Perhaps Strauss-Kahn Really WAS Set Up?

Dominque Strauss-Kahn

Lots of people questioned the convenient timing of the Strauss-Kahn arrest, and I pooh-poohed them. Now The New York Times is reporting that the woman who accused former IMF head Dominique Strauss-Kahn of sexual assault is turning out to be a very different sort of person from the simple hotel maid she had originally appeared to be–so much so that the case against Strauss-Kahn is “on the verge of collapse.”

Although forensic tests found unambiguous evidence of a sexual encounter between Mr. Strauss-Kahn, a French politician, and the woman, prosecutors do not believe much of what the accuser has told them about the circumstances or about herself.

Since her initial allegation on May 14, the accuser has repeatedly lied, one of the law enforcement officials said….Among the discoveries, one of the officials said, are issues involving the asylum application of the 32-year-old housekeeper, who is Guinean, and possible links to criminal activities, including drug dealing and money laundering.

Either the woman or her boyfriend, who is currently in jail for possession of 400 pounds of pot, has apparently been using her name to facilitate a drug dealing operation. She claims she didn’t know anything about all this, but she was recorded talking to the jailed man about how they could profit from the sexual assault charges against Strauss-Kahn.

They also learned that she was paying hundreds of dollars every month in phone charges to five different companies. The woman insisted she only had a single phone and said she knew nothing about the deposits except that they were made by a man she described as her fiancé and his friends.

Could she have been paid to set Strauss-Kahn up and get him fired from the IMF as well as dropped from consideration as a candidate for President of France? If so, who set him up? Who had motive, means, and opportunity, and who benefited? I see a couple of possibilities:

1. The Brits and Americans wanted him off the IMF so they could really stick it to Greece. Strauss-Kahn is a socialist and was talking about trying to help struggling countries. Obviously the Obama administration or some rogue element in the government had means and opportunity.

2. Sarkozy wanted to get rid of a dangerous rival for the French presidency and also to install his Finance Minister as head of the IMF. He would probably need cooperation from the Obama administration or the aforementioned rogue government elements to get the NYPD on board. (Coincidentally (or not?), Sarkozy was attacked in France today).

Are there other possibilities I’ve overlooked?

France’s Christine Legarde Set to head IMF creating another ‘first’ for Women

One of the world’s best economists and France’s Minister of Economics, Finance, and Industry–Christine Legarde–will likely be the newly appointed head of the International Monetary Fund (IMF).   Thankfully, the U.S. joined with other members of the IMF board to approve Legarde which virtually assures her appointment.  Legarde will be the first woman to head the IMF.  She is widely regarded as the best Finance minister in the Eurozone.  She will inherit an IMF still reeling from the sex scandal surrounding Dominique Strauss-Kahn as well as an IMF dealing with the Greek sovereign debt meltdown. The IMF is an important development vehicle for many of the world’s struggling economies.  It has been controversial in the past since it has been seen to implement ideological as well as development strategies.

Lagarde’s presence itself as the first female head of the IMF will go a long way toward reinvigorating any demoralization of the staff. Granted, Lagarde is poised to earn the job because she’s the most qualified and best positioned to help the organization deal with its pressing economic crises. And while putting an extremely successful woman atop the IMF certainly won’t erase the Strauss-Kahn scandal or stop every unwanted advance, it should go a long way toward reminding the IMF’s staffers how much the organization values gender equality and won’t tolerate such behavior at any level. At the very least, having someone in charge who doesn’t have the reputation of being a womanizer is surely a good thing.

It’s unclear how much the internal culture at IMF actually needs fixing. A May New York Times story laid out an image of the IMF as a place “in which romances often flourish—and lines are sometimes crossed,” and where a pressured, “sharp-elbowed” place left complaints of harassment unanswered and where “rules are more like guidelines.” Some 676 women in the organization filed a response to the story, saying they were insulted by the way their workplace was depicted.

Still, Lagarde herself says the organization will need to “take pains to show the outside world” that it is a leader in ethical behavior.  And she acknowledges that staff morale will need some mending following the august organization’s embarrassing time in the spotlight.

