Article from WeChat public account:Wall Street Insights (ID: wallstreetcn), author: Qi month, cover from the visual China
Christina Lagarde (Christine Lagarde) is staring thoughtfully at the walls of her office.
There is a cartoon hanging there: a woman who is nearly one meter tall and wearing stilettos is holding a whip and is about to beat a banker.
The lady in the comic is her own – then the French Finance Minister. Her proposal of “the government tightened the belt and lived, the people ride bicycles to cope with high oil prices” made some French people angry.
“If you succeeded in being elected president of the IMF, would you like to hang this picture on the wall of the new office?” Lagarde thought quietly.
It was already some day eight years ago. Time flies by, and now this cartoon is about to become a reality – starting today, Lagarde will officially lead all banks in the euro zone. There is no “whip” in her hand. It is hard to say whether the painting has no wall on the IMF office. The only certainty is that Lagarde will have the power to press the start button of all the printing machines in the Eurozone.
In Europe and the world, no one can be like Lagarde, throughoutHis career has always been accompanied by the label “The first woman in history”.
Like her favorite Hermès, the labels hanging on Lagarde are among the best in the world: France’s first female finance minister, G7 Group’s first female finance minister, IMF’s first female president, and Forbes’ world’s most influential One of the women.
Since November 1, the 63-year-old French woman has taken a new “first female” label: the first female president of the European Central Bank. At the recent handover ceremony, Lagarde took a golden bell from Draghi to summon the policymakers of the ECB policy. And, at least in the coming weeks, she will be the only woman in the ECB’s management committee.
At this point, there has been an interesting scene in the history of the global central bank: whether in the United States or Europe, the central bank’s helm is not an economist, but a lawyer.
For a woman who has no economic education background and no central bank experience, the ECB President’s title is obviously surprising. The incumbent current president, Draghi, holds a Ph.D. in MIT economics and has been a recipient of the Nobel Prize in Economics and is also in charge of the Bank of Italy. Lagarde himself admits: “I have studied a little economics, but I am not a very professional economist.” She also publicly admitted to hating mathematics.
All this, even she did not expect. In September last year, when Lagarde, the president of the IMF, heard that he would become the rumor of the next ECB president, it seemed to be very annoyed. She said that she has a very important job at the IMF. “When there is a rush of water coming in, I won’t leave this beautiful boat.”
The magic is that the outside world has not only questioned Lagarde’s election, but almost agreed with it, and even said it was quite expected.
Everything seems to be related to the largest “super loose money experiment” in human history in the past decade.
Forty years ago, economists convinced the world that good monetary policy needs to get rid of the political influence in order to look at it in a long-term perspective in an increasingly globalized and interconnected economy. Formulate monetary policy and let the economy go on the track of sound development. As a result, a batch of technical bureaucrats with deep economic background or financial market experience entered the central bank.
However, since the 2008 financial crisis, these technocrats have launched a series of round-the-money monetary stimulus measures, and their policies have not been very successful in pushing up inflation and stimulating economic vitality. Instead, the market has been worried about asset bubbles, and the central bank’s policy space is running low, and it will be difficult to deal with in the face of the next recession or crisis.
In some ways, technical bureaucracy has become a victim of success: low inflation has been rampant in advanced economies for so many years, and many people are no longer able to realize deeply what damage it will cause.
The times have changed. People now live in a world where politicians, the media, and the public can’t move to blame the central bank’s technical managers, and economic populism threatens the central bank’s independence.
In view of this, the central bank governor has largely been unable to immerse himself in the formulation of monetary policy. Instead, he needs to become a central bank spokesperson and must be able to participate in and even control the necessary political game in order to truly exempt monetary policy. Maintain independence by politicians.
Maybe, it is time for a layman with political intuition and political skills and good communication skills to take over the management of the central bank.
Lagarde has proven himself to be a competent political game controller. In the current era, she is considered the best candidate for the ECB president.
But the road ahead is not smooth, and the ECB president’s path also means high risk: Lagarde, who does not have sufficient economic theory, must be able to negotiate with economists and must know how to put economic interests Political interests are paramount, or at least economically and politically maintaining a delicate balance.
01 “President”
Lagarde is so good at competing for the first, even birth is no exception: she came to this world on the day of the beginning of the new year in 1956.
Under the rich marine culture of Le Havre, a port city in the north of France, Lagarde, born in a family of foreign language teachers, embarked on a unique path to life.
Under the influence of the father of the English professor and the mother of the Latin teacher, Lagarde in his childhood learned English and American culture that most of his peers had never touched. Parents often take her to the cultural salon and go to the theatre to enjoy the opera.
