WASHINGTON — The International Monetary Fund and emerging markets should work together to finally pull the world’s economy from the brink of collapse, Bill Rhodes, a senior adviser for Citigroup Inc., said Wednesday.
Promoting his new book “Banker to the World: Leadership Lessons Form the Front Lines of Global Finance,” Rhodes suggested to a lunch crowd that the IMF seek financing in the form of a special fund supported by China, Brazil, Gulf countries and Korea that would not only help buy more bonds but support continuing programs.
“A crisis is here,” he added, “but it’s an opportunity to turn the fund back into what it used to be, to make it the lynchpin, the anchor of the system when there’s a crisis,” Rhodes said.
The emphasis on cooperation comes as U.S. lawmakers continue to argue over the budget. But bickering, Rhodes warned, only exacerbates monetary problems.
“If the sovereign is in trouble, the banks are in trouble; and if the banks are in trouble, the sovereign is in trouble,” he said. He added international markets are so intertwined and move so quickly that taking time to argue can result in much deeper losses in the long run.
“The U.S. investor ought to watch what’s going on with the ‘Super Committee’because I think it’s very, very important that they reach some sort of agreement between the parties on what to do with the deficit,” he said. “Obviously we’re a period of stagnation, and we need to get confidence in the private sector to invest and an implementation of all the regulatory process that we have pending.”
On the bright side, Rhodes added the U.S. has support to recover in a way the European countries don’t.
“Here in the United States, we obviously have the structure and the framework,” he said. “The question is do we have the will on the deficit, which will be tested, but they don’t even have the structure over there.”
“We’re still a leader of the world and we’re still the number one economy,” he said. “The only thing I would say is that we have a unique ability to bounce back.”