Legarde has a formidable intellect and is well-known for her straight and tough talk.  Finance and economics are areas dominated by men with swagger.  She has succeeded in ways that many men have not.

Ms Lagarde was appointed France’s Trade Minister in 2005 and under her watch, French exports reached record levels.

In 2007 she became finance minister, the first woman to hold this post not just in France but in any of the G8 major industrial countries.

Never afraid of speaking her mind, she has blamed the 2008 worldwide financial crisis partly on the male-dominated, testosterone-fuelled culture at global banks.

One of France’s most popular right-wing politicians, in 2009 she came second in a poll carried out by broadcaster RTL and newspaper Le Parisien on the country’s favourite personalities, beaten only by singer and actor Johnny Hallyday.

But her popularity has stretched beyond French shores and she is viewed with high regard in the international arena.

In 2009, the Financial Times voted her the best finance minister in Europe.

She has won international respect for promoting France’s negotiating clout in key forums like the G20, for which France currently holds the presidency.

She has also received plaudits for the key role she played in approving a bail-out mechanism to aid struggling members of the eurozone last May.

Lagarde has played a large role in the many challenges facing the Eurozone since the U.S. financial market meltdown.  Unlike the U.S. which has basically coddled the very executives whose risky behavior and bad business practices have gone largely unpunished, Largarde has worked hard to reform the system to avoid a repeat.  She not only has to herd French politicians but also create consensus among the other members of the EU community.

Lagarde has won praise for steering France through the financial crisis, notably by dispensing $48 billion in aid to French banks, which are repaying the money with interest after stabilizing themselves. She also fought successfully to provide corporate tax relief, aid to small businesses, and tax credits to stimulate research. “None of those things would have happened without Christine Lagarde,” says Frédéric Gonand, an economics professor at Paris-Dauphine University who recently stepped down after four years as Lagarde’s chief economic adviser. “She placed her own mark on economic policy.” A May poll by Ipsos for the magazine Le Point put her approval rating at 51 percent, far above her boss Sarkozy’s 37 percent.

Still, France has fallen behind Germany in making the kinds of changes that could give the economy a serious boost, such as reducing government bureaucracy and labor market restrictions. The need to carry out policies dictated by Sarkozy has also put her in awkward situations at times. In 2009 she had to defend his plan to invest $51 billion in research and development and other projects at a time when France was under attack by other euro zone countries for running a 7.5 percent budget deficit, far above the 3 percent that member countries had agreed on. And despite her role in negotiating the euro rescue package, the terms of that deal, such as automatic sanctions against aid recipients if they didn’t meet agreed-upon targets, were dictated largely by Germany. “France’s game seemed to be, ‘Let’s stick to the Germans as closely as possible,'” says Philip Whyte, a senior research fellow at the London-based Centre for European Reform. “She’s a great facilitator and chair, but she’s probably not in the absolute center of influence.”

I actually can’t tell you how excited I am about this development.  As I’ve said before, she’s been a great success in France.  This shows she can once again bust through a major glass ceiling that’s been there for ages for women in my profession.

Elite Conspiracy Theories and the Arrest of Dominique Strauss-Kahn

Dominque Strauss-Kahn and wife Anne

When one of us common people questions the Bush failures before 9/11 or the Warren Commission’s insistence that JFK was killed by a lone gunman, we are laughed at by the corporate media and lectured by politicians. But when one of the Global Elite gets in trouble, conspiracy theories are suddenly in vogue. Now that a global banker and possible candidate for the French presidency is accused of a sexual attack on a lowly hotel maid, elite conspiracy theories are running rampant in the U.S. and international media. I’ll give you a few examples.

At the Pakistan Observer, Ali Ashraf Kahn argues that Strauss-Kahn had to brought down, first because he would very likely have beaten the “American poodle Sarakozi” in a race for the presidency of France, and second because he (Strauss-Kahn) had offended the international banksters and corporations by proposing more liberal policies at the IMF which would have been a threat to the dollar. According to Ali Ashraf Kahn, getting rid of Strauss-Kahn would–along with U.S. military actions in Libya and Pakistan–would help to “save American predominance in the world.”

