Christine Lagarde Warns Against ‘complacent’ Europe

Speaking at the Fund’s headquarters in Washington DC, managing director Christine Lagarde told CNN’s Richard Quest that member states cannot afford “fatigue” on their commitments to create jobs and to shore up the region’s banks. Europe out of limelight Europe has been spared some market scrutiny recently, as headlines shifted to the U.S. debt ceiling negotiations and the Federal Reserve’s bond-buying program. Europe’s energy challenges Solving Portugal’s economic woes Lagarde said that leaders in the currency union will be eager to remain out of the limelight. Is Serbia ready for EU membership? And last year European finance ministers approved a 39.5 billion euro ($51.6 billion) lifeline for Spain’s banks, struggling after the property bubble went bust. In return for state aid, creditors have imposed strict rules on debtor nations, forcing them to carry out harsh austerity measures. However, that strategy has come under question. Mujtaba Rahman, Europe director at Eurasia Group, said Germany may believe austerity is working but “clearly there’s a strand that believes otherwise.” Some eurozone economies, he noted, believe they have improved after easing off on austerity. Tackling youth unemployment Lagarde, a former French finance minister, also highlighted youth unemployment as the biggest priority on the policy-making agenda. She said: “Countries have to do their job; the IMF will help the process as well so we have to partner goodwill, the money available and political determination to focus on the right issues.” Youth unemployment in Spain and Greece is above 50%, where strict austerity programs are in place, while rates in Portugal, Italy and Ireland are all above 30%. Widespread unemployment has led to anti-austerity protests in the worst-hit nations with many demonstrations turning violent.

Europe Has Tea Parties, Too. They’ve Just Learned to Compromise

Had they stayed within the fold, he says, UKIP-type members of Parliament could have held us hostage just as the Tea Party is doing to the Republicans. Without them, Newmark adds, the Tories still have been able to pass austerity budgets. In the U.S., members of the House and Senate allied with the Tea Party have the support of some percentage of voters for their unyielding stance on fiscal policy. But because they hold power as Republicans, rather than in a coalition alongside the GOP, its hard to tell how many Americans believe they were right to shut down the government and threaten default. America has never done more than flirt with the idea of a third party. Those that gained a modicum of recent support rose up around the appeal of a single person, such as Ross Perot or Ralph Nader. Like new parties in Europe, the Tea Party seized on an issuepublic debtthat both major parties had agreed to ignore. Its shown staying power that eluded other attempts to form lasting third parties. Yet the true test of its strength and legitimacy will come only if it leaves or is ejected from the Republican Party that now uncomfortably hosts it. Running candidates for office under its own banner would reveal the depth of its popularity. And it would force the party to decide whether it wants to make laws or throw rocks.