UK Edition
There will be plenty of speeches to snooze through. There will be some solemn warnings about the risks to financial stability. And there may well be an initiative or two on climate change, and perhaps another one on inclusivity, to demonstrate that it is committed to progressive social change.
When the annual meeting of the International Monetary Fund (IMF) and the World Bank opens in Washington on Monday nobody expects anything other than another round of banal, platitudinous statements.
Surely this is the time for a radical revolt? In reality, the IMF has badly lost its way. We saw that most dramatically with the Fund’s ridiculous intervention in the sterling drama in the UK, when it seemed more interested in inflaming the situation than calming it.
But we have seen it in its failed intervention in Argentina, its biggest loss in history. We have seen it in its failure to coordinate a meaningful financial package for Ukraine. And we are seeing its complete failure to grapple with all the stresses caused by interest rates finally rising.
The blunt truth is the IMF has turned into an engine of complacency, spreading chaos wherever it goes. Its members, with the UK in the lead, should throw out its inept, intellectually lazy leadership - before they can do any more damage.
It is certainly an opportune moment for the two bodies - the IMF and the World Bank - charged with stabilising the global financial system to be gathering to work out what needs to be done to avoid another financial crisis.
With interest rates rising across the world, with inflation rampant, with a recession looming, the currency markets getting pummelled by a soaring dollar, and with rumours of major financial institution such as Credit Suisse or Deutsche Bank heading for a collapse swirling across the internet, the levels of risk have reached levels not seen since 2008. If ever there was a moment for the major world leaders to get together and work out what needs to be done to steady the ship, this is surely it.
The trouble is, it is not going to happen. Ahead of the meeting, the managing director of the Fund, Kristalina Georgieva, issued a statement of such stultifying blandness it would have been hard for even the nerdiest follower of the global economy to stay awake for more than a couple of nanoseconds.
Apparently, the Fund plans to “stabilise the world economy”, create more “resilient systems” and address the “special needs of developing and emerging countries”. “That’s it?,” argued High Frequency Economics in a withering note.
“There is nothing at all new in this assessment. We fully support the idea of transforming unstable and troubled economic conditions for more stable ones, but how does the IMF propose to do that? Can it end the war in Ukraine? Can it make crops grow in a drought, or end droughts? Will the IMF be able to broker diplomatic and commercial detente between the United States and China? Can it make poor countries rich enough to pay their bills or emerging countries emerge faster into economic and financial stability? These are all lofty goals, but they are also objectives that have been in the IMF’s viewfinder for a long time already with no success.”
That is very true. In reality, the IMF has badly lost its way. That was most dramatically illustrated by its ridiculous intervention during the UK’s minor kerfuffle in the bond markets - known by some as a “sterling crisis” when it was nothing of the sort - when it seemed more intent on stirring up the crisis than trying to calm it down.
But we have seen it lots of times over the last few years. Its 2018 bail-out of Argentina, costing it a record $57bn (£51bn), has turned into a catastrophe of epic proportions, and has saddled the country with even worse debts than it started with (Argentina doesn’t have a great record of paying money back! Who knew?).
It has woefully failed to provide adequate support to keep the Ukrainian economy alive despite the pressures of its heroic resistance to Russia's illegal invasion; shockingly, an extra $1.3bn, a measly sum, will be considered at the summit instead of being rushed through.
Perhaps worst of all, we are already getting signs that the ending of 14 years of zero interest rates and programmes that printed money on an unprecedented scale are going to reveal all kinds of nasty fault lines in the financial markets, and yet the IMF and its officials don’t seem to have even woken up to the problems they are about to face, never mind figuring out what to do about them.
There are two big issues. The first is that the system of appointing EU’s hacks to the top job means it is controlled by mediocrities. First Christine Lagarde, a lawyer with little financial experience, and now the hapless Kristalina Georgieva, means it is always led by someone who is hopelessly out of their depth. The second is that it has been captured by the same groupthink that dominates so many international bodies.
It is not that there's anything wrong with combating climate change, or promoting equality. They are worthy enough causes. And yet they have also become a form of displacement activity, preventing it from tackling the issues it is actually meant to be working on. In reality, the Fund is completely incapable of doing its job any more.
It isn’t stabilising the global economy, nor is it coordinating policy, nor is it bringing new ideas to the table. It has just turned into an expensive, virtue-signalling talking shop, and we surely have enough of those already. As the members gather in Washington they should recognise that - and throw out the leadership, and replace them with a team that can work on the real challenges the global financial system faces - and before it blows up again.
Members of the IMF should throw out its inept, lazy leadership
The blunt truth is the IMF has turned into an engine of complacency, spreading chaos wherever it goes