"The Best Person For the Job", Redux

Is Lagarde, not Brown: Cameron, Osborne

With campaigning to replace the outgoing Managing Director of the International Monetary Fund mounting, many Britons are expecting their government to back a fellow Briton to fill that job.

For now, they will be disappointed.

Speculation has held that former Prime Minister and former Chancellor of the Exchequer Gordon Brown has been quietly campaigning for his shot at the job. Yet current Prime Minister David Cameron and current Chancellor George Osborne seem to have made themselves fairly clear: Brown is not "the best person for the job".

Apparently, according to Cameron and Osborne, the best person for the job may be French Finance Minister Christine Lagarde.

"I believe Christine is the outstanding candidate for the IMF – and that's why Britain will back her," Osborne declared. "I also personally think it would be a very good thing to see the first female managing director of the IMF in its 60-year history."

Lagarde's greatest strength, in Osborne's mind, is that she's in favour of developing countries bringing their budgets under control.

"She has been a strong advocate for countries tackling high budget deficits and living within their means," Osborne noted.

That applies to financial institutions just as much as it does to entire countries. While many western countries were rolling out fat bailout packages for banks, Lagarde was publicly taking them to task, particularly at the World Economic Forum in Davos.

"The best way for the banking sector to say thank you would be to actually have good financing of the economy, sensible compensation systems in place and reinforcement of their capital," Lagarde told Barclay's Bank chief executive Bob Diamond.

As if to offer some substance to Osborne's remarks about a having a woman in charge of the IMF, Lagarde has suggested that the global economy could use a woman's touch, particularly in terms of stock trading.

"In gender-dominated environments, men have a tendency to show how hairy chested they are, compared with the man who's sitting next to them. I honestly think that there should never be too much testosterone in one room."

Brown himself has also taken a sticter stance toward banks. He, like Lagarde, backed an international bank tax.

Unlike Brown, however, Lagarde seems to understand that the best fix for the global economy is for sensible reform and regulation to begin within the board rooms of the institutions themselves. It's time for banks to cut back on their unsecured loans, cut back on the unjustifiably-lavish and self-serving compensation for their execs, and put sustainable profit at the forefront of their agendas.

As the mortgage crisis in the United States clearly demonstrates -- as banks took advantage of lax regulatory schemes put in place by George W Bush as a means to manage the impact of toxic loans mandated by the Bill Clinton administration -- no government can force financial institutions to regulate themselves, nor can they really do so in their place; those set on abusing the system for short-term and unsustainable profit will find a way.

It's hard to say whether David Cameron and George Osborne are correct and Christine Lagarde really is the best person for the job. But one thing remains abundantly clear: she's much better for it than Gordon Brown.

"The Best Person For the Job"

Chancellor not a booster for Gordon Brown's IMF bid

With former British Prime Minister Gordon Brown seeking to assume the role of Managing Director of the International Monetary Fund, there may be one key obstacle in his path:

The British government.

In April, Prime Minister David Cameron questioned Brown's suitability for the job.

“If you have someone who didn’t think we had a debt problem [running the IMF] they may not be the best person to decide whether other countries have that problem," Cameron declared.

The decision over whether or not the British government will attempt to block Brown from becoming IMF Managing Director has not been made. For his own part, Chancellor of the Exchequer George Osborne hasn't expressed any great preference regarding Brown and the IMF.

He's calling for the "best person for the job".

"If it comes to a decision about a replacement for Dominique Strauss-Kahn, what I will be motivated by and what the British Government will be motivated by is who is the best person for the job," Osborne declared. "Instead of 'Is it Buggins's turn?' or 'Should it be someone from a particular country or not', let's focus on getting the right person for the right job."

Brown hasn't yet asked Osborne for any kind of endorsement for assuming the role.

"As it happens, Gordon Brown has not asked me directly or indirectly to be considered for the job," Osborne said. "I'm at the moment focused on making sure we get the best person for the job."

So is Gordon Brown the best person for the job?

The Brown government's use of Private Finance Initiatives to conceal billions of Pounds Sterling in public debt has previously been explored here.

What has not been is Brown's "tripartite" system of Financial regulation.

When he was Chancellor of the Exchequer, Brown split regulatory powers between the Bank of England, the Financial Services Authority, and the Treasury. This led to a breakdown of surveillance powers, leading to a state of affairs where two-thirds of bank lending in Britain was to other financial institutions.