This incident goes to prove the hidden agenda of an international vested interest group trying to build and secure an American Empire for their master, which has not spared even Strauss-Kahn, who has been fixed in a rape attempt with a 32 year old hotel maid in a country where teen aged unwed mothers are a normal accepted feature. The former French Foreign Minister Strauss-Kahn, once if he was elected as president of France would have worked to strengthen the Euro to bring down dollar, which was of serious concern for the Federal Reserve Board in the already ongoing currency war with China. John F. Kennedy, US president was murdered for his only sin of canceling Federal Reserve Act of 1913 in 1963, when for the first time dollar currency was issued with the seal of US government, soon after his assassination President Lyndon B. Johnson revived this Act to continue their financial exploitation.

The author of this article appears to have a problem understanding the distinction between rape and consensual sex that results in pregnancies, but I’ll let that go for the moment. Kahn explains that Strauss-Kahn was trying to make radical changes at the IMF–so much so that Strauss Kahn won high praise from Joseph Stiglitz, which was apparently the final “kiss of death.”

Strauss-Kahn was trying to move the bank in a more positive direction, a direction that didn’t require that countries leave their economies open to the ravages of foreign capital that moves in swiftly-pushing up prices and creating bubbles, and departs just as fast, leaving behind the scourge of high unemployment, plunging demand, hobbled industries, and deep recession. Strauss-Kahn had set out on a “kinder and gentler” path, one that would not force foreign leaders to privatize their state-owned industries or crush their labour unions. Naturally, his actions were not warmly received by the banker’s mafia and multi national corporations who look to the IMF to provide legitimacy to their ongoing plunder of the rest of the world. These are the people who think that the current policies are “just fine” because they produce the desired results they’re looking for, which is bigger profits for themselves and deeper poverty for everyone else.

I have to admit, I’m in sympathy with those goals. There’s a lot more, so read the whole thing if you want more detail.

The next conspiracy theory is from Uganda. The author, Dr. Kihura Nkuba, also argues that Strauss-Kahn’s attack on the U.S. dollar is what led to his downfall. Nkuba says that police in the racist U.S. would never take the word of a poor black woman against that of a powerful white man unless motivated by a political conspiracy.

A woman from West Africa, assaulted by a famous white male, a future president of France, to be listened to by the New York Police, is amazing. But is it? [….]

New York police has [sic] been rummaging through DSK’s diaries, hotel registries, phone records, yearbooks and have made sure that the “great seducer” always appears handcuffed and dressed in a “pervie” raincoat with three-days stubble before they parade him in front of the media. He gets this treatment even though he has no criminal record and nothing, but the sketchy accusations of a room service cleaner.

What is his real crime? Strauss-Kahn was mounting an attack against the dollar and had called for a new world reserve currency that would challenge the dominance of the dollar and protect against future financial instability. He suggested adding emerging market countries’ currencies, such as the Yuan, to a basket of currencies that the IMF will administer to add stability to the global system….Strauss-Kahn saw a greater role for the IMF’s Special Drawing Rights, (SDRs) which is currently composed of the dollar, sterling, euro and yen, over time but said it will take a great deal of international cooperation to make that work.”

I love the way these male authors toss aside the charges against Strauss-Kahn–in Nkuba’s case, while complaining about racial prejudice. I guess he goes by the “bros before hos” rule: racism bad, sexism invisible.

Naomi Wolf also has a conspiracy theory about the Strauss-Kahn arrest that goes along with her defense of Julian Assange against sexual abuse charges in Sweden. She begins by comparing the NYC police response to the Strauss-Kahn case with the case of two of New York’s “finest,” Kenneth Moreno and Franklin Mata, who are on trial for raping a woman in Manhattan.