At the age of 17, his father died of motor neuron disease (MND), and Lagarde quickly left France to attend an international exchange program at a women’s college in Maryland, USA. These young experiences have laid a solid foundation for her future life. Some praised that Lagarde’s English ability is the same as her fashion sense. “Impressive.”
After his studies, Lagarde returned to France to study law at the University of Paris. This school has been a base for the ultra-leftist student movement since 1966. In 1968, when young French men stopped and participated in the massive student movement, Lagarde stayed away from the hustle and bustle, joined the National Synchronized Swimming Team, and won the bronze medal in the All-France Championship.
The young Lagarde is full of political aspirations. When she was in the United States, she gave William Cohen’s practice assistant to the then Clinton administration’s defense minister.
Lagarde has applied to the National School of Administration – this is the cradle of a French politician. In the history of the Fifth Republic of France, three presidents, seven prime ministers and many ministers were trained here – however, they were rejected twice. But she was not disheartened, but chose to go to Aix-en-Provence University in Provence to complete her master’s degree in political science.
Unfortunately, Lagarde faced a male-dominated world when he graduated. After being told that it would never be possible to become a French law firm partner as a woman, Lagarde turned to join American law firm Baker & McKenzie and was promoted to a partner only six years later, eventually becoming the first female board in the company’s history. The chairman, and received a very special title: Chairman (Madame Chairman).
2005 was an important turning point in Lagarde’s life. At that time, French Prime Minister De Villepin asked Lagarde to return to France as the Minister of Trade. Lagarde seized the opportunity and she was so eager to leave Chicago that she even forgot to bring her glasses. Since then, Lagarde has opened her life in the international political and economic arena.
02 “Stupid Lady”
After only two days as a trade minister, Lagarde made one of her few political mistakes.
Lagarde, who has long been accustomed to the rhythm of American work, is keen to discuss the holidays and rest days for the people of the motherland, and is surprised to work 35 hours a week. She boldly made a proposal to amend the French people’s highly respected labor laws.
After this statement, the “horse honeycomb” was smashed. The French press immediately gave her the nickname: “Stupid Lady” (Madame La Gaffe).
After experiencing the Minister of Agriculture and eventually being nominated as Minister of Finance and Economy, Lagarde proposed a fiscal austerity plan, which led to criticism from Prime Minister Sarkozy. When she suggested that the French should ride bicycles to deal with high oil prices, they were once again accused by Sarkozy.
The linguistic bluntness is just one aspect of Lagarde’s “going my own way” personality.
At the G20 meeting held in Osaka, Japan in July this year, the straightforward Lagarde “fired” on the Internet: she seemed to squint at Trump’s daughter Ivanka.
At the time, Lagarde was discussing issues with French President Marcus, Canadian Prime Minister Trudeau and British Prime Minister Teresa May. The 37-year-old “first daughter” Ivanka joined them. conversation.
You feel the expression of Lagarde at the time…
Talking about the impression of Lagarde, almost everyone will remember her decent suits in the first place. People use the word “elegance” to describe her. However, this is not the only image style of Lagarde. .
At a cocktail party held by a law firm, Lagarde’s anti-traditional leather pants and black leather jacket appeared in front of everyone, which surprised everyone. Because there is an unwritten dress code in the lawyer circle: on formal occasions, female lawyers should wear conservative suits and wear diamonds or pearl earrings.
It is also Lagarde’s act of being comfortable, confident, and not dressing for her, which has enabled her to open the door smoothly in the international legal community.
03 “Women need a thick face like an old crocodile”
In Lagarde’s statement, she believes that the person who has the greatest influence on herself is the mother, and the grandmother who served as a nurse in the field during World War I. She said that they are all strong women.
In April 2016, Lagarde was invited to attend a World Women’s Summit, when she talked about her own ideas on a very old topic. The question is simple: how women deal with themselves as the “only woman in the room”, especially in the male-dominated financial and economic fields.
“When you want to stand out in the male world, women must have a thick face like an old crocodile.” This is the answer given by Lagarde at the time. “At some point, unfortunately, cheeky is a necessary condition.” .”
This is indeed the style of Lagarde: at some point imitate men, at the expense of achieving goals in an embarrassing way. In 2012, at the “Stars” Davos Forum, Lagarde raised his handbag in public on the podium and said with pride: “I am here to raise a little money.” For a long time, she has been calling on IMF member states to help Europe in various occasions.
Of course, she does not recommend that women always wear “crocodile skin”. After that time, “I hope that we can take off the crocodile skin and become a normal person without facing terrible attacks and injustices. The world needs diversity, and this part of the human body represented by women should be in this kind of photo. In this case, (below) has a place.”
In the eyes of many people, Lagarde seems to be a high-profile critics of the patriarchal society. She did say that if a company does not allow women to hold senior positions, it must be “politically incorrect.”
