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Published: Friday, 7/1/2011

Debt watch

Christine Lagarde of France is considered the most adroit finance minister in the European Union. She'll need all of that skill in her new job: managing director of the International Monetary Fund.

The top IMF post has been reserved for a European official since it was created in 1945, just as the top World Bank position has been a job for an American. Given changes in the global economic and financial pecking order, arguments have grown louder that someone from China, India, Brazil, or Russia should have a strong claim on the IMF job.

But the non-European world did not offer a viable candidate this time, while France did. Ms. Lagarde is the first woman to hold the post.

European nations have not dealt well with the national debt crises that have bedeviled the euro zone. That reflects to a degree on Ms. Lagarde's performance. Recent leadership in dealing with those issues has come more from Germany than France.

The biggest problem Ms. Lagarde will inherit is Greece. Its government is fighting tenaciously to respect the conditions for its bailouts imposed by the IMF and euro zone members. But it is doing so in the face of disorder in the streets by thousands of demonstrators who claim that bankers and the government, not they, should pay for Greece's debt crisis.

The other impending disaster that propelled the rapid choice of a new IMF leader is the possibility of a sovereign debt default by the U.S. government as early as Aug. 2.

Some U.S. politicians still appear not to grasp the gravity of the matter they are dealing with. Ms. Lagarde and the IMF need to understand it very well.

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