Not even an understaffed US Treasury is afraid of doubling up its bets. This week, in the face of European scepticism of its demands for global fiscal stimulus, Tim Geithner, US Treasury secretary, upped the stakes by proposing a massive expansion of the International Monetary Fund and sweeping reforms to the global financial architecture.
But at the heart of Washington’s strategy, experts say, lurks an attempted trade-off. The emerging world gets more say over the running of the world economy, and Europe gets more IMF cash to bail out the crisis-hit countries on its eastern periphery. In return, the US is trying to recruit the IMF to its campaign to press the rest of the world – and particularly recalcitrant European finance ministers – to increase fiscal stimulus.
