Prime Ministers in Greece and Britain

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George Papandreou – Cleverer Than David Cameron, It Seems

Mr Papandreou has survived – just – the no confidence vote in the Greek Parliament. He remains as Prime Minister, Greece will accept the “bailout” deal, the Opposition have been forced to very publically back the deal, and his stature as a wily survivor remains intact.

He humbly told everyone that the leadership of the new coalition government is up for grabs. Presumably he holds himself ready to step into the breach, if nobody else wants the job just as the austerity programme there starts to bite.

Meanwhile, David Cameron reckons increased UK contributions to the IMF are completely safe.

No government has ever lost money on lending to the IMF. It doesn’t add to your debt, it doesn’t add to your deficit. It is the right thing for an advanced economy like ours to do and we should continue to do so. But it does not put Britain’s taxpayers’ money at risk – it is just merely the most sensible thing for us to do to support the economy.

Just in case nobody believed him, though, he hinted that parliament wouldn’t be allowed to vote on it. After all, can’t have those Eurosceptic chappies getting all excited again, now can we?

Did you notice that Old Etonian arrogance shining through? “An advanced economy like ours”. He still lives in that world where Britain rules the waves and is just going through a bit of a bad patch, old chap.

And he just loves strutting around as the Prime Minister of the Great Power that now only exists in the heads of people like him.

Can we do a swap please? We give the Greeks David Cameron and they give us Mr Papandreou.

You can’t trust either of them. But at least Mr Papandreou evidently has some brains.

New IMF Chief Spanks the Naughty Boys in America

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Christine Lagarde, the new head of the IMF, has been putting pressure on US politicians to agree a deal to allow the US to go on borrowing more in the markets.

The Republican-controlled House of Representatives wants the President to agree to big spending cuts before they will agree to the new borrowing. The President wants to go on spending. And neither one will budge.

Ms Lagarde told them sternly:

The issue needs to be resolved immediately.

And the answer, according to her, is more borrowing.

Ms Lagarde warned that whilst a package to cut the US deficit was essential, quick cuts in spending could damage the economy.

“That’s why we’ve advised against fiscal consolidation that is unduly hasty – even as we stress the importance of getting a fiscal consolidation plan agreed soon,” she said.

In other words, she was siding with President Obama. The answer is the same as it was for Greece. More borrowing at all costs.

Ms Lagarde could have made other constructive suggestions.

For example, perhaps she might have suggested that France and Germany should bail out the US. I’m sure they can afford it. After all, they have bottomless pockets and the important thing is to avoid “contagion”. They did it for Greece last year, and surely they could trump that by helping the US now.

If not that, then perhaps she might have suggested a default. It worked just fine for Greece this year, after all.

And it would be so much preferable to the US running out of money on August 2nd. After all, that could lead to … a default.

Which, of course, would be a disaster according to Ms Lagarde.

Meanwhile, there is one bright spot in the world economy – the developing markets are still growing.

Ms Lagarde knows how to put a stop to that. She called for higher interest rates there:

Staying ahead of the curve will be essential to avoid the possible hard landing if policy action comes too late.

Well, what an impressive debut for the new head of the IMF. You’d think she’d be more grateful to the US, considering their arrest of her predecessor was what catapulted her into the job.