Borges….won’t be missed by EU Godfathers

Although the IMF’s newly unpersonned  European Section Head Antonio Borges appears to have been dispatched following a bond market idea that became inadvertantly public, there appears to be rather more to the affair than that alone.

Borges was a major signing for Dominique Strauss-Kahn last November, a few months before the rutting Frenchman slipped on a bar of soap onto Nafissatou Diallo. Antonio appears to be a pretty boring man to be honest, and very much in the mould of IMF robocrats for whom “The answer’s austerity, now what’s the question?” seems to apply from Chile to Hungary.

“I didn’t rate him at all,” says a former Goldman colleague. The Portuguese national was previously the Hedge Fund Standards Board Chairman (a busy job, I’d imagine) and Strauss-Kahn was no doubt impressed by Borges’ ability to toe the line, and be unimaginative. DSK was always keen on those who were happy to glow in the reflected glory of his genius. However, Borges may have eventually proved him wrong in this respect.

Some six weeks ago, Antonio suddenly suggested to a press conference that IMF bond market intervention could create a special financing vehicle to buy bonds facing stress in the primary and secondary markets – especially in Spain and Italy. The suggestion garnered significant financial market attention, and this outcome set hares running in Berlin and Frankfurt among those of German nationality. It was too close to the idea of a eurobond – a hobby horse for Das MerkeSchauble and the German contingent within the ECB – so Borges was hastily volunteered to retract his statement immediately. But some suggest that his suggestion was also a lifeline Berlin didn’t want to be extended at that particular time.

Borges being a former Strauss-Kahn apparatchik, Pristine Lagarde is delighted to have fired the hapless bloke….even though, as a Frenchwoman (I’m told) she privately agreed with him – and may even have known in advance what he was going to say. Anyway: open and shut case of grey person being purged, close book.

Or not. Watch Borges on YouTube, and he does indeed come over like a cross between Steve McClaren and the Equalities Minister of an obscure Baltic State; but true Robocrats don’t suddenly have an idea, and then blurt it out at a press conference. Prats do, but this isn’t the question: the question is, was this just the expulsion of a prat?

Think on this: I’ve established that Antonio was and is a Greek austerity hawk. I have also established that he had become agitated about the manner in which Athens ‘slippage’ was being conveniently ignored by Das MerkeSchauble. I have further established that he made a bit of a nuisance of himself about it within the IMF. As early as last April, in fact, Borges publicly maintained that no adjustments to the draconian Greek austerity-and-loan programme were needed……..even though the IMF and the Eurozone had just had a secret meeting on the topic. He didn’t like being out of that loop.

I think what we have here is a strict monetarist Believer with a profound faith in the individual will of debtor States to solve their own problems. In relation to Ireland, for instance, he was genuinely pleased last month to opine publicly that Ireland’s economic outlook was “surprisingly positive”, after visiting the country as part of an EU-IMF quarterly review.

However, he also recognised that going too far with this anal attitude, when things became critical, wasn’t such a great idea either.

Thus, most of the time, he was all the way there with the Germanic attitude. But for a part of that way, Das MerkeSchauble had to calm down various communities in Germany about the Greeks. And when they simply lied about how the Greeks were doing, it looks to me as though Antonio Borges started to look, to the cynics, as if he might be a potential whistle-blower. Tonight on Twitter, for example, I note that Daily Telegraph business journalist Louise Armitstead is tweeting, ‘Greece is missing €60bn of unpaid taxes – QUARTER of GDP’.

It seems to me that the IMF’s European boss came increasingly to be seen by the EU’s movers and shakers as that most dangerous of things: a naif with some principles about what should be done, and a chap unwilling to shut up when those principles were being compromised for political ends.

As such, he will become, at best, a very small, italic 8-pt footnote in the eventual history of Crash 2. The only certain thing in this mini-saga is that he didn’t resign ‘for personal reasons’.