euro dropped on 'fear of contagion' but solidified once 'stress tests' made investors gain confidence. Did anything real change during that time? Just the news coverage. IMHO the FX markets go where the FX gods (or devils) make them go and the news is there to suck retail investors into losing positions. But my humble opinion has become pretty jaded of late. I suggest a contrarian position.

dracos_ghost's picture

I was thinking the same. Even here on ZH, there have been posts about record levels of non-commercial spec long EUs. Good old fashion rigged game to create nothing but negative news to shake out the weak hands. Spike down, then the big dogs come back in and buy.

I also don't see how this impacts the Greek bailout. If anything, the IMF will need to come out with a super positive spin to the EU bailouts to maintain stability.

DSK was a lame duck administrator anyway, I agree with others that this has more to do with Sarkozy and the French elections than any economic news.



LeBalance's picture

... other more exotic but stable currencies go up ...

Now WHAT could they possibly be?

/jingle, jingle, jingle/

Caviar Emptor's picture

50% off Greek salads and Souvlaki. Hurry, supplies limited. 

Drag Racer's picture

in the case of Strauss-Khan, what happened to diplomatic ammunity? or does the port authority get around this?? seems quite a coincedence for this to happen right now... setup???

tmosley's picture

The IMF is not a diplomatic organization.

If it was, this financial crisis would look a lot more like Lethal Weapon 2.  And that would just be too awesome.

Drag Racer's picture

To play with the IMF you sign agreements which are similar to UN immunity clause.

Here is an example in practice...

Immunity for British IMF chief over 'wife assault'

Wolrd Bank has the same deal

This basically answers my question though. He was not operating in official capacity at the time of the incedent.

IMF bylaws state that its officials "shall be immune from legal process with respect to acts performed by them in their official capacity except when the fund waives this immunity." Strauss-Kahn's attorneys did not answer questions from CNN about whether he may claim that diplomatic immunity covers such an allegation.

Bringin It's picture

Appears it don't apply to rape.  Here's Domonique at the job interview.

Honest_Money's picture

I'm sure that there are many people in line who would love to hand out the SDR toilet paper and pretend that they are the savior of the world.

sabra1's picture

"The DS-K pecker remains fully functioning and operational."

Oh regional Indian's picture

Oh goodness. Lips to the sky. Such interesting names of key players in the world eh? Kash and carry, BrrrrrrBank, Dimon...d.... trippy.

Such a strange move in the grand game though. Puzzling. It feels like we are watching a bad B movie and the damn restraints on the arms of this plush chair hurt!

Nothing makes sense anymore. Really. The theater of the absurd is on us like a ton of bricks...



Caviar Emptor's picture

It's like a cheap remake of the good, the bad and the ugly. We got Obama, Osama and Omama (DSK)

snowball777's picture

Difficult to distinguish between hubris run amok (apparently) and a convenient framing lie, well-told...a well-meaning saboteur of the PTB could do worse than to insert a monkeywrench thus.

Sudden Debt's picture


So the IMF wanted to give them money which could cause the euro to drop pretty hard making the dollar to strong which could harm the "reconnery".

Monday the dollar will go down now.... the euro up... and the euro crisis remains.



RobotTrader's picture

At least none of our acting politicians is involved in a sex scandal.

I wonder if this means the Euro is going to get slammed tomorrow.

Perhaps we will see more of the "Risk Off" trade with mad F12-punching speculators selling anything and everything that is commodity oriented and fleeing once again into U.S. Dollars and Treasury Bonds.

Poor Bill Gross.

He picked the exact wrong time to be shorting treasuries.

Meanwhile, it looks like Jim Puplava and his crew have dropped the "buy and hold" religion on gold and oil, and Ryan actually has some of this clients short commodities and long dollars right now.

Even the most devout inflation worshipers are now starting to respect the powers of Uncle Gorilla, and have now adopted an F12-punching, short term bit-flipping trading strategy.

Heh, Puplava is actually bullish on many Dow stocks, as Ralph Ancampora is now convinced that we are now in a secular bull market.  As some of the most unlikey "widow and orphan" dividend stocks are skying like Internet stocks.  While gold and oil stocks are now under intense liquidation.

HamyWanger's picture

Robot, bro', I totally agree with your reasoning and I'm long stocks for this reason since February 2009.

But do you think the DOW can go higher than 14,500? It's already back at Nov. 2007 levels, and I'm afraid anymore further would be viewed as indecent. Sure, the Pigmen will probably not hesitate to do it, but it wouldn't surprise me if they allowed a 1,500/2,000 pts controlled drop to make a killing first on momo bulls, then on bears. 

Caviar Emptor's picture

Why not? And what would be the point of trying to be "decent" or even real? If you're right and only pigmen and uncle gorillas are in charge then we should see S&P 30,000 by December. That way they can all retire and let the momo bulls and bears fight it out for a few years with a good cushion. 

Arius's picture

Hamy...i am w/ you...remember a book from 2000 titled DOW 36000...better late than the moon!


El Hosel's picture

"At least none of our acting politicians is involved in a sex scandal."...

What a relief, things will be just fine.   They are all buttfrking the system daily.

Muir's picture


"Even the most devout inflation worshipers are now starting to respect the powers of Uncle Gorilla"

You are the most ignorant of apostates.

My good Sir, do you not realize what good news in disguise this is for silver?

$600 / ounce here we come.


RNC's picture

Comedy hour at its finest. You couldn't make this shiat up!

falak pema's picture

Merkel calls the shots on this...the IMF only follows up on what the ECB/Merkel have decided. They are NOT front seat on this...So Merkel will have her hands free to make her calls and IMF will be more back seat...that's all. Germany has NO strategic interest in seeing Greece defaulting. NONE. So plan accordingly.