According to Wolf,

Moreno and Mata have not been asked to strip naked for “evidence” photos, were not initially denied bail, and were not held in solitary confinement, and are not being strip-searched daily. Their entire case has followed the usual timetable of many months, as evidence was gathered, testimony compiled and arguments made.

On the other hand, Wolf writes,

After a chambermaid reportedly told her supervisor at the elegant Sofitel hotel that she had been sexually assaulted, the suspect was immediately tracked down, escorted off a plane just before its departure, and arrested. High-ranking detectives, not lowly officers, were dispatched to the crime scene. The DNA evidence was sequenced within hours, not the normal eight or nine days. By the end of the day’s news cycle, New York City police spokespeople had made uncharacteristic and shockingly premature statements supporting the credibility of the victim’s narrative — before an investigation was complete.

The accused was handcuffed and escorted before television cameras — a New York tradition known as a “perp walk.” The suspect was photographed naked, which is also unusual, initially denied bail and held in solitary confinement. The Police Commissioner has boasted to the press that Strauss-Kahn is strip-searched now multiple times a day — also unheard-of.

I didn’t know that Strauss-Kahn was being subjected to daily strip-searches, but it seems to be true, according to the New York Post.

Prison brass and the NYPD have an airtight plan to safeguard the jet-setting French moneyman by having him isolated, chained, shackled — and repeatedly strip-searched — before and after court appearances, including a bail hearing newly scheduled for today.

“He will be strip-searched when he leaves Rikers Island. He will be strip-searched when he arrives in court. He’s strip-searched when he leaves court, and he’s strip-searched when he gets back to Rikers,” said Norman Seabrook, head of the correction officers union.

“When he arrives to the courthouse, he’s going to be put in an isolated cell away from other inmates,” said Seabrook. “This is for fear that another inmate would try to kill him to make a name for himself.”

Yet, as Wolf points out, hotel maids are routinely subject to sexual attacks during their work. Her conspiracy theory is that in the modern surveillance state,

men like former New York Governor Eliot Spitzer, who was investigating financial wrongdoing by the insurance giant AIG, WikiLeaks founder Julian Assange and Strauss-Kahn — whose efforts to reform the IMF gained him powerful opponents — can be, and are, kept under constant surveillance. Indeed, Strauss-Kahn, who had been the odds-on favorite to defeat Nicolas Sarkozy in next year’s French presidential election, probably interested more than one intelligence service.

This does not mean that Strauss-Kahn is innocent or that he is guilty. It means that policy outcomes can be advanced nowadays, in a surveillance society, by exploiting or manipulating sex-crime charges, whether real or inflated.

She has a pretty good point there. But the maid who reported Strauss-Kahn’s attack was a member of a union, as Dean Baker pointed out. Could that be why her employer made sure she was treated well by the police?

The reason that this is an important part of the story is that it is likely that Strauss-Kahn’s alleged victim might not have felt confident enough to pursue the issue with either her supervisors or law enforcement agencies, if she had not been protected by a union contract. The vast majority of hotel workers in the United States, like most workers in the private sector, do not enjoy this protection.

Dean Baker was also disappointed in Strauss-Kahn’s arrest, because whether or not he is guilty, his resignation spells the end of reform at the IMF.

Reading all these arguments for a conspiracy against Dominque Strauss-Kahn has given me pause. It certainly makes sense that the U.S. government would want to end his tenure at the IMF and prevent him from becoming President of France. But how could they know he would attack a hotel maid? Does the conspiracy require her involvement? That’s the serious hangup I have in buying into these authors’ claims–much as I do always enjoy a good conspiracy theory.

Patrica J. Williams touches all the bases in an article about the case at NPR. On the conspiracy issue, she argues for a skeptical approach to conspiracy theories, while keeping an open mind.

