The head of the International Monetary Fund, Christine Lagarde, is warning that a US default could cause the world to go into a recession, echoing President Obama’s warnings over the current fiscal fight.
Lagarde said, “If there is that degree of disruption, that lack of certainty, that lack of trust in the US signature, it would mean massive disruption the world over and we would be at risk of tipping yet again into recession.”
Obama loaded his argument with a reminder that Christmas is coming, as he said, “It wouldn’t be wise, as some suggest, to just kick the debt ceiling can down the road for a couple of months, and flirt with a first-ever intentional default right in the middle of the holiday shopping season.”
The president of the World Bank, Jim Yong Kim, also said:
The closer we get to the deadline the greater the impact will be for the developing world. Inaction could result in interest rates rising, confidence falling and growth slowing. If this comes to pass it could be a disastrous event for the developing world and that will in turn greatly hurt the developed economies as well.
Lagarde is known for her hypocrisy; in May 2012, she excoriated Greece as the country faced a financial crisis, raging, “Parents have to pay their tax… Do you know what? As far as Athens is concerned, I also think about all those people who are trying to escape tax all the time. All these people in Greece who are trying to escape tax.”
At the very same time, LaGarde was paying no taxes on her $467,940 yearly salary as head of the IMF.
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