Friday, April 20, 2012

Flaherty's no to the IMF

Update (Friday 8:35 p.m.) below.

From Canadian Press last night: "Flaherty digs in heels on calls to pony up more bailout money for euro zone." Jim is all talk to the hand, Eurozone:
Finance Minister Jim Flaherty had some tough talk on Thursday for the 17 euro zone countries, saying Canada and other non-euro nations shouldn't be expected to commit any more bailout funds to the region and even publicly challenging a top European Central Bank official.
Tough talk from Flaherty on Thursday. Preceded by tough talk from Tim Geithner on Wednesday where on behalf of the U.S., he too said no more funds to the IMF. Why is the U.S. balking?
The United States, the IMF’s largest shareholder, is refusing to offer more cash, in part because of skepticism that Europe has done enough, the view that the IMF has substantial resources already and reluctance to seek more money from Congress in an election year.
That latter point, that the U.S. position is election year politics, is more explicitly emphasized here. All of this U.S. backdrop kind of giving us a little bit more context to the portrayal of the situation as Jim vs. the European Central Bank Executive Board and Jim vs. Christine Lagarde. Really, it's more likely that it's a case of Jim standing behind Tim Geithner and taking license from that freedom.

So why do we care? Well, Canada doesn't hesitate to skip around the world these days telling anyone who will listen how well our economy has done and held up through the recession years. Like Harper did in Colombia this week:
Canada is right now one of the few strongly recovering, growth-oriented, developed economies.

The relative strength of the Canadian economy has been shown through the recent worldwide recession and nascent recovery.

It is based on a secure banking system, solid macroeconomic policies, open and transparent government institutions, and stable parliamentary politics.

That is not just our opinion.

The World Economic Forum considers Canada’s banks to be the soundest in the world, and of course, earlier this week Moody’s came out and said the same thing.

Forbes magazine ranks Canada as the best place on earth to invest, and the OECD and IMF continue to predict that the Canadian economy will be among the leaders of the industrialized world over the next two years.
So you'd think we'd be capable, like other nations, of stepping up when the IMF is seeking funds in case European economies go under. We don't face election year politics, after all, the Canadian public likely wouldn't bat an eye at us making a contribution. But since the U.S. isn't, easier for us not to do so. Never mind all the glowing talk from Harper on us leading the industrialized world.

Meanwhile, Japan, that was rocked with a tsunami and nuclear disaster that is still unsettled, has stepped up with $60 billion, along with Denmark, Norway and Sweden chipping in $26 billion. Lagarde now claims to have about $320 billion in pledges of the $400 billion she is seeking.

We're more of an international outlier now, such developments tend to confirm it. Sure hope we won't need the world's assistance for anything in the future.

Update (Friday 8:35 p.m.): Here's the Canadian Press update on Friday night. The IMF has raised $430 billion in pledges, excluding Canada and the U.S. Just wanted to add the Japanese official's quote here:
Japanese Finance Minister Jun Azumi said his country wanted to make a significant contribution in part to say thanks for the support the world provided Japan last year.

"Last year we were hit by a great earthquake and a large number of countries provided assistance," Azumi told reporters at a briefing following the G-20 meetings. "Now we are heading toward reconstruction and we are moving solidly so we have to help (other) people who are in need."