A new job for the IMF: as global policeman

In early November the head of the world’s leading multilateral agency made a remarkable public bid for survival. Speaking in São Paulo, addressing the world’s most powerful finance ministers, Dominique Strauss-Kahn, managing director of the International Monetary Fund, announced that his institution was the right one to lead us out of our financial and economic malaise. Conveniently overlooking some uncomfortable facts — that the IMF must at least share responsibility for getting parts of the world into this soup, and that it failed to predict the coming financial storm — Strauss-Kahn told his audience that the world needed ‘a stronger IMF, particularly as far as early warnings are concerned’.

In this the Frenchman was at least half correct. If this crisis has taught us anything, it is that we desperately need some sort of early warning system for the global economy. All of us — from slack-jawed governments to maxed-out mortgage borrowers — are guilty of succumbing to the idea that this bubble was just part of a natural economic cycle.