Politics is a complicated, dirty business, as the impeachment hearings of President Clinton ought to have instructed us. (Who guessed back then that Newt Gingrich, while skewering Clinton’s morals, was cheating on his then-wife with his present wife?) For Americans, who by and large have never heard of DSK, the possibility of his arrest being a set-up is inconceivable. But in the immediate aftermath of his detention, a majority of French citizens believe he has been purposely brought down. Why? Dominique Strauss-Kahn was well on track not just to become France’s president but its first Jewish president. As head of the IMF, he led that institution in a distinctly progressive manner. He sharply critiqued corrupt American bankers and banking practices and, early on, predicted the collapse of the mortgage market. As a center-left Socialist party member, he was close to negotiating a European Union bailout for Greece. And his elimination from the election empowers the candidacy of Marine LePen, head of the anti-immigrant, anti-Muslim and anti-Semitic National Front party, whose popularity, alarmingly enough, currently polls higher than that of Nicolas Sarkozy.

I’m certainly going to keep all this in mind as I follow the developments in the Strauss-Kahn case. I’d love to know what you all think about it too, so please chime in!

Dollar Dazed

One of the debates coming out of the global financial crisis is the potential for the U.S. Dollar to loose its supremacy as continental dollarthe safe-haven and international reserve currency of choice.  The dollar has not experienced this kind of problem since the 1970s when U.S. inflation threatened the Bretton Woods agreement.  The threat to the dollar’s supremacy is based on different issues this time around. The first issue is the pervasive and increasingly huge U.S. trade deficit which  has contributed to huge dollar holdings in oil rich countries and China.  The second issue is the widespread acceptance and credibility of the Eurodollar.

Prior to the GS 2- meeting, China called for replacement of the U.S. Dollar by Special Drawing Rights (SDR) as the international reserve currency.  This would certainly diminish U.S. economic influence around the world.  What is an SDR and what is the chance it will supplant the Dollar as the currency of choice in the global economy?  The best place to learn about Special Drawing Rights is to go straight to  the IMF website.

The SDR is an international reserve asset, created by the IMF in 1969 to supplement the existing official reserves of member countries. SDRs are allocated to member countries in proportion to their IMF quotas. The SDR also serves as the unit of account of the IMF and some other international organizations. Its value is based on a basket of key international currencies.

As you can see, SDRs have been around for some time. They were created during the inflationary period of US history to support the Bretton Woods Agreement.  This agreement established a fixed exchange rate regime to help build the global economy as it was experiencing World War 2.  Bretton Woods is a small town in New Hampshire and served as the meeting place for the representatives of the 44 Allied Nations.  This agreement was the basis of international currency evaluation until it’s official demise in 1976  in Jamaica.  The system had collapsed prior to that date so the Jamaican agreement was really just an ex poste meeting to officiate the end.

Since then, most of the world’s currencies are traded on markets and the market determines their exchange rates.  This is called a flexible exchange rate regime.  Not all countries have flexible exchange rates.  Some countries (because of weak governments or problems with inflation) peg their currencies to a stronger currency in their geographic area.  Other countries adopt the currency of their economically stronger neighbors.  Some form currency unions where they share a common currency.  The biggest of these unions is the Eurozone which remains a coalition of politically independent countries that rely on the Eurodollar for trade.  Both the Wikki site I referenced above as well as the International Monetary Fund site have some really interesting historical backgrounds and are worth the read.  I’ve read through the Wikki reference and can guarantee that information on it is correct so that I do not have to send you to a textbook or someplace more complex.  (International Trade, Finance, and Macroeconomics are my primary research areas now.  I’ve somewhat branched out from my first masters area which was just basically the Financial economy of the U.S. and it’s the subject of my dissertation.)

The SDR is the unit of account for the IMF and other international development funds. It’s not really a currency or a money as we tend to think of monies today.  This is because it is not a claim on the IMF in the way that a dollar bill is a claim on the Federal Reserve Bank and essentially the U.S. Treasury.  It is a potential claim on the set of currencies that it represents.  These currencies are basically those of the IMF members and they are placed in what is known as a basket.  The basket is a weighted average of all the currencies of the members. This is how SDRs are ‘created’ (also from the IMF link.)  Today the basket consists of the yen, the Eurodollar, the U.S. dollar, and the U.K. pound sterling.

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