New IMF Head Urges Rise in US Debt Ceiling
Predicting Bad Results
Christine Lagarde, the new chief of the International Monetary Fund, predicted dire consequences in the United States and across the world if the US does not raise the limit on borrowing which is legally imposed by the US Congress.Lagarde is the first woman to lead the prestigious international lending institution, taking her position on June 5 after the resignation of her predecessor Dominique Strauss-Kahn in May, after he was accused of sexual assault.
Interest Rates Will Rise and Stocks Will Tumble
Legarde said in an interview that was broadcast on Sunday that a failure on the part of the US to raise the borrowing limit past $14.3 trillion could lead to increasing interest rates and stock market deceleration. Together these two occurrences could wreak havoc on global economies and the US domestic economy, thwarting what the IMF sees as its mission- a stable world economy.President Obama has stated that the US will begin to default on its loans on August 2 unless some kind of agreement is arranged.”If you draw out the entire scenario of default, yes, of course, you have all of that — interest hikes, stock markets taking a huge hit and real nasty consequences, not just for the United States, but for the entire global economy, because the U.S. is such a big player and matters so much for other countries,” she said.
Expecting Good Behavior
Addressing the circumstances of her taking over of the IMF, Lagarde explained what she intends to do to keep the confidence of the 2,500 employees of the IMF and the respect of the 187 member nations:
“When it comes to ethics and whatever I do, I always think to myself, would my mother approve of that,” she said. “And if she did not, then there’s something wrong.”
Lagarde added that she plans on being on her “best behavior all the time.”