Lagarde firmly believes that women are a powerful force of civilization. For the 2008 financial crisis, she commented this way:
If it is a “Lehman sister” rather than a “Lehman brother”, today’s world may look very different.
04 “Why is she?”
The news that Lagarde was elected as the next ECB president spreadAfter that, the European and American stock markets rebounded. Former Greek Finance Minister Giorgos Papakonstantinou said:
The financial market’s response to her election was positive, which is tantamount to saying that the market welcomes such a person with a pragmatic stance and political agility.
The market generally believes that Lagarde is likely to inherit the “policy legacy” of his predecessor Draghi and adopt a measure similar to “at all costs” to save the euro zone economy.
At this point, Lagarde has the ability to control the situation.
One of the qualities that people find in me is that I have the ability to lend a helping hand to help the parties reach a consensus and let people form a common interest. Moreover, I am a reliable person who does not talk nonsense.
extraordinary coordination ability
Those who have worked with Lagarde commented that Lagarde is better at being a spokesperson for decision-making by others, rather than being a groundbreaking and like-minded independent thinker like Kahn. Scholar-type official.
In other words, Lagarde’s role as president of the European Central Bank is likely to act as a mouthpiece for policy, which will be significantly different from Draghi.
Draghi has made a number of decisions at key moments over the past few years, most notably the 2012 “at all costs” intervention – the decision that turned into a turning point in the European debt crisis. In 2015, he introduced quantitative easing measures, and in September of that year, he further introduced the ultimate easing policy. These measures are basically the result of solitary struggles and angered some colleagues.
Lagarde also played the role of “firefighter” like Draghi, except that she was a supporting role, not a protagonist like Draghi. That is the American insurance giant AIG.Finally, unable to support, on the night of preparation for bankruptcy, Lagarde called the US Treasury Secretary Henry Paulson. “I only have 15 seconds to convince him not to let it fall.”
Persuasion is not the only thing that Lagarde has. She is also approachable and easy to win the favor of others. When she went to the apartment where she lived six years ago, she revisited the entrance. The concierge was excited to sprint out, warmly hug her, kiss her cheek, and tell them how much they missed her.
Dominique Moisi is very familiar with Lagarde. The founder of the French Institute of International Relations praises his old friend: “She knows she has a high weight. Although she has everything, she is not swaying and still enthusiastic. When she knows she needs humor and fun, she can be humorous and interesting.”
In the past, on a slobber’s mouth, Lagarde made a lot of M&M’s chocolate beans to ease the “war situation” and give people to the scene.
As a woman, Lagarde has patience. In June 2015, the then Greek Prime Minister Tsipras made a lengthy speech in an effort to explain international financial situation, which made the meeting on the Greek debt crisis last for eleven hours. Many of the participants collapsed, they lost interest in listening, and even used the phone to pass the time. But Lagarde has always listened attentively, still taking notes, and asking questions from time to time.
Of course, the lengthy and boring meeting is something that many people can’t stand. Later, with the strong promotion of Lagarde, the IMF Board of Directors issued a new regulation: the speaking time should not exceed 4 minutes. Otherwise, Lagarde began to tap the microphone to remind him.
Many outsiders believe that the ECB, led by Lagarde, may be more cooperative. Some media have commented:
Lagarde’s diplomatic skills are a legend in the IMF, and this skill will prove to be crucial as people’s expectations of central bankers’ powers reach historic highs.of.
In terms of monetary policy, Lagarde may be more like a coordinator than a planner.
“I never fight alone.” Lagarde once said, “In the process of synchronized swimming, you need to pay attention to coordination with other teammates while maintaining your own beautiful posture.”
“Floating swimming teaches me one thing: grit your teeth and keep smiling.” Lagarde explained when talking about the role of IMF’s president. “As with synchronized swimming, this position also requires resilience and endurance. You often In a tight rhythm, you must take full control of the situation.”
Crisis “Women”
Lagarde is more like a female fighter who came forward in a crisis.
“Whenever the situation is very, it’s very bad, people will ask women to do it,” Lagarde said on the Daily show, which aired a few months ago.
Lagarde is indeed on the verge of death. In June 2007, before the global financial crisis broke out, Lagarde entered the French Ministry of Finance as the minister. Two years later, she was named the best finance minister in the Eurozone by the Financial Times.
In June 2011, history was repeated again. That was the beginning of the European debt crisis, when the then IMF president Kahn was exposed to sexual assault scandals. At the critical juncture of the double crisis fermentation, Lagarde took the upper position and became the first female leader in the history of the IMF.
In the position of IMF’s president, Lagarde has been sitting for eight years, successfully repairing the reputation of the IMF’s severe damage, expanding the scope of the organization’s work, and leading the rescue plan for Greece and Argentina.
