IMFAND THE SUITE ROOM 2286 STORY IS IMF GUILTY FOR EMPLOYING TAINTED WITH SEXTUAL HARASSMENT AND ABUSE OF POWER

PAST CONTROVERSY  STRAUSS-KAHN HAS FACED CONTROVERSY BEFORE. IN OCTOBER 2008, HE APOLOGIZED FOR “AN ERROR OF JUDGMENT” FOR AN AFFAIR WITH A FEMALE IMF ECONOMIST WHO WAS HIS SUBORDINATE. AN INQUIRY CLEARED HIM OF HARASSMENT AND ABUSE OF POWER, ALTHOUGH HE WAS WARNED BY THE FUND’S BOARD OF MEMBER COUNTRIES AGAINST FURTHER IMPROPER CONDUCT.

Strauss-Kahn apologized to the woman, Piroska Nagy, and his wife, French television personality Anne Sinclair, as well as to IMF employees for the trouble he had caused.

Since taking over the IMF, he has won plaudits for putting the fund, the world’s main overseer of the global economic system, at the center of global efforts to cope with the financial meltdown of 2007-09.

Dominique Strauss-Kahn is a possible Socialist candidate in next April’s French presidential election [AFP]

The managing director of the International Monetary Fund (IMF) has been charged with sexual assault and attempted rape in New York following a complaint by a hotel chambermaid.

A police deputy spokesman, Ryan Sesa, told reporters on Sunday that the charges against Dominique Strauss-Kahn included “criminal sexual act, unlawful emprisonment, attempted rape” and “assaulting a 32-year-old girl in a hotel room”.

Strauss-Kahn, widely expected to run for the French presidency in 2012, was taken off the Air France flight at John F Kennedy International Airport by police officers on Saturday after the maid reported the case.

The maid told authorities that she entered Strauss-Kahn’s room at the Sofitel near Manhattan’s Times Square at about 1pm local time (1600 GMT) on Saturday.

According to the maid’s account, the IMF chief emerged from the bedroom naked, threw her down and tried to sexually assault her, Paul J Browne, a New York Police Department (NYPD) spokesman, said.
Al Baker, a reporter for The New York Times, which broke the story, told Al Jazeera that more details about the alleged attack had emerged.

“The police investigators found his cell phone in the [hotel] room,” he said.

“There’re some more details coming out according to the chambermaid’s account, which is that she entered what she believed was his empty suite – Room 2286 – at the Sofitel Hotel, and he basically came out of the bathroom and grabbed her, locked the door and put her to the bed.

“She broke free – this is according to her account. She fought him off; then he dragged her again down the hallway to the bathroom where another, second, alleged sex assault occurred.”
‘Left in a hurry’
Police said Strauss-Kahn, who is married, apparently left the hotel in a hurry. They then discovered he was at the airport, and contacted the Port Authority of New York and New Jersey, which pulled him off the flight.

It was not immediately clear if the 62-year-old Strauss-Kahn had been planning to leave New York for France on Saturday afternoon, police said.
The maid was taken by police to an area hospital.

John Sheehan, a spokesman for the hotel, said its staff was co-operating with the authorities in the investigation.
William Murray, a spokesman for the IMF in Washington, said the IMF had no immediate comment on the reports of Strauss-Kahn’s arrest.

Strauss-Kahn’s offices in Paris could not be reached when the news broke overnight in France, nor could French Socialist Party officials. The IMF chief belongs to the party and has been leading opinion polls for next year’s elections.
Before taking the top post at the IMF, Strauss-Kahn was a member of the French National Assembly and a professor of economics at the Institut d’Etudes Politiques de Paris.
He had also served as France’s minister of economy, finance and industry from June 1997 to November 1999.
Strauss-Kahn, popularly known as “DSK” in France, was seen as the strongest possible challenger to French president Nicolas Sarkozy, though he had yet to declare his candidacy, remaining vague in interviews while feeding speculation that he wanted France’s top job.
He took over as head of the IMF in November 2007. The 187-nation lending agency, headquartered in Washington, provides help in the form of emergency loans for countries facing severe financial problems.
Strauss-Kahn won praise for his leadership at the IMF during the financial crisis of 2008 and the severe global recession that followed.
More recently, he has directed the IMF’s participation in bailout efforts to keep a European debt crisis which began in Greece from destabilising the global economy.
But his tenure at the IMF has also brought controversy, In October 2008, he apologised for “an error of judgment” over an affair with a junior colleague. Although cleared by an inquiry of harassment and abuse of power, he was warned by the fund’s board of member countries against further improper conduct.

