Next IMF boss shouldn’t be European

Allister Heath
FAR too much time and energy is being wasted on trying to work out who the International Monetary Fund’s (IMF) new boss will be. The truth is that it is unlikely to matter that much: the individuals entrusted with the running of large transnational bureaucracies almost invariably find it impossible to break away from the tyranny of the status quo. Soon enough, even radical reformers tend to be brought back into the fold and to spout the consensus view on all matters. In part, of course, this is because those who pay the IMF’s bills tend to exercise the real power. In any case, most of the leading candidates – such as France’s Christine Lagarde, who used to chair the law firm Baker & McKenzie – wouldn’t really change any of the IMF’s policies, at least not in any substantial way.

It would nevertheless be fun for Dominique Strauss-Kahn’s replacement not to be a European citizen – especially given that the IMF’s new role seems to be to bail out bankrupt Eurozone nations, in a desperate attempt to pretend that their sovereign debt is worth more than it is and to reduce their need to take truly tough measures. Yet the European-led IMF was always perfectly happy to force much harsher policies on emerging countries. These days, however, it is the Asian and other emerging nations that have put their houses in order and Europe and the US that continue to spend money they don’t have. It wouldn’t make much, if any, difference in practice but it would be poetic justice for somebody from an Asian Tiger economy to be given the top job at the IMF.

There are now so many success stories globally that listing them all would be a hopeless endeavour. Take, one of the longest-established internet firms, which started selling books in 1995: yesterday it announced that it is now selling more Kindle e-books than hardcopy books for the first time, even though the former were launched under four years ago. Since 1 April, it has been selling 105 e-books for every 100 print books. This includes sales of hardcover and paperback books where there is no Kindle edition; free Kindle books are excluded. Amazon is now a major global powerhouse and a key reason why second-rate retailers such as Mothercare are being forced to shut many of their stores.

But LinkedIn, while undoubtedly a fast-growing and successful business, is not in the same class as Amazon. Its valuation yesterday was preposterous: its shares more than doubled on its first day as a public company, valuing a firm which generated earnings of just $15m in the first nine months of last year at $8.9bn. For some reason, investors are allowing another bubble to build in tech stocks. They are failing to distinguish between good, fast-growing companies – of which LinkedIn seems to be one – and superstars, new Googles, Amazons or even Facebooks. Why do investors never learn?

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