All this made Lagarde win a high praise, she was again in 2016When it was appointed as the president of the IMF, it was approved by the whole vote. She has been ranked in the top ten among the top ten most powerful women in Forbes magazine.
However, there is also a state official who has received assistance from the IMF, saying that Lagarde has performed quite strongly in the negotiation of international aid clauses, and the conditions for assistance provided are also very demanding.
subtle balance
Lagarde’s election may also confirm a secret that European politicians are not willing to say: the balance of the left and right wing factions, and the priority of party loyalty.
This is especially important in the European and American continents where the left-wing political forces are rapidly emerging.
Although Lagarde did not show a clear political tendency in public, she was in Chirac (Jacques Chirac) before she took the IMF. /span> and Sarkozy (Nicolas Sarkozy), the two French right-wing presidents formed a cabinet in the cabinet.
05 The European Central Bank will “big face”?
In David Owen, chief European economic analyst at Jefferies, at the helm of Lagarde, “the decision-making situation of the European Central Bank will be very different and will become an organization that is more difficult to interpret and understand.”
As Draghi stepped down, the high-level opposition to his ultra-loose monetary policy may take advantage of the opportunity of the president’s substitution, taking the opportunity to change the tone of the ECB Executive Committee’s discussion, and the power balance of the executive committee. May change.
Among the six members of the ECB Executive Board, Draghi and his two deputies have been releasing dovish information to the market. The impact of these three on the ECB Management Committee is also very large. With Draghi stepping down, the two deputies have already or are about to leave the core decision-making.
Lagarde is likely to reconfigure his own after taking office. At that time, once the Bundesbank has appointed heavyweights to the Executive Committee, the ECB will undergo a major power balance adjustment, and the current stimulus bond plan may encounter more objections. The QE program led by Draghi has expressed opposition in more than one-third of the current 25-member management committee.
And Lagarde has a good relationship with German Chancellor Merkel. She has a good relationship with former German finance minister and Schaeuble, who has a tight fiscal position. The latter often has opinions on the ECB. conflict. Schaeuble’s successor, Olaf Scholz, has welcomed Lagarde’s appointment as the European Central Bank Governor. It is said that French President Mark Long also trusted her.
06 challenges are heavy
A week ago, when asked if “the successor is likely to be re-elected for eight years as a president”, Draghi replied that he hopes not, no matter who is the successor.
Draghi is right. As the next ECB president, Lagarde needs to face more challenges than the IMF’s president, plus the relatively complicated consultation between member states.The re-election for eight years is more like a torment.
Although Draghi realized the oath of defending the euro that year, he also successfully helped the euro zone to survive the crisis, reshaping the confidence of the bank in managing the economy. However, inflation has been in a long-term downturn, and there is still a long way to go to achieve the set goals. At the same time, the problem of negative interest rates in the euro zone has become more and more prominent, and the “addiction” of super-easy policies is difficult to quit.
What is more serious is that the policy tools that the ECB can use are very limited and the policy space is not large. Just in the last few weeks before his departure, Draghi also “put a hand” and launched a new round of monetary stimulus, which will make the ECB at least 2022 to raise the timing of interest rate hikes. .
Because of the latest decisions, from the purchase of bonds to negative interest rate measures, there is unprecedented disagreement among ECB internal policy makers, and central bankers from conservative economies such as Germany are opposed to Draghi’s economic stimulus package.
Lagarde must use such a central bank that is about to exhaust the policy “bullet bank” to revive the euro zone economy. The immediate challenge she will face immediately after she joins the job is to overcome the shortcomings of the European Central Bank in monetary policy making, especially after years of using unconventional policy tools to stimulate inflation and growth failures, the ECB is seeking to redeploy the “arsenal”. To deal with the potential recession.
Nevertheless, the ECB can’t say too clearly at this point, otherwise the market will be scared and collapsed. Olivier Blanchard, chief economist at the IMF, said: “Lagarde must make a delicate balancing act: while claiming that he still has a lot to do, and she will insist that policy makers provide financial and other help.”
The market generally believes that Lagarde’s main job as the ECB president may not be to introduce more stimulating monetary policy, but to persuade all member states to use fiscal stimulus to jointly save the economy. At the same time, try to bridge the differences between policy makers.
These predictions were immediately verified by Lagarde himself. On the eve of his inauguration, Lagarde said with a strong attitude in the media interview: “In recent years, monetary policy has done a lot of things. Now, financial and economic policies must be supplemented immediately.”
When the Fed reopens the rate hike cycle, Lagarde will be able to break the pattern of Dragi’s eight-year non-interest rate increase, and at the same time complete the unfinished business of Draghi, people will wait and see.
Article from WeChat public number: Wall Street knowledge (ID: wallstreetcn) , author: Qi month