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Home / Business / Christine Lagarde on the world economy: We are all together – 60 minutes

Christine Lagarde on the world economy: We are all together – 60 minutes



With the global economy threatened by recession, the man is a woman for the job. Since 2011, Christine Lagarde has been the head of the trillion dollar International Monetary Fund for Emergencies. Before that, she was the French Minister of Finance during the Great Recession. In November, as the President of the European Central Bank, she will embark on a new crisis, trying to keep the world's second largest economy stable as she is plagued by trade wars, Brexit and historical uncertainty.

Last month we spent time with Lagarde in France and Washington, DC, during a rare break between two jobs. She was surprisingly open about the threat of global recession, the threat of nationalism and what she says is a big question mark in the global economy, President Donald Trump.

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Christine Lagarde with correspondent John Dickerson

John Dickerson: If you think about the challenges facing the world economy, where is Donald Trump on this list ?

Christine Lagarde: I think he has many keys to that would unlock the uncertainty and the risks.

John Dickerson: What are some of those keys he has?

Christine Lagarde: I think the biggest key is President Trump has in terms of predictability and security of trading conditions. It is the unknown that hurts because you can not adjust to the unknown. So what are you doing? They build buffers. You build up savings. You wonder what's next. This is not favorable for economic development.

John Dickerson: People are not taking any chances anymore.

Christine Lagarde: Yes, they are sitting on their money.

The IMF, the International Monetary Fund, led by Christine Lagarde for eight years, says that the main reason for the US-China trade war's instability is that global growth this year is expected to reach its slowest pace since 2008 financial crisis goes back.

Last week, President Trump announced first steps towards a partial agreement with China. However, the biggest and most difficult problems remain.

John Dickerson: Is it possible that the trade war between the United States and China is leading the world economy in the wrong direction?

Christine Lagarde: That will certainly give the world economy a big debt cut. And when you do, almost one percentage point of growth means less investment, fewer jobs, more unemployment and less growth. Of course that has effects.

John Dickerson: What will happen?

Christine Lagarde: My very, very strong message to all policy makers is: Please sit down like tall men, many men in these rooms and put everything on the table and try to do something piece by piece with it we have certainty.

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Christine Lagarde has spent her career telling men what to do. And she will be the first woman to head the ECB, the European Central Bank. It's like the US Federal Reserve, but for 19 countries known as the Eurozone.

Last month, Lagarde invited us to visit her in Normandy, France, where she grew up.

John Dickerson: On the other side of the canal in the UK they are in the middle of Brexit. What does Brexit mean for you?

Christine Lagarde: For me personally, it is a source of great sadness. And to see how they are leaving the European Union is sad.
At the ECB, Lagarde will have the task of keeping Europe, the second largest economy in the world, alive in the middle of Brexit.

John Dickerson: How will the fallout be economical?

Christine Lagarde: It will affect both the United Kingdom and certain countries in the European Union, notably Ireland, Germany and the Netherlands. And all will be a little worse off as a result.

John Dickerson: Why is it important for Americans if the European Union thrives?

Christine Lagarde: If something goes wrong in one part of the world, it will affect the rest of the world as well. We buy American products in large quantities. The United States is buying European products in large quantities. Many European companies have settled in the USA. And vice versa. We invade the markets of each other.

If there is a basic belief that determines Lagarde's life and economic prospects, it is that "we are all together."

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Christine Lagarde: You know, when I grew up, I was very grateful to the Allies, the Americans …

It was here on Omaha Beach, where the Americans were on D-Day Landed in 1944.

Today Lagarde hears in national echoes of the rage that led to the Second World War t leaders who direct their countries inward and reject all others.

Christine Lagarde: Nationalism in Europe is associated with very, very terrible developments that always led to war.
President Trump at the rally: Do you know what I am? I am a nationalist. OK.

John Dickerson: President Trump has called himself a nationalist. He is proud of the nationalist label. This is a big debate. This is the central debate on the global stage when countries decide, "Maybe this idea of ​​networking is not so wonderful."

Christine Lagarde: International trade, links, personal and capital movements have deprived hundreds of millions of people of poverty. Now some people in advanced economies might say, "Pooh, what do I care?" Of course, we take care of the person next door. And because of the connections next door is not the way next door is everywhere in the world. And when my neighbors across the border are desperate, hungry, struggling, there will be consequences at home.

John Dickerson: Do you think the president who believes in walls argues strongly with people who do the opposite of what you do?

Christine Lagarde: But do you know what walls can do against pandemics? What can walls do against terrorism? What can walls do against climate change and the destruction of the environment? This is not the answer to the global issues and problems that connect with each other, whether we like it or not.

But this message outrages people who do not want global bureaucracies like the IMF and who tell them how to live their lives and leaders think like Lagarde are elitist and non-contact.