Under Dominique Strauss-Kahn, the IMF is looking to assist countries in stimulating their economies through long-term investments, boosting wages and strengthening collective bargaining [GALLO/GETTY]

The annual spring meeting of the International Monetary Fund was notable in marking the Fund’s effort to distance itself from its own long-standing tenets on capital controls and labour-market flexibility. It appears that a new IMF has gradually, and cautiously, emerged under the leadership of Dominique Strauss-Kahn.
Slightly more than 13 years earlier, at the IMF’s Hong Kong meeting in 1997, the fund had attempted to amend its charter in order to gain more leeway to push countries towards capital-market liberalisation. The timing could not have been worse: the East Asia crisis was just brewing – a crisis that was largely the result of capital-market liberalisation in a region that, given its high savings rate, had no need for it.
That push had been advocated by Western financial markets – and the Western finance ministries that serve them so loyally. Financial deregulation in the United States was a prime cause of the global crisis that erupted in 2008, and financial and capital-market liberalisation elsewhere helped spread that “made in the USA” trauma around the world.
The crisis showed that free and unfettered markets are neither efficient nor stable. They also did not necessarily do a good job at setting prices (witness the real-estate bubble), including exchange rates (which are merely the price of one currency in terms of another).
Emerging markets, concerned countries
Iceland showed that responding to the crisis by imposing capital controls could help small countries manage its impact. And the US Federal Reserve’s “quantitative easing” (QEII) made the demise of the ideology of unfettered markets inevitable: money goes to where markets think returns are highest. With emerging markets booming, and the US and Europe in the doldrums, it was clear that much of the new liquidity being created would find its way to emerging markets. This was especially true given that America’s credit pipeline remained clogged, with many community and regional banks still in a precarious position.
The resulting surge of money into emerging markets has meant that even finance ministers and central bank governors – who are ideologically opposed to intervening – believe that they have no choice but to do so. Indeed, country after country has now chosen to intervene one way or another to prevent their currencies from skyrocketing in value.
Now the IMF has blessed such interventions – but, as a sop to those who are still not convinced, it suggests that they should be used only as a last resort. On the contrary, we should have learned from the crisis that financial markets need regulation, and that cross-border capital flows are particularly dangerous. Such regulations should be a key part of any system to ensure financial stability; resorting to them only as a last resort is a recipe for continued instability.
There is a wide range of available capital-account management tools, and it is best if countries use a portfolio of them. Even if they are not fully effective, they are typically far better than nothing.
But an even more important change is the link that the IMF has finally drawn between inequality and instability. This crisis was largely a result of the efforts of the US to bolster an economy weakened by vastly increased inequality, through low interest rates and lax regulation – both of which resulted in many people borrowing far beyond their means. The consequences of this excessive indebtedness will take years to undo. But, as another IMF study reminds us, this is not a new pattern.
Unemployment, rising class-divide
The crisis has also put to the test long-standing dogmas that blame labour-market rigidity for unemployment, because countries with more flexible wages, such as the US, have fared worse than northern European economies, including Germany. Indeed, as wages weaken, workers will find it even more difficult to pay back what they owe, and problems in the housing market will become worse. Consumption will remain restrained, while strong and sustainable recovery cannot be based on another debt-fuelled bubble.
As unequal as the US was before the Great Recession, the crisis, and the way it has been managed, has led to even greater income inequality, making recovery all the more difficult. The US is setting itself up for its own version of a Japanese-style malaise.
But there are ways out of this dilemma: strengthening collective bargaining, restructuring mortgages, using carrots and sticks to get banks to resume lending, restructuring tax and spending policies to stimulate the economy now through long-term investments, and implementing social policies that ensure opportunity for all. As it is, with almost one-quarter of all income and 40 per cent of US wealth going to the top one per cent of income earners, the US is now less a “land of opportunity” than even “old” Europe.
For progressives, these abysmal facts are part of the standard litany of frustration and justified outrage. What is new is that the IMF has joined the chorus. As Strauss-Kahn concluded in his speech to the Brookings Institution shortly before the Fund’s recent meeting: “Ultimately, employment and equity are building blocks of economic stability and prosperity, of political stability and peace. This goes to the heart of the IMF’s mandate. It must be placed at the heart of the policy agenda.”
Strauss-Kahn is proving himself a sagacious leader of the IMF. We can only hope that governments and financial markets heed his words.
Joseph E. Stiglitz is a professor at Columbia University, a Nobel laureate in Economics, and the author of Freefall: Free Markets and the Sinking of the Global Economy. He is also a former Senior Vice President and Chief Economist of the World Bank.

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