IMF's Lagarde: Global Trading System In "Danger Of Being Torn Apart"

Without mentioning either the US or China by name, IMF head (and convicted criminal) Christine Lagarde warned about the dangers of the world being "sucked into a protectionist spiral" that would undermine global growth - the latest sign that the IMF's upcoming global growth projection might be somewhat less enthusiastic than the nearly 4% rate for this year and next forecast by the IMF in January.

Lagarde

While her organization remains optimistic, Lagarde said Wednesday during a speech in Hong Kong ahead of the annual spring meeting of the IMF next week in Washington that the global economy is benefiting from surging investment, recovering trade and "favorable" financial conditions (low or negative interest rates) all of which are encouraging companies and households to spend more money.

The only problem is that as we have shown in recent weeks, this "coordinated recovery" is now over.

Worse, growing protectionism could quickly reverse out all of this she said. "Yes, the current global picture is bright. But we can see darker clouds looming," she said.

Parroting an argument that has been made countless times since Trump unveiled his aluminum and steel tariffs, Lagarde said the rise in global trade reduced extreme poverty, reduced the cost of living and created millions of high-paying jobs.

"But that system of rules and shared responsibility is now in danger of being torn apart," she said. "This would be an inexcusable, collective policy failure."

Import restrictions, Lagarde said, hurt everybody - especially the poorest consumers.

"Increasing trade, removing barriers, encouraging this level playing field to which everybody should contribute has to be done collectively," she said. "It can’t be by exceptional measures. It can’t be by unilateral threat."

But instead of the biggest risk being to the overall growth picture, Lagarde said trade barriers risk "undermining confidence", which would in turn hurt investment.

Of course, the latest round of "conciliatory" rhetoric from both Trump and Chinese leader Xi Jinping would suggest China is considering a concession on auto imports that could placate the US and help stave off an all-out trade war - though it's unclear if this is another bluff.

Lagarde also appeared to take Xi at his word when he "renewed" his promise earlier this week to finally lower barriers for foreign firms to compete in China's banking and insurance sectors (a dangerous prospect for the Communist Party because they wouldn't be able to directly control the foreign firms).

Lagarde hailed his promises as "significant advances that we need to see delivered in the coming months" and "clearly an improvement to a situation that has evolved over time," she said.

"We need to be a little bit sensible about this talk about a trade war," she said. "There are threats and there are counter threats, there is an attempt to open a dialogue and I think we should support that dialogue attempt as much as we can, that is the way to progress the situation, not to let it snowball into something that would then lead to significant consequences."

Well, if the IMF is hanging its hopes for global growth on the promises of the newly crowned Chinese emperor, then good luck.

Meanwhile, in an implicit critique of President Trump's grumbling about the US trade deficit, Lagarde insisted that trade deficits are an "imbalance" driven by "the fact a country spends above its income" - not a sign of some injustice, or the predatory practices of a trading partner. And with global risks intensifying, Lagarde urged her audience to do more to widen the window of economic opportunity in the developed and developing worlds.

"The window of opportunity is open," she said. "Yet there is new urgency because uncertainties have significantly increased - from trade tensions, to rising financial and fiscal risks, to more uncertain geopolitics."

The IMF will release its next quarterly growth forecast on April 17; expect it to be far less optimistic than recent prior editions.

Comments

DownWithYogaPants Dindu Nuffins Wed, 04/11/2018 - 10:15 Permalink

I wish I could get a job as a nincompoop Western Private Central Banking Cartel spokes-model like Lagarde.  Bet it pays well and you never have to think.  Just mouth the words and you are out by lunch.

She looks like a piece of beef jerky in an expensive pants suit.  Maybe she should run for president.  She's almost as tasty as a dancing dumpling.

In reply to by Dindu Nuffins

gdpetti ProstoDoZiemi Wed, 04/11/2018 - 11:20 Permalink

Could be a sign for the rest of us in the herd.... a symbol to spot them... a 'warning' sign.. danger ahead. Trumpy, Boris... et al. but they are still 'alive' as real people and not just psychopaths... there is that difference... which, again, is why the 'smart' Jews don't live in Isreal... the land full of psychos... said to be close to half... imagine that!

In reply to by ProstoDoZiemi

keep the basta… Wed, 04/11/2018 - 07:51 Permalink

Lagarde insisted that trade deficits are an "imbalance" driven by "the fact a country spends above its income" - not a sign of some injustice, or the predatory practices of a trading partner. 

wow interesting idea. Here where USA companies are manufacturing overseas, importing their products eg apple phones back home costs.

Angry Plant keep the basta… Wed, 04/11/2018 - 09:27 Permalink

So a synchronized global depression is her answer to US and EU trade deficits with China. As Detroit and southern Europe suddenly cut back to bring consumption into balance. Who would have thought 20% plus unemployment was a sign of over consumption. Meanwhile China and Germany will see massive reductions in employment and economic growth as well from loss exports as others are rebalancing.

Isn't the IMF supposed to prevent things like she is suggesting here? IMF doesn't have promotion of free trade as it mission. Between IMF imposed global depression and trade war I think world would rather take it chances on a trade war. 

In reply to by keep the basta…

DillyDilly Wed, 04/11/2018 - 07:57 Permalink

If "global growth" [which these leatherfaces applaud] was responsible for getting the world into the situation that it finds itself in today...

 

IT'S OVERRATED!

TFS Wed, 04/11/2018 - 07:58 Permalink

I thought we are suffering the ravages of Global Warming?

 

If that's the case then a lack of Global Growth is COOL, No?

 

Which is it?

BoingBoing Wed, 04/11/2018 - 08:09 Permalink

Why should the average global citizen give a shit about world trade? It's not improved our quality of life or opportunity over the past 20 years - it's merely siphoned value from the poor into the pockets of the wealthy.

I am living an appreciably worse life than my parents had. And they were poor.

They could still buy their first house for 1.2x years wage. I'm looking at 6-8x. Could still go to university on grants. Could still buy the occasional overseas trip. Their food wasn't poisoned with microplastics, and their country still manufactured clothes and hardware domestically.

What has actually improved for the rest of us?

Dumpster Elite BoingBoing Wed, 04/11/2018 - 08:38 Permalink

Come on, you can buy cheap Chinese shit! Look how much cheap shit you can buy now...when this stuff was "Made in America", you couldn't get HARDLY as much of it, for the same amount of money. Now that the multi-nationals and Globalists transferred all those jobs overseas, now you can get all that stuff much cheaper. Isn't that great? Of course, the quality of everything now is just god awful (Chinese steel??? Compare any Chinese garbage Crescent wrench to an old time American-made wrench ). But quality doesn't matter any more, right? It's "how much cheap shit can I get for my dollar". And hey, somebody got rich off of all this. It wasn't you...but it WAS somebody....so that's a good thing, too.

In reply to by BoingBoing

bigloser Wed, 04/11/2018 - 08:33 Permalink

Jeebus, if I had to see that crinkled face very morning I'd shoot myself.

That woman needs to stop the laser treatments. A boob job wouldn't hurt, though. On second thought, scratch that. Waste of good silicone.

At least the IMF has the proper acronym, Insane Muther Fukkers.

pauhana Wed, 04/11/2018 - 08:36 Permalink

All this because someone - Trump - pointed out that the "system" has been rigged by TPTB against the US.  The IMF protects the fat pig oligarchs who are our trading partners.  When they squeal, the IMF jumps into action.