John Dickerson: But what happens when someone says, "Madame Lagarde, are you the global elite?"

Christine Lagarde: I think I am also a very regular, down to earth person and I am proud to be part of the intellectual effort we have made to achieve this stability in order to protect people. People are safer.

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John Dickerson correspondent with Christine Lagarde

Lagarde faces weak growth at the European Central Bank, triggered by a slump in manufacturing fears of a European recession.

Lagarde's main tool to stimulate the economy and lower interest rates could be useless, as interest rates in Europe are already negative, once unthinkable.

Christine Lagarde: The possibilities of central bankers are limited. There is a limit to how far and how deep you are going into negative territory. John Dickerson: So there is a low point? Christine Lagarde: There is a low point for everything, but we are not at this low point at this time.

President Trump likes the idea of ​​low, even negative interest rates. So much so, that he is hurting the decades-long tradition of presidents who are not joining the Federal Reserve and even calling the chairman Jerome Powell and his colleagues "boneheads" because they are not cutting interest rates any more.

Lagarde's advice to the president? Be careful.

Christine Lagarde: If the unemployment rate is 3.7%, you do not want to speed it up too much by cutting interest rates. Because you take the risk that then the prices rise. You have to be very careful. You know, it's like navigating a plane. And you have to watch everything, altitude, speed, winds. And that's exactly what a central banker needs to do.

John Dickerson: If you're a pilot looking at all these tricky actions, would you like an executive behind you to say you're a bonehead?

Christine Lagarde: A Governor of the Central Bank does his job best when he does it's independent.

John Dickerson: You met President Trump, would you talk to him about it and represent the independence of central bankers?

Christine Lagarde: Definitely.

John Dickerson: And what would you say?

Christine Lagarde: Market stability should not be the subject of a tweet here or there. It requires consideration, reflection, calm, moderate and rational decisions.

And for these qualities, Lagarde brings the women as directed. They are better at risk assessment, she believes, saying that if the Lehman Brothers investment bank that triggered the financial crisis in 2008 were "Lehman Sisters", the whole mess might have been bypassed.

Christine Lagarde: Do you know? How many women are presidents of banks? Two percent. This is ridiculously low because women around the world, in most families, generally handle the money. And they are doing pretty well. There is a clear correlation between good and sound corporate governance, a good attitude to risk and the number of women on board and in senior management.

Christine Lagarde: Poverty is sexist, and we need to remember it and make sure that it's women are not forgotten.

Now, 63, Lagarde has become a global force. Not just for what she says about women, but because she acts accordingly. For the first time in its history, Lagarde has tied IMF loans to improving conditions for women in countries such as Argentina and Jordan.

And take a look at what the IMF staff looks like now. Under Lagarde, the proportion of women working at the IMF has risen to 44%.

She is charming but demanding. Lagarde closed the doors of the conference room so no one could leave until a consensus was reached. And she has announced not to attend meetings where she is the only woman in the room.

John Dickerson: You once called yourself bossy. You know, Bossy is a dirty word now.

Christine Lagarde: I do not mind that. (LAUGH)

John Dickerson: You do not mind –

Christine Lagarde: You know, sometimes you have to be a boss.

John Dickerson: Is there a French language for Bossy? It feels like a very American word.

Christine Lagarde: They use Boss in French, C & # 39; est Le Boss. Elle est Le Boss. But there is an element of respect when you say it in French. "C'est le boss."

As volatile as the world economy may be, Lagarde is not. She is controlled, even on vacation. In her house in Normandy, she gave us an idea of ​​how precisely this control is calibrated.

John Dickerson: You've learned to pretend that you drink wine when you're not drinking wine.

Christine Lagarde: Yes. Yes.

John Dickerson: How do I pretend to drink wine but not to drink?

Christine Lagarde: Oh, okay, I'll show you. I do it with water. So you go. You have to smell. Terribly important. Then move it to check the color. Then you go very important. See this, you go. I did not drink anything.

John Dickerson: That's dangerous. You will keep your mind on you.

Christine Lagarde: Yes.

Weeks later, glasses were raised to honor Lagarde's time at the IMF. She said goodbye to an institution established in America to ensure global cooperation. As she embarks on her new job, she fears that the country that contributed to maintaining stability during her lifetime could now weaken it.

Christine Lagarde: I grew up as a citizen of the world. I see the risk that the US will lose the lead. And that would just be a terrible development.

John Dickerson: Because?

Christine Lagarde: Because it was a force for the good and the principles that I highly respect: the rule of law, democracy, free market and respect for the individual and – and respect .

It is the same message that the Allies sent to the world on these shores 75 years ago: we are all there together.

Produced by Denise Schrier Cetta. Associate Producer, Katie Brennan.


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