In the opinion of Dr Sushil Wadhwani, a former member of the Bank of England's Monetary Policy Committee, this led to a situation in which interest rates lagged far behind the rate required to return credit markets to equilibrium.

This led to British credit markets in which the incentives to borrow were overloaded. Eventually, Britain fell into the same credit collapse as the rest of the world.

Given the kind of havoc Gordon Brown wrought with Britain's finances and Britain's economy, the idea of giving him a surplus of power over the global economy should be a sobering thought indeed.

David Cameron is right. Gordon Brown is not the right person for the job.

Who Will Pay for Britain's Nuclear Deterrent?

British Tories in accounting quarrel over nuclear subs

With the Cold War now over for more than twenty years, some would expect that the debate over nuclear submaries would be question whether such weapons are needed at all.

In Britain, however, under their Conservative/Liberal Democrat coalition government, this is not the question. Rather, the question regarding the Trident II submarine -- the model of nuclear sub being developed to replace Britain's fleet of Trident Submaries -- is how they will be budgeted.

George Osborne, the Chancellor of the Exchequer, has declared that they will be budgeted for out of the Ministry of Defence's existing budget. Liam Fox, the Secretary of State for Defence, wants a budget exemption for the Trident II, and wants the project to be funded from another part of the budget.

In a move that has created friction with Osborne, Fox has made discussion of the matter quite public.

"Ultimately, all our defence capabilities have to be paid for," Fox announced. "Which bits are paid, over what timescale, is part of the discussions we are having and I'm not going to entertain them in public. I have enough time entertaining them in private."

"The Trident costs, I have made it absolutely clear, are part of the defence budget," Osborne later responded. "All budgets have pressure. I don't think there's anything particularly unique about the Ministry of Defence."

The Ministry of Defence is alreay responding to their budgetary pressures in a manner that may leave some Britons feeling uncomfortable. The British armed services will sed up to 16,000 personell. The air force is expected to be particularly hard hit by reductions.

Britain's fleet of helicopters -- crucial at a time when Britain remains engaged in the war in Afghanistan -- may be cut by up to 20%.

Fox likely would not have to make as many hard decisions if he receives his sought-after budget exemption for the Trident II.

Despite the push to negotiate a nuclear arms reduction treaty between the United States and Russia, some may argue that the Trident II is not necessary at all. In a perfect world, they would not be mistaken.

But the world is not perfect, and they are mistaken. With Iran seemingly continuing its efforts to develop nuclear weapons, and with North Korea threatening nuclear responses to joint US/South Korean naval exercises, the end of the Cold War has not yet resulted in an alleviation of nuclear tensions.

Then there is the matter of Pakistan and its nuclear arsenal.

Right now, the global situation regarding nuclear weapons is as tense as it has been in 20 years. There seems to be little reason to expect that the situation will reverse itself anytime soon.

Accordingly, the British Conservatives need to stop fighting over how the Trident II will be paid for, and need to get on with securing Britain's nuclear deterrent for a coming time when it may be desperately needed once again.

Welcome to Europe: The Land of the Peer-Reviewed Budget

Peer reviewed budgets a threat to fiscal sovereignty

As British Chancellor of the Exchequer George Osborne prepares to deliver his first budget, a pecular process has gotten underway.

Osborne is preparing to send his budget to Brussels, Belgium, to be peer-reviewed by the European Commission and other European Union Finance Ministers.

The purported goal is to ensure that EU countries are fiscally responsible. The current cause celibre for this process is to pressure EU countries to cut government expenditures and eliminate deficits. The raison d'etre for this is at least partially the economic crisis engulfing Greece, and threatening to spread to other EU countries like Spain, Italy, Ireland and Portugal.

The peer review process is controversial in Britain, and rightfully so.

While the current puprose underlying this peer review process should be pleasing to fiscal conservatives, there is an underlying danger in this process that no conservative government -- the one in which George Osborne currently serves as Chancellor included -- should tolerate.

Today, the mission is to fight deficits and enforce conservative fiscal responsibility across Europe. This is much easier with conservative governments in power in Britain, France and Germany.

However, a shift in this state of affairs -- should left-wing governance return to France and Germany -- would change this process drastically. Rather than pressuring governments to follow a course of fiscal conservatism, the admonitions issued by EU Finance Ministers could instead become fodder for left-wing forces within any government that pursued such a course.

Today, the budget peer review process favours conservatism. But it could quite easily be used to coerce governments into the spendthrift policies so often imagined by the far left.

It's as much a threat to individual sovereignty as is crushing levels of public debt, and should not be acquiesced to.