Christine Lagarde and the International Monetary Fund have answered the easy question but dodged the hard ones. Yes, of course an era of tit-for-tat tariffs dims the global economic outlook. So what can the IMF do about it? Does it need more funding to protect the international economy, given the weakening scene?
Ms Lagarde should say so directly and, if so, petition the shareholders, of which the US is the biggest.
Her allusions to IMF coffers are vague, like this speech on Monday: "Guarding against turbulence also requires a strong financial safety net, which in turn means a well-equipped and well-resourced IMF at its centre. This will ensure the Fund can play its unique role in helping countries deal with future crises."
The trade clash between the US and China has intensified the past few months, and emerging markets have taken a hit. Ms Lagarde this week flagged cuts to growth estimates when the institution updates its World Economic Outlook on Oct 9. Perhaps she is saving the capital question of cash for next week, when the IMF gathers for its annual meeting in Bali, Indonesia.
When it comes to forecasting, the IMF is a cautious place. Big cuts are unlikely, especially when America powered along at a 4.1% clip in the second quarter. Growth is likely to have peaked with a whimper, not a bang.
The important issues may be just how lopsided the projections are and, specifically, how soft the numbers for the developing countries look. The former has consequences for the latter.
Emerging markets have been stressed by higher US interest rates and the dollar. In some instances, like Turkey, Argentina, South Africa and Indonesia, the stress has been major. Indonesia, like much of Asia, is also caught in the trade crossfire.
It's not a stretch to ask what plans the IMF has in the event it needs to come to the rescue. The World Bank got a capital increase from its shareholders this year. The IMF hasn't publicly pressed for one and, to be fair, the need isn't yet quite there. But a glance at what the IMF has pledged for Argentina is sobering: US$57.1 billion over three years, a record.
When Ms Lagarde has all her shareholders in one place, she should follow the example of one of her predecessors. In September 1997, in an IMF annual meeting in Hong Kong, then-chief Michel Camdessus won a 45% increase in contributions, equivalent to US$285 billion.
Attendees of that meeting basked in the glow of China's economic miracle and the peaceful handover of power in Hong Kong. Emerging market rumblings had pushed only Thailand into the arms of the IMF. Much worse was to follow in what became a full-blown financial crisis. Good thing the IMF was ready.
Will it be next time? I hope what we are seeing now from Ms Lagarde is a very careful process of preparing that safety net. - Bloomberg Opinion
Daniel Moss writes and edits articles on economics for Bloomberg Opinion. Previously he was executive editor of Bloomberg News for global economics, and has led teams in Asia, Europe and North America.