ALEX BRUMMER: Scandals at the top of the IMF and the Fed could not have come at a worse time
Supply bottlenecks, surging energy costs and the re-appearance of inflation provide a sombre background to this week’s virtual global financial meetings in Washington.
The post-Covid bounce has been remarkable and long term scarring avoided in the advanced nations. But the return to more normal conditions could not be more complex.
At times such as these the world needs the steadiest hands on the tiller. Unfortunately, the managing director of the International Monetary Fund Kristalina Georgieva is distracted greatly.
Distracted: International Monetary Fund boss Kristalina Georgieva’s future is hanging in the balance
In the days leading up to this week’s gathering, the executive board has found itself deeply embroiled in discussing her future following the doubts raised about her independence of thought and action exposed by a report by Washington lawyers Wilmer Hale into the World Bank’s Doing Business report.
The allegation is that in her previous post as chief executive of the World Bank, Georgieva had some responsibility for making China look a better place for commerce than was justified by the data.
The integrity of the data of the IMF and World Bank is integral to their operations. Anything which casts a doubt on that undermines relationships with member countries.
What is unfortunate is that Georgieva’s future looks to have become a tug of war between the Europeans, supported by emerging nations, and the US, which is the IMF’s biggest shareholder with a veto.
Even if the Americans could be persuaded that the quality of her work in the pandemic has been exemplary – it includes a controversial soft bailout of Argentina – the stain will remain.
If the first question at her major press conference this week were to come from a Chinese journalist, as has often been the case in recent times, the conclusion will be that the independence of the answer cannot be trusted.
The Americans themselves are not without ethical difficulties at present. The Federal Reserve is the subject of unfortunate allegations about the trading activities of senior officials.
That may well see President Biden having to remove chairman Jay Powell from office when his four-year term ends in February 2022 as part of a house cleaning operation.
Out of fashion
Corporate hubris gained the upper-hand at fast fashion outfit Asos in the pandemic, which has been a blessing and a curse for the online no-frills clothing industry.
It delivered supercharged profits when consumers were confined at home, and at the start of this year allowed them to pick the carcasses of the defunct Topshop and Debenhams chains.
At the same time it provided a huge incentive for more traditional clothing retailers to lift their online games.
Next sailed through spectacularly well and Marks & Spencer was forced into urgent change.
Asos may still have the edge on low prices and high fashion design but its financial ambition has run far ahead of market changes.
Revenues and earnings have been hollowed out and there has been a cataclysmic subsidence in the share price.
Chief executive Nick Beighton is leaving with immediate effect and a new chairman – paradoxically a refugee from M&S – Ian Dyson is charged with sorting out the mess.
Current chairman Adam Crozier has bigger fish to fry in making sure the nation receives fibre-to-the-door broadband at BT.
One trusts, from the point of view of Asos investors, that the turnaround and recovery is a matter of months rather than the decades it has been taking at M&S. Supply chain hell is blamed for the Asos debacle.
There must be some sympathy for that. It is a problem shared with almost all cotton and clothing businesses.
What is unforgivable is the admittance that earnings could be 30 per cent lower than previously expected for next year.
Restoring credibility is the big task ahead. Watching all this from Monaco, Philip Green could be forgiven a wry smile.
Austin, Texas is a hipster, neon clad and Democratic stronghold in a fiercely Republican state.
The transplant of Elon Musk and his Tesla headquarters from Palo Alto, California to Austin ought to greeted as a great moment.
Instead, there is concern that the city’s Bohemian character will be eroded by urban sprawl, rising house prices and